<PAGE>
As filed with the Securities and Exchange Commission on Feb. 22, 2000
File No. 333-91921
811-9295
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 2 [X]
-----
Post-Effective Amendment No. [ ]
-----
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 14 [X]
------
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT SEVEN
(Exact Name of Registrant)
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
(Name of Depositor)
P. O. Box 2999
Hartford, CT 06104-2999
(Address of Depositor's Principal Offices)
(860) 843-6733
(Depositor's Telephone Number, Including Area Code)
Marianne O'Doherty
Hartford Life and Annuity Insurance Company
P. O. Box 2999
Hartford, CT 06104-2999
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485
-----
on March 1, 2000 pursuant to paragraph (b) of Rule 485
-----
60 days after filing pursuant to paragraph (a)(1) of Rule 485
-----
on ___________, 2000 pursuant to paragraph (a)(1) of Rule 485
-----
this post-effective amendment designates a new effective date
----- for a previously filed post-effective amendment.
Approximate Date of Proposed Public Offering: As soon as practicable after
the effective date of the registration statement.
<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(A)
<TABLE>
<CAPTION>
N-4 ITEM NO. PROSPECTUS HEADING
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<S> <C>
1. Cover Page Hartford Life and Annuity Insurance Company -
Separate Account Seven
2. Definitions Definitions
3. Synopsis or Highlights Highlights
4. Condensed Financial Yield Information
Information
5. General Description of Hartford Life and Annuity Insurance Company,
the Registrant The Separate Account, and The Funds
6. Deductions Contract Charges
7. General Description of The Contract
Annuity Contracts
8. Annuity Period Annuity Payouts
9. Death Benefit Death Benefits
10. Purchases and Contract Value The Contract, and
Contract Value
11. Redemptions Surrenders
12. Taxes Federal Tax Considerations
13. Legal Proceedings Legal Matters and Experts
14. Table of Contents of the Table of Contents to
Statement of Additional Statement of Additional
Information Information
15. Cover Page Part B; Statement of Additional
Information
16. Table of Contents Table of Contents
17. General Information and History Summary
<PAGE>
18. Services None
19. Purchase of Securities Distribution of Contracts
being Offered
20. Underwriters Distribution of Contracts
21. Calculation of Performance Data Calculation of Yield and Return
22. Annuity Payments Settlement Provisions
23. Financial Statements Financial Statements
24. Financial Statements and Financial Statements and
Exhibits Exhibits
25. Directors and Officers of the Directors and Officers of the
Depositor Depositor
26. Persons Controlled by or Under Persons Controlled by or Under
Common Control with the Common Control with the Depositor
Depositor or Registrant or Registrant
27. Number of Contract Owners Number of Contract Owners
28. Indemnification Indemnification
29. Principal Underwriters Principal Underwriters
30. Location of Accounts and Location of Accounts and Records
Records
31. Management Services Management Services
32. Undertakings Undertakings
</TABLE>
<PAGE>
PART A
<PAGE>
<TABLE>
<S> <C>
HARTFORD LEADERS PLUS
SEPARATE ACCOUNT SEVEN
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
P.O. BOX 5085
HARTFORD, CONNECTICUT 06102-5085
TELEPHONE: 1-800-862-6668 (CONTRACT OWNERS)
1-800-862-7155 (REGISTERED REPRESENTATIVES) [LOGO]
</TABLE>
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This prospectus describes information you should know before you purchase
Hartford Leaders Plus variable annuity. Please read it carefully.
We call this annuity Hartford Leaders Plus because each time you make a Premium
Payment, Hartford will credit your Contract Value with a Payment Enhancement.
The expenses for this Annuity may be higher than the expenses for an annuity
without the Payment Enhancements. The Payment Enhancements may, over time, be
more than offset by the higher expenses.
The Hartford Leaders Plus variable annuity is a contract between you and
Hartford Life and Annuity Insurance Company where you agree to make at least one
Premium Payment to us and we agree to make a series of Annuity Payouts at a
later date. This Annuity is a flexible premium, tax-deferred, variable annuity
offered to both individuals and groups. It is:
x Flexible, because you may add Premium Payments at any time.
x Tax-deferred, which means you don't pay taxes until you take money out or
until we start to make Annuity Payouts.
x Variable, because the value of your Annuity will fluctuate with the
performance of the underlying funds.
