HARTFORD LIFE INC, S-1/A, 1997-03-21

HARTFORD LIFE INC
S-1/A, 1997-03-21
LIFE INSURANCE

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 20, 1997.
REGISTRATION NO. 333-21459

================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 1
TO

FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
------------------------

HARTFORD LIFE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 6719 06-1470915
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>

200 HOPMEADOW STREET
SIMSBURY, CT 06089
(860) 843-7716
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------

GREGORY A. BOYKO
SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER
HARTFORD LIFE, INC.
200 HOPMEADOW STREET
SIMSBURY, CT 06089
(860) 843-7716

(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)

COPIES TO:

<TABLE>
<S> <C> <C>
GEORGE W. BILICIC, JR. MICHAEL S. WILDER ANDREW S. ROWEN
CRAVATH, SWAINE & MOORE ITT HARTFORD GROUP, INC. SULLIVAN & CROMWELL
825 EIGHTH AVENUE HARTFORD PLAZA 125 BROAD STREET
NEW YORK, NEW YORK 10019 HARTFORD, CONNECTICUT 06115 NEW YORK, NEW YORK 10004
(212) 474-1000 (860) 547-5000 (212) 558-4000
</TABLE>

------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable on or after the effective date of this Registration Statement.
------------------------

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
- ------------

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ------------

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------

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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

================================================================================
<PAGE> 2

EXPLANATORY NOTE

This Registration Statement contains two forms of prospectus: one to be
used in connection with the offering in the United States (the "U.S.
Prospectus") and one to be used in the concurrent international offering outside
the United States (the "International Prospectus"). The two prospectuses are
identical except for the front and back cover pages, the additional inside front
cover page and the section entitled "Underwriting". The form of U.S. Prospectus
included herein is followed by the front cover page, the additional inside front
cover page, the Section entitled "Underwriting" and the back cover page to be
used in the International Prospectus. Each of the alternate pages for the
International Prospectus included herein is labeled "Alternate Page for
International Prospectus".
<PAGE> 3

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED MARCH 20, 1997

[LOGO] HARTFORD LIFE, INC.

CLASS A COMMON STOCK
(PAR VALUE $.01 PER SHARE)
------------------------

Of the shares of Class A Common Stock, par value $.01 per share (the
"Class A Common Stock"), being offered, shares are being offered hereby in
the United States and shares are being offered in a concurrent
international offering outside the United States. The initial public offering
price and the aggregate underwriting discount per share will be identical for
both Equity Offerings. See "Underwriting".

Hartford Life, Inc. (the "Company") is an indirect wholly owned subsidiary
of ITT Hartford Group, Inc. ("The Hartford") and, upon completion of the Equity
Offerings, The Hartford will beneficially own 100% of the outstanding shares of
Class B Common Stock, which will represent approximately % of the economic
interest (i.e., the right to participate in distributions in respect of the
common equity) in the Company ( % if the Underwriters' over-allotment options
are exercised in full).

Holders of Class A Common Stock generally have rights identical to holders
of Class B Common Stock, except that holders of Class A Common Stock are
entitled to one vote per share while holders of Class B Common Stock are
entitled to five votes per share on all matters submitted to a vote of the
Company's stockholders. Following completion of the Equity Offerings, The
Hartford will beneficially own shares of Class B Common Stock representing
approximately % of the combined voting power of all the Company's classes of
voting stock ( % if the Underwriters' over-allotment options are exercised
in full) and will thereby be able, among other things, to direct the election of
all the Company's directors and exercise a controlling influence over the
business and affairs of the Company. See "Risk Factors -- Control by and
Relationship with The Hartford" and "Description of Capital Stock".

The Hartford has advised the Company that its current intention is to
continue to hold all the shares of Class B Common Stock it beneficially owns.
However, The Hartford has no contractual obligation to retain its shares of
Class B Common Stock, except for a limited period described in "Underwriting".

Prior to the Equity Offerings, there has been no public market for the Class
A Common Stock. It is currently estimated that the initial public offering price
per share will be between $ and $ . For factors to be considered in
determining the initial public offering price, see "Underwriting".

Up to shares of Class A Common Stock are being reserved for sale to
certain employees of the Company, The Hartford and their respective affiliates,
and the respective directors thereof, at the initial public offering price.

SEE "RISK FACTORS" BEGINNING ON PAGE 14 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE CLASS A COMMON STOCK.

Application is being made to list the Class A Common Stock on the New York
Stock Exchange, Inc. under the symbol "HLI".

------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE DISCOUNT(1) COMPANY(2)
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
Per Share........................... $ $ $
Total(3)............................ $ $ $
</TABLE>

(3) The Company has granted the U.S. Underwriters an option for 30 days to
purchase up to an additional shares of Class A Common Stock at the
initial public offering price per share, less the underwriting discount,
solely to cover over-allotments. Additionally, the Company has granted the
International Underwriters a similar option with respect to an additional
shares as part of the concurrent International Offering. If such
options are exercised in full, the total initial public offering price,
underwriting discount and proceeds to Company will be $ , $
and $ , respectively. See "Underwriting".

------------------------

The shares of Class A Common Stock offered hereby are offered severally by
the U.S. Underwriters, as specified
herein, subject to receipt and acceptance by them and subject to their right to
reject any order in whole or in part. It is expected that certificates for the
shares of Class A Common Stock will be ready for delivery in New York, New York
on or about , 1997, against payment therefor in immediately available
funds.

GOLDMAN, SACHS & CO.
DEAN WITTER REYNOLDS INC.
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
SMITH BARNEY INC.
------------------------
The date of this Prospectus is , 1997.
<PAGE> 4

AVAILABLE INFORMATION

Hartford Life, Inc. has filed with the Securities and Exchange Commission
(the "Commission") a Registration Statement (which term shall include any
amendments thereto) on Form S-1 (the "Registration Statement") under the
Securities Act of 1933 (the "Securities Act"), with respect to the shares of
Class A Common Stock, par value $.01 per share (the "Class A Common Stock"),
being offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto, to which
reference is hereby made. For further information with respect to the Company
and the Class A Common Stock being offered hereby, reference is made to the
Registration Statement, including the exhibits and schedules thereto. Statements
made in this Prospectus as to the contents of any contract, agreement or other
document referred to are not necessarily complete. With respect to each such
contract, agreement or other document filed as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and each such statement shall be deemed qualified in its
entirety by such reference. The Registration Statement and the exhibits and
schedules thereto filed with the Commission by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission located at Seven World Trade Center, Suite
1300, New York, New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661 or on the internet at http://www.sec.gov.
Copies of such material may also be obtained upon written request from the
Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates.

Upon the completion of the offering made hereby in the United States (the
"U.S. Offering") by the underwriters therefor (the "U.S. Underwriters") and the
concurrent international offering (the "International Offering" and, together
with the U.S. Offering, the "Equity Offerings") by the underwriters therefor
(the "International Underwriters" and, together with the U.S. Underwriters, the
"Underwriters"), the Company will be subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, will file reports and other information with the
Commission.

Application is being made to list the Class A Common Stock on the New York
Stock Exchange, Inc. (the "NYSE"). Upon such listing, copies of the Registration
Statement, including all exhibits thereto, and periodic reports, proxy
statements and other information will be available for inspection at the offices
of the NYSE located at 20 Broad Street, New York, New York 10005.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE CLASS A COMMON
STOCK, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN
SUCH SECURITIES, AND THE IMPOSITION OF A PENALTY BID, DURING AND AFTER THE
OFFERING. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".

THE COMPANY IS A HOLDING COMPANY WHICH OWNS DIRECTLY OR INDIRECTLY ALL THE
OUTSTANDING SHARES OF CAPITAL STOCK OF CERTAIN INSURANCE COMPANY SUBSIDIARIES
DOMICILED IN CONNECTICUT AND NEW JERSEY. INSURANCE LAWS OF SUCH STATES
APPLICABLE TO THE COMPANY GENERALLY PROVIDE THAT NO PERSON MAY ACQUIRE CONTROL
OF THE COMPANY, AND THUS INDIRECT CONTROL OF THESE INSURANCE COMPANY
SUBSIDIARIES, WITHOUT THE PRIOR APPROVAL OF THE APPROPRIATE INSURANCE
REGULATORS. IN GENERAL, ANY PERSON WHO ACQUIRES BENEFICIAL OWNERSHIP OF 10% OR
MORE OF THE VOTING SECURITIES OF THE COMPANY WOULD BE PRESUMED TO HAVE ACQUIRED
SUCH CONTROL, ALTHOUGH THE APPROPRIATE INSURANCE REGULATORS, UPON APPLICATION,
MAY DETERMINE OTHERWISE.

2
<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to the more
detailed information and consolidated financial statements appearing elsewhere
in this Prospectus. Unless the context otherwise requires, the "Company" means
Hartford Life, Inc. and its consolidated subsidiaries. See "Glossary of Selected
Insurance and Other Terms" for the definitions of certain insurance-related
terms which are printed in boldface type the first time they appear in this
Prospectus.

Unless otherwise indicated, financial information, operating statistics and
ratios applicable to the Company set forth in this Prospectus are based on
United States generally accepted accounting principles ("GAAP") rather than
STATUTORY ACCOUNTING PRACTICES. In addition, unless otherwise indicated, all
information in this Prospectus assumes no exercise of the Underwriters'
over-allotment options.

"CORE EARNINGS" is an internal performance measure used by the Company in
the management of its operations. Core earnings represents the Company's net
income excluding the after-tax effects of its runoff operations and certain
other items, the cumulative effect of changes in accounting principles and net
realized capital gains (losses), as further described below. Management believes
that this performance measure delineates the results of operations of the
Company's on-going lines of business in a manner that would allow for a better
understanding of the underlying trends in the Company's current business.
However, core earnings should only be analyzed in conjunction with, and not in
lieu of, GAAP net income and may not be comparable to other performance measures
used by the Company's competitors.

GENERAL

The Company is a leading insurance and financial services company that
provides (i) investment products such as individual VARIABLE ANNUITIES and FIXED
MVA ANNUITIES, deferred compensation plan services and mutual funds for savings
and retirement needs to over 1 million customers, (ii) life insurance for income
protection and estate planning to approximately 500,000 customers and (iii)
employee benefits products such as group life and group disability insurance for
the benefit of over 15 million individuals. As of or for the year ended December
31, 1996, the Company had $250 million of core earnings, $24 million of net
income, $76 billion of assets (excluding assets related to Closed Book GRC, as
hereinafter defined), $1.245 billion of stockholder's equity (excluding net
unrealized capital gains or losses) and $ billion of pro forma
stockholders' equity, as adjusted for the Equity Offerings and described in
"Capitalization". According to the latest publicly available data identified
below, with respect to the United States, the Company is the largest writer of
both total individual annuities and individual variable annuities based on new
sales for the year ended December 31, 1996, the eighth largest consolidated life
insurance company based on STATUTORY ASSETS as of December 31, 1995, and the
largest writer of group short-term disability benefit plans and the second
largest writer of group long-term disability products based on full-year 1995
new PREMIUM and PREMIUM EQUIVALENTS.

3
<PAGE> 6

annual growth rate of 43%, from $18 billion in 1992 to $76 billion in 1996.
During this period, the Company has attained strong market positions for the
principal product offerings of each of its three business segments -- Investment
Products, Individual Life Insurance and Employee Benefits. In particular, the
Company holds the leading market position in the individual variable annuity
industry based on sales for the year ended December 31, 1996. The Company's
sales of individual variable annuities grew from $1.8 billion in 1992 to $9.3
billion in 1996, and, for the year ended December 31, 1996, the Company had a
13% market share (according to information compiled by Variable Annuities
Research and Data Service ("VARDS")). During this period of growth, the
Company's separate account assets, which are generated principally by the sale
of annuities, grew from 36% of total assets at December 31, 1992 to 62% of total
assets at December 31, 1996. The Company believes that such asset growth stems
from various factors including the variety and quality of its product offerings,
the performance of its products, the effectiveness of its multiple channel
distribution network, the quality of its customer service and the overall growth
of the variable annuity industry and the stock and bond markets. However, there
is no assurance that the Company's historical growth rate will continue. See
"Risk Factors -- Risks Associated with Certain Economic and Market Factors".
Management believes the Company's substantial growth in assets, together with
management's effort to control expenses, has made the Company one of the most
efficient competitors in the insurance industry, placing it among the top ten of
the fifty largest life insurers (based on statutory assets) in operating
efficiency. The Company's ratio of GENERAL INSURANCE EXPENSES to statutory
assets, an industry measure of operating efficiency, improved to .64% in 1996,
from .72% in 1995 and 1.38% in 1992, as compared with the average ratio for the
top fifty life insurance companies, for the year ended December 31, 1995, of
1.50%, based on information compiled by A.M. Best Company, Inc. ("A.M. Best").

The following table details the Company's net income, after tax, for the
five-year period ended December 31, 1996.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------
1992 1993 1994 1995 1996
---- ---- ---- ---- -----
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Investment Products....................................... $ 38 $ 54 $ 84 $114 $ 146
Individual Life Insurance................................. 16 21 26 37 44
Employee Benefits......................................... 36 48 53 67 78
---- ---- ---- ---- ----
Total segment earnings.................................. 90 123 163 218 268
Corporate operation(1).................................... (11) (3) (7) (14) (18)
---- ---- ---- ---- ----
Core earnings(2)........................................ 79 120 156 204 250
Runoff and other(3)....................................... 16 5 (6) (51) (226)
Net realized capital gains (losses)....................... 6 5 1 (3) --
Cumulative effect of changes in accounting
principles(4)........................................... (47) -- -- -- --
---- ---- ---- ---- ----
Net income.............................................. $ 54 $130 $151 $150 $ 24
==== ==== ==== ==== ====
</TABLE>

- ---------------

(1) The Company maintains a Corporate operation through which it reports net
investment income on assets representing surplus not assigned to any of its
business segments, interest expense on Allocated Advances (as hereinafter
defined) and certain other revenues and expenses not specifically allocable
to any of its business segments.

(2) Core earnings represents the Company's net income excluding the after-tax
effects of the items described under "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Results of Operations --
Runoff and Other", the cumulative effect of changes in accounting principles
and net realized capital gains (losses). Core earnings should only be
analyzed in conjunction with, and not in lieu of, GAAP net income and may
not be comparable to other performance measures used by the Company's
competitors.

(3) Runoff and other primarily represents (i) Closed Book GRC, including, for
the year ended December 31, 1996, $143 million of realized capital losses
relating to investments supporting Closed Book GRC, (ii) the Company's group
medical business, which it decided to exit in 1993, and (iii) certain other
items that have been excluded from the Company's core earnings to allow for
a better understanding of the underlying trends in the Company's current
business.

(4) Reflects the cumulative effect of adoption of Statement of Financial
Accounting Standards ("SFAS") No. 106, Employers' Accounting for
Postretirement Benefits Other Than Pensions, and SFAS No. 112, Employers'
Accounting for Postemployment Benefits.

4
<PAGE> 7

Investment Products segment earnings, which represented 55% of total
segment earnings in 1996, have grown at a compound annual rate of 40%, from $38
million in 1992 to $146 million in 1996. This segment offers individual variable
annuities and fixed MVA annuities, deferred compensation and retirement plan
services, mutual funds, investment management services and other financial
products. As indicated above, the Company is the largest writer of individual
annuities (according to information compiled by Life Insurance Marketing and
Research Association ("LIMRA")) and the largest writer of individual variable
annuities (according to information compiled by VARDS), as well as the largest
writer of annuities sold through banks (according to information compiled by
Kenneth Kehrer Associates). In 1996, the Company sold $9.8 billion of individual
annuities, of which $9.3 billion were individual variable annuities; of the
Company's total individual annuities, $6.6 billion were sold through
broker-dealers and $3.2 billion were sold through banks. The Company's variable
annuity product offerings include Putnam Capital Manager Variable Annuity and
The Director, two of the four highest selling variable annuity contracts in the
United States for the nine months ended September 30, 1996. These variable
annuity products allow customers to save for retirement on a tax-deferred basis
through a variety of mutual funds provided by the Company. The Company's fixed
MVA annuity also provides customers a tax-deferred savings vehicle with fixed
rates for guaranteed periods. As of December 31, 1996, such fixed rates ranged
from 3.4% to 9.3% and averaged 6.53%, while the periods over which such rates
are to be paid ranged from one to ten years and averaged approximately seven
years. The Company has distribution arrangements to sell its individual annuity
products with approximately 1,350 national and regional broker-dealers and 200
banks. Management believes that it has established a strong distribution
franchise through its long-standing relationships with the members of its bank
and broker-dealer network and is committed both to expanding sales through these
established channels of distribution and promoting new distributors for all its
products and services.

Individual Life Insurance segment earnings, which represented 16% of total
segment earnings in 1996, have grown at a compound annual rate of 29%, from $16
million in 1992 to $44 million in 1996. This segment, which focuses on the
high-end estate and business planning markets, sells a variety of individual
life insurance products, including VARIABLE LIFE and UNIVERSAL LIFE policies.
The Company believes that it is one of the leading competitors in the high-end
estate and business planning markets as indicated by its relatively high average
face value per POLICY. The Company has distribution arrangements to sell its
individual life products in the United States with approximately 137,000
licensed life insurance agents.

Employee Benefits segment earnings, which represented 29% of total segment
earnings in 1996, have grown at a compound annual rate of 21%, from $36 million
in 1992 to $78 million in 1996. This segment sells group insurance products,
including group life and group disability insurance and corporate-owned life
insurance ("COLI"), and engages in certain international operations. As
indicated above, the Company is the largest writer of group short-term
disability benefit plans and the second largest writer of group long-term
disability insurance, as well as the fourth largest writer of group life
insurance based on full-year 1995 new premium and premium equivalents, based on
information reported to the Employee Benefits Plan Review ("EBPR"). Management
believes that, as a result of the Company's name recognition, the value-added
nature of its managed disability products and its effective claims
administration, it is one of the leading sellers in the "large case" group
market (companies with over 1,000 employees) and that further growth
opportunities exist in the "small" and "medium case" group markets. The Company
uses an experienced group of employees to distribute its Employee Benefits
products through a variety of distribution outlets, including insurance agents,
brokers, associations and THIRD-PARTY ADMINISTRATORS.

In addition to its three business segments, the Company maintains a
Corporate operation in which it reports net investment income on assets
representing surplus not assigned to any of its business segments, interest
expense on Allocated Advances (as defined below), and certain other revenues and
expenses not specifically allocable to any of its business segments. The
Corporate operation has incurred net expenses of $7 million, $14 million and $18
million in 1994, 1995 and

5
<PAGE> 8

1996, respectively. In addition, the Company maintains a closed block of
guaranteed rate contracts ("Closed Book GRC") which the Company wrote prior to
1995. For more information on Closed Book GRC, the Company's former group
medical business and certain other non-recurring items, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Results of Operations -- Runoff and Other".

The Company's principal insurance subsidiaries currently are rated "A+
(superior)" by A.M. Best and have claims-paying ability ratings of "AA" from
Standard and Poor's ("S&P") and "AA+" from Duff & Phelps Credit Rating Co.
("Duff & Phelps"), and one such insurance subsidiary, Hartford Life Insurance
Company ("Hartford Life"), has an insurance financial strength rating of "Aa3"
from Moody's Investors Service, Inc. ("Moody's").

The Company is a direct subsidiary of Hartford Accident and Indemnity
Company ("Hartford Accident and Indemnity") and an indirect subsidiary of ITT
Hartford Group, Inc. ("The Hartford"). The Hartford is among the largest
domestic and international providers of commercial property-casualty insurance,
property-casualty REINSURANCE and personal lines (including homeowners and auto)
coverages. On December 19, 1995, ITT Industries, Inc. (formerly ITT Corporation)
("ITT") distributed all the outstanding shares of capital stock of The Hartford
to ITT stockholders of record on such date (the transactions relating to such
distribution are referred to herein as the "ITT Spin-Off"). As a result of the
ITT Spin-Off, The Hartford became an independent, publicly traded company.

BUSINESS STRATEGY

Management believes that its corporate strategies will maintain and enhance
its position as a market leader within the financial services industry and will
maximize stockholder value. In addition, the Company's strong positions in each
of its businesses, coupled with the growth potential management believes exists
in its markets, provide opportunities to increase sales of its products and
services, as individuals increasingly save and plan for retirement, protect
themselves and their families against disability or death and prepare their
estates for an efficient transfer of wealth between generations. Management has
established the following strategic priorities for the Company:

LEVERAGE THE COMPANY'S MULTIPLE CHANNEL DISTRIBUTION NETWORK. Management
believes that the Company's multiple channel distribution network provides a
distinct competitive advantage in selling its products and services to the
broadest cross-section of customers throughout varying economic and market
cycles. The Company has access to a variety of distribution outlets through
which it sells its products and services, including approximately 1,350 national
and regional broker-dealers, 200 banks (including 21 of the 25 largest banks in
the United States), 137,000 licensed life insurance agents, 2,900 insurance
brokers, 244 third-party administrators and 165 associations. In particular, the
Company believes that the bank and broker-dealer network employed by its
Investment Products segment is the largest in the insurance industry. Management
believes that this extensive distribution system provides the Company with
greater opportunities to access its customer base than its competitors. In
addition, the multiple channel distribution system allows the Company to
introduce new products and services quickly through this established
distribution network as well as new channels of distribution. For example, the
Company sells fixed MVA annuities, variable annuities, mutual funds, single
premium variable life and Section 401(k) plan services through its broker-dealer
and bank distribution systems.

6
<PAGE> 9

individual annuities to successfully develop and market fixed annuities with an
MVA feature which protects the Company from losses due to higher interest rates
in the event of early surrender. The Company was also a leader in introducing
the "managed disability" approach to the group disability insurance market. This
approach focuses on early claimant intervention in an effort to facilitate a
claimant's return to work and to contain costs.

CAPITALIZE ON ECONOMIES OF SCALE, CUSTOMER SERVICE AND TECHNOLOGY. As a
result of its growth and attention to maintaining low expenses, the Company
believes it has achieved advantageous economies of scale and operating
efficiencies in its businesses which together enable the Company to
competitively price its products for its distribution networks and
policyholders. For example, as noted above, the Company is the eighth largest
consolidated life insurance company based on statutory assets as of December 31,
1995, with a ratio of general insurance expenses to statutory assets that is
less than half the average ratio of its competitors. In addition, the Company
has reduced its individual annuity expenses as a percentage of total individual
annuity account value to 28 basis points in 1996 from 43 basis points in 1992.
In addition, the Company believes that it maintains high-quality service for its
customers and utilizes computer technology to enhance communications within the
Company and throughout its distribution network in order to improve the
Company's efficiency in marketing, selling and servicing its products. In 1996,
the Company received one of the five Quality Tested Service Seals awarded by
DALBAR Inc. ("DALBAR"), a recognized independent research organization, for its
achievement of the highest tier of customer service in the variable annuity
industry.

CONTINUE PRUDENT RISK MANAGEMENT. The Company's product designs, prudent
underwriting standards and risk management techniques protect it against
DISINTERMEDIATION risk and greater than expected MORTALITY and MORBIDITY. As of
December 31, 1996, the Company had limited exposure to disintermediation risk on
approximately 99% of its insurance liabilities through the use of NON-GUARANTEED
SEPARATE ACCOUNTS, MVA features, policy loans, SURRENDER CHARGES and non-
surrenderability provisions. With respect to the Company's individual annuities,
97% of the related total account value was subject to surrender charges as of
December 31, 1996. The Company also enforces disciplined claims management to
protect the Company against greater than expected mortality and morbidity. The
Company regularly monitors its underwriting, mortality and morbidity assumptions
to determine whether its experience remains consistent with these assumptions
and to ensure that the Company's product pricing remains appropriate.

BUILD ON BRAND NAME AND FINANCIAL STRENGTH. Management believes that the
combined effect of the above-mentioned strengths, The Hartford's 187-year
history and customer recognition of the Stag Logo have produced a distinguished
brand name for the Company. The Company's financial strength, characterized by
sound ratings and a balance sheet of well-protected liabilities and highly rated
assets, has also enhanced the Company's brand name within the financial services
industry. Management believes that brand awareness, an established reputation
and financial strength will continue to be important factors in maintaining
distribution relationships, enhancing investment advisory alliances and
generating new sales with customers.

RELATIONSHIP BETWEEN THE COMPANY AND THE HARTFORD

Following the Equity Offerings, The Hartford will continue to be the
controlling stockholder of the Company and will beneficially own 100% of the
outstanding Class B Common Stock, par value $.01 per share (the "Class B Common
Stock" and, together with the Class A Common Stock, the "Common Stock"), which
will represent approximately % of the combined voting power of all the
outstanding Common Stock and approximately % of the economic interest in the
Company (or approximately % and %, respectively, if the over-allotment
options of the Underwriters (as defined herein) are exercised in full). The
Hartford has advised the Company that its current intention is to continue to
hold all the shares of Class B Common Stock it beneficially owns. However, The
Hartford has no contractual obligation to retain its shares of Class B Common
Stock, except for a limited period described in "Underwriting".

7
<PAGE> 10

Promptly following the Equity Offerings, The Hartford and the Company
expect to elect two additional directors of the Company who will be persons not
currently or formerly associated with The Hartford or the Company. The Board of
Directors of the Company (the "Board of Directors") will then consist of ten
members, including eight who are directors and/or officers of The Hartford. See
"Management -- Directors". The Hartford will have the ability to change the size
and composition of the Company's Board of Directors.

For additional information concerning the Company's relationship with The
Hartford following the Equity Offerings, see "Risk Factors -- Control by and
Relationship with The Hartford" and "Certain Relationships and Transactions".

FINANCING PLAN

Historically, for financial reporting purposes, The Hartford internally
allocated a portion of its indebtedness (referred to as the "Allocated
Advances") to the Company's life insurance subsidiaries. Cash was contributed to
the life insurance subsidiaries in connection with certain of such Allocated
Advances. In February 1997, the Company obtained a line of credit from a
syndicate of four banks (the "Line of Credit") in the amount of $1.3 billion,
borrowed $1.084 billion under the Line of Credit and executed a promissory note
for the benefit of Hartford Accident and Indemnity in the amount of $100 million
(the "Promissory Note" and, together with the Line of Credit and any other
short-term indebtedness of the Company, the "Pre-Offering Indebtedness"). The
Company then made a payment of $1.184 billion as a dividend to Hartford Accident
and Indemnity. $893 million of such dividend constituted a repayment of the
Allocated Advances.

The Company will use the estimated net proceeds from the Equity Offerings
to make a capital contribution of $ million to its life insurance
subsidiaries, to reduce the Pre-Offering Indebtedness and for other general
corporate purposes.

Promptly following the Equity Offerings, subject to market conditions, the
Company plans to offer $ million of debt securities (the "Notes") in
one or more offerings (the "Debt Offering") pursuant to a shelf registration
statement. The consummation of the Equity Offerings will not be conditioned on
the consummation of the Debt Offering. The Company will use the net proceeds
from the Debt Offering to further reduce the Pre-Offering Indebtedness. For a
description of certain transactions effected prior to the Equity Offerings and
the actions to be taken concurrently with or promptly after the Equity
Offerings, see "Company Financing Plan".

THE EQUITY OFFERINGS

Class A Common Stock
offered(1):

United States
Offering...................

International
Offering...................

Total............ shares

Common Stock to be
outstanding after the
Equity Offerings(1)(2)

Class A Common
Stock...................... shares

Class B Common
Stock...................... shares

Total............ shares

- ---------------
(1) Assumes the Underwriters' over-allotment options are not exercised. See
"Underwriting".

(2) Does not include shares reserved for issuance pursuant to the Company's
benefit plans and the restricted stock plan for non-employee directors.

8
<PAGE> 11

Dividend Policy............ The holders of Class A Common Stock and Class B
Common Stock will share ratably on a per share
basis in all dividends and other distributions
declared by the Board of Directors. The Board of
Directors currently intends to declare quarterly
dividends on the Common Stock and expects that the
first quarterly dividend payment will be
$ per share, with the initial dividend to
be declared in the second quarter of 1997 and paid
in the third quarter of 1997. For a discussion of
the tax treatment of such dividends, see "Dividend
Policy". For a discussion of the factors that
affect the determination by the Board of Directors
to declare dividends, as well as other certain
matters concerning the Company's dividend policy,
see "Dividend Policy" and "Risk Factors -- Holding
Company Structure; Restrictions on Dividends".

Voting Rights.............. On all matters submitted to a vote of stockholders,
holders of Class A Common Stock are entitled to one
vote per share and holders of Class B Common Stock
are entitled to five votes per share. The Class A
Common Stock and Class B Common Stock generally
will vote together as a single class on all
matters, except as otherwise required by law. See
"Description of Capital Stock -- Class A Common
Stock and Class B Common Stock -- Voting Rights".

Conversion................. Under certain circumstances, shares of Class B
Common Stock will convert or are convertible into
an equivalent number of shares of Class A Common
Stock. See "Description of Capital Stock -- Class A
Common Stock and Class B Common Stock --
Conversion".

Use of Proceeds............ Based upon an assumed initial offering price of
$ per share (the midpoint of the range of
initial public offering prices set forth on the
cover page of this Prospectus), the net proceeds to
the Company from the Equity Offerings are estimated
to be $ million (or $ million if
the Underwriters' over-allotment options are
exercised in full), after deducting the
underwriting discounts and estimated expenses for
the Equity Offerings payable by the Company. The
Company will use the estimated net proceeds of the
Equity Offerings to make a capital contribution of
$ million to its life insurance
subsidiaries, to reduce the Pre-Offering
Indebtedness and for other general corporate
purposes. See "Use of Proceeds".

New York Stock Exchange
Listing.................. Application is being made to list the Class A
Common Stock on the NYSE under the symbol "HLI".

RISK FACTORS

Prospective investors should consider carefully, in addition to the other
information contained in this Prospectus, the matters set forth under the
caption "Risk Factors" before purchasing shares of the Class A Common Stock
offered hereby.

9
<PAGE> 12

SUMMARY FINANCIAL DATA

The summary income statement data and balance sheet data set forth below
are derived in the relevant periods from the consolidated financial statements
and the notes thereto of the Company and its subsidiaries. The consolidated
financial statements have been audited by Arthur Andersen LLP, independent
public accountants, as of December 31, 1996 and 1995, and for each of the three
years in the period ended December 31, 1996, and are included elsewhere in this
Prospectus, together with the report of Arthur Andersen LLP thereon. The
consolidated financial statements for other periods were derived from audited
financial statements of certain of the Company's subsidiaries and The Hartford
and include all adjustments that management considers necessary for a fair
presentation of the data for such periods. This summary financial data should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations", the consolidated financial statements and
the other financial information included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS OF OR FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------
1992 1993 1994 1995 1996
------- ------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues:
Premiums and other considerations................................. $ 1,273 $ 1,755 $ 2,139 $ 2,643 $ 3,069
Net investment income............................................. 1,038 1,160 1,403 1,451 1,534
Net realized capital gains (losses)............................... 10 7 1 (4) (219)
------- ------- ------- ------- -------
Total revenues.................................................. 2,321 2,922 3,543 4,090 4,384
------- ------- ------- ------- -------
Benefits, claims and expenses:
Benefits, claims and claim adjustment expenses.................... 1,663 1,903 2,254 2,395 2,727
Amortization of deferred policy acquisition costs................. 74 188 149 205 241
Dividends to policyholders(1)..................................... 48 228 419 675 635
Interest expense(2)............................................... 26 25 29 35 55
Other insurance expense........................................... 360 377 469 554 695
------- ------- ------- ------- -------
Total benefits, claims and expenses............................. 2,171 2,721 3,320 3,864 4,353
------- ------- ------- ------- -------
Income before income tax expense.................................... 150 201 223 226 31
Income tax expense.................................................. 49 71 72 76 7
------- ------- ------- ------- -------
Income before cumulative effect of changes in accounting
principles........................................................ 101 130 151 150 24
------- ------- ------- ------- -------
Cumulative effect of changes in accounting principles(3)............ (47) -- -- -- --
------- ------- ------- ------- -------
Net income...................................................... $ 54 $ 130 $ 151 $ 150 $ 24
======= ======= ======= ======= =======
OTHER FINANCIAL DATA (AFTER TAX)
Segment Earnings:
Investment Products............................................... $ 38 $ 54 $ 84 $ 114 $ 146
Individual Life Insurance......................................... 16 21 26 37 44
Employee Benefits................................................. 36 48 53 67 78
------- ------- ------- ------- -------
Total segment earnings.......................................... 90 123 163 218 268
Corporate operation(4)............................................ (11) (3) (7) (14) (18)
------- ------- ------- ------- -------
Core earnings(5)................................................ 79 120 156 204 250
Runoff and other(6)................................................. 16 5 (6) (51) (226)
Net realized capital gains (losses)................................. 6 5 1 (3) --
Cumulative effect of changes in accounting principles(3)............ (47) -- -- -- --
------- ------- ------- ------- -------
Net income...................................................... $ 54 $ 130 $ 151 $ 150 $ 24
======= ======= ======= ======= =======

BALANCE SHEET DATA
General account invested assets(7).................................. $13,514 $15,866 $18,078 $20,072 $19,830
Separate account assets(8)(9)....................................... 8,550 16,314 22,847 36,296 49,770
All other assets(7)................................................. 1,430 7,454 9,324 9,594 10,333
------- ------- ------- ------- -------
Total assets...................................................... $23,494 $39,634 $50,249 $65,962 $79,933
======= ======= ======= ======= =======
Policy liabilities.................................................. $13,040 $20,863 $25,208 $26,318 $26,239
SEPARATE ACCOUNT liabilities(8)..................................... 8,550 16,314 22,847 36,296 49,770
Allocated Advances(2)(10)........................................... 375 425 525 732 893
All other liabilities............................................... 802 1,107 1,283 1,439 1,757
------- ------- ------- ------- -------
Total liabilities................................................. $22,767 $38,709 $49,863 $64,785 $78,659
======= ======= ======= ======= =======
Stockholder's equity(10)(11)........................................ $ 727 $ 925 $ 386 $ 1,177 $ 1,274
======= ======= ======= ======= =======
Stockholder's equity, excluding net unrealized capital gains
(losses), net of tax(10).......................................... $ 727 $ 931 $ 1,116 $ 1,221 $ 1,245
======= ======= ======= ======= =======
</TABLE>

10
<PAGE> 13

<TABLE>
<CAPTION>
AS OF OR FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------
1992 1993 1994 1995 1996
------- ------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
SELECTED SEGMENT DATA
Investment Products:
Individual annuity sales.......................................... $ 2,212 $ 4,232 $ 7,005 $ 6,947 $ 9,841
Group annuity and other investment product sales(12).............. 442 386 389 1,391 803
ACCOUNT VALUE
GENERAL ACCOUNT................................................. $ 3,779 $ 4,767 $ 5,499 $ 7,435 $ 7,994
GUARANTEED SEPARATE ACCOUNT(13)................................. 2,845 4,208 7,149 9,270 9,483
Non-guaranteed separate account(14)............................. 5,451 11,003 14,282 21,970 34,219
------- ------- ------- ------- -------
Total account value......................................... $12,075 $19,978 $26,930 $38,675 $51,696
======= ======= ======= ======= =======
Individual Life Insurance:
Individual life sales............................................. $ 90 $ 96 $ 94 $ 107 $ 130
Account value
General account................................................. 816 1,127 1,456 1,579 1,998
Separate account................................................ -- 736 836 979 1,238
------- ------- ------- ------- -------
Total account value......................................... $ 816 $ 1,863 $ 2,292 $ 2,558 $ 3,236
======= ======= ======= ======= =======
Employee Benefits:
Group insurance premiums.......................................... $ 841 $ 856 $ 974 $ 1,103 $ 1,329
Group insurance RESERVES.......................................... 1,056 1,224 1,412 1,633 1,934
Total group insurance invested assets............................. 1,046 1,212 1,400 1,617 1,917
COLI account value
General account................................................. 864 1,549 2,308 3,566 4,028
Separate account................................................ -- -- 897 3,484 4,441
------- ------- ------- ------- -------
Total COLI account value.................................... $ 864 $ 1,549 $ 3,205 $ 7,050 $ 8,469
======= ======= ======= ======= =======
STATUTORY DATA(15)
Gains from operations............................................... $ 70 $ 91 $ 45 $ 175 $ 148
Gains (losses)...................................................... 59 10 29 (62) 23
------- ------- ------- ------- -------
Net income.......................................................... $ 129 $ 101 $ 74 $ 113 $ 171
======= ======= ======= ======= =======
Capital and surplus................................................. $ 824 $ 926 $ 1,088 $ 1,224 $ 1,320
======= ======= ======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
AS OF OR FOR THE YEAR ENDED DECEMBER 31, 1996
--------------------------------------------------------------
AS
PRO FORMA ADJUSTED
FOR PRE-OFFERING FOR EQUITY
HISTORICAL TRANSACTIONS(16) OFFERINGS
---------- ---------------- ----------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
CAPITALIZATION DATA
Borrowings under Line of Credit.............
Allocated Advances from parent(2)(10)....... $ 893
Short-term debt due parent..................
Stockholder's equity(10)(11)................ 1,274

PRO FORMA PER SHARE DATA(17)(18)
Net income..................................
Core earnings...............................
Book value..................................
</TABLE>

- ---------------
(1) Growth in dividends to policyholders is a result of the November 1992
acquisition from Mutual Benefit Life Assurance Company ("Mutual Benefit")
of a block of participating LEVERAGED COLI business and the subsequent
growth in the leveraged COLI business from 1993 to 1995. Policyholder
dividends are expected to decline in the future since sales of new
leveraged COLI policies have been terminated as a result of the HIPA Act of
1996 (as defined in "Risk Factors -- Adverse Effect of Legislation and
Regulatory Actions").

11
<PAGE> 14

(2) For financial reporting purposes, the Company has treated certain amounts
previously allocated by The Hartford to the Company's life insurance
subsidiaries as Allocated Advances. Such amounts were not treated as
liabilities or indebtedness for tax and statutory accounting purposes. Cash
received in respect of Allocated Advances was used to support the growth of
the life insurance subsidiaries and was treated as surplus for statutory
accounting purposes. Interest expense represents the expense internally
allocated to the Company with respect to the Allocated Advances based on
The Hartford's actual external borrowing costs. Interest expense paid was
treated as dividends for tax and statutory accounting purposes. The
increase in Allocated Advances in 1995 was attributable to the ITT
Spin-Off.

(3) Reflects the cumulative effect of adoption of SFAS No. 106, Employers'
Accounting for Postretirement Benefits Other Than Pensions, and SFAS No.
112, Employers' Accounting for Postemployment Benefits.

(4) The Company maintains a Corporate operation through which it reports net
investment income on assets representing surplus not assigned to any of its
business segments, interest expense on Allocated Advances and certain other
revenues and expenses not specifically allocable to any of its business
segments.

(5) "Core earnings" is an internal performance measure used by the Company in
the management of its operations. Core earnings represents the Company's
net income excluding the after-tax effects of the items described under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations -- Runoff and Other", the cumulative
effect of changes in accounting principles and net realized capital gains
(losses). Management believes that this performance measure delineates the
results of operations of the Company's on-going lines of business in a
manner that would allow for a better understanding of the underlying trends
in the Company's current business. However, core earnings should only be
analyzed in conjunction with, and not in lieu of, GAAP net income and may
not be comparable to other performance measures used by the Company's
competitors.

(6) Runoff and other primarily represents (i) Closed Book GRC, including, for
the year ended December 31, 1996, $143 million of realized capital losses
relating to investments supporting Closed Book GRC, (ii) the Company's
group medical business, which it decided to exit in 1993, and (iii) certain
other items that have been excluded from the Company's core earnings to
allow for a better understanding of the underlying trends in the Company's
current business.

(7) General account invested assets and all other assets include assets related
to Closed Book GRC of $5.591 billion, $6.123 billion, $7.171 billion,
$5.101 billion and $3.613 billion in 1992, 1993, 1994, 1995 and 1996,
respectively.

(8) Includes both non-guaranteed and guaranteed separate accounts.

(9) Separate account assets include assets related to Closed Book GRC of $81.9
million, $93.0 million, $86.1 million, $75.6 million and $55.1 million in
1992, 1993, 1994, 1995 and 1996, respectively.

(10) The Company has received capital contributions and paid or accrued
dividends to its stockholder for the five-year period ended December 31,
1996 as set forth in the table below. The capital contributions described
below exclude those amounts classified as Allocated Advances from parent.
Dividends exclude those amounts classified as interest expense with respect
to the Allocated Advances from parent and paid to The Hartford as described
in (2) above.

<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Capital contributions................................... $ -- $100 $ 50 $180 $ --
Dividends............................................... -- 24 17 226 --
---- ---- ---- ----
Net contributions....................................... $ -- $ 76 $ 33 $(44) $ --
==== ==== ==== ====
</TABLE>

(11) Stockholder's equity beginning December 31, 1994 reflects the adoption of
SFAS No. 115, Accounting for Certain Investments in Debt and Equity
Securities. See Note 2 of Notes to consolidated financial statements.

(12) Excludes the Company's retail mutual funds.

(13) Guaranteed separate accounts represent policyholder funds that are
segregated from the general account of the Company and on which the Company
contractually guarantees a minimum return, subject, in most cases, to an
MVA feature if the relevant product is surrendered prior to the end of the
applicable guarantee period.

(14) Non-guaranteed separate accounts represent policyholder funds that are
segregated from the general account of the Company and as to which the
Company does not guarantee minimum returns.

(15) Statutory data has been derived from Annual Statements of Hartford Life and
Accident Insurance Company ("Hartford Life and Accident"), Hartford Life
and ITT Hartford Life and Annuity Insurance Company ("ITT Hartford Life and
Annuity") filed or, in the case of 1996, to be filed with insurance
regulatory authorities, each in accordance with statutory accounting
practices. Gains (losses) are net of IMR and taxes.

12
<PAGE> 15

(16) The pro forma capitalization data reflects the Pre-Offering Transactions
(as defined in "Capitalization"), as if such transactions had occurred as
of December 31, 1996.

(17) Per share data is presented only for the year ended December 31, 1996, as
such information for earlier periods would not be meaningful. Pro forma per
share data is calculated based upon shares of Class B Common Stock
owned by The Hartford immediately prior to the Equity Offerings plus an
assumed issuance of shares of Class A Common Stock in the Equity
Offerings (the number of shares which, based on the midpoint of the range
of the initial public offering prices set forth on the cover page of this
Prospectus and the estimated underwriting discounts and expenses payable by
the Company, would result in net proceeds equal to the excess of the amount
of the February 1997 dividend over the 1996 earnings and the Allocated
Advances).

(18) As adjusted per share data is calculated based upon shares of Class
B Common Stock owned by The Hartford immediately prior to the Equity
Offerings plus an assumed issuance of shares of Class A Common
Stock. As adjusted core earnings and net income are based upon historical
amounts adjusted to reflect a reduction in interest expense, net of tax,
from historical levels that would result from the completion of the
Pre-Offering Transactions; the application of the estimated net proceeds of
the Equity Offerings to reduce $ million of Pre-Offering
Indebtedness (bearing an interest rate of %); and an increase in net
investment income, net of tax, that would result from an investment in
securities with an assumed yield of % relating to a capital
contribution of $
million to the Company's insurance subsidiaries. As adjusted book value
represents total stockholders' equity, as of December 31, 1996, together
with the effect of the Pre-Offering Transactions and the estimated net
proceeds from the issuance and sale of shares of Class A Common
Stock.

13
<PAGE> 16

RISK FACTORS

In addition to the other information in this Prospectus, the following risk
factors should be considered carefully in evaluating the Company and its
business before purchasing shares of the Class A Common Stock offered hereby.

CONTROL BY AND RELATIONSHIP WITH THE HARTFORD

CONTROLLING STOCKHOLDER

The Hartford is currently the beneficial owner of all the capital stock of
the Company. Following the Equity Offerings, The Hartford will continue to be
the controlling stockholder of the Company and will beneficially own 100% of the
outstanding Class B Common Stock, which will represent approximately % of
the combined voting power of all the outstanding Common Stock and approximately
% of the economic interest in the Company (or approximately % and
%, respectively, if the Underwriters' over-allotment options are exercised
in full). For as long as The Hartford continues to beneficially own shares of
Common Stock representing more than 50% of the combined voting power of the
outstanding Common Stock, it generally will be able to approve any matter
submitted to a vote of the stockholders, including, among other things, the
election of the entire Board of Directors or the amendment of the Certificate of
Incorporation and By-laws of the Company, without the consent of the other
stockholders of the Company. In addition, through its controlling beneficial
ownership (as well as certain provisions of the Master Intercompany Agreement
described under "Certain Relationships and Transactions -- Intercompany
Arrangements -- Master Intercompany Agreement"), The Hartford will be able to
exercise a controlling influence over the business and affairs of the Company,
including determinations with respect to mergers or other business combinations
involving the Company, the acquisition or disposition of assets by the Company,
the Company's access to the capital markets, the payment of dividends and any
change in control of the Company. In the foregoing situations or otherwise,
various conflicts of interest or areas of competition between the Company and
The Hartford could arise. Furthermore, ownership interests of directors or
officers of the Company in common stock of The Hartford or service as a director
or officer of both the Company and The Hartford could create or appear to create
potential conflicts of interest when directors and officers are faced with
decisions that could have different implications for the Company and The
Hartford. See "Certain Relationships and Transactions -- General".

Promptly following the Equity Offerings, The Hartford and the Company
expect to elect two additional directors of the Company who will be persons not
currently or formerly associated with The Hartford or the Company. The Board of
Directors will then consist of ten members, including eight who are directors
and/or officers of The Hartford. See "Management -- Directors". Members of the
Board of Directors will be divided into three classes and serve staggered
three-year terms. The Hartford will have the ability to change the size and
composition of the Company's Board of Directors.

INTERCOMPANY ARRANGEMENTS

The Company's relationship with The Hartford will be governed by, among
other things, agreements to be entered into in connection with the Equity
Offerings and possibly in the future, including a master intercompany agreement
(the "Master Intercompany Agreement"), certain investment management agreements
(the "Investment Management Agreements"), a tax sharing agreement (the "Tax
Sharing Agreement") and the sublease of the Company's headquarters (the
"Simsbury Sublease"). See "Certain Relationships and
Transactions -- Intercompany Arrangements". The agreements entered into in
connection with the Equity Offerings generally will maintain the relationship
between the Company and The Hartford in a manner consistent in all material
respects with past practice. Under applicable insurance holding company laws,
agreements between the Company's insurance subsidiaries and The Hartford or its
affiliates must be fair and

14
<PAGE> 17

reasonable and may be subject to the approval of applicable state insurance
commissioners. However, none of these agreements, nor any agreements entered
into in the future between the Company and The Hartford or their respective
subsidiaries (for so long as The Hartford maintains its controlling beneficial
ownership in the Company) will result from arm's-length negotiations and, as a
result, the terms of such agreements may be less favorable to the Company than
could be obtained from an independent third party.

MASTER INTERCOMPANY AGREEMENT. The Master Intercompany Agreement will
identify the services that will be provided by The Hartford to the Company and
by the Company to The Hartford following the completion of the Equity Offerings
and will specify certain significant corporate activities that the Company only
may undertake upon the prior written consent of The Hartford. The Company also
will agree to use its best efforts, pursuant to the Master Intercompany
Agreement, to effect the registration under the applicable federal and state
securities laws of any of the shares of Common Stock beneficially owned by The
Hartford or any permitted transferee.

Pursuant to the Master Intercompany Agreement, Hartford Fire Insurance
Company ("Hartford Fire"), the principal subsidiary of The Hartford, will grant
to the Company a non-exclusive, royalty-free right and license (the "Hartford
License") (and the right to grant further sublicenses (the "Hartford
Sublicenses") to certain qualified subsidiaries) to use the "Hartford" name,
various versions of the Stag Logo and certain other trademarks and service marks
in connection with the products and services sold through the Company's
Investment Products, Individual Life Insurance and Employee Benefits segments on
a worldwide basis, and any property-casualty products offered outside the United
States and Canada by the Company in the future, subject to customary usage
restrictions. The Hartford License will be perpetual, except that, in the event
that The Hartford reduces its beneficial ownership below 50% of the combined
voting power of the outstanding Common Stock, Hartford Fire may revoke the
Hartford License and/or any Hartford Sublicenses upon the later of the fifth
anniversary of the date of consummation of the Equity Offerings or one year
after receipt by the Company of written notice of Hartford Fire's intention to
revoke the Hartford License and/or any Hartford Sublicenses. In addition, the
Hartford License and/or any Hartford Sublicenses may be revoked immediately in
certain other limited, customary circumstances. Subject to the terms of the
Master Intercompany Agreement, upon the revocation of such licenses, the Company
and any of its subsidiaries affected thereby will change their name to exclude
"Hartford" and will discontinue the use of the Stag Logo and the other licensed
trademarks and service marks. The revocation of the Hartford License and/or any
Hartford Sublicenses, in whole or in part, could have a material adverse effect
on the Company's ability to conduct its business. See "Certain Relationships and
Transactions -- Intercompany Arrangements -- Master Intercompany
Agreement -- License and Sublicense".

TAX SHARING AGREEMENT. Pursuant to the Tax Sharing Agreement, the Company,
its subsidiaries and The Hartford will make payments between them such that,
with respect to any period, the amount of taxes to be paid by the Company,
subject to certain adjustments, generally will be determined as though the
Company were to file separate federal, state and local income tax returns
(including, except as provided below, any amounts determined to be due as a
result of a redetermination of the tax liability of The Hartford arising from an
audit or otherwise). With respect to certain tax items, however, such as foreign
tax credits, alternative minimum tax credits, net operating losses and net
capital losses, the Company's right to reimbursement will be determined based on
the usage of such credits or losses by the consolidated group. In addition, by
virtue of its controlling beneficial ownership of the Company and the terms of
the Tax Sharing Agreement, as is presently the case, The Hartford will control
all the tax decisions of the Company. This arrangement may result in conflicts
of interest between the Company and The Hartford. See "Certain Relationships and
Transactions -- Intercompany Arrangements -- Tax Sharing Agreement and Tax
Consolidation".

15
<PAGE> 18

Provided that The Hartford continues to beneficially own, directly or
indirectly, at least 80% of the combined voting power and 80% of the value of
the outstanding capital stock of the Company, the Company will be included for
federal income tax purposes in the consolidated group of which The Hartford is
the common parent. Each member of a consolidated group for federal income tax
purposes is jointly and severally liable for the federal income tax liability of
each other member of the consolidated group. Accordingly, the Company could be
liable for the federal income tax liability of any other member of The Hartford
consolidated group in the event any such liability is incurred, and not
discharged, by such other member. Similar principles apply with respect to
members of a combined group for state tax purposes. In addition, provided that
The Hartford continues to beneficially own at least 80% of the combined voting
power or the value of the outstanding capital stock of the Company, the Company
will be included for federal income tax purposes in the controlled group of
which The Hartford is the common parent. Each member of a controlled group is
jointly and severally liable for pension funding and pension termination
liabilities of each other member of the controlled group, as well as certain
benefit plan taxes. Accordingly, the Company could be liable for pension
funding, pension termination liabilities and certain other pension-related
excise taxes as well as other taxes of another member of The Hartford controlled
group in the event any such liability is incurred, and not discharged, by such
other member.

INVESTMENT MANAGEMENT AGREEMENTS. Management of the Company's general
accounts and certain of its separate accounts has been, prior to the Equity
Offerings, and will be, following the Equity Offerings, conducted by the
Company. The Company's investment strategy group is responsible for determining
investment allocations for its general account and guaranteed separate account
investment portfolios. The Investment Management Agreements will provide that
the investment staff of The Hartford will implement (e.g., selection, purchase
and sale of securities) the investment strategies determined by the investment
strategy group of the Company and act as advisor to certain of the Company's
non-guaranteed separate accounts and mutual funds. The Investment Management
Agreements also will provide that the Company will pay a fee designed to reflect
the actual costs of providing such services. In addition, the Investment
Management Agreements generally will provide that, prior to April 1, 2000, The
Hartford may not terminate such Agreements, and the Company may only terminate
such Agreements, upon six months' written notice, based on The Hartford's
failure to satisfy performance benchmarks agreed to by the parties. Further, the
Investment Management Agreements generally will provide that from and after
April 1, 2000, the Investment Management Agreements will continue unless 180
days' prior written notice of termination is provided on or after October 1,
1999 by one party to the other. The Investment Management Agreements for the
Company's mutual funds may be terminated by the mutual funds' boards of
directors at any time. See "Certain Relationships and
Transactions -- Intercompany Arrangements -- Investment Management Agreements".

HARTFORD FIRE GUARANTEE. Pursuant to a guarantee agreement between
Hartford Fire, Hartford Life and Accident Insurance Company ("Hartford Life and
Accident") and Hartford Life (the "Guarantee Agreement"), Hartford Fire has
provided to Hartford Life and Accident and Hartford Life an unconditional
guarantee since 1990, on behalf of and for the benefit of such subsidiaries and
the owners of the life, disability and other insurance and annuity contracts
issued by either such subsidiary, in respect of contractual claims made under
such contracts by the beneficiaries thereof. Hartford Fire intends, prior to or
immediately following the Equity Offerings, to terminate such guarantee;
however, the guarantee will remain in full force and effect with respect to any
outstanding contracts at the time of such termination. Although management does
not believe the termination of the guarantee will have an adverse impact on
sales, it is possible that future sales of some of the Company's products could
be adversely affected as a result of the absence of the marketing benefit
associated with such guarantee.

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IMPORTANCE OF COMPANY RATINGS

Ratings are an important factor in establishing the competitive position of
insurance companies. Insurers compete with other insurance companies, financial
intermediaries and other financial institutions on the basis of a number of
factors, including the ratings assigned by nationally recognized statistical
rating organizations. In September 1996, S&P announced that it reduced the
claims-paying ability ratings of The Hartford group of companies from "AA+" to
"AA" and, in January 1997, Moody's announced that it downgraded various ratings
of The Hartford and its subsidiaries, including the insurance financial strength
ratings of The Hartford's insurance subsidiaries from Aa2 to Aa3. Taken
together, S&P and Moody's expressed concern with, among other things, the
overall strength of The Hartford's consolidated capital, the recent charges it
had taken relating to the environmental and asbestos reserves of The Hartford's
property-casualty insurance operations (which are not part of the Company's
operations) and Closed Book GRC and the competitive nature of the business in
which The Hartford and its subsidiaries operate. Further ratings downgrades (or
the potential for such downgrades) of the Company could, among other things,
materially increase surrender levels, adversely affect relationships with
broker-dealers, banks, agents, wholesalers and other distributors of the
Company's products and services, negatively impact PERSISTENCY, adversely affect
the Company's ability to compete and thereby materially and adversely affect the
Company's business, financial condition and results of operations.

Moreover, for so long as The Hartford maintains a controlling interest in
the Company, a deterioration in the financial condition or significant insured
losses from a catastrophic event or other unforeseen occurrence that materially
affects the financial results of The Hartford and results in a downgrade of The
Hartford's ratings could adversely impact the ratings of the Company.

Claims-paying ability or insurance financial strength ratings reflect a
rating agency's opinion of the Company's principal life insurance subsidiaries'
financial strength, operating performance and ability to meet their respective
obligations to policyholders and are not evaluations directed toward the
protection of investors.

For more information on the ratings of the Company, see
"Business -- Ratings".

RISKS ASSOCIATED WITH CERTAIN ECONOMIC AND MARKET FACTORS

The Company's results of operations are affected by certain economic and
market factors, including the level of volatility in the markets in which the
Company invests and the overall investment returns provided thereby. In
particular, significant growth in the retirement-oriented investment market and
uncommonly strong stock and bond market appreciation have been material factors
in the growth of the Company's assets and its ability to generate new sales in
recent years. There can be no assurance, however, that these economic and market
trends will continue. While management believes that the Company operates in
growing markets and that its business strategy will foster continued asset
growth, adverse economic conditions and other factors, including a protracted
and/or precipitous decline in the stock market and other economic factors that
affect the popularity of the Company's products and services, may negatively
impact the Company's business, financial condition and results of operations.
Accordingly, no assurance can be given that the Company's historic growth of
core earnings, revenues and assets will continue.

INTEREST RATE RISK

Changes in interest rates can have significant effects on the Company's
profitability. Under certain circumstances of interest rate volatility, the
Company is exposed to disintermediation risk and reduction in net interest
spread or profit margins. The Company's investment portfolio primarily consists
of investment-grade, fixed maturity securities, including mortgage-backed
securities ("MBSS") and collateralized mortgage obligations ("CMOS"). The fair
value of these and the Company's other invested assets fluctuates depending on
market and other general economic

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<PAGE> 20

conditions as well as the interest rate environment. During periods of declining
interest rates, MBSs and CMOs prepay faster as the underlying mortgages are
prepaid and refinanced at lower interest rates. In addition, during such
periods, the Company generally will not be able to reinvest the proceeds of any
such prepayments at comparable yields. Conversely, during periods of rising
interest rates, the rate of prepayments generally slows.

Management believes that its asset/liability management strategies minimize
the effects of such interest rate volatility, including product design (e.g.,
the use of surrender charges or MVA features in certain products), the use of
certain hedging techniques, the purchase of securities structured to protect
against prepayments and consistent monitoring of the pricing of the Company's
products. See "Business -- Investment Operations -- Asset/Liability Management
Strategies". No assurance can be given, however, that management will
successfully implement such strategies. Any such failure could have a material
adverse impact on the Company's business, financial condition and results of
operations.

During the early 1990s, Closed Book GRC was materially and adversely
affected by lower investment rates and earnings in the related investment
portfolio, principally composed of MBSs and CMOs, due to prepayments
substantially in excess of assumed and historical levels, as well as the
interest rate rise in 1994, which caused a mismatch in the DURATION of such
assets and liabilities. In 1995 and 1996, the Company's net income fell to $150
million and $24 million, respectively, mainly due to losses associated with the
prepayment of the MBSs and CMOs in Closed Book GRC and the resulting duration
mismatch in respect of the guaranteed rate contract ("GRC") liabilities.
Management expects that the net income (loss) from Closed Book GRC in the years
subsequent to 1996 will be immaterial based on the Company's current projections
for the performance of the assets and liabilities associated with Closed Book
GRC, the Company's expectations regarding future sales of assets from the Closed
Book GRC portfolio from time to time in order to make the necessary payments on
maturing Closed Book GRC liabilities and the stabilizing effect of various hedge
transactions. However, no assurance can be given that, under certain
unanticipated economic circumstances which result in the Company's assumptions
proving incorrect, further losses in respect of Closed Book GRC will not occur
in the future. To date, such asset sales have been consistent with the Company's
expectations. For more information on Closed Book GRC, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Results of Operations -- Runoff and Other". In response to these losses
associated with Closed Book GRC, the Company instituted an improved risk
management process during 1995 and 1996. In addition, the Company recently
enhanced its computerized analytical systems to allow for more effective
management of its portfolio positions and potential exposures in an effort to
identify possible asset/liability mismatches earlier. As a result, all major
portfolios, including Closed Book GRC, are now reviewed on a monthly basis to
determine if the net economic sensitivity of the assets and the related
liabilities to interest rate changes are within a pre-determined range. For a
further discussion of the Company's risk management process, see
"Business -- Investment Operations -- General". Nonetheless, there can be no
assurance that such improvements will eliminate the possibility that
asset/liability mismatches may occur in the future.

INVESTMENT PORTFOLIO EXPOSURE

The Company's investment portfolio consists primarily of investment-grade
debt securities. The market value of these investments varies depending on
general economic and market conditions and the interest rate environment. In
general, the market value of the fixed maturity securities held by the Company
increases or decreases in inverse relationship with fluctuations in interest
rates. For a further discussion of the effect of interest rates on the Company's
investment portfolio, particularly its MBSs and CMOs, and the related risk to
its results of operations, see "-- Interest Rate Risk".

The Company is also subject to credit risk relating to the uncertainty
associated with the continued ability of an issuer to make timely payments of
principal and interest. Although almost all

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<PAGE> 21

the fixed maturity securities held by the Company in its portfolio are
investment grade and the Company believes that it maintains prudent issuer
diversification, no assurance can be given that, under certain unanticipated
economic circumstances, issuer defaults would not have a material adverse effect
on the business, financial condition and results of operations of the Company.
See "Business -- Investment Operations".

DEPENDENCE ON CERTAIN THIRD-PARTY RELATIONSHIPS

The Company distributes its annuity and life insurance products through a
variety of distribution channels, including broker-dealers, banks, wholesalers,
its own internal sales force and other third-party marketing organizations. In
connection with the distribution or investment management of these products,
certain third-party service providers have materially contributed to the growth
of the Company, particularly in its individual annuity business. The Company
periodically negotiates renewal terms for these relationships and there can be
no assurance that such renewal terms will remain acceptable to the Company or
such service providers. An interruption in the Company's continuing relationship
with certain of these third parties or the impairment of their reputation or
creditworthiness could materially adversely affect the Company's ability to
market its products. There can be no assurance that the Company would be able to
find alternate sources of distribution in a timely manner. See
"Business -- Investments Products -- Marketing and Distribution".

ADVERSE EFFECT OF LEGISLATION AND REGULATORY ACTIONS

The insurance business of the Company is subject to comprehensive state and
federal regulation and supervision throughout the United States. The purpose of
such regulation is primarily to provide safeguards for policyholders rather than
to protect the interests of stockholders. The laws of the various state
jurisdictions establish supervisory agencies with broad administrative powers
with respect to, among other things, licensing to transact business, admittance
of assets, regulating premium rates, approving policy forms, regulating unfair
trade and claims practices, establishing reserve requirements and solvency
standards, fixing maximum interest rates on life insurance policy loans and
minimum rates for accumulation of surrender values, restricting certain
transactions between affiliates and regulating the type, amounts and valuation
of investments permitted. State insurance regulators and the National
Association of Insurance Commissioners (the "NAIC") continually are re-examining
existing laws and regulations. It is impossible to predict the future impact of
potential state and federal regulations on the Company's operations, and there
can be no assurance that future insurance related laws and regulations, or the
interpretation thereof, will not have an adverse effect on the operations of the
Company's business.

Although the United States federal government does not directly regulate
the insurance business, federal legislation and administrative policies in
several areas, including pension regulation, financial services regulation and
federal taxation, can significantly and adversely affect the insurance industry
and thus the Company. For example, Congress has from time to time considered
legislation relating to the deferral of taxation on the accretion of value
within certain annuities and life insurance products, the removal of barriers
preventing banks from engaging in the insurance business, changes in regulations
for the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
the alteration of the federal income tax structure and the availability of
Section 401(k) or individual retirement accounts. It is not possible to predict
whether future legislation or regulation adversely affecting the insurance
industry may be enacted or, if enacted, the extent to which such legislation or
regulation would have an effect on the Company and its competitors.

The Health Insurance Portability and Accountability Act of 1996 (the "HIPA
Act of 1996") phases out the deductibility of interest on policy loans under
COLI by 1998, thus eliminating all future sales of leveraged COLI. The Company's
leveraged COLI product has been an important contributor to its profitability in
recent years. During 1994, 1995 and 1996, leveraged COLI sales generated
revenues of $892 million, $1.226 billion and $1.298 billion, respectively, which
represented 25%, 30%

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<PAGE> 22

and 30% of the Company's total revenues. Leveraged COLI will continue to
contribute to the profitability of the Company (although such contribution will
be reduced in the future due to the effects of this legislation). As a result,
core earnings contributed by COLI may be lower in the future (particularly
during 1999 and later years) as a result of the elimination of leveraged COLI
sales.

For additional information on other laws and regulations that affect the
Company's operations, see "Business -- Insurance Regulation".