- --------------------------------------------------------------------------------
At the time you purchase your Annuity, you allocate your Premium Payment to
"Sub-Accounts". These are subdivisions of our Separate Account, an account that
keeps your Annuity assets separate from our company assets. The Sub-Accounts
then purchase shares of mutual funds set up exclusively for variable annuity or
variable life insurance products. These funds are not the same mutual funds that
you buy through your stockbroker or through a retail mutual fund. They may have
similar investment strategies and the same portfolio managers as retail mutual
funds. This Annuity offers you Funds with investment strategies ranging from
conservative to aggressive and you may pick those Funds that meet your
investment goals and risk tolerance. The Sub-Accounts and the Funds are listed
below:
- - AMERICAN FUNDS ASSET ALLOCATION SUB-ACCOUNT which purchases Class 2 shares of
the Asset Allocation Fund of American Funds Insurance Series (also known as
American Variable Insurance Series) ("American Funds Asset Allocation Fund")
- - AMERICAN FUNDS BOND SUB-ACCOUNT which purchases Class 2 shares of the Bond
Fund of American Funds Insurance Series ("American Funds Bond Fund")
- - AMERICAN FUNDS GLOBAL GROWTH SUB-ACCOUNT which purchases Class 2 shares of the
Global Growth Fund of American Funds Insurance Series ("American Funds Global
Growth Fund")
- - AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION SUB-ACCOUNT which purchases Class 2
shares of the Global Small Capitalization Fund of American Funds Insurance
Series ("American Funds Global Small Capitalization Fund")
- - AMERICAN FUNDS GROWTH SUB-ACCOUNT which purchases Class 2 shares of the Growth
Fund of American Funds Insurance Series ("American Funds Growth Fund")
- - AMERICAN FUNDS GROWTH-INCOME SUB-ACCOUNT which purchases Class 2 shares of the
Growth-Income Fund of American Funds Insurance Series ("American Funds
Growth-Income Fund")
- - AMERICAN FUNDS INTERNATIONAL SUB-ACCOUNT which purchases Class 2 shares of the
International Fund of American Funds Insurance Series ("American Funds
International Fund")
- - AMERICAN FUNDS NEW WORLD SUB-ACCOUNT which purchases Class 2 shares of the New
World Fund of American Funds Insurance Series ("American Funds New World
Fund")
- - FRANKLIN REAL ESTATE SECURITIES SUB-ACCOUNT which purchases Class 2 shares of
the Real Estate Securities Fund of the Franklin Templeton Variable Insurance
Products Trust* ("Real Estate Securities Fund")
- - FRANKLIN SMALL CAP SUB-ACCOUNT which purchases Class 2 shares of the Small Cap
Fund of the Franklin Templeton Variable Insurance Products Trust* ("Small Cap
Fund")
- - FRANKLIN STRATEGIC INCOME INVESTMENTS SUB-ACCOUNT which purchases Class 1
shares of the Franklin Strategic Income Investments Fund of the Templeton
Variable Products Series Fund
- - HARTFORD MONEY MARKET SUB-ACCOUNT which purchases Class IB shares of the
Hartford Money Market HLS Fund
<PAGE>
- - MFS CAPITAL OPPORTUNITIES SUB-ACCOUNT which purchases shares of the
MFS-Registered Trademark- Capital Opportunities Series of the MFS-Registered
Trademark- Variable Insurance Trust-SM-
- - MFS EMERGING GROWTH SUB-ACCOUNT which purchases shares of the MFS-Registered
Trademark- Emerging Growth Series of the MFS-Registered Trademark- Variable
Insurance Trust-SM-
- - MFS GLOBAL EQUITY SUB-ACCOUNT which purchases shares of the MFS-Registered
Trademark- Global Equity Series of the MFS-Registered Trademark- Variable
Insurance Trust-SM-
- - MFS GROWTH SUB-ACCOUNT which purchases shares of the MFS-Registered Trademark-
Growth Series of the MFS-Registered Trademark- Variable Insurance Trust-SM-
- - MFS GROWTH WITH INCOME SUB-ACCOUNT which purchases shares of the
MFS-Registered Trademark- Growth with Income Series of the MFS-Registered
Trademark- Variable Insurance Trust-SM-
- - MFS HIGH INCOME SUB-ACCOUNT which purchases shares of the MFS-Registered
Trademark- High Income Series of the MFS-Registered Trademark- Variable
Insurance Trust-SM-
- - MFS NEW DISCOVERY SUB-ACCOUNT which purchases shares of the MFS-Registered
Trademark- New Discovery Series of the MFS-Registered Trademark- Variable
Insurance Trust-SM-
- - MFS TOTAL RETURN SUB-ACCOUNT which purchases shares of the MFS-Registered
Trademark- Total Return Series of the MFS-Registered Trademark- Variable
Insurance Trust-SM-
- - MUTUAL SHARES SECURITIES SUB-ACCOUNT which purchases Class 2 shares of Mutual
Shares Securities Fund of the Franklin Templeton Variable Insurance Products
Trust*
- - TEMPLETON ASSET ALLOCATION SUB-ACCOUNT which purchases Class 2 shares of the
Templeton Asset Allocation Fund of the Templeton Variable Product Series Fund
("Templeton Asset Allocation Fund")
- - TEMPLETON DEVELOPING MARKETS EQUITY SUB-ACCOUNT which purchases Class 1 shares
of the Templeton Developing Markets Equity Fund of the Franklin Templeton
Variable Insurance Products Trust* ("Templeton Developing Markets Equity
Fund")
- - TEMPLETON GLOBAL GROWTH SUB-ACCOUNT which purchases Class 2 shares of the