HOLDING COMPANY STRUCTURE; RESTRICTIONS ON DIVIDENDS

As a holding company with no significant business operations of its own,
the Company relies on dividends from its subsidiaries, which are primarily
domiciled in the State of Connecticut, as the principal source of cash to meet
its obligations, including the payment of principal and interest on debt
obligations of the Company, and the payment of dividends to holders of its
capital stock. The payment of dividends by Connecticut-domiciled insurers is
limited under the insurance holding company laws of Connecticut, which require
notice to and approval by the Connecticut Insurance Commissioner for the
declaration or payment of any dividend which, together with other dividends or
distributions made within the preceding twelve months, exceeds the greater of
(i) 10% of the insurer's policyholder surplus as of December 31 of the preceding
year or (ii) net gain from operations for the twelve-month period ending on the
December 31 last preceding, in each case determined under statutory insurance
accounting practices. In addition, if any dividend of a Connecticut-domiciled
insurer exceeds the insurer's earned surplus, it requires the approval of the
Connecticut Insurance Commissioner. Based on these limitations and statutory
results, as of December 31, 1996, the Company would be able to receive $132
million in dividends in 1997 from Hartford Life and Accident, the Company's
direct subsidiary, without obtaining the approval of the Connecticut Insurance
Commissioner. There can be no assurance that dividends will be declared by the
Company in the future or if declared that it will obtain any required approvals
from the applicable state insurance commissioners. See "Dividend Policy".

As discussed under "Certain Relationships and Transactions -- Intercompany
Arrangements -- Master Intercompany Agreement", the Company must obtain the
Hartford's approval for the declaration or payment of dividends other than
dividends on the Common Stock which are consistent with the Company's dividend
policy then in effect.

From time to time, the NAIC and various state insurance regulators have
considered, and may in the future consider, proposals to further restrict
dividend payments that may be made by an insurance company without regulatory
approval. No assurance can be given that there will not be any further
regulatory action restricting the ability of the Company's insurance
subsidiaries to pay dividends. Inability to pay dividends to the Company in an
amount sufficient to enable the Company to meet its debt service and other cash
requirements (including dividend payments on the Common Stock) could have a
material adverse effect on the Company's business, financial condition and
results of operations.

POTENTIAL NEW ACCOUNTING POLICY FOR DERIVATIVES

In June 1996, the Financial Accounting Standards Board ("FASB") issued an
exposure draft of an accounting standard entitled "Accounting for Derivative and
Similar Financial Instruments and for Hedging Activities". This exposure draft,
if adopted in the form in which it was issued, would require companies to report
derivatives on the balance sheet at fair value with changes in fair value
recorded in income or equity. The exposure draft also would change the
accounting for derivatives used in hedging strategies from traditional deferral
accounting to a current recognition approach which could impact a company's
income statement and balance sheet and expand the definition of a derivative
instrument to include certain structured securities currently accounted for as
fixed maturities. Management expects that this accounting standard, in whatever
form, will not be effective until 1998. FASB's Rules of Procedure require that,
prior to approving a new accounting

20
<PAGE> 23

standard, extensive "due process" be followed. FASB requests written comments
from interested parties on an exposure draft and also may hold public hearings.
This exposure draft has drawn widespread criticism primarily because the
required accounting treatment would not match the perceived economic effect of
such hedging strategies. As a result of, among other things, the concerns and
criticisms in comment letters and at public hearings held on this exposure
draft, FASB has continued to deliberate with regard to this exposure draft
during the first quarter of 1997 and emphasizes that a final decision has not
been reached. FASB has stated that it expects to conclude its review of this
matter in the second quarter of 1997. The Company is unable to predict the form
that the final accounting standard, if adopted, may take and believes it would
be inappropriate to speculate on the effects of any such adoption at this time.
However, the Company believes the adoption of a new accounting standard similar
to this exposure draft could cause substantial volatility in the Company's
reported net income if certain of the Company's current derivative and hedging
strategies were continued after the adoption of such accounting standard. Were
the Company to continue to employ its current derivative strategies, the
Company's reported net income as a general matter would be adversely affected in
the short-term as interest rates rise and positively affected as interest rates
decline. In addition, if adopted in its present form, the Company would be
required to make a cumulative effect adjustment to its net income and/or
stockholder's equity, which adjustment would vary based on the then current
holdings of derivatives and the economic and market circumstances present at the
time such adjustment was implemented. For a discussion of the Company's use of
derivatives, see "Business -- Investment Operations -- Asset/Liability
Management Strategies".

COMPETITION

The Company competes with over 2,000 life insurance companies in the United
States, as well as certain banks, securities brokerage firms, investment
advisors and other financial intermediaries marketing insurance products,
annuities, mutual funds and other retirement-oriented investments. Some of these
competitors have greater financial resources and currently have higher financial
strength and claims-paying ratings than the Company. National banks, in
particular, may become more significant competitors in the future for the
Company as a result of certain recent court decisions and regulatory actions
discussed under "Business -- Insurance Regulation -- Regulation at Federal
Level". Although the effect of these recent developments on the Company and its
competitors is uncertain, both the persistency of the Company's existing
products and the Company's ability to sell products could be materially impacted
in the future. Also, several proposals to repeal or modify the Glass-Steagall
Act of 1933, as amended (the "Glass-Steagall Act"), and the Bank Holding Company
Act of 1956, as amended (the "Bank Holding Company Act"), have been made by
members of Congress and the Executive Branch. Certain of these proposals would
repeal or modify the current restrictions that prevent banks from being
affiliated with insurance companies. None of these proposals has yet been
enacted, and it is not possible to predict whether any of these proposals will
be enacted or, if enacted, what their potential effect on the Company or its
competitors would be.

The Company also competes for distributors of its products such as banks,
broker-dealers and wholesalers. Since the Company does not have a career agency
force, it must compete with other insurers and financial services providers to
attract and maintain productive independent distributors to sell its products.
Moreover, the Company does not have exclusive agency agreements with many of its
distributors and believes that certain of them sell products similar to those
marketed by the Company for other insurance companies. The Company's ability to
attract distributors of its products could be adversely affected if for any
reason the Company's products became less competitive or concerns arose
regarding the Company's asset quality or ratings.

The investment performance of investment managers chosen by the Company to
manage the assets related to its products may vary and non-competitive
investment performance could adversely affect the Company's ability to market
its products.

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<PAGE> 24

For additional information on the competitive forces affecting the Company,
see "Business -- Competition".

CERTAIN LITIGATION

Companies in the life insurance industry historically have been subject to
substantial litigation resulting from claims disputes and other matters. Most
recently, companies in the life insurance industry have faced extensive claims,
including class-action lawsuits, alleging improper sales practices relating to
sales of certain life insurance products. Negotiated settlements of such class-
action lawsuits have had a material adverse effect on the business, financial
condition and results of operations of certain of these companies. The Company
is not and has not been a defendant in any such class-action lawsuit alleging
improper sales practices. No assurance can be given that such class-action
lawsuits or other litigation against the Company would not materially and
adversely affect the Company's business, financial condition or results of
operations.

NO PRIOR MARKET FOR COMMON STOCK; POSSIBLE VOLATILITY OF COMMON STOCK PRICE AND
THE SECURITIES MARKETS

Prior to the Equity Offerings, there has been no public market for the
Class A Common Stock. Application will be made to list the Class A Common Stock
on the NYSE. The initial public offering price of the Class A Common Stock will
be determined through negotiations between the Company and the representatives
of the Underwriters. There can be no assurance that the initial public offering
price will correspond to the price at which the Class A Common Stock will trade
in the public market subsequent to the Equity Offerings or that an active
trading market for the Class A Common Stock will develop and continue after the
completion of the Equity Offerings. See "Underwriting". In addition, the market
price of the Class A Common Stock upon the completion of the Equity Offerings
could be subject to significant fluctuations in response to variations in the
Company's quarterly financial results or other developments, such as
announcements of new products by the Company or the Company's competitors,
enactment of legislation or regulation affecting the insurance industry,
interest rate movements or general economic conditions.

POSSIBLE FUTURE SALES OF COMMON STOCK BY THE HARTFORD

Subject to applicable federal and state securities laws and the
restrictions set forth below, after completion of the Equity Offerings, The
Hartford may sell any and all of the shares of Common Stock it beneficially owns
or distribute any or all of such shares of Common Stock to its stockholders.
Sales or distributions by The Hartford of substantial amounts of Common Stock in
the public market or to its stockholders, or the perception that such sales or
distributions could occur, could adversely affect prevailing market prices for
the shares of Class A Common Stock.

The Hartford has advised the Company that its current intention is to
continue to hold all the Common Stock it beneficially owns. However, The
Hartford has no contractual obligation to retain its shares of Common Stock,
except for a limited period described in "Underwriting". Each share of Class B
Common Stock is convertible into one share of Class A Common Stock at any time
and is convertible automatically in certain circumstances. See "Description of
Capital Stock -- Class A Common Stock and Class B Common Stock -- Conversion".
There can be no assurance that shares of Class B Common Stock will not be
converted into Class A Common Stock or that any holder or holders, including The
Hartford, of such Class B Common Stock will not seek to sell their shares
following the Equity Offerings pursuant to registration rights or otherwise. In
addition, the Company has agreed that it will, upon the request of The Hartford,
except for a limited period described in "Underwriting", use its best efforts to
effect the registration under applicable federal and state securities laws of
any shares of the Company's capital stock held by The Hartford or any of its
affiliates (and such rights may be assigned by The Hartford), which would
facilitate any future disposition. See "Certain Relationships and
Transactions -- Intercompany Arrangements -- Master Intercompany Agreement" and
"Shares Eligible for Future Sale".

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<PAGE> 25

DILUTION

Based on an assumed initial offering price of $ per share (the midpoint
of the range of initial public offering prices set forth on the cover page of
this Prospectus) and assuming no exercise of the Underwriters' over-allotment
options, the Company's net tangible book value as of December 31, 1996, after
giving effect to the transactions set forth in "Capitalization", would be $
per share of Common Stock. Accordingly, purchasers of Class A Common Stock
offered hereby would suffer an immediate dilution in net tangible book value of
$ per share. See "Dilution".

ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's Restated Certificate of Incorporation
and By-laws may be deemed to have anti-takeover effects and, although of little
practical significance for so long as The Hartford maintains controlling
beneficial ownership of the Company, may, under certain circumstances, delay,
defer or prevent a takeover attempt or the removal of the present management of
the Company which a stockholder might consider to be in its best interest. Such
provisions also may adversely affect prevailing market prices for the Class A
Common Stock. These provisions include (i) the availability of
shares of preferred stock, no par value (the "Preferred Stock"), for issuance
from time to time at the discretion of the Board of Directors; (ii) prohibitions
against stockholders calling a special meeting of stockholders or acting by
written consent in lieu of a meeting; (iii) the classification of the Board of
Directors into three classes, each of which will serve for different three-year
periods; (iv) a requirement, pursuant to Section 141 of the General Corporation
Law of the State of Delaware (the "DGCL"), that directors of the Company may
only be removed for cause; (v) a requirement that certain provisions of the
Certificate of Incorporation may be amended only with the approval of the
holders of at least 80% of the combined voting power of the Common Stock then
outstanding; (vi) requirements for advance notice for raising business or making
nominations at stockholders' meetings; and (vii) the ability of the Board of
Directors to increase the size of the board and to appoint directors to fill
newly created directorships. See "Certain Provisions of the Certificate of
Incorporation and By-laws of the Company -- Potential Limits on Change of
Control".

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COMPANY FINANCING PLAN

The Company was formed in December 1996 to serve as the holding company for
Hartford Life and Accident and its subsidiaries. In connection with such
formation, Hartford Accident and Indemnity contributed its ownership of all the
outstanding capital stock of Hartford Life and Accident to the Company and the
Company issued to Hartford Accident and Indemnity shares of the capital stock of
the Company. Subsequent to the initial capitalization of the Company, the
following transactions took place or will take place:

(1) Historically, for financial reporting purposes, The Hartford
internally allocated the Allocated Advances to the Company's life insurance
subsidiaries. Cash was contributed to the life insurance subsidiaries in
connection with certain of such Allocated Advances. The Company borrowed
$1.084 billion pursuant to the Line of Credit, executed the Promissory Note
in the amount of $100 million and then made a payment of $1.184 billion as
a dividend to Hartford Accident and Indemnity. $893 million of such
dividend constituted a repayment of the Allocated Advances.

(2) The Company will use the net proceeds of the Equity Offerings to
make a capital contribution of $ million to its life insurance
subsidiaries, to reduce the Pre-Offering Indebtedness and for other general
corporate purposes.

(3) Promptly following the Equity Offerings, subject to market
conditions, the Company plans to offer $ million of the Notes in
the Debt Offering pursuant to a shelf registration statement. The
consummation of the Equity Offerings will not be conditioned on the
consummation of the Debt Offering. The Company will use the net proceeds of
the Debt Offering to further reduce the Pre-Offering Indebtedness.

If the Underwriters' over-allotment options in respect of the Equity
Offerings are exercised in full, the Company intends to use the estimated
additional proceeds to make an additional capital contribution of approximately
$ million to its life insurance subsidiaries and/or to further reduce
the Pre-Offering Indebtedness. To the extent that the Debt Offering is not
consummated, indebtedness that otherwise would have been repaid from the net
proceeds of the Debt Offering will remain outstanding. Assuming the sale of $
million of the Notes, the Company will have $ million of debt securities
and/or preferred stock remaining available for sale in the public markets
pursuant to the shelf registration statement, which may be issued at any time
following the Equity Offerings. See "Use of Proceeds", "Capitalization" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources".

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CAPITALIZATION

The table below sets forth the capitalization of the Company as of December
31, 1996 under the following circumstances: (i) on a historical basis; (ii) on a
pro forma basis to give effect to the reclassification of the 1,000 shares of
authorized common stock of the Company into Class B Common Stock and the
authorization of the Class A Common Stock, the borrowing of $1.084 billion
pursuant to the Line of Credit, the execution of the Promissory Note in the
amount of $100 million and then the payment of $1.184 billion as a dividend to
Hartford Accident and Indemnity, with $893 million of such dividend constituting
a repayment of the Allocated Advances (together, the "Pre-Offering
Transactions"); (iii) on an as adjusted basis to give effect to the issuance and
sale in the Equity Offerings of shares of Class A Common Stock at an
assumed initial public offering price of $ per share (the midpoint of
the range of initial public offering prices set forth on the cover page of this
Prospectus) and the application of the estimated net proceeds therefrom to make
a capital contribution to the Company's insurance subsidiaries, to reduce the
Pre-Offering Indebtedness and for other general corporate purposes; and (iv) as
further adjusted to give effect to the consummation of the Debt Offering
promptly following the Equity Offerings and the application of the net proceeds
therefrom to further reduce the Pre-Offering Indebtedness. See "Use of
Proceeds". To the extent the Debt Offering is not consummated, the Pre-Offering
Indebtedness of the Company that would otherwise have been repaid from the net
proceeds of the Debt Offering will remain outstanding.

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
--------------------------------------------------------------
PRO FORMA
FOR PRE- AS ADJUSTED AS FURTHER
OFFERING FOR EQUITY ADJUSTED FOR
HISTORICAL TRANSACTIONS OFFERINGS DEBT OFFERING
---------- ------------- ----------- -----------------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Borrowings under Line of Credit(1)............. $ $ $ $
Short-term debt due parent(2)..................
Allocated Advances from parent(3).............. 893
Long-term debt:
Debt Offering................................
</TABLE>

<TABLE>

---------- ------------- ----------- --------
<S> <C> <C> <C> <C>
Stockholder's equity:
Preferred Stock, no par value; shares
authorized; no shares issued
and outstanding...........................
Common stock, par value $.01 per share; 1,000
shares authorized, 100 shares issued and
outstanding............................... --
Class A Common Stock, par value $.01 per
share; shares authorized; no shares
issued and outstanding; shares issued
and outstanding, as adjusted..............
Class B Common Stock, par value $.01 per
share; shares authorized; shares
issued and outstanding....................
Capital surplus.............................. 585
Net unrealized capital gains (losses) on
investments, net of tax................... 29
Retained earnings............................ 660
---------- ------------- ----------- --------
Total stockholder's equity................ 1,274
---------- ------------- ----------- --------
Total capitalization................. $ 2,167 $ $ $
======= =========== ========== =============
</TABLE>

- ---------------

(1) Represents $1.084 billion borrowed under the Line of Credit on February 20,
1997 with interest payable at a defined Eurodollar rate plus 13.5 basis
points and principal payable on or before February 9, 1998.

(2) Represents the $100 million Promissory Note executed by the Company for the
benefit of Hartford Accident and Indemnity. The Promissory Note provides for
a term of one year and interest at a Eurodollar rate defined in the Line of
Credit plus 15 basis points.

(3) For financial reporting purposes, the Company has treated certain amounts
previously allocated by The Hartford to the Company's life insurance
subsidiaries as Allocated Advances. Such amounts were not treated as
liabilities or indebtedness for tax and statutory accounting purposes. Cash
received in respect of Allocated Advances was used to support the growth of
the life insurance subsidiaries and was treated as surplus for statutory
accounting purposes. Interest expense represents the expense internally
allocated to the Company with respect to the Allocated Advances based on The
Hartford's actual external borrowing costs. Interest expense paid was
treated as dividends for tax and statutory accounting purposes.

25
<PAGE> 28

USE OF PROCEEDS

Based upon an assumed initial offering price of $ per share, the net
proceeds to the Company from the sale of the Class A Common Stock in the Equity
Offerings are estimated to be $ million (or $ million if the
Underwriters' over-allotment options are exercised in full), after deducting the
underwriting discounts and estimated expenses for the Equity Offerings payable
by the Company. The Company will use the estimated net proceeds to make a
capital contribution to its life insurance subsidiaries of approximately $
million, to reduce the Pre-Offering Indebtedness by $ million and for other
general corporate purposes.

If the Underwriters' over-allotment options in respect of the Equity
Offerings are exercised in full, the Company intends to use the estimated
additional proceeds to make an additional capital contribution to its life
insurance subsidiaries and/or to further reduce the Pre-Offering Indebtedness.
To the extent that the Debt Offering is not consummated, indebtedness that
otherwise would have been repaid from the proceeds of the Debt Offering will
remain outstanding. Assuming the sale of $693 million of the Notes, the Company
will have $307 million of debt securities and/or preferred stock remaining
available for sale in the public markets pursuant to the shelf registration
statement, which may be issued at any time following the Equity Offerings. See
"Use of Proceeds", "Capitalization" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources".

DIVIDEND POLICY

The holders of Class A Common Stock and Class B Common Stock will share
ratably on a per share basis in all dividends and other distributions declared
by the Board of Directors. The Board of Directors currently intends to declare
quarterly dividends on the Common Stock and expects that the first quarterly
dividend payment will be $ per share (a rate of $ annually), with
the initial dividend to be declared in the second quarter of 1997 and paid in
the third quarter of 1997. The Company expects that any dividends paid in 1997
will consist primarily of a return of basis for U.S. federal income tax
purposes. To the extent that any such dividends in fact consist of a return of
basis for U.S. federal income tax purposes, such dividends will be ineligible
for the dividends received deduction otherwise available to certain corporate
holders and will reduce a holder's adjusted tax basis with respect to their
shares of either Class A Common Stock or Class B Common Stock, as the case may
be. The Company further expects that any dividends paid in 1998 and future years
will constitute primarily taxable dividends for U.S. federal income tax purposes
and generally will be eligible for the dividends received deduction available to
certain corporate holders. See "Certain United States Federal Tax Consequences
to Non-United States Holders of Class A Common Stock -- Dividends" for a
discussion of certain tax consequences related to dividends paid to Non-United
States Holders (as defined therein).The declaration and payment of dividends by
the Company are subject to the discretion of the Board of Directors. The
determination to pay dividends will depend upon, among other things, general
business conditions, the Company's financial results, contractual, legal and
regulatory restrictions on the payment of dividends by the Company's
subsidiaries, the effect on claims paying and debt ratings of the Company and
its subsidiaries and such other factors as the Board of Directors may consider
to be relevant. In addition, until The Hartford and its affiliates no longer own
at least 50% of the combined voting power of all the outstanding Common Stock,
the approval of The Hartford, pursuant to the Master Intercompany Agreement, is
required for the payment by the Company of dividends that are not consistent
with the Company's then current dividend policy. See "Certain Relationships and
Transactions". Although there can be no assurance that any dividends will be
paid by the Company, management believes that the Company's cash flows after the
completion of the Equity Offerings should be sufficiently strong such that,
barring unforeseen circumstances, the initial dividend rate can be maintained
for the foreseeable future. See "Risk Factors -- Holding Company Structure;
Restrictions on Dividends" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources".

26
<PAGE> 29

DILUTION

At December 31, 1996, the pro forma net tangible book value of the Company
(after giving effect to the Pre-Offering Transactions) was approximately $
billion, or approximately $ per share of Common Stock. "Net tangible book
value" per share of Common Stock represents the amount of the Company's total
tangible assets minus total liabilities, divided by the shares of Common
Stock outstanding. After giving effect to the sale by the Company of shares
of Class A Common Stock in the Equity Offerings at an assumed initial public
offering price of $ per share (the midpoint of the range of initial public
offering prices set forth on the cover page of this Prospectus) and after
deducting the estimated underwriting discounts and expenses payable by the
Company, the pro forma net tangible book value of the Company at December 31,
1996 would have been approximately $ billion, or approximately $ per
share of Common Stock. This represents an immediate increase in net tangible
book value of $ per share of Class B Common Stock to The Hartford and an
immediate dilution in net tangible book value of $ per share to new
investors purchasing shares of Class A Common Stock at the assumed initial
public offering price. The following table illustrates this dilution on a per
share basis:

<TABLE>
<S> <C>
Assumed initial public offering price per share of Class A Common Stock.... $
Pro forma net tangible book value per share before the Equity Offerings
(1)...................................................................... $
Increase in net tangible book value per share attributable to the sale of
Class A Common Stock in the Equity Offerings (2)......................... $
Pro forma net tangible book value per share after giving effect to the
Equity Offerings......................................................... $
----
Dilution in net tangible book value per share to the purchasers of Class A
Common Stock offered hereby (3).......................................... $
=======
</TABLE>

- ---------------

(1) The Company's intangible assets are $27 million of goodwill, equivalent to
$ per share of Common Stock.

(2) After deducting the underwriting discounts and estimated expenses for the
Equity Offerings payable by the Company.

(3) Dilution is determined by subtracting pro forma net tangible book value per
share after giving effect to the Equity Offerings, from the assumed initial
public offering price paid by a new investor for a share of Class A Common
Stock.

27
<PAGE> 30

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated income statement data and balance sheet data set
forth below are derived in the relevant periods from the consolidated financial
statements and the notes thereto of the Company and its subsidiaries. The
consolidated financial statements have been audited by Arthur Andersen LLP,
independent public accountants, as of December 31, 1996 and 1995, and for each
of the three years in the period ended December 31, 1996, and are included
elsewhere in this Prospectus, together with the report of Arthur Andersen LLP
thereon. The consolidated financial statements for other periods were derived
from audited financial statements of certain of the Company's subsidiaries and
The Hartford and include all adjustments that management considers necessary for
a fair presentation of the data for such periods. This selected consolidated
financial data should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations", the consolidated
financial statements and the other financial information included elsewhere in
this Prospectus.

BALANCE SHEET DATA
General account invested assets(7).................................. $13,514 $15,866 $18,078 $20,072 $19,830
Separate account assets(8)(9)....................................... 8,550 16,314 22,847 36,296 49,770
All other assets(7)................................................. 1,430 7,454 9,324 9,594 10,333
------- ------- ------- ------- -------
Total assets...................................................... $23,494 $39,634 $50,249 $65,962 $79,933
======= ======= ======= ======= =======
Policy liabilities.................................................. $13,040 $20,863 $25,208 $26,318 $26,239
Separate account liabilities(8)..................................... 8,550 16,314 22,847 36,296 49,770
Allocated advances(2)(10)........................................... 375 425 525 732 893
All other liabilities............................................... 802 1,107 1,283 1,439 1,757
------- ------- ------- ------- -------
Total liabilities................................................. $22,767 $38,709 $49,863 $64,785 $78,659
======= ======= ======= ======= =======
Stockholder's equity(10)(11)........................................ $ 727 $ 925 $ 386 $ 1,177 $ 1,274
======= ======= ======= ======= =======
Stockholder's equity, excluding net unrealized capital gains
(losses), net of tax(10).......................................... $ 727 $ 931 $ 1,116 $ 1,221 $ 1,245
======= ======= ======= ======= =======
</TABLE>

28
<PAGE> 31

<TABLE>
<CAPTION>
AS OF OR FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------
1992 1993 1994 1995 1996
------- ------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
SELECTED SEGMENT DATA
Investment Products:
Individual annuity sales.......................................... $ 2,212 $ 4,232 $ 7,005 $ 6,947 $ 9,841
Group annuity and other investment product sales(12).............. 442 386 389 1,391 803
ACCOUNT VALUE
GENERAL ACCOUNT................................................. $ 3,779 $ 4,767 $ 5,499 $ 7,435 $ 7,994
GUARANTEED SEPARATE ACCOUNT(13)................................. 2,845 4,208 7,149 9,270 9,483
Non-guaranteed separate account(14)............................. 5,451 11,003 14,282 21,970 34,219
------- ------- ------- ------- -------
Total account value......................................... $12,075 $19,978 $26,930 $38,675 $51,696
======= ======= ======= ======= =======
Individual Life Insurance:
Individual life sales............................................. $ 90 $ 96 $ 94 $ 107 $ 130
Account value
General account................................................. 816 1,127 1,456 1,579 1,998
Separate account................................................ -- 736 836 979 1,238
------- ------- ------- ------- -------
Total account value......................................... $ 816 $ 1,863 $ 2,292 $ 2,558 $ 3,236
======= ======= ======= ======= =======
Employee Benefits:
Group insurance premiums.......................................... $ 841 $ 856 $ 974 $ 1,103 $ 1,329
Group insurance RESERVES.......................................... 1,056 1,224 1,412 1,633 1,934
Total group insurance invested assets............................. 1,046 1,212 1,400 1,617 1,917
COLI account value
General account................................................. 864 1,549 2,308 3,566 4,028
Separate account................................................ -- -- 897 3,484 4,441
------- ------- ------- ------- -------
Total COLI account value.................................... $ 864 $ 1,549 $ 3,205 $ 7,050 $ 8,469
======= ======= ======= ======= =======
STATUTORY DATA(15)
Gains from operations............................................... $ 70 $ 91 $ 45 $ 175 $ 148
Gains (losses)...................................................... 59 10 29 (62) 23
------- ------- ------- ------- -------
Net income.......................................................... $ 129 $ 101 $ 74 $ 113 $ 171
======= ======= ======= ======= =======
Capital and surplus................................................. $ 824 $ 926 $ 1,088 $ 1,224 $ 1,320
======= ======= ======= ======= =======
</TABLE>

PRO FORMA PER SHARE DATA(17)(18)
Net income..................................
Core earnings...............................
Book value..................................
</TABLE>

- ---------------
(1) Growth in dividends to policyholders is a result of the November 1992
acquisition from Mutual Benefit of a block of participating LEVERAGED COLI
business and the subsequent growth in the leveraged COLI business from 1993
to 1995. Policyholder dividends are expected to decline in the future since
sales of new leveraged COLI policies have been terminated as a result of
the HIPA Act of 1996.

29
<PAGE> 32

support the growth of the life insurance subsidiaries and was treated as
surplus for statutory accounting purposes. Interest expense represents the
expense internally allocated to the Company with respect to the Allocated
Advances based on The Hartford's actual external borrowing costs. Interest
expense paid was treated as dividends for tax and statutory accounting
purposes. The increase in Allocated Advances in 1995 was attributable to
the ITT Spin-Off.

(5) "Core earnings" is an internal performance measure used by the Company in
the managment of its operations. Core earnings represents the Company's net
income excluding the after-tax effects of the items described under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations -- Runoff and Other", the cumulative
effect of changes in accounting principles and net realized capital gains
(losses). Management believes that this performance measure delineates the
results of operations of the Company's on-going lines of business in a
manner that would allow for a better understanding of the underlying trends
in the Company's current business. However, core earnings should only be
analyzed in conjunction with, and not in lieu of, GAAP net income and may
not be comparable to other performance measures used by the Company's
competitors.

(8) Includes both non-guaranteed and guaranteed separate accounts.

(9) Separate account assets include assets related to Closed Book GRC of $81.9
million, $93.0 million, $86.1 million, $75.6 million and $55.1 million in
1992, 1993, 1994, 1995 and 1996, respectively.

(12) Excludes the Company's retail mutual funds.

(14) Non-guaranteed separate accounts represent policyholder funds that are
segregated from the general account of the Company and as to which the
Company does not guarantee minimum returns.

(15) Statutory data has been derived from Annual Statements of Hartford Life and
Accident, Hartford Life and ITT Hartford Life and Annuity, filed or, in the
case of 1996, to be filed with insurance regulatory authorities, each in
accordance with statutory accounting practices. Gains (losses) are net of
IMR and taxes.

(16) The pro forma capitalization data reflects the Pre-Offering Transactions,
as if such transactions had occurred as of December 31, 1996.

30
<PAGE> 33

owned by The Hartford immediately prior to the Equity Offerings plus an
assumed issuance of shares of Class A Common Stock in the Equity
Offerings (the number of shares which, based on the midpoint of the range
of the initial public offering prices set forth on the cover page of this
Prospectus and the estimated underwriting discounts and expenses payable by
the Company, would result in net proceeds equal to the excess of the amount
of the February 1997 dividend over the 1996 earnings and the Allocated
Advances).

(18) As adjusted per share data is calculated based upon shares of Class
B Common Stock owned by The Hartford immediately prior to the Equity
Offerings plus an assumed issuance of shares of Class A Common
Stock. As adjusted core earnings and net income are based upon historical
amounts adjusted to reflect a reduction in interest expense, net of tax,
from historical levels that would result from the completion of the
Pre-Offering Transactions; the application of the estimated net proceeds of
the Equity Offerings to reduce $ million of Pre-Offering
Indebtedness (bearing an interest rate of %); and an increase in net
investment income, net of tax, that would result from an investment in
securities with an assumed yield of % relating to a capital
contribution of $
million to the Company's insurance subsidiaries. As adjusted book value
represents total stockholder's equity, as of December 31, 1996, together
with the effect of the Pre-Offering Transactions and the estimated net
proceeds from the issuance and sale of shares of Class A Common
Stock.

31
<PAGE> 34

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition and results of
operations of the Company is prepared as if the Company were a separate entity
for all periods presented and should be read in conjunction with the "Selected
Consolidated Financial Data", the Consolidated Financial Statements, the notes
thereto and the other financial information included elsewhere in this
Prospectus.

"Core earnings" is an internal performance measure used by the Company in
the managment of its operations. Core earnings represents the Company's net
income excluding the after-tax effects of the items described under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations -- Runoff and Other", the cumulative effect
of changes in accounting principles and net realized capital gains (losses).
Management believes that this performance measure delineates the results of
operations of the Company's on-going lines of business in a manner that would
allow for a better understanding of the underlying trends in the Company's
current business. However, core earnings should only be analyzed in conjunction
with, and not in lieu of, GAAP net income and may not be comparable to other
performance measures used by the Company's competitors.

GENERAL

The Company is a leading insurance and financial services company that
provides pre-retirement savings, estate planning and employee benefit products.
The Company offers variable and fixed annuities, retirement plan services,
mutual funds and life and disability insurance on both an individual and group
basis. Prior to the completion of the Equity Offerings, the Company operated its
savings, protection and retirement and estate planning businesses as part of The
Hartford.

The Company attempts to attain a pre-determined return on stockholder's
equity for each of its business segments. Management facilitates this
"bottom-line" approach by operating the Company as a series of micro-enterprises
within each of its three business segments. These micro-enterprises are managed
by individuals with accountability for the profit or loss of the specific
operation. The Company assigns capital to each micro-enterprise based on
internal formulae and each of the managers is expected to earn the Company's
targeted return on the assigned capital.

The Company derives its revenues principally from (i) asset management fees
and mortality and expense fees on separate accounts, (ii) premiums, (iii) net
investment income on general account assets, including the general account
portion of variable annuities, and (iv) certain other fees earned by the
Company. The Company generates investment and mortality and expense fees
primarily from the separate account assets deposited with the Company through
the sale of individual annuities and variable life products. Premium revenues
are derived primarily from the sale of individual life, group life and group
disability insurance and COLI. The Company's operating expenses consist of
insurance benefits provided, interest credited on general account liabilities,
the cost of selling and servicing the various products sold by the Company,
including commissions to the various sales representatives (net of any
deferrals), and general business expenses.

The Company's profitability depends in large part upon (i) the amount of
its assets, (ii) the adequacy of its product pricing (which is primarily a
function of competitive conditions, management's ability to assess and manage
trends in mortality and morbidity experience as compared to the level of benefit
payments and its ability to maintain expenses within pricing assumptions), (iii)
the maintenance of the Company's target spreads between its customer CREDITED
RATES and its earned investment rates and (iv) the persistency of its policies
and premiums (which determines the recoverability of the costs incurred in
selling a policy). External factors, such as the impact of legislation on the
Company's products, also affect the Company's profitability.

32
<PAGE> 35

From time to time, the Company has acquired certain COLI and life and
annuity blocks of businesses from distressed carriers. These acquisitions have
contributed to the Company's growth in assets. The Company assumed COLI blocks
of business of approximately $5.6 billion in 1992 and $300 million in 1993 from
Mutual Benefit and individual life insurance and annuity policies of $3.2
billion in 1993 from Fidelity Bankers Life Insurance Company ("Fidelity
Bankers"), $434 million in 1994 from Pacific Standard Life Insurance Company
("Pacific Standard") and $77 million in 1996 from Investors Equity Life
Insurance Company of Hawaii ("Investors Equity").

The Company's income prior to the cumulative effect of changes in the
Company's accounting principles grew from $101 million in 1992 to $151 million
in 1994, a compound annual growth rate of 22%, due in part to internal growth
and the acquisitions discussed above. In 1995 and 1996, the Company's net income
fell to $150 million and $24 million, respectively, mainly due to losses
associated with the prepayment of MBSs and CMOs in Closed Book GRC. For a
discussion of Closed Book GRC, see "-- Results of Operations -- Runoff and
Other". Core earnings have increased from $79 million in 1992 to $250 million in
1996, a compound annual growth rate of 33%.

SEGMENT OVERVIEW

The following table details the Company's net income, after tax, for the
five-year period ended December 31, 1996.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Investment Products.................................... $ 38 $ 54 $ 84 $114 $146
Individual Life Insurance.............................. 16 21 26 37 44
Employee Benefits...................................... 36 48 53 67 78
---- ---- ---- ---- ----
Total segment earnings............................ 90 123 163 218 268
Corporate operation(1)................................. (11) (3) (7) (14) (18)
---- ---- ---- ---- ----
Core earnings(2).................................. 79 120 156 204 250
Runoff and other(3).................................... 16 5 (6) (51) (226)
Net realized capital gains (losses).................... 6 5 1 (3) --
Cumulative effect of changes in accounting
principles(4)........................................ (47) -- -- -- --
---- ---- ---- ---- ----
Net Income........................................ $ 54 $130 $151 $150 $ 24
===== ===== ===== ===== =====
</TABLE>

- ---------------

(1) The Company maintains a Corporate operation through which it reports net
investment income on assets representing surplus not assigned to any of its
business segments, interest expense on Allocated Advances and certain other
revenues and expenses not specifically allocable to any of its business
segments.

(2) Core earnings represents the Company's net income excluding the after-tax
effects of the items described under "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Results of Operations --
Runoff and Other", the cumulative effect of changes in accounting principles
and net realized capital gains (losses). Core earnings should only be
analyzed in conjunction with, and not in lieu of, net income and may not be
comparable to other performance measures used by the Company's competitors.

(4) Reflects the cumulative effect of adoption of SFAS No. 106, Employers'
Accounting for Postretirement Benefits Other Than Pensions, and SFAS No.
112, Employers' Accounting for Postemployment Benefits.

The Company operates in three principal market segments: Investment
Products, Individual Life Insurance and Employee Benefits. During the past five
years, each segment has grown significantly in revenues and core earnings. In
addition, the Company maintains a Corporate operation in which it

33
<PAGE> 36

reports net investment income on assets representing surplus not assigned to any
of its business segments, interest expense on Allocated Advances and certain
other revenues and expenses not specifically allocable to any of its business
segments.

The Investment Products segment focuses on the savings and retirement needs
of the growing number of individuals who are preparing for retirement or have
already retired. The variety of products sold within this segment reflect the
diverse nature of the market. These include individual variable annuities, fixed
MVA annuities, deferred compensation plan services for municipal governments and
corporations, STRUCTURED SETTLEMENT CONTRACTS and other special purpose annuity
contracts, investment management contracts and mutual funds. The Investment
Products segment distributes its products primarily through broker-dealers and
financial institutions for individual sales, and through employees of the
Company for institutional sales. Assets in this segment have grown from $12
billion in 1992 to $52 billion in 1996, which, along with favorable expense
trends, has resulted in an increase in core earnings from $38 million in 1992 to
$146 million in 1996, a compound annual growth rate of 40%.

The Individual Life Insurance segment focuses on individuals' needs
regarding the transfer of wealth between generations, as well as the protection
of individuals and their families against lost earnings resulting from death.
The chief products sold in this market include both variable and fixed universal
life-type contracts (including interest-sensitive whole life), as well as single
premium variable life and term life products. The Individual Life Insurance
segment distributes its products through insurance agents, broker-dealers and
financial institutions, typically assisted by a dedicated group of Company
employees. Life insurance IN FORCE has increased from $29 billion in 1992 to $52
billion in 1996, of which $4.4 billion was derived from acquisitions. The
Company's growth in insurance in force, together with favorable mortality
results and a declining expense ratio, has resulted in an increase of core
earnings from $16 million in 1992 to $44 million in 1996, a compound annual
growth rate of 29%.

The Employee Benefits segment focuses on the needs of employers and
associations to purchase group insurance products. A significant amount of the
revenue and net income in this segment is derived from the sale of group life
and group long-term and short-term disability products. This segment also
contains specialty businesses such as COLI, life/health reinsurance and several
international operations of the Company. The Employee Benefits segment
distributes its products through insurance agents and brokers, usually assisted
by a dedicated group of Company employees. Group insurance premiums have
increased from $841 million in 1992 to $1.329 billion in 1996, which, along with
favorable underwriting results, disciplined claims and expense management and
sales of COLI, has resulted in an increase of core earnings from $36 million in
1992 to $78 million in 1996, a compound annual growth rate of 21%.

Historically, the Allocated Advances received by the Company were allocated
to its corporate operation. For GAAP purposes, the interest expense in respect
of all Allocated Advances that were internally allocated to the Company was
included in the Company's Corporate operation.

In addition, the Company's financial results are impacted by the effects of
certain other operations including Closed Book GRC and the Company's former
group medical business. See "-- Results of Operations -- Runoff and Other". Net
realized capital gains and losses are excluded for management purposes from core
earnings. Realized capital gains and losses recognized in the period of
realization related to interest rate movements are amortized into segment
earnings, as a component of net investment income, over the estimated duration
of the portfolio at the time of sale. The offset to such amortization is
reflected in the Corporate operation.

34
<PAGE> 37

RESULTS OF OPERATIONS

COMPARISON OF CONSOLIDATED RESULTS FOR THE YEARS ENDED DECEMBER 31, 1994, 1995
AND 1996

The following consolidated results of operations of the Company for all
prior periods represent the historical results of the Company's subsidiaries.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER
31,
----------------------------
1994 1995 1996
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues:
Premiums and other considerations............................ $2,139 $2,643 $3,069
Net investment income........................................ 1,403 1,451 1,534
Net realized capital gains (losses).......................... 1 (4) (219)
------ ------ ------
Total revenues.......................................... 3,543 4,090 4,384
------ ------ ------

Benefits, claims and expenses:
Benefits, claims and claim adjustment expenses............... 2,254 2,395 2,727
Amortization of deferred policy acquisitions costs........... 149 205 241
Dividends to policyholders(1)................................ 419 675 635
Interest expense(2).......................................... 29 35 55
Other insurance expense...................................... 469 554 695
------ ------ ------
Total benefits, claims and expenses..................... 3,320 3,864 4,353
------ ------ ------

Income before income tax expense............................... 223 226 31
Income tax expense............................................. 72 76 7
------ ------ ------
Net income.............................................. 151 150 24
Less: Runoff and other, after-tax(3)........................... (6) (51) (83)
Less: Net realized capital gains (losses), after-tax........... 1 (3) (143)
------ ------ ------
Core earnings(4)........................................ $ 156 $ 204 $ 250
====== ====== ======
</TABLE>

- ---------------

(1) Growth in dividends to policyholders is a result of the November 1992
acquisition from Mutual Benefit of a block of participating leveraged COLI
business and the subsequent growth in the leveraged COLI business from 1993
to 1995. Policyholder dividends are expected to decline in the future since
sales of new leveraged COLI policies have been terminated as a result of the
HIPA Act of 1996.

(2) For financial reporting purposes, the Company has treated certain amounts
previously allocated by The Hartford to the Company's life insurance
subsidiaries as Allocated Advances. Such amounts were not treated as
liabilities or indebtedness for tax and statutory accounting purposes. Cash
received in respect of Allocated Advances was used to support the growth of
the life insurance subsidiaries and was treated as surplus for statutory
accounting purposes. Interest expense represents the expense internally
allocated to the Company with respect to the Allocated Advances based on The
Hartford's actual external borrowing costs. Interest expense paid was
treated as dividends for tax and statutory accounting purposes.

(3) Runoff and other primarily represents (i) Closed Book GRC, excluding, for
the year ended December 31, 1996, $143 million of realized capital losses
relating to investments supporting Closed Book GRC, (ii) the Company's group
medical business, which it decided to exit in 1993, and (iii) certain other
items that have been excluded from the Company's core earnings to allow for
a better understanding of the underlying trends in the Company's current
business.

(4) Core earnings represents the Company's net income excluding the after-tax
effects of the items described under "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Results of Operations --
Runoff and Other", the cumulative effect of changes in accounting principles
and net realized capital gains (losses). Core earnings should only be
analyzed in conjunction with, and not in lieu of, net income and may not be
comparable to other performance measures used by the Company's competitors.

PREMIUMS AND OTHER CONSIDERATIONS. Premiums and other considerations
(including maintenance and expenses fees, COST OF INSURANCE charges and premiums
on traditional life, group life and group disability contracts) increased $426
million, or 16%, to $3.069 billion in 1996 from $2.643 billion in 1995. This
increase was principally a result of (i) a $216 million increase in the
Investment

35
<PAGE> 38

Products segment from a substantial increase in aggregate fees earned on a
larger block of separate account assets resulting from strong annuity sales and
market appreciation and (ii) a $167 million increase in the Employee Benefits
segment driven by an increase in group insurance premiums of $226 million in
1996 from strong group disability sales and renewals, partially offset by a
decline in COLI premiums from 1995 levels primarily due to the enactment of the
HIPA Act of 1996.

Premiums and other considerations increased $504 million, or 24%, to $2.643
billion in 1995 from $2.139 billion in 1994. This increase primarily reflects a
$505 million increase in the Employee Benefits segment, of which $376 million
was due to growth in the COLI business and the remainder of which was increased
group insurance premiums due to strong group disability sales and renewals.

NET INVESTMENT INCOME. Net investment income increased $83 million, or 6%
to $1.534 billion in 1996 from $1.451 billion in 1995 due to growth in general
account assets excluding Closed Book GRC. Net investment income in Closed Book
GRC declined by $130 million as the average assets supporting Closed Book GRC
declined to $4.4 billion in 1996 from $6.2 billion in 1995. Excluding Closed
Book GRC, net investment income increased $213 million, or 19%, to $1.327
billion in 1996 from $1.114 billion in 1995.

Net investment income increased $48 million, or 3%, to $1.451 billion in
1995 from $1.403 billion in 1994 due to growth in general account assets
excluding Closed Book GRC. Net investment income in Closed Book GRC declined by
$144 million as the average assets supporting Closed Book GRC declined to $6.2
billion in 1995 from $6.7 billion in 1994. Excluding Closed Book GRC, net
investment income increased $192 million, or 21%, to $1.114 billion in 1995 from
$922 million in 1994.

NET REALIZED CAPITAL GAINS (LOSSES). In 1996, the Company's net realized
capital losses were $219 million due to Closed Book GRC. For additional
information on the losses related to Closed Book GRC, see "-- Runoff and Other".
The Company's net realized capital losses in 1995 and net realized capital gains
in 1994 were immaterial.

BENEFITS, CLAIMS AND CLAIM ADJUSTMENT EXPENSES. Benefits, claims and claim
adjustment expenses increased $332 million, or 14%, to $2.727 billion in 1996
from $2.395 billion in 1995. This increase was caused primarily by (i) a $311
million increase in the Employee Benefits segment chiefly due to increased
blocks of group disability and COLI business and (ii) a $104 million increase in
the Investment Products segment principally due to increased interest credited
on general account liabilities, including the general account portion of the
individual variable annuity products, partially offset by a decline of $124
million in Closed Book GRC as the average assets supporting Closed Book GRC
declined to $4.4 billion in 1996 from $6.2 billion in 1995.

Benefits, claims and claim adjustment expenses increased $141 million, or
6%, to $2.395 billion in 1995 from $2.254 billion in 1994. This increase
principally reflects (i) a $173 million increase in the Employee Benefits
segment primarily due to an increase in the COLI block of business to $7.1
billion in 1995 from $3.2 billion in 1994 and (ii) a $62 million increase in the
Investment Products segment due to increased interest credited on the growth in
general account liabilities, including the general account portion of the
individual variable annuity products, partially offset by (iii) the one-time
effect of the reserves assumed in connection with the Pacific Standard
acquisition in 1994, thereby creating a one-time increase in such expenses in
1994, and (iv) a decline of $50 million in Closed Book GRC as the average assets
supporting Closed Book GRC declined to $6.2 billion in 1995 from $6.7 billion in
1994.

AMORTIZATION OF DEFERRED POLICY ACQUISITION COSTS. In connection with the
sale of individual life and annuity contracts, the Company defers certain policy
acquisition costs, records such costs as assets and amortizes such costs against
earnings over the estimated life of the contracts. The amortization of deferred
policy acquisition costs increased $36 million, or 18%, to $241 million in 1996
from $205 million in 1995 primarily due to increased sales and total account
value in the

36
<PAGE> 39

Investment Products segment. In 1996, approximately 70% of the Company's
deferred policy acquisition costs related to its individual annuity business.
The amortization of deferred policy acquisition costs increased $56 million, or
38%, to $205 million in 1995 from $149 million in 1994 primarily due to an
increase in assets in the Investment Products segment and an increase in the
individual life insurance in force.

DIVIDENDS TO POLICYHOLDERS. The Company's dividends to policyholders arise
out of the Company's leveraged COLI business, a substantial portion of which was
written on a participating basis. Dividends to policyholders decreased $40
million, or 6%, to $635 million in 1996 from $675 million primarily due to the
elimination of sales of leveraged COLI as a result of the enactment of the HIPA
Act of 1996. Dividends to policyholders increased $256 million, or 61%, to $675
million in 1995 from $419 million in 1994 primarily due to the substantial
growth of the COLI block of business from 1994.

INTEREST EXPENSE. Interest expense increased $20 million, or 57%, to $55
million in 1996 from $35 million in 1995 primarily due to an increase in
Allocated Advances of $207 million at December 31, 1995 and $75 million at June
30, 1996. Interest expense increased $6 million, or 21%, to $35 million in 1995
from $29 million in 1994 mainly due to an increase in Allocated Advances of $100
million in 1994. The increase in Allocated Advances in June 1996 was in respect
of a capital contribution by The Hartford to support the Company's business
growth. Allocated Advances increased in 1995 as a result of the increase of
indebtedness of The Hartford associated with transactions in connection with the
ITT Spin-Off, a portion of which indebtedness was allocated internally by The
Hartford to the Company as Allocated Advances.

OTHER INSURANCE EXPENSE. Other insurance expense, including premium taxes,
commissions and other general expenses, net of deferral, increased $141 million,
or 25%, to $695 million in 1996 from $554 million in 1995 primarily reflecting
increased blocks of group disability and COLI and strong individual annuity and
individual life insurance sales.

Other insurance expense increased $85 million, or 18%, to $554 million in
1995 from $469 million in 1994 primarily reflecting factors largely similar to
those described in the preceding paragraph as well as additional growth in the
individual life insurance segment due to the Pacific Standard acquisition in
1994.

INCOME TAX EXPENSE. Income tax expense decreased $69 million in 1996 to $7
million in 1996 from $76 million in 1995 as a result of the charges associated
with Closed Book GRC. See "-- Runoff and Other". Income tax expense increased $4
million to $76 million in 1995 from $72 million in 1994 due to higher pre-tax
income in all three Company segments, partially offset by a decline in Closed
Book GRC. The Company's effective tax rate is below the statutory tax rate of
35% primarily due to the availability of the corporate dividends received
deduction.

NET INCOME. Net income decreased $126 million to $24 million in 1996 from
$150 million in 1995 chiefly reflecting a $158 million decrease owing to Closed
Book GRC, partially offset by growth in all three Company segments. Net income
was essentially unchanged in 1995 at $150 million from $151 million in 1994
primarily due to a $69 million decrease due to Closed Book GRC, essentially
offset by growth in all three Company segments.

CORE EARNINGS. Core earnings increased $46 million, or 23%, to $250
million in 1996 from $204 million in 1995 primarily reflecting (i) a $32 million
increase in the Investment Products segment principally driven by an increase in
total account value, (ii) a $7 million increase in the Individual Life Insurance
segment due to growth in individual life insurance in force and favorable
mortality experience and (iii) an $11 million increase in the Employee Benefits
segment principally due to an increase in group insurance premiums and favorable
morbidity experience.

Core earnings increased $48 million, or 31%, to $204 million in 1995 from
$156 million in 1994 largely due to (i) a $30 million increase in the Investment
Products segment principally driven by an increase in total account value, (ii)
an $11 million increase in the Individual Life Insurance segment

37
<PAGE> 40

principally due to growth in the in force block and favorable mortality
experience and expense trends and (iii) a $14 million increase in the Employee
Benefits segment principally due to an increase in group insurance premiums and
favorable morbidity experience, as well as growth in the COLI block of business.

COMPARISON OF SEGMENT RESULTS FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND
1996

INVESTMENT PRODUCTS SEGMENT

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
------------------------
1994 1995 1996
---- ---- ------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues:
Premiums and other considerations................................ $264 $324 $ 540
Net investment income............................................ 330 437 478
Net realized capital gains (losses).............................. -- -- --
----- ----- -----
Total revenues................................................ 594 761 1,018
----- ----- -----

Benefits, claims and expenses:
Benefits, claims and claim adjustment expenses................... 290 352 456
Amortization of deferred policy acquisitions costs............... 90 118 175
Dividends to policyholders....................................... -- -- --
Other insurance expense.......................................... 85 121 161
----- ----- -----
Total benefits, claims and expenses........................... 465 591 792
----- ----- -----

Income before income tax expense................................... 129 170 226
Income tax expense................................................. 45 56 80
----- ----- -----
Net income.................................................... 84 114 146
Less: Net realized capital gains (losses), after tax............... -- -- --
----- ----- -----
Core earnings................................................. $ 84 $114 $ 146
===== ===== =====
</TABLE>

Revenues increased $257 million, or 34%, to $1.018 billion in 1996 from
$761 million in 1995. This increase was principally the result of a $216 million
increase in premiums and other considerations, reflecting a substantial increase
in aggregate fees earned due to the Company's growing block of separate account
assets. The average separate account assets of this segment increased to $37.5
billion in 1996 from $26.3 billion in 1995 primarily due to sales of individual
annuities of approximately $10 billion in 1996 and $7 billion in 1995, as well
as strong market appreciation in both 1996 and 1995. In addition, the average
general account assets of this segment increased to approximately $7.7 billion
in 1996 from $6.5 billion in 1995 largely as a result of growth in the general
account portion of the individual variable annuity products of the Company. The
growth in this segment in 1996 also resulted in an increase in total benefits,
claims and expenses of $201 million, or 34%, to $792 million in 1996 from $591
million in 1995. The 38% growth in average account value in 1996, coupled with
an overall reduction in individual annuity expenses as a percentage of total
individual annuity account value to 28 basis points in 1996 from 31 basis points
in 1995, has contributed to the growth in core earnings of $32 million, or 28%,
to $146 million in 1996 from $114 million in 1995. Similar factors generated an
increase in 1995, as compared with 1994, in revenues of $167 million, or 28%,
average general account assets of $1.3 billion, or 26%, average separate account
assets of $8.0 billion, or 44%, total benefits, claims and expenses of $126
million, or 27%, core earnings of $30 million, or 36%, and a reduction in
individual annuity expenses as a percentage of total individual annuity account
value to 31 basis points in 1995 from 35 basis points in 1994.

38
<PAGE> 41

INDIVIDUAL LIFE INSURANCE SEGMENT

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
---------------------------
1994 1995 1996
----- ----- -----
(IN MILLIONS)
<S> <C> <C> <C>
Revenues:
Premiums and other considerations................................ $ 277 $ 266 $ 313
Net investment income............................................ 113 142 159
Net realized capital gains (losses).............................. 1 -- --
---- ---- ----
Total revenues................................................ 391 408 472

Benefits, claims and expenses:
Benefits, claims and claim adjustment expenses................... 252 217 266
Amortization of deferred policy acquisition costs................ 52 72 63
Dividends to policyholders....................................... -- -- 1
Other insurance expense.......................................... 47 61 74
---- ---- ----
Total benefits, claims and expenses........................... 351 350 404

Income before income tax expense................................... 40 58 68
Income tax expense................................................. 13 21 24
---- ---- ----
Net income.................................................... 27 37 44
Less: Net realized capital gains (losses), after tax............... 1 -- --
---- ---- ----
Core earnings................................................. $ 26 $ 37 $ 44
==== ==== ====
</TABLE>

Revenues increased $64 million, or 16%, to $472 million in 1996 from $408
million in 1995. This increase was chiefly due to a $47 million increase in
premiums and other considerations, reflecting the cost of insurance charges and
variable life fees applied to a larger block of business as insurance in force
increased to $52 billion in 1996 from $48 billion in 1995. Total benefits,
claims and expenses increased $54 million, or 15%, to $404 million in 1996 from
$350 million in 1995. This increase also reflects the increase in the block of
individual life insurance business. Additionally, in recent years, mortality
results have been favorable. The combination of growth of the Company's business
and favorable mortality experience resulted in an increase in core earnings in
this segment of $7 million, or 19%, to $44 million in 1996 from $37 million in
1995.

In addition, two other events, along with those mentioned above, influenced
the results of 1995 compared with 1994. In 1994, the Company assumed $218
million of individual life insurance reserves from Pacific Standard. This
affected both revenues and total benefits, claims and expenses for 1994.
Expenses were also positively influenced by the consolidation of the
professional functions previously performed in Minneapolis, Minnesota into the
Company's Simsbury, Connecticut operations. The combination of this acquisition,
internal Company growth, expense management and favorable mortality experience
caused core earnings in this segment to increase $11 million, or 42%, to $37
million in 1995 from $26 million in 1994.

39
<PAGE> 42

EMPLOYEE BENEFITS SEGMENT

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
------------------------
1994 1995 1996
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues:
Premiums and other considerations................................ $1,543 $2,048 $2,215
Net investment income............................................ 443 467 618
Net realized capital gains (losses).............................. -- -- --
------ ------ ------
Total revenues................................................ 1,986 2,515 2,833

Benefits, claims and expenses:
Benefits, claims and claim adjustment expenses................... 1,200 1,373 1,684
Amortization of deferred policy acquisition costs................ 3 4 4
Dividends to policyholders(1).................................... 419 675 634
Other insurance expense.......................................... 283 362 396
------ ------ ------
Total benefits, claims and expenses........................... 1,905 2,414 2,718

Income before income tax expense................................... 81 101 115
Income tax expense................................................. 28 34 37
------ ------ ------
Net income.................................................... 53 67 78
Less: Net realized capital gains (losses), after tax............... -- -- --
------ ------ ------
Core earnings................................................. $ 53 $ 67 $ 78
====== ====== ======
</TABLE>

- ---------------
(1) Growth in dividends to policyholders is a result of the November 1992
acquisition from Mutual Benefit of a block of participating leveraged COLI
business and the subsequent growth in the leveraged COLI business from 1993
to 1995. Policyholder dividends are expected to decline in the future since
sales of new leveraged COLI policies have been terminated as a result of the
HIPA Act of 1996.

Revenues increased $318 million, or 13%, to $2.833 billion in 1996 from
$2.515 billion in 1995. This increase was largely the result of (i) a $167
million increase in premiums and other considerations, reflecting a $226 million
increase in group insurance premiums from strong group disability sales and
renewals partially offset by a decline in leveraged COLI premiums primarily in
response to the enactment of the HIPA Act of 1996, and (ii) a $151 million
increase in net investment income primarily due to an increase in the Company's
COLI account value. Total benefits, claims and expenses increased $304 million,
or 13%, to $2.718 billion in 1996 from $2.414 billion in 1995. This increase
generally reflected an increased block of group disability business and other
group insurance and an increase in the Company's COLI block of business,
partially offset by a $41 million decrease in dividends to policyholders
primarily due to the elimination of sales of leveraged COLI as a result of the
enactment of the HIPA Act of 1996. In addition, expenses in the group insurance
business, as a percentage of premiums, have declined over the past several
years. This trend, along with favorable mortality and morbidity experience, as
well as the factors mentioned above, resulted in an increase in core earnings in
this segment of $11 million, or 16%, to $78 million in 1996 from $67 million in
1995.

The Company had $306 million and $867 million of leveraged COLI sales in
1994 and 1995, respectively, which significantly affected the results of 1995
compared with 1994. Revenues increased $529 million, or 27%, in 1995 primarily
due to a $353 million increase related to COLI premiums. Total benefits, claims
and expenses increased $509 million, or 27%, in 1995 of which $344 million
related to COLI. The additional growth in COLI, coupled with factors similar to
those discussed above for 1996 compared with 1995, caused core earnings in this
segment to increase $14 million, or 26%, to $67 million in 1995 from $53 million
in 1994.

40
<PAGE> 43

In general, the growth in COLI account value has been a significant
component of earnings for the Employee Benefits segment over the past three
years, representing $26 million, or 33%, in 1996, $22 million, or 33%, in 1995
and $16 million, or 30%, in 1994 of total segment earnings.

RUNOFF AND OTHER

GENERAL. The Company has reflected the results of certain operations and
the effects of certain other items separate from the results of its core
operations: Closed Book GRC (and the related net realized capital gains and
losses) and the Company's former group medical business, a guaranty fund
adjustment of $10 million in 1995 due to lower than expected insolvencies in the
insurance industry and the impact of certain assets and liabilities assumed
during the ITT Spin-Off. If Closed Book GRC and the former group medical
business were part of the Company's core operations, the nature of the related
products are such that Closed Book GRC would be reported as a component of the
Investment Products segment and the former group medical business would be
reported as a component of the Employee Benefits segment.

CLOSED BOOK GRC. Substantially all of the products included in Closed Book
GRC are contracts with guaranteed fixed or indexed rates for a specific period,
constituting all GRC written by the Company prior to 1995. The Company continues
to write GRC products only as an accommodation to existing customers or to
customers who are purchasing a range of services. Closed Book GRC results have
been negatively affected by lower investment rates and earnings in the related
investment portfolio (principally composed of MBSs and CMOs) due to prepayments
experienced in excess of assumed levels in years prior to 1995. Closed Book GRC
also was affected by an interest rate rise in 1994 which caused the duration of
the Company's assets to lengthen relative to that of its liabilities. Due to the
reduced investment earnings and duration mismatch, the portfolio had
insufficient assets to fully fund its liability commitments. During the third
quarter of 1996, the Company transferred assets in the amount of $200 million to
adequately fund Closed Book GRC so that future cash infusions would be minimal.

Although the Closed Book GRC asset portfolio as a whole is duration matched
with its liabilities, certain investments continue to have a longer maturity
than their corresponding liabilities and will need to be liquidated prior to
maturity in order to meet the specific liability commitments. To protect the
existing value of these investments, the Company entered into various interest
rate swap, cap and floor transactions in late September 1996 with the objective
of offsetting the market price sensitivity of hedged assets to changes in
interest rates. As a result of the hedge, the Company substantially eliminated
further fluctuation in the fair value of these investments due to interest rate
changes, thereby substantially reducing the likelihood of any further loss on
the assets due to such changes.

The Company's accounting policy for impairment recognition is to record an
other than temporary impairment charge on a security if it is determined that
the Company is unable to recover all amounts due under the contractual
obligations of the security. In addition, the Company has established specific
criteria to be used in the impairment evaluation of an individual portfolio of
assets. Specifically, if the asset portfolio supports a runoff operation and is
expected to be liquidated prior to maturity to meet liability commitments and
has a fair value below amortized cost which will not materially fluctuate as a
result of future interest rate changes, then an other than temporary impairment
condition has been determined to have occurred. Each individual security within
the portfolio is evaluated to determine whether it is impaired. Once an
impairment charge has been recorded, the Company then continues to review the
impaired securities for appropriate valuation on an ongoing basis.

41
<PAGE> 44

The following table sets forth the after-tax losses incurred by the Company
in respect of Closed Book GRC for the three years ended December 31, 1996.

CLOSED BOOK GRC

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
-----------------------
1994 1995 1996
---- ---- -----
(IN MILLIONS)
<S> <C> <C> <C>
Runoff income (losses)...................................... $ 1 $(68) $ (51)
Other than temporary impairment............................. -- -- (88)
Net realized capital gains (losses)......................... -- -- (55)
Other charges............................................... -- -- (32)
--
---- -----
Net Income............................................. $ 1 $(68) $(226)
== ==== =====
</TABLE>

During 1996, Closed Book GRC incurred a $51 million after-tax loss from
operations as a result of negative interest spread, as compared with an
after-tax loss from operations of $68 million in 1995. With the initiation of
the hedge transactions discussed above, which eliminated the possibility that
the fair value of Closed Book GRC investments would recover to their current
amortized cost, an other than temporary impairment loss of $82 million, after
tax, was determined to have occurred and was recorded in September 1996. An
additional other than temporary impairment loss of $6 million, after tax,
occurred in the fourth quarter of 1996 bringing the total 1996 impairment to $88
million. Also, during the third quarter of 1996, Closed Book GRC had asset sales
resulting in proceeds of approximately $500 million and a realized loss of $55
million, after tax. The asset sales were undertaken as a result of liquidity
needs and favorable market conditions for certain securities. Other charges of
$32 million, after tax, which primarily reflect an interest accrual on tax
assessments, also were recorded in the third quarter of 1996.

In response to the losses associated with Closed Book GRC, the Company
instituted an improved risk management process. See "Business -- Investment
Operations -- General". Management expects that the net income (loss) from
Closed Book GRC in the years subsequent to 1996 will be immaterial based on the
Company's current projections for the performance of the assets and liabilities
associated with Closed Book GRC, the Company's expectations regarding future
sales of assets from the Closed Book GRC portfolio from time to time in order to
make the necessary payments on maturing Closed Book GRC liabilities and the
stabilizing effect of the hedge transactions. In determining the projected
Closed Book GRC net income in years subsequent to 1996, the Company assumed that
yield spreads implicit in market values would be consistent with historic
trends. In addition, the Company assumed that there would be no material credit
losses in respect of assets supporting Closed Book GRC. However, no assurance
can be given that, under certain unanticipated economic circumstances which
result in the Company's assumptions proving inaccurate, further losses in
respect of Closed Book GRC will not occur in the future. To date, such asset
sales have been consistent with the Company's expectations.

As of December 31, 1996, Closed Book GRC had general account assets of $3.6
billion and general account liabilities of $3.6 billion. Closed Book GRC assets
consisted of $2.7 billion of fixed maturity securities (including $21 million of
MBSs and $1.03 billion of CMOs), a $471 million market-neutral portfolio based
on London interbank offered quotations for U.S. dollar deposits and $432 million
of cash or short-term instruments. Of the $3.6 billion in Closed Book GRC
liabilities remaining as of December 31, 1996, the scheduled maturity of such
GRC is as follows: $1.2 billion or 33% in 1997, $1.1 billion or 31% in 1998,
$0.8 billion or 22% in 1999 and $0.5 billion or 14% thereafter.

GROUP MEDICAL BUSINESS. The Company also previously marketed group medical
insurance to its customers. The Company decided to exit this business in 1993.
Management had determined that the projected future return on assigned capital
for the group medical business was inadequate. This decision allowed the Company
to focus its group insurance operation on group life and group

42
<PAGE> 45

disability coverage. All known material obligations related to the Company's
exit from its group medical business expired as of December 31, 1996. The
Company reported a net loss of $7 million and $1 million in 1994 and 1995,
respectively, and a net gain of $1 million in 1996.

OTHER. In addition, the Company also excluded from its calculation of core
earnings the effects of an insurance guaranty fund adjustment of $10 million in
1995 made to reflect lower than expected insolvencies in the insurance industry
and the impact of certain assets and liabilities assumed by the Company in 1995
in connection with the ITT Spin-Off. Prior to 1995, as a response to certain
significant insolvencies experienced in the life insurance industry during the
late 1980s and early 1990s, the Company took an approach which incorporated an
assumption that more companies would fail in the following years. As more
historical data became available from outside sources such as the National
Organization of Life and Health Guaranty Associations, the Company re-estimated
reserves based on specific state assessment data and determined that $10 million
of such reserve could be released.

INTERCOMPANY ARRANGEMENTS

The Company's relationship with The Hartford generally will be governed by
a series of agreements to be entered into in connection with the Equity
Offerings. These agreements generally will maintain the relationship between the
Company and The Hartford in a manner consistent in all material respects with
past practice. As a result, management believes that none of these arrangements
will have a material impact on the results of operations and liquidity of the
Company. In general, these arrangements are intended to remain in effect for so
long as The Hartford continues to maintain controlling beneficial ownership of
the Company.

Under the terms of the Master Intercompany Agreement, the Company and The
Hartford will agree to provide to each other, after the completion of the Equity
Offerings, services largely similar to those provided prior thereto. In
addition, The Hartford will agree to license all the tradenames, service marks,
logos (including the Stag Logo) and other trademarks currently used by the
Company in its domestic and international operations. Furthermore, the Master
Intercompany Agreement will require the Company to receive prior written
approval from The Hartford with respect to certain corporate activities, provide
for the assumption of liabilities and cross-indemnities allocating liabilities
between the parties and grant certain registration rights to The Hartford. The
Master Intercompany Agreement contains various termination provisions, including
the ability of either party to terminate the agreement with respect to services
upon six months' written notice in the event that The Hartford ceases to own 50%
or more of the combined voting power of the outstanding Common Stock. See
"Certain Relationships and Transactions -- Intercompany Arrangements -- Master
Intercompany Agreement".

The Tax Sharing Agreement will provide that The Hartford and its
subsidiaries, including the Company, will file a consolidated federal income tax
return and that The Hartford will have all the rights of a parent of a
consolidated group. However, The Hartford and its subsidiaries will make
payments to each other such that the amount of taxes each such party pays would
be that amount it would be required to pay as a separate filer. As the
controlling beneficial owner of the Company, The Hartford will control all the
tax decisions in respect of The Hartford. The Tax Sharing Agreement will
terminate when the Company ceases to be a subsidiary of The Hartford. See
"Certain Relationships and Transactions -- Intercompany Arrangements -- Tax
Sharing Agreement and Tax Considerations".

The Investment Management Agreements will provide that the investment staff
of The Hartford will implement the investment strategies of the Company and act
as advisor to certain of the Company's non-guaranteed separate accounts and
mutual funds for a fee based on the actual costs of providing such services.
Such agreements generally will be non-terminable by The Hartford for a period of
three years from the completion of the Equity Offerings and thereafter will be
terminable by either party upon 180 days' prior written notice. Such agreements
relating to the Company's mutual

43
<PAGE> 46

funds are terminable at any time. See "Certain Relationships and
Transactions -- Intercompany Arrangements -- Investment Management Agreements".

The Company will sublease its headquarters from Hartford Fire pursuant to
the Simsbury Sublease which in turn leases it from a third party pursuant to a
sale-leaseback arrangement. Hartford Fire will retain the right to purchase the
facility and the renewal option in respect of such arrangement. The rental
payments are fixed (but not level) over the term of the lease and sublease. See
"Certain Relationships and Transactions -- Intercompany Arrangements -- Simsbury
Sublease".

LIQUIDITY AND CAPITAL RESOURCES

HOLDING COMPANY

Management believes that the liquidity requirements of the Company will be
met by funds from the operations of its subsidiaries. As a holding company, the
Company's principal source of funds is dividends from its operating
subsidiaries. For financial reporting purposes, the Company has treated certain
amounts previously allocated by The Hartford to the Company's life insurance
subsidiaries as Allocated Advances. Such amounts were not treated as liabilities
or indebtedness for tax and statutory accounting purposes. Cash received in
respect of Allocated Advances was used to support the growth of the life
insurance subsidiaries and was treated as surplus for statutory accounting
purposes. In return, the Company paid The Hartford certain dividends (so treated
for tax and statutory accounting purposes) based on The Hartford's actual
external borrowing costs. In general, the Company seeks to maintain a
conservative liquidity position and actively manages its capital levels,
asset/liability matching and the diversification, duration and credit quality of
its investments to ensure that the Company is able to meet its obligations.

Historically, The Hartford has provided capital, including the Allocated
Advances, to the Company's insurance subsidiaries. Following the Equity
Offerings, the Company intends to independently address any of its capital
requirements that may arise. However, for so long as The Hartford maintains a
controlling interest in the Company, any deterioration in the financial
condition or ratings of The Hartford (as well as the Company) could have the
effect of increasing the Company's borrowing costs and/or impairing its access
to the capital markets. In addition, The Hartford will have the ability, through
its controlling beneficial ownership of the Company and the terms of the Master
Intercompany Agreement, to limit or otherwise restrict the Company's ability to
raise common or preferred equity capital or incur debt. See "Risk
Factors -- Control by and Relationship with The Hartford" and "Certain
Relationships and Transactions -- Intercompany Arrangements -- Master
Intercompany Agreement".

The following table sets forth the historical amounts of capital
contributed by The Hartford to the Company and the related dividends accrued or
paid or interest expense paid by the Company to The Hartford in respect thereof.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Capital contributed................................ $ -- $100 $ 50 $180 $ --
Cash received in respect of Allocated
Advances(1)...................................... -- 50 100 -- 115
Dividends accrued or paid.......................... -- 24 17 226 --
Interest accrued and paid.......................... 26 25 29 35 55
---- ---- ---- ---- ----
Net Capital................................... $(26) $101 $104 $(81) $ 60
==== ==== ==== ==== ====
</TABLE>

- ---------------
(1) Excludes non-cash Allocated Advances of $207 million in 1995 and $46 million
in 1996.

The payment of dividends to the Company from its life insurance
subsidiaries is subject to certain regulatory restrictions. The payment of
dividends by Connecticut-domiciled life insurers is limited under the insurance
holding company laws of Connecticut. The Company adheres to these laws which
require notice to and approval by the state insurance commissioner for the
declaration or

44
<PAGE> 47

payment of any dividend which, together with other dividends or distributions
made within the preceding twelve months, exceeds the greater of (i) 10% of the
insurer's policyholder surplus as of December 31 of the preceding year or (ii)
net gain from operations for the twelve-month period ending on the December 31
last preceding, in each case determined under statutory insurance accounting
practices. In addition, if any dividend of a Connecticut-domiciled insurer
exceeds the insurer's earned surplus, it requires the approval of the
Connecticut Insurance Commissioner. Based on these limitations and 1996
statutory results, the Company would be able to receive $132 million in
dividends from Hartford Life and Accident, the Company's direct wholly owned
subsidiary, in 1997 without obtaining the approval of the Connecticut Insurance
Commissioner. See "Risk Factors -- Holding Company Structure; Restrictions on
Dividends".

On February 20, 1997, the Company made a payment of $1.184 billion as a
dividend to Hartford Accident and Indemnity. $893 million of such dividend
constituted a repayment of the Allocated Advances. This dividend was paid with
the $1.084 billion borrowed by the Company under the Line of Credit with
interest payable at a defined Eurodollar rate plus 13.5 basis points and
principal payable on or before February 9, 1998, and the $100 million Promissory
Note for the benefit of Hartford Accident and Indemnity with interest payable at
a Eurodollar rate defined in the Line of Credit plus 15 basis points and a term
of one year. Management believes that the Line of Credit contains terms and
provisions that are normal and customary for agreements of this type.

Promptly after completion of the Equity Offerings, the Company plans,
subject to market conditions, to offer $ million of Notes in the Debt
Offering pursuant to a shelf registration statement. The Company expects that
the Debt Offering will involve the sale of fixed rate, multi-tranche securities
of varying maturities and may include redemption provisions. The Company intends
to use the net proceeds of the Debt Offering, as well as a portion of the Equity
Offerings, to reduce the Pre-Offering Indebtedness. The Company believes that,
after giving effect to all of the foregoing transactions, it will have
sufficient liquidity to service its debt obligations. Furthermore, the Company
also believes that because each of these transactions took place at the holding
company level, they will have no impact on the statutory surplus of the
Company's insurance subsidiaries, other than an increase in statutory surplus to
the extent of capital contributions received from the Company in respect of the
Equity Offerings.

The Company's fixed maturity investments are classified as
"available-for-sale" and, accordingly, are reflected in the Consolidated
Financial Statements at fair value with the corresponding impact included as a
component of stockholder's equity. Changes in interest rates, accordingly, can
have a significant impact on stockholder's equity. The effect of SFAS No. 115 on
stockholder's equity, which represents the net unrealized capital gain (loss),
net of tax, on fixed maturity investments, was a decrease of $725 million
(including a cumulative adjustment with respect to the adoption of SFAS No. 115
which increased stockholder's equity by $103 million) as of December 31, 1994
and an increase of $679 million and $71 million as of December 31, 1995 and
1996, respectively.

Based on the Company's historic cash flow and current financial results,
management believes that the cash flow from the Company's operating activities
over the next year will provide sufficient liquidity for the operations of the
Company, as well as provide sufficient funds to enable the Company to make
dividend payments, as described in "Dividend Policy", satisfy debt service
obligations and pay other operating expenses. Management also believes that
completion of the Equity Offerings and the continued execution of its business
strategy for the Company will strengthen the financial position of the Company.
Although the Company currently anticipates that it will be able to make dividend
payments, as described in "Dividend Policy", and pay other operating and capital
expenses for the foreseeable future, the Company can give no assurances as to
whether the net cash provided primarily by dividends from Hartford Life and
Accident and its other subsidiaries will provide sufficient funds for the
Company to do so.

45
<PAGE> 48

OPERATING SUBSIDIARIES

The principal sources of funds for the Company's operating subsidiaries are
premiums, net investment income and other considerations, as well as maturities
and sales of invested assets. These funds are used primarily to pay policy
benefits, dividends to policyholders, claims, operating expenses, interest,
commissions and dividends to stockholders, as well as to purchase new
investments. The Company's life insurance and group disability products involve
long-term liabilities that in general have reasonably predictable payout
patterns. However, the Company's annuity products involve liabilities that are
less certain as to payout timing and may be subject to unexpected increases in
surrenders, which would result in increased liquidity needs. Accordingly,
asset/liability management is important to maintaining appropriate liquidity for
the Company's operations. The Company's investment strategies are designed to
reasonably match the yields and estimated durations of its investments with the
contractual obligations of its policies. The Company acquires investments that
management believes will provide a predictable spread between investment
earnings and amounts credited to policyholders and contractholders and will
allow the Company to maintain sufficient liquidity in its investment portfolio
such that it would be able to adequately satisfy policy and contract commitments
under a broad range of adverse economic circumstances. In addition, the Company
closely monitors market and other economic conditions that might affect the
value and duration of its assets and the persistency of its liabilities. For a
discussion of the Company's investment operations, see "Business -- Investment
Operations".

The Company maintained cash and short-term investments totaling $895
million, $1.2 billion and $837 million as of December 31, 1994, 1995 and 1996,
respectively, and believes that its investment policies combined with the terms
of its life and annuity contracts are adequate to support its liquidity needs.
Investment grade, public fixed maturity securities (including securities sold
pursuant to Rule 144A of the Securities Act ("Rule 144A")) represented 99.5% of
the Company's general account and guaranteed separate account investment
portfolios at December 31, 1996. For a discussion of the Company's investment
operations, see "Business -- Investment Operations".

Interest rate fluctuations can affect the duration of contractual
obligations as well as the value and duration of the assets supporting these
obligations and expose the Company to disintermediation risk. See "Risk
Factors -- Risks Associated with Certain Economic and Market Factors". The
Company can respond to interest rate fluctuations in a number of ways, including
changing investment strategies for new cash flows, adjusting interest crediting
rates (subject to policy limitations in some instances), and adjusting the price
on any new products.

46
<PAGE> 49

In addition, the Company closely evaluates and monitors this risk of early
policyholder and contractholder surrender. Management believes that it has
minimized the potential impact of surrenders, particularly with respect to its
annuity business, by protecting approximately 99% of its insurance liabilities
as of December 31, 1996 against early surrender through the use of non-
guaranteed separate accounts, MVA features, policy loans, surrender charges and
non-surrenderability provisions as follows:

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
-----------------------------------------------
AMOUNT OF PERCENTAGE OF TOTAL
INSURED LIABILITIES INSURANCE LIABILITIES
------------------- ---------------------
(IN BILLIONS)
<S> <C> <C>
Non-guaranteed separate accounts....................... $38.1 56%
MVA feature............................................ 17.1 25
Policy loans(1)........................................ 4.0 6
Non-surrenderability................................... 3.9 6
----- ---
Subtotal.......................................... 63.1 93
Surrender charges on remaining liabilities............. 4.2 6
----- ---
Total............................................. $67.3 99%
===
-----
</TABLE>

- ---------------
(1) Policy loans primarily relate to the Company's leveraged COLI business in
which the Company earns a stated spread on assets that are loaned to the related
policyholder.

In particular, the Company uses surrender charges to limit the ability of
individual and group annuity policyholders to withdraw from such contracts. The
following table summarizes the Company's annuity policy reserves as of December
31, 1996 and 1995 based on such policyholders' ability to withdraw funds.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------
1995 1996
---------------------- ----------------------
PERCENTAGE PERCENTAGE
POLICY OF TOTAL POLICY OF TOTAL
RESERVES RESERVES RESERVES RESERVES
------- ---------- ------- ----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Not subject to discretionary withdrawal..... $ 1,363 3% $ 1,807 3%
Subject to discretionary withdrawal with
adjustment:
With MVA.................................. 37,445 86 48,160 89
At contract value, less surrender charge
of 5% or more.......................... 1,743 4 1,592 3
Subject to discretionary withdrawal at
contract value with no surrender charge or
surrender charge of less than 5%.......... 2,863 7 2,628 5
------- ---- ------- ----
Total annuity policy reserves.......... $43,414 100% $54,187 100%
======= ==== ======= ====
</TABLE>

Life insurance policies also are subject to surrender; however, they are
less susceptible to surrender than are annuity contracts because policyholders
must generally undergo a new underwriting process and incur new policy
acquisition costs in order to obtain new life insurance policies.

Surrenders and other fund withdrawals on all insurance liabilities,
including liabilities related to Closed Book GRC, totaled $3.0 billion, $5.2
billion and $5.8 billion, and benefits totaled $1.1 billion, $1.2 billion and
$1.2 billion, in each of 1994, 1995 and 1996, respectively, and were met with
cash from ongoing operations and required no significant sale of fixed maturity
assets.

The Company's asset for deferred policy acquisition costs ("DPAC") reflects
those portions of acquisition costs, including commissions and certain
underwriting expenses associated with acquiring insurance products, which are
deferred and amortized over the lesser of the estimated or actual

47
<PAGE> 50

contract life. As of December 31, 1996, deferred policy acquisitions costs were
$2.8 billion, having grown from $836 million at December 31, 1992, principally
owing to the growth in sales of the Company's annuity products. In determining
its DPAC deferral and amortization, the Company believes it sets its
amortization and lapsation assumptions and other key variables at reasonable and
conservative levels, deferring only those acquisition expenses that are within
pricing allowables (which is a measure of the amount of expenses permissible for
deferral consistent with the Company's target returns over the expected life of
a product). In contrast, GAAP generally allows companies to defer recoverable
acquisition expenses independent of expected return. These assumptions and the
recoverability of the asset are periodically monitored by the Company's internal
actuarial and accounting professionals, with adjustments made, where
appropriate, in accordance with SFAS No. 60 and SFAS No. 97. Approximately 70%
of the Company's DPAC asset relates to the Company's individual annuity block of
business. The DPAC asset in respect of the individual variable and fixed MVA
annuity products has a weighted average life of less than nine years and
approximately six years, respectively, at the time of sale. By comparison, the
Company imposes surrender charges, on a declining basis, for seven years,
although its fixed MVA annuities sold with a five or six year rate guarantee may
be surrendered without penalty at the end of the guarantee period.

To date, the Company's experience has been favorable, in the aggregate,
compared with the assumptions used in its internal DPAC amortization models. The
Company believes that its product design, its relationships with its wholesale
and retail distribution channels and the quality of its customer service have
been contributing factors to this positive variance. However, if lapsation
levels were to substantially rise due to certain factors discussed under "Risk
Factors -- Risks Associated with Certain Economic and Market Factors" or
otherwise, the Company could determine that accelerated DPAC amortization would
be necessary.

For a discussion of potential material adverse effects to the Company's
business, financial condition and results of operations in connection with any
further downgrade in the ratings of the Company's insurance subsidiaries, see
"Risk Factors -- Importance of Company Ratings".

RECENT ACCOUNTING PRONOUNCEMENTS

For a discussion of certain enacted changes and recently proposed
accounting principles, see the Notes to the Consolidated Financial Statements
and "Risk Factors -- Potential New Accounting Policy for Derivatives".

48
<PAGE> 51

BUSINESS
GENERAL

The Company sells financial products such as fixed and variable annuities,
retirement plan services, mutual funds and life and disability insurance on both
an individual and group basis. The Company divides its core businesses into
three segments: Investment Products, Individual Life Insurance and Employee
Benefits. As of or for the year ended December 31, 1996, the Company had $250
million of core earnings, $24 million of net income, $76 billion of assets
(excluding assets related to Closed Book GRC), $1.245 billion of stockholder's
equity (excluding net unrealized capital gains or losses) and $ billion of
pro forma stockholders' equity, as adjusted for the Equity Offerings and
described in "Capitalization". According to the latest publicly available data
with respect to the United States, the Company is the largest writer of both
total individual annuities and individual variable annuities based on new sales
for the year ended December 31, 1996 (according to information compiled by LIMRA
and VARDS, respectively), the eighth largest consolidated life insurance company
in the United States based on statutory assets, as of December 31, 1995, and the
largest writer of group short-term disability benefit plans and the second
largest writer of group long-term disability products based on full-year 1995
new premium and premium equivalents (according to information reported to EBPR).

The Company has achieved rapid growth of core earnings and assets by
pursuing a strategy of selling diverse and innovative products through multiple
distribution channels, achieving cost efficiencies through economies of scale
and improved technology, maintaining effective risk management and prudent
underwriting techniques and capitalizing on its brand name and customer
recognition of the Stag Logo, one of the most recognized symbols in the
financial services industry. The Company's core earnings have grown at a
compound annual growth rate of 33%, from $79 million in 1992 to $250 million in
1996, and its assets (excluding assets relating to Closed Book GRC) have grown
at a compound annual growth rate of 43%, from $18 billion in 1992 to $76 billion
in 1996. During this period, the Company has attained strong market positions
for the principal product offerings of each of its three business segments. In
particular, the Company holds the leading market position in the variable
annuity industry based on sales for the year ended December 31, 1996. The
Company's sales of individual variable annuities grew from $1.8 billion in 1992
to $9.3 billion in 1996, and, for the year ended December 31, 1996, the Company
had a 13% market share (according to information compiled by VARDS). During this
period of growth, the Company's separate account assets, which are generated
principally by the sale of annuities, grew from 36% of total assets at December
31, 1992 to 62% of total assets at December 31, 1996. Management believes the
Company's substantial growth in assets, together with management's effort to
control expenses, has made the Company one of the most efficient competitors in
the insurance industry, placing it among the top ten of the fifty largest life
insurers (based on statutory assets) in operating efficiency. The Company's
ratio of general insurance expenses to statutory assets, an industry measure of
operating efficiency, improved to .64% in 1996, from .72% in 1995 and 1.38% in
1992 as compared with the average ratio for the top fifty life insurance
companies, for the year ended December 31, 1995, of 1.50%, based on information
compiled by A.M. Best.

The Company is a newly-organized holding company formed in December 1996,
which holds virtually all the investment products, individual life insurance and
employee benefits operations of The Hartford. In addition, The Hartford owns
certain life insurance operations internationally (i.e., through wholly owned
subsidiaries in Spain, the United Kingdom and The Netherlands) acquired in
connection with the acquisition of companies primarily engaged in
property-casualty insurance. The Company is a direct subsidiary of Hartford
Accident and Indemnity and an indirect subsidiary of Hartford Fire. Hartford
Fire is an indirect wholly owned subsidiary of The Hartford. The Hartford is
among the largest domestic and international providers of commercial
property-casualty insurance, property-casualty reinsurance and personal lines
(including homeowners and auto) coverages. On December 19, 1995, ITT distributed
all the outstanding shares of capital stock of The Hartford to ITT stockholders
of record on such date in connection with the ITT Spin-Off. As a result of the
ITT Spin-

49
<PAGE> 52

Off, The Hartford became an independent, publicly traded company. The Company's
principal offices are located at 200 Hopmeadow Street, Simsbury, Connecticut
06089. The Company's telephone number is (860) 843-7716.

INDUSTRY OVERVIEW

The life insurance and annuity industries recently have been influenced by
certain savings trends and demographic factors. The United States Census Bureau
reports that the number of individuals aged 45 to 64, which represents the
Company's primary market, will grow from 55.7 million in 1996 to 71.1 million in
2005, making this age group the fastest growing segment of the U.S. population.
In addition, the Bureau of Labor Statistics forecasts that individuals in the
United States will live approximately 18.6 years beyond the age of their
retirement. These emerging demographic trends have significantly influenced the
growth of the Company as, in management's view, the "baby boomer" segment of the
population has become increasingly concerned about retirement and confidence in
the ability of government-provided retirement benefits to meet retirement needs
diminishes. The Company has also benefited as employer-provided defined benefit
plans and other non-cash compensation have become used increasingly as a means
to facilitate savings for retirement. Moreover, as the overall population ages,
the Company believes that individuals will focus their attention on efficiently
transferring wealth between generations. As a result, management believes that
an increasing number of individuals will be attracted to the Company's variety
of savings-oriented insurance products, with tax-advantaged status, in order to
both fund their retirement years and protect accumulated savings.

In addition, management believes that group life and group disability
insurance will continue to be an important employee benefit due to the growing
emphasis in recent years on the non-cash component of employee compensation. The
Company also believes that the continued growth of small businesses could result
in the overall growth of in force group insurance for the insurance industry.
Management expects that an increased demand for high-quality services in the
group insurance industry will result in continued growth in the Company's sales,
particularly if the Company successfully expands the range of services offered
in connection with its group disability products.

BUSINESS STRATEGY

50
<PAGE> 53

network as well as new channels of distribution. For example, the Company sells
fixed MVA annuities, variable annuities, mutual funds, single premium variable
life and Section 401(k) plan services through its broker-dealer and bank
distribution systems.

OFFER DIVERSE AND INNOVATIVE PRODUCTS. The Company provides its customers
a diverse mix of products and services aimed at serving their needs throughout
the different stages of their lives and during varying economic cycles. The
Company offers a variety of variable and fixed MVA annuity products with funds
managed both internally and by outside money managers such as Wellington, Putnam
and Dean Witter. The Company also regularly develops and brings to market
innovative products and services. For example, the Company was the first major
seller of individual annuities to successfully develop and market fixed
annuities with an MVA feature which protects the Company from losses due to
higher interest rates in the event of early surrender. The Company was also a
leader in introducing the "managed disability" approach to the group disability
insurance market. This approach focuses on early claimant intervention in an
effort to facilitate a claimant's return to work and to contain costs.

CAPITALIZE ON ECONOMIES OF SCALE, CUSTOMER SERVICE AND TECHNOLOGY. As a
result of its growth and attention to maintaining low expenses, the Company
believes it has achieved advantageous economies of scale and operating
efficiencies in its businesses which together enable the Company to
competitively price its products for its distribution networks and
policyholders. For example, as noted above, the Company is the eighth largest
consolidated life insurance company based on statutory assets as of December 31,
1995, with a ratio of general insurance expenses to statutory assets that is
less than half the average ratio of its competitors. In addition, the Company
has reduced its expenses as a percentage of total individual annuity account
value to 28 basis points in 1996 from 43 basis points in 1992. In addition, the
Company believes that it maintains high-quality service for its customers and
utilizes computer technology to enhance communications within the Company and
throughout its distribution network in order to improve the Company's efficiency
in marketing, selling and servicing its products. In 1996, the Company received
one of the five Quality Tested Service Seals awarded by DALBAR, a recognized
independent research organization, for its achievement of the highest tier of
customer service in the variable annuity industry.

CONTINUE PRUDENT RISK MANAGEMENT. The Company's product designs, prudent
underwriting standards and risk management techniques protect it against
disintermediation risk and greater than expected mortality and morbidity. As of
December 31, 1996, the Company had limited exposure to disintermediation risk on
approximately 99% of its insurance liabilities through the use of non-guaranteed
separate accounts, MVA features, policy loans, surrender charges and
non-surrenderability provisions. With respect to the Company's individual
annuities, 97% of the related total account value was subject to surrender
charges as of December 31, 1996. The Company also enforces disciplined claims
management to protect the Company against greater than expected mortality and
morbidity. The Company regularly monitors its underwriting, mortality and
morbidity assumptions to determine whether its experience remains consistent
with these assumptions and to ensure that the Company's product pricing remains
appropriate.

51
<PAGE> 54

INVESTMENT PRODUCTS

GENERAL

The Investment Products segment focuses on the savings and retirement needs
of the growing number of individuals who are preparing for retirement or have
already retired. The Company offers fixed and variable annuities, certain
deferred compensation and retirement plan services, mutual funds, investment
management services and certain other financial products. Investment Products
accounted for $146 million, or 55%, of the total segment earnings of the Company
for the year ended December 31, 1996. Growth in the Company's assets has been
driven by its sale of variable annuities. New sales of individual annuities were
approximately $9.8 billion in 1996, bringing individual annuity total account
value to $41.7 billion as of December 31, 1996. Of the total individual annuity
account value, $32.4 billion relates to variable annuities and $9.0 billion
relate to fixed MVA annuities held in guaranteed separate accounts. Of the
Company's $32.4 billion variable annuities in force, $29.9 billion, or 92%, is
held in non-guaranteed separate accounts, as of December 31, 1996. In contrast,
the next nine largest writers in the United States of variable annuities held an
average of 70% of their variable annuities in force in non-guaranteed separate
accounts, as of December 31, 1996, based on the Company's analysis of
information compiled by VARDS. The following table sets forth the total account
value by product and annual sales for the principal product offerings in the
Investment Products segment.

INVESTMENT PRODUCTS SEGMENT INFORMATION

<TABLE>
<CAPTION>
AS OF OR FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------
1992 1993 1994 1995 1996
------- -------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
ACCOUNT VALUE
Individual annuities
General account............................. $ 614 $ 1,255 $ 1,714 $ 2,439 $ 2,783
Guaranteed separate account(1).............. 2,663 3,989 7,026 8,996 8,960
Non-guaranteed separate account(2).......... 3,578 8,670 11,594 18,466 29,907
------ ------- ------- ------- -------
Total account value...................... $ 6,855 $ 13,914 $ 20,334 $ 29,901 $ 41,650
====== ======= ======= ======= =======
Group annuities and other investment
products(3)(4)
General account............................. $ 3,165 $ 3,512 $ 3,785 $ 4,996 $ 5,211
Guaranteed separate account(1).............. 182 219 123 274 523
Non-guaranteed separate account(2).......... 1,873 2,333 2,688 3,504 4,312
------ ------- ------- ------- -------
Total account value...................... $ 5,220 $ 6,064 $ 6,596 $ 8,774 $ 10,046
====== ======= ======= ======= =======
ANNUAL SALES BY PRODUCT(5)
Individual variable annuities................. $ 1,838 $ 4,055 $ 4,097 $ 4,868 $ 9,327
Fixed MVA/Other individual annuities.......... 374 177 2,908 2,079 514
Mutual funds.................................. -- -- -- -- 21
Group annuities and other investment
products(3)................................. 442 386 389 1,391 803
</TABLE>

- ---------------

(1) Guaranteed separate accounts represent policyholder funds that are
segregated from the general account of the Company and on which the Company
contractually guarantees a minimum return, subject, in most cases, to an MVA
feature if the relevant product is surrendered prior to the end of the
applicable guarantee period. The assets are carried at fair value.
Investment income and net realized capital gains and losses are not included
in the Company's Consolidated Statements of Income. Revenues to the Company
from the guaranteed separate accounts consist of investment earnings in
excess of guaranteed amounts.

(2) Non-guaranteed separate accounts represent policyholder funds that are
segregated from the general account of the Company and as to which the
Company does not guarantee a minimum return. The assets are carried at fair
value. Investment income and net realized capital gains and losses accrue
directly to the policyholders and are therefore not

52
<PAGE> 55

included in the Company's Consolidated Statements of Income. Revenues to the
Company from the separate accounts consist of mortality and expense charges
and other investment fees.

(3) Includes GRC sales consummated after December 31, 1994.

(4) Excludes the Company's retail mutual funds.

(5) Annual sales data excludes asset transfers between different products sold
by the Company.

INDIVIDUAL ANNUITIES

The Company is the market leader in the annuity industry and sells both
variable and fixed products, with single and flexible premium payment options,
through a wide distribution network of broker-dealers and other financial
institutions. Of the Company's total sales of individual annuities in 1996, 95%
were variable annuities and 5% were fixed MVA and other individual annuities.
The Company believes that its variable annuities have been particularly well
received due to the Company's product offerings, fund performance, successful
utilization of external wholesaling organizations, relationships with
broker-dealers and banks and quality of customer service, as well as the recent
reductions in interest rates and the concurrent stock market appreciation. VARDS
ranked the Company the number one writer of individual variable annuities for
the nine months ended September 30, 1996 with a 13% market share based on sales.
At present, the Company has approximately 900,000 individual annuity contracts
in force. The Company earns fees for managing annuity assets (based on its total
account value) and maintaining policyholders' accounts.

Each policyholder has a variety of equity and fixed income fund options
within the Company's different products. Deposits of varying amounts may be made
at regular or irregular intervals. The assets underlying the Company's variable
annuities are principally managed by Wellington, Putnam and Dean Witter and the
investment staff of The Hartford. See "Certain Relationships and
Transactions -- Intercompany Arrangements -- Investment Management Agreements".
The value of these assets fluctuates in accordance with the investment
performance of the funds selected by the policyholder. To encourage persistency,
the Company's individual annuities are subject to withdrawal restrictions and
surrender charges ranging initially from 6% to 7% that dissipate on a sliding
scale, usually within seven policy years. The Company's individual annuity
products, principally consisting of variable and fixed MVA annuities, in general
are priced to earn an after-tax margin of approximately 35 to 40 basis points on
average total account value and, in each of the past five years, the Company has
achieved such earnings.

Variable annuity products have advantages for the Investment Products
segment in comparison with traditional fixed annuity products. For variable
annuities, the Company uses specified portions of the periodic premiums of a
customer to purchase units in one or more mutual funds, as directed by the
customer, who then assumes the investment performance risks and rewards. As a
result, variable annuities permit policyholders to choose more aggressive or
conservative investment strategies as they deem appropriate without affecting
the composition and quality of assets in the Company's general account.
Management believes that the investment performance of its separate accounts in
recent years has created a competitive advantage in the sale of its separate
account products which makes these products attractive to potential customers.

53
<PAGE> 56

The growth of the Company's individual variable annuity account value has
been considerable for the past several years due to strong sales, acquisitions,
market appreciation and low levels of surrenders. The following table
illustrates the growth in individual variable annuity account value from the
beginning to the end of each calendar year listed below and the principal
factors that caused the increase in account value for each such year.

INDIVIDUAL VARIABLE ANNUITY TOTAL ACCOUNT VALUE

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1992 1993 1994 1995 1996
------- ------- -------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Beginning Total Account Value........ $ 2,169 $ 4,096 $ 9,742 $ 13,078 $ 20,691
Sales and Other Deposits........... 1,876 4,444 4,186 5,024 9,647
Acquisitions....................... -- 827 -- -- --
Market Appreciation................ 209 724 (131) 3,440 3,406
Surrenders......................... (158) (349) (719) (851) (1,347)
------ ------ ------- ------- -------
Ending Total Account Value........... $ 4,096 $ 9,742 $ 13,078 $ 20,691 $ 32,397
====== ====== ======= ======= =======
</TABLE>

The Company has made a strategic decision to align itself with a select
group of high-quality independent money managers which have an interest in the
continued growth in sales of the Company's products. Two of the four largest
variable annuities (Putnam Capital Manager Variable Annuity and The Director) in
the annuity industry, for the year ended December 31, 1996, are managed in part
by Putnam and Wellington, each of which was selected by management as part of
this strategy. The Company believes these relationships, and the name
recognition of Wellington, Putnam and the Company's other independent money
managers, greatly enhance the marketability of its annuities and strength of its
product offerings. The following table illustrates the performance of certain of
the funds available in respect of Putnam Capital Manager Variable Annuity and
The Director. Historical performances of these funds are not an indication of
future performance.

54
<PAGE> 57

SEPARATE ACCOUNT PERFORMANCE

<TABLE>
<CAPTION>
ASSETS ONE-YEAR FIVE-YEAR
------------- ANNUALIZED ANNUALIZED
FUND TYPE OF FUND RETURN(1) RETURN(2)
- ------------------------------------ ----------------- (IN MILLIONS) ---------- ----------
<S> <C> <C> <C> <C>
Putnam Variable Trust(3)
Putnam VT Growth & Income......... Growth & Income $ 5,551 21.92% 15.97%
Putnam VT Voyager................. Aggressive Growth 3,161 12.94 16.03
Putnam VT New Opportunities....... Aggressive Growth 1,486 10.17 N/A
International
Putnam VT Global Growth........... Stock 1,322 17.18 12.11
Putnam VT High Yield.............. High Yield 761 12.81 13.48
All other Putnam Capital Manager
Variable Annuity non-guaranteed
separate accounts................. 3,143
------
Total Putnam Capital Manager
Variable Annuity non-
guaranteed separate
accounts..................... 15,424
------
The Director(3)
Advisers.......................... Balanced 5,126 16.59% 12.09%
Capital Appreciation.............. Growth 2,773 20.70 17.89
Stock............................. Growth 2,339 24.37 15.54
International
International Opportunities....... Stock 886 12.93 10.03
Dividend and Growth............... Growth & Income 816 22.91 N/A
All other Director non-guaranteed
separate accounts................. 1,636
------
Total Director non-guaranteed
separate accounts............ 13,576
------
All other non-guaranteed separate
account assets.................... 907
------
Total variable annuity general
account assets............... 2,490
------
Total individual variable
annuity assets............... $32,397
======
</TABLE>

- ---------------
(1) The one-year return for the Standard & Poor's 500 Index as of December 31,
1996 was 20.3%, which may or may not be applicable for each fund listed.

(2) The five-year return for the Standard & Poor's 500 Index as of December 31,
1996 was 12.2%, which may or may not be applicable for each fund listed.

(3) Information as of December 31, 1996 for the five largest funds available
within both of the Company's two most popular variable annuity contracts.

Fixed MVA annuities are fixed rate annuity contracts that guarantee that a
specific sum of money will be paid in the future, either as a lump sum or as
monthly income, to an ANNUITANT. In the event of surrender prior to the
specified period, the MVA feature adjusts the surrender value of the contracts
thereby protecting the Company from losses due to higher interest rates at the
time of surrender provided that the Company has appropriately matched its
portfolio of assets supporting its fixed MVA annuities and the related
liabilities. The amount of such payments will not fluctuate due to adverse
changes in the Company's investment return, mortality experience or expenses.
The Company's primary fixed MVA annuities are CRC(R) and The Hartford Saver(R)
and The Hartford Saver Plus(R) annuities (together, the "Saver Annuities"),
which have terms of one, three, five, six, seven, eight, nine or ten years and
an average of approximately seven years. As of December 31, 1996, interest rates
on these contracts ranged from 3.4% to 9.3% and averaged 6.53%. CRC is a

55
<PAGE> 58

yield-to-maturity product with guaranteed principal and interest payments and an
MVA feature (and generally surrender charges) triggered in the event of the
early surrender of the policy. In the event that a policyholder surrenders a
policy prior to the end of a guarantee period, the MVA feature increases or
decreases the cash surrender value of the annuity in respect of interest rate
decreases or increases, respectively. The assets related to CRC are held in a
separate account by the Company but the guaranteed rate is supported by the
general account of the Company. The Saver Annuities are yield-to-maturity
products similar to CRC that cap the MVA feature, thereby guaranteeing a minimum
rate of return minus any surrender charge. As a result of the design of its
fixed MVA annuities, the Company allocates less capital in respect of fixed MVA
annuities than would be required for other fixed annuity products. The Company
offers its fixed MVA annuities with terms designed to provide for a spread
sufficient to meet its internal return-on-equity goals. As a result, the Company
achieves a net investment spread on its fixed MVA annuities that is generally
lower than the net investment spreads now earned by its peers for fixed
annuities without MVA features. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- General".

In 1995, the Company, in conjunction with Pacific Mutual Life Insurance
Company, formed American Maturity Life Insurance Company ("AML") (of which the
Company owns 60%) in order to enter into a ten-year exclusive arrangement with
the American Association of Retired Persons ("AARP") to sell annuities to its 33
million members through direct mail and advertising. The Company believes this
relationship improves the Company's access to the growing market of senior
Americans. The Company initially offered a fixed MVA annuity to AARP members,
but there have been only limited sales of such product by AML due to the present
interest rate environment. However, in 1997, the Company intends to offer AARP
members a variable annuity product in an effort to better realize the benefits
of this relationship.

DEFERRED COMPENSATION AND RETIREMENT PLAN SERVICES

The Company believes that it is among the leading providers of retirement
products and services, including asset management and plan administration, to
municipalities under Section 457 of the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code"). At present, the Company administers
approximately 900 Section 457 plans for governmental entities, of which the
Company is the exclusive provider for 750 of such plans. These plans cover
approximately 200,000 individuals. Traditionally, Section 457 plan assets have
been held in the Company's general account but increasingly plan beneficiaries
are transferring assets into mutual funds held in separate accounts. The Company
offers a number of different funds, both fixed income and equity, to the
employees in such Section 457 plans. Generally, the Company manages the fixed
income funds offered in Section 457 plans administered by the Company.
Wellington, Fidelity Distributors Corporation, Twentieth Century Investors
Research Corporation and certain other mutual fund companies act as advisors to
the equity funds offered in Section 457 plans administered by the Company. See
"Certain Relationships and Transactions -- Intercompany
Arrangements -- Investment Management Agreements". The Section 457 savings and
retirement plan market is a mature one in which, in the belief of management,
any future growth principally will be achieved through the acquisition of
business from competing companies and through increased contributions from
existing participants and individuals eligible to be participants.

The Company also provides products and services to plans created under
Section 401(k) and 403(b) of the Internal Revenue Code. Management believes that
opportunities exist to expand its operations by building on the Company's
distribution strength in the individual annuity and Section 457 markets. The
Company also sees opportunities to market these products and services to small
employers, which management expects to be the fastest growing area of the
market.

MUTUAL FUNDS AND OTHER INVESTMENT MANAGEMENT SERVICES

In September 1996, the Company launched eight retail mutual funds. Six of
these funds are managed by Wellington and closely resemble the Company's
Director variable annuity equity funds

56
<PAGE> 59

(which are also managed by Wellington) and the other two are fixed income funds
managed by the Company. See "Certain Relationships and
Transactions -- Intercompany Arrangements -- Investment Management Agreements".
The Company has entered into agreements with over 150 financial services firms
to distribute these mutual funds. However, because the Company is a recent
entrant into the mutual fund business, there can be no assurance as to the
Company's potential success in this business. Also, the Company manages
institutional funds on both a guaranteed and non-guaranteed basis. As discussed
in "Management's Discussion and Analysis of Financial Condition and Results of
Operations", the Company has transferred all of its guaranteed rate contracts
written prior to 1995 to Closed Book GRC. While the focus of recent marketing
efforts has been on separate account investment management services where the
policyholder bears the risk, the Company still sells GRC in limited
circumstances when it believes the margins are appropriate. The GRC presently
sold by the Company are largely similar in design to the GRC in Closed Book GRC
but the liabilities related to the new GRC sold are supported by a portfolio of
assets with different investment parameters, including a reduced exposure to
CMOs. The Company has sold an additional $807 million of GRC through December
31, 1996, comprised of $699 million in 1995 and $108 million in 1996. The
Company's GRC business is expected to represent a small portion of the assets
managed by this segment in the future.

STRUCTURED SETTLEMENT CONTRACTS AND OTHER SPECIAL PURPOSE ANNUITY CONTRACTS

The Company also sells structured settlement contracts. These contracts
provide for periodic payments to an injured person or survivor for a generally
determinable number of years typically in settlement of a claim under a
liability policy in lieu of a lump sum settlement. Approximately 40% of the
Company's structured settlement contract sales relate to claims in respect of
policies sold by agents of The Hartford's property-casualty insurance operations
(who are paid an expense allowance). The remaining structured settlement
contract sales are made through specialty brokers. The Company also markets
other annuity contracts for special purposes such as the funding of terminated
defined benefit pension plans. The Company reported revenues of $43.7 million,
$69.2 million and $74.8 million from such contracts, representing 1.2%, 1.7% and
1.7% of its total revenues, in 1994, 1995 and 1996, respectively.

MARKETING AND DISTRIBUTION

The Company's individual annuity distribution network has been developed
based on management's strategy of utilizing multiple and competing distribution
channels with variable costs to achieve the broadest distribution possible in
the geographic areas in which the Company operates. The success of the Company's
marketing and distribution system depends on its product offerings, fund
performance, successful utilization of external wholesaling organizations,
relationship with broker-dealers and banks (through which the sale of the
Company's individual annuities to customers is consummated) and quality of
customer service. See "-- Information Systems; Customer Service; Research and
Development".

In general, the Company sells approximately 70% of its individual annuities
through broker-dealers and 30% of its individual annuities through banks.
Management is engaged in continuous efforts to maintain and develop strong
relationships with the broker-dealers and banks that sell the Company's
products. The following table sets forth the Company's individual annuity sales
by distribution channel for the five years ended December 31, 1996.

57
<PAGE> 60

INDIVIDUAL ANNUITY SALES BY DISTRIBUTION CHANNEL

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------
1992 1993 1994 1995 1996
------ ------ ------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Broker-dealers..................................... $1,548 $3,124 $5,433 $5,125 $6,637
Banks(1)........................................... 664 1,108 1,572 1,822 3,204
------ ------ ------ ------ ------
Total......................................... $2,212 $4,232 $7,005 $6,947 $9,841
====== ====== ====== ====== ======
</TABLE>

- ---------------
(1) Includes sales by banks which are made through their affiliated
broker-dealers.

The Company maintains a network of approximately 1,350 broker-dealers and
200 banks (including 21 of the 25 largest banks in the United States) through
the use of wholesaling organizations, principally Planco Financial Services,
Inc. ("Planco") and Essex National Securities, Inc. ("Essex"), and through
strategic alliances with Putnam and Dean Witter, to sell its individual annuity
products. These four entities generate virtually all the Company's individual
annuity sales, with Putnam and Planco accounting for a significant majority of
such sales. The agreements governing these relationships have varying renewal
and termination provisions but generally provide for ongoing continuation unless
one of the parties elects otherwise or fails to reaffirm continuation on a
periodic basis. The Company periodically negotiates renewal terms for these
relationships and there can be no assurance that such renewal terms will remain
acceptable to the Company or such parties. Should one or more of these
relationships terminate, on a short-term basis or otherwise, there could be a
material disruption in sales. See "Risk Factors -- Dependence on Certain Third-
Party Relationships".

The Putnam relationship commenced in 1988, Planco in 1986, Essex in 1990
and Dean Witter in 1994. Putnam is an investment management firm that sells the
Company's individual variable annuity products that are based on Putnam-managed
funds through broker-dealers and banks. Planco, a privately held independent
wholesaling organization, distributes certain of the Company's products to
broker-dealers and banks. Essex, a registered broker-dealer, wholesales a number
of the Company's products to banks and other financial institutions. Dean Witter
sells a proprietary variable annuity based on Dean Witter-managed funds through
its own network of broker-dealers, as well as the Company's CRC product.

The Company also uses this distribution network to sell products other than
individual annuities. Putnam and Planco sell single premium variable life
products through broker-dealers and Planco sells Section 401(k) plan services
and is the exclusive broker-dealer wholesaler for the Company's family of mutual
funds. In addition to Planco, the Investment Products segment uses internal
personnel with extensive experience in the Section 457 market, as well as access
to the Section 401(k) market, to sell its products and services in the deferred
compensation markets. Investment management contracts are sold through a group
of employees who exclusively market such contracts. Structured settlements are
sold through The Hartford's property-casualty insurance operations and certain
specialty brokers using a small group of internal personnel. Special purpose
annuity contracts are sold through different organizations and distribution
mechanisms depending on the ultimate use of the annuity contract.

INDIVIDUAL LIFE INSURANCE

GENERAL

The Individual Life Insurance segment sells a variety of individual life
insurance products. Individual Life Insurance accounted for $44 million, or 16%,
of the total segment earnings of the Company for the year ended December 31,
1996.

The Company's in force life insurance consists of a variety of variable
life, universal life, interest-sensitive whole life and TERM LIFE INSURANCE
policies. The Company's business also includes

58
<PAGE> 61

traditional whole life, which was sold in prior years, and modified guaranteed
life, which was acquired in the Fidelity Bankers and Pacific Standard
acquisitions. The Company presently has policies in force for approximately
500,000 customers. The Company focuses in this segment particularly on the
high-end estate and business planning markets and believes it is one of the
leading competitors in these markets based on its relatively high average face
value per policy. NEW ANNUALIZED WEIGHTED PREMIUMS of individual insurance life
policies reached $130 million in 1996, $7 million of which was term life, $46
million of which was universal life, traditional or interest-sensitive whole
life and $75 million of which was variable life. The Company has also recently
begun to develop its single premium variable life business, which accounted for
$20 million of the $75 million in 1996 variable life sales. In addition, through
this segment the Company sells individual disability coverage for loss of income
for professionals, corporate executives, business owners and administrative
support personnel in the event of a disabling accident or illness. The Company
has only recently entered the individual disability market and its current
business in this area is immaterial.

The following table illustrates for the five years ended December 31, 1996
new sales of individual life insurance and changes in individual life insurance
account value and aggregate life insurance in force, with internal growth and
acquisitions separately identified.

INDIVIDUAL LIFE INSURANCE SEGMENT INFORMATION

<TABLE>
<CAPTION>
AS OF OR FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------
1992 1993 1994 1995 1996
------- ------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
INDIVIDUAL LIFE SALES(1)
Variable life.............................. $ -- $ 1 $ 10 $ 27 $ 75
Universal life/Interest-sensitive whole 77 80 72 71 46
life....................................
Term life.................................. 11 13 10 7 7
Other...................................... 2 2 2 2 2
---- ---- ------ ------ ------
Total................................. $ 90 $ 96 $ 94 $ 107 $ 130
==== ==== ====== ====== ======
INDIVIDUAL LIFE ACCOUNT VALUE
Internal
Variable life.............................. $ -- $ 4 $ 20 $ 158 $ 604
Universal life/Interest-sensitive whole 708 872 1,066 1,265 1,534
life....................................
Other...................................... 108 115 119 118 110
---- ---- ------ ------ ------
Total................................. $ 816 $ 991 $ 1,205 $ 1,541 $ 2,248
==== ==== ====== ====== ======
Acquisitions(2)
Universal life/Interest-sensitive whole $ -- $ 136 $ 251 $ 197 $ 208
life....................................
Modified guaranteed life................... -- 736 836 821 781
---- ---- ------ ------ ------
Total................................. $ -- $ 872 $ 1,087 $ 1,018 $ 989
==== ==== ====== ====== ======
</TABLE>

59
<PAGE> 62

<TABLE>
<CAPTION>
AS OF OR FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------
1992 1993 1994 1995 1996
------- ------- ------- ------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
LIFE INSURANCE IN FORCE
Internal
Variable life.............................. $ -- $ 158 $ 700 $ 1,645 $ 4,946
Universal life/Interest-sensitive whole 21,208 25,243 27,751 30,416 31,012
life....................................
Term life.................................. 8,098 10,705 11,711 11,507 11,623
Other...................................... 114 125 131 144 155
---- ---- ------ ------ ------
Total................................. $29,420 $36,231 $40,293 $43,712 $47,736
==== ==== ====== ====== ======
Acquisitions(2)
Universal life/Interest-sensitive whole $ -- $ 1,583 $ 2,784 $ 2,578 $ 2,560
life....................................
Term life.................................. -- 96 428 365 369
Modified guaranteed life................... -- 1,416 1,715 1,624 1,478
---- ---- ------ ------ ------
Total................................. $ -- $ 3,095 $ 4,927 $ 4,567 $ 4,407
==== ==== ====== ====== ======
</TABLE>

- ---------------
(1) Individual life sales are recorded as new annualized weighted premiums,
except that, prior to 1994, some of the related data is recorded on a paid
weighted premium basis, which only records premium collected, and thus is
not directly comparable.

(2) This data reflects the individual life portion of the Fidelity Bankers,
Pacific Standard and Investors Equity block of business assumptions.

PRODUCTS

VARIABLE LIFE. Variable life insurance provides a return linked to an
underlying portfolio. The Company allows policyholders to determine their
desired asset mix among a variety of mutual funds. As the total return on the
investment portfolio increases or decreases, as the case may be, the death
benefit or surrender value of the variable life policy may increase or decrease.
The Company's single premium variable life product provides a death benefit to
the policy beneficiary based on a single premium deposit. Variable life policies
represented 58% of new annualized weighted premiums for individual life
insurance products for the year ended December 31, 1996. The Company's variable
life portfolio also includes products with a second-to-die feature. These
products are distinguished from other variable life products in that two lives
are insured rather than one, and the policy proceeds are paid upon the second
death of the two insureds. Second-to-die policies are used in individual estate
planning, often to fund estate taxes for a married couple.

UNIVERSAL AND INTEREST-SENSITIVE WHOLE LIFE. Universal life and
interest-sensitive whole life insurance coverages provide life insurance with
adjustable rates of return based on current interest rates. The Company offers
both flexible and fixed premium policies. These policies provide policyholders
flexibility in the available coverage, timing and amount of premium payments and
the amount of the death benefit, provided there are sufficient policy funds to
cover all policy charges for the coming period. Universal life and
interest-sensitive whole life policies represented 35% of new annualized
weighted premiums for individual life products for the year ended December 31,
1996. The Company sells universal life policies with a second-to-die feature
similar to the variable life product described above.

OTHER. The Company also offers individual term life and individual
disability insurance, although the Company has a limited presence in these
markets. However, management believes there may be opportunities to successfully
sell term insurance through banks and broker-dealers and is currently developing
term insurance products to sell through these distribution channels. Also, the
Company's individual disability product is offered in a guaranteed renewable
contract, designed to minimize the Company's risk by allowing for future premium
increases in the event of greater than expected morbidity.

60
<PAGE> 63

MARKETING AND DISTRIBUTION

The Individual Life Insurance distribution system is segregated into two
product types: those products designed for high-end estate and business planning
and those products designed for protection against lost income from death to
cover basic needs such as mortgage payments (referred to as "middle income"
sales). The high-end estate and business planning organization is managed
through a sales office system of qualified life professionals with specialized
training in sophisticated life insurance sales. These employees have access to
approximately 137,000 licensed life insurance agents. High-end sales also occur
in certain regions of the United States through ELAR Partners LLC ("ELAR"), a
group of independent life marketing organizations. The middle income sales force
is led by a group of internal employees who use lead generation techniques to
sell insurance through a collection of independent sales organizations. The
success of the Company's marketing efforts in its Individual Life Insurance
segment primarily depends on the breadth and quality of its life insurance
products, the competitiveness of its pricing, its relationships with its
third-party distributors and the quality of its customer service. See
"-- Information Systems; Customer Service; Research and Development".
Approximately 74% of the Company's new sales of individual life policies
(measured by new annualized weighted premiums) in 1996 were consummated through
the Company's internal estate and business planning sales force and ELAR in
conjunction with life insurance professionals, The Hartford's property-casualty
agents and broker-dealers, 11% were sold to the middle income market through
licensed life insurance agents and 15% were single premium variable life
insurance contracts sold through the bank and broker-dealer distribution network
of the Investment Products segment. Approximately $12 million, or 9%, of the
Company's 1996 sales in the Individual Life Insurance segment were consummated
through The Hartford's property-casualty agents.

EMPLOYEE BENEFITS

GENERAL

The Employee Benefits segment consists of two areas of operation: Group
Insurance and Specialty Insurance Operations. The Company markets group
insurance products, including group life, group short- and long-term managed
disability, stop loss and supplementary medical coverage to employers and
employer-sponsored plans and accidental death and dismemberment, travel and
special risk coverage to employers and associations. The Company also offers
disability underwriting, administration, claims processing services and
reinsurance to other insurers and self-funded employer plans. The Specialty
Insurance Operations unit consists of the Company's COLI business, life/health
reinsurance operations and international operations. Employee Benefits accounted
for $78 million, or 29%, of the total segment earnings of the Company for the
year ended December 31, 1996. The following table sets forth for the five years
ended December 31, 1996 net earned premiums for group insurance products,
reserves for group insurance products and the COLI account value held in the
Company's general account and separate accounts.

61
<PAGE> 64

EMPLOYEE BENEFITS SEGMENT INFORMATION

<TABLE>
<CAPTION>
AS OF OR FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------
1992 1993 1994 1995 1996
------ ------ ------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C>
GROUP INSURANCE PREMIUMS
Group Disability...................... $ 252 $ 285 $ 352 $ 419 $ 551
Group Life............................ 274 291 308 361 432
Other................................. 315 280 314 323 346
------ ------ ------ ------ ------
Total............................ $ 841 $ 856 $ 974 $1,103 $1,329
====== ====== ====== ====== ======
GROUP INSURANCE RESERVES
Group Disability...................... $ 549 $ 691 $ 857 $1,030 $1,268
Group Life............................ 220 270 294 325 389
Other................................. 287 263 261 278 277
------ ------ ------ ------ ------
Total............................ $1,056 $1,224 $1,412 $1,633 $1,934
====== ====== ====== ====== ======
COLI ACCOUNT VALUE
General Account....................... $ 864 $1,549 $2,308 $3,566 $4,028
Separate Account...................... -- -- 897 3,484 4,441
------ ------ ------ ------ ------
Total............................ $ 864 $1,549 $3,205 $7,050 $8,469
====== ====== ====== ====== ======
</TABLE>

GROUP INSURANCE

The Company provides life, disability and other group insurance coverage to
large and small employers across the United States; the Company estimates that
this aggregate coverage is maintained for the benefit of over 15 million
individuals. The Company had approximately $1.3 billion of premiums for group
insurance in 1996, of which $432 million is attributable to group life coverage
and $551 million is attributable to group disability coverage (and of which $23
million of such group life premiums and $78 million of disability premiums
related to the acquisition of a block of business from North American Life
Assurance Company of Toronto ("NAL")). The Company sells its product line to
employers through brokers and consultants and to multiple employer groups
through its relationships with trade associations. Management believes that the
comparative quality of its underwriting and claims management provides a
competitive advantage in the group disability insurance business. In addition,
all group life insurance policies sold by the Company are term insurance,
generally with one- to two-year rate guarantees. This allows the Company to make
adjustments in rates or terms of its policies in order to minimize the adverse
effect of various market trends.

The Company is one of the largest participants in the "large case" market
in the group disability insurance business. The large case market, as defined by
the Company, generally consists of group disability policies covering over 1,000
employees in a particular company. As of December 31, 1996, the Company had
approximately 530 group disability contracts in force in the large case market,
covering an estimated 3 million employees. Management believes that further
opportunities exist in the "small" and "medium case" group markets due to the
Company's name recognition and reputation, managed disability capabilities and
claims administration. The Company intends to continue to expand its operations
in both the small and medium case markets. As of December 31, 1996, the Company
had sold approximately 22,500 and 585 group disability contracts in the small
and medium case markets, respectively, covering an estimated 600,000 and 335,000
employees, respectively. The Company's efforts in the group disability area
focus on early intervention, return-to-work programs, reduction of long-term
disability claims and successful rehabilitation. The Company also works with
disability claimants to improve the receipt rate of Social Security offsets
(i.e., reducing payment of benefits by the amount of Social Security payments
received).

62
<PAGE> 65

Managed disability coverage is the flagship product for the Company's group
disability insurance operations. The Company emphasizes early claimant
intervention in this coverage in an effort to facilitate a disabled claimant's
return to work and to contain costs. The Company's newest generation of managed
disability is the Ability Assurance(R) program in which the Company plans to
offer an expanded set of services to disabled employees of the Company's group
disability customers. Management believes its individualized approach to claim
servicing, as well as its incentive to control costs, leads to an overall
reduction in the cost of group disability coverage for employers and thus
provides an important competitive advantage.

GROUP SHORT-TERM DISABILITY. Short-term disability benefit plans provide a
weekly benefit amount (typically 60% to 70% of the employees earned income up to
a specified maximum benefit) to insured employees when they are unable to work
due to an accident or an illness. Most of these benefit plans begin providing
benefits immediately for accidents, or typically following a one-week waiting
period for sickness, and continue providing benefits for a limited term,
generally 52 weeks or less. Short-term disability, excluding the NAL block of
business, accounted for $104 million, or 8%, of net earned premiums from group
insurance products for the year ended December 31, 1996.

GROUP LONG-TERM DISABILITY. Long-term disability provides a monthly
benefit for those periods of time not covered by a short-term disability
benefits plan when insured employees are unable to work due to disability.
Employees may receive total or partial disability benefits. Most of these
policies begin providing benefits following 90- or 180-day waiting periods and
continue providing benefits until the employee reaches age 65-70. Long-term
disability benefits are paid monthly and are limited to a portion, generally
50-70%, of the employee's earned income up to a specified maximum benefit.
Premiums for long-term disability coverage are based upon expected claim
incidence rates and duration of claims of the insured group, as well as
assumptions concerning operating expenses and future interest rates. Long-term
disability, excluding the NAL block of business, accounted for $369 million, or
28%, of net earned premiums from group insurance products for the year ended
December 31, 1996.

GROUP TERM LIFE. Group term life provides term coverage to employees and
their dependents for a specified period and has no accumulation of cash values.
The Company works to distinguish itself from its competitors by offering
innovative options for its basic group life coverage, including portability of
coverage and a living benefit option, whereby terminally ill policyholders can
receive death benefits prior to their death. Premiums for group life coverage
are based upon the expected mortality of the insured group, as well as operating
expense and interest rate assumptions. Group term life, excluding the NAL block
of business, accounted for $409 million, or 31%, of net earned premiums from
group insurance products for the year ended December 31, 1996.

OTHER. The Company also provides term life, accidental death and
dismemberment, travel accident, hospital indemnity, medicare supplement and
other coverages primarily to individual members of various associations as well
as employee groups. The Company provides excess of loss medical coverage (known
as "stop loss" insurance) to employers who self-fund their medical plans and pay
claims using the services of a third-party administrator.

SPECIALTY INSURANCE OPERATIONS

The Specialty Insurance Operations unit consists of a collection of niche
businesses, including International Corporate Marketing Group ("ICMG"), which
contains the Company's COLI operations, ITT Hartford International Life
Reassurance Corporation ("HLRe") and the Company's international operations.

The Company is a leader in the COLI market and provides coverage for
approximately 400,000 individuals. COLI is life insurance purchased by a company
on the life of its employees, with the company named as the beneficiary under
the policy. Through the purchase of COLI, corporations have been able to use the
favorable tax treatment of life insurance to fund a variety of employee benefit
liabilities such as post-retirement health care and non-qualified benefit
programs. In 1992,

63
<PAGE> 66

the Company acquired the $5.6 billion COLI business (which at the time was the
largest block of leveraged COLI in force) of Mutual Benefit, which Mutual
Benefit had assumed from Mutual Benefit Life Insurance Company in Rehabilitation
("MBL"), an insurance company then in insolvency proceedings. Under two
coinsurance agreements between the Company and Mutual Benefit, the terms of
which were approved by a New Jersey state court overseeing the insolvency of
MBL. Mutual Benefit is required to secure its obligations to the Company by
depositing assets equal to 100% of the coinsured liabilities in certain trust
accounts held for the benefit of the Company. These trust accounts were
established in 1992 to secure the reinsurance recoverable asset of $3.5 billion
under the coinsurance agreements. The assets held in the two trust accounts
comprise cash, Mutual Benefit's interest in policy loans on the coinsured
business, certain investment-grade bonds and other securities that the trustee
is permitted to hold under the terms of the trust agreements. As a result of the
security provided by these court-approved trusts, management believes that the
Company is not affected by the outcome of MBL's insolvency proceedings. The
Company retained the Mutual Benefit dedicated COLI staff and formed
International Corporate Marketing Group, Inc. ("ICMG"), 60% of which is owned by
the Company and 40% of which is owned by the estate of Mutual Benefit. The
Company has the right to acquire the remaining 40% of ICMG in November 1997 by
paying the estate of Mutual Benefit 40% of ICMG's earnings (which are
substantially the same as cash flow) over the following five years.

Until the passage of the HIPA Act of 1996, the Company sold two principal
types of COLI, leveraged and variable. The HIPA Act of 1996 phases out the
deductibility of interest on policy loans under COLI by 1998, thus eliminating
all future sales of leveraged COLI. Leveraged COLI is a fixed premium life
insurance policy owned by a company or a trust sponsored by a company. The
proceeds from such a policy help to fund general corporate liabilities such as
deferred compensation plans or post-retirement obligations. This general account
policy provides cash flow flexibility and optimizes certain tax advantages for a
company or trust by allowing it to borrow the policy cash value and receive
certain interest deductions on such policy loans. The Company's leveraged COLI
product has been an important contributor to its profitability in recent years
and will continue to contribute to the profitability of the Company although
such contribution will be reduced in the future due to the effects of this
legislation. VARIABLE COLI continues to be a product used by employers to fund
non-qualified benefits or offset other post-employment benefits liabilities, but
does not provide the same cash flow or tax advantages generated by leveraged
COLI. See "Risk Factors -- Adverse Effect of Legislation and Regulatory
Actions".

In 1993, the Company also purchased HLRe (formerly known as American
Skandia Life Reinsurance Corporation), a specialty insurance subsidiary that
focuses on life/health reinsurance markets, especially the COLI market, from
American Skandia Life Assurance Corporation. The leveraged COLI business of HLRe
has been adversely affected by the HIPA Act of 1996 in a manner similar to the
Company's ICMG COLI business.