Templeton Global Growth Fund of the Franklin Templeton Variable Insurance
Products Trust* ("Templeton Global Growth Fund")
- - TEMPLETON INTERNATIONAL SUB-ACCOUNT which purchases Class 2 shares of the
Templeton International Fund of the Templeton Variable Products Series Fund
("Templeton International Fund")
You may also allocate some or all of your Premium Payment to the "Fixed
Accumulation Feature", which pays an interest rate guaranteed for a certain time
period from the time the Premium Payment is made. Premium Payments allocated to
the Fixed Accumulation Feature are not segregated from our company assets like
the assets of the Separate Account.
If you decide to buy this Annuity, you should keep this prospectus for your
records. You can also call us at 1-800-862-6668 to get a Statement of Additional
Information, free of charge. The Statement of Additional Information contains
more information about this Annuity and, like this prospectus, is filed with the
Securities and Exchange Commission ("SEC"). We have included the Table of
Contents for the Statement of Additional Information at the end of this
prospectus.
Although we file the prospectus and the Statement of Additional Information with
the SEC, the SEC doesn't approve or disapprove these securities or determine if
the information is truthful or complete. Anyone who represents that the SEC does
these things may be guilty of a criminal offense. This prospectus and the
Statement of Additional Information can also be obtained from the SEC's website
(HTTP://WWW.SEC.GOV).
This Annuity IS NOT:
- A bank deposit or obligation
- Federally insured
- Endorsed by any bank or governmental agency
This Annuity may not be available for sale in all states.
- --------------------------------------------------------------------------------
THE DATE OF THIS PROSPECTUS IS MARCH 1, 2000
THE DATE OF THE STATEMENT OF ADDITIONAL INFORMATION IS MARCH 1, 2000.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 3
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
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DEFINITIONS 4
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FEE TABLE 6
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HIGHLIGHTS 11
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GENERAL CONTRACT INFORMATION 12
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Hartford Life and Annuity Insurance Company 12
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The Separate Account 12
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The Funds 13
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THE FIXED ACCUMULATION FEATURES 15
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THE CONTRACT 16
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Purchases and Contract Value 16
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Charges and Fees 18
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Death Benefit 20
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Surrenders 23
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ANNUITY PAYOUTS 24
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OTHER PROGRAMS AVAILABLE 26
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OTHER INFORMATION 27
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Legal Matters and Experts 27
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More Information 28
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FEDERAL TAX CONSIDERATIONS 28
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A. General 28
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B. Taxation of Hartford and The Separate Account 28
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C. Taxation of Annuities -- General Provisions Affecting
Purchases Other Than Qualified Retirement Plans 28
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D. Federal Income Tax Withholding 31
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E. General Provisions Affecting Qualified Retirement Plans 31
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F. Annuity Purchases By Nonresident Aliens and Foreign
Corporations 31
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G. Generation-Skipping Transfers 31
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TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION 32
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APPENDIX I -- INFORMATION REGARDING TAX-QUALIFIED RETIREMENT
PLANS 33
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</TABLE>
<PAGE>
4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
DEFINITIONS
These terms are capitalized when used throughout this prospectus. Please refer
to these defined terms if you have any questions as you read your prospectus.
ACCOUNT: Any of the Sub-Accounts or Fixed Accumulation Feature.
ACCUMULATION UNITS: If you allocate your Premium Payment to any of the
Sub-Accounts, we will convert those payments into Accumulation Units in the
selected Sub-Accounts. Accumulation Units are valued at the end of each
Valuation Day and are used to calculate