The Company recently initiated an international expansion strategy to
diversify its risk exposure and expand its business opportunities in
international markets. In June 1994, the Company consummated its initial
international investment outside North America by forming Hartford Sudamericana
Holding, S.A. ("HSH"), a joint venture with a group of Argentine insurance
executives, of which the Company owns 60%. Through this joint venture, the
Company operates several subsidiaries devoted to life insurance, retirement
annuities, life insurance brokerage and pensions. In 1995, the Company expanded
its activities in Argentina by initiating reinsurance coverage for Argentina's
developing life insurance market. In 1996, HSH and Banco de Galicia y Buenos
Aires, S.A. formed a joint venture to operate an insurance business in a number
of countries throughout South America. The Company also recently has formed a
Brazilian joint venture, Icatu Hartford, with Group Icatu, a broad-based
financial services company in Brazil, to sell life insurance, savings products,
specialty health insurance and pension plans. Management views each of these
international joint ventures as a long-term project. The Company has invested
less than $100 million

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<PAGE> 67

of start-up capital in all its existing international operations. The Company
plans to pursue other international opportunities in Latin America from time to
time as it deems appropriate.

MARKETING AND DISTRIBUTION

The Company uses an experienced group of Company employees to distribute
its group insurance products and services through a variety of distribution
outlets. These channels include insurance agents, brokers, associations and
third-party administrators. The Company sells its COLI products through Company
employees working with brokers and consultants specializing in the COLI market.
The success of the Company's distribution efforts in the group insurance and
specialty insurance markets primarily depends on the variety and quality of its
product offerings, the Company's relationships with its third-party distributors
and the quality of its customer service, particularly in the case of its
disability products. See "-- Information Systems; Customer Service; Research and
Development". In addition, the Company benefits from its historical and ongoing
public relations and advertising campaign. In particular, the Company's recent
Break Away(SM) campaign, designed to showcase the achievements of disabled
athletes, has received favorable reviews in the market.

INFORMATION SYSTEMS; CUSTOMER SERVICE; RESEARCH AND DEVELOPMENT

The Company has significantly enhanced its systems capabilities in recent
years. Over the last three years, the Company has spent over $20 million for
systems technology and is projected to spend approximately $30 million over the
next two years. The Company currently maintains a decentralized network of
systems designed to meet the specific business needs of each of its units and is
in the process of fully integrating this system. Management believes that such
technology will improve workflow and document management, develop processing
economies of scale and facilitate communications with customers. The Company
also is on-line with many of its bank and broker-dealer distributors to
facilitate the marketing, sales and servicing process.

The Company focuses on the maintenance and expansion of its distribution
system and customer base through quality customer service and efficient policy
administration. In that regard, management continuously focuses attention on
productivity improvements and process reassessments. As part of this process,
the Company creates quality service standards based upon industry studies which
are used to evaluate the Company's overall performance. Management believes its
service performance compares favorably with other life insurance companies. The
Company received one of the five Quality Tested Service Seals awarded in 1996 in
the variable annuity industry by DALBAR, which recognized the Company's
achievement of the highest tier of service in that industry. The Company's
implementation of a new state-of-the-art administration and customer service
system has further improved its ability to process new business applications,
apply policyholder funds, pay commissions, respond to customer inquiries and
provide valuable management information.

The Company's product development process is largely market and customer
driven, with each of the Company's units attempting to respond to and anticipate
the needs of its customers. Employees from sales, actuarial, underwriting,
accounting and administration are included in this process at an early stage to
ensure that pricing and underwriting are coordinated and that administrative
support is efficient and developed on a cost-effective basis. After the
initiation of a product, the Company monitors sales and pricing assumptions to
identify any adjustments necessary to maintain sufficient profitability. Also,
the Company maintains close contact with the distributors to ensure that its new
and established products and/or services satisfy the targeted customer needs.

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<PAGE> 68

UNDERWRITING AND PRICING

The Company follows detailed and uniform underwriting practices and
procedures for its Individual Life Insurance segment designed to properly assess
and quantify risks before issuing coverage to qualified applicants. The Company
has underwriters who evaluate policy applications on the basis of the
information provided by the applicant and others. If the policy amount exceeds
certain prescribed dollar limits, a prospective policyholder must submit to a
variety of underwriting tests, such as medical examinations, electrocardiograms,
blood tests, urine tests, treadmill tests, chest X-rays and inspection reports.
Underwriting requirement limits are scrutinized against industry standards to
prevent anti-selection and to stay abreast of industry trends. Acquired Immune
Deficiency Syndrome ("AIDS") is expected to continue to affect mortality
adversely for the life insurance industry. Where permitted by law, the Company
has responded by considering AIDS information in underwriting and pricing
decisions. At the present time, comprehensive blood test screening, including
tests for the AIDS antibody, is performed on approximately 90% of all business
written.

The Company employs prudent underwriting standards to protect the quality
of its group life and group disability business. The Company has developed
standard rating systems for each product line based on its past disability
experience and relevant industry experience. The Company updates its manual
rates on an ongoing basis and periodically reviews the quality of its group life
and group disability underwriting. Company underwriters evaluate the risk
characteristics of each prospective insured group. The premium rate quoted to a
prospective insured group is based on a standard rate and, for larger groups,
the group's past claims experience rate. Of the Company's group life and group
disability business, over 80% is renewal business from which the Company seeks
annual rate increases where appropriate. The Company maintains a persistency
rate of approximately 85% to 90% with respect to its group life and group
disability business. With regard to its stop loss business, the Company's
underwriters look at the particular group as a whole and determine whether to
write the whole case rather than agreeing to write the relevant group coverage
while excluding certain high risk individuals from such coverage.

The Company is not obligated to accept any policy or group of policies from
any distributor. Policies are underwritten on their merits and are not issued
without having been examined and underwritten individually. In addition, the
Company's policies generally afford it the flexibility to adjust dividend scales
and to increase rates charged to its policyholders (subject to specified maximum
charges) in order to provide for increased mortality and/or morbidity
experience. Management believes that its underwriting standards produce
mortality and morbidity results consistent with the assumptions used in product
pricing, while also allowing competitive risk selection.

Management believes that a competitive strength of the Company is its
ability to coordinate underwriting and product pricing. Product pricing on group
and individual insurance products is based on the expected pay-out of benefits
calculated through the use of assumptions for mortality, morbidity, expenses,
persistency and investment returns, as well as certain macroeconomic factors
such as inflation. Investment-oriented products are priced based on various
factors, including investment return, expenses and persistency, depending on the
specific product features. Product specifications are designed to prevent
greater than expected mortality and the Company periodically monitors mortality
and morbidity assumptions. Ongoing internal underwriting audits, conducted at
multiple levels, also monitor consistency of underwriting requirements and
philosophy. The Company's underwriters have extensive experience in the field
and the Company is committed to periodic retraining in order to keep its
underwriters familiar with the latest industry trends.

RESERVES

In accordance with applicable insurance regulations, the Company
establishes and carries as liabilities actuarially determined reserves which are
calculated to meet the Company's future

66
<PAGE> 69

obligations. The reserves are based on actuarially recognized methods using
prescribed morbidity and mortality tables in general use in the United States
modified to reflect the Company's actual experience when appropriate. These
reserves are computed at amounts that, with additions from premiums to be
received and with interest on such reserves compounded annually at certain
assumed rates, are expected to be sufficient to meet the Company's policy
obligations at their maturities or in the event of an insured's death. Reserves
include unearned premiums, premium deposits, claims reported but not yet paid,
claims incurred but not reported and claims in the process of settlement. The
Company's reserves for assumed reinsurance are computed on bases essentially
comparable to direct insurance reserves.

For the Company's individual life policies, universal life and
interest-sensitive whole life reserves are set according to premiums collected,
plus interest credited, less charges. Other fixed death benefit reserves are
based on assumed investment yield, persistency, mortality and morbidity as per
commonly used actuarial tables, expenses and margins for adverse deviations. For
the Company's group disability policies, the level of reserves is based on a
variety of factors including particular diagnoses, termination rates and benefit
payments.

The stability of the Company's annuity and other interest-sensitive life
insurance reserves is enhanced by policy restrictions on withdrawal of funds.
Withdrawals in excess of allowable penalty-free amounts are assessed a surrender
charge during a penalty period of approximately seven years. Such surrender
charge is initially a percentage of the accumulation value, which varies by
product, and generally decreases gradually during the penalty period. Surrender
charges are set at levels to protect the Company from loss on early terminations
and to reduce the likelihood of policyholders terminating their policies during
periods of increasing interest rates, thereby lengthening the effective duration
of policy liabilities and improving the Company's ability to maintain
profitability on such policies. In addition, the Company's fixed MVA annuities
discourage surrender by policyholders. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources -- Operating Subsidiaries". The Company's reserves comply in all
material respects with state insurance department statutory accounting
practices; however, in the Consolidated Financial Statements, life insurance
reserves are determined in accordance with GAAP, which may vary from statutory
accounting practices.

REINSURANCE

The Company follows the standard industry practice of reinsuring ("CEDING")
portions of its insurance risks with other insurance companies under traditional
indemnity reinsurance agreements. This practice permits the Company to write
policies in amounts larger than the risk it is willing to retain. Each of the
Company's lines of business enters into reinsurance arrangements with different
insurance carriers as it deems appropriate. In general, the Company has entered
into yearly renewable term insurance contracts. The Company's method for
allocating reinsurance obligations among such reinsurers varies by product line.
As of December 31, 1996, 1995 and 1994, the amount of premiums ceded to
third-party reinsurers totaled $413 million, $313 million and $184 million,
respectively. The Company's principal unaffiliated reinsurers of individual life
insurance policies at December 31, 1996 (and their corresponding A.M. Best
rating) were: American Classic Reinsurance Company ("A"), Lincoln National
Insurance Company ("A"), Manufacturers Hanover Life Insurance Company ("A") and
Minnesota Mutual Life Insurance Company ("A"). As of December 31, 1996, the life
insurance in force ceded to these reinsurers, constituted approximately 25% of
the total ceded life insurance in force, other than amounts ceded in respect of
COLI. The Company also cedes approximately $10 billion of group life insurance
in force to companies affiliated with The Hartford and assumes approximately
$122 million of premiums relating to stop loss and short-term disability sold by
the Company but written by a number of The Hartford's property-casualty
subsidiaries.

Reinsurance does not discharge the Company's obligations to pay policy
claims on the reinsured business. The Company remains responsible for policy
claims to the extent the reinsurer

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<PAGE> 70

fails to pay such claims. The Company therefore seeks to enter into reinsurance
treaties with highly rated reinsurers that have passed an internal due diligence
review. At December 31, 1996, excluding any reinsurance with its affiliates, of
the $347 billion of gross insurance in force, the Company had ceded to
reinsurers approximately $89 billion of insurance in force.

The Company uses reinsurance to manage the net exposure in its individual
life and group life lines of business. The risks that are reinsured vary by
product line. The Company does not currently reinsure any of the risks
associated with group short-term disability. As of January 1, 1997, the Company
increased the level at which it retains the risk on any one individual life
insurance policy to $2.5 million from $1.25 million. The Company reinsures
mortality risk in excess of $1,000,000 on any single life covered by a group
life insurance policy and retains no more than $8,000 of monthly benefits per
insured life on group long-term disability policies. In addition, the Company
reinsures its accidental death and dismemberment and group travel businesses for
coverage exposure in excess of $250,000 per life and maintains catastrophic
coverage of up to $200 million for exposure in excess of $500,000 where more
than two policyholders are involved in a catastrophe. The Company's COLI
business, which was acquired from Mutual Benefit, is 84% reinsured, primarily
through Mutual Benefit and its successor, MBL Life Assurance Corporation, and
assets have been placed in a security trust to support the reinsurance
recoverable asset which was $3.5 billion in 1992 and $3.8 billion as of December
31, 1996.

INVESTMENT OPERATIONS

GENERAL

The Company's investment operations are managed by its investment strategy
group which reports directly to senior management of the Company and consists of
a risk management unit and portfolio management unit. The risk management unit
is responsible for monitoring and managing the Company's asset/liability profile
and establishing investment objectives and guidelines and the portfolio
management unit is responsible for determining, within specified risk tolerances
and investment guidelines, the general asset allocation, duration and CONVEXITY
and other characteristics of the Company's general account and guaranteed
separate account investment portfolios. The investment staff of The Hartford
executes the strategic investment decisions of the portfolio management unit,
including the identification and purchase of securities that fulfill the
objectives of the investment strategy group.

The primary investment objective of the Company for its general account and
guaranteed separate accounts is to maximize after-tax returns consistent with
acceptable risk parameters (including the management of the interest rate
sensitivity of invested assets to that of policyholder obligations). The Company
is exposed to two primary sources of investment risk: credit risk, relating to
the uncertainty associated with the continued ability of a given obligor to make
timely payments of principal and interest, and interest rate risk, relating to
the market price and/or cash flow variability associated with changes in market
YIELD CURVES. The Company manages credit risk through industry and issuer
diversification and asset allocation. The Company manages interest rate risk as
part of its asset/liability management strategies, including the use of certain
hedging techniques (which may include the use of certain financial derivatives),
product design, such as the use of MVA features and surrender charges, and
proactive monitoring and management of certain non-guaranteed elements of the
Company's products (such as the resetting of credited interest rates for
policies that permit such adjustments). For a further discussion of hedging
strategies, including derivatives utilization, see "-- Asset/Liability
Management Strategies", as well as the Notes to the Consolidated Financial
Statements.

The Company's separate accounts reflect two categories of risk assumption:
non-guaranteed separate accounts totaling $39.4 billion as of December 31, 1996,
wherein the policyholder assumes substantially all of the risk and reward, and
guaranteed separate accounts totaling $10.4 billion as of December 31, 1996,
wherein the Company contractually guarantees either a minimum return or

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<PAGE> 71

account value to the policyholder. The investment strategy followed varies by
fund choice, as outlined in the applicable fund prospectus or separate account
plan of operations. Non-guaranteed products include variable annuities and
variable life contracts. The funds underlying such contracts are managed by the
investment staff of The Hartford and a variety of independent money managers,
including Wellington, Putnam and Dean Witter. Guaranteed separate account
products primarily consist of modified guaranteed individual annuities and
MODIFIED GUARANTEED LIFE INSURANCE, and generally include MVA features to
mitigate the disintermediation risk upon surrenders. Virtually all the assets in
the guaranteed separate accounts are fixed maturity securities and, as of
December 31, 1996, $10.2 billion, or approximately 99%, of the fixed maturity
securities portfolio within the guaranteed separate accounts were investment
grade or better. See "-- Asset/Liability Management Strategies".

The Company's general account consists of a diversified portfolio of
investments. Although all the assets of the general account support all the
Company's liabilities, the Company's investment strategy group has developed
separate investment portfolios for specific classes of product liabilities
within the general account. The investment strategy group works closely with the
business lines to develop investment guidelines, including duration targets,
asset allocation and convexity constraints, asset/liability mismatch tolerances
and return objectives, for each product line in order to achieve each such
product line's individual risk and return objectives. For example, fixed
maturities are managed according to duration and return guidelines based
generally on the duration, cash payment and other characteristics of the
underlying liabilities. Fixed maturities in the Company's general account are
identified as available for sale and are carried at fair value with the net
unrealized investment gains and losses reflected as a component of stockholder's
equity. Equity securities are stated at fair value.

Interest rates fell more than 300 basis points from June 1991 to September
1993. This dramatic decline in rates, combined with an unprecedented push by
financial intermediaries to refinance mortgages, resulted in prepayment levels
substantially above the expectations and historical experience for the entire
investment community, including the Company. As a result, the duration of the
Company's CMO holdings shortened dramatically. Hedging performed to mitigate
prepayment acceleration was insufficient to cover actual prepayment experience.
As interest rates rose in 1994, prepayment activity declined as fast as it had
accelerated during the falling rate scenario, causing the duration of the
Company's CMO holdings to extend relative to expectations. Thus, the effect of
actions taken by the Company to increase asset duration (to offset fast
prepayments) was intensified by extension of the Company's mortgage collateral.
This produced a portfolio with assets having a longer duration than the related
liabilities. In response to the corresponding losses suffered by the Company,
the Company instituted an improved risk management process during 1995 and 1996,
including the division of the Company's investment strategy group into a risk
management unit and portfolio management unit. The Company also reduced its
exposure to MBSs and CMOs and recently enhanced its computerized analytical
systems to allow for more effective management of its portfolio positions and
potential exposures to identify potential asset/liability mismatches earlier. As
a result, all major portfolios, including Closed Book GRC, are now reviewed on a
monthly basis to determine if the net economic sensitivity of the assets and the
related liabilities to interest changes is within a pre-determined range.
Specifically, the assets and liabilities are stressed against parallel interest
rate shifts of up to plus or minus 300 basis points and against non-parallel
interest rate shifts. The results of such analyses demonstrate a very close
matching of the Company's assets and liabilities, consistent with written
portfolio guidelines maintained by the Company. By testing monthly, the Company
believes that it can detect asset/liability mismatches earlier and take action
to reduce the potential impact of interest rate fluctuations on the portfolio.

In addition, the Company annually performs asset adequacy analysis for all
of its life insurance subsidiaries. This includes cash flow testing for all
material produce lines. These analyses are accomplished by projecting, under a
number of possible future interest rate scenarios, the anticipated cash flows
from such business and the assets required to support such business. The

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<PAGE> 72

first seven of these scenarios are required by state insurance laws. Projections
are also made using several additional scenarios which involve more extreme
fluctuations in future interest rates. The results of these tests demonstrate
that the projected cash flows for the assets are sufficient to provide the cash
flows needed for the liabilities under the scenarios tested.

DESCRIPTION OF INVESTMENT ASSETS IN GENERAL ACCOUNT

The following table sets forth by category the invested assets in the
Company's general account as of December 31, 1996 by category.

INVESTED ASSETS BY CATEGORY

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
--------------------------------
PERCENT OF
TOTAL
INVESTED AND
SEPARATE
ACCOUNT ASSETS
AMOUNT --------------
-------------
(IN MILLIONS)
<S> <C> <C>
Fixed maturity securities, available-for-sale, at fair value.... $15,711 22.6%
Equity securities, available for sale, at fair value............ 119 0.2
Policy loans, at outstanding balance(1)......................... 3,839 5.5
Other investments at cost(2).................................... 161 0.2
------- -----
Total general account invested assets...................... 19,830 28.5
Total separate account assets.............................. 49,770 71.5
------- -----
Total invested assets.................................... $69,600 100.0%
======= =====
</TABLE>

- ---------------

(1) Policy loans, which have a current weighted average interest rate of 11.9%,
are secured by the cash value of the related life insurance policy. These
loans do not mature in the conventional sense but expire in conjunction with
the related policy liabilities.

(2) The Company has approximately $2 million in commercial mortgages in its
general account.

The following table sets forth by category the fixed maturity securities,
including CMOs, MBSs and other asset-backed securities ("ABSs"), held in the
Company's general account as of December 31, 1996.

FIXED MATURITY SECURITIES BY CATEGORY

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
-----------------------------------------
WEIGHTED
AVERAGE
AMOUNT YIELD(1) PERCENTAGE
------------- -------- ----------
(IN MILLIONS)
<S> <C> <C> <C>
Fixed maturity securities:
Corporate............................................. $ 7,587 6.80% 48.3%
CMOs.................................................. 2,150 6.58 13.7
Gov't/gov't agencies -- U.S. (including municipals)... 621 5.85 3.9
MBS-Agency............................................ 402 7.36 2.6
ABSs.................................................. 2,693 6.31 17.1
Gov't/gov't agencies -- Foreign....................... 395 7.24 2.5
Commercial mortgage-backed securities................. 1,098 7.68 7.0
Short-terms........................................... 765 5.97 4.9
------- ---- -----
Total............................................ $15,711 6.69% 100.0%
======= ==== =====
</TABLE>

- ---------------

(1) For the year ended December 31, 1996, the calculated yield on average fixed
maturities excluding derivatives was 6.69%, while the calculated yield
including derivative hedge income was 6.48%. The calculated yield represents
earnings on fixed maturities, excluding realized capital gains and losses,
and excluding or including derivative hedge income, divided by average fixed
maturities.

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<PAGE> 73

As of December 31, 1996, the Company had approximately 16.3% of its fixed
maturity securities portfolio invested in MBSs and CMOs. MBSs and CMOs are
subject to significant prepayment and extension risk, since underlying mortgages
may be repaid more or less rapidly than scheduled. See "Risk Factors -- Risks
Associated with Certain Economic and Market Factors". As a result, holders of
MBSs and CMOs may receive prepayments which cannot be reinvested at yields
comparable to the rates on such securities or may be forced to liquidate
securities at a loss to meet liquidity obligations. The Company measures and
manages prepayment and extension risk through option-adjusted modeling of the
market price sensitivity (duration and convexity) of all of its assets,
including MBSs and CMOs. For most MBSs and CMOs, prepayment risk causes
"negative convexity". Convexity can be increased for a portfolio by adding
securities or derivatives that have significant positive convexity. In
particular, the Company uses interest rate caps and floors to increase portfolio
convexity and reduce the market price sensitivity of its MBSs and CMOs. At
December 31, 1996, the net weighted average coupon and weighted average life for
the Company's MBS portfolio was 7.74% and 5.2 years, respectively. At December
31, 1996, the net weighted average coupon of the mortgage collateral supporting
the Company's CMO portfolio was 6.75%, and the weighted average life of the CMO
portfolio was 4.6 years. The Company has reduced its exposure to CMOs and MBSs,
from 24% of the total fixed maturity securities as of December 31, 1995 to 16.3%
as of December 31, 1996.

The following table sets forth, by category, the CMOs in the Company's
general account as of December 31, 1996.

COLLATERALIZED MORTGAGE OBLIGATIONS(1)

<TABLE>
<CAPTION>
AS OF
DECEMBER 31, 1996
--------------------------
PERCENTAGE
CARRYING OF
VALUE INVESTED
(AT MARKET) CMO ASSETS
----------- ----------
(IN
MILLIONS)
<S> <C> <C>
PAC........................................................ $ 786 36.6%
INVERSE FLOATERS........................................... 323 15.0
PRINCIPAL-ONLY SECURITIES.................................. 167 7.8
INTEREST-ONLY SECURITIES................................... 126 5.9
ACCRUAL SECURITIES......................................... 321 14.9
SEQUENTIAL-PAY SECURITIES.................................. 89 4.1
FLOATERS................................................... 252 11.7
Other...................................................... 86 4.0
------ -----
Total................................................. $ 2,150 100.0%
====== =====
</TABLE>

- ---------------

(1) As of December 31, 1996, approximately 56% of CMO holdings had implicit or
explicit protection against prepayment.

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<PAGE> 74

As of December 31, 1996, $15,662 million or approximately 99.7% of the
fixed maturity securities portfolio was investment grade securities or better,
and only $49 million or .3% of the fixed maturity securities portfolio was
invested in below investment grade securities (less than "BBB"). The following
table sets forth the ratings of the fixed maturity securities in the Company's
general account as of December 31, 1996.

QUALITY DISTRIBUTION OF FIXED MATURITY SECURITIES(1)

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
----------------------------------------
PERCENTAGE OF TOTAL
AMOUNT GENERAL ACCOUNT ASSETS
------------- ----------------------
(IN MILLIONS)
<S> <C> <C>
U.S. Government/agency............................ $ 353 2.2%
Short-terms....................................... 765 4.9
AAA............................................... 4,695 29.9
AA................................................ 1,902 12.1
A................................................. 5,366 34.2
BBB............................................... 2,581 16.4
BB and below...................................... 49 0.3
------- -----
Total fixed maturity securities.............. $15,711 100.0%
======= =====
</TABLE>

- ---------------

(1) The ratings referenced in this section are based on the S&P system or the
equivalent rating of another nationally recognized rating organization or,
if not rated, are internal ratings assigned by the Company based on the
Company's internal analysis of such securities. The Company holds
approximately 3.6% of non-rated securities.

At December 31, 1996, approximately 10.3% of the Company's fixed maturity
portfolio was invested in private placement securities (including Rule 144A
offerings). These securities are not registered with the Commission and
generally only can be purchased by certain institutional investors. Private
placement securities are thus generally less liquid than public securities.
However, covenants for private placements are generally designed to mitigate the
impact of such increased liquidity risk. Most of the private placement
securities in the Company's portfolio are rated by rating agencies. If such
securities are not so rated, the Company assigns ratings for internal monitoring
purposes based on the Company's general understanding of methodologies employed
by rating agencies.

The estimated maturities of the Company's fixed and variable rate
investments in its general account, along with the respective yields at December
31, 1996, are reflected in the table below. ABSs, MBSs and CMOs are distributed
to maturity year based on the Company's estimate of the rate of future
prepayments of principal over the remaining life of the securities. These
estimates are developed using prepayment speeds reported in broker consensus
data derived from prepayment speeds experienced at the interest rate levels
projected for the applicable underlying mortgages and can be expected to vary
from actual experience. Expected maturities differ from contractual maturities
due to call or prepayment provisions.

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FIXED MATURITY INVESTMENTS MATURITY SCHEDULE

<TABLE>
<CAPTION>
ESTIMATED MATURITY
-----------------------------------------------------------------------
1997 1998 1999 2000 2001 THEREAFTER TOTAL
------ ------ ------ ------ ------ ---------- -------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
ABS, MBS AND CMOS(1)
Variable rate(2)
Amortized cost....... $ 185 $ 111 $ 80 $ 233 $ 157 $ 891 $ 1,657
Market value......... 183 131 171 226 148 851 1,710
Pre-tax yield(3)..... 5.97% 6.87% 6.60% 6.51% 6.63% 7.21% 7.09%
Fixed rate
Amortized cost....... $ 879 $ 630 $ 782 $ 709 $ 473 $1,188 $ 4,661
Market value......... 880 626 773 706 468 1,180 4,633
Pre-tax yield(3)..... 6.38% 6.76% 6.49% 6.74% 6.76% 6.96% 6.69%
BONDS AND NOTES
Variable rate(2)
Amortized cost....... $ 183 $ 72 $ 113 $ 90 $ 16 $ 248 $ 722
Market value......... 181 76 90 94 17 248 706
Pre-tax yield(3)..... 4.91% 5.74% 3.03% 5.97% 5.99% 6.72% 5.54%
Fixed rate
Amortized cost....... $1,673 $ 692 $ 919 $ 817 $ 752 $3,766 $ 8,619
Market value......... 1,692 689 918 821 751 3,791 8,662
Pre-tax yield(3)..... 6.35% 6.47% 6.43% 6.72% 6.84% 7.16% 6.80%
TOTAL FIXED MATURITIES
Amortized cost.......... $2,920 $1,505 $1,894 $1,849 $1,398 $6,093 $15,659
Market value............ 2,936 1,522 1,952 1,847 1,384 6,070 15,711
Pre-tax yield(3)........ 6.25% 6.59% 6.26% 6.66% 6.78% 7.11% 6.74%
</TABLE>

- ---------------

(1) With respect to the ABS, MBS and CMO portfolio of the Company, a 100 basis
point increase in interest rates would decrease the duration of such
portfolio from 3.6 to 3.4; a 100 basis point decrease in interest rates
would increase the duration of such portfolio from 3.6 to 3.7. The
maturities noted in this table would be significantly impacted if interest
rates were to decrease by 100 basis points or increase by 300 basis points
from December 31, 1996 levels.

(2) Variable rate securities are instruments for which the coupon rates move
directly with or based upon an index rate. Includes interest-only securities
and inverse floaters, which represent less than 1% and 2.48%, respectively,
of the Company's invested assets. Interest-only securities, for which cost
approximates market, have an average life of 5.1 years and earn an average
yield of 14.7%. Inverse floaters, for which cost approximates market, have
an average life of 4.8 years and earn an average yield of 6.42%. Average
yields are based upon estimated cash flows using prepayment speeds reported
in broker consensus data.

(3) Pre-tax yields do not reflect yields on derivative instruments though
derivative adjustments are included in fixed maturity amortized cost and
market value.

ASSET/LIABILITY MANAGEMENT STRATEGIES

Derivatives play an important role in facilitating the management of
interest rate risk, creating opportunities to efficiently fund obligations to
policyholders and contract holders, hedge against risks that affect the value of
certain liabilities and adjust broad investment risk characteristics as a result
of any significant changes in market risks. As an end user of derivatives, the
Company uses a variety of derivative financial instruments, including swaps,
caps, floors, forwards and exchange-traded financial futures and options, in
order to hedge exposure to price, foreign currency and/or interest rate risk on
anticipated investment purchases or existing assets and liabilities. The
notional amounts of derivatives contracts represent the basis upon which pay and
receive amounts are

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<PAGE> 76

calculated and are not reflective of credit risk for derivatives contracts.
Credit risk for derivatives contracts is limited to the amounts calculated to be
due to the Company on such contracts. The Company believes it maintains prudent
policies regarding the financial stability and credit standing of its major
counterparties and typically requires credit enhancement provisions to further
limit its credit risk. Many of these derivatives contracts are bilateral
agreements that are not assignable without the consent of the relevant
counterparty. Notional amounts pertaining to derivative financial instruments of
the Company totaled $10.9 billion at December 31, 1996 ($8.3 billion of which
related to life insurance investments and $2.6 billion of which related to life
insurance liabilities). Management believes that the use of derivatives allows
the Company to sell more innovative products, capitalize on market opportunities
and execute a more flexible investment strategy for its general account
portfolio. The strategies described below are used by the Company to manage the
aforementioned risks associated with its obligations.

ANTICIPATORY HEDGING. For certain liabilities, the Company commits to the
price of the product prior to receipt of the associated premium or deposit. The
Company routinely executes anticipatory hedges to offset the impact of any
changes in asset prices arising from interest rate changes pending the receipt
of the premium or deposit payment and the resulting purchase of the assets.
These hedges involve taking a long position in an interest rate futures position
or entering into an interest rate swap with duration characteristics equivalent
to the associated liabilities or anticipated investments. The notional amount of
derivatives used for anticipatory hedges totaled $392 million and $718 million
at December 31, 1996 and 1995, respectively.

LIABILITY HEDGING. Several products obligate the Company to credit a
return to the contractholder which is indexed to a market rate. In order to
hedge risks associated with these products, the Company typically enters into
interest rate swaps to convert the contract rate into a rate that trades in a
more liquid and efficient market. This hedging strategy enables the Company to
customize contract terms and conditions to customer objectives and satisfies the
Company's asset/liability matching policy. Additionally, interest rate swaps are
used to convert certain fixed contract rates into floating rates, thereby
allowing them to be appropriately matched against floating rate assets. The
notional amount of derivatives used for liability hedging totaled $2.6 billion
and $1.7 billion at December 31, 1996 and 1995, respectively.

ASSET HEDGING. To meet the various policyholder obligations and to provide
investment risk diversification, the Company may combine two or more derivative
financial instruments to achieve the investment characteristics that match the
associated liability. The use of derivatives in this regard effectively
transfers unwanted investment risks or attributes to others. The selection of
the appropriate derivatives depends on the investment risk, the liquidity and
efficiency of the market and the asset and liability characteristics. The
notional amount of asset hedges totaled $2.4 billion and $3.0 billion at
December 31, 1996 and 1995, respectively.

PORTFOLIO HEDGING. The Company periodically compares the duration and
convexity of its portfolios of assets to their corresponding liabilities and
enters into portfolio hedges to reduce certain differences to acceptable levels.
Portfolio hedges reduce the mismatch between assets and liabilities and offset
the potential cash flow impact caused by interest rate changes. The notional
amount of portfolio hedges totaled $5.5 billion and $4.2 billion at December 31,
1996 and 1995, respectively.

The Company is committed to maintaining effective risk management
discipline. Derivatives used by the Company must support at least one of the
following objectives: to manage the risk arising from price, interest rate and
foreign currency volatility, to manage liquidity or to control transaction
costs. The Company has established credit limits, diversification standards and
review procedures for all credit risk, whether borrower, issuer, or
counterparty.

Each of the Company's segments utilizes the aforementioned derivatives
strategies. In particular, the Investment Products and Employee Benefits
segments use anticipatory hedges to protect against adverse investment results
from new business sales due to interim interest rate movements

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<PAGE> 77

and the Investment Products segment also uses a number of liability hedges in
order to convert certain fixed rate liabilities into floating rate liabilities.
In contrast, the Individual Life Insurance segment uses derivatives
infrequently, other than utilizing certain liability hedges (such as the
purchase of interest rate floors) to hedge against a dramatic decline in
interest rates for products with long-term minimum credited rate guarantees.
FASB recently has issued an exposure draft of an accounting standard which, if
adopted in the form in which it was issued, would require companies to report
derivatives on the balance sheet at fair value with changes in fair value
recorded in income or equity. Under SFAS No. 115, derivatives linked to assets
are currently reflected in the fair value of such assets reported on the
Company's balance sheet. This exposure draft also would change the accounting
for derivatives used in hedging strategies from traditional deferral accounting
to a current recognition approach which could impact a company's income
statement and balance sheet and expand the definition of a derivative instrument
to include certain structured securities currently accounted for as fixed
maturities. This exposure draft has drawn widespread criticism primarily because
the required accounting treatment would not match the perceived economic effect
of such hedging strategies. As a result of, among other things, the concerns and
criticisms in comment letters and at public hearings held on this exposure
draft, the Company is unable to predict the form that the final accounting
standard, if adopted, may take and believes it would be inappropriate to
speculate on the effects of any such adoption at this time. See "Risk
Factors -- Potential New Accounting Policy for Derivatives".

For a discussion of (i) the investments of the Company segregated by major
category, (ii) the types of derivatives related to the type of investment and
their respective notional amounts and (iii) the accounting policies utilized by
the Company for derivative financial instruments, see the Notes to consolidated
financial statements.

INSURANCE LIABILITY CHARACTERISTICS

Insurance liabilities, other than non-guaranteed separate accounts, which
were backed by $40.6 billion in total assets (including investments of $30.2
billion), totaled $30.8 billion (net of ceded reinsurance) at December 31, 1996.
Matching of the duration of the investments with respective policyholder
obligations is an explicit objective of the Company's management strategy. The
Company's insurance policy liabilities, along with estimated duration periods
based on the Company's internal actuarial assumptions, can be summarized based
on investment needs in the five categories described below at December 31, 1996.

ESTIMATED DURATION YEARS(1)

<TABLE>
<CAPTION>
BALANCE AT LESS
DECEMBER 31, THAN 1-5 6-10 OVER 10
DESCRIPTION 1996 1 YEAR YEARS YEARS YEARS
- ------------------------------------------- ------------ ------ ----- ----- -------
(IN BILLIONS)
<S> <C> <C> <C> <C> <C>
Fixed rate asset accumulation vehicles..... $ 13.8 $1.9 $ 8.2 $3.7 $ 0.0
Indexed asset accumulation vehicles........ 0.2 0.2 -- -- --
Interest credited asset accumulation
vehicles................................. 13.6 4.2 5.1 3.7 0.6
Long-term payout liabilities............... 2.7 0.1 0.6 0.8 1.2
Short-term payout liabilities.............. 0.5 0.5 -- -- --
----- ---- ----- ---- ----
Total................................. $ 30.8 $6.9 $13.9 $8.2 $ 1.8
===== ==== ===== ==== ====
</TABLE>

- ---------------
(1) The duration of liabilities reflects management's assessment of the market
price sensitivity of the liabilities to changes in market interest rates,
and is not necessarily reflective of the projected liabilities' cash flows
under any specific scenario.

FIXED RATE ASSET ACCUMULATION VEHICLES. Products in this category require
the Company to pay a fixed rate for a certain period of time. The cash flows are
not interest rate sensitive because the products are written with an MVA feature
and the liabilities have protection against the early

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<PAGE> 78

withdrawal of funds through surrender charges. The primary risk associated with
these products is that the spread between investment return and credited rate is
not sufficient to earn the Company's targeted return. Product examples include
fixed rate annuities with an MVA feature and fixed rate GRC. Contract duration
is reflected above and is dependent on the policyholder's choice of guarantee
period. The weighted average credited policyholder rate for these policyholder
liabilities was 6.71% at December 31, 1996.

INDEXED ASSET ACCUMULATION VEHICLES. Products in this category are similar
to the fixed rate asset accumulation vehicles, but require the Company to pay a
rate that is determined by an external index. The amount and/or timing of cash
flows will therefore vary based on the level of the particular index. The
primary risks inherent in these products are similar to the fixed rate asset
accumulation vehicles, with an additional risk of changes in the index adversely
affecting profitability. Product examples include indexed GRC with an estimated
duration of up to two years. The weighted average credited rate was 5.78% at
December 31, 1996.

INTEREST CREDITED ASSET ACCUMULATION VEHICLES. Products in this category
credit interest to policyholders, subject to market conditions and minimum
guarantees. Policyholders may surrender at book value but are subject to
surrender charges for an initial period. The primary risks vary depending on the
degree of insurance element contained in the product. Product examples include
universal life contracts and the general account portion of the Company's
variable annuity products. Liability duration is short- to intermediate-term and
is reflected in the table above. The average credited rate for these liabilities
was 5.52% at December 31, 1996, excluding policy loans.

LONG-TERM PAYOUT LIABILITIES. Products in this category are long-term in
nature and may contain significant actuarial (including mortality and morbidity)
pricing risks. The cash flows are not interest sensitive, but do vary based on
the timing and amount of benefit payments. The primary risks associated with
these products are that the benefits will exceed expected actuarial pricing
and/or the investment return will be lower than assumed in pricing. Product
examples include structured settlement contracts, on-benefit annuities (i.e.,
the annuitant is currently receiving benefits thereon) and long-term disability
contracts. Contract duration is generally six to ten years but, at times,
exceeds 30 years. Policy liabilities under these contracts are not
interest-sensitive.

SHORT-TERM PAYOUT LIABILITIES. These liabilities are short-term in nature
with a duration of less than one year. The primary risks associated with these
products are determined by the non-investment contingencies such as mortality or
morbidity. Liquidity is of greater concern than for the long-term payout
liabilities. Products include individual and group-term contracts and short-term
disability contracts.

COMPETITION

The Company competes with the over 2,000 life insurance companies in the
United States and certain banks, securities brokerage firms, investment advisors
and other financial intermediaries marketing insurance products, annuities,
mutual funds and other retirement-oriented investments. Some of these companies
have greater financial resources and currently have higher financial strength
and claims-paying ratings from major rating agencies than the Company. National
banks, in particular, may become more significant competitors in the future for
insurers who sell annuities, including the Company, as a result of recent court
decisions and regulatory actions discussed under "-- Insurance
Regulation -- Regulation at Federal Level". Although the effect of these recent
developments on the Company and its competitors is uncertain, both the
persistency of the Company's existing products and the Company's ability to sell
products could be materially impacted in the future. Also, several proposals to
repeal or modify the Glass-Steagall Act and the Bank Holding Company Act have
been made by members of Congress and the Executive Branch. Certain of these
proposals would repeal or modify the current restrictions that prevent banks
from being affiliated with insurance companies. None of these proposals has yet
been enacted, and it is

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<PAGE> 79

not possible to predict whether any of these proposals will be enacted or, if
enacted, their potential effect on the Company or its competitors.

The fundamental competitive factors affecting the sale of the Company's
products are price, the levels of commissions, charges and other expenses,
financial strength and claims-paying ratings, distribution ability, reputation,
quality of service, visibility in the marketplace and range of products. For
variable life insurance and annuity products, additional competitive factors
include mutual fund options, product design and investment performance ratings.
The Company's ability to compete is affected in part by its ability to provide
competitive products and quality service to the consumer, wholesaler, general
agents, licensed insurance agents and broker-dealers. Management believes that
its alternative and competing distribution systems provide the Company with a
competitive advantage in penetrating and communicating with its growing target
markets.

The Company also competes for distributors such as banks, broker-dealers
and wholesalers. Management believes the principal bases upon which insurance
and financial services companies compete for distribution channels are the
services provided to, and the relationships developed with, broker-dealers,
wholesalers and other distributors, as well as compensation and the variety and
quality of products. Since the Company does not have a career agency force, it
must compete with other insurers and financial services providers to attract and
maintain productive independent distributors to sell its products. Moreover, the
Company does not have exclusive agency agreements with many of its distributors
and believes that certain of them sell products similar to those marketed by the
Company for other insurance companies.

RATINGS

Ratings are an important factor in establishing the competitive position of
insurance companies. The Company's principal insurance subsidiaries currently
are rated "A+ (superior)" by A.M. Best and have claims-paying ability ratings of
"AA" from S&P and "AA+" from Duff & Phelps, and one such insurance subsidiary,
Hartford Life, has an insurance financial strength rating of "Aa3" from Moody's.
A ratings downgrade (or the potential for such a downgrade) of the Company
could, among other things, materially increase surrender levels, adversely
affect relationships with broker-dealers, banks, agents, wholesalers and other
distributors of the Company's products and services, negatively impact
persistency, adversely affect the Company's ability to compete and thereby
materially and adversely affect the Company's business, financial condition and
results of operations. For more information on the ratings of the Company, see
"Risk Factors -- Importance of Company Ratings".

A.M. Best's financial condition ratings for insurance companies currently
range from "A++ (superior)" to "F (in liquidation)". These ratings reflect A.M.
Best's opinion of an insurance company's financial strength, operating
performance and ability to meet its obligations to policyholders. Moody's
insurance financial strength ratings currently range from "Aaa (exceptional)" to
"C (lowest rated)". Such ratings are an opinion of the ability of an insurance
company to repay senior policyholder claims and obligations. S&P's insurance
claims-paying ability ratings currently range from "AAA (superior)" to "CCC
(extremely vulnerable)". Such a rating is an opinion of an operating insurance
company's financial capacity to meet the obligations of its insurance policies
in accordance with their terms. Duff & Phelps' claims-paying ability ratings
currently range from "AAA (negligible risk factors)" to "DD (liquidation)". Such
a claims-paying ability rating relates to the likelihood of timely payment of
policyholder and contractholder obligations.

The foregoing ratings reflect each rating agency's opinion of the Company's
principal life insurance subsidiaries' financial strength, operating performance
and ability to meet its obligations to policyholders and are not evaluations
directed toward the protection of investors.

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<PAGE> 80

INSURANCE REGULATION

GENERAL REGULATION AT STATE LEVEL

The insurance business of the Company is subject to comprehensive state and
federal regulation and supervision throughout the United States. The laws of the
various jurisdictions establish supervisory agencies with broad administrative
powers with respect to, among other things, licensing to transact business,
licensing agents, admittance of assets, regulating premium rates, approving
policy forms, regulating unfair trade and claims practices, establishing reserve
requirements and solvency standards, fixing maximum interest rates on life
insurance policy loans and minimum rates for accumulation of surrender values,
restricting certain transactions between affiliates and regulating the type,
amounts and valuations of investments permitted.

Several states, including the State of Connecticut, regulate affiliated
groups of insurers, such as the Company, under insurance holding company
legislation. As a holding company with no significant business operations of its
own, the Company relies on dividends from its subsidiaries, which are primarily
domiciled in the State of Connecticut, as the principal source of cash to meet
its obligations, including the payment of principal and interest on debt
obligations of the Company, and the payment of dividends to holders of its
capital stock. The payment of dividends by Connecticut-domiciled life insurers
is limited under the insurance holding company laws of Connecticut which require
notice to and approval by the Connecticut Insurance Commissioner for the
declaration or payment of any dividend which, together with the other dividends
or distributions made within the preceding twelve months, exceeds the greater of
(i) 10% of the insurer's policyholder surplus as of December 31 of the preceding
year or (ii) net gain from operations for the twelve-month period ending on
December 31 last preceding, in each case determined under statutory insurance
accounting practices. In addition, if any dividend of a Connecticut-domiciled
insurer exceeds the insurer's earned surplus, it requires the approval of the
Connecticut Insurance Commissioner. Based on these limitations and statutory
results as of December 31, 1996, the Company would have been able to receive
$132 million in dividends in 1997 from Hartford Life and Accident, the Company's
direct subsidiary, without obtaining the approval of the Connecticut Insurance
Commissioner.

Life insurance companies are required to establish an AVR consisting of two
components: (i) a "default component" which provides for future credit-related
losses on fixed maturity investments and (ii) an "equity component" which
provides for losses on all types of equity investments, including real estate.
Insurers are also required to establish an IMR for fixed maturity net realized
capital gains and losses, net of tax, related to changes in interest rates. The
IMR is required to be amortized into statutory earnings on a basis reflecting
the remaining period to maturity of the fixed maturity securities sold. These
reserves are required by state insurance regulatory authorities to be
established as a liability on a life insurer's statutory financial statements,
but do not affect financial statements of the Company prepared in accordance
with GAAP. Although future additions to AVR will reduce the future statutory
surplus of the Company's insurance subsidiaries, the Company does not believe
that the impact under current regulations of such reserve requirements will
materially affect the ability of its insurance subsidiaries to grow its
statutory surplus and pay dividends to the Company in the future.

In addition, the Company is a holding company which owns directly or
indirectly all the outstanding shares of capital stock of certain insurance
company subsidiaries domiciled in Connecticut and New Jersey. Insurance laws of
such states applicable to the Company generally provide that no person may
acquire control of the Company, and thus indirect control of these insurance
company subsidiaries, without the prior approval of the appropriate insurance
regulators. In general, any person who acquires beneficial ownership of 10% or
more of the voting securities of the Company would be presumed to have acquired
such control, although the appropriate insurance regulators, upon application,
may determine otherwise. See "Description of Capital Stock -- Restrictions on
Ownership Under Insurance Laws".

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<PAGE> 81

Each insurance company is required to file detailed annual reports with
supervisory departments in each of the jurisdictions in which it does business
and its operations and accounts are subject to examination by such departments
at regular intervals. Each of the Company's life insurance subsidiaries prepare
statutory financial statements in accordance with accounting practices
prescribed or permitted by the insurance departments of their respective states
of domicile. Prescribed statutory accounting practices include publications of
the NAIC, as well as state laws, regulations and general administrative rules.

In addition, as part of their routine regulatory oversight process, state
insurance departments conduct detailed examinations periodically (generally once
every three to five years) of the books, records, accounts and market conduct of
insurance companies domiciled in their states. Such examinations are generally
conducted in cooperation with the departments of two or three other states under
guidelines promulgated by the NAIC. In 1996, a State of Connecticut association
examination report of the Company's operations for the four years ended December
31, 1993 found no material discrepancies. The Company anticipates that its next
examination will occur in 1998. In addition, in 1995, a State of New York
Insurance Department examination of the Company's market conduct for the three
years ended December 31, 1994 found no material deficiencies. The Company is
currently undergoing separate periodic market conduct examinations conducted by
the State of Connecticut (covering the period from July 1, 1995 through June 30,
1996), the State of Maryland (covering the period from January 1, 1992 through
December 31, 1995), and the State of California (covering the period from
January 1, 1995 through June 30, 1996). Management does not expect any finding
from any of these examinations that would have a materially adverse impact on
the Company.

REGULATORY INITIATIVES

State insurance regulators and the NAIC are continually re-examining
existing laws and regulations, specifically focusing on insurance company
investments and solvency issues, risk-adjusted capital guidelines,
interpretations of existing laws, the development of new laws, the
implementation of non-statutory guidelines and the circumstances under which
dividends may be paid. These initiatives may be adopted by the various states in
which the Company's insurance subsidiaries are licensed, but the ultimate
content and timing of any statutes and regulations adopted by the states cannot
be determined at this time. It is impossible to predict the future impact of
changing state and federal regulations on the Company's operations, and there
can be no assurance that existing or future insurance-related laws and
regulations will not become more restrictive.

In the 1970s, the NAIC developed a set of financial relationships or
"tests" known as the Insurance Regulatory Information System ("IRIS") that was
designed for early identification of companies that may require special
attention by insurance regulatory authorities. Insurance companies submit data
annually to the NAIC, which in turn analyzes the data using ratios covering
twelve categories of financial data with defined "usual ranges" for each such
category. An insurance company may fall out of the usual range for one or more
ratios because of specific transactions or events that are in and of themselves
immaterial or eliminated at the consolidated level. Generally, an insurance
company will become subject to regulatory scrutiny if it falls outside the usual
ranges of four or more of the ratios, and regulators may then act, if such
company has insufficient capital, to constrain the company's underwriting
capacity. The Company has estimated 1996 IRIS ratio tests for Hartford Life and
Hartford Life and Accident and has determined that one such ratio for Hartford
Life and two such ratios for Hartford Life and Accident fall outside the usual
range for the IRIS ratios. Such ratios fell outside of the usual range due to
normal business operations such as the ownership by Hartford Life and Accident
of Hartford Life.

The NAIC also has approved risk-based capital ("RBC") standards, which are
used to determine the amount of total adjusted capital (STATUTORY CAPITAL AND
SURPLUS plus AVR and other adjustments) that a life insurance company must have,
taking into account the risk characteristics of

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<PAGE> 82

such company's investments and liabilities. The formula establishes a standard
of capital adequacy that is related to risk. The RBC formula establishes capital
requirements for four categories of risk: asset risk, insurance risk, interest
rate risk and business risk. For each category, the capital requirements are
determined by applying specified factors to various asset, premium, reserve and
other items, with the factor being higher for items with greater underlying risk
and lower for items with less risk. The formula is used by insurance regulators
as an early warning tool to identify deteriorating or weakly capitalized
companies for the purpose of initiating regulatory action.

The NAIC's RBC requirements provide for four levels of regulatory attention
depending on the ratio of a company's total adjusted capital (defined as the
total of its statutory capital, surplus, asset valuation reserve and certain
other adjustments) to its RBC. If a company's total adjusted capital is less
than 100% but greater than or equal to 75% of its RBC, or if a negative trend
has occurred (as defined in the regulations) and total adjusted capital is less
than 125% of its RBC, the company must submit a comprehensive plan to the
regulatory authority which discusses proposed corrective actions to improve its
capital position. If a company's total adjusted capital is less than 75% but
greater than or equal to 50% of its RBC, the regulatory authority will perform a
special examination of the company and issue an order specifying corrective
actions that must be followed. If a company's total adjusted capital is less
than 50% but greater than or equal to 35% of its RBC, the regulatory authority
may take any action it deems necessary, including placing the company under its
control. If a company's total adjusted capital is less than 35% of its RBC, the
regulatory authority is mandated to place the company under its control. The RBC
ratios for each of Hartford Life, Hartford Life and Accident and ITT Hartford
Life and Annuity Insurance Company have been in excess of 200% of their
respective RBC from 1993 through 1996.

In addition, state regulatory authorities, industry groups and rating
agencies have developed several initiatives regarding market conduct. For
example, the NAIC has adopted the NAIC Model Illustration Regulation, which
applies to group and individual life insurance policies and certificates, and
the Market Conduct Handbook. State regulators have imposed significant fines on
various insurers for improper market conduct. The American Council on Life
Insurance is establishing the Insurance Market Place Standards Association, a
self-regulatory organization, to implement its Principles and Code of Ethical
Life Insurance Market Conduct, which includes a third-party assessment
procedure. Market conduct also has become one of the criteria used to establish
the ratings of an insurance company. For example, A.M. Best's ratings analysis
now includes a review of the insurer's compliance program. Management does not
believe that these market conduct initiatives will have a material adverse
effect on its business, financial condition or results of operations.

In addition, the NAIC has adopted a model regulation called "Valuation of
Life Insurance Policies Model Regulation", which would establish new minimum
STATUTORY RESERVE requirements for individual life insurance policies written in
the future. Before the new reserve standards can become effective, individual
states must enact the model regulation. If these reserve standards were adopted
in their current form, companies selling certain individual life insurance
products such as term life products with guaranteed premium periods and
universal life products with no-lapse guarantees would be required to adjust
reserves to be consistent with the new minimum standards. It is impossible at
this time to predict if the model regulation will be enacted and, if enacted,
when it will become applicable. However, the Company anticipates no material
impact as a result of the enactment of this legislation.

ASSESSMENTS AGAINST INSURERS

Under the insurance guaranty fund laws existing 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

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<PAGE> 83

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 for annual limits on such assessments. A large part of the
assessments paid by the Company's insurance subsidiaries pursuant to these laws
may be used as credits for a portion of the Company's insurance subsidiaries'
premium taxes. The Company's insurance subsidiaries were assessed $11 million,
$13 million and $12 million in 1994, 1995 and 1996, respectively. Since such
assessments are typically not made for several years after an insurer fails and
depend upon the final outcome of liquidation or rehabilitation proceedings, the
Company cannot accurately determine the amount or timing of any future
assessment on the Company's insurance subsidiaries. However, based on the best
information presently available, management believes the Company's total future
assessments will not be material to its operating results or financial position.

REGULATION AT FEDERAL LEVEL

Although the federal government does not directly regulate the business of
insurance, federal legislation and administrative policies in several areas,
including pension regulation, financial services regulation and federal
taxation, can significantly and adversely affect the insurance industry and thus
the Company. For example, Congress has from time to time considered legislation
relating to the deferral of taxation on the accretion of value within certain
annuities and life insurance products, the removal of barriers preventing banks
from engaging in the insurance business, changes in ERISA regulations, the
alteration of the federal income tax structure and the availability of Section
401(k) or individual retirement accounts. In particular, Congress has reviewed
various proposals to repeal or modify the McCarran-Ferguson Act (which exempts
the insurance industry from certain federal laws), the Glass-Steagall Act (which
restricts banks from engaging in a securities-related business) and the Bank
Holding Company Act (which prohibits banks from being affiliated with insurance
companies).

Moreover, the United States Supreme Court held on January 18, 1995 in
NationsBank of North Carolina v. Variable Annuity Life Insurance Company that
annuities are not insurance for purposes of the National Bank Act. In addition,
the Supreme Court also held on March 26, 1996 in Barnett Bank of Marion City v.
Nelson that state laws prohibiting national banks from selling insurance in
small town locations are preempted by federal law. The Office of the Comptroller
of the Currency also adopted a ruling in November 1996 that permits national
banks, under certain circumstances, to expand into other financial services,
thereby increasing competition for the Company. At present, the extent to which
banks can sell insurance and annuities without regulation by state insurance
departments is being litigated in various courts in the United States. Although
the effect of these recent developments on the Company and its competitors is
uncertain, both the persistency of the Company's existing products and the
Company's ability to sell products may be materially impacted in the future.

The HIPA Act of 1996 phases out the deductibility of interest on policy
loans under COLI by 1998, thus eliminating all future sales of leveraged COLI.
The Company's leveraged COLI product has been an important contributor to its
profitability in recent years and will continue to contribute to the
profitability of the Company (although such contribution will be reduced in the
future due to the effects of this legislation). As a result, core earnings
contributed by COLI may be lower in the future (particularly during 1999 and
later years) as a result of the elimination of leveraged COLI sales.

SECURITIES LAWS

Certain of the Company's subsidiaries and certain policies and contracts
offered by them are subject to regulation under the federal securities laws
administered by the Commission and certain state securities laws. Certain
separate accounts of the Company's insurance subsidiaries are registered as
investment companies under the Investment Company Act of 1940, as amended (the
"Investment Company Act"). Separate accounts through which certain variable
annuity contracts and certain variable insurance policies issued by the
Company's insurance subsidiaries are made

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available are also registered under the Securities Act. Certain other
subsidiaries of the Company are registered as broker-dealers under the Exchange
Act and are members of, and subject to regulation by, the National Association
of Securities Dealers, Inc.

Certain of the Company's subsidiaries are investment advisors registered
under the Investment Advisers Act of 1940, as amended. The investment companies
managed by such subsidiaries are registered with the Commission under the
Investment Company Act and the shares of certain of these entities are qualified
for sale in certain states in the United States and the District of Columbia.
Certain subsidiaries of the Company are also subject to the Commission's net
capital rules.

In October 1996, the National Securities Markets Improvements Act of 1996
was enacted into law. Of particular interest to the variable products industry
are the provisions establishing a new "reasonableness standard" for all fees and
charges in variable annuity and variable life insurance policies. Because
insurers no longer will have to explain each and every component of their fees
and charges to the Commission, and instead will be subject to an overall
reasonableness standard for aggregate fees and charges, the Company believes the
legislative changes will provide the industry with greater flexibility in
product design. However, given the significant barriers to market entry, such as
entering into relationships with broker-dealers and systems constraints, the
Company believes that the legislation overall will have a minimal competitive
impact.

All aspects of the Company's investment advisory activities are subject to
various federal and state laws and regulations. These laws and regulations are
primarily intended to benefit investment advisory clients and investment company
stockholders and generally grant supervisory agencies broad administrative
powers, including the power to limit or restrict the carrying on of business for
failure to comply with such laws and regulations. In such event, the possible
sanctions which may be imposed include the suspension of individual employees,
limitations on the activities in which the investment advisor may engage,
suspension or revocation of the investment advisor's registration as an advisor,
censure and fines.

ERISA CONSIDERATIONS

Enacted into law on August 20, 1996, the Small Business Protection Act (the
"SBPA") offered insurers protection from potential litigation exposure prompted
by the 1993 U.S. Supreme Court decision in John Hancock Mutual Life Insurance
Company v. Harris Trust & Savings Bank (the "Harris Trust Decision") in which
the Court held that, with respect to a portion of the funds held under certain
general account group annuity contracts, an insurer is subject to the fiduciary
requirements of ERISA. The pertinent SBPA provisions provide that insurers are
protected from lawsuits claiming breaches of fiduciary duties under ERISA for
past actions. However, insurers remain subject to federal criminal law and
liable for actions brought by the Secretary of Labor alleging breaches of
fiduciary duties that also constitute a violation of federal or state criminal
law. The SBPA also provides that contracts issued from an insurer's general
account on or before December 31, 1998, that are not guaranteed benefit
policies, will be permanently grandfathered if they meet the requirements of
regulations the United States Department of Labor has to issue by December 31,
1997. The SBPA further provides that contracts issued from an insurer's general
account after December 31, 1998, that are not guaranteed benefit policies, will
be subject to ERISA. Although the Company does not believe that the Harris Trust
Decision had a material adverse effect on its business, financial condition or
results of operations, the Company supported and welcomed the enactment of the
aforementioned provisions of the SBPA as a means to remove an area of potential
exposure for the insurance industry generally.

With respect to employee welfare benefit plans subject to ERISA, the United
States Congress periodically has considered amendments to the law's federal
preemption provision, which would expose the Company, and the insurance industry
generally, to state law causes of action, and accompanying extra-contractual
(e.g., punitive) damages in lawsuits involving, for example, group life and
group disability claims. To date, all such amendments to ERISA have been
defeated.

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PROPERTIES

The Company's headquarters, located in Simsbury, Connecticut, is currently
leased from a third party by Hartford Fire pursuant to a sale-leaseback
arrangement. After the Equity Offerings, the Company or one of its subsidiaries
will sublease from Hartford Fire the right to use the headquarters building. For
a further discussion of this sublease arrangement, see "Certain Relationships
and Transactions--Intercompany Arrangements--Simsbury Sublease". The remainder
of the material facilities of the Company are either leased or subleased from
The Hartford or its subsidiaries (see "Certain Relationships and
Transactions--Intercompany Arrangements--Master Intercompany Agreement") or
leased from third parties. The Company believes its existing properties are
adequate for its present operations.

LEGAL PROCEEDINGS

The Company is a defendant in various lawsuits arising in the ordinary
course of business. In the opinion of management, the resolution of these
matters is not expected to have a material adverse effect on the Company's
business, financial condition or results of operations. In addition, companies
in the life insurance industry historically have been subject to substantial
litigation resulting from claims disputes and other matters. Most recently,
companies in the life insurance industry have faced extensive claims, including
class-action lawsuits, alleging improper sales practices relating to sales of
certain life insurance products. Negotiated settlements of such class-action
lawsuits have had a material adverse effect on the business, financial condition
and results of operations of certain of these companies. The Company is not and
has not been a defendant in any such class-action lawsuit alleging improper
sales practices. No assurance can be given that such class-action lawsuits or
other litigation would not materially and adversely affect the Company's
business, financial condition or results of operations.

EMPLOYEES

As of January 27, 1997, the Company has 3,669 direct employees, 2,109 of
whom are employed at the home office in Simsbury, Connecticut, and 1,560 of whom
are employed at various branch offices throughout the United States, Canada and
elsewhere. Management believes that its employee relations are good. None of the
Company's employees is subject to a collective bargaining agreement and the
Company is not aware of any current efforts to implement such an agreement.

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MANAGEMENT

DIRECTORS

The names, ages and a description of the business experience, principal
occupation and employment during at least the last five years of each of the
directors of the Company that will be elected prior to the Equity Offerings are
set forth below:

<TABLE>
<CAPTION>
NAME AGE
---
<S> <C>
Ramani Ayer......................... 49
Donald R. Frahm..................... 65
Paul G. Kirk, Jr.................... 59
Lowndes A. Smith.................... 57
H. Patrick Swygert.................. 54
DeRoy C. Thomas..................... 71
Gordon I. Ulmer..................... 64
David K. Zwiener.................... 42
</TABLE>

Mr. Ayer has been Chairman and Chief Executive Officer of The Hartford
since February 1, 1997 and a director since 1991. Prior to that, Mr. Ayer served
as an Executive Vice President of The Hartford since the ITT Spin-Off in
December 1995. He has been President and Chief Operating Officer of Hartford
Fire since 1991 and previously served as Executive Vice President of Hartford
Fire from 1990 to April 1991 and Senior Vice President from 1989 to 1990. Mr.
Ayer joined The Hartford in 1973 as a member of the Operations Research
Department. In 1981 he was appointed Secretary and Director of Corporate
Reinsurance. In 1983 he was named Vice President of Hartford Re Company, The
Hartford's reinsurance subsidiary, and in 1984 he joined the Hartford Specialty
Company, of which he was appointed President in 1986.

Mr. Frahm served as Chairman and Chief Executive Officer of The Hartford
from April 1988 until his retirement on January 31, 1997. He has served on The
Hartford's Board of Directors since 1985. Mr. Frahm is a member of the Board of
Directors of the Insurance Information Institute and the American Insurance
Association. He also is a director of the Hartford Hospital and Junior
Achievement North Central Connecticut Inc. and the Greater Hartford Chamber of
Commerce. He is also a corporator of Connecticut Children's Medical Center.

Mr. Kirk became a partner in the law firm of Sullivan & Worcester in 1977
and is presently of Counsel to the firm. He served as Chairman of the Democratic
Party of the United States from 1985 to 1989 and as Treasurer from 1983 to 1985.
Following his resignation in 1989 as Chairman of the Democratic National
Committee, he returned to Sullivan & Worcester as a partner in general corporate
practice at the firm's Boston and Washington offices. Mr. Kirk has served on The
Hartford's Board of Directors since 1995. He is a director of Kirk-Sheppard &
Co., Inc., of which he also is Chairman and Treasurer. Mr. Kirk is also a
director of ITT Corporation (formerly ITT Destinations, Inc.) ("New ITT"), the
Bradley Real Estate Corporation and Rayonier Inc. He is Co-Chairman of the
Commission on Presidential Debates, Chairman of the John F. Kennedy Library
Foundation Board of Directors, Chairman of the Board of Directors of the
National Democratic Institute for International Affairs and a trustee of
Stonehill College and St. Sebastian's School. He is a graduate of Harvard
College and Harvard Law School.

Mr. Smith has been Vice-Chairman of The Hartford since February 1, 1997 and
is President and Chief Executive Officer of the Company. He served as an
Executive Vice President of The Hartford from December 1995 until his
appointment to Vice-Chairman and has been a director of The Hartford since 1991.
Mr. Smith has been President and Chief Operating Officer of The Hartford's life
insurance subsidiaries since 1989. Prior to that time, he served as Senior Vice
President and Group Controller for all companies owned or operated by The
Hartford. Mr. Smith joined The Hartford in

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1968 as a member of the Corporate Accounting Department and in 1972 he was
appointed the Secretary and Director of Corporate Accounting. He was elected
Assistant Vice President in 1974, and he was named Controller in 1977. Mr. Smith
is a director of the Connecticut Children's Medical Center and the American
Council of Life Insurance.

Mr. Swygert has been President of Howard University, Washington, D.C.,
since August 1995. Prior to that, he was President of the University at Albany,
State University of New York, since 1990. Mr. Swygert received his undergraduate
and law degrees from Howard University, has been a visiting professor and
lecturer abroad and is the author of numerous articles and publications on
higher education and the law. He has been a director of The Hartford since 1996
and is a member of the Board of Directors of The Victory Funds, Cleveland, Ohio.
Mr. Swygert is Chairman of the Washington, D.C. Area Consortium of Colleges and
Universities and a trustee of the Institute of Public Administration and a
member of the Commission on Women in Higher Education and the Capital District
Martin Luther King, Jr. Commission.

Mr. Thomas is a retired partner of LeBoeuf, Lamb, Greene & MacRae, a law
firm in New York, New York, having practiced there from 1991 through December
31, 1994. He was President, Chief Operating Officer and a director of ITT from
1988 to 1991, and from 1983 to 1988 he was Vice-Chairman and Chief Operating
Officer of ITT Diversified Services, and Chairman and Chief Executive Officer of
The Hartford. He has been a director of The Hartford since 1995 and is also a
director of Houghton-Mifflin, Connecticut Health Services and MedSpan, Inc. He
is also a former trustee of Fordham University, Wheelock College, University of
Hartford, Hartford Hospital and CT Health System. Mr. Thomas is President of
Goodspeed Opera House and the Chairman of the Old State House Association.

Mr. Ulmer is former Chairman and Chief Executive Officer of the former
Connecticut Bank and Trust Company ("CBT") and retired President of the former
Bank of New England Corporation, the former holding company of CBT ("BNEC"). He
joined CBT in 1957 and held numerous positions before being elected President
and a director in 1980 and Chairman and Chief Executive Officer in 1985. In 1988
he was elected President of BNEC, and he retired as President in December 1990.
Mr. Ulmer has been a director of The Hartford since 1995 and also serves as a
director of Rayonier Inc. and the Old State House Association. He is a graduate
of Middlebury College, the American Institute of Banking and Harvard Business
School Advanced Management Program and attended New York University's Graduate
School of Engineering.

Mr. Zwiener has been Executive Vice President and Chief Financial Officer
of The Hartford since August 1995. From March 1993 until August 1995 he served
as Executive Vice President and Chief Financial Officer of ITT Financial
Corporation. From 1987 to February 1993, Mr. Zwiener served as Senior Vice
President and Treasurer, as well as Executive Vice President -- Capital Markets
Division of Heller International Corporation.

Promptly following the Equity Offerings, The Hartford and the Company
expect to elect two additional directors of the Company who will be persons not
associated currently or formerly with The Hartford or the Company. The Board of
Directors will then consist of ten members, including eight who are directors
and/or officers of The Hartford. The Hartford will have the ability to change
the size and composition of the Board of Directors.

Members of the Board of Directors will be divided into three classes with
staggered three-year terms and each class as equal in number as possible. Of the
current members of the Board of Directors, the terms of Messrs. Zwiener, Kirk
and Ulmer will expire at the next annual meeting of stockholders (expected to
occur in the second quarter of 1998), the terms of Messrs. Smith and Thomas and
one of the two individuals to be elected to the Board of Directors who is not
currently or formerly associated with The Hartford or the Company will expire at
the annual meeting of stockholders to be held in 1999 and the terms of Messrs.
Ayer, Frahm and Swygert and the other individual to be elected to the Board of
Directors who is not currently or formerly associated with The Hartford or the
Company will expire at the annual meeting of stockholders to be held in 2000.

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<PAGE> 88

The Board of Directors will have an audit committee which will review the
results and scope of the audit and other services provided by the Company's
independent auditors as well as review the Company's internal accounting and
control procedures and policies. The Board of Directors will also have a
compensation and personnel committee of the Company (the "Compensation and
Personnel Committee") which will oversee the compensation and benefits of the
management and employees of the Company and will consist entirely of directors
who are disinterested persons within the meaning of Rule 16b-3 under the
Exchange Act. The Board of Directors may, from time to time, establish certain
other committees to facilitate the management of the Company.

COMPENSATION OF DIRECTORS

Members of the Board of Directors who are employees of the Company or The
Hartford or their respective subsidiaries will not be compensated for service on
the Board of Directors or any committee thereof. Other directors of the Company
will receive an annual retainer fee of $20,000 payable solely in restricted
shares of Class A Common Stock, $1,000 for each board meeting attended and
$1,000 for each committee meeting attended. See "-- Restricted Stock Plan for
Non-Employee Directors". All directors will be reimbursed for travel expenses
incurred on behalf of the Company.

RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS

Prior to the Equity Offerings, the Company is expected to adopt (and the
sole stockholder of the Company prior to the Equity Offerings is expected to
approve) the 1997 Hartford Life, Inc. Restricted Stock Plan for Non-Employee
Directors (the "1997 Restricted Stock Plan"). The 1997 Restricted Stock Plan is
designed to further the Company's objectives of attracting and retaining
individuals of ability as directors and aligning the directors' interests more
closely with the interests of its stockholders.

Under the proposed 1997 Restricted Stock Plan, directors of the Company who
are not employees of the Company, The Hartford or any of their respective
subsidiaries will automatically participate in the 1997 Restricted Stock Plan.
There will be seven directors of the Company eligible to participate in the 1997
Restricted Stock Plan.

The 1997 Restricted Stock Plan will be administered by the Compensation and
Personnel Committee. The Compensation and Personnel Committee will have the
responsibility of interpreting and establishing the rules appropriate for the
administration of the 1997 Restricted Stock Plan.

Grants of restricted Class A Common Stock will be made automatically on the
date of each annual meeting of stockholders to each non-employee director
elected at the meeting or continuing in office following the meeting. The amount
of the award will equal (and be in lieu of) the annual retainer in effect for
the twelve-month period beginning on the date of the annual meeting ("service
year") divided by the fair market value of one share of the Company's Class A
Common Stock. The annual retainer is the amount payable to a non-employee
director for service on the Board of Directors during the service year and does
not include meeting attendance fees. The annual retainer is presently set at
$20,000. Fair market value is the average of the high and low sales price per
share of Class A Common Stock on the date of the annual meeting, as reported on
the NYSE Composite Tape. No awards will be made prior to completion of the
Equity Offerings. For periods of service on the Board of Directors preceding the
Company's first annual meeting, each non-employee director is expected to be
granted a prorated number of restricted shares of Class A Common Stock. Non-
employee directors elected to the Board of Directors between annual meetings
also will be awarded a prorated number of restricted shares based on the
duration of their service. A total of 100,000 shares of Class A Common Stock may
be issued under the 1997 Restricted Stock Plan. However, the 1997 Restricted
Stock Plan is expected to provide that no award will be made thereunder, and the
Company will have no obligation to make any award thereunder, if such award
would cause the percentage of The Hartford's beneficial ownership of the
combined voting power or the value of the

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<PAGE> 89

capital stock of the Company to fall below 80%. The shares to be issued may be
treasury shares or authorized but unissued shares or shares purchased on the
open market. The shares of Class A Common Stock that are granted under the 1997
Restricted Stock Plan will be registered in the name of the director and held in
escrow by the Company and will be subject to a restriction period (after which
restrictions will lapse) which shall mean a period commencing on the grant date
and ending on the earliest of (i) the fifth anniversary of the grant date, (ii)
upon retirement at age 72, (iii) upon a "change of control" (as defined in the
1997 Restricted Stock Plan) of the Company, (iv) death, (v) the onset of total
disability, as defined in the Hartford Investment and Savings Plan, or (vi)
resignation under certain circumstances. Except as provided above, any
resignation from board service within the restriction period will result in
forfeiture of the shares. Shares may not be sold, assigned, transferred, pledged
or otherwise disposed of during the restriction period. However, during the
restriction period, a director will have the right to vote and to receive
dividends on the shares granted under the 1997 Restricted Stock Plan.

The Board of Directors may amend, suspend or discontinue the 1997
Restricted Stock Plan at any time except that the Board of Directors may not,
without stockholder approval, take any action that would cause grants of
restricted stock under the 1997 Restricted Stock Plan to no longer be exempt
from Section 16(b) of the Exchange Act pursuant to Rule 16b-3 promulgated
thereunder or any other regulatory requirement. No amendment, suspension or
discontinuance of the 1997 Restricted Stock Plan may impair a director's right
under a restricted stock award previously granted without his or her consent.

The 1997 Restricted Stock Plan would become effective as of the date of
consummation of the Equity Offerings and terminate on December 31, 2007;
provided, however, that grants of Restricted Stock made prior to the termination
of the 1997 Restricted Stock Plan may vest following such termination in
accordance with their terms.

NON-EMPLOYEE DIRECTORS' BENEFITS

Prior to the Equity Offerings, the Company is expected to adopt the 1997
Hartford Life, Inc. Insurance Program for non-employee directors. Under the
program, the Company will provide non-employee directors with $100,000 of group
life insurance coverage and $750,000 of accidental death and dismemberment and
permanent total disability coverage while they are serving on the Board of
Directors. Non-employee directors may purchase additional benefits under this
program.

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OFFICERS

The names, ages and positions of each of the executive and other key
officers of the Company are set forth below:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------ ---- --------------------------------------------------------
<S> <C> <C>
Lowndes A. Smith.............. 57 Chief Executive Officer and President
John P. Ginnetti.............. 51 Executive Vice President, Asset Management
Thomas M. Marra............... 38 Executive Vice President, Individual Life and Annuities
Leonard E. Odell, Jr.......... 51 Senior Vice President, Specialty and International
Raymond P. Welnicki........... 48 Senior Vice President, Employee Benefits
Gregory A. Boyko.............. 45 Senior Vice President, Chief Financial Officer and
Treasurer
Lynda Godkin.................. 43 Vice President and General Counsel
Craig R. Raymond.............. 36 Vice President and Chief Actuary
Ann M. de Raismes............. 46 Vice President, Human Resources
David M. Znamierowski......... 36 Vice President, Life Investment Strategy
Lizabeth H. Zlatkus........... 38 Vice President, Group Life and Disability
William A. Godfrey............ 39 Vice President, Information Technology
Robert F. Nolan............... 42 Vice President, Corporate Relations
Walter C. Welsh............... 50 Vice President, Government Affairs
</TABLE>

Set forth below is a description of the business experience, principal
occupation and employment during at least the last five years of the executive
and other key officers of the Company.

For Mr. Smith's business experience, principal occupation and employment
history, see information under "-- Directors".

Mr. Ginnetti has been Executive Vice President and Director of Asset
Management Services of the Investment Products segment since 1994. From 1988 to
1994, he served as Senior Vice President and Director of Individual Life and
Annuities, also a division of the Investment Products segment. Mr. Ginnetti
joined Hartford Life in 1982 as General Counsel. Previously, he was Assistant
General Counsel with the Life Insurance Company of North America.

Mr. Marra has been Executive Vice President and Director of Individual Life
and Annuities of the Investment Products segment since 1996. Mr. Marra also
oversees the Individual Life Insurance segment. Mr. Marra joined Hartford Life
in 1980 as an associate actuary. He held positions of increasing responsibility
and in 1991 was named Vice President and Director of Individual Annuities. He
was elected Senior Vice President in 1994. He is the current Chairman of the
National Association of Variable Annuities. He also is a Fellow of the Society
of Actuaries.

Mr. Odell has been Senior Vice President and Director of Specialty and
International of the Employee Benefits segment since 1994. Prior to that, he was
Vice President, Chief Actuary and Director of Business Development for Hartford
Life. Mr. Odell joined Hartford Life in 1973 as Actuary and has held positions
of increasing responsibility, including Vice President and Director, Individual
Life Actuarial, Marketing and Underwriting and Vice President and Director,
Group Actuarial, Marketing and Underwriting. He is a Fellow of the Society of
Actuaries.

Mr. Welnicki has been Senior Vice President and Director of Employee
Benefits since 1994. He joined Hartford Life in 1992 as Director of Employee
Benefits Actuarial Long-Term Care. He was named Vice President of Hartford Life
in 1993. Prior to 1992, he was employed with Aetna Life & Casualty Company as
Assistant Vice President, Issues and Strategic Management. He is a Fellow of the
Society of Actuaries.

Mr. Boyko is Senior Vice President, Chief Financial Officer and Treasurer.
He joined Hartford Life in 1995 as Controller. He was elected Vice President in
1996. He previously worked at ING

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America Life Insurance Company where he held the position of Senior Vice
President and Chief Financial Officer. His prior experience included positions
at Connecticut Mutual Life Insurance Company ("CML"), where he progressed from
Controller of CML to Chief Financial Officer of Connecticut Mutual Insurance
Services. Mr. Boyko holds a Juris Doctor degree and is a Certified Public
Accountant, Chartered Life Underwriter and Chartered Financial Consultant. He is
a member of the Connecticut and American Bar Associations and the Connecticut
Society of Certified Public Accountants.

Ms. Godkin is Vice President and General Counsel. She joined Hartford Life
in 1990 as Counsel for the Employee Benefits segment. In 1994 she was named
Assistant General Counsel and Director of Hartford Life's Law Department. In
1996 she was named General Counsel of Hartford Life. She previously practiced
law at CIGNA Corporation. She began her legal career in 1981 at the law firm of
Day, Berry & Howard in Hartford, Connecticut. She is a member of the Connecticut
and American Bar Associations.

Mr. Raymond is Vice President and Chief Actuary. Since joining Hartford
Life in 1985, Mr. Raymond has held actuarial leadership positions of increased
responsibility throughout the Company. In 1992, he became Assistant Vice
President and Director of Individual Life and Annuities, Actuarial and Vice
President in 1994. Prior to joining Hartford Life, Mr. Raymond held positions at
Integon Corporation and National Life and Accident. He is a Fellow of the
Society of Actuaries and Chairman of the American Academy of Actuaries Committee
on Life Insurance.

Ms. de Raismes is Vice President and Director of Human Resources. She
joined Hartford Life in 1984 as Manager of Staffing. She has been Director of
Human Resources since 1991 and was elected Vice President in 1994. Previously,
she held human resource management positions of increasing responsibility with
SCM Corporation. She is a member of The Hartford Foundation Board of Directors.

Mr. Znamierowski is Vice President and Director of Investment Strategy. Mr.
Znamierowski joined Hartford Life in 1996 as Director of Risk Management.
Previously, he held positions with Aetna Life & Casualty Company, including Vice
President, Investment Strategy and Policy. From 1986 through 1991, Mr.
Znamierowski held positions with Salomon Brothers Inc.

Ms. Zlatkus is Vice President and Director of Group Life and Disability.
Ms. Zlatkus held positions of increasing responsibility since joining The
Hartford in 1983. She was named Vice President and Director of Risk Management
and Business Operations in 1994. Prior to joining The Hartford, she was a senior
accountant with Peat, Marwick, Mitchell & Company. She became a Certified Public
Accountant in 1982.

Mr. Godfrey is Vice President and Director of Information Technology. He
joined the senior management team at Hartford Life in 1996 to oversee technology
management. Previously, Mr. Godfrey held information technology positions at
Fleet Financial Group. He also held positions in systems development with CIGNA
Corporation and Electronic Data Systems.

Mr. Nolan is Vice President and Director of Corporate Relations. Mr. Nolan
joined Hartford Life in 1992. He was elected Vice President in 1995. Previously,
Mr. Nolan held progressively more responsible positions at Aetna Life & Casualty
Company in public relations, marketing communications and corporate
communications.

Mr. Welsh is Vice President and Director of Government Affairs. Mr. Welsh
has worked at The Hartford since 1979. Since 1993, Mr. Welsh has served as
Director of Government Relations for Hartford Life. From 1979 to 1993, Mr. Welsh
held tax management positions within the Law Department of The Hartford. He was
named Assistant General Counsel in 1984 and was named Assistant Director of
Taxes in 1986. He previously practiced law with the United States Internal
Revenue Service (the "Internal Revenue Service"). He is a member of the
Connecticut and American Bar Associations.

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EMPLOYMENT AGREEMENT

Mr. Smith is currently the only employee of the Company who is a party to
an employment agreement with The Hartford. Mr. Smith's employment agreement is
effective as of December 19, 1995 and expires on December 19, 1999. Upon
consummation of the Equity Offerings, the Company is expected to become a party
to the agreement. The agreement provides, or is expected to be amended upon
consummation of the Equity Offerings to provide, among other things: (i) a base
salary payable by the Company in an amount not less than $525,000 per annum,
(ii) participation in the benefit plans described herein, (iii) Mr. Smith's
employment as President and Chief Executive Officer of the Company and The
Hartford's life insurance subsidiaries, and as Vice-Chairman of The Hartford,
and (iv) certain payments and benefits in the event of termination, without
cause, by the Company or The Hartford such that Mr. Smith will receive salary,
on a monthly basis, equivalent in the aggregate to the amounts of salary
remaining unpaid until the expiration of the agreement, or, at the discretion of
the Company and The Hartford, the balance remaining of such aggregate amount in
a lump sum payment if Mr. Smith accepts other full-time employment; and as long
as such salary continues to be paid, he will be eligible for participation in
certain benefit plans of the Company and The Hartford and outstanding stock
options issued by the Company and The Hartford, or he will receive a termination
allowance under The Hartford's Severance Pay Program or other termination
allowance plan if such allowance exceeds the salary described above.

EXECUTIVE COMPENSATION

SUMMARY

Since the formation of the Company, none of the executive officers of the
Company has received any compensation from the Company. All compensation has
been paid by Hartford Fire, and a certain percentage of such compensation has
been allocated to the Company's life insurance subsidiaries which have
reimbursed Hartford Fire for such cost. Upon consummation of the Equity
Offerings, all compensation of the executive officers of the Company is expected
to be paid by a subsidiary of the Company.

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<PAGE> 93

The following table reflects all compensation paid by Hartford Fire to the
Company's chief executive officer and the other four most highly compensated
executive officers of the Company (the "Named Executives") for services rendered
to the Company for the fiscal year ended December 31, 1996.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
----------------
ANNUAL COMPENSATION SECURITIES
--------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(1)(#) COMPENSATION(2)($)
- ------------------------------ ---- ------------ ------------ ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Lowndes A. Smith.............. 1996 $525,000 $ 310,000 37,200 $ 21,260
Chief Executive Officer and
President
John P. Ginnetti.............. 1996 375,000 335,000 11,500 16,802
Executive Vice President,
Asset Management
Thomas M. Marra............... 1996 350,000 610,000 16,300 16,355
Executive Vice President,
Individual Life &
Annuities
Leonard E. Odell, Jr. ........ 1996 238,000 166,400 11,500 11,215
Senior Vice President,
Specialty & International
Raymond P. Welnicki........... 1996 238,000 169,500 11,500 11,911
Senior Vice President,
Employee Benefits
</TABLE>

- ---------------

(1) Represents options to purchase shares of The Hartford common stock.

(2) Amounts in this column consist of contributions by The Hartford under the
Hartford Investment and Savings Plan and the Hartford Excess Savings Plans
(defined contribution plans, as defined below), vacation time sold under The
Hartford flexible benefit programs and imputed income from group term life
insurance. Under the Hartford Investment and Savings Plan and the Hartford
Excess Savings Plans, The Hartford makes a matching contribution in an
amount equal to 50% of an employee's contribution, such matching
contributions not to exceed 3% of such employee's salary. The Hartford also
makes a non-matching contribution equal to 1/2 of 1% of an employee's
salary. The Hartford's flexible benefit programs allow for the sale back to
The Hartford of up to one week of vacation time capped at a 1996 limit of
$2,885. The group term life imputed income results from the federal tax
laws' requirement that the value of group term life insurance exceeding
$50,000 be included as taxable income.

OPTION GRANTS ON THE HARTFORD COMMON STOCK TO COMPANY EXECUTIVES IN LAST FISCAL
YEAR

The following table provides information on fiscal year 1996 grants of
options to the Named Executives to purchase shares of The Hartford common stock.
No options to acquire Company Common Stock have been granted or are outstanding.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZED
---------------------------------------------- VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PER PRICE APPRECIATION
UNDERLYING GRANTED TO SHARE FOR OPTION TERM(4)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ----------------------
NAME GRANTED(1) 1996(2) PRICE(3) DATE 5% 10%
- ------------------------------ ---------- ------------ -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Lowndes A. Smith.............. 37,200 2.60% $52.00 2/16/06 $1,216,440 $3,082,764
John P. Ginnetti.............. 11,500 0.80 52.00 2/16/06 376,050 953,005
Thomas M. Marra............... 16,300 1.14 52.00 2/16/06 533,010 1,350,761
Leonard E. Odell, Jr. ........ 11,500 0.80 52.00 2/16/06 376,050 953,005
Raymond P. Welnicki........... 11,500 0.80 52.00 2/16/06 376,050 953,005
</TABLE>

- ---------------
(1) Represents options to purchase shares of The Hartford common stock. The
options granted to Mr. Smith became fully exercisable on December 5, 1996,
when the closing price of The Hartford common stock was equal to or greater
than $65.00 for ten consecutive trading days. The options granted to Messrs.
Ginnetti, Marra, Odell and Welnicki are exercisable in three equal annual
installments commencing on the first anniversary date of the grant. The
exercisability,

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<PAGE> 94

payment or vesting of options may be accelerated upon the occurrence of a
change in control (as defined in the 1995 Hartford Incentive Stock Plan) of
The Hartford.

(2) Percentages indicated are based on options to purchase a total of 1,431,217
shares of The Hartford common stock granted to 764 employees of The Hartford
during 1996.

(3) Options were granted at exercise prices that were 100% of the fair market
value of one share of common stock of The Hartford on the date of grant. The
exercise price may be paid in cash or in shares of The Hartford common stock
valued at their fair market value on the date of exercise.

(4) At the end of the term of the options granted in 1996, the projected price
of a share of The Hartford common stock would be $84.70 and $134.87 at
assumed annual appreciation rates of 5% and 10%, respectively.

AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

The following table provides information on option exercises in 1996 by the
Named Executives and the value of each such Named Executive's unexercised
options to acquire The Hartford common stock at December 31, 1996.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED,
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS HELD AT
SHARES FISCAL YEAR-END(#) FISCAL YEAR-END(2)
ACQUIRED VALUE -------------------------- -------------------------
NAME ON EXERCISE (#) REALIZED(1) UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------- --------------- ----------- ------------- ---------- -------------
EXERCISABLE
-----------
<S> <C> <C> <C> <C> <C> <C>
Lowndes A. Smith....... -- $ -- 241,216 -- $7,201,309 $ --
John P. Ginnetti....... -- -- 30,979 27,438 1,028,808 658,702
Thomas M. Marra........ -- -- 35,582 38,891 1,112,123 898,365
Leonard E. Odell,
Jr................... -- -- 13,721 19,134 444,726 392,493
Raymond P. Welnicki.... 5,333 93,114 6,591 19,350 200,034 386,331
</TABLE>

- ---------------
(1) The value realized reflects the difference between the fair market value of
a share of The Hartford common stock on the date of exercise of the option
and the per share exercise price of such option.

(2) Values are calculated for "in-the-money" options by subtracting the exercise
price per share from the per share NYSE market price of $67.50 on December
31, 1996.

LONG-TERM INCENTIVE PLANS -- AWARDS IN FISCAL YEAR 1996

The following table provides information on long-term performance share
awards made to the Named Executives during 1996.

<TABLE>
<CAPTION>
AWARDS OF PERFORMANCE SHARES
RELATING TO THE HARTFORD COMMON ESTIMATED FUTURE PAYOUTS UNDER
STOCK IN LAST FISCAL YEAR NON-STOCK PRICE-BASED PLANS(#)(1)
------------------------------------ -------------------------------------
NAME # OF SHARES PERIOD UNTIL PAYOUT(1) THRESHOLD(#) TARGET(#) MAXIMUM(#)
- -------------------------- ----------- ---------------------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Lowndes A. Smith.......... 8,250 12/31/98 4,125 8,250 16,500
John P. Ginnetti.......... 2,550 12/31/98 1,275 2,550 5,100
Thomas M. Marra........... 3,600 12/31/98 1,800 3,600 7,200
Leonard E. Odell, Jr. .... 2,550 12/31/98 1,275 2,550 5,100
Raymond P. Welnicki....... 2,550 12/31/98 1,275 2,550 5,100
</TABLE>

- ---------------

(1) Each of the Named Executives was granted the number of performance shares
relating to The Hartford common stock set forth above. The grants are
contingent upon The Hartford achieving two general performance objectives
over a three-year period ending on December 31, 1998. The performance
objectives and the extent to which a Named Executive may be entitled to a
future payout are described under "-- Hartford Stock Plan; Prior Awards".
The threshold, target and maximum number of shares that may be awarded as
set forth in the table above are based on The Hartford equally achieving
75%, 100% and 150% or more, respectively, of each of the two performance
objectives.

COMPENSATION, BENEFIT AND RETIREMENT PLANS

As described below, prior to the Equity Offerings, the Company is expected
to adopt (and the sole stockholder prior to the Equity Offerings is expected to
approve) the 1997 Hartford Life, Inc. Incentive Stock Plan (the "1997 Stock
Plan"), 1997 Hartford Life, Inc. Deferred Restricted Stock Unit Plan (the "1997
Bonus Swap Plan") and 1997 Hartford Life, Inc. Employee Stock Purchase Plan (the
"1997 Stock Purchase Plan") in which the officers of the Company are expected to

92
<PAGE> 95

participate upon completion of the Equity Offerings and thereafter. In addition,
prior to the completion of the Equity Offerings, certain employees of the
Company, including the Named Executives, were eligible to participate in the
following benefit plans and programs operated by The Hartford: the 1995 ITT
Hartford Incentive Stock Plan (the "Hartford Stock Plan"), the 1996 ITT Hartford
Deferred Restricted Stock Unit Plan (the "Hartford Bonus Swap Plan"), the Annual
Executive Bonus Program, the Hartford Fire Insurance Company Retirement Plan for
U.S. Employees (the "Hartford Retirement Plan"), The Hartford Senior Executive
Severance Pay Program (the "Hartford Senior Executive Severance Pay Program"),
The Hartford Investment and Savings Plan (the "Hartford Investment and Savings
Plan"), the 1996 ITT Hartford Deferred Compensation Plan (the "Hartford Deferred
Compensation Plan"), the ITT Hartford Employee Stock Purchase Plan (the
"Hartford Stock Purchase Plan") and certain other plans offered within The
Hartford's employee welfare benefits program. After consummation of the Equity
Offerings, as described herein and to the extent provided in the Hartford Stock
Plan, certain employees of the Company, including the Named Executives, will
remain eligible for vesting of restricted stock of The Hartford and to receive
performance shares and exercise options previously awarded by The Hartford under
the Hartford Stock Plan. Further, upon completion of the Equity Offerings,
certain employees of the Company, including the Named Executives, will continue
to be eligible under and participate in The Hartford's plans and programs
described above with respect to compensation paid by the Company and for
services rendered to the Company after consummation of the Equity Offerings,
except that none of the employees of the Company is expected to participate in
the Hartford Bonus Swap Plan or the Hartford Stock Purchase Plan, and none of
the employees of the Company other than Mr. Smith is expected to participate in
the Hartford Stock Plan. The Company will reimburse The Hartford for any direct
costs, distributions and other expenses associated with post-Equity Offerings
payments (and corresponding reserves of the Company) to Company employees in
respect of the Hartford Stock Plan and the other Hartford plans referred to
above pursuant to the terms of the Master Intercompany Agreement. See "Certain
Relationships and Transactions -- Intercompany Arrangements -- Master
Intercompany Agreement".

The following is a description of the compensation, benefit and retirement
plans for certain employees of the Company, including the Named Executives, that
are currently expected to be adopted by the Board of Directors, and that are
maintained by The Hartford and currently cover and are expected to continue to
cover certain employees of the Company, including the Named Executives, as
described above.

1997 STOCK PLAN

One of the reasons for the Equity Offerings is to enable the Company to
provide meaningful long-term incentives for its key employees, directly related
to their individual and collective performance in enhancing stockholder value.
Once the Equity Offerings have been completed and a public market has developed
for the Class A Common Stock, market-based incentives based on stock performance
will allow the Company to provide significant incentives to key employees of the
Company. Awards of stock options and other market-based incentives will permit
key employees to profit as stockholder value is enhanced (through increases in
the market price for Class A Common Stock) and will also give the Company an
effective tool to encourage key employees to continue in the employ of the
Company.

In order to achieve these objectives, effective prior to the Equity
Offerings, the Board of Directors is expected to adopt (and the sole stockholder
of the Company prior to the Equity Offerings is expected to approve) the 1997
Stock Plan. The 1997 Stock Plan will be administered by the Compensation and
Personnel Committee. The 1997 Stock Plan provides for the grant of incentive
stock options (qualifying under Section 422 of the Internal Revenue Code),
non-qualified stock options, stock appreciation rights ("SARs"), performance
shares and restricted stock, or any combination of the foregoing, as the
Compensation and Personnel Committee may determine, as well as substitute stock
options and restricted stock for award to key employees who are permitted

93
<PAGE> 96

by the Compensation and Personnel Committee to surrender previously awarded
options or restricted stock of The Hartford as described below. The 1997 Stock
Plan will expire on December 31, 2007 but will continue in effect for awards
then outstanding for so long as such awards are outstanding. No determination
has yet been made as to the number of key employees of the Company who will be
eligible to participate in the 1997 Stock Plan.

The 1997 Stock Plan contains a formula for establishing an annual limit on
the number of shares that may be awarded (or with respect to which non-stock
Awards may be made) in any given calendar year (the "Annual Limit"). The Annual
Limit formula is expressed as a percentage of the Company's total issued and
outstanding Class A Common Stock and treasury stock as of the year end
immediately preceding the year of awards ("Plan Year"). In addition, for the
Plan Year that includes the Equity Offerings, the number of shares that may be
awarded will equal the Annual Limit plus the number of substitute Awards granted
to key employees who are entitled to and do surrender stock options and
restricted stock previously awarded by The Hartford. Under the Annual Limit
formula, the maximum number of shares of Class A Common Stock for which Awards
may be granted under the 1997 Stock Plan in each Plan Year shall be 1.5% of the
total of the issued and outstanding shares of Class A Common Stock and treasury
stock as reported in the Annual Report on Form 10-K of the Company for the
fiscal year ending immediately prior to any Plan Year, except that for the Plan
Year that includes the Equity Offerings, such maximum number shall be 1.5% of
the Company's issued and outstanding shares of Class A Common Stock immediately
following the Equity Offerings exclusive of any shares issued pursuant to the
exercise of the Underwriters' over-allotment options. Any unused portion of the
Annual Limit for any Plan Year shall be carried forward and be made available
for awards in succeeding Plan Years. In addition to the foregoing, the 1997
Stock Plan is expected to provide that no award will be made thereunder, and the
Company will have no obligation to make any award thereunder, if such award
would cause the percentage of beneficial ownership by The Hartford of the
combined voting power or the value of the capital stock of the Company to fall
below 80%.

In addition to the foregoing, in no event shall more than five million
shares of Class A Common Stock be cumulatively available for awards of options
under the 1997 Stock Plan, and provided further, that no more than 20% of the
total number of shares available on a cumulative basis shall be available for
awards of restricted Class A Common Stock and awards of performance shares
relating to Class A Common Stock. For any Plan Year, no individual key employee
may receive options to acquire Class A Common Stock or SARs for more than the
lesser of (i) 10% of the Annual Limit applicable to that Plan Year or (ii)
500,000 shares; except that, for the Plan Year that follows the date of
consummation of the Equity Offerings, each individual key employee may receive
in addition to the foregoing limit the number of substitute options to acquire
Class A Common Stock required to replace the canceled options to acquire The
Hartford common stock.

Subject to the above limitations, shares of Class A Common Stock to be
issued under the 1997 Stock Plan may be made available from the authorized but
unissued Class A Common Stock, treasury stock or from shares purchased on the
open market or any combination of the foregoing. In the event of a
reorganization, merger, stock dividend or other change in the corporate
structure of the Company or the Class A Common Stock described in the 1997 Stock
Plan, the number of shares subject to the 1997 Stock Plan, the number of shares
then subject to awards and the price per share payable on exercise of options
may be appropriately adjusted by the Compensation and Personnel Committee.

For the purpose of computing the total number of shares of stock available
for awards under the 1997 Stock Plan, there shall be counted against the
foregoing limitations the number of shares of Class A Common Stock subject to
issuance upon exercise or settlement of awards and the number of shares of Class
A Common Stock that equal the value of awards of performance shares, in each
case determined as at the dates on which such awards are granted. If any awards
under the 1997 Stock Plan are forfeited, terminated, expire unexercised, are
settled in cash in lieu of Class A Common Stock or are exchanged for other
awards, the shares of stock which were theretofore

94
<PAGE> 97

subject to such awards shall again be available for Awards under the 1997 Stock
Plan to the extent of such forfeiture, termination, expiration, cash settlement
or exchange of such awards. Further, any shares that are exchanged (either
actually or constructively) by optionees as full or partial payment to the
Company of the purchase price of shares being acquired through the exercise of a
stock option granted under the 1997 Stock Plan may be available for subsequent
awards.

The Compensation and Personnel Committee, none of whose members may receive
any award under the 1997 Stock Plan, will administer the 1997 Stock Plan,
including, but not limited to, making determinations with respect to the
designation of those key employees who shall receive awards, the number of
shares to be covered by options, SARs and restricted stock awards, the exercise
price of options (which may not be less than 100% of the fair market value of
Class A Common Stock on the date of grant), other option terms and conditions,
and the number of performance shares to be granted and the applicable
performance objectives. The Compensation and Personnel Committee may impose such
additional terms and conditions on an award as it deems advisable. The
Compensation and Personnel Committee's decisions in the administration of the
1997 Stock Plan shall be binding on all persons for all purposes.

The Compensation and Personnel Committee may in its sole discretion
delegate such administrative powers as it may deem appropriate to the chief
executive officer or other members of senior management, except that awards to
executive officers shall be made solely by the Compensation and Personnel
Committee subject to compliance with Rule 16b-3 under the Exchange Act.

Awards may be made, at the discretion of the Compensation and Personnel
Committee, to key employees of the Company and any of its subsidiaries or
affiliates (including officers and members of the Board of Directors who are
also employees) whose responsibilities and decisions directly affect the
performance of the Company and its subsidiaries.

SUBSTITUTE AND EXPECTED NEW AWARDS. In order to provide meaningful
compensation in the form of options and related rights to acquire Class A Common
Stock of the Company and restricted shares of Class A Common Stock to the
Company's key employees who surrender, upon consummation of the Equity
Offerings, options and related rights to acquire common stock of The Hartford
and restricted stock of The Hartford previously awarded pursuant to The Hartford
Stock Plan (see "-- Hartford Stock Plan"), the Compensation and Personnel
Committee is authorized to award to certain key employees of the Company
substitute non-qualified options to acquire Class A Common Stock and restricted
stock of the Company. As indicated above, the substitute options awarded to any
one individual by the Compensation and Personnel Committee for the Plan Year
following the date of consummation of the Equity Offerings shall not exceed the
number of non-qualified options necessary to preserve the economic value of the
canceled options on The Hartford common stock as determined by application of
the formulas described below. Subject to this limitation, shares of Class A
Common Stock to be issued upon the exercise of substitute stock options and
restricted shares may be made available from authorized but unissued shares,
treasury shares, shares purchased on the open market, or any combination of the
foregoing.

The following describes the 1997 awards of restricted common stock of The
Hartford and options to acquire common stock of The Hartford previously made
pursuant to the Hartford Stock Plan (see "-- Hartford Stock Plan; Prior Awards")
and the expected substitution therefor, upon consummation of the Equity
Offerings, of restricted Class A Common Stock and options to acquire Class A
Common Stock. Other than the foregoing, no substitutions of Company Awards for
Awards made by The Hartford are expected. The following also describes new
awards of restricted Class A Common Stock and performance shares of the Company
that are expected to be made upon consummation of the Equity Offerings, such
awards having been approved by The Hartford compensation and personnel committee
contingent upon consummation of the Equity Offerings.

SUBSTITUTE AND NEW RESTRICTED STOCK AWARDS. Effective January 24, 1997,
The Hartford compensation and personnel committee awarded Mr. Smith 20,000
shares of restricted common stock of The Hartford pursuant to the Hartford Stock
Plan, subject to a three-year restriction period.

95
<PAGE> 98

Upon consummation of the Equity Offerings, it is expected that 10,000 of these
restricted shares will be canceled upon surrender, and that the Company's
Compensation and Personnel Committee will issue to Mr. Smith, pursuant to the
Company's 1997 Stock Plan, a number of substitute restricted shares of Class A
Common Stock calculated as follows: The number of surrendered shares of
restricted common stock of The Hartford shall be multiplied by the arithmetic
average of the closing market price of common stock of The Hartford reported on
the NYSE during the ten trading days beginning on the trading day following the
date of consummation of the Equity Offerings (the "Hartford Average Fair Market
Value"), and then divided by the arithmetic average of the closing market prices
of the Company's Class A Common Stock reported on the NYSE during the ten
trading days beginning on the trading day following the date of the Equity
Offerings (the "Company Average Fair Market Value"), and the nearest whole
number resulting will be the number of substitute shares of restricted stock
awarded. These substitute restricted shares will be subject to the same
restriction period and other terms and conditions as the canceled restricted
shares of The Hartford.

Upon consummation of the Equity Offerings, it is expected that the
Compensation and Personnel Committee will award to Mr. Marra, pursuant to the
1997 Stock Plan, the nearest whole number of shares equal to the greater of the
amounts resulting from the following calculations: (i) the amount resulting from
multiplying 15,000 by $72.25, and then dividing the resulting amount by the
Company Average Fair Market Value, or (ii) the amount resulting from multiplying
15,000 by the Hartford Average Fair Market Value, and then dividing the
resulting amount by the Company Average Fair Market Value. One-third of these
substitute restricted shares will be subject to a three-year restriction period,
and two-thirds will be subject to a seven-year restriction period, each
restriction period to begin on the effective date of award. This award was
approved, contingent upon consummation of the Equity Offerings, by The Hartford
compensation and personnel committee on December 11, 1996.

The following table describes the substitute and new awards of restricted
Class A Common Stock expected to be made upon consummation of the Equity
Offerings.

SUBSTITUTE AND EXPECTED NEW AWARDS OF COMPANY RESTRICTED STOCK

<TABLE>
<CAPTION>
HARTFORD
COMMON STOCK
NAME EQUIVALENT
---------------------------------------------------------------------- ------------
<S> <C>
Lowndes A. Smith (substitute award)................................... 10,000
Thomas M. Marra (new award)........................................... 15,000
</TABLE>

SUBSTITUTE OPTION AWARDS. On January 24, 1997, The Hartford compensation
and personnel committee approved pursuant to the Hartford Stock Plan the award
to certain key employees of the Company of non-qualified options to acquire
common stock of The Hartford. The exercise price for these options is $72.25,
the closing market price for one share of The Hartford common stock reported on
the NYSE on January 24, 1997. The options on The Hartford common stock granted
to Mr. Smith on such date are to become exercisable on the earlier of (i) the
date the closing market price for The Hartford common stock reported on the NYSE
reaches and remains at 125% of the exercise price for such options for ten
consecutive trading days, or (ii) seven years from the date of grant. The
options on The Hartford common stock granted to Messrs. Ginnetti, Marra, Odell
and Welnicki (as well as all other key employees of the Company who were awarded
options on The Hartford common stock on January 24, 1997) are to become
exercisable in one-third increments on the first, second and third anniversaries
of the date of grant.

Upon consummation of the Equity Offerings, it is expected that the
foregoing options on The Hartford common stock will be canceled (upon surrender
within a certain time period), and that the Company's Compensation and Personnel
Committee will issue to such key employees in substitution therefor a number of
non-qualified options to acquire Class A Common Stock pursuant to the Company's
1997 Stock Plan. The number of substitute options issued to Mr. Smith will be
calculated as follows: the number of surrendered options on The Hartford common
stock shall be multiplied by

96
<PAGE> 99

the Hartford Average Fair Market Value, and then divided by the Company Average
Fair Market Value, and the nearest whole number resulting shall be the number of
substitute options awarded. The substitute options will have an exercise price
determined as follows: $72.25 shall be divided by the Hartford Average Fair
Market Value, and the resulting amount shall be multiplied by 100, resulting in
a percentage amount. This percentage amount shall be multiplied by the Company
Average Fair Market Value, resulting in the exercise price for the substitute
options. Such options will become exercisable on the earlier of (i) the date the
closing market price for the Class A Common Stock reported on the NYSE reaches
and remains at 125% of the exercise price for the substitute options for ten
consecutive trading days or (ii) seven years from the date of grant of the
canceled options. For Messrs. Ginnetti, Marra, Odell and Welnicki, the
substitute options issued will be calculated in accordance with the same formula
applicable to Mr. Smith. Such substitute options will have the same exercise
price as the substitute options granted to Mr. Smith and will become exercisable
in accordance with the same vesting schedule applicable to Mr. Smith described
above. For other key employees, the number of substitute options issued will be
calculated in accordance with the same formula applicable to Mr. Smith. The
substitute options will have the same exercise price as the substitute options
referred to above, and will become exercisable in accordance with the vesting
schedule applicable to the canceled options.

The following table describes the awards of options on The Hartford common
stock made to the Named Executives for which substitute awards of options to
acquire Class A Common Stock are expected to be made upon consummation of the
Equity Offerings.

SUBSTITUTE AWARDS OF OPTIONS TO ACQUIRE COMMON STOCK

<TABLE>
<CAPTION>
THE HARTFORD
COMMON STOCK THE HARTFORD
EXERCISE COMMON STOCK
NAME PRICE EQUIVALENT
------------------------------------------------------- ------------ ------------
<S> <C> <C>
Lowndes A. Smith....................................... $72.25 28,302
John P. Ginnetti....................................... 72.25 7,862
Thomas M. Marra........................................ 72.25 12,579
Leonard E. Odell, Jr................................... 72.25 7,862
Raymond P. Welnicki.................................... 72.25 7,862
</TABLE>

NEW PERFORMANCE SHARE AWARDS. Upon consummation of the Equity Offerings,
it is expected that the Compensation and Personnel Committee will award to
certain key employees of the Company a number of performance shares contingent
upon the Company achieving certain performance objectives described below. To
the extent that the performance objectives are achieved, a combination of cash
and shares of Class A Common Stock will be paid to such key employees pursuant
to the terms of the 1997 Stock Plan. The number of performance shares to be
awarded will be calculated as follows: the dollar value approved by The Hartford
compensation and personnel committee with respect to a key employee, contingent
upon consummation of the Equity Offerings, shall be divided by 75% of the
Company Average Fair Market Value, and the nearest whole number resulting shall
be the number of new performance shares awarded.

Under the terms of the expected performance share awards, there will be two
equally weighted performance objectives measured over the performance period
beginning with the date of consummation of the Equity Offerings and ending with
December 31, 1999: core earnings per share of the Company for purposes of
calculating performance share awards ("Performance Core Earnings") and total
stockholder return ("TSR"). Performance Core Earnings will be defined as the
Company's GAAP net income minus (i) net realized capital gains and/or losses
except for capital items related to Closed Book GRC; (ii) income or losses
associated with one-time accounting changes; (iii) the entire amount of any
individual non-catastrophe loss associated with any significant, unusual and
non-recurring charge that exceeds $100 million; and (iv) the income or losses
associated with the liabilities allocated pursuant to the Spin-Off Distribution
Agreement in connection with the ITT Spin-

97
<PAGE> 100

Off. TSR will be measured by the difference between the price of the Company's
Class A Common Stock at the beginning of the performance period and the price at
the end of such period (assuming the reinvestment of dividends paid), compared
with the TSR of the stock of the companies in the Merrill Lynch Life Insurance
Stock Index, a recognized index of publicly traded life insurance companies.
There will be a target Performance Core Earnings and TSR to be achieved in
connection with the awards, such targets having been approved, contingent upon
consummation of the Equity Offerings, by The Hartford compensation and personnel
committee. If the target is achieved, an executive will receive 100% of the
performance shares awarded (payable one-third in cash and two-thirds in Class A
Common Stock). There also will be a minimum threshold Performance Core Earnings
and TSR to be achieved, such thresholds having been approved (contingent upon
consummation of the Equity Offerings) by The Hartford compensation and personnel
committee. If the threshold amounts are not achieved, the executives will not
receive any of the performance shares awarded. If the amount of Performance Core
Earnings and TSR achieved exceeds the thresholds but falls below the targets,
the executives will receive awards adjusted downward by interpolation to reflect
falling short of the targets. If the targets are exceeded, the executives will
receive awards adjusted upward by interpolation subject to a cap approved,
contingent upon consummation of the Equity Offerings, by The Hartford
compensation and personnel committee.

The terms and conditions of each substitute award, including, without
limitation, the time or times when, and the manner in which, each substitute
award shall be exercisable, the duration of the exercise or restriction period,
the permitted method of exercise, settlement and payment, the rules that shall
apply in the event of the termination of employment of the key employee, the
events, if any, that may give rise to a key employee's right to accelerate the
time of exercise of an option and the vesting provisions of restricted stock,
shall be equitably determined to preserve the economic value of the surrendered
award of The Hartford.

The following describes the awards of performance shares expected to be
made to the Named Executives upon consummation of the Equity Offerings.

EXPECTED COMPANY PERFORMANCE SHARE AWARDS

<TABLE>
<CAPTION>
NAME DOLLAR VALUE OF AWARD
----------------------------------------------------------------- ---------------------
<S> <C>
Lowndes A. Smith................................................. $ 360,000
John P. Ginnetti................................................. 100,000
Thomas M. Marra.................................................. 160,000
Leonard E. Odell, Jr............................................. 100,000
Raymond P. Welnicki.............................................. 100,000
</TABLE>

GENERAL PLAN TERMS

STOCK OPTIONS AND RELATED SARS. Options and related SARs under the 1997
Stock Plan must expire within ten years after grant; non-qualified stock options
and related SARs will expire not more than ten years and two days after grant.
No SAR may be exercised until at least six months after it is granted. The
exercise price for options must be at least equal to the fair market value of
the Class A Common Stock on the date of grant. The exercise price for options
must be paid to the Company at the time of exercise and, in the discretion of
the Compensation and Personnel Committee, may be paid in the form of cash or
already-owned shares of Class A Common Stock or a combination thereof. During
the lifetime of a key employee, an option or SAR must be exercised only by the
key employee (or his or her estate or designated beneficiary) but no later than
three months after his or her termination of employment (or for longer periods
as determined by the Compensation and Personnel Committee). If termination is
caused by retirement, total disability or death, an option or SAR may be
exercised within five years after such termination (or such other period
determined by the Compensation and Personnel Committee), but in no event later
than the expiration of the original term of the option. If a key employee
voluntarily resigns or is terminated for cause, the options and SARs are
canceled immediately.

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PERFORMANCE SHARES. Performance shares under the 1997 Stock Plan are
contingent rights to receive future payments of Class A Common Stock, cash or a
combination thereof, based on the achievement of performance objectives as
prescribed by the Compensation and Personnel Committee. Such performance
objectives will be determined by the Compensation and Personnel Committee over a
measurement period or periods of not less than two nor more than five years and
related to at least one of the following criteria, which may be (i) determined
solely by reference to the performance of the Company, any subsidiary or
affiliate of the Company or any division or unit of any of the foregoing or (ii)
based on comparative performance of any one or more performance measures
described in the 1997 Stock Plan relative to other entities. The maximum number
of performance shares that may be granted to any individual key employee in any
given year is 100,000. The ultimate payments are determined by the number of
shares awarded and the extent that performance objectives are achieved during
the period. In the event a key employee terminates employment during such a
performance period, the key employee will forfeit any right to payment unless
the Compensation and Personnel Committee determines otherwise. However, in the
case of retirement, total disability, death or cases of special circumstances,
the key employee may, in the discretion of the Compensation and Personnel
Committee, be entitled to an award prorated for the portion of the performance
period during which he or she was employed by the Company.

RESTRICTED SHARES. Restricted shares of Class A Common Stock awarded under
the 1997 Stock Plan will be issued subject to a restriction period set by the
Compensation and Personnel Committee during which time the shares may not be
sold, transferred, assigned or pledged or otherwise disposed of. In the event an
employee terminates employment during a restriction period, all such shares
still subject to restrictions will be forfeited by the key employee and
reacquired by the Company, except when the Compensation and Personnel Committee
determines otherwise in special circumstances. The Compensation and Personnel
Committee may provide for the lapse of restrictions where deemed appropriate and
it may also require the achievement of pre-determined performance objectives in
order for such shares to vest. The recipient, as owner of the awarded shares,
shall have all other rights of a stockholder, including the right to vote the
shares and receive dividends and other distributions during the restriction
period. The restrictions may be waived, in the discretion of the Compensation
and Personnel Committee, in the event of the awardee's retirement, total
disability, death or in cases of special circumstances.

Prior to the completion of the Equity Offerings, the Board of Directors is
expected to adopt the 1997 Bonus Swap Plan, a component of the 1997 Stock Plan.
Under the 1997 Bonus Swap Plan, key employees who elect to receive a portion of
their annual bonuses in the form of contractual rights to receive shares of
Class A Common Stock after the expiration of a three-year restriction period
(the "elective shares") are awarded contractual rights to receive additional
"premium" shares of restricted Class A Common stock equal to 10% of the elective
shares. The premium shares are also subject to a three-year restriction period.
In the event a key employee terminates employment during the restriction period,
the premium shares are forfeited by the key employee and reacquired by the
Company unless the Compensation and Personnel Committee provides otherwise where
deemed appropriate in accordance with the 1997 Stock Plan. The restrictions on
the premium shares may be waived, in the discretion of the Compensation and
Personnel Committee, in the event of the key employee's retirement, total
disability, death or in cases of special circumstances. The elective shares are
nonforfeitable. The key employee will have no stockholder rights by virtue of
participation in the 1997 Bonus Swap Plan, but will have the right to direct the
voting of actual Company shares (owned by a grantor trust) corresponding to the
number of elective and premium shares awarded to the executive. Additional
elective and premium shares are awarded to a key employee equal to any dividend
paid during the restriction period on the number of shares of Class A Common
Stock corresponding to the elective and premium shares previously awarded. Such
additional elective and premium shares are subject to the same conditions as the
elective and premium shares with respect to which they are awarded. The 1997
Bonus Swap Plan is expected to provide that no awards shall be made thereunder,
and the Company shall have no obligation to make any awards thereunder, if

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<PAGE> 102

such an award would cause the percentage ownership of The Hartford of the
combined voting power and value of the capital stock of the Company to fall
below 80%.

COMPENSATION UPON CHANGE OF CONTROL. The 1997 Stock Plan provides for the
automatic protection of intended economic benefits for key employees in the
event of a change of control of the Company (i.e., upon the occurrence of an
"Acceleration Event" as defined below). Notwithstanding any other provisions of
the 1997 Stock Plan, upon the occurrence of an Acceleration Event (a) all
options and SARs will generally become immediately exercisable for a period of
60 calendar days; (b) options and SARs will continue to be exercisable for a
period of seven months in the case of an employee whose employment is terminated
other than for "just cause" (as defined in the 1997 Stock Plan) or who
voluntarily terminates employment because of a good faith belief that such
employee will not be able to discharge his or her duties; (c) SARs exercised
during the 60-day period will be settled fully in cash based on a formula price
generally reflecting the highest price paid for a share of Class A Common Stock
during the 60-day period preceding the date such SARs are exercised; (d)
"limited stock appreciation rights" shall automatically be granted on all
outstanding options not otherwise covered by SARs, which shall generally be
immediately exercisable in full and which shall entitle the holders to the same
exercise period and formula price referred to in clauses (a), (b) and (c) above;
(e) outstanding performance share awards shall automatically vest, with the
valuation of such performance shares based on the formula price; and (f)
restrictions applicable to awards of restricted stock shall be automatically
waived.

"Acceleration Event" is generally defined in the 1997 Stock Plan as any of
the following events: (i) a report on Schedule 13D shall be filed with the
Commission pursuant to Section 13(d) of the Exchange Act disclosing that any
person (within the meaning of Section 13(d) of the Exchange Act), other than the
Company or a subsidiary of the Company or The Hartford or a subsidiary of The
Hartford or any employee benefit plan sponsored by the Company or a subsidiary
of the Company or The Hartford or a subsidiary of The Hartford, is the
beneficial owner (as such term is defined in Rule 13d-3 under the Exchange Act)
directly or indirectly of the greater of (A) the percentage of the outstanding
Common Stock owned at the time by The Hartford or (B) 20% or more of the
outstanding Common Stock (calculated as provided in paragraph (d) of Rule 13d-3
under the Exchange Act in the case of rights to acquire Common Stock); (ii) any
person (within the meaning of Section 13(d) of the Exchange Act), other than the
Company or a subsidiary of the Company or The Hartford or a subsidiary of The
Hartford or any employee benefit plan sponsored by the Company or a subsidiary
of the Company or The Hartford or a subsidiary of The Hartford, shall purchase
shares pursuant to a tender offer or exchange offer to acquire any Common Stock
(or securities convertible into such Common Stock) for cash, securities or any
other consideration; provided that after consummation of the offer, the person
in question is the beneficial owner (as such term is defined in Rule 13d-3 under
the Exchange Act) directly or indirectly of the greater of (A) the percentage of
the outstanding Common Stock owned at the time by The Hartford or (B) 15% or
more of the outstanding Common Stock (calculated as provided in paragraph (d) of
Rule 13d-3 under the Exchange Act in the case of rights to acquire Common
Stock); (iii) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of Common Stock
would be converted into cash, securities or other property, other than a merger
of the Company in which holders of Common Stock immediately prior to the merger
have the same proportionate ownership of common stock of the surviving
corporation immediately after the merger as immediately before or (B) any sale,
lease, exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of the Company; or (iv)
there shall have been a change in a majority of the members of the Board of
Directors within a twelve-month period unless the election or nomination for
election by the Company's stockholders of each new director during such
twelve-month period was approved by the vote of two-thirds of the directors then
still in office who were directors at the beginning of such twelve-month period.
The 1997 Stock Plan is expected to provide that a sale of The Hartford's
interest in the Company will not be considered an Acceleration Event. The 1997
Stock Plan also is expected to provide that if an

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<PAGE> 103

Acceleration Event (as defined above) occurs with respect to The Hartford at a
time when The Hartford owns more than 50% of the combined voting power and value
of the capital stock of the Company, then an Acceleration Event will be deemed
to have occurred at such time with respect to the Company for purposes of the
1997 Stock Plan.

AMENDMENT AND TERMINATION OF THE 1997 STOCK PLAN. The Board of Directors
may amend or discontinue the 1997 Stock Plan at any time and, specifically, may
make such modifications to the 1997 Stock Plan as it deems necessary to avoid
the application of Section 162(m) of the Internal Revenue Code and the United
States Treasury regulations issued thereunder. However, stockholder approval is
required for certain amendments, including any amendment applicable to tax
qualified options which may (i) increase the number of shares reserved for
awards (except as provided in the 1997 Stock Plan with respect to stock splits
or other similar changes) or (ii) materially change the group of employees
eligible for Awards.

1997 EMPLOYEE STOCK PURCHASE PLAN

Prior to the completion of the Equity Offerings, the Board of Directors is
expected to adopt (and the sole stockholder of the Company prior to the Equity
Offerings is expected to approve) the 1997 Stock Purchase Plan. The 1997 Stock
Purchase Plan is intended to meet the applicable requirements of Section 423 of
the Internal Revenue Code. Under the 1997 Stock Purchase Plan, all full-time and
certain part-time employees of the Company who meet certain minimum service
requirements will be eligible to purchase shares of Class A Common Stock by
means of payroll deductions. Eligible employees may elect to participate in
quarterly offering periods ("Purchase Periods") under the 1997 Stock Purchase
Plan by authorizing after-tax payroll deductions of up to 10% (in whole
percentages) of their salary for the purchase of shares of Class A Common Stock
under the Stock Purchase Plan. The 1997 Stock Purchase Plan will have a term of
five years. The price at which shares of Class A Common Stock will be purchased
at the end of each Purchase Period will be 85% of the Fair Market Value (as
defined in the 1997 Stock Purchase Plan) at the beginning or end of the Purchase
Period, whichever is less. No participating employee will be entitled in any
Purchase Period under the 1997 Stock Purchase Plan to purchase Class A Common
Stock having an aggregate Fair Market Value at the beginning of such Purchase
Period in excess of $21,250. Further, the 1997 Stock Purchase Plan is expected
to provide that no Class A Common Stock may be purchased thereunder, and the
Company will have no obligation to permit the purchase of Class A Common Stock
thereunder, if such purchase would cause the percentage of beneficial ownership
by The Hartford of the combined voting power or the value of the capital stock
of the Company to fall below 80%. Additional restrictions may apply to employees
deemed to be "insiders" under Section 16 of the Exchange Act in order to comply
with the exemption provided by Rule 16b-3 under the Exchange Act. Shares of
Class A Common Stock available for issuance under the 1997 Stock Purchase Plan
may be made available from treasury shares, authorized but unissued shares,
reacquired shares, shares purchased on the open market, or any combination of
the foregoing.

HARTFORD STOCK PLAN; PRIOR AWARDS

The Hartford Stock Plan has been in place since December 1995. The terms
and provisions of the Hartford Stock Plan are identical in material part to
those of the Company's 1997 Stock Plan (see "-- 1997 Stock Plan"), except that
awards are made to key employees of The Hartford and its subsidiaries and
affiliates by and in the discretion of The Hartford compensation and personnel
committee pursuant to the Hartford Stock Plan in the form of tax-qualified
incentive stock options and nonqualified options and related rights to acquire
common stock of The Hartford, SARs relating to common stock of The Hartford,
performance shares payable in cash and common stock of The Hartford, and
restricted common stock of The Hartford. After consummation of the Equity
Offerings, the employees of the Company will remain eligible for awards under
the Hartford Stock Plan, however, The Hartford compensation and personnel
committee is not expected to make awards pursuant to the Hartford Stock Plan to
any employees of the Company except Mr. Smith.

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<PAGE> 104

As indicated above, a portion of the award of restricted shares of common
stock of The Hartford made to Mr. Smith pursuant to the Hartford Stock Plan is
expected, upon consummation of the Equity Offerings, to be canceled upon
surrender thereof, and restricted shares of Class A Common Stock of the Company
are expected to be issued in substitution therefor pursuant to the 1997 Stock
Plan. See "-- 1997 Stock Plan -- Substitute and New Restricted Stock Awards".

Certain options to acquire common stock of The Hartford granted to key
employees of the Company on February 14, 1996 pursuant to the Hartford Stock
Plan will not be subject to cancelation and substitution. For Mr. Smith, such
options have an exercise price of $52 per share and are presently exercisable.
For Messrs. Ginneti, Marra, Odell and Welnicki, such options are to become
exercisable in one-third increments on the first, second and third anniversaries
of the grant date, and are subject to the general terms of the Hartford Stock
Plan. However, as indicated above, options to acquire common stock of The
Hartford approved by The Hartford compensation and personnel committee on
January 24, 1997, for award to executives of the Company pursuant to the
Hartford Stock Plan on January 24, 1997, are expected upon consummation of the
Equity Offerings to be canceled upon surrender, and substitute options to
acquire Class A Common Stock of the Company issued therefor. See "-- Substitute
Option Awards".

On January 24, 1997, The Hartford compensation and personnel committee
awarded Mr. Smith options to acquire 18,868 shares of common stock of The
Hartford pursuant to the Hartford Stock Plan. These options will not be subject
to substitution. These options have an exercise price of $72.25 per share, and
will become exercisable on the earlier of (i) the date the closing market price
for The Hartford's common stock reported on the NYSE reaches and remains at 125%
of the exercise price for such options for ten consecutive trading days or (ii)
seven years from the date of grant.

On February 14, 1996, The Hartford compensation and personnel committee
made contingent awards of performance shares to certain key employees of the
Company, including the Named Executives. The awards are contingent upon The
Hartford achieving certain performance objectives described below. To the extent
that the performance objectives are achieved, cash and shares of The Hartford
common stock will be granted to such key employees pursuant to the performance
share provisions of the Hartford Stock Plan. These performance shares awarded to
key employees of the Company on February 14, 1996 will not be subject to
cancelation and substitution, but rather will become payable after the
performance period to the extent described below.

Under the terms of the awards, there are two equally weighted performance
objectives measured over the 1996-1998 three-year performance period: core
earnings per share of The Hartford ("Hartford Core Earnings") and TSR. Hartford
Core Earnings is defined as The Hartford's net income minus: (i) net realized
capital gains or losses; (ii) income or losses due to changes in methods of
accounting; (iii) the amount of losses from individual catastrophes in excess of
1% of worldwide property-casualty earned premium for the year; (iv) the amount
of any individual non-catastrophe loss associated with any non-recurring charge
that exceeds $100 million; and (v) the income or loss associated with
allocations resulting from the liability sharing agreement entered into in
connection with the ITT Spin-Off. TSR is measured by the difference between the
price of The Hartford's common stock at the beginning of the 1996-1998
performance period and the price at the end of the performance period (assuming
the reinvestment of dividends paid), compared with the TSR of the stock of a
group of peer insurance companies.

The Hartford compensation and personnel committee established a target
Hartford Core Earnings and a TSR to be achieved in connection with the awards.
If the target is achieved, a key employee will receive 100% of the performance
shares awarded (payable one-third in cash and two-thirds in common stock of The
Hartford). The Hartford compensation and personnel committee also established a
threshold (minimum) Hartford Core Earnings and TSR to be achieved. If the
threshold amounts are not achieved, the key employees will not receive any of
the performance shares awarded. If the amount of Hartford Core Earnings and TSR
achieved exceeds the thresholds

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<PAGE> 105

but falls below the targets, the key employees will receive awards adjusted
downward by interpolation to reflect falling short of the targets. If the
targets are exceeded, the key employees will receive awards adjusted upward by
interpolation subject to a cap established by The Hartford compensation and
personnel committee.

On January 24, 1997, the Hartford compensation and personnel committee
awarded Mr. Smith 4,444 performance shares relating to common stock of The
Hartford pursuant to the Hartford Stock Plan. This award will not be subject to
substitution. The terms of the award are substantially similar to those
described above with respect to awards of performance shares made on February
14, 1996, except that the performance period for the award runs from 1997 to
1999 and the "Performance Share Core Earnings" definition applies.

ANNUAL EXECUTIVE BONUS PROGRAM

Certain executives and key managers of the Company, including the Named
Executives, will be eligible to participate in an annual incentive bonus program
(the "Annual Bonus Program") administered by The Hartford. Under this program,
each executive and key manager is assigned a target bonus opportunity based on
grade and position, expressed as a percentage of the individual's year end base
salary rate (a "target bonus"). At year end, the aggregate amount of individual
target bonuses is adjusted in accordance with a pre-established formula to
create a bonus pool for the year.

For 1996, the Company measures net income and ROE against budgeted amounts
for the year and the measures are weighted 60% and 40% respectively. Corporate
staff, including Mr. Smith, will be measured by a weighted average performance
factor for the Company. The maximum bonus pool is 200% of the aggregated target
bonus pool. Individual bonus amounts within the authorized pool are determined
on a discretionary basis taking into account specific personal contributions
during the year.

For 1996, incentive bonus programs were developed for Messrs. Ginnetti,
Marra, Welnicki and Odell. Financial measures and target bonuses are unique to
each such Named Executive. At year end, the individual target bonuses are
adjusted in accordance with the pre-established formula under each plan, with a
maximum bonus payout at 200% of target. The incentive formulas used to calculate
these individual target bonuses are based on various financial measures,
including ROE, net income and sales for the respective areas of responsibility
for such individuals, as well as the Company's net income and certain other
discretionary measures.

During 1996, the target bonus adjustment factors pursuant to the above
formulas were 178.7% for Mr. Ginnetti, 290.5% for Mr. Marra, 142.4% for Mr.
Welnicki and 139.8% for Mr. Odell. In total, approximately $4,297,000 was
authorized for expenditure to approximately 100 executives and key managers of
the Company, including the amounts indicated in the Summary Compensation Table
for the Named Executives.

Bonus awards for certain Company executives that are payable in 1997 are
subject to approval by The Hartford compensation and personnel committee and
Company senior line of business management.

For 1997, the formula for the Company's bonus program, which includes Mr.
Smith, measures core earnings and ROE against budgeted amounts for the year,
weighted at 60% and 40% respectively.

For 1997, incentive bonus programs, similar to those described above for
1996, have been developed for Messrs. Ginnetti, Marra, Odell and Welnicki.
Financial measures, including a core earnings measure for bonus purposes, and
target bonuses are unique to each executive. At year end, the individual target
bonuses are adjusted in accordance with the pre-established formula under each
plan, with a maximum bonus payout at 200%. These individual target bonuses are
calculated in a manner substantially similar to the 1996 incentive bonus
programs.

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<PAGE> 106

HARTFORD RETIREMENT PLAN

The Hartford Retirement Plan covered substantially all eligible U.S.
salaried employees of the Company and its subsidiaries, including the Named
Executives, prior to the Equity Offerings and will continue to do so after the
completion thereof. An employee's annual pension will equal 2% of his or her
average final compensation up to thirty years of benefit service, reduced by
1 2/3% of the employee's primary Social Security benefit for each such year of
benefit service; provided that no more than one-half of an employee's primary
Social Security benefit is used for such reduction. An employee's average final
compensation is defined under the Hartford Retirement Plan as the total of (i)
an employee's average annual base salary earned in the 60 calendar months during
the last 120 consecutive calendar months of eligible service affording the
highest such average, plus (ii) a member's average annual compensation not
including base salary for the five calendar years of the member's last 120
consecutive calendar months of eligible service affording the highest such
average. The Hartford Retirement Plan also provides for undiscounted early
retirement pensions for employees who retire at or after age 60 following
completion of fifteen years of eligibility service. An employee will be vested
in benefits accrued under the Hartford Retirement Plan upon completion of five
years of eligibility service.

Applicable federal law limits the amount of benefits that can be paid and
compensation that may be recognized under a tax-qualified retirement plan.
Therefore, The Hartford has non-qualified unfunded retirement plans (the
"Hartford Excess Retirement Plans") for payment of those benefits at retirement
for eligible employees that cannot be paid from the qualified Hartford Fire
Retirement Plan. After the completion of the Equity Offerings, certain employees
of the Company, including the Named Executives, also will remain eligible to
participate in the Hartford Excess Retirement Plans. The practical effect of the
Hartford Excess Retirement Plans is to continue calculation of retirement
benefits for all employees on a uniform basis. The Hartford also maintains an
excess plan trust under which excess benefits under the Hartford Excess
Retirement Plans for certain officers of The Hartford are funded. Any such
employee may indicate a preference, subject to certain conditions, to receive
any excess benefit in the form of a single discounted lump sum payment. Any
"excess" benefit accrued to any such employee will be immediately payable in the
form of a single discounted lump sum payment upon the occurrence of a change in
corporate control (as defined in the Hartford Excess Retirement Plan). Upon the
completion of the Equity Offerings, such excess plan trust will continue to
provide such benefits to any eligible Company officers.

Based on various assumptions as to remuneration and years of service,
before Social Security reductions, the following table illustrates the estimated
annual benefits payable from the Hartford Fire Retirement Plan at retirement at
age 65 that are paid for by the Company.

PENSION PLAN TABLE

<TABLE>
<CAPTION>
AVERAGE YEARS OF SERVICE
FINAL ------------------------------------------------
COMPENSATION 15 20 25 30
------------------------------------ --------- --------- --------- ---------
<S> <C> <C> <C> <C>
$ 50,000.......................... $ 15,000 $ 20,000 $ 25,000 $ 30,000
100,000.......................... 30,000 40,000 50,000 60,000
300,000.......................... 90,000 120,000 150,000 180,000
500,000.......................... 150,000 200,000 250,000 300,000
750,000.......................... 225,000 300,000 375,000 450,000
1,000,000.......................... 300,000 400,000 500,000 600,000
1,500,000.......................... 450,000 600,000 750,000 900,000
</TABLE>

The amounts shown under "Salary" and "Bonus" opposite the names of the
Named Executives in the Summary Compensation Table in "-- Executive
Compensation -- Summary Compensation Table" comprise the compensation that is
used for purposes of determining "average final compensation" under the plan.
The years of service with the Company of each of the Named Executives for
eligibility and benefit purposes as of December 31, 1996, are as follows: Mr.
Smith,

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28.75 years; Mr. Ginnetti, 14.5 years; Mr. Marra, 16.58 years; Mr. Odell, 23.33
years; and Mr. Welnicki, 4.17 years.

HARTFORD SENIOR EXECUTIVE SEVERANCE PAY PROGRAM

The Hartford Senior Executive Severance Pay Program applies to the
Company's senior executives, including, as of December 31, 1996, the Named
Executives. Under the Hartford Senior Executive Severance Pay Program, if a
participant's employment is terminated by the Company, other than for misconduct
or other disciplinary action or in other events specified in the program, the
participant is entitled to severance pay in an amount up to 24 months of base
salary from the Company depending upon his or her length of service, except that
Mr. Smith is entitled to severance pay for the greater of (i) the remaining term
of his employment contract (his current contract expires on December 19, 1999),
or (ii) 24 months. The Hartford Senior Executive Severance Pay Program provides,
however, that in no event shall severance pay (for the Company's senior
executives, including the Named Executives other than Mr. Smith) exceed the
amount of base salary from the Company for the number of months remaining
between the termination of employment and the participant's normal retirement
date, and that in no event shall the total amount of severance pay exceed two
times the participant's total annual compensation during the year immediately
preceding such termination. The Hartford Senior Executive Severance Pay Program
includes offset provisions for other compensation from the Company and
requirements on the part of executives with respect to non-competition and
compliance with certain standards of conduct. Under the Hartford Senior
Executive Severance Pay Program, severance payments would ordinarily be made
periodically over the scheduled term of such payments, however the Company and
The Hartford have the option to make such payments in the form of a single
lump-sum payment discounted to present value.

The annual base salaries of Messrs. Smith, Ginnetti, Marra, Odell and
Welnicki as of December 31, 1996 were $525,000, $375,000, $350,000, $238,000 and
$238,000, respectively.

HARTFORD INVESTMENT AND SAVINGS PLAN

The salaried employees of the Company who, prior to the Equity Offerings,
have been participants in the Hartford Investment and Savings Plan, including
the Named Executives, will continue to be eligible to participate in the Plan
after the completion of the Equity Offerings. However, future employer
contributions to the Hartford Investment and Savings Plan on behalf of Company
employees will be made in Class A Common Stock of the Company, and a new
investment fund permitting employees of the Company and The Hartford to invest
their own prior and future contributions in the Company's stock will be added to
the Plan. Employees of the Company may also elect to transfer to the new
investment fund, within a certain time period, contributions previously made by
The Hartford on their behalf. The Hartford Investment and Savings Plan is a
defined contribution plan that is intended to be tax-qualified under Sections
401(a) and 401(k) of the Internal Revenue Code. The Hartford Investment and
Savings Plan is expected to provide that no contributions of Class A Common
Stock will be made thereunder, and the Company and The Hartford shall have no
obligation to make or permit any contribution thereunder, if such contribution
would cause the percentage of beneficial ownership by The Hartford of the
combined voting power or the value of the capital stock of the Company to fall
below 80%.

Federal legislation limits the annual contributions which an employee may
make to the Investment and Savings Plan. Accordingly, The Hartford has adopted
Excess Savings Plans (the "Hartford Excess Savings Plans") and, after the
completion of the Equity Offerings, the Company's employees will continue to be
eligible for the Hartford Excess Savings Plans, which will enable an employee
who is precluded by these limitations from contributing six percent of salary to
the Hartford Investment and Savings Plan to make up the shortfall through salary
deferrals to the Hartford Excess Savings Plan and thereby receive an amount
credited to a book reserve account maintained by The Hartford equal to the three
percent maximum matching employer contribution

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<PAGE> 108

and one-half of one percent non-matching employer contribution otherwise
allowable under the Hartford Investment and Savings Plan. Salary deferrals,
employer contributions and imputed earnings will be entered into a book reserve
account maintained by The Hartford for each participant in the Hartford Excess
Savings Plan.

HARTFORD DEFERRED COMPENSATION PLAN

Employees of The Hartford who meet certain salary level standards have been
participants in the Hartford Deferred Compensation Plan. It is intended that the
employees of the Company, including the Named Executives, who meet such
standards will continue to be eligible for the Deferred Compensation Plan after
the completion of the Equity Offerings. Under the Hartford Deferred Compensation
Plan, eligible employees with eligible compensation of $200,000 or more could
elect to defer receipt of up to 100% of their 1997 bonus. The Hartford will
credit participating employees a hypothetical return on the deferred
compensation based upon the performance of benchmark investment funds made
available under the plan and selected by the executive to measure such return.

EMPLOYEE WELFARE BENEFITS

After the date of completion of the Equity Offerings, salaried employees of
the Company and its participating subsidiaries, including the Named Executives,
will continue to participate in the broad-based employee welfare benefits
program which is currently sponsored by The Hartford. The Company's salaried
employees will participate in The Hartford's comprehensive benefits program
which will include group medical and dental coverage, group life insurance and
other benefit plans, in addition to the pension program and investment and
savings plan available to salaried employees of The Hartford described
previously.

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth at March 14, 1997, the beneficial ownership
of common stock, par value $.01 per share, of The Hartford by the Company's
directors, the Named Executives and all the directors and executive officers of
the Company as a group.

<TABLE>
<CAPTION>
AMOUNT
BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED(1)(2)
--------------------------------------------------------------- -----------
<S> <C>
Ramani Ayer.................................................... 265,298
Donald R. Frahm................................................ 379,536
Paul G. Kirk, Jr. ............................................. 1,873
Lowndes A. Smith............................................... 265,698
H. Patrick Swygert............................................. 606
DeRoy C. Thomas................................................ 26,624
Gordon I. Ulmer................................................ 2,863
David K. Zwiener............................................... 115,333
John P. Ginnetti............................................... 98,036
Thomas M. Marra................................................ 63,219
Leonard E. Odell, Jr. ......................................... 29,880
Raymond P. Welnicki............................................ 14,140
All directors and executive officers of the Company 1,276,508
as a group (15) persons).....................................
</TABLE>

- ---------------

(1) All shares are owned directly except as otherwise indicated below. Pursuant
to regulations of the Commission, shares (i) that may be acquired by
directors and executive officers upon exercise of stock options exercisable
within sixty days after March 14, 1997, (ii) allocated to the accounts of
certain directors and executive officers under the Hartford

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Investment and Savings Plan based on a valuation of plan accounts as of
December 31, 1996, (iii) acquired by directors and executive officers under
the Hartford Dividend Reinvestment and Cash Payment Plan through March 14,
1997, (iv) owned by a director's or executive officer's spouse or minor
child or (v) that have been granted under the Hartford Incentive Stock Plan
or the 1995 ITT Hartford Group, Inc. Restricted Stock Plan for Non-Employee
Directors and are restricted, but as to which the directors or executive
officers have the right to vote, are deemed to be beneficially owned by such
directors and executive officers as of such date and are included in the
number of shares listed in the table above.

Of the number of shares shown above, the following represent shares that may
be acquired upon exercise of stock options that are exercisable within sixty
days after March 14, 1997 by: Mr. Smith, 241,216 shares; Mr. Ginnetti,
38,165 shares; Mr. Marra, 55,216 shares; Mr. Odell, 19,901 shares; Mr.
Welnicki, 13,240 shares; and all directors and executive officers as a
group, 1,024,518 shares.

(2) The shares of The Hartford's common stock beneficially owned by each person
named above do not exceed one percent of the issued and outstanding shares
of common stock of The Hartford. The shares beneficially owned by the group
of directors and executive officers are approximately one percent of such
issued and outstanding shares.

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CERTAIN RELATIONSHIPS AND TRANSACTIONS

GENERAL

The Hartford is currently the beneficial owner of all the capital stock of
the Company. Following the Equity Offerings, The Hartford will continue to be
the controlling stockholder of the Company and will beneficially own 100% of the
outstanding Class B Common Stock, which will represent approximately % of the
combined voting power of all the outstanding Common Stock and approximately %
of the economic interest in the Company (or approximately % and %,
respectively, if the Underwriters' over-allotment options are exercised in
full). For so long as The Hartford continues to beneficially own shares of
Common Stock representing more than 50% of the outstanding combined voting power
of the Common Stock, it generally will be able to approve any matter submitted
to a vote of the stockholders, including, among other things, the election of
the entire Board of Directors or the amendment of the Certificate of
Incorporation and By-laws without the consent of the other stockholders of the
Company. In addition, through its controlling beneficial ownership of the
Company (as well as certain provisions of the Master Intercompany Agreement
discussed under "Intercompany Arrangements -- Master Intercompany Agreement"),
The Hartford will be able to exercise a controlling influence over the business
and affairs of the Company, including determinations with respect to mergers or
other business combinations involving the Company, the acquisition or
disposition of assets by the Company, the Company's access to the capital
markets, the payment of dividends and any change in control of the Company. In
the foregoing situations or otherwise, various conflicts of interest or areas of
competition between the Company and The Hartford could arise. Furthermore,
ownership interests of directors or officers of the Company in common stock of
The Hartford or service as a director or officer of both the Company and The
Hartford could create or appear to create potential conflicts of interest when
directors and officers are faced with decisions that could have different
implications for the Company and The Hartford.

COMPETITION

The Hartford historically has conducted the operations of its Investment
Products, Individual Life Insurance and Employee Benefits segments (each as
described in this Prospectus) in the United States and Canada solely through the
Company and its subsidiaries. The Hartford has informed the Company that it
currently intends to continue this strategy with respect to those products and
services currently being offered by the Company through those business segments.
Separately, The Hartford has informed the Company that The Hartford intends to
engage in efforts to provide investment management services to large businesses,
some of which may be customers of the Company. The Company currently does not
plan to enter those lines of business in the United States and Canada in which
The Hartford or any of its subsidiaries (other than the Company or any of its
subsidiaries) currently operates. The Hartford provides commercial
property-casualty insurance, property-casualty reinsurance and personal lines
(including homeowners and auto) coverages.

The Hartford historically has conducted its international life insurance
and investment products operations both through the Company and its subsidiaries
and through other subsidiaries of The Hartford. Currently, The Hartford holds
life insurance and investment products operations internationally through direct
or indirect wholly owned subsidiaries in The Netherlands, Spain and the United
Kingdom, while the Company operates lines of business in Brazil and Argentina.
There is no current intention on the part of the Company or The Hartford,
respectively, to enter such lines of business in countries in which The Hartford
or the Company, respectively, currently operates.

The Certificate of Incorporation of the Company provides that, subject to
any contractual agreements of the Company to the contrary, and subject to
applicable law, The Hartford or any subsidiary thereof (other than the Company
or any of its subsidiaries) will have the right to compete with the Company or
any of its subsidiaries. For a further discussion of the Company's Certificate
of

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Incorporation, see "Certain Provisions of the Certificate of Incorporation and
By-laws of the Company". It is possible that areas of competition and conflicts
of interest may arise between the two companies or their respective subsidiaries
in the future. No assurance can be given that such areas of competition or
conflicts of interest will not arise or will be resolved in a manner favorable
to the Company.

The Hartford has advised the Company that its current intent is to continue
to hold all the Class B Common Stock it beneficially owns. However, The Hartford
has no contractual obligation to retain its shares of Class B Common Stock,
except for a limited period described in "Underwriting". In addition, the
Company has agreed that it will, upon the request of The Hartford, use its best
efforts to effect the registration under applicable federal and state securities
laws of any shares of Common Stock held by The Hartford or any of its
affiliates. See "Certain Relationships and Transactions -- Intercompany
Arrangements -- Master Intercompany Agreement". The address of The Hartford is
Hartford Plaza, Hartford, Connecticut 06115.

BOARD OF DIRECTORS

Promptly following the Equity Offerings, The Hartford and the Company
expect to elect two additional directors of the Company who will be persons not
currently or formerly associated with The Hartford or the Company. The Board of
Directors will then consist of ten members, including eight who are directors
and/or officers of The Hartford. See "Management -- Directors". Members of the
Board of Directors will be divided into three classes and serve staggered
three-year terms. The Hartford will have the ability to change the size and
composition of the Company's Board of Directors.

INTERCOMPANY ARRANGEMENTS

The Company's relationship with The Hartford will be governed by, among
other things, certain agreements to be entered into in connection with the
Equity Offerings and possibly in the future, including the Master Intercompany
Agreement, the Investment Management Agreements, the Tax Sharing Agreement and
the Simsbury Sublease, the material terms of which are summarized below. The
agreements entered into in connection with the Equity Offerings generally will
maintain the relationship between the Company and The Hartford in a manner
consistent in all material respects with past practice. Under applicable
insurance holding company laws, agreements between the Company's insurance
subsidiaries and The Hartford or its affiliates must be fair and reasonable and
may be subject to the approval of applicable state insurance commissioners.
However, none of these agreements, nor any agreements entered into in the future
between the Company and The Hartford or their respective subsidiaries (for so
long as The Hartford maintains controlling beneficial ownership in the Company)
will result from arm's-length negotiations and, as a result, the terms of
certain of such agreements may be less favorable to the Company than could be
obtained from an independent third party.

The descriptions set forth below are intended to be summaries and, while
material terms of the agreements are set forth herein, the descriptions are
qualified in their entirety by reference to the relevant agreement or form
thereof filed with the Registration Statement of which this Prospectus forms a
part.

MASTER INTERCOMPANY AGREEMENT

SERVICES. The Company and The Hartford will enter into the Master
Intercompany Agreement which will identify those services that The Hartford will
agree to provide to the Company and that the Company will agree to provide to
The Hartford, with the costs of such services allocated according to established
methodologies determined on an annual basis by The Hartford, in its sole
discretion, after consultation with the Company, which evidence each such
party's fair and reasonable share of such costs. Such allocation of costs for
such services provided in prior years is reflected in the

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Consolidated Financial Statements. In particular, The Hartford intends to allow
eligible employees of the Company to continue to participate in The Hartford's
employee benefit plans.

The general purpose of the Master Intercompany Agreement is to ensure that
The Hartford continues to provide to the Company the range of services provided
prior to the Equity Offerings. These services include, among others, certain
corporate relations, executive, government affairs, human resources, legal,
investment, finance, real estate, information management, internal audit, cash
management, tax and treasury services.

In addition, the Company will have the exclusive right under the Master
Intercompany Agreement to distribute certain of its products through The
Hartford. The Hartford will not solicit or encourage any of its independent
agents to (x) sell or endorse any products of another company similar in type
and nature to such products of the Company or (y) transfer any of such
independent agents' in force business of the Company with respect to such
products to another company.

APPROVAL OF CORPORATE ACTIVITIES. The Master Intercompany Agreement also
will require that, prior to the date on which The Hartford ceases to
beneficially own 50% or more of the combined voting power of the Common Stock
then outstanding, neither the Company nor any of its subsidiaries may undertake
or agree to undertake any of the following without the prior written consent of
The Hartford:

(i) any merger or consolidation (or equivalent transaction) of the
Company or any of its subsidiaries with or into any corporation,
partnership, joint venture or any other person, or division thereof, which
merger or consolidation (or equivalent transaction) is material to the
Company and its subsidiaries taken as a whole;

(ii) the acquisition by the Company or any of its subsidiaries of a
majority of the issued and outstanding shares of capital stock or all or
substantially all the assets of any corporation, partnership, joint venture
or any other person involving consideration or value in excess of $5
million;

(iii) any sale, assignment, lease, transfer or other disposition, or
the pledge, mortgage or encumbrance, of assets of the Company or a
subsidiary other than (w) any transaction in the ordinary course of
business and consistent with past practice, (x) any acquisition,
disposition or transfer of securities pursuant to investment portfolio
decisions in the ordinary course of business and consistent with past
practice, (y) any transaction between or among any of the Company and its
subsidiaries or (z) any transaction, or series of related transactions,
which does not involve aggregate consideration or value in excess of $5
million;

(iv) any transaction, or series of related transactions, not
specifically enumerated in subparagraphs (i) through (iii) above, involving
aggregate consideration, value or liabilities in excess of $10 million or
that is otherwise material to the Company and its subsidiaries taken as a
whole;

(v) any transaction, or series of related transactions, that could
have a material effect on The Hartford;

(vi) any increase or decrease in, or the reclassification of, the
authorized capital stock of the Company or the creation of any class or
series of capital stock of the Company;

(vii) the dissolution, liquidation or winding up of the Company;

(viii) any redemption, acquisition or issuance by the Company of any
shares of its capital stock or any options, warrants or rights to acquire
such capital stock or securities convertible into or exchangeable for
capital stock, other than issuances in respect of and pursuant to the
requirements of the 1997 Hartford Life, Inc. Restricted Stock Plan for
Non-Employee Directors, the 1997 Hartford Life, Inc. Incentive Stock Plan,
the 1997 Hartford Life, Inc. Deferred Restricted Stock Unit Plan and the
1997 Hartford Life, Inc. Employee Stock Purchase Plan or such other
employee and director stock option, profit sharing or other benefit plans
of the Company in effect from time to time;

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(ix) the declaration or payment of dividends on or in respect of any
class or series of capital stock of the Company or any other distribution
to the stockholders of the Company, other than dividends on or in respect
of the Common Stock consistent with the Company's dividend policy then in
effect; and

(x) any direct or indirect act that would result, either alone or
taking into account the business, operations, properties, activities and
legal and regulatory status of The Hartford and the Company, in (i) The
Hartford or any of its subsidiaries (other than the Company and any of its
subsidiaries) being required to file any notice, report or other document
or make any registration with, or obtain any approval, consent or
authorization of, any governmental or regulatory agency, other than in the
ordinary course of business and consistent with past practice, or otherwise
becoming subject to any applicable law or regulation or (ii) any director
of The Hartford being ineligible to serve or prohibited from so serving as
a director of The Hartford under or pursuant to any applicable law or
regulation.

REGISTRATION RIGHTS. The Master Intercompany Agreement will further
provide that, upon the request of The Hartford or any transferee in respect of
at least 5% of the securities subject to the below-mentioned rights (together,
the "Rights Holders"), the Company will use its best efforts to effect the
registration under the applicable federal and state securities laws of any of
the shares of Common Stock (and any other securities issued in respect of or in
exchange therefor) beneficially owned by such Rights Holder for sale in
accordance with its intended method of disposition thereof, and will take such
other actions as may be necessary to permit the sale thereof in other
jurisdictions, subject to certain limitations specified in the Master
Intercompany Agreement. The Rights Holders also will have the right which,
subject to certain limitations, it may exercise at any time and from time to
time, to include the shares of Common Stock (and any other securities issued in
respect of or in exchange therefor) beneficially owned by it in certain other
registrations of such securities initiated by the Company on its own behalf or
on behalf of its other stockholders. The Company generally will agree to pay all
out-of-pocket costs and expenses in connection with each such registration that
a Rights Holder requests or in which a Rights Holder participates. Subject to
certain limitations specified in the Master Intercompany Agreement, such
registration rights will be assignable by the Rights Holders and their assigns.
The Master Intercompany Agreement will contain customary terms and provisions
with respect to, among other things, registration procedures and certain rights
to indemnification and contribution granted by the parties thereunder in
connection with such a registration.

INDEMNIFICATION. The Master Intercompany Agreement will provide for the
assumption of liabilities and cross-indemnities allocating liability in respect
of the Company's businesses to the Company and in respect of The Hartford's
businesses (other than the businesses of the Company and its subsidiaries) to
The Hartford. In addition, for those liabilities not specifically arising out of
or allocable to either of their respective former or present businesses, the
parties will agree to share such liabilities, allocating 30% of the cost of such
liabilities to the Company and 70% of the cost of such liabilities to The
Hartford. In addition, pursuant to the terms of the Master Intercompany
Agreement, the Company will be responsible for 30% of certain shared liabilities
not specifically arising out of or allocable to any of the present or former
businesses of ITT, New ITT or The Hartford under the distribution agreement
executed in connection with the ITT Spin-Off (the "Spin-Off Distribution
Agreement") and for which The Hartford has responsibility thereunder. See
"-- ITT Spin-Off".

Under the tax allocation agreement entered into in connection with the ITT
Spin-Off (the "Spin-Off Tax Agreement"), The Hartford also is responsible for a
one-third share of certain federal, state or foreign tax liabilities with
respect to the ITT Spin-Off and certain business activities of ITT prior to the
date of such ITT Spin-Off. See "-- ITT Spin-Off". Pursuant to the Master
Intercompany Agreement, the Company will be responsible for 30% of any such
liabilities and The Hartford will be responsible for 70% of any such
liabilities. In addition, the Company and The Hartford agree that, pursuant to
the Master Intercompany Agreement, any sales or use tax arising from or imposed
upon

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the transfer of property or services by either of them or their respective
subsidiaries following the completion of the Equity Offerings will be the
liability of the party receiving such property or services. The Master
Intercompany Agreement also provides that the Company and its subsidiaries will
be liable for any payroll tax attributable to 1997 that arises from the
employment by the Company after the date of completion of the Equity Offerings
of individuals who perform services for the Company or any of its subsidiaries
during 1997. Further, the Master Intercompany Agreement provides that the
Company and its subsidiaries or The Hartford and its subsidiaries (other than
the Company and its subsidiaries) (each group, an "Indemnifiable Group"), as
applicable, will each indemnify the other Indemnifiable Group for any taxes,
including interest and penalties thereon (regardless of which Indemnifiable
Group member taxes are imposed upon), attributable to, or otherwise arising as a
result of, the exercise by the Internal Revenue Service, or any other
governmental revenue authority, of the authority granted under Section 482 of
the Internal Revenue Code or any similar statutory provision, to distribute,
apportion or allocate gross income, deductions, credits or allowances between or
among The Hartford or any of its subsidiaries (other than the Company and its
subsidiaries) and the Company and its subsidiaries, as applicable.

LICENSE AND SUBLICENSE. Hartford Fire will grant to (x) the Company the
Hartford License and the right to grant Hartford Sublicenses to the extent
described under "Risk Factors -- Control by and Relationship with The
Hartford -- Intercompany Arrangements -- Master Intercompany Agreement" and (y)
the Company and/or certain of its subsidiaries a personal, non-transferable
sublicense to use the "ITT" name and marks, including the logo, owned by ITT
Sheraton Corporation (each, an "ITT Sublicense") which was previously licensed
to Hartford Fire under the ITT Trade Name and Service Mark License Agreement
(the "ITT License Agreement") entered into in connection with the ITT Spin-Off,
each such license subject to customary usage restrictions. In addition, the
rights that will be granted under an ITT Sublicense may be restricted or
terminated pursuant to the terms of the ITT License Agreement, including a
provision that allows for termination by The Hartford of its license thereunder
upon six months' prior written notice. Moreover, the ITT License Agreement
provides that ITT may, under certain limited circumstances, terminate the ITT
License Agreement and thereby the ITT Sublicenses. For a description of the
circumstances under which ITT may terminate the ITT License Agreement, see
"-- ITT Spin-Off".

Subject to the foregoing limitations, each of the Hartford License, any
Hartford Sublicenses and the ITT Sublicenses will be perpetual, except that, in
the event that The Hartford reduces its beneficial ownership below 50% of the
combined voting power of the outstanding Common Stock, Hartford Fire may revoke
the Hartford License and any Hartford Sublicenses upon the later of the fifth
anniversary of the date of consummation of the Equity Offerings or one year
after receipt by the Company of written notice of Hartford Fire's intention to
revoke the Hartford License and/or any Hartford Sublicenses. However, only with
respect to any future international property-casualty operations conducted by
the Company, the Hartford License and any Hartford Sublicenses may be revoked by
Hartford Fire upon six months' written notice in the event that The Hartford
reduces its beneficial ownership below 50% of the combined voting power of the
outstanding Common Stock. Each ITT Sublicense will terminate on the earlier of
(i) the earliest termination date specified in the ITT License Agreement or (ii)
the date that The Hartford reduces its beneficial ownership below 50% of the
combined voting power of the outstanding Common Stock. In addition, in each case
the Hartford License, any Hartford Sublicenses and the ITT Sublicenses may be
revoked immediately in certain other limited, customary circumstances, such as
material breach of any such licenses, insolvency and any non-permitted transfers
of such licenses and sublicenses. The Company may assign its rights in the
Hartford License to a third party upon the prior written approval of Hartford
Fire. See "Risk Factors -- Control by and Relationship with The
Hartford -- Intercompany Arrangements -- Master Intercompany Agreement".

TERM. The Master Intercompany Agreement contains various termination
provisions. In the case of the provision of services, the relevant provisions of
the Master Intercompany Agreement are subject to termination by the Company or
The Hartford, upon six months' prior written notice, on

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and after the date on which The Hartford ceases to own 50% or more of the
combined voting power of the Common Stock then outstanding and as otherwise
specified therein. As noted above, the provisions in respect of approval of
certain corporate activities by The Hartford are only effective so long as The
Hartford beneficially owns 50% or more of the combined voting power of the
outstanding Common Stock. The Master Intercompany Agreement does not provide for
termination of the provisions in respect of registration rights and
indemnification discussed above. For a discussion of the termination provisions
in respect of the Hartford License, any Hartford Sub-licenses and the ITT
Sublicenses, see "-- License and Sublicense".

TAX SHARING AGREEMENT AND TAX CONSOLIDATION

Pursuant to the Tax Sharing Agreement, the Company, its subsidiaries and
The Hartford will make payments between them such that, with respect to any
period, the amount of taxes to be paid by the Company, subject to certain
adjustments, generally will be determined as though the Company were to file
separate federal, state and local income tax returns (including, except as
provided below, any amounts determined to be due as a result of a
redetermination of the tax liability of The Hartford arising from an audit or
otherwise). With respect to certain tax items, however, such as foreign tax
credits, alternative minimum tax credits, net operating losses and net capital
losses, the Company's right to reimbursement will be determined based on the
usage of such credits or losses by the consolidated group.

The Hartford will continue to have all the rights of a parent of a
consolidated group (and similar rights provided for by applicable state and
local law with respect to a parent of a combined, consolidated or unitary
group), will be the sole and exclusive agent for the Company in any and all
matters relating to the tax liabilities of the Company, will have sole and
exclusive responsibility for the preparation and filing of all tax returns (or
amended returns) and will have the power, in its sole discretion, to contest or
compromise any asserted tax adjustment or deficiency and to file, litigate or
compromise any claim for refund on behalf of the Company.

By virtue of its controlling beneficial ownership of the Company and the
terms of the Tax Sharing Agreement, The Hartford, as is presently the case, will
control all the tax decisions of the Company. Under the Tax Sharing Agreement,
The Hartford will have sole authority to respond to and conduct all tax
proceedings (including tax audits) relating to the Company, file all returns on
behalf of the Company and determine the amount of the Company's liability to (or
entitlement to payment from) The Hartford under the Tax Sharing Agreement. This
arrangement may result in conflicts of interest between the Company and The
Hartford. For example, under the Tax Sharing Agreement, The Hartford may choose
to contest, compromise or settle any adjustment or deficiency proposed by the
relevant taxing authority in a manner that may be beneficial to The Hartford and
detrimental to the Company.

Provided that The Hartford continues to beneficially own, directly or
indirectly, at least 80% of the combined voting power and 80% of the value of
the outstanding capital stock of the Company, the Company will be included for
federal income tax purposes in the consolidated group of which The Hartford is
the common parent. It is the present intention of The Hartford and its
subsidiaries to continue to file a single consolidated federal income tax
return. In certain circumstances, certain of the Company's subsidiaries will
also be included with certain subsidiaries of The Hartford (other than Company
subsidiaries) in combined, consolidated or unitary income tax groups for state
and local tax purposes. Each member of a consolidated group for federal income
tax purposes is jointly and severally liable for the federal income tax
liability of each other member of the consolidated group. Similar principles
apply with respect to members of a combined group for state law tax purposes.
Accordingly, although the Tax Sharing Agreement will allocate tax liabilities
between the Company and The Hartford during the period in which the Company is
included in The Hartford's consolidated group, the Company could be liable for
the federal income tax liability of any other member of The Hartford
consolidated group in the event any such liability is incurred, and not
discharged, by such other member.

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In addition, provided that The Hartford continues to beneficially own at
least 80% of the combined voting power or the value of the outstanding capital
stock of the Company, the Company will be included for federal income tax
purposes in the controlled group of which The Hartford is the common parent.
Each member of a controlled group is jointly and severally liable for pension
funding and pension termination liabilities of each other member of the
controlled group, as well as certain benefit plan taxes. Accordingly, the
Company could be liable for pension funding, pension termination liabilities and
certain other pension-related excise taxes as well as other taxes of another
member of The Hartford-controlled group in the event any such liability is
incurred, and not discharged, by such other member.

INVESTMENT MANAGEMENT AGREEMENTS

The Investment Management Agreements will provide that the investment staff
of The Hartford will implement (e.g., selection, purchase and sale of
securities) the investment strategies determined by the investment strategy
group of the Company and act as advisor to certain of the Company's
non-guaranteed separate accounts and mutual funds. The Investment Management
Agreements also will provide that the Company will pay a fee designed to reflect
the actual costs of providing such services. In addition, the Investment
Management Agreements generally will provide that, prior to April 1, 2000, The
Hartford may not terminate such Agreements, and the Company may only terminate
such Agreements, upon six months' written notice, based on The Hartford's
failure to satisfy performance benchmarks agreed to by the parties. Further, the
Investment Management Agreements generally will provide that from and after
April 1, 2000, the Investment Management Agreements will continue unless 180
days' prior written notice of termination is provided on or after October 1,
1999 by one party to the other. The Investment Management Agreements for the
Company's mutual funds may be terminated by the mutual funds' boards of
directors at any time. See "Risk Factors -- Control by and Relationship with The
Hartford -- Investment Management Agreements".

SIMSBURY SUBLEASE

The Company's headquarters, located in Simsbury, Connecticut, is currently
leased from a third party by Hartford Fire pursuant to a sale-leaseback
arrangement. After the Equity Offerings, the Company or one of its subsidiaries
will sublease from Hartford Fire the right to use the headquarters building
pursuant to the Simsbury Sublease. The right to purchase the facility and the
renewal option in respect of the sale-leaseback arrangement are being retained
by Hartford Fire. In addition, a subsidiary of The Hartford owns the land
underlying and surrounding the headquarters building. The Hartford Fire sublease
expires on January 1, 2010. Rental payments are fixed (but not level) over the
term of the lease. The Company expects to pay rent of $12 million in each of
1997, 1998 and 1999, respectively, $21 million in each of 2000 and 2001,
respectively, and $175 million thereafter in the aggregate over the remaining
term of the sublease.

ITT SPIN-OFF

The agreements entered into in connection with the ITT Spin-Off are not
affected by the Equity Offerings and, in material part, to the extent still in
force and effect, are the obligations of The Hartford. However, certain matters
addressed in the agreements relating to the ITT Spin-Off are also addressed in
agreements to be entered into in connection with the Equity Offerings. The Spin-
Off Distribution Agreement provides for, among other things, the assumption of
liabilities and cross-indemnities designed generally to allocate among ITT, New
ITT and The Hartford, effective as of the effective date of the ITT Spin-Off
(the "Distribution Date"), financial responsibility for the liabilities arising
out of or in connection with their respective businesses, including liabilities
in respect of The Hartford's business, and for certain shared liabilities not
specifically arising out of or allocable to any of their respective former or
present businesses. The Hartford is responsible for one-third of the costs of
such shared liabilities under the Spin-Off Distribution Agreement. The
intellectual property

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agreements entered into in connection with the ITT Spin-Off provide for
licensing to and among such entities of rights under patents, copyrights,
software, technology, trade secrets and certain other intellectual property
owned by them and their respective subsidiaries as of the Distribution Date,
including a grant of rights and licenses to The Hartford, with rights to
sublicense to its subsidiaries, to continue to use the "ITT" name and mark in
the operation of its business following the Distribution Date, subject to
certain conditions. For a description of the allocation of the above-described
shared liabilities between the Company and The Hartford, see "-- Master
Intercompany Agreement -- Indemnification".

However, under the terms of the ITT License Agreement, ITT may, in its
discretion, terminate such agreement in the event of a change in control of The
Hartford, which is defined therein to include (i) the sale of 20% or more of the
outstanding common stock of The Hartford to any person, (ii) a tender or
exchange offer for 15% or more of the outstanding common stock of The Hartford,
(iii) a consolidation or merger in which The Hartford is not the surviving
corporation and (iv) a change in the majority of the members of the board of
directors of The Hartford during any twelve-month period. Pursuant to the Master
Intercompany Agreement, Hartford Fire will grant the ITT Sublicense to the
Company and certain of its subsidiaries subject to such terms and conditions and
certain other terms and conditions. See "-- Master Intercompany
Agreement -- License and Sublicense".

The Spin-Off Tax Agreement provides that New ITT and The Hartford will pay
their respective shares of ITT's consolidated tax liability for the tax years
that they were included in ITT's consolidated federal income tax return, as well
as their respective shares of any state, local and foreign taxes attributable to
periods prior to the Distribution Date. The Hartford is responsible for a
one-third share of certain federal, state or foreign tax liabilities with
respect to the ITT Spin-Off and certain business activities of ITT prior to the
date of such ITT Spin-Off. While there can be no ultimate assurance, management
does not believe that its share of any such tax liabilities under the Spin-Off
Tax Agreement will have a material adverse effect on the results of operations,
financial condition or businesses of the Company. For a description of the
allocation of such liabilities between the Company and The Hartford, see
"-- Master Intercompany Agreement -- Indemnification".

HARTFORD FIRE GUARANTEE

Pursuant to the Guarantee Agreement, Hartford Fire has provided to Hartford
Life and Accident and Hartford Life an unconditional guarantee since 1990, on
behalf of and for the benefit of such subsidiaries and the owners of the life,
disability and other insurance and annuity contracts issued by either such
subsidiary, in respect of any contractual claims made under such contracts by
the beneficiaries thereof. Hartford Fire intends, prior to or immediately
following the Equity Offerings, to terminate such guarantee; however, the
guarantee will remain in full force and effect with respect to any outstanding
contracts at the time of such termination. Although management does not believe
the termination of the guarantee will have an adverse impact on sales, it is
possible that future sales of some of the Company's products could be adversely
impacted as a result of the absence of the marketing benefit associated with
such guarantee.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Equity Offerings, the Company will have issued and
outstanding shares of Class A Common Stock ( if the
Underwriters' over-allotment options are exercised in full) and shares
of Class B Common Stock. All of the shares of Class A Common Stock sold in the
Equity Offerings will be freely tradeable without restrictions under the
Securities Act, except for shares owned by "affiliates" of the Company, as such
term is defined in Rule 144, which will be subject to the resale limitations of
Rule 144. All the outstanding shares of Class B Common Stock held by The
Hartford will continue to be "restricted securities" as defined in

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Rule 144 and may not be resold in the absence of registration under the
Securities Act or pursuant to an exemption from such registration, including,
among others, the exemptions provided by Rule 144. The Company has agreed that
it will, upon the request of The Hartford, except for a limited period described
in "Underwriting", use its best efforts to effect the registration under the
applicable federal and state securities laws of any shares of capital stock held
by The Hartford or any of its affiliates (and such rights may be assigned by The
Hartford). See "Certain Relationships and Transactions -- Intercompany
Arrangements -- Master Intercompany Agreement -- Registration Rights".

In general, under Rule 144, as currently in effect, a person (or persons
whose shares are required to be aggregated), including affiliates of the
Company, who has beneficially owned "restricted securities" for at least two
years may sell within any three-month period a number of such shares that does
not exceed the greater of (i) 1% of the total number of outstanding shares of
Class A Common Stock or (ii) the reported average weekly trading volume of the
Class A Common Stock on all national securities exchanges during the four
calendar weeks preceding the date on which notice of the sale is filed with the
Commission. Sales under Rule 144 are also subject to certain manner-of-sale
provisions, notice requirements and the availability of current public
information about the Company. A person who is not deemed to have been an
"affiliate" of the Company at any time during the 90 days preceding a sale, and
who has beneficially owned "restricted securities" for at least three years, may
sell such shares under Rule 144 without regard to the volume limitations,
manner-of-sale provisions or notice requirements. Effective April 29, 1997, the
Rule 144 holding period will be reduced from two years to one year and the Rule
144(k) holding period will be reduced from three years to two years. Sales of
"restricted securities" by affiliates, even after a three-year holding period,
must continue to be made in brokers' transactions subject to the volume
limitations described above. As defined in Rule 144, an "affiliate" of an issuer
is a person that directly or indirectly through the use of one or more
intermediaries, controls, is controlled by or is under common control with, such
issuer. For the foregoing purposes, The Hartford, as the beneficial owner of all
the Class B Common Stock, is an "affiliate" of the Company and will be deemed to
have held such Class B Common Stock for more than two years. The above summary
of Rule 144 is not intended to be a complete description of that rule.

Rule 144A provides a non-exclusive safe harbor exemption from the
registration requirements of the Securities Act for specified resales of
restricted securities to certain institutional investors. In general, Rule 144A
allows unregistered resales of restricted securities to a "qualified
institutional buyer", which generally includes an entity, acting for its own
account or for the account of other qualified institutional buyers, that in the
aggregate owns or invests at least $100 million in securities of unaffiliated
issuers. Rule 144A does not extend an exemption to the offer or sale of
securities that, when issued, were of the same class as securities listed on a
national securities exchange or quoted on an automated quotation system. The
shares of Class B Common Stock outstanding as of the date of this Prospectus
would be eligible for resale under Rule 144A because such shares, when issued,
were not of the same class as any listed or quoted securities. The above summary
of Rule 144A is not intended to be a complete description of that rule.

Prior to the Equity Offerings, there has been no public market for the
Class A Common Stock and no prediction can be made as to the effect, if any,
that future sales or the availability of shares for future sales, will have on
the market price of the shares of Class A Common Stock prevailing from time to
time. Sales of substantial amounts of Class A Common Stock or Class B Common
Stock, or the perception that such sales could occur, could adversely affect the
prevailing market prices of the Class A Common Stock, or the ability of the
Company to raise capital through public offerings of equity securities.
Application is being made to list the Class A Common Stock on the NYSE under the
symbol "HLI".

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DESCRIPTION OF CAPITAL STOCK

GENERAL

The authorized capital stock of the Company consists of
shares of Class A Common Stock, par value $.01 per share, shares
of Class B Common Stock, par value $.01 per share, and shares of
Preferred Stock, no par value. Of the shares of Class A Common Stock,
shares are being offered hereby and shares are reserved for issuance
upon conversion of any of the Class B Common Stock into Class A Common Stock.
shares of Class B Common Stock are outstanding and held by The
Hartford or one of its directly or indirectly wholly owned subsidiaries as of
the date hereof. None of the shares of Preferred Stock will be outstanding upon
the completion of the Equity Offerings. A description of various provisions of
the Company's Certificate of Incorporation and By-laws affecting the rights of
the Class A Common Stock, Class B Common Stock and Preferred Stock is set forth
below. This description is intended as a summary and is qualified in its
entirety by reference to the Company's Certificate of Incorporation and By-laws
filed as exhibits to the Registration Statement of which this Prospectus is a
part.

CLASS A COMMON STOCK AND CLASS B COMMON STOCK

DIVIDENDS

Holders of Class A Common Stock and Class B Common Stock are entitled to
receive ratably such dividends, if any, as may be declared by the Board of
Directors out of funds legally available for the payment thereof, subject to any
preferential dividend rights of any outstanding Preferred Stock. Cash dividends
may be declared and paid to the holders of Class A Common Stock only if at such
time cash dividends in the same amount per share are declared and paid to the
holders of Class B Common Stock, and vice versa. Dividends payable other than in
cash or Common Stock (or securities convertible into or exchangeable for Common
Stock) will be declared and paid to holders of Class A Common Stock and Class B
Common Stock on a pro rata per share basis. Dividends consisting of shares of
Common Stock, or of rights, options, warrants or other securities convertible
into or exchangeable for such shares, may be declared and paid to holders of
Class A Common Stock only if a like dividend is declared and paid to holders of
Class B Common Stock, and vice versa, and shares of Class A Common Stock, or any
rights, options, warrants or securities convertible into or exchangeable for
Class A Common Stock, may be declared and paid only to holders of shares of
Class A Common Stock and shares of Class B Common Stock, or any rights, options,
warrants or securities convertible into or exchangeable for Class B Common
Stock, may be declared and paid only to holders of Class B Common Stock. The
Company may not reclassify, subdivide or combine the shares of either class of
Common Stock without at the same time proportionately reclassifying, subdividing
or combining the shares of the other class.

VOTING RIGHTS

Holders of Class A Common Stock and Class B Common Stock generally have
identical voting rights and vote together (and not as separate classes), except
that holders of Class A Common Stock are entitled to one vote per share while
holders of Class B Common Stock are entitled to five votes per share and the
shares of Class B Common Stock maintain certain conversion rights and transfer
restrictions as described below. Except as required by law or as provided below,
all matters to be voted on by stockholders must be approved by a majority (or,
in the case of the election of directors, by a plurality) of the votes entitled
to be cast in person or by proxy by all shares of Class A Common Stock and Class
B Common Stock, voting together as a single class, subject to any voting rights
granted to holders of any outstanding Preferred Stock. Holders of shares of
Class A Common Stock and Class B Common Stock are not entitled to cumulate their
votes in the election of directors. Except as otherwise provided by law, and
subject to any voting rights granted to holders of any outstanding Preferred
Stock, amendments to the Certificate of Incorporation

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(including any such amendment to increase or decrease the authorized shares of
any class) must be approved by a majority of the votes entitled to be cast in
person or by proxy by all outstanding shares of Class A Common Stock and Class B
Common Stock, voting together as a single class, except that certain provisions
of the Certificate of Incorporation may be amended only with the approval of the
holders of at least 80% of the combined voting power of the Common Stock then
outstanding. See "Certain Provisions of the Certificate of Incorporation and
By-laws of the Corporation -- Corporate Opportunities". However, amendments to
the Certificate of Incorporation that would change the powers, preferences and
relative participating, optional or other special rights of the Class A Common
Stock or the Class B Common Stock also must be approved by a majority of the
outstanding shares of such class voting as a separate class. The superior voting
rights of the Class B Common Stock described above may discourage unsolicited
tender offers and merger proposals.

CONVERSION

Following the consummation of the Equity Offerings, each share of Class B
Common Stock is convertible at any time by the holder thereof or a Class B
Transferee (as defined below), if any, at the option of such holder, into one
share of Class A Common Stock, except as provided herein. Subject to the
exceptions described in the following sentence, upon the sale or other transfer
of shares by a stockholder of the Company of Class B Common Stock such that any
person or persons, other than such stockholder or any of its affiliates (within
the meaning of the rules and regulations under the Exchange Act), or a Class B
Transferee (as defined below), will have beneficial ownership thereof, such
shares will automatically convert into an equal number of shares of Class A
Common Stock (with the same rights and restrictions as shares of Class A Common
Stock generally). However, if shares of Class B Common Stock representing 50% or
more of all the then outstanding shares of Common Stock (calculated without
regard to the difference in voting rights between the classes of Common Stock)
are transferred by the holder thereof in a single transaction, or series of
related transactions, to any person or group of affiliated persons not
affiliated with such transferor (a "Class B Transferee"), such shares of Class B
Common Stock so transferred will not automatically convert into shares of Class
A Common Stock upon such transfer. Each share of Class B Common Stock retained
by such transferor following any such transfer will automatically convert into a
share of Class A Common Stock upon such transfer. In addition, each share of
Class B Common Stock will automatically convert into one share of Class A Common
Stock on the date on which the number of shares of Class B Common Stock then
outstanding is less than 50% of the then outstanding shares of Common Stock.

The provisions of the Company's Certificate of Incorporation described
above under "Conversion" are generally designed so that, were The Hartford to
reduce its ownership of shares of the Class B Common Stock to less than 50% of
all the then outstanding shares of Common Stock (calculated without regard to
the difference in voting rights between the classes of Common Stock), its shares
of Class B Common Stock would be automatically converted into Class A Common
Stock, thereby resulting in all holders of Common Stock having identical voting
rights other than any Class B Transferee. However, The Hartford (and any Class B
Transferee) is permitted to transfer shares of Class B Common Stock representing
50% or more of all the then outstanding shares of Common Stock (calculated
without regard to the difference in voting rights between the classes of Common
Stock) to a Class B Transferee with the effect that such Class B Transferee will
succeed to the ownership of such shares of Class B Common Stock and thus control
of the Company.

OTHER

Upon the liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary, and subject to the rights of the holders of the
Preferred Stock, the net assets of the Company available for distribution to
stockholders of the Company shall be distributed pro rata to the holders of the
Common Stock in accordance with their respective rights and interests and the
Class B Common Stock shall rank pari passu with the Class A Common Stock as to
such distribution.

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No shares of either class of Common Stock are subject to redemption or have
preemptive rights to purchase additional shares of Common Stock. However, see
"Certain Relationships and Transactions -- Master Intercompany
Agreement -- Registration Rights".

The outstanding shares of Class B Common Stock are, and the shares of Class
A Common Stock offered by the Company in the Equity Offerings will be, when
issued and paid for, fully paid and non-assessable.

PREFERRED STOCK

The authorized Preferred Stock of the Company is available for issuance
from time to time at the discretion of the Board of Directors without
stockholder approval. The Board of Directors has the authority to prescribe for
each series of the Preferred Stock it establishes the number of shares in that
series, the number of votes (if any) to which such shares in that series are
entitled, the dividends payable on such shares in that series, any conversion
rights applicable thereto and the other powers, preferences and relative
participating, optional or other special rights, and any qualifications,
limitations or restrictions of the shares in that series. Depending upon the
rights of such Preferred Stock, the issuance thereof could have an adverse
effect on holders of the Common Stock by delaying or preventing a change in
control of the Company, making removal of the present management of the Company
more difficult or resulting in restrictions upon the payment of dividends and
other distributions to the holders of the Common Stock.

RESTRICTIONS ON OWNERSHIP UNDER INSURANCE LAWS

Although the Certificate of Incorporation and By-laws of the Company do not
contain any provision restricting ownership of the Common Stock, under
applicable state insurance laws and regulations, no person may acquire control
of any of the insurance subsidiaries of the Company or any corporation
controlling such subsidiaries unless such person has filed a statement
containing specified information with appropriate regulatory authorities and
approval for such acquisition is obtained from such authorities. For example,
under the laws of the State of Connecticut, any person acquiring, directly by
stock ownership or indirectly by revocable proxy or otherwise, 10% or more of
the voting securities of any other person is presumed to have acquired control
of such person, and, as a result, any person who beneficially acquires 10% or
more of the voting securities of the Company's insurance company subsidiaries or
the Company without obtaining the approval of the Connecticut insurance
department would be in violation of Connecticut's insurance holding company laws
and may be subject to injunctive action requiring disposition or seizure of such
shares of voting securities and prohibiting the voting of such shares, as well
as other action determined by the applicable regulatory authority. The
application of such state insurance laws may be a deterrent to any person
proposing to acquire control of the Company, particularly in a hostile
transaction.

CERTAIN PROVISIONS OF THE
CERTIFICATE OF INCORPORATION AND
BY-LAWS OF THE COMPANY

TRANSACTIONS WITH INTERESTED PARTIES

The Company's Certificate of Incorporation includes certain provisions
addressing potential conflicts of interest between the Company and The Hartford
and regulating and defining the conduct of certain affairs of the Company as
they may involve The Hartford and its subsidiaries, directors and officers. The
Certificate of Incorporation provides that no contract, agreement, arrangement
or transaction (or amendment, modification or termination thereof) between the
Company and The Hartford or any of its subsidiaries (other than the Company and
its subsidiaries) or between the Company and any entity in which any of the
Company's directors has a financial interest (a "Related Entity"), or between
the Company and any director or officer of the Company, The Hartford, any
subsidiary of the Company or The Hartford or any Related Entity will be void or
voidable for the

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reason that The Hartford or any subsidiary thereof, any Related Entity or any
director or officer of the Company, The Hartford or any subsidiary of the
Company or The Hartford or any Related Entity is a party thereto, or because any
such director or officer is present at, participates in or votes at a meeting of
the Board of Directors or a committee thereof which authorizes such contract,
agreement, arrangement or transaction (or amendment, modification or termination
thereof), if:

(i) the material facts as to such contract, agreement, arrangement or
transaction (or amendment, modification or termination thereof) are
disclosed or are known to the Board of Directors or the committee thereof
that authorizes such contract, agreement, arrangement or transaction (or
amendment, modification or termination thereof) and the Board of Directors
or such committee in good faith authorizes, approves or ratifies such
contract, agreement, arrangement or transaction (or amendment, modification
or termination thereof) by the affirmative vote of a majority of the
Disinterested Directors (as defined below), even though the number of
Disinterested Directors voting may be less than a quorum;

(ii) the material facts as to such contract, agreement, arrangement or
transaction (or amendment, modification or termination thereof) are
disclosed or are known to the holders of Common Stock entitled to vote
thereon, and the contract, agreement, arrangement or transaction (or
amendment, modification or termination thereof) is specifically approved or
ratified in good faith by a majority of the votes entitled to be cast by
all then outstanding shares of Common Stock present in person or
represented by proxy and not owned by The Hartford or any subsidiary
thereof or a Related Entity, as the case may be; or

(iii) such contract, agreement, arrangement or transaction (or
amendment, modification or termination thereof) is fair as to the Company
at the time it is authorized, approved or ratified by the Board of
Directors, a committee thereof or the stockholders of the Company.

For purposes hereof, "Disinterested Directors" means the directors of the
Company who are not (i) officers of either the Company or The Hartford or any of
their respective subsidiaries or (ii) directors of The Hartford or any
subsidiary thereof (other than the Company).

CORPORATE OPPORTUNITIES

The Certificate of Incorporation further provides that, subject to any
contract to which the Company is a party and subject to applicable law, The
Hartford or any subsidiary thereof (other than the Company or any subsidiary
thereof) will have the right to: (i) engage in the same or similar business
activities or lines of business as the Company or any subsidiary thereof; (ii)
do business with any client or customer of the Company or any subsidiary
thereof; and (iii) employ or otherwise engage any officer or employee of the
Company or any subsidiary thereof. In addition, in the event that The Hartford
or any of its subsidiaries (other than the Company and its subsidiaries) or the
Company or any of its subsidiaries acquires knowledge of a potential transaction
or matter that may be a corporate opportunity for both The Hartford and the
Company, such person shall have no duty, other than pursuant to the laws of the
State of Delaware, to communicate or present such corporate opportunity to the
Company or The Hartford, as applicable.

CERTAIN AMENDMENTS TO THE CERTIFICATE OF INCORPORATION

Until The Hartford ceases to beneficially own, directly or indirectly, more
than 20% of the number of outstanding shares of Common Stock, the Certificate of
Incorporation requires an affirmative vote of the holders of 80% or more of the
combined voting power of the Common Stock then outstanding, voting together as a
single class, to amend or repeal the provisions of the Certificate of
Incorporation relating to transactions with interested parties and corporate
opportunities (described above), as well as the provision requiring such an 80%
vote to effect such an amendment or repeal. Thereafter, under the DGCL, an
affirmative vote of 50% or more of the combined voting power of the Common Stock
then outstanding would be required to effect such an

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amendment or repeal. Accordingly, so long as The Hartford beneficially owns more
than 20% of the number of outstanding shares of Common Stock, it can prevent any
such amendment or repeal.

POTENTIAL LIMITS ON CHANGE OF CONTROL

Certain provisions of the Certificate of Incorporation and By-laws may
delay, defer or prevent a tender offer, proxy contest or other takeover attempt
involving the Company. It is believed that such provisions will enable the
Company to develop its business in a manner that will foster its long-term
growth without disruption caused by the threat of a takeover not deemed by its
Board of Directors to be in the best interests of the Company and its
stockholders. In addition, these provisions also are intended to ensure that the
Board of Directors will have sufficient time to act in what the Board of
Directors believes to be in the best interests of the Company and its
stockholders. However, such provisions could have the effect of making it more
difficult for a third party to undertake or discouraging a third party from
undertaking an unsolicited takeover bid or otherwise attempting to obtain
control of the Company or the Board of Directors although such proposals, if
made, might be considered desirable by a majority of the Company's stockholders.
Such provisions also may have the effect of making it more difficult for third
parties to cause the replacement of the current management of the Company
without the concurrence of the Board of Directors. These provisions include (i)
the availability of shares of Preferred Stock for issuance from time to time at
the discretion of the Board of Directors; (ii) prohibitions against stockholders
calling a special meeting of stockholders or acting by written consent in lieu
of a meeting; (iii) the classification of the Board of Directors into three
classes, each of which will serve for different three-year periods; (iv) a
requirement, pursuant to Section 141 of the DGCL, that directors of the Company
may only be removed for cause; (v) a requirement that certain provisions of the
Certificate of Incorporation may be amended only with the approval of the
holders of at least 80% of the combined voting power of the Common Stock then
outstanding; (vi) requirements for advance notice for raising business or making
nominations at stockholders' meetings; and (vii) the ability of the Board of
Directors to increase the size of the board and to appoint directors to fill
newly created directorships. The Hartford, as owner of more than 80% of the
combined voting power of all classes of voting stock, could sell or otherwise
dispose of a substantial portion of its holdings and still be able to block any
tender offer, proxy contest or other takeover attempt by any third party and
certain other material transactions and matters.

LIMITATION ON LIABILITY

To the fullest extent permitted by applicable law as then in effect, no
director of the Company shall be personally liable to the Company or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Company or its stockholders; (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (iii) under
Section 174 of the DGCL; or (iv) for any transaction from which the director
derived an improper personal benefit.

While the Certificate of Incorporation provides directors with protection
from awards for monetary damages for breaches of their duty of care, it does not
eliminate such duty. Accordingly, the Certificate of Incorporation should have
no effect on the availability of equitable remedies such as an injunction or
recission based on a director's breach of his or her duty of care and does not
eliminate or limit a director's liability arising in connection with causes of
action brought under the federal securities laws. This provision, however, may
discourage or deter stockholders or management from bringing a lawsuit against a
director for a breach of his or her fiduciary duty, though such an action, if
successful, might otherwise have benefited the Company and its stockholders.

The By-laws provide that the Company, to the fullest extent permitted by
applicable law as then in effect, will indemnify any person who was or is
involved in any manner or is threatened to be made so involved in any
threatened, pending or completed investigation, claim, action, suit or
proceeding, by reason of the fact that such person was or is a director,
officer, employee or agent of the

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Company or was or is serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against all expenses, judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in connection
with such investigation, claim, action, suit or proceeding. To receive such
indemnification under the DGCL as currently in effect, such a person must have
been successful in such investigation, claim, action, suit or proceeding or
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the Company.

DELAWARE STATUTE

The Company is a Delaware corporation subject to Section 203 of the DGCL.
Section 203 provides that, subject to certain exceptions specified therein, a
corporation may not engage in any business combination, including mergers or
consolidations or acquisitions of assets or additional shares of the
corporation, with any "interested stockholder" for a period of three years
following the time that such stockholder became an interested stockholder unless
(i) prior to such time, the board of directors of the corporation approved
either the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder, (ii) upon consummation of the
transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced (excluding
certain shares) or (iii) at or subsequent to such time, the business combination
is approved by the board of directors of the corporation and authorized at an
annual or special meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of the outstanding voting stock which is
not owned by the interested stockholder. Except as otherwise specified in
Section 203 of the DGCL, an "interested stockholder" is defined to include (x)
any person that is the owner of 15% or more of the outstanding voting stock of
the corporation or is an affiliate or associate of the corporation and was the
owner of 15% or more of the outstanding voting stock of the corporation at any
time within the three-year period immediately prior to the relevant date and (y)
the affiliates and associates of any such person. Under certain circumstances,
Section 203 of the DGCL makes it more difficult for an interested stockholder to
effect various business combinations with a corporation for the above-referenced
three-year period, although the stockholders may elect to exclude a corporation
from the restrictions imposed thereunder. By virtue of its beneficial ownership
of the Class B Common Stock, The Hartford is in a position to elect to exclude
the Company from the restrictions under Section 203 of the DGCL, although it
currently has no intention to do so.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Class A Common Stock is The Bank
of New York.

VALIDITY OF CLASS A COMMON STOCK

The validity of the Class A Common Stock offered hereby will be passed upon
for the Company by Cravath, Swaine & Moore, New York, New York, and for the
Underwriters by Sullivan & Cromwell, New York, New York.

EXPERTS

The audited consolidated financial statements and financial statement
schedules of the Company and its subsidiaries, as of December 31, 1996 and 1995,
and for each of the years in the three-year period ended December 31, 1996, have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein and
elsewhere in the Registration Statement to which this Prospectus relates in
reliance upon the authority of said firm as experts in giving said reports.
Reference is made to said reports which include an explanatory paragraph with
respect to the change in the method of accounting for debt and equity securities
as of January 1, 1994, as discussed in Note 2 of Notes to consolidated financial
statements.

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CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
TO NON-UNITED STATES HOLDERS OF CLASS A COMMON STOCK

The following is a general discussion of certain United States federal
income and estate tax consequences of the purchase, ownership and disposition of
Class A Common Stock by a holder that, for United States federal tax purposes,
is not a "United States person" (a "Non-United States Holder"). For purposes of
this discussion, a "United States person" means any person or entity which is
(a) a citizen or resident of the United States, (b) a corporation, partnership
or other entity created or organized in or under the laws of the United States
or of any political subdivision thereof or (c) an estate or trust that is
subject to United States federal taxation on its income regardless of its
source. This summary does not address all United States federal income and
estate tax considerations that may be relevant to a Non-United States Holder in
light of its particular circumstances or to certain Non-United States Holders
that may be subject to special treatment under United States federal tax laws
(i.e., insurance companies, tax-exempt organizations, financial institutions or
broker-dealers). Furthermore, this summary does not discuss any aspects of
foreign, state or local taxation. This summary is based on current provisions of
the Internal Revenue Code, existing, temporary and proposed United States
Treasury regulations promulgated thereunder and administrative and judicial
interpretations thereof, all of which are subject to change, possibly with
retroactive effect. Each prospective Non-United States Holder is advised to
consult its tax advisor with respect to the tax consequences of purchasing,
owning and disposing of Class A Common Stock.

DIVIDENDS

Dividends paid with respect to the Class A Common Stock to a Non-United
States Holder generally will be subject to withholding of United States federal
income tax at a 30% rate (or such lower rate as may be specified by an
applicable income tax treaty), unless the dividend (i) is effectively connected
with the conduct of a trade or business of the Non-United States Holder within
the United States or (ii) if a tax treaty applies, is attributable to a United
States permanent establishment of the Non-United States Holder. Such U.S.
federal withholding tax will apply without regard to whether a dividend
represents a distribution of current or accumulated earnings and profits of the
Company or a return of basis for U.S. federal income tax purposes. In order to
claim the benefit of an applicable tax treaty rate, a Non-United States Holder
may have to file with the Company or its dividend paying agent an exemption or
reduced treaty rate certificate or letter in accordance with the terms of such
treaty. To the extent that a dividend represents a return of basis for U.S.
federal income tax purposes, a Non-United States Holder may obtain a refund of
any amounts currently withheld with respect to such return of basis by filing an
appropriate claim for a refund with the Internal Revenue Service.

Dividends which are effectively connected with such a United States trade
or business or, if a tax treaty applies, are attributable to such a United
States permanent establishment, are generally subject to tax on a net income
basis (that is, after allowance for applicable deductions) at rates applicable
to United States citizens, resident aliens and domestic United States
corporations and are not generally subject to withholding. Any such effectively
connected dividends received by a Non-United States corporation may also, under
certain circumstances, be subject to an additional "branch profits tax" at a 30%
rate or such lower rate as may be specified by an applicable income tax treaty.

Under current United States Treasury regulations, dividends paid to an
address outside the United States are presumed to be paid to a resident of such
country for purposes of the withholding discussed above (unless the payer has
knowledge to the contrary), and, under the current interpretation of United
States Treasury regulations, for purposes of determining the applicability of a
tax treaty rate. Under recently proposed United States Treasury regulations (the
"Proposed Regulations"), not currently in effect, however, a Non-United States
Holder of Class A Common Stock who wishes to claim the benefit of an applicable
treaty rate would be required to satisfy

123
<PAGE> 126

applicable certification and other requirements. The Proposed Regulations are
proposed to be effective for payments made after December 31, 1997. There can be
no assurance that the Proposed Regulations will be adopted or what the
provisions will include if and when adopted in temporary or final form. Certain
certification and disclosure requirements must be complied with in order to be
exempt from withholding under the effectively connected income exemption
discussed above.

A Non-United States Holder of Class A Common Stock that is eligible for a
reduced rate of United States tax withholding pursuant to an income tax treaty
may obtain a refund of any excess amounts currently withheld by filing an
appropriate claim for refund with the Internal Revenue Service.

SALE OR DISPOSITION OF CLASS A COMMON STOCK

A Non-United States Holder generally will not be subject to United States
federal income tax on any gain recognized on the sale or other disposition of
Class A Common Stock unless (i) (a) the gain is effectively connected with a
trade or business of the Non-United States Holder in the United States or (b) if
a tax treaty applies, the gain is attributable to a United States permanent
establishment of the Non-United States Holder; (ii) in the case of a Non-United
States Holder who is an individual and holds the Class A Common Stock as a
capital asset, such holder is present in the United States for 183 or more days
in the taxable year of the disposition and either (a) has a "tax home" for
United States federal income tax purposes in the United States or (b) has an
office or other fixed place of business in the United States to which the gain
is attributable; (iii) the Non-United States Holder is subject to tax pursuant
to the provisions of United States federal income tax laws applicable to certain
United States expatriates; or (iv)(a) the Company is or has been a "U.S. real
property holding corporation" for United States federal income tax purposes at
any time during the five-year period ending on the date of the disposition, or,
if shorter, the period during which the Non-United States Holder held the Class
A Common Stock, and (b) assuming that the Class A Common Stock continues to be
"regularly traded on an established securities market" for tax purposes, the
Non-United States Holder holds, directly or indirectly, at any time during the
five-year period ending on the date of disposition, more than 5% of the
outstanding Class A Common Stock. The Company believes it is not currently a
U.S. real property holding corporation and does not anticipate becoming such a
corporation.

If an individual Non-United States Holder falls under clause (i) above,
such individual generally will be taxed on the net gain derived from a sale
under regular graduated United States federal income tax rates. If an individual
Non-United States Holder falls under clause (ii) above, such individual
generally will be subject to a flat 30% tax on the gain derived from a sale,
which may be offset by certain United States capital losses (notwithstanding the
fact that such individual is not considered a resident of the United States).
Thus, Non-United States Holders who have spent (or expect to spend) 183 days or
more in the United States in the taxable year in which they contemplate a sale
of Class A Common Stock are urged to consult their tax advisors as to the tax
consequences of such sale.

If a Non-United States Holder that is a foreign corporation falls under
clause (i) above, it generally will be taxed on its net gain under regular
graduated United States federal income tax rates. Effectively connected gains
realized by a Non-United States corporation may also, under certain
circumstances, be subject to an additional "branch profits tax" at a 30% rate or
such lower rate as may be specified by an applicable income tax treaty.

BACKUP WITHHOLDING AND REPORTING REQUIREMENTS

The Company must report annually to the Internal Revenue Service and to
each Non-United States Holder the amount of dividends paid to, and the tax
withheld with respect to, such holder,

124
<PAGE> 127

regardless of whether any tax was actually withheld. This information may also
be made available to the tax authorities in the Non-United States Holder's
country of residence.

Under current law, United States backup withholding (which generally is
imposed at a 31% rate) generally will not apply to (i) the payment of dividends
paid on Class A Common Stock to a Non-United States Holder at an address outside
the United States or (ii) the payment of the proceeds of a sale of Class A
Common Stock to or through the foreign office of a broker. However, under the
Proposed Regulations, dividend payments generally will be subject to information
reporting and backup withholding unless applicable certification requirements
are satisfied. In the case of the payment of proceeds from such a sale of Class
A Common Stock through a foreign office of a broker that is a United States
person or a "U.S. related person," however, information reporting (but not
backup withholding) is required with respect to the payment unless the broker
has documentary evidence in its files that the owner is a Non-United States
Holder (and has no actual knowledge to the contrary) and certain other
requirements are met or the holder otherwise establishes an exemption. For this
purpose, a "U.S. related person" is (i) a "controlled foreign corporation" for
United States federal income tax purposes, or (ii) a foreign person 50% or more
of whose gross income from all sources for the three-year period ending with the
close of its taxable year preceding the payment (or for such part of the period
that the broker has been in existence) is derived from activities which are
effectively connected with the conduct of a United States trade or business. The
payment of the proceeds of a sale of shares of Class A Common Stock to or
through a United States office of a broker is subject to information reporting
and possible backup withholding at a rate of 31% unless the holder certifies,
among other things, its non-United States status under penalties of perjury or
otherwise establishes an exemption.

Backup withholding is not an additional tax. Amounts withheld under the
backup withholding rules are generally allowable as a refund or credit against
such Non-United States Holder's United States federal income tax liability, if
any, provided that the required information is furnished to the Internal Revenue
Service.

FEDERAL ESTATE TAXES

Class A Common Stock owned or treated as owned by an individual who is not
a citizen or resident of the United States (as defined for United States federal
estate tax purposes) at the time of death will be included in such individual's
gross estate for United States federal estate tax purposes unless an applicable
estate tax treaty provides otherwise.

THE FOREGOING DISCUSSION IS A SUMMARY OF THE PRINCIPAL UNITED STATES
FEDERAL INCOME AND ESTATE TAX CONSEQUENCES OF THE OWNERSHIP, SALE OR OTHER
DISPOSITION OF CLASS A COMMON STOCK BY NON-UNITED STATES HOLDERS. ACCORDINGLY,
INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF CLASS
A COMMON STOCK, INCLUDING THE APPLICATION AND EFFECT OF THE LAWS OF ANY STATE,
LOCAL, FOREIGN OR OTHER TAXING JURISDICTION.

125
<PAGE> 128

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants............................................ F-2
Consolidated Statements of Income for each of the three years in the period ended
December 31, 1996................................................................ F-3
Consolidated Balance Sheets as of December 31, 1996 and 1995........................ F-4
Consolidated Statements of Stockholder's Equity for each of the three years in the
period ended December 31, 1996................................................... F-5
Consolidated Statements of Cash Flows for each of the three years in the period
ended December 31, 1996.......................................................... F-6
Notes to Consolidated Financial Statements.......................................... F-7
</TABLE>

F-1
<PAGE> 129

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Hartford Life, Inc.:

We have audited the accompanying consolidated balance sheets of Hartford
Life, Inc. (a Delaware corporation and wholly owned subsidiary of Hartford
Accident and Indemnity Company) and subsidiaries as of December 31, 1996 and
1995, and the related consolidated statements of income, stockholder's equity
and cash flows for each of the three years in the period ended December 31,
1996. These consolidated financial statements are the responsibility of Hartford
Life, Inc.'s management. Our responsibility is to express an opinion on these
consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Hartford Life, Inc. and subsidiaries as of December 31, 1996 and 1995, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1996 in conformity with generally accepted
accounting principles.

As discussed in Note 2 of Notes to consolidated financial statements,
Hartford Life, Inc. adopted a new accounting standard promulgated by the
Financial Accounting Standards Board, changing its method of accounting, as of
January 1, 1994, for debt and equity securities.

ARTHUR ANDERSEN LLP

Hartford, Connecticut

February 10, 1997

F-2
<PAGE> 130

HARTFORD LIFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS)

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
REVENUES
Premiums and other considerations...................... $2,139 $2,643 $3,069
Net investment income.................................. 1,403 1,451 1,534
Net realized capital gains (losses).................... 1 (4) (219)
------ ------ ------
TOTAL REVENUES...................................... 3,543 4,090 4,384
------ ------ ------

BENEFITS, CLAIMS AND EXPENSES
Benefits, claims and claim adjustment expenses......... 2,254 2,395 2,727
Amortization of deferred policy acquisition costs...... 149 205 241
Dividends to policyholders............................. 419 675 635
Interest expense....................................... 29 35 55
Other insurance expense................................ 469 554 695
------ ------ ------
TOTAL BENEFITS, CLAIMS AND EXPENSES................. 3,320 3,864 4,353
------ ------ ------
INCOME BEFORE INCOME TAX EXPENSE......................... 223 226 31
Income tax expense....................................... 72 76 7
------ ------ ------
NET INCOME............................................... $ 151 $ 150 $ 24
====== ====== ======
PRO FORMA NET INCOME PER SHARE (UNAUDITED)............... $
======
</TABLE>

The accompanying Notes to Consolidated Financial Statements

are an integral part of the above statements.

F-3
<PAGE> 131

HARTFORD LIFE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------------------
HISTORICAL PRO FORMA
------------------- -----------
1995 1996 1996
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Investments:
Fixed maturities, available for sale, at fair value
(amortized cost $16,156 and $15,659)................. $16,139 $15,711 $
Equity securities, available for sale, at fair value.... 63 119
Policy loans, at outstanding balance.................... 3,380 3,839
Other investments, at cost.............................. 490 161
------- ------- -----------
TOTAL INVESTMENTS.................................... 20,072 19,830
------- ------- -----------
Cash...................................................... 70 72
Premiums and amounts receivable........................... 157 170
Reinsurance recoverable................................... 5,855 5,839
Deferred policy acquisition costs......................... 2,220 2,800
Deferred income tax....................................... 443 543
Other assets.............................................. 849 909
Separate account assets................................... 36,296 49,770
------- ------- -----------
TOTAL ASSETS......................................... $65,962 $79,933 $
======== ======== ==========
LIABILITIES
Future policy benefits.................................... $ 3,554 $ 4,026 $
Other policyholder funds.................................. 22,764 22,213
Other liabilities......................................... 1,439 1,757
Borrowings under line of credit........................... -- --
Short-term debt due parent................................ -- --
Allocated advances from parent............................ 732 893
Separate account liabilities.............................. 36,296 49,770
------- ------- -----------
TOTAL LIABILITIES.................................... 64,785 78,659
------- ------- -----------
STOCKHOLDER'S EQUITY
Preferred Stock, no par value; shares
authorized; no shares issued and outstanding............
Common Stock, par value $.01 per share, 1,000 shares
authorized; 100 shares issued and outstanding........... -- --
Class A Common Stock, par value $.01 per share,
shares authorized; shares issued
and outstanding.........................................
Class B Common Stock, par value $.01 per share,
shares authorized; shares issued
and outstanding.........................................
Capital surplus........................................... 585 585
Net unrealized capital (loss) gain on investments, net of
tax..................................................... (44) 29
Retained earnings......................................... 636 660
------- ------- -----------
TOTAL STOCKHOLDER'S EQUITY........................... 1,177 1,274
------- ------- -----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY........... $65,962 $79,933 $
======== ======== ==========
</TABLE>

The accompanying Notes to Consolidated Financial Statements

are an integral part of the above statements.

F-4
<PAGE> 132

HARTFORD LIFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(IN MILLIONS)

<TABLE>
<CAPTION>
NET
UNREALIZED
CAPITAL
CLASS CLASS GAIN (LOSS)
A B ON TOTAL
PREFERRED COMMON COMMON COMMON CAPITAL INVESTMENTS, RETAINED STOCKHOLDER'S
STOCK STOCK STOCK STOCK SURPLUS NET OF TAX EARNINGS EQUITY
--------- ------ ------ ------ ------- -------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1993...... $ -- $ -- $ -- $ -- $ 355 $ (6) $ 576 $ 925
Net income...................... -- -- -- -- -- -- 151 151
Dividends declared on common
stock......................... -- -- -- -- -- -- (17) (17)
Capital contribution............ -- -- -- -- 50 -- -- 50
Change in net unrealized capital
gain (loss) on investments,
net of tax(1)................. -- -- -- -- -- (724) -- (724)
Translation adjustments......... -- -- -- -- -- -- 1 1
--- --- --- ---- ----- ----- ------
BALANCE, DECEMBER 31, 1994...... -- -- -- -- 405 (730) 711 386
Net income...................... -- -- -- -- -- -- 150 150
Dividends declared on common
stock......................... -- -- -- -- -- -- (226) (226)
Capital contribution............ -- -- -- -- 180 -- -- 180
Change in net unrealized capital
gain (loss) on investments,
net of tax.................... -- -- -- -- -- 686 -- 686
Translation adjustments......... -- -- -- -- -- -- 1 1
--- --- --- ---- ----- ----- ------
BALANCE, DECEMBER 31, 1995...... -- -- -- -- 585 (44) 636 1,177
Net income...................... -- -- -- -- -- -- 24 24
Change in net unrealized capital
gain (loss) on investments,
net of tax.................... -- -- -- -- -- 73 -- 73
--- --- --- ---- ----- ----- ------
BALANCE, DECEMBER 31, 1996...... -- -- -- -- 585 29 660 1,274
Issuance of Class B Common Stock
(unaudited)...................
Dividends declared
February , 1997
(unaudited).................
--- --- --- ---- ----- ----- ------
Pro forma balance,
December 31, 1996
(unaudited)................. $ -- $ $ $ $ $ $ $
=== === === ==== ===== ===== ======
</TABLE>

- ---------------

(1) The 1994 change in net unrealized capital gain (loss) on investments, net of
tax, includes a gain of $103 due to the adoption of SFAS No. 115 as
discussed in Note 2(b) of Notes to consolidated financial statements.

The accompanying Notes to consolidated financial statements

are an integral part of the above statements.

F-5
<PAGE> 133

HARTFORD LIFE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income................................................ $ 151 $ 150 $ 24
Adjustments to net income:
Depreciation and amortization............................. 35 17 12
Net realized capital (gains) losses on sale of
investments............................................. (1) 4 219
Increase in premiums receivable........................... (21) (27) (13)
Increase in other liabilities............................. 201 171 433
Change in receivables, payables and accruals.............. 102 (266) 2
(Decrease) increase in accrued taxes...................... (65) 35 (90)
Increase in deferred income taxes......................... (109) (104) (137)
Increase in deferred policy acquisition costs............. (470) (390) (580)
Increase in liability for future policy benefits.......... 371 654 472
(Increase) decrease in reinsurance recoverable and related
assets.................................................. (5) 22 (4)
------- ------- -------
CASH PROVIDED BY OPERATING ACTIVITIES................ 189 266 338
------- ------- -------
INVESTING ACTIVITIES
Purchases of fixed maturity investments................... (9,968) (6,950) (7,045)
Sales of fixed maturity investments....................... 6,262 5,494 4,018
Maturities and principal paydowns of fixed maturity
investments............................................. 2,069 1,847 2,890
Purchase of other investments............................. (1,530) (928) (391)
Sales of other investments................................ 167 64 284
Net sales (purchases) of short-term investments........... 181 (189) 302
------- ------- -------
CASH USED FOR (PROVIDED BY) INVESTING ACTIVITIES..... (2,819) (662) 58
------- ------- -------
FINANCING ACTIVITIES
Increase in allocated advances............................ 100 -- 115
Capital contribution...................................... 50 -- --
Dividends paid............................................ (17) -- (19)
Net receipts from (disbursements for) investment and
universal life-type contracts credited to (charged from)
policyholder accounts................................... 2,523 431 (490)
------- ------- -------
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES..... 2,656 431 (394)
------- ------- -------
Net increase in cash...................................... 26 35 2
Impact of foreign exchange................................ (1) 1 --
Cash -- beginning of year................................. 9 34 70
------- ------- -------
CASH -- END OF YEAR.................................. $ 34 $ 70 $ 72
======= ======= =======

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

CASH PAID DURING THE YEAR FOR:
Income taxes.............................................. $ 257 $ 173 $ 166
Interest.................................................. $ 29 $ 35 $ 55

SUPPLEMENTAL DISCLOSURE OF NONCASH INFORMATION

Capital contribution...................................... $ -- $ 180 $ --
Dividends................................................. $ -- $ 207 $ --
Increase in allocated advances for other assets........... $ -- $ -- $ 46
</TABLE>

The accompanying Notes to consolidated financial statements

are an integral part of the above statements.

F-6
<PAGE> 134

HARTFORD LIFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN MILLIONS)

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Hartford Life, Inc. (the "Company") was formed on December 13, 1996 and
capitalized on December 16, 1996 with the contribution of all the outstanding
common stock of Hartford Life and Accident Insurance Company ("Hartford Life and
Accident"). The Company is a direct subsidiary of Hartford Accident and
Indemnity Company ("Hartford Accident and Indemnity") and is ultimately a
subsidiary of Hartford Fire Insurance Company ("Hartford Fire"). Hartford Fire
is an indirect wholly owned subsidiary of ITT Hartford Group, Inc. ("The
Hartford"). On December 19, 1995, ITT Industries, Inc. (formerly ITT
Corporation) ("ITT") distributed all the outstanding shares of capital stock of
The Hartford to ITT stockholders of record on such date (the transactions
relating to such distribution are referred to herein as the "ITT Spin-Off"). As
a result of the ITT Spin-Off, The Hartford became an independent, publicly
traded company. The Company is a holding company and as such has no material
business of its own.

The Company is a leading insurance and financial services company which
provides: (a) investment products such as individual variable annuities and
fixed market value adjusted annuities, deferred compensation plan services and
mutual funds for savings and retirement needs; (b) life insurance for income
protection and estate planning; and (c) employee benefits products such as group
life and group disability insurance.

2. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying consolidated financial statements present the financial
position, results of operations and cash flows of Hartford Life, Inc. and
Hartford Life and Accident and subsidiaries on the basis of historical cost, in
a manner similar to pooling of interests accounting. Hartford Life and Accident
directly owns all the outstanding shares of capital stock of ITT Hartford Life
of Canada Insurance Company and Hartford Life Insurance Company, which in turn
owns all outstanding shares of ITT Hartford Life and Annuity Insurance Company
and ITT Hartford International Life Reassurance Corporation.

These financial statements present the financial position, results of
operations and cash flows of the Company as if it were a separate entity for all
periods presented. All material intercompany transactions and balances between
the Company and its subsidiaries have been eliminated. The consolidated
financial statements are prepared on a basis of generally accepted accounting
principles which differ materially from the statutory accounting prescribed by
various insurance regulatory authorities.

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 and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

CHANGES IN ACCOUNTING PRINCIPLES

On November 14, 1996, the Emerging Issues Task Force ("EITF") reached a
consensus on Issue No. 96-12, "Recognition of Interest Income and Balance Sheet
Classification of Structured Notes". This Issue requires companies to record
income on certain structured securities on a retrospective interest method. The
Company adopted EITF No. 96-12 for structured securities acquired after November
14, 1996. Adoption of EITF No. 96-12 did not have a material effect on the
Company's financial condition or results of operations.

F-7
<PAGE> 135

HARTFORD LIFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN MILLIONS)

In October 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation", which was effective in 1996. As permitted by SFAS No.
123, the Company continued to measure compensation costs of employee stock
option plans (relating to options on common stock of The Hartford) using the
intrinsic value method prescribed by Accounting Principles Board Opinion No. 25.
As of February 10, 1997, the Company had not adopted an employee stock
compensation plan. Certain officers of the Company participate in The Hartford's
stock option plan. Compensation costs allocated by The Hartford to the Company,
as well as pro forma compensation costs as determined under SFAS No. 123, were
immaterial to the results of operations for 1995 and 1996.

In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities". This statement
established criteria for determining whether transferred assets should be
accounted for as sales or secured borrowings. Subsequently, in December 1996,
the FASB issued SFAS No. 127, "Deferral of Effective Date of Certain Provisions
of FASB Statement No. 125", which defers the effective date of certain
provisions of SFAS No. 125 for one year. Adoption of SFAS No. 125 is not
expected to have a material effect on the Company's financial condition or
results of operations.

Effective January 1, 1994, the Company adopted SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities". The new standard
requires, among other things, that securities 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 effect those intentions. The classification determines the
appropriate accounting carrying value (cost basis or fair value) and, in the
case of fair value, whether the fair value difference from cost, net of tax,
impacts stockholder's equity directly or is reflected in the Consolidated
Statements of Income. Investments in equity securities had previously been and
continue to be recorded at fair value with the corresponding after-tax impact
included in stockholder's equity. Under SFAS No. 115, the Company's fixed
maturity investments are classified as "available-for-sale" and, accordingly,
these investments are reflected at fair value with the corresponding impact
included as a component of stockholder's equity designated as "Net unrealized
capital gain (loss) on investments, net of tax". As with the underlying
investment security, unrealized capital gains and losses on derivative financial
instruments are considered in determining the fair value of the portfolios. The
impact of adoption was an increase to stockholder's equity of $103. The
Company's cash flows were not impacted by this change in accounting principle.

REVENUE RECOGNITION

Revenues for universal life policies and investment products consist of
policy charges for the cost of insurance, policy administration and surrender
charges assessed to policy account balances and are recognized in the period in
which services are provided. Premiums for traditional life insurance policies
are recognized as revenues when they are due from policyholders.

FUTURE POLICY BENEFITS AND OTHER POLICYHOLDER FUNDS

Liabilities for future policy benefits are computed by the net level
premium method using interest rate assumptions varying from 3% to 11% and
withdrawal and mortality assumptions appropriate at the time the policies were
issued. Health reserves, which are the result of sales of group long-term and
short-term disability, stop loss, Medicare supplement and individual disability
products, are stated at amounts determined by estimates on individual cases and
estimates of

F-8
<PAGE> 136

HARTFORD LIFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN MILLIONS)

unreported claims based on past experience. Liabilities for universal life-type
and investment contracts are stated at policyholder account values before
surrender charges.

DEFERRED POLICY ACQUISITION COSTS

Policy acquisition costs, including commissions and certain underwriting
expenses associated with acquiring business, are deferred and amortized over the
estimated lives of the contracts, generally 20 years. Generally, acquisition
costs are deferred and amortized using the retrospective deposit method. Under
the retrospective deposit method, acquisition costs are amortized in proportion
to the present value of expected gross profits from surrender charges,
investment, mortality and expense margins. Actual gross profits can vary from
management's estimates resulting in increases or decreases in the rate of
amortization. Management periodically updates these estimates, when appropriate,
and evaluates the recoverability of the deferred acquisition cost asset. When
appropriate, management revises its assumptions on the estimated gross profits
of these contracts and the cumulative amortization for the books of business are
reestimated and readjusted by a cumulative charge or credit to income.

POLICYHOLDER REALIZED CAPITAL GAINS AND LOSSES

Realized capital gains and losses on security transactions associated with
the Company's immediate participation guaranteed contracts are excluded from
revenues and deferred, since under the terms of the contracts the realized gains
and losses will be credited to policyholders in future years as they are
entitled to receive them.

FOREIGN CURRENCY TRANSLATION

Foreign currency translation gains and losses are reflected in
stockholder's equity. Balance sheet accounts are translated at the exchange
rates in effect at each year end and income statement accounts are translated at
the average rates of exchange prevailing during the year. The national
currencies of international operations are generally their functional
currencies.

INVESTMENTS

The Company's investments in fixed maturities include bonds, redeemable
preferred stock and commercial paper which are classified as
"available-for-sale" and accordingly are carried at fair value with the
after-tax difference from cost reflected as a component of stockholder's equity
designated as "Net unrealized capital gain (loss) on investments, net of tax".
Equity securities, which include common and non-redeemable preferred stocks, are
carried at fair value with the after-tax difference from cost reflected in
stockholder's equity. Policy and mortgage loans are each carried at their
outstanding balance which approximates fair value. Investments in partnerships
and trusts are carried at cost. Net realized capital gains (losses), after
deducting the policyholders' share, are reported as a component of revenue and
are determined on a specific identification basis.

The Company's accounting policy for impairment recognition requires
recognition of an other than temporary impairment charge on a security if it is
determined that the Company is unable to recover all amounts due under the
contractual obligations of the security. In addition, the Company has
established specific criteria to be used in the impairment evaluation of an
individual portfolio of assets. Specifically, if the asset portfolio is
supporting a runoff operation, is forced to be liquidated prior to maturity to
meet liability commitments and has fair value below amortized cost, which will
not materially fluctuate as a result of future interest rate changes, then an
other than temporary impairment condition has been determined to have occurred.
Each individual security within the

F-9
<PAGE> 137

HARTFORD LIFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN MILLIONS)

portfolio is evaluated to determine whether or not it is impaired. Once an
impairment charge has been recorded, the Company then continues to review the
individual impaired securities for appropriate valuation on an on-going basis.

During 1996, it was determined that certain individual securities within
the investment portfolio supporting the Company's closed block of guaranteed
rate contracts ("Closed Book GRC") were impaired. With the initiation of certain
hedge transactions, which eliminated the possibility that the fair value of the
Closed Book GRC investments would recover to their current amortized cost, an
other than temporary impairment loss of $88 after tax was determined to have
occurred and was recorded.

DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses a variety of derivative financial instruments including,
swaps, caps, floors, forwards and exchange traded-financial futures and options
as part of an overall risk management strategy. These instruments are used as a
means of hedging exposure to price, foreign currency and/or interest rate risk
on anticipated investment purchases or existing assets and liabilities. The
Company does not hold or issue derivative financial instruments for trading
purposes. The Company's accounting for derivative financial instruments used to
manage risk is in accordance with the concepts established in SFAS No. 80,
Accounting for Futures Contracts, SFAS No. 52, Foreign Currency Translation,
American Institute of Certified Public Accountants Statement of Position 86-2,
Accounting for Options, and various EITF pronouncements. Written options are, in
all cases, used in conjunction with other assets and derivatives as part of the
Company's asset/liability management strategies. Derivative instruments are
carried at values consistent with the asset or liability being hedged.
Derivatives used to hedge fixed maturities or equities are carried at fair value
with the after-tax difference from cost reflected in stockholder's equity.
Derivatives used to hedge other invested assets or liabilities are carried at
cost.

Derivatives must be designated at inception as a hedge and measured for
effectiveness both at inception and on an ongoing basis. The Company's minimum
correlation threshold for hedge designation is 80%. If correlation, which is
assessed monthly and measured based on a rolling three month average, falls
below 80%, hedge accounting will be terminated. Derivatives used to create a
synthetic asset must meet synthetic accounting criteria including designation at
inception and consistency of terms between the synthetic and the instrument
being replicated. Interest rate swaps are the primary type of derivatives used
to convert London interbank offered quotations for U.S. dollar deposits
("LIBOR") based variable rate instruments to fixed rate instruments. Synthetic
instrument accounting, consistent with industry practice, provides that the
synthetic asset is accounted for like the financial instrument it is intended to
replicate. Derivatives which fail to meet risk management criteria are marked to
market with the impact reflected in the Consolidated Statements of Income.

Gains or losses on financial futures contracts entered into in anticipation
of the future receipt of product cash flows are deferred and, at the time of the
ultimate purchase, reflected as an adjustment to the cost basis of the purchased
asset. Gains or losses on futures used in invested asset risk management are
deferred and adjusted into the cost basis of the hedged asset when the futures
contracts are closed, except for futures used in duration hedging which are
deferred and are adjusted into the cost basis on a quarterly basis. The
adjustments to the cost basis are amortized into investment income over the
remaining asset life.

Open forward commitment contracts are marked to market through
stockholder's equity. Such contracts are recorded at settlement by recording the
purchase of the specified securities at the

F-10
<PAGE> 138

HARTFORD LIFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN MILLIONS)

previously committed price. Gains or losses resulting from the termination of
the forward commitment contracts before the delivery of the securities are
recognized immediately in the Consolidated Statements of Income as a component
of net investment income.

The cost of purchased options and/or premiums received on covered written
options, entered into as part of an asset/liability management strategy, is/are
adjusted into the cost basis of the underlying asset or liability and amortized
over the remaining life of the hedge. Gains or losses on expiration or
termination of the hedge are adjusted into the basis of the underlying asset or
liability and amortized over the remaining asset life. The Company had no
written options as of December 31, 1995 and 1996.

Interest rate swaps involve the periodic exchange of payments without the
exchange of underlying principal or notional amounts. Net receipts or payments
are accrued and recognized over the life of the swap agreement as an adjustment
to income. Should the swap be terminated, the gain or loss is adjusted into the
basis of the asset or liability and amortized over the remaining life. Should
the hedged asset be sold or liability terminated without terminating the swap
position, any swap gains or losses are immediately recognized in earnings.
Interest rate swaps purchased in anticipation of an asset purchase (an
"anticipatory transaction") are recognized consistent with the underlying asset
components such that the settlement component is recognized in the Consolidated
Statements of Income while the change in market value is recognized as an
unrealized gain or loss.

Premiums paid on purchased floor or cap agreements and the premium received
on issued floor or cap agreements (used for risk management) are adjusted into
the basis of the applicable asset and amortized over the asset life. Gains or
losses on termination of such positions are adjusted into the basis of the asset
or liability and amortized over the remaining asset life. Net payments are
recognized as an adjustment to income or basis adjusted and amortized depending
on the specific hedge strategy.

Forward exchange contracts and foreign currency swaps are accounted for in
accordance with SFAS No. 52.

RELATED PARTY TRANSACTIONS

Transactions of the Company with Hartford Accident and Indemnity and its
affiliates relate principally to tax settlements, reinsurance, insurance
coverage, rental and service fees and payment of dividends and capital
contributions. 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 employee benefit plan
expenses, are initially paid by Hartford Fire. Direct expenses are allocated to
the Company 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. Indirect expenses allocated to the Company by
The Hartford were $46, $51, and $45 in 1994, 1995, and 1996, respectively.
Management of the Company believes that the methods used are reasonable. In
addition, the Company was charged its share of costs allocated to The Hartford
by ITT prior to the ITT Spin-Off, which were immaterial in 1994 and 1995.
Included in other liabilities is $44 and $61 due The Hartford as of December 31,
1995 and 1996, respectively.

The Company cedes approximately $10 billion of group life insurance in
force to companies affiliated with The Hartford and assumes approximately $122
million of premiums relating to stop

F-11
<PAGE> 139

HARTFORD LIFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN MILLIONS)

loss and short-term disability sold by the Company but written by a number of
The Hartford's property-casualty subsidiaries.

On June 30, 1995, the ownership of ITT Lyndon Insurance Company was
transferred to the Company via a capital contribution of $180, representing the
net assets of such company.

DIVIDENDS TO POLICYHOLDERS

Certain life insurance policies contain dividend payment provisions that
enable the policyholder to participate in the earnings of the life insurance
subsidiaries of the Company. The participating insurance in force accounted for
28%, 23%, and 25% in 1994, 1995, and 1996, respectively, of total insurance in
force.

3. EVENT SUBSEQUENT TO DATE OF AUDITORS' REPORT -- PRO FORMA INFORMATION
(UNAUDITED)

On February 20, 1997, the Company borrowed $1,084 pursuant to a line of
credit (see note 15), which together with a promissory note in the amount of
$100 was paid as a dividend to its parent. Of the $1,184 dividend, $893
constituted a repayment of the allocated advances. The promissory note principal
is due and payable February 19, 1998, together with interest at a defined
Eurodollar rate (5.45% at inception of the promissory note) plus 15 basis
points.

Prior to March 31, 1997, the Company intends to reclassify the authorized
shares of common stock, par value $.01 per share, of the Company into Class B
Common Stock, par value $.01 per share (the "Class B Common Stock"), and to
authorize the Class A Common Stock, par value $.01 per share (the "Class A
Common Stock") and the preferred stock, no par value (the "Preferred Stock").
Holders of Class A Common Stock and Class B Common Stock are entitled to receive
ratably such dividends, if any, as may be declared by the Board of Directors,
subject to any preferential dividend rights of any outstanding Preferred Stock,
and generally have identical voting rights and vote together (and not as
separate classes), except that holders of Class A Common Stock are entitled to
one vote per share while holders of Class B Common Stock are entitled to five
votes per share. Also, each share of Class B Common Stock is convertible into a
share of Class A Common Stock at any time at the option of the holder and will
automatically convert into a share of Class A Common Stock (i) upon the transfer
of such share Class B Common Stock by the holder thereof to a non-affiliate
(except where the shares of Class B Common Stock so transferred represent 50% or
more of all the outstanding shares of Common Stock, calculated without regard to
the difference in voting rights between the classes of Common Stock) or (ii) in
the event that the number of shares of outstanding Class B Common Stock is less
than 50% of all the Common Stock then outstanding.

The pro forma balance sheet and pro forma statement of stockholder's equity
reflect the above transactions as if they had occurred on December 31, 1996.

Pro forma net income per share data is presented only for the year ended
December 31, 1996, as such information for earlier periods would not be
meaningful. Pro forma net income per share data is calculated based upon the
shares of Class B Common Stock owned by The Hartford immediately prior to the
Equity Offerings (see Note 15) plus an assumed issuance of Class A Common Stock
in the Equity Offerings (the number of shares that, based on the midpoint of the
range of the estimated initial public offering prices and the estimated
underwriting discounts and expenses payable by the Company, would result in net
proceeds equal to the excess of the amount of the February 1997 dividend over
the 1996 earnings and the allocated advances).

F-12
<PAGE> 140

HARTFORD LIFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN MILLIONS)

4. INVESTMENTS

COMPONENTS OF NET INVESTMENT INCOME

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------
1994 1995 1996
------- ------ ------
<S> <C> <C> <C>
Interest income................................... $ 1,345 $1,450 $1,546
Income from other investments..................... 69 13 3
------ ------ ------
Gross investment income........................... 1,414 1,463 1,549
Less: Investment expenses......................... 11 12 15
------ ------ ------
NET INVESTMENT INCOME............................. $ 1,403 $1,451 $1,534
====== ====== ======
</TABLE>

COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)

<TABLE>
<S> <C> <C> <C>
Fixed maturities.................................. $ (37) $ 30 $ (214)
Equity securities................................. (9) (6) 2
Real estate and other............................. 47 (26) (4)
Less: Decrease in liability to policyholders for
realized capital gains.......................... -- (2) (3)
------- ------ ------
NET REALIZED CAPITAL GAINS (LOSSES)............... $ 1 $ (4) $ (219)
======== ====== ======
</TABLE>

COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON EQUITY SECURITIES

<TABLE>
<S> <C> <C> <C>
Gross unrealized gains............................ $ 3 $ 4 $ 7
Gross unrealized losses........................... (11) (2) (1)
------- ------ ------
Net unrealized capital (losses) gains............. (8) 2 6
Deferred income tax (asset) liability............. (3) -- 2
------- ------ ------
Net unrealized capital (losses) gains,
after-tax....................................... (5) 2 4
Balance beginning of year......................... (6) (5) 2
------- ------ ------
CHANGE IN NET UNREALIZED CAPITAL GAINS (LOSSES) ON
EQUITY SECURITIES............................... $ 1 $ 7 $ 2
======== ====== ======
</TABLE>

COMPONENTS OF NET UNREALIZED CAPITAL (LOSSES) GAINS ON FIXED MATURITIES

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
-----------------------------
1994 1995 1996
------- ------ ------
<S> <C> <C> <C>
Gross unrealized gains................................ $ 174 $ 581 $ 425
Gross unrealized losses............................... (1,333) (598) (373)
Unrealized losses (gains) credited to policyholders... 43 (53) (13)
------- ------ ------
Net unrealized capital (losses) gains................. (1,116) (70) 39
Deferred income tax (asset) liability................. (391) (24) 14
------- ------ ------
Net unrealized capital (losses) gains, after-tax...... (725) (46) 25
Balance beginning of year............................. 103 (725) (46)
------- ------ ------
CHANGE IN NET UNREALIZED CAPITAL (LOSSES) GAINS ON
FIXED MATURITIES.................................... $ (828) $ 679 $ 71
======== ====== ======
</TABLE>

F-13
<PAGE> 141

HARTFORD LIFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN MILLIONS)

COMPONENTS OF FIXED MATURITIES INVESTMENTS

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1995
-------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
U.S. government and government agencies and
authorities (guaranteed and sponsored)........ $ 554 $ 5 $ (9) $ 550
U.S. government and government agencies and
authorities (guaranteed and sponsored) --
asset-backed.................................. 3,880 230 (407) 3,703
States, municipalities and political
subdivisions.................................. 202 4 (3) 203
International governments....................... 364 21 (4) 381
Public utilities................................ 1,027 31 (2) 1,056
All other corporate including international..... 4,682 190 (98) 4,774
All other corporate -- asset-backed............. 3,421 81 (63) 3,439
Short-term investments.......................... 1,088 -- -- 1,088
Certificates of deposit......................... 938 19 (12) 945
------- --- ----- -------
TOTAL FIXED MATURITIES.......................... $16,156 $581 $ (598) $16,139
======= === ===== =======
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
-------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
U.S. government and government agencies and
authorities (guaranteed and sponsored)........ $ 194 $ 13 $ (4) $ 203
U.S. government and government agencies and
authorities (guaranteed and sponsored) --
asset-backed.................................. 2,167 165 (138) 2,194
States, municipalities and political
subdivisions.................................. 423 6 (11) 418
International governments....................... 380 19 (4) 395
Public utilities................................ 967 13 (9) 971
All other corporate including international..... 5,477 137 (125) 5,489
All other corporate -- asset-backed............. 4,151 57 (60) 4,148
Short-term investments.......................... 765 -- -- 765
Certificates of deposit......................... 1,135 15 (22) 1,128
------- ---- ----- -------
TOTAL FIXED MATURITIES.......................... $15,659 $425 $ (373) $15,711
======= ==== ===== =======
</TABLE>

The amortized cost and fair value of fixed maturities at December 31, 1996,
by maturity, are shown below. Asset-backed securities, including mortgage-backed
securities and collateralized mortgage obligations, are distributed to maturity
year based on the Company's estimates of the rate of future prepayments of
principal over the remaining life of such securities. These estimates are
developed using prepayment speeds reported in broker consensus data, and can be
expected to vary from actual experience. Expected maturities differ from
contractual maturities due to call or prepayment provisions.

F-14
<PAGE> 142

HARTFORD LIFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN MILLIONS)

<TABLE>
<CAPTION>
MATURITY AMORTIZED COST FAIR VALUE
---------------------------------------------------------- -------------- ----------
<S> <C> <C>
One year or less.......................................... $ 2,920 $ 2,936
Over one year through five years.......................... 6,646 6,705
Over five years through ten years......................... 3,993 3,982
Over ten years............................................ 2,100 2,088
------- -------
TOTAL........................................... $ 15,659 $ 15,711
======= =======
</TABLE>

Sales of fixed maturities excluding short-term fixed maturities for the
years ended December 31, 1994, 1995 and 1996 resulted in proceeds of $6,262,
$5,494 and $4,018, respectively, resulting in gross realized capital gains of
$79, $111 and $102, respectively, and gross realized capital losses (including
investment writedowns) of $116, $81 and $316, respectively, not including
policyholder gains and losses. Sales of equity securities for the years ended
December 31, 1994, 1995 and 1996 resulted in proceeds of $58, $42 and $74,
respectively, resulting in gross realized capital gains of $5, $0 and $2,
respectively, and gross realized capital losses of $14, $6 and $0, respectively,
not including policyholder gains and losses.

CONCENTRATION OF CREDIT RISK

As of December 31, 1996, the Company had a reinsurance recoverable of $3.8
billion from Mutual Benefit Life Assurance Corporation ("Mutual Benefit"),
supported by assets in a security trust of $3.8 billion (including policy loans
of $3.3 billion). The risk of Mutual Benefit becoming insolvent is mitigated by
the reinsurance agreement's requirement that the assets be kept in a security
trust with the Company as sole beneficiary.

The Company has invested in the securities of a single issuer in amounts
greater than 10% of stockholder's equity. The table below details the issuer and
the amount invested by the Company, as of December 31, 1996. Excluding these
investments and investments in U.S. government and agencies, the Company has no
other significant concentrations of credit risk in fixed maturities.

<TABLE>
<CAPTION>
AMORTIZED FAIR
ISSUER COST VALUE RATING
- -------------------------------------------- --------- ----- -------------------------
<S> <C> <C> <C>
MBNA Credit Card............................ $ 180 $ 181 BBB-AAA
Green Tree Financial Corporation............ $ 175 $ 175 A-AAA
Province of Quebec.......................... $ 152 $ 158 A+ (Standard and Poor's)
Traveler's Group, Inc....................... $ 160 $ 160 A+ (Standard and Poor's)
Finova Capital.............................. $ 136 $ 137 A- (Standard and Poor's)
Ford Motor Corporation...................... $ 143 $ 144 A+ (Standard and Poor's)
Sears, Roebuck and Co. ..................... $ 131 $ 131 BBB - A-
</TABLE>

DERIVATIVE INVESTMENTS

Derivatives play an important role in facilitating the management of
interest rate risk, in creating opportunities to develop asset packages which
efficiently fund product obligations, in hedging against indexation risks which
affect the value of certain liabilities, and in adjusting investment risk
characteristics when dictated by significant changes in market risks. As an end
user of derivatives, the Company uses a variety of derivative financial
instruments, including swaps, caps, floors, forwards and exchange traded
financial futures and options in order to hedge exposure to price, foreign
currency and/or interest rate risk on anticipated investment purchases or
existing assets and liabilities. The notional amounts of derivative contracts
represent the basis upon which pay and

F-15
<PAGE> 143

HARTFORD LIFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN MILLIONS)

receive amounts are calculated and are not reflective of credit risk for
derivative contracts. Credit risk for derivative contracts is limited to the
amounts calculated to be due to the Company on such contracts. The Company
believes it maintains prudent policies regarding the financial stability and
credit standing of its major counterparties and typically requires credit
enhancement provisions to further limit its credit risk for derivative
contracts. Many of these derivative contracts are bilateral agreements that are
not assignable without the consent of the relevant counterparty. Notional
amounts pertaining to derivative financial instruments totaled $9.6 billion and
$10.9 billion at December 31, 1995 and 1996, respectively ($7.9 billion and $8.3
billion related to life insurance investments and $1.7 billion and $2.6 billion
related to life insurance liabilities at December 31, 1995 and 1996,
respectively).

The following table summarizes the Company's derivatives, segregated by
major categories, as of December 31, 1995 and 1996.

<TABLE>
<CAPTION>
AMOUNTS HEDGED (NOTIONAL AMOUNTS) (EXCLUDING LIABILITY HEDGES)
---------------------------------------------------------------------
PURCHASED
TOTAL ISSUED OPTIONS, INTEREST FOREIGN TOTAL
CARRYING CAPS & CAPS & RATE CURRENCY NOTIONAL
VALUE FLOORS(C) FLOORS(D) FUTURES(E) SWAPS(H) SWAPS(F) AMOUNT
-------- --------- --------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1995
Asset-backed securities (excluding
inverse floaters and
anticipatory)................... $ 6,375 $ 118 $ 3,433 $ 323 $ 290 $ -- $4,164
Inverse floaters(A)............... 770 560 354 18 681 -- 1,613
Anticipatory(G)................... (3) -- -- 478 240 -- 718
Other bonds and notes............. 7,909 33 66 323 798 186 1,406
Short-term investments............ 1,088 -- -- -- -- -- --
------- ------ ------ ------ ------ ---- ------
TOTAL FIXED MATURITIES.... 16,139 711 3,853 1,142 2,009 186 7,901
Equity securities, policy loans
and other investments........... 3,933 -- -- -- 18 -- 18
------- ------ ------ ------ ------ ---- ------
TOTAL INVESTMENTS......... $20,072 $ 711 $ 3,853 $1,142 $2,027 $186 $7,919
======= ====== ====== ====== ====== ==== ======
TOTAL DERIVATIVES -- FAIR
VALUE(B)................ $ (32) $ 47 $ -- $ (113) $(24) $ (122)
====== ====== ====== ====== ==== ======
</TABLE>

F-16
<PAGE> 144

HARTFORD LIFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN MILLIONS)

<TABLE>
<CAPTION>
AMOUNTS HEDGED (NOTIONAL AMOUNTS) (EXCLUDING LIABILITY HEDGES)
---------------------------------------------------------------------
PURCHASED
TOTAL ISSUED OPTIONS, INTEREST FOREIGN TOTAL
CARRYING CAPS & CAPS & RATE CURRENCY NOTIONAL
VALUE FLOORS(C) FLOORS(D) FUTURES(E) SWAPS(H) SWAPS(F) AMOUNT
-------- --------- --------- ---------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1996
Asset-backed securities (excluding
inverse floaters and
anticipatory)................... $ 5,939 $ 500 $ 2,454 $ -- $ 941 $ -- $3,895
Inverse floaters(A)............... 404 98 856 -- 346 -- 1,300
Anticipatory(G)................... -- -- -- 287 105 -- 392
Other bonds and notes............. 8,603 456 747 50 1,265 125 2,643
Short-term investments............ 765 -- -- -- -- -- --
------- ------ ------ ------ ------ ---- ------
TOTAL FIXED MATURITIES.... 15,711 1,054 4,057 337 2,657 125 8,230
Equity securities, policy loans
and other investments........... 4,119 -- -- -- 19 -- 19
------- ------ ------ ------ ------ ---- ------
TOTAL INVESTMENTS......... $19,830 $ 1,054 $ 4,057 $ 337 $2,676 $125 $8,249
======= ====== ====== ====== ====== ==== ======
TOTAL DERIVATIVES -- FAIR
VALUE(B)................ $ (10) $ 35 $ -- $ (27) $ (9) $ (11)
====== ====== ====== ====== ==== ======
</TABLE>

- ---------------

(A) Inverse floaters are variations of collateralized mortgage obligations for
which the coupon rates move inversely with an index rate such as LIBOR. The
risk to principal is considered negligible as the underlying collateral for
the securities is guaranteed or sponsored by government agencies. To address
the volatility risk created by the coupon variability, the Company uses a
variety of derivative instruments, primarily interest rate swaps and
purchased caps and floors.

(B) The fair value of derivative instruments including swaps, caps, floors,
futures, options and forward commitments was determined using dealer quoted
prices, for 1995, and using a pricing model which is validated through
quarterly comparison to dealer quoted prices, for 1996.

(C) The 1995 data includes issued caps of $475 with a weighted average strike
rate of 8.5% (ranging from 7.0% to 10.4%) and over 85% maturing in 2000
through 2004. In addition, issued floors totaled $236, a weighted average
strike rate of 8.1% (ranging from 5.3% to 10.9%) and mature through 2007
with 76% maturing by 2004. The 1996 data includes issued caps of $433 with a
weighted average strike rate of 8.21% (ranging from 7.0% to 9.5%) and over
93% maturing in 2000 through 2005. In addition, issued floors totaled $621,
have a weighted average strike rate of 5.16% (ranging from 4.875% to 7.85%)
with all of them maturing by the end of 2005.

(D) The 1995 data includes purchased floors of $2.1 billion and purchased caps
of $1.8 billion. The floors have a weighted average strike price of 5.7%
(ranging from 3.7% to 6.8%) and over 87% mature in 1997 through 1999. The
caps have a weighted average strike price of 7.6% (ranging from 4.5% to
10.1%) and over 82% mature in 1997 through 2000. The 1996 data includes
purchased floors of $2.6 billion, purchased options of $10 and purchased
caps of $1.4 billion. The floors have a weighted average strike rate of
5.77% (ranging from 3.70% to 7.85%) and over 95% mature in the years 1997
through 2001. The options mature in 1997. The caps have a weighted average
of 7.68% (ranging from 4.40% to 10.125%) and over 77% of them mature in the
years 1997 through 2001.

(E) As of December 31, 1995 and 1996, over 95% and 71% respectively, of the
notional futures contracts expire within one year.

(F) As of December 31, 1995 and 1996, over 25% and 42%, respectively, of the
Company's foreign currency swaps expire within one year; the balance mature
over the succeeding 4 to 5 years.

(G) Deferred gains and losses on anticipatory transactions are included in the
carrying value of bond investments in the Consolidated Balance Sheets. At
the time of the ultimate purchase, they are reflected as a basis adjustment
to the purchased asset. At December 31, 1995, the Company had $12.9 in net
deferred gains for futures, interest rate swaps and purchased options. The
Company basis adjusted $12.6 of the deferred gains in 1996. At December 31,
1996, the Company had $5.7 in net deferred gains for futures, interest rate
swaps and purchased options. The Company expects to basis adjust the $5.7 of
deferred gains in 1997.

(H) For additional information on the Company's interest rate swaps, see the
table on page F-17.

The following table summarizes the maturities by notional value of interest
rate swaps outstanding at December 31, 1995 and 1996, and the related weighted
average interest pay rate or receive rate. The variable rates represent spot
rates (primarily 90-day LIBOR) as of December 31,

F-17
<PAGE> 145

HARTFORD LIFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN MILLIONS)

1996. Such variable rates have been calculated assuming that the spot rates
remain unchanged throughout the life of the interest rate swaps.

<TABLE>
<CAPTION>
LATEST
1996 1997 1998 1999 2000 THEREAFTER TOTAL MATURITY
----- ----- ----- ----- ----- ---------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995
PAY FIXED/RECEIVE VARIABLE
Notional value.................... $ 15 $ 50 $ -- $ 453 $ 31 $ 229 $ 778 2004
Weighted average pay rate......... 4.95% 7.28% -- 8.10% 7.11% 7.78% 7.85%
Weighted average receive rate..... 5.81% 5.94% -- 5.75% 5.70% 5.88% 5.80%
PAY VARIABLE/RECEIVE FIXED
Notional value.................... $ 120 $ 68 $ 25 $ 25 $ 35 $ 295 $ 568 2007
Weighted average pay rate......... 5.89% 8.63% 5.93% -- 5.88% 4.35% 5.41%
Weighted average receive rate..... 2.78% 7.87% 4.00% -- 6.48% 6.66% 5.56%
PAY VARIABLE/RECEIVE DIFFERENT
VARIABLE
Notional value.................... $ 161 $ 18 $ 36 $ 12 $ 200 $ 254 $ 681 2004
Weighted average pay rate......... 5.51% 6.19% 3.65% 3.45% 4.53% 16.26% 5.59%
Weighted average receive rate..... 6.48% 8.10% 5.58% 5.16% 6.81% 5.91% 6.55%
Total interest rate swaps......... $ 296 $ 136 $ 61 $ 490 $ 266 $ 778 $2,027 2007
Total weighted average pay rate... 5.64% 7.78% 4.58% 7.57% 5.01% 6.40% 6.51%
Total weighted average receive
rate............................ 4.94% 7.19% 4.94% 5.44% 6.64% 6.30% 5.91%
</TABLE>

<TABLE>
<CAPTION>
LATEST
1997 1998 1999 2000 2001 THEREAFTER TOTAL MATURITY
----- ----- ----- ----- ----- ---------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996
PAY FIXED/RECEIVE VARIABLE
Notional value.................... $ -- $ 50 $ 165 $ 35 $ 162 $ 334 $ 746 2016
Weighted average pay rate......... -- 5.7% 5.8% 5.5% 5.5% 5.6% 5.6%
Weighted average receive rate..... -- 3.2% 1.5% 6.5% 6.3% 6.7% 5.2%
PAY VARIABLE/RECEIVE FIXED
Notional value.................... $ 86 $ 25 $ 486 $ 74 $ 582 $ 399 $1,652 2007
Weighted average pay rate......... 7.5% -- 6.4% 6.7% 7.0% 6.8% 6.8%
Weighted average receive rate..... 5.6% -- 5.6% 5.7% 6.2% 5.8% 5.9%
PAY VARIABLE/RECEIVE DIFFERENT
VARIABLE
Notional value.................... $ 19 $ 15 $ -- $ 200 $ -- $ 44 $ 278 2007
Weighted average pay rate......... 5.9% 5.7% -- 6.4% -- 12.9% 7.4%
Weighted average receive rate..... 3.7% 5.5% -- 5.0% -- 6.4% 5.2%
Total interest rate swaps......... $ 105 $ 90 $ 651 $ 309 $ 744 $ 777 $2,676 2016
Total weighted average pay rate... 7.2% 5.7% 6.2% 6.4% 6.7% 6.6% 6.5%
Total weighted average receive
rate............................ 5.2% 3.8% 4.4% 5.4% 6.2% 6.3% 5.6%
</TABLE>

In addition, interest rate sensitivity related to certain Company insurance
liabilities was altered primarily through interest rate swap agreements. The
notional amount of the liability agreements in which the Company generally pays
one variable rate in exchange for another was $2.5 billion at December 31, 1995
and 1996. As of December 31, 1996, the weighted average pay rate was 5.6% and
the weighted average receive rate was 6.5%. These agreements mature at various
times through 2001.

F-18
<PAGE> 146

HARTFORD LIFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN MILLIONS)

A reconciliation between notional amounts at December 31, 1995 and 1996 by
derivative type and strategy is as follows:

<TABLE>
<CAPTION>
BY DERIVATIVE TYPE
-----------------------------------------------
12/31/95 12/31/96
NOTIONAL MATURITIES/ NOTIONAL
AMOUNT ADDITIONS TERMINATIONS AMOUNT
--------- --------- ------------ --------
<S> <C> <C> <C> <C>
Caps............................................... $ 2,284 $ 1,293 $ 1,715 $ 1,862
Floors............................................. 2,380 2,184 1,165 3,399
Options............................................ -- 10 -- 10
Swaps/Forwards..................................... 3,821 4,292 2,844 5,269
Futures............................................ 1,142 3,776 4,581 337
------ ------- ------- -------
TOTAL.................................... $ 9,627 $ 11,555 $ 10,305 $ 10,877
====== ======= ======= =======
</TABLE>

<TABLE>
<CAPTION>
BY STRATEGY
-----------------------------------------------
12/31/95 12/31/96
NOTIONAL MATURITIES/ NOTIONAL
AMOUNT ADDITIONS TERMINATIONS AMOUNT
--------- --------- ------------ --------
<S> <C> <C> <C> <C>
Liability.......................................... $ 1,708 $ 2,057 $ 1,137 $ 2,628
Anticipatory....................................... 718 2,117 2,443 392
Asset.............................................. 3,037 1,572 2,229 2,380
Portfolio.......................................... 4,164 5,809 4,496 5,477
------ ------- ------- -------
TOTAL.................................... $ 9,627 $ 11,555 $ 10,305 $ 10,877
====== ======= ======= =======
</TABLE>

FAIR VALUE OF FINANCIAL INSTRUMENTS

<TABLE>
<CAPTION>
AS OF AS OF
DECEMBER 31, 1995 DECEMBER 31, 1996
------------------- -------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- ------- -------- -------
<S> <C> <C> <C> <C>
ASSETS
Fixed maturities.................................... $ 16,139 $16,139 $ 15,711 $15,711
Equity securities................................... 63 63 119 119
Policy loans........................................ 3,380 3,380 3,839 3,839
Mortgage loans...................................... 271 271 2 2
Investments in partnerships and trust............... 180 194 66 68
Other............................................... 39 39 93 119
LIABILITIES
Other policy benefits............................... $ 12,727 $12,767 $ 11,707 $11,469
Allocated advances.................................. 732 732 893 893
</TABLE>

The following methods and assumptions were used to estimate the fair value
of each class of financial instrument: fair value for fixed maturities and
equity securities approximate those quotations published by applicable stock
exchanges or received from other reliable sources; policy and mortgage loan
carrying amounts approximate fair value; investments in partnerships and trusts
are based on external market valuations from partnership and trust managements;
fair value of derivative instruments, including swaps, caps, floors, futures,
and forward commitments, is determined by using a pricing model which is
validated through quarterly comparison to dealer quoted

F-19
<PAGE> 147

HARTFORD LIFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN MILLIONS)

market prices; and other policy benefits payable for investment type contracts
are determined by estimating future cash flows discounted at the yearend market
rate.

5. INCOME TAX

The Company and The Hartford have entered into a tax sharing agreement
under which each member in the consolidated U.S. federal income tax return will
make payments between them such that, with respect to any period, the amount of
taxes to be paid by the Company, subject to certain adjustments, generally will
be determined as though the Company were to file separate federal, state and
local income tax returns.

As long as The Hartford continues to beneficially own, directly or
indirectly, at least 80% of the combined voting power and 80% of the value of
the outstanding capital stock of the Company, the Company will be included for
federal income tax purposes in the consolidated group of which The Hartford is
the common parent. It is the current intention of The Hartford and its
subsidiaries to continue to file a single consolidated federal income tax
return. The Company will continue to remit (receive from) The Hartford a current
income tax provision (benefit) computed in accordance with such tax sharing
agreement. The Company's effective tax rate was 32%, 34% and 23% in 1994, 1995
and 1996, respectively.

Income tax expense was as follows:

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
-----------------------
1994 1995 1996
----- ----- -----
<S> <C> <C> <C>
Current......................................................... $ 202 $ 213 $ 134
Deferred........................................................ (130) (137) (127)
----- ----- -----
TOTAL................................................. $ 72 $ 76 $ 7
===== ===== =====
</TABLE>

A reconciliation of the tax provision of the U.S. federal statutory rate to
the provision of income taxes is as follows:

<TABLE>
<CAPTION>
FOR THE YEAR
ENDED
DECEMBER 31,
-----------------
1994 1995 1996
--- --- ---
<S> <C> <C> <C>
Tax provision at U.S. statutory rate................................... $78 $79 $11
Tax-exempt income...................................................... (4) (3) (2)
Foreign tax credit..................................................... -- (4) --
Other.................................................................. (2) 4 (2)
---- ---- ----
TOTAL........................................................ $72 $76 $ 7
==== ==== ====
</TABLE>

Income taxes paid were $257, $173, and $166 in 1994, 1995 and 1996,
respectively. The current tax refund due from The Hartford was $16 and $59 as of
December 31, 1995 and 1996, respectively.

F-20
<PAGE> 148

HARTFORD LIFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN MILLIONS)

Deferred tax assets (liabilities) included the following:

<TABLE>
<CAPTION>
AS OF DECEMBER
31,
-----------------
1995 1996
---- ----
<S> <C> <C>
Tax return deferred acquisition costs............................... $405 $524
Financial statement deferred acquisition costs and reserves......... 181 (260)
Employee benefits................................................... 13 15
Unrealized loss (gain) on investments............................... 24 (16)
Investments and other............................................... (180) 280
---- ----
TOTAL..................................................... $443 $543
==== ====
</TABLE>

Prior to the Tax Reform Act of 1984, the Life Insurance Company Income Tax
Act of 1959 permitted the deferral from taxation of a portion of statutory
income under certain circumstances. In such circumstances, the deferred income
was accumulated in a "Policyholders' Surplus Account" and will be taxable in the
future only under conditions which management considers to be remote; therefore,
no federal income taxes have been provided on this deferred income. The balance
for tax return purposes of the Policyholders' Surplus Account as of December 31,
1996 was $37.

6. REINSURANCE

The Company cedes insurance to non-affiliated insurers in order to limit
its maximum loss. Such transfer does not relieve the Company of its primary
liability. The Company also assumes insurance from other insurers. Group life
and accident and health insurance business is reinsured to unaffiliated
companies.

Insurance net retained premiums were comprised of the following:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------------
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Gross premiums................................................ $1,989 $2,348 $3,077
Insurance assumed............................................. 334 608 405
Insurance ceded............................................... (184) (313) (413)
------ ------ ------
TOTAL............................................... $2,139 $2,643 $3,069
====== ====== ======
</TABLE>

Reinsurance recoveries, which reduced death and other benefits, for the
years ended December 31, 1994, 1995 and 1996 approximated $113, $162 and $239,
respectively.

Also in December 1994, the Company ceded to a third party $1.0 billion in
individual fixed and variable annuities on a modified coinsurance basis. In
December 1995, the Company ceded approximately $1.2 billion in individual
variable annuities on a modified coinsurance basis to a third party. These
transactions did not have a material impact on consolidated net income.

In May 1994, the Company assumed the life insurance policies and the
individual annuities of Pacific Standard with reserves and account values of
approximately $434. The Company received cash and investment-grade assets to
support the life insurance and individual annuity contract obligations assumed.

F-21
<PAGE> 149

HARTFORD LIFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN MILLIONS)

7. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

The Company's employees are included in Hartford Fire's noncontributory
defined benefit pension plans. These plans provide pension benefits that are
based on years of service and the employee's compensation during the last ten
years of employment. The Company's funding policy is to contribute annually an
amount between the minimum funding requirements set forth in the Employee
Retirement Income Security Act of 1974, as amended, and the maximum amount that
can be deducted for federal income tax purposes. Generally, pension costs are
funded through the purchase of the Company's group pension contracts. The cost
to the Company was approximately $7, $6 and $7 in 1994, 1995 and 1996,
respectively.

The Company also provides, through Hartford Fire, certain health care and
life insurance benefits for eligible retired employees. A substantial portion of
the Company's employees may become eligible for these benefits upon retirement.
The Company's contribution for health care benefits will depend on the retiree's
date of retirement and years of service. In addition, the plan has a defined
dollar cap which limits average Company contributions. The Company has prefunded
a portion of the health care and life insurance obligations through trust funds
where such prefunding can be accomplished on a tax effective basis.
Postretirement health care and life insurance benefits expense, allocated by The
Hartford, was immaterial to the results of operations for 1994, 1995 and 1996,
respectively.

The assumed rate of future increases in the per capita cost of health care
(the health care trend rate) was 9.3% for 1996, decreasing ratably to 6.0% in
the year 2001. 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 the covered employees.

8. ALLOCATED ADVANCES FROM PARENT

For financial reporting purposes, the Company has treated certain amounts
previously allocated by The Hartford to the Company's life insurance
subsidiaries as Allocated Advances from parent. Such amounts were not treated as
liabilities or indebtedness for tax and statutory accounting purposes. Cash
received in respect of Allocated Advances was used to support the growth of the
life insurance subsidiaries and was treated as surplus for statutory accounting
purposes. Interest expense represents the expense internally allocated to the
Company with respect to the Allocated Advances based on The Hartford's actual
external borrowing costs. Interest expense paid was treated as dividends for tax
and statutory accounting purposes. The weighted average interest rate paid by
the Company was 6.5%, 6.8%, and 7.1% in 1994, 1995 and 1996, respectively.

9. BUSINESS SEGMENT INFORMATION

The Company sells financial products such as fixed and variable annuities,
retirement plan services, and life and disability insurance on both an
individual and a group basis. The Company divides its core businesses into three
segments: Investment Products, Individual Life Insurance and Employee Benefits.
In addition, the Company also maintains a corporate operation and also
classifies certain of its business as runoff operations. The Investment Products
segment offers individual variable annuities and fixed market value adjusted
annuities, deferred compensation and retirement plan services, mutual funds,
investment management services and other financial products. The Individual Life
Insurance segment sells a variety of individual life insurance products,
including variable life, universal life and interest-sensitive whole life
policies. The Employee Benefits

F-22
<PAGE> 150

HARTFORD LIFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN MILLIONS)

segment sells group insurance products, including group life and group
disability insurance and corporate-owned life insurance, and engages in certain
international operations. Through its corporate operation, the Company reports
net investment income on assets representing surplus not assigned to any of its
business segments, interest expense on the Allocated Advances and certain other
revenues and expenses not specifically allocable to any of its business
segments. The Company's runoff operations are primarily comprised of Closed Book
GRC and the Company's transferred group medical business. Net realized capital
gains and losses are recognized in the period of realization, but are allocated
to the segments utilizing durations of the segment portfolios.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1994 1995 1996
------- ------- -------
<S> <C> <C> <C>
REVENUES
Investment Products................................. $ 594 $ 761 $ 1,018
Individual Life Insurance........................... 391 408 472
Employee Benefits................................... 1,986 2,515 2,833
Corporate Operation................................. 28 51 72
Runoff Operations and Other......................... 544 355 (11)
------- ------- -------
TOTAL REVENUES................................. $ 3,543 $ 4,090 $ 4,384
======= ======= =======

INCOME BEFORE INCOME TAX EXPENSE
Investment Products................................. $ 129 $ 170 $ 226
Individual Life Insurance........................... 40 58 68
Employee Benefits................................... 81 101 115
Corporate Operation................................. (16) (24) (30)
Runoff Operations and Other......................... (11) (79) (348)
------- ------- -------
INCOME BEFORE INCOME TAX EXPENSE............... $ 223 $ 226 $ 31
======= ======= =======

ASSETS
Investment Products................................. $29,961 $40,565 $53,833
Individual Life Insurance........................... 2,808 3,173 3,968
Employee Benefits................................... 9,346 15,137 16,297
Corporate Operation................................. 911 1,910 2,168
Runoff Operations and Other......................... 7,257 5,177 3,667
------- ------- -------
TOTAL ASSETS................................... $50,283 $65,962 $79,933
======= ======= =======
</TABLE>

10. STATUTORY NET INCOME AND SURPLUS

A significant percentage of the consolidated statutory surplus is
permanently reinvested or is subject to various state regulatory restrictions
which limit the payment of dividends without prior approval. The total amount of
statutory dividends which may be paid by the insurance subsidiaries of the
Company in 1997, without prior approval, is estimated to be $132. Statutory net
income and surplus as of and for the years ended December 31 were:

<TABLE>
<CAPTION>
1994 1995 1996
------ ------ ------
<S> <C> <C> <C>
Statutory net income................................... $ 74 $ 113 $ 171
====== ====== ======
Statutory surplus...................................... $1,088 $1,224 $1,320
====== ====== ======
</TABLE>

F-23
<PAGE> 151

HARTFORD LIFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN MILLIONS)

The insurance subsidiaries of the Company prepare their statutory financial
statements in accordance with accounting practices prescribed by the State of
Connecticut Insurance Department and the State of New Jersey Insurance
Department. Prescribed statutory accounting practices include publications of
the National Association of Insurance Commissioners, as well as state laws,
regulations, and general administrative rules.

11. SEPARATE ACCOUNTS

The Company maintained separate account assets and liabilities totaling
$36.3 billion and $49.8 billion at December 31, 1995 and 1996, respectively,
which are reported at fair value. Separate account assets are segregated from
other investments, and investment income and gains and losses accrue directly to
the policyholder. Separate accounts reflect two categories of risk assumption:
non-guaranteed separate accounts totaling $25.9 billion and $39.4 billion at
December 31, 1995 and 1996, respectively, wherein the policyholder assumes the
investment risk, and guaranteed separate account assets totaling $10.4 billion
at December 31, 1995 and 1996, wherein the Company contractually guarantees
either a minimum return or account value to the policyholder. Included in the
non-guaranteed category are policy loans totaling $1.7 billion and $2.0 billion
at December 31, 1995 and 1996, respectively. Investment income (including
investment gains and losses) and interest credited to policyholders on separate
account assets are not reflected in the Consolidated Statements of Income.
Separate account management fees, net of minimum guarantees, were $256, $387 and
$538 in 1994, 1995 and 1996, respectively.

The guaranteed separate accounts include modified guaranteed individual
annuity and modified guaranteed life insurance. The average credited interest
rate on these contracts was 6.53% at December 31, 1996. The assets that support
these liabilities were comprised of $10.2 billion in fixed maturities at
December 31, 1996. The portfolios are segregated from other investments and are
managed so as to minimize liquidity and interest rate risk. In order to minimize
the risk of disintermediation associated with early withdrawals, individual
annuity and modified guaranteed life insurance contracts carry a graded
surrender charge as well as a market value adjustment. Additional investment
risk is hedged using a variety of derivatives which totaled $0.1 billion in
carrying value and $2.4 billion in notional amounts at December 31, 1996.

12. CLAIM RESERVES

The following table displays the development of the claim reserves
(included in future policy benefits on the Consolidated Balance Sheets)
resulting primarily from disability products as of December 31, 1995 and 1996:

<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------
1995 1996
------ ------
<S> <C> <C>
CLAIM RESERVES, JANUARY 1...................................... $1,115 $1,254
------ ------
Less: Reinsurance recoverable, January 1....................... 38 35
------ ------
Incurred expenses related to:
Current year................................................. 632 799
Prior year................................................... (28) (66)
------ ------
Total incurred............................................ 604 733
------ ------
Paid expenses related to:
Current year................................................. 227 236
Prior year................................................... 235 273
------ ------
Total paid................................................ 462 509
------ ------
Add: Reinsurance recoverable, December 31...................... 35 53
------ ------
CLAIM RESERVES, DECEMBER 31.................................... $1,254 $1,496
====== ======
</TABLE>

F-24
<PAGE> 152

HARTFORD LIFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN MILLIONS)

13. COMMITMENTS AND CONTINGENCIES

Under insurance guaranty fund laws existing 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. A
large part of the assessments paid by the Company's insurance subsidiaries
pursuant to these laws may be used as credits for a portion of the Company's
insurance subsidiaries' premium taxes. The Company paid guaranty fund
assessments of approximately $11, $13 and $12 in 1994, 1995 and 1996,
respectively, of which $5, $7 and $6 were estimated to be creditable against
premium taxes.

The rent paid to Hartford Fire for the space occupied by the Company was
$11 in 1994, 1995, and 1996. The Company expects to pay annual rent of $12 in
each of 1997, 1998, and 1999, $21 in each of 2000 and 2001, and $175 thereafter
over the remaining term of the sublease, which expires on December 31, 2009.
Rental expense is recognized on a level basis over the term of the sublease and
amounted to approximately $14 in 1994, 1995 and 1996.

14. QUARTERLY RESULTS FOR 1996 AND 1995 (UNAUDITED)

<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
----------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
--------------- ----------- -------------- ---------------
1996 1995 1996 1995 1996 1995 1996 1995
------ ------ ---- ---- ----- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues...................... $1,304 $1,065 $988 $896 $ 820 $1,062 $1,272 $1,067
Benefits, claims, and expenses... 1,265 1,030 945 857 933 1,025 1,217 1,028
------ ------ ---- ---- ----- ------ ------ ------
Net income.................... $ 39 $ 35 $ 43 $ 39 $(113) $ 37 $ 55 $ 39
====== ====== ===== ===== ====== ====== ====== ======
</TABLE>

15. SUBSEQUENT EVENTS

On February 10, 1997, the Company filed a Registration Statement with the
Securities and Exchange Commission relating to the U.S. and international
offerings of shares of Class A Common Stock (the "Equity Offerings")
representing up to 20% ownership of the Company. After completion of the Equity
Offerings, The Hartford would own all of the shares of Class B Common Stock
(after reclassification of the Company's common stock into Class B Common Stock
prior to March 31, 1997). The Company intends to use the estimated net proceeds
of the Equity Offerings to make a capital contribution to its insurance
subsidiaries, to reduce its third-party indebtedness and for other general
corporate purposes.

The Hartford has advised the Company that its current intent is to continue
to beneficially own at least 80% of the Company, but it is under no contractual
obligation to do so, except for a limited period. Provided that The Hartford
continues to beneficially own at least 80% of the combined voting power or the
value of the outstanding capital stock of the Company, the Company will be
included for federal income tax purposes in the controlled group of which The
Hartford is the common parent.

F-25
<PAGE> 153

HARTFORD LIFE, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN MILLIONS)

Each member of a controlled group is jointly and severally liable for pension
funding and pension termination liabilities of each other member of the
controlled group, as well as certain benefit plan taxes. Accordingly, the
Company could be liable for pension funding, pension termination liabilities and
certain other pension-related excise taxes as well as other taxes of another
member of The Hartford controlled group in the event any such liability is
incurred, and not discharged, by such other member.

In connection with the proposed Equity Offerings, the Company plans to
enter into formal agreements, including a master intercompany agreement,
investment management agreements and a new tax sharing agreement, with The
Hartford covering such matters as corporate services, approval of certain
corporate activities, registration rights, owned and leased space, allocation of
expenses, taxes and liabilities, investment advisory services, use of trademarks
and certain other corporate matters. As part of the master intercompany
agreement, the Company would agree to remit to The Hartford 30% of any shared
liabilities for which The Hartford is responsible in respect of the ITT
Spin-Off, 30% of any taxes which may be assessed to The Hartford relating to the
ITT Spin-Off and will indemnify The Hartford for certain other tax liabilities.
As of December 31, 1996, there was no known liability associated with the ITT
Spin-Off. Such agreements are meant to maintain the relationship between the
Company and The Hartford in a manner consistent in all material respects with
past practice. As a result, management believes these agreements will not have a
material impact on the results of operations of the Company.

In addition, under insurance company holding laws, agreements between the
Company's insurance subsidiaries and The Hartford must be fair and reasonable
and may be subject to the approval of applicable insurance commissioners. The
agreements will be intended to maintain the relationship between the Company and
The Hartford in a manner generally consistent with past practices. However, none
of these arrangements will result from arm's-length negotiations and, therefore,
the prices charged to the Company and its subsidiaries for services provided
under these arrangements may be higher or lower than prices that may be charged
by third parties.

On February 10, 1997, the Company entered into a $1,300 unsecured
short-term credit facility with a syndicate of four banks. Interest on
borrowings will be equal to a defined Eurodollar rate plus 13.5 basis points.
Borrowings must be repaid by February 9, 1998.

F-26
<PAGE> 154

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Company has agreed to sell to each of the U.S. Underwriters named below, and
each of such U.S. Underwriters, for whom Goldman, Sachs & Co., Dean Witter
Reynolds Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan
Stanley & Co. Incorporated and Smith Barney Inc. are acting as representatives,
has severally agreed to purchase from the Company, the respective number of
shares of Class A Common Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
CLASS A
UNDERWRITER COMMON STOCK
- ------------------------------------------------------------------------------ ------------
<S> <C>
Goldman, Sachs & Co...........................................................
Dean Witter Reynolds Inc......................................................
Merrill Lynch, Pierce, Fenner & Smith Incorporated...............
Morgan Stanley & Co. Incorporated.............................................
Smith Barney Inc..............................................................

-------
Total....................................................................
=======
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the U.S.
Underwriters are committed to take and pay for all the shares offered hereby, if
any are taken.

The U.S. Underwriters propose to offer the shares of Class A Common Stock
in part directly to the public at the initial public offering price set forth on
the cover page of this Prospectus and in part to certain securities dealers at
such price less a concession of $ per share. The U.S. Underwriters may
allow, and such dealers may reallow, a concession not in excess of $ per
share to certain brokers and dealers. After the shares of Class A Common Stock
are released for sale to the public, the offering price and other selling terms
may from time to time be varied by the representatives.

The Company has entered into an underwriting agreement (the "International
Underwriting Agreement") with the underwriters of the International Offering
(the "International Underwriters") providing for the concurrent offer and sale
of shares of Class A Common Stock in an international offering
outside the United States. The offering price and aggregate underwriting
discounts and commissions per share for the two offerings are identical. The
closing of the offering made hereby is a condition to the closing of the
International Offering, and vice versa. The representatives of the International
Underwriters are Goldman Sachs International, Dean Witter International Ltd.,
Merrill Lynch International, Morgan Stanley & Co. International Limited and
Smith Barney Inc.

Pursuant to an Agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the two offerings, each of the
U.S. Underwriters named herein has agreed that, as a part of the distribution of
the shares offered hereby and subject to certain exceptions, it will offer, sell
or deliver the shares of Class A Common Stock, directly or indirectly, only in
the United States of America (including the States and the District of
Columbia), its territories, its possessions and other areas subject to its
jurisdiction (the "United States") and to U.S. persons, which term shall mean,
for purposes of this paragraph: (a) any individual who is a resident of the
United States or (b) any corporation, partnership or other entity organized in
or under the laws of the United States or any political subdivision thereof and
whose office most directly involved with the purchase is located in the United
States. Each of the International

U-1
<PAGE> 155

Underwriters has agreed pursuant to the Agreement Between that, as a part of the
distribution of the shares offered as a part of the International Offering, and
subject to certain exceptions, it will (i) not, directly or indirectly, offer,
sell or deliver shares of Class A Common Stock (a) in the United States or to
any U.S. persons or (b) to any person who it believes intends to reoffer, resell
or deliver the shares in the United States or to any U.S. persons and (ii) cause
any dealer to whom it may sell such shares at any concession to agree to observe
a similar restriction.

Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Class A Common Stock as may be mutually agreed. The price of any shares so sold
shall be the initial public offering price, less an amount not greater than the
selling concession.

The Company has granted the U.S. Underwriters an option exercisable for 30
days after the date of this Prospectus to purchase up to an aggregate of
additional shares of Class A Common Stock solely to cover
over-allotments, if any. If the U.S. Underwriters exercise their over-allotment
option, the U.S. Underwriters have severally agreed, subject to certain
conditions, to purchase approximately the same percentage thereof that the
number of shares to be purchased by each of them, as shown in the foregoing
table, bears to the shares of Class A Common Stock offered. The
Company has granted the International Underwriters a similar option to purchase
up to an aggregate of additional shares of Class A Common Stock.

At the request of the Company, up to shares of Class A Common
Stock being offered in the Equity Offerings are being reserved for sale to
employees (other than international employees) of the Company, The Hartford and
their respective affiliates, and the respective directors thereof, at the
initial public offering price. A limited group of individuals purchasing
reserved shares of Class A Common Stock may be required to agree not to sell,
offer or otherwise dispose of any of such shares of Class A Common Stock for a
period of up to five months after the date of this Prospectus.

The Company, The Hartford, certain subsidiaries of The Hartford and certain
executive officers and directors of the Company have agreed, subject to certain
exceptions, that, during the period beginning on the date of this Prospectus and
continuing to and including the date 180 days after the date of this Prospectus,
they will not offer, sell, contract to sell, file a registration statement with
respect to or otherwise dispose of, directly or indirectly, any Common Stock (or
any securities convertible into or exercisable or exchangeable for Common Stock)
or grant any options or warrants to purchase Common Stock, without the prior
written consent of the representatives of the Underwriters, except for the
shares of Class A Common Stock offered in connection with the Equity Offerings.

The representatives of the Underwriters have informed the Company that they
do not expect sales to accounts over which the Underwriters exercise
discretionary authority to exceed 5% of the total number of shares of Class A
Common Stock offered by them.

Prior to the Equity Offerings, there has been no public market for the
shares of Class A Common Stock. The initial public offering price will be
negotiated among the Company and the representatives of the U.S. Underwriters
and the International Underwriters. Among the factors to be considered in
determining the initial public offering price of the Class A Common Stock, in
addition to prevailing market conditions, will be the Company's historical
performance, estimates of the business potential and earnings prospects of the
Company, an assessment of the Company's management and the consideration of the
above factors in relation to market valuation of companies in related
businesses.

U-2
<PAGE> 156

syndicate members or other broker-dealers in respect of the Class A Common Stock
sold in the Equity Offerings for their account may be reclaimed by the syndicate
if such securities are repurchased by the syndicate in stabilizing or covering
transactions. These activities may stabilize, maintain or otherwise affect the
market price of the Class A Common Stock which may be higher than the price that
might otherwise prevail in the open market. These transactions may be effected
on the NYSE, in the over-the-counter market or otherwise, and these activities,
if commenced, may be discontinued at any time.

Application is being made to list the Class A Common Stock on the NYSE
under the trading symbol "HLI". In order to meet one of the requirements for
listing the Class A Common Stock on the NYSE, the Underwriters will be required
to undertake to sell lots of 100 or more shares to a minimum of 2,000 beneficial
holders.

Certain of the Underwriters distribute a number of the Company's products
for which they receive customary compensation. An affiliate of Dean Witter
Reynolds Inc. provides money management services for certain of the Company's
products for which it receives customary compensation.

The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act.

U-3
<PAGE> 157

GLOSSARY OF SELECTED INSURANCE AND OTHER TERMS

The following Glossary includes definitions of certain insurance-related
terms as well as terms relating specifically to the Company and should be read
in conjunction with the terms defined elsewhere in this Prospectus.

ACCOUNT VALUE: The amount of money held in either a general account or
separate account of an insurance company to support policyholder liabilities.

ACCRUAL SECURITIES: A type of CMO the holder of which receives higher
principal amounts of bonds, in lieu of cash, for interest earned until all the
principal amounts of bonds preceding the accrual tranche have been fully repaid.
At such time, this security begins receiving both interest and principal in
cash.

ANNUITANT: A person who receives an income benefit from an annuity for
life or for a specified period.

ABS: Investment-grade securities representing undivided ownership
interests in a pool of financial assets, such as credit card receivables, auto
loans, equipment leases and bank loans.

AVR: Under statutory accounting practices, AVR is a liability on a life
insurance company's statutory financial statements beginning with such company's
statutory financial statements for 1992. AVR establishes statutory reserves for
debt securities, preferred stock, common stock, mortgage loans, equity real
estate and joint ventures and other invested assets. AVR generally captures all
net realized and unrealized capital gains and losses on such assets, other than
those resulting from changes in interest rates. AVR has no effect on financial
statements prepared in conformity with GAAP.

CEDING: The reinsuring of all or a portion of an insurer's risk with
another insurer.

COLI: A fixed premium individual or group life insurance policy owned by a
company or a trust sponsored by a company. The proceeds from such a policy may
be used to help fund general corporate liabilities such as deferred compensation
plans or post-retirement obligations.

CMO: A mortgage-backed obligation secured by the cash flow of a pool of
mortgages. Regular principal and interest payments made by borrowers are
separated into different payment streams, creating several bonds that repay
invested capital at different rates.

CONVEXITY: A measure of the shape of the price/yield curve. Convexity
helps explain the difference between the prices estimated by standard duration
and the actual market prices of a security resulting from a change in
market-required yield.

CORE EARNINGS: The Company's segment and corporate operation earnings. As
such, core earnings represents the Company's net income excluding the after-tax
effects of its runoff operations and certain other items, the cumulative effect
of changes in accounting principles and net realized capital gains (losses).

COST OF INSURANCE: The mortality charges assessed against certain life
insurance policies such as universal life.

CREDITED RATES: Interest rates applied (i.e., credited) to life insurance
policies and annuity contracts, whether contractually guaranteed or currently
declared for a specified period, as outlined in the policy or contract.

DPAC: Commissions and certain other underwriting, policy issuance and
selling expenses which vary with and are directly related to the production of
business. These acquisition costs are

G-1
<PAGE> 158

deferred and later amortized in proportion to either revenues or gross profits
when reported in financial statements prepared in conformity with GAAP.

DISINTERMEDIATION: The risk to a financial institution of a loss due to
the movement of policyholder funds at book (i.e., without a market value
adjustment) when interest rates are higher than at contract inception.

DURATION: A measure expressed in years of the price sensitivity of a
financial instrument to changes in interest rates.

EXPOSURE: Possibility of loss.

FIXED MVA ANNUITIES: Fixed rate annuity contracts that guarantee that a
specific sum of money will be paid in the future, either as a lump sum or as
monthly income, to an annuitant. In the event of surrender prior to the
specified period, the MVA feature adjusts the surrender value of the contract
thereby protecting the Company from losses due to higher interest rates at the
time of surrender provided that the Company has appropriately matched its
portfolio of assets and liabilities. The amount of such payments will not
fluctuate due to adverse changes in the Company's investment return, mortality
experience or expenses.

FLOATER: Debt instrument with a variable coupon, paying a rate indexed to
any of a variety of rates, typically short term.

GENERAL ACCOUNT: All assets of an insurer other than those allocated to a
separate account. An insurer's general account consists of the assets held in
the general account of the insurer. The insurer bears the investment risk on the
invested assets of the general account.

GUARANTEED SEPARATE ACCOUNT: Assets held in an insurer's separate account,
where the insurer provides some form of guarantee on the rate credited to the
policy. This guarantee is backed by the general account assets of the insurer.
Assets held in guaranteed separate accounts usually contain a market value
adjustment to protect the insurer against disintermediation risk.

GENERAL INSURANCE EXPENSES: Costs incurred by an insurance company other
than agent commissions, other premium-related expenses and taxes; mainly the
administrative expense of running the company.

IMR: The interest maintenance reserve was adopted by the NAIC in December
1991 to be established under statutory accounting practices as a liability or a
non-admitted asset on a life insurer's statutory financial statements beginning
with the insurer's statutory financial statements for 1992. IMR applies to all
types of fixed income investments (bonds, preferred stocks, MBSs and mortgage
loans). IMR captures the net gains or losses from changes in the overall level
of interest rates which are realized upon the sale of investments and amortizes
these net realized capital gains or losses into income over the remaining life
of each investment sold. IMR has no effect on financial statements prepared in
conformity with GAAP.

IN FORCE: Insurance policies in effect.

INSURANCE GUARANTY FUNDS: Funds created in all fifty states, the District
of Columbia and Puerto Rico by law to cover funding shortfalls in paying claims
of insolvent insurance companies. These funds are maintained by assessments of
insurance companies operating in a particular state in proportion to their
business written in that state.

INTEREST-ONLY SECURITIES: Securities representing only the interest
payments of CMOs or MBS based on an underlying pool of mortgages. The interest
payments are "stripped" from the principal

G-2
<PAGE> 159

repayment obligation and can represent the interest from an entire pool of
mortgages or can be tranches within a CMO.

INVERSE FLOATER: Mortgage-backed bond, usually part of a CMO, bearing an
interest rate that moves inversely with a specified index.

LEVERAGED COLI: A fixed premium life insurance policy owned by a company
or a trust sponsored by a company. This general account policy provides cash
flow flexibility and optimizes certain tax advantages for a company or trust by
allowing it to borrow the policy cash value and receive certain interest
deductions on the policy loans.

MBS: An investment grade security backed by a pool of mortgages or trust
deeds.

MODIFIED GUARANTEED LIFE INSURANCE: Certain blocks of life insurance
policies, which have provisions protecting the Company from disintermediation
risk, assumed by the Company in connection with the rehabilitation of certain
insurance companies.

MORBIDITY: The relative incidence of disability or sickness due to disease
or physical impairment.

MORTALITY: The relative incidence of death.

MVA: The market value adjustment feature in the Company's fixed annuity
products that adjusts the surrender value of a contract in the event of
surrender prior to the end of the contract period to protect the Company against
losses due to higher interest rates at the time of surrender.

NEW ANNUALIZED WEIGHTED PREMIUM: An internal measure the Company developed
to measure new sales on an equivalent basis period-to-period and
product-to-product. For example, the premium for a new single premium life
insurance policy sold is divided by ten.

NON-GUARANTEED SEPARATE ACCOUNT: Assets held in an insurer's separate
account as to which the insurer does not guarantee any minimum return to the
policyholder. Rather, any investment income and net realized capital gains and
losses with respect to these assets accrue directly to the policyholder.

PAC: A CMO security, also known as a planned amortization class security,
which amortizes with a predetermined sinking fund as long as prepayments on the
underlying collateral remain within a broad range of speeds, providing the
holder with an enhanced degree of cash flow certainty.

PERSISTENCY: The rate, expressed as a percentage of the number of policies
remaining in force over the previous year, at which insurance policies or
annuity contracts remain in force.

POLICY: A life or disability or other insurance policy or annuity contract
issued by the Company's insurance subsidiaries.

PREMIUMS: The amount that a policy owner is charged, reflecting the
expectation of profit, loss or risk. The insurance company assumes certain risks
of the insured (e.g., mortality, morbidity) in exchange for a premium payment.
Premiums are calculated utilizing actuarial models and assumptions.

PREMIUM EQUIVALENTS: Claims and administration fees on self-funded
disability business.

PRINCIPAL-ONLY SECURITIES: Securities representing only the principal
repayment obligations of CMOs or MBS based on an underlying pool of mortgages.
The principal repayment obligations are "stripped" from the interest payments
and can represent the principal from an entire pool of mortgages or can be
tranches within a CMO.

G-3
<PAGE> 160

REINSURANCE: The practice whereby one party (the reinsurer or assuming
company), in consideration of a premium paid to such party, agrees to indemnify
another party, called the ceding company. Reinsurance provides a primary insurer
with three major benefits: it reduces net liability on individual risks; it
helps to protect against losses; and it provides a primary insurer with
additional underwriting capacity in that the primary insurer can accept larger
risks and can expand the volume of business it writes with lower amounts of
capital.

RESERVES: Liabilities established by insurers that generally represent the
estimated discounted present value of the net cost of claims, payments or
contract liabilities and the related expenses that the insurer will ultimately
be required to pay in respect of insurance or annuities it has written.

SEPARATE ACCOUNTS: Investment accounts maintained by an insurer to which
funds have been allocated for certain policies under provisions of relevant
state insurance law. The investments in each separate account are maintained
separately from those in other separate accounts and the general account.

SEQUENTIAL-PAY SECURITIES: Bonds, also known as sequentials, that start to
pay principal when the principal and interest of classes with an earlier
priority have been fully repaid.

STATUTORY ACCOUNTING PRACTICES: Accounting practices prescribed or
permitted by an insurer's domiciliary state insurance regulatory authorities for
purposes of financial reporting to regulators. Statutory accounting practices
emphasize solvency rather than operating results that match revenues and
expenses during an accounting period.

STATUTORY ASSETS: Assets determined in accordance with statutory
accounting principles. This valuation methodology is generally considered very
conservative, but is deemed most appropriate by regulators in evaluating
solvency.

STATUTORY CAPITAL AND SURPLUS: The excess of statutory admitted assets
over statutory liabilities as shown on an insurer's statutory financial
statements.

STATUTORY RESERVE: Amounts established by state insurance law that an
insurer must have available to provide for future obligations with respect to
all policies. Statutory reserves are liabilities on the balance sheet of
financial statements prepared in conformity with statutory accounting practices.

STRUCTURED SETTLEMENT CONTRACTS: Contracts providing for periodic payments
to an injured person for a determinable number of years or for life, typically
in settlement of a claim under a property-casualty insurance policy.

SURRENDER CHARGE: The fee charged to a policy owner when a life insurance
policy or annuity is surrendered for its cash value prior to the end of the
surrender charge period. Such charge is intended to recover all or a portion of
policy acquisition costs and act as a deterrent to early surrender. Surrender
charges typically decrease over a set period of time as a percentage of the
account value in relation to the anticipated amortization of the deferred policy
acquisition costs.

TERM LIFE INSURANCE: Life insurance protection during a certain number of
years but expiring without policy cash value if the insured survives the stated
period.

THIRD-PARTY ADMINISTRATOR: An entity that processes insurance or
self-funded claims for, and/or provides administrative services to, companies or
associations that have purchased insurance coverage, including stop loss
insurance, for a fee.

UNDERWRITING: The process of examining, accepting or rejecting insurance
risks, and classifying those accepted, in order to charge an appropriate premium
for each accepted risk. The underwriter is expected to select business that will
produce an average risk of loss no greater than that anticipated for the class
of business. In the life insurance industry, underwriter may also mean an agent
or other field representative who is referred to as a "field underwriter".

UNIVERSAL LIFE INSURANCE: A form of life insurance where an insurance
account is maintained for each insurance policy. Premiums, net of specified
expenses, are credited to the account, as is

G-4
<PAGE> 161

interest, generally at a rate determined from time to time by the insurer.
Specific charges are made against the account for the cost of insurance
protection and for the insurer's expenses. The universal life form allows
considerable flexibility as to the amount and timing of premium payments and for
the level of death benefits provided.

VARIABLE ANNUITIES: Annuities in which premium payments are used to
purchase accumulation units. The value of a unit fluctuates in accordance with
the investment experience of a separate account; variable annuity contracts
typically include a general account guaranteed interest investment option. At
the time of the payment of benefits to the annuitant, the annuitant may
generally elect from a number of payment options that provide either fixed or
variable benefit payments.

VARIABLE COLI: A separate account COLI policy where the benefits payable
upon surrender of the policy or the death of certain of the policyholder's
employees vary to reflect the investment experience of the separate account
supporting such policy.

VARIABLE LIFE INSURANCE: Investment-oriented life insurance policy that
offers fixed premiums and a minimum death benefit and provides a return linked
to an underlying portfolio of securities that may be either in the general or
separate account of the insurer. The portfolio typically is a group of mutual
funds established by the insurer as a separate account, with the policyholder
given investment discretion in choosing among the investment alternatives
provided. In general, the better the total return on the investment portfolio,
the higher the death benefit or account value of the variable life policy.

WHOLE LIFE INSURANCE: Permanent life insurance offering guaranteed death
benefits and guaranteed cash values.

YIELD CURVE: A spectrum of measures that compares the interest rate yields
on securities of the same credit quality but with varying maturities ranging
from the shortest to the longest available.

G-5
<PAGE> 162

=======================================================

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information....................... 2
Prospectus Summary.......................... 3
Risk Factors................................ 14
Company Financing Plan...................... 24
Capitalization.............................. 25
Use of Proceeds............................. 26
Dividend Policy............................. 26
Dilution.................................... 27
Selected Consolidated Financial Data........ 28
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................ 32
Business.................................... 49
Management.................................. 84
Security Ownership of Management............ 106
Certain Relationships and Transactions...... 108
Shares Eligible for Future Sale............. 115
Description of Capital Stock................ 117
Certain Provisions of the Certificate of
Incorporation and By-laws of the Company.. 119
Validity of Class A Common Stock............ 122
Experts..................................... 122
Certain United States Federal Tax
Consequences to Non-United States Holders
of Class A Common Stock................... 123
Index to Consolidated Financial
Statements................................ F-1
Underwriting................................ U-1
Glossary of Selected Insurance and Other
Terms..................................... G-1
</TABLE>

------------------

THROUGH AND INCLUDING , 1997 (THE 25TH DAY AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE CLASS A COMMON STOCK,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
=======================================================
=======================================================

HARTFORD LIFE, INC.

CLASS A COMMON STOCK
(PAR VALUE $.01 PER SHARE)
------------------

PROSPECTUS
------------------
GOLDMAN, SACHS & CO.
DEAN WITTER REYNOLDS INC.
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED

SMITH BARNEY INC.
REPRESENTATIVES OF THE UNDERWRITERS
=======================================================
<PAGE> 163

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

SUBJECT TO COMPLETION, DATED MARCH 20, 1997

HARTFORD LIFE, INC.
[LOGO] CLASS A COMMON STOCK
(PAR VALUE $.01 PER SHARE)
------------------------

Of the shares of Class A Common Stock, par value $.01 per share (the
"Class A Common Stock"), being offered, shares are being offered hereby in
an international offering outside the United States and shares are being
offered in a concurrent United States offering. The initial public offering
price and the aggregate underwriting discount per share will be identical for
both Equity Offerings. See "Underwriting".

Holders of Class A Common Stock generally have rights identical to holders
of Class B Common Stock, except that holders of Class A Common Stock are
entitled to one vote per share while holders of Class B Common Stock are
entitled to five votes per share on all matters submitted to a vote of the
Company's stockholders. Following completion of the Equity Offerings, The
Hartford will beneficially own shares of Class B Common Stock representing
approximately % of the combined voting power of all the Company's classes of
voting stock ( % if the Underwriters' over-allotment options are exercised in
full) and will thereby be able, among other things, to direct the election of
all the Company's directors and exercise a controlling influence over the
business and affairs of the Company. See "Risk Factors -- Control by and
Relationship with The Hartford" and "Description of Capital Stock".

Up to shares of Class A Common Stock are being reserved for sale to
certain employees of the Company, The Hartford and their respective
subsidiaries, and the respective directors thereof, at the initial public
offering price.

SEE "RISK FACTORS" BEGINNING ON PAGE 14 FOR CERTAIN CONSIDERATIONS RELEVANT
TO AN INVESTMENT IN THE CLASS A COMMON STOCK.

Application is being made to list the Class A Common Stock on the New York
Stock Exchange, Inc. under the symbol "HLI".

------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

- ---------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting".
(2) Before deducting estimated expenses of $ payable by the Company.
(3) The Company has granted the International Underwriters an option for 30 days
to purchase up to an additional shares of Class A Common Stock at
the initial public offering price per share, less the underwriting discount,
solely to cover over-allotments. Additionally, the Company has granted the
U.S. Underwriters a similar option with respect to an additional
shares as part of the concurrent U.S. Offering. If such options are
exercised in full, the total initial public offering price, underwriting
discount and proceeds to Company will be $ , $ and $ ,
respectively. See "Underwriting".
------------------------

The shares of Class A Common Stock offered hereby are offered severally by
the International Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that certificates
for the shares of Class A Common Stock will be ready for delivery in New York,
New York on or about , 1997, against payment therefor in immediately
available funds.

GOLDMAN SACHS INTERNATIONAL
DEAN WITTER INTERNATIONAL LTD.
MERRILL LYNCH INTERNATIONAL
MORGAN STANLEY & CO
INTERNATIONAL
SMITH BARNEY INC.
------------------------
The date of this Prospectus is , 1997.
<PAGE> 164

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
---------------------

This Prospectus does not constitute an offer to sell or the solicitation of
an offer to buy the shares of Class A Common Stock in any jurisdiction in which
such offer or solicitation is unlawful. There are restrictions on the offer and
sale of the shares of Class A Common Stock in the United Kingdom. All applicable
provisions of the Financial Services Act 1986 and the Public Offers of
Securities Regulations 1995 with respect to anything done by any person in
relation to the shares of Class A Common Stock, in, from or otherwise involving
the United Kingdom must be complied with. See "Underwriting".

In this Prospectus, references to "dollars", "U.S. $" and "$" are to United
States dollars.
<PAGE> 165

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Company has agreed to sell to each of the International Underwriters named
below, and each of such International Underwriters, for whom Goldman Sachs
International, Dean Witter International Ltd., Merrill Lynch International,
Morgan Stanley & Co. International Limited and Smith Barney Inc. are acting as
representatives, has severally agreed to purchase from the Company, the
respective number of shares of Class A Common Stock set forth opposite its name
below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
CLASS A
UNDERWRITER COMMON STOCK
-------------------------------------------------------------------- ------------
<S> <C>
Goldman Sachs International.........................................
Dean Witter International Ltd.......................................
Merrill Lynch International.........................................
Morgan Stanley & Co. International Limited..........................
Smith Barney Inc....................................................

----
Total.....................................................
====
</TABLE>

Under the terms and subject to the conditions of the Underwriting
Agreement, the International Underwriters are committed to take and pay for all
the shares offered hereby, if any are taken.

The International Underwriters propose to offer the shares of Class A
Common Stock in part directly to the public at the initial public offering price
set forth on the cover page of this Prospectus and in part to certain securities
dealers at such price less a concession of $ per share. The International
Underwriters may allow, and such dealers may reallow, a concession not in excess
of $ per share to certain brokers and dealers. After the shares of Class A
Common Stock are released for sale to the public, the offering price and other
selling terms may from time to time be varied by the representatives.

The Company has entered into an underwriting agreement (the "U.S.
Underwriting Agreement") with the underwriters of the U.S. Offering (the "U.S.
Underwriters") providing for the concurrent offer and sale of shares
of Class A Common Stock in a U.S. offering in the United States. The offering
price and aggregate underwriting discounts and commissions per share for the two
offerings are identical. The closing of the offering made hereby is a condition
to the closing of the U.S. Offering, and vice versa. The representatives of the
U.S. Underwriters are Goldman, Sachs & Co., Dean Witter Reynolds Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated
and Smith Barney Inc.

Pursuant to an Agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the two offerings, each of the
U.S. Underwriters has agreed that, as a part of the distribution of the shares
offered hereby and subject to certain exceptions, it will offer, sell or deliver
the shares of Class A Common Stock, directly or indirectly, only in the United
States of America (including the States and the District of Columbia), its
territories, its possessions and other areas subject to its jurisdiction (the
"United States") and to U.S. persons, which term shall mean, for purposes of
this paragraph: (a) any individual who is a resident of the United States or (b)
any corporation, partnership or other entity organized in or under the laws of
the United

U-1
<PAGE> 166

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

States or any political subdivision thereof and whose office most directly
involved with the purchase is located in the United States. Each of the
International Underwriters named herein has agreed pursuant to the Agreement
Between that, as a part of the distribution of the shares offered as a part of
the International Offering, and subject to certain exceptions, it will (i) not,
directly or indirectly, offer, sell or deliver shares of Class A Common Stock
(a) in the United States or to any U.S. persons or (b) to any person who it
believes intends to reoffer, resell or deliver the shares in the United States
or to any U.S. persons and (ii) cause any dealer to whom it may sell such shares
at any concession to agree to observe a similar restriction.

The Company has granted the International Underwriters an option
exercisable for 30 days after the date of this Prospectus to purchase up to an
aggregate of additional shares of Class A Common Stock solely to cover
over-allotments, if any. If the International Underwriters exercise their
over-allotment option, the International Underwriters have severally agreed,
subject to certain conditions, to purchase approximately the same percentage
thereof that the number of shares to be purchased by each of them, as shown in
the foregoing table, bears to the shares of Class A Common Stock
offered. The Company has granted the U.S. Underwriters a similar option to
purchase up to an aggregate of additional shares of Class A Common
Stock.

The Company, The Hartford, certain subsidiaries of The Hartford and certain
executive officers and directors of the Company have agreed, subject to certain
exceptions that, during the period beginning from the date of this Prospectus
and continuing to and including the date 180 days after the date of this
Prospectus, they will not offer, sell, contract to sell, file a registration
statement with respect to or otherwise dispose of, directly or indirectly, any
Common Stock (or any securities convertible into or exercisable or exchangeable
for Common Stock) or grant any options or warrants to purchase Common Stock,
without the prior written consent of the representatives of the Underwriters,
except for the shares of Class A Common Stock offered in connection with the
Equity Offerings.

Each International Underwriter has also agreed that (a) it has not offered
or sold and prior to the date six months after the date of issue of the shares
of Class A Common Stock will not offer or sell any shares of Class A Common
Stock to persons in the United Kingdom except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995, (b) it has complied, and will comply
with, all applicable provisions of the Financial Services Act of 1986 of Great
Britain with respect to anything done by it in relation to the shares of Class A
Common Stock in, from or otherwise involving the United Kingdom and (c) it has
only issued or passed on and will only issue or pass on in the United Kingdom
any document received by it in connection with the issuance of the shares of

U-2
<PAGE> 167

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

Class A Common Stock to a person who is a kind described in Article 11(3) of the
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
of Great Britain or is a person to whom the document may otherwise lawfully be
issued or passed on.

Buyers of shares of Class A Common Stock offered hereby may be required to
pay stamp taxes and other charges in accordance with the laws and practices of
the country of purchase in addition to the initial public offering price.

During and after the Equity Offerings, the Underwriters may purchase and
sell the Class A Common Stock in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover syndicate
short positions created in connection with the Equity Offerings. The
Underwriters also may impose a penalty bid, whereby selling concessions allowed
to syndicate members or other broker-dealers in respect of the Class A Common
Stock sold in the Equity Offerings for their account may be reclaimed by the
syndicate if such securities are repurchased by the syndicate in stabilizing or
covering transactions. These activities may stabilize, maintain or otherwise
affect the market price of the Class A Common Stock which may be higher than the
price that might otherwise prevail in the open market. These transactions may be
effected on the NYSE, in the over-the-counter market or otherwise, and these
activities, if commenced, may be discontinued at any time.

Certain of the Underwriters distribute a number of the Company's products
for which they receive customary compensation. An affiliate of Dean Witter
International Ltd. provides money management services for certain of the
Company's products for which it receives customary compensation.

The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act.

U-3
<PAGE> 168

[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]

=======================================================

TABLE OF CONTENTS

------------------

THROUGH AND INCLUDING , 1997 (THE 25TH DAY AFTER THE DATE OF THIS
INTERNATIONAL PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE CLASS A
COMMON STOCK IN THE UNITED STATES, WHETHER OR NOT PARTICIPATING IN THE
DISTRIBUTION, MAY BE REQUIRED TO DELIVER THE U.S. PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
=======================================================
=======================================================

HARTFORD LIFE, INC.

CLASS A COMMON STOCK
(PAR VALUE $.01 PER SHARE)
------------------

PROSPECTUS
------------------
GOLDMAN SACHS INTERNATIONAL
DEAN WITTER INTERNATIONAL LTD.
MERRILL LYNCH INTERNATIONAL
MORGAN STANLEY & CO.
INTERNATIONAL
SMITH BARNEY INC.

REPRESENTATIVES OF THE UNDERWRITERS
=======================================================
<PAGE> 169

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth all the expenses in connection with the
issuance and distribution of the Class A Common Stock being registered, other
than underwriting discounts and commissions which will be paid solely by the
Company. All the amounts shown are estimates, except the Commission registration
fee and NASD filing fee.

<TABLE>
<S> <C>
Commission Registration Fee.............................................. $3,030.31
NASD Filing Fee.......................................................... $1,500.00
NYSE Listing Fee......................................................... *
Blue Sky Fees and Expenses............................................... *
Accounting Fees and Expenses............................................. *
Legal Fees and Expenses.................................................. *
Printing Expenses........................................................ *
Transfer Agent's Fees.................................................... *
Miscellaneous............................................................ $ *
--------
TOTAL.......................................................... $ *
========
</TABLE>

- ---------------
* To be completed by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the General Corporation Law of the State of Delaware (the
"DGCL") provides that a Delaware corporation may indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation) by
reason of the fact that any such person is or was a director, officer, employee
or agent of such corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise. The indemnity may include
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding, provided that such officer or director acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. A Delaware corporation may indemnify officers and
directors against expenses (including attorneys' fees) in connection with the
defense or settlement of an action by or in the right of the corporation under
the same conditions, except that no indemnification is permitted without
judicial approval if the officer or director is adjudged to be liable to the
corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him or her against the expenses (including attorneys' fees) which such
officer or director actually and reasonably incurred. The foregoing description
is qualified in its entirety by reference to the more detailed provisions of
Section 145 of the DGCL.

Article 4 of the Company's Restated By-laws provides in terms similar to
those of Section 145 of the DGCL that the Company shall have the power and shall
be required to indemnify its officers and directors in accordance with such law.

As permitted by Section 102(b)(7) of the DGCL, Article Tenth of the
Company's Restated Certificate of Incorporation states that:

To the fullest extent permitted by applicable law as then in effect,
no director shall be personally liable to the Corporation or any of its
stockholders for monetary damages for breach

II-1
<PAGE> 170

of fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
General Corporation Law of the State of Delaware or (iv) for any
transaction from which the director derived an improper personal benefit.
Any repeal or modification of this ARTICLE TENTH by the stockholders of the
Corporation shall not adversely affect any right or protection of a
director or officer of the Corporation existing at the time of such repeal
or modification with respect to acts or omissions occurring prior to such
repeal or modification.

The forms of Underwriting Agreements filed as Exhibits 1.1 and 1.2 to this
Registration Statement provide for indemnification of the Registrant and certain
controlling persons under certain circumstances against certain liabilities,
including liabilities under the Securities Act of 1933.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

On December 16, 1996, the Registrant issued 100 shares of Common Stock, par
value $.01 per share, to Hartford Accident and Indemnity Company in exchange for
all the outstanding shares of common stock of Hartford Life and Accident
Insurance Company and $1 in cash. Such issuance did not involve an underwriter,
and no discount or commission was paid in connection therewith. Exemption from
registration is provided under Section 4(2) of the Securities Act of 1933,
regarding transactions by an issuer not involving any public offering.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------
<C> <S>
*1.1 Form of Underwriting Agreement (U.S. Version).
*1.2 Form of Underwriting Agreement (International Version).
*3.1 Form of Restated Certificate of Incorporation of Hartford Life, Inc.
*3.2 Form of By-laws of Hartford Life, Inc.
*4.1 Specimen Certificate of Class A Common Stock of Hartford Life, Inc.
*5.1 Form of Opinion of Cravath, Swaine & Moore as to the legality of the securities
being registered.
*10.1 Form of Master Intercompany Agreement between Hartford Life, Inc., ITT Hartford
Group, Inc. and, with respect to Article VI, Hartford Fire Insurance Company.
*10.2 Form of Tax Sharing Agreement between ITT Hartford Group, Inc. and its
subsidiaries, including Hartford Life, Inc.
*10.3 Form of Management Agreement between Hartford Life Insurance Company and The
Hartford Investment Management Company.
*10.4 Form of Management Agreement between Hartford Life Insurance Company, Hartford
Accident and Indemnity Company and The Hartford Investment Management Company.
*10.5 Form of Management Agreement between certain subsidiaries of the Company and
Hartford Investment Services, Inc.
*10.6 Form of Management Agreement between certain subsidiaries of the Company and
Hartford Investment Services, Inc.
*10.7 Form of Sublease Agreement between Hartford Fire Insurance Company and Hartford
Life, Inc.
*10.8 Credit Agreement dated as of February 10, 1997, among Hartford Life, Inc., the
initial lenders named therein and Citibank, N.A.
*10.9 Promissory Note executed by Hartford Life, Inc. for the benefit of Hartford
Accident and Indemnity Company.
*10.10 Employment Agreement for Lowndes A. Smith.
*10.11 Form of 1997 Hartford Life, Inc. Incentive Stock Plan.
*10.12 Form of 1997 Hartford Life, Inc. Deferred Restricted Stock Unit Plan.
</TABLE>

II-2
<PAGE> 171

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ---------------------------------------------------------------------------------
<C> <S>
*10.13 Form of 1997 Hartford Life, Inc. Employee Stock Purchase Plan.
*10.14 Form of 1997 Hartford Life, Inc. Restricted Stock Plan for Non-Employee
Directors.
*11.1 Computation of earnings per share.
21.1 Subsidiaries of Hartford Life, Inc.
*23.1 Consent of Cravath, Swaine & Moore (included in Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
**23.3 Consent of Ramani Ayer.
**23.4 Consent of Donald R. Frahm.
**23.5 Consent of Paul G. Kirk, Jr.
**23.6 Consent of Lowndes A. Smith.
**23.7 Consent of H. Patrick Swygert.
**23.8 Consent of DeRoy C. Thomas.
**23.9 Consent of Gordon I. Ulmer.
**23.10 Consent of David K. Zwiener.
**24.1 Powers of Attorney.
**27.1 Financial Data Schedule.
</TABLE>

- ---------------
* To be filed by amendment.

** Previously filed.

ITEM 17. UNDERTAKINGS

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 provisions referred to in Item 14 of this
Registration Statement, 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 Securities Act of 1933, 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 Securities Act of 1933 and will be governed by the
final adjudication of such issue.

The undersigned Registrant hereby undertakes:

(a) To provide to the underwriters at the closing specified in the
underwriting agreements certificates in such denominations and registered
in such names as required by the underwriters to permit prompt delivery to
each purchaser.

(b) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed
to be part of this Registration Statement as of the time it was declared
effective.

(c) That, for the purpose of determining any liability under the
Securities Act of 1933, each posteffective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.

II-3
<PAGE> 172

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Simsbury, State of Connecticut, on March 20, 1997.

HARTFORD LIFE, INC.

By /s/ LOWNDES A. SMITH
------------------------------------
Name: Lowndes A. Smith
Title: Chief Executive Officer and
President

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<C> <S> <C>

/s/ LOWNDES A. SMITH Chief Executive Officer, March 20, 1997
- ------------------------------------------ President and Director
Lowndes A. Smith (Principal Executive Officer)

/s/ GREGORY A. BOYKO Senior Vice President, Chief March 20, 1997
- ------------------------------------------ Financial Officer and
Gregory A. Boyko Treasurer (Principal Financial
and Accounting Officer)

/s/ MICHAEL S. WILDER Director March 20, 1997
- ------------------------------------------
Michael S. Wilder

/s/ MICHAEL O'HALLORAN Director March 20, 1997
- ------------------------------------------
Michael O'Halloran

/s/ LYNDA GODKIN Director March 20, 1997
- ------------------------------------------
Lynda Godkin
</TABLE>

II-4
<PAGE> 173

INDEX TO CONSOLIDATED FINANCIAL STATEMENT SCHEDULES

<TABLE>
<S> <C>
Report of Independent Public Accountants on Schedules................................. S-2

Schedule I: Summary of Investments -- Other Than Investments in Affiliates............ S-3
Schedule II: Supplementary Condensed Financial Statements............................. S-4
Schedule III: Supplementary Insurance Information for the years ended December 31,
1994, 1995 and 1996................................................................. S-6
Schedule IV: Reinsurance.............................................................. S-7
</TABLE>

All other schedules are omitted because they are not applicable, or not
required or because the required information has been included in the
consolidated financial statements or notes thereto.

S-1
<PAGE> 174

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES

To Hartford Life, Inc.:

We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements of Hartford Life, Inc. and subsidiaries
included in this registration statement and have issued our report thereon dated
February 10, 1997. Our audits were made for the purpose of forming an opinion on
the basic consolidated financial statements taken as a whole. Our report on the
Consolidated Financial Statements includes an explanatory paragraph with respect
to the change in method of accounting for debt and equity securities, as of
January 1, 1994, as discussed in Note 2 of Notes to consolidated financial
statements. The accompanying schedules are the responsibility of the Company's
management and are presented for the purposes of complying with the Securities
and Exchange Commission's rules and are not part of the basic consolidated
financial statements. These schedules have been subjected to the auditing
procedures applied in the audits of the basic consolidated financial statements
and, in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic consolidated financial
statements taken as a whole.

ARTHUR ANDERSEN LLP

Hartford, Connecticut

February 10, 1997

S-2
<PAGE> 175

HARTFORD LIFE, INC. AND SUBSIDIARIES
SCHEDULE I

SUMMARY OF INVESTMENTS -- OTHER THAN INVESTMENTS IN AFFILIATES
AS OF DECEMBER 31, 1996
(IN MILLIONS)

<TABLE>
<CAPTION>
AMOUNT AT
WHICH SHOWN
ESTIMATED ON BALANCE
TYPES OF INVESTMENT COST FAIR VALUE SHEET
- --------------------------------------------------------- ------- ---------- -----------
<S> <C> <C> <C>
FIXED MATURITIES
Bonds and Notes
U.S. government and government agencies and authorities
(guaranteed and sponsored).......................... $ 194 $ 203 $ 203
U.S. government and government agencies and authorities
(guaranteed and sponsored) -- asset-backed.......... 2,167 2,194 2,194
States, municipalities and political subdivisions...... 423 418 418
International governments.............................. 380 395 395
Public utilities....................................... 967 971 971
All other corporate including international............ 5,477 5,489 5,489
All other corporate -- asset-backed.................... 4,151 4,148 4,148
Short-term investments................................. 765 765 765
Certificates of deposit................................ 1,135 1,128 1,128
------- ------- -------
TOTAL FIXED MATURITIES......................... 15,659 15,711 15,711
------- ------- -------
EQUITY SECURITIES
Common stocks -- industrial, miscellaneous, and all
other............................................... 113 119 119
------- ------- -------
TOTAL FIXED MATURITIES AND EQUITY SECURITIES... 15,772 15,830 15,830
------- ------- -------
OTHER INVESTMENTS
Policy loans........................................... 3,839 3,839 3,839
Mortgage loans......................................... 2 2 2
Investments in partnerships and trusts................. 66 68 66
Futures, options, and miscellaneous.................... 93 119 93
------- ------- -------
TOTAL OTHER INVESTMENTS........................ 4,000 4,028 4,000
------- ------- -------
Total investments.............................. $19,772 $ 19,858 $19,830
======= ======= =======
</TABLE>

NOTE: THE FAIR VALUES FOR SHORT-TERM INVESTMENTS APPROXIMATE COST.

S-3
<PAGE> 176

HARTFORD LIFE, INC. AND SUBSIDIARIES
SCHEDULE II

SUPPLEMENTARY CONDENSED FINANCIAL STATEMENTS
(IN MILLIONS)

The following Condensed Balance Sheets, Condensed Statements of Income and
Condensed Statements of Cash Flows reflect Hartford Life, Inc. with its
subsidiaries on an equity basis. This presentation does not affect Consolidated
Income or Stockholder's Equity.

CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
AS OF DECEMBER
31,
-----------------
1995 1996
------ ------
<S> <C> <C>
ASSETS
Investment in affiliates............................................... $1,909 $2,121
Other assets........................................................... -- 46
------ ------
TOTAL ASSETS................................................... $1,909 $2,167
====== ======
LIABILITIES AND STOCKHOLDER'S EQUITY
Allocated advances..................................................... $ 732 $ 893
------ ------
TOTAL LIABILITIES.............................................. 732 893
TOTAL STOCKHOLDER'S EQUITY..................................... 1,177 1,274
------ ------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY..................... $1,909 $2,167
====== ======
</TABLE>

CONDENSED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
---------------------
1994 1995 1996
---- ---- ---
<S> <C> <C> <C>
Earnings of subsidiaries............................................. $252 $261 $86
Interest expense..................................................... 29 35 55
---- ---- ---
INCOME BEFORE TAX EXPENSE............................................ 223 226 31
Income tax expense................................................... 72 76 7
---- ---- ---
NET INCOME........................................................... $151 $150 $24
==== ==== ===
</TABLE>

S-4
<PAGE> 177

HARTFORD LIFE, INC. AND SUBSIDIARIES
SCHEDULE II

SUPPLEMENTARY CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
(IN MILLIONS)

CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
-------------------------
1994 1995 1996
----- ----- -----
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income..................................................... $ 151 $ 150 $ 24
Undistributed earnings......................................... (134) (150) (5)
Change in working capital...................................... -- -- --
----- ----- -----
CASH FROM OPERATING ACTIVITIES.............................. 17 -- 19
----- ----- -----
INVESTING ACTIVITIES
Capital contribution to subsidiary............................. (150) -- (115)
----- ----- -----
CASH USED FOR INVESTING ACTIVITIES.......................... (150) -- (115)
----- ----- -----
FINANCING ACTIVITIES
Increase in allocated advances................................. 100 -- 115
Dividends paid................................................. (17) -- (19)
Capital contribution........................................... 50 -- --
----- ----- -----
CASH FROM FINANCING ACTIVITIES.............................. 133 -- 96
----- ----- -----
Net change in cash............................................. -- -- --
Cash -- beginning of year...................................... -- -- --
----- ----- -----
CASH -- END OF YEAR......................................... $ -- $ -- $ --
===== ===== =====
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
CASH PAID DURING THE YEAR FOR
Interest expense............................................... $ 29 $ 35 $ 55
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES
Capital contribution........................................... $ -- $ 180 $ --
Dividends...................................................... $ -- $ 207 $ --
Increase in allocated advances for other assets................ $ -- $ -- $ 46
</TABLE>

S-5
<PAGE> 178

HARTFORD LIFE, INC. AND SUBSIDIARIES
SCHEDULE III

SUPPLEMENTARY INSURANCE INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
(IN MILLIONS)
<TABLE>
<CAPTION>
FUTURE POLICY
BENEFITS, OTHER
DEFERRED UNPAID CLAIMS POLICY
POLICY AND CLAIM CLAIMS AND
ACQUISITION ADJUSTMENT BENEFITS
SEGMENT COSTS EXPENSES PAYABLE
- --------------------------------------------------------------------------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
1994
Investment Products........................................................ $ 1,231 $ 895 $ 5,468
Individual Life Insurance.................................................. 575 560 1,688
Employee Benefits.......................................................... 12 1,402 7,894
Corporate.................................................................. 2 -- --
Runoff operations and other................................................ 11 44 7,257
------ ------ -------
Consolidated Operations................................................... $ 1,831 $ 2,901 $ 22,307
====== ====== =======
1995
Investment Products........................................................ $ 1,560 $ 1,314 $ 6,248
Individual Life Insurance.................................................. 630 569 1,940
Employee Benefits.......................................................... 29 1,643 9,399
Corporate.................................................................. 1 -- --
Runoff operations and other................................................ -- 28 5,177
------ ------ -------
Consolidated Operations................................................... $ 2,220 $ 3,554 $ 22,764
====== ====== =======
1996
Investment Products........................................................ $ 2,034 $ 1,547 $ 6,644
Individual Life Insurance.................................................. 748 514 2,133
Employee Benefits.......................................................... 18 1,965 9,895
Corporate.................................................................. -- -- --
Runoff operations and other................................................ -- -- 3,541
------ ------ -------
Consolidated Operations................................................... $ 2,800 $ 4,026 $ 22,213
====== ====== =======

NET
PREMIUMS NET REALIZED
AND OTHER INVESTMENT CAPITAL
SEGMENT CONSIDERATIONS INCOME (LOSSES) GAINS
- --------------------------------------------------------------------------- -------------- ---------- --------------
<S> <C> <C> <C> <C>
1994
Investment Products........................................................ $ 264 $ 330 $ --
Individual Life Insurance.................................................. 277 113 1
Employee Benefits.......................................................... 1,543 443 --
Corporate.................................................................. -- 28 --
Runoff operations and other................................................ 55 489 --
------ ------ -----
Consolidated Operations................................................... $2,139 $1,403 $ 1
====== ====== =====
1995
Investment Products........................................................ $ 324 $ 437 $ --
Individual Life Insurance.................................................. 266 142 --
Employee Benefits.......................................................... 2,048 467 --
Corporate.................................................................. -- 55 (4)
Runoff operations and other................................................ 5 350 --
------ ------ -----
Consolidated Operations................................................... $2,643 $1,451 $ (4)
====== ====== =====
1996
Investment Products........................................................ $ 540 $ 478 $ --
Individual Life Insurance.................................................. 313 159 --
Employee Benefits.......................................................... 2,215 618 --
Corporate.................................................................. -- 72 --
Runoff operations and other................................................ 1 207 (219)
------ ------ -----
Consolidated Operations................................................... $3,069 $1,534 $ (219)
====== ====== =====

BENEFITS, AMORTIZATION
CLAIMS, OF DEFERRED
AND CLAIM POLICY DIVIDENDS
ADJUSTMENT ACQUISITION TO OTHER

SEGMENT EXPENSES COSTS POLICYHOLDERS EXPENSES*

- --------------------------------------------------------------------------- ---------- ------------ ------------- --------

1994
Investment Products........................................................ $ 290 $ 90 $ -- $ 85

Individual Life Insurance.................................................. 252 52 -- 47

Employee Benefits.......................................................... 1,200 3 419 283

Corporate.................................................................. (3) -- -- 47

Runoff operations and other................................................ 515 4 -- 36

------ ---- ---- ----

Consolidated Operations................................................... $2,254 $149 $ 419 $498

====== ==== ==== ====

1995
Investment Products........................................................ $ 352 $118 $ -- $121

Individual Life Insurance.................................................. 217 72 -- 61

Employee Benefits.......................................................... 1,373 4 675 362

Corporate.................................................................. 15 (1) -- 61

Runoff operations and other................................................ 438 12 -- (16)

------ ---- ---- ----

Consolidated Operations................................................... $2,395 $205 $ 675 $589

====== ==== ==== ====

1996
Investment Products........................................................ $ 456 $175 $ -- $161

Individual Life Insurance.................................................. 266 63 1 74

Employee Benefits.......................................................... 1,684 4 634 396

Corporate.................................................................. 28 (1) -- 75

Runoff operations and other................................................ 293 -- -- 44

------ ---- ---- ----

Consolidated Operations................................................... $2,727 $241 $ 635 $750

====== ==== ==== ====

</TABLE>

* Includes interest expense on allocated advances

S-6
<PAGE> 179

HARTFORD LIFE, INC. AND SUBSIDIARIES
SCHEDULE IV

REINSURANCE
(IN MILLIONS)

<TABLE>
<CAPTION>
PERCENTAGE
CEDED TO ASSUMED OF AMOUNT
GROSS OTHER FROM OTHER NET ASSUMED
AMOUNT COMPANIES COMPANIES AMOUNT TO NET
-------- --------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31, 1994
Life insurance in force................. $237,420 $ 64,538 $ 32,987 $205,869 16.0%
======== ======== ======= ========
INSURANCE REVENUES
Life insurance and annuities............ $ 1,358 $ 119 $ 195 $ 1,434 13.6%
Accident and health insurance........... 631 65 139 705 19.7%
-------- -------- ------- --------
Total................................... $ 1,989 $ 184 $ 334 $ 2,139 15.6%
======== ======== ======= ========

FOR THE YEAR ENDED DECEMBER 31, 1995
Life insurance in force................. $328,130 $109,829 $ 18,805 $237,106 7.9%
======== ======== ======= ========
INSURANCE REVENUES
Life insurance and annuities............ $ 1,653 $ 247 $ 471 $ 1,877 25.1%
Accident and health insurance........... 695 66 137 766 17.9%
-------- -------- ------- --------
Total................................... $ 2,348 $ 313 $ 608 $ 2,643 23.0%
======== ======== ======= ========
FOR THE YEAR ENDED DECEMBER 31, 1996
Life insurance in force................. $300,783 $ 89,388 $ 46,040 $257,435 18.0%
======== ======== ======= ========
INSURANCE REVENUES
Life insurance and annuities............ $ 2,338 $ 326 $ 183 $ 2,195 8.3%
Accident and health insurance........... 739 87 222 874 25.4%
-------- -------- ------- --------
Total................................... $ 3,077 $ 413 $ 405 $ 3,069 13.2%
======== ======== ======= ========
</TABLE>

S-7
<PAGE> 180

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
<C> <S>
*1.1 Form of Underwriting Agreement (U.S. Version).
*1.2 Form of Underwriting Agreement (International Version).
*3.1 Form of Restated Certificate of Incorporation of Hartford Life, Inc.
*3.2 Form of By-laws of Hartford Life, Inc.
*4.1 Specimen Certificate of Class A Common Stock of Hartford Life, Inc.
*5.1 Form of Opinion of Cravath, Swaine & Moore as to the legality of the securities
being registered.
*10.1 Form of Master Intercompany Agreement between, Hartford Life, Inc., ITT Hartford
Group, Inc. and, with respect to Article VI, Hartford Fire Insurance Company.
*10.2 Form of Tax Sharing Agreement between ITT Hartford Group, Inc. and its
subsidiaries, including Hartford Life, Inc.
*10.3 Form of Management Agreement between Hartford Life Insurance Company and The
Hartford Investment Management Company.
*10.4 Form of Management Agreement between Hartford Life Insurance Company, Hartford
Accident and Indemnity Company and The Hartford Investment Management Company.
*10.5 Form of Management Agreement between certain subsidiaries of the Company and
Hartford Investment Services, Inc.
*10.6 Form of Management Agreement between certain subsidiaries of the Company and
Hartford Investment Services, Inc.
*10.7 Form of Sublease Agreement between Hartford Fire Insurance Company and Hartford
Life, Inc.
*10.8 Credit Agreement dated as of February 10, 1997, among Hartford Life, Inc., the
initial lenders named therein and Citibank, N.A.
*10.9 Promissory Note executed by Hartford Life, Inc. for the benefit of Hartford
Accident and Indemnity Company.
*10.10 Employment Agreement for Lowndes A. Smith.
*10.11 Form of 1997 Hartford Life, Inc. Incentive Stock Plan.
*10.12 Form of 1997 Hartford Life, Inc. Deferred Restricted Stock Unit Plan.
*10.13 Form of 1997 Hartford Life, Inc. Employee Stock Purchase Plan.
*10.14 Form of 1997 Hartford Life, Inc. Restricted Stock Plan for Non-Employee
Directors.
*11.1 Computation of earnings per share.
21.1 Subsidiaries of Hartford Life, Inc.
*23.1 Consent of Cravath, Swaine & Moore (included in Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
**23.3 Consent of Ramani Ayer.
**23.4 Consent of Donald R. Frahm.
**23.5 Consent of Paul G. Kirk, Jr.
**23.6 Consent of Lowndes A. Smith.
**23.7 Consent of H. Patrick Swygert.
**23.8 Consent of DeRoy C. Thomas.
**23.9 Consent of Gordon I. Ulmer.
**23.10 Consent of David K. Zwiener.
**24.1 Powers of Attorney.
**27.1 Financial Data Schedule.
</TABLE>

- ---------------
* To be filed by amendment.

** Previously filed.

<PAGE> 1

EXHIBIT 21.1

SIGNIFICANT SUBSIDIARIES

<TABLE>
<S> <C>
State of
Subsidiaries of Hartford Life, Inc. Incorporation
American Maturity Life Insurance Company (60%) Connecticut
Hartford Life and Accident Insurance Company Connecticut
Hartford Life Insurance Company Connecticut
ITT Hartford International Life Reassurance Corp. Connecticut
ITT Hartford Life, Ltd. Bermuda
ITT Hartford Life and Annuity Insurance Company Connecticut
</TABLE>

<PAGE> 1

EXHIBIT 23.2

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
Amendment No. 1 to the Registration Statement (File No. 333-21459) on Form S-1
for Hartford Life, Inc.

/s/ ARTHUR ANDERSEN LLP

Hartford, Connecticut

March 19, 1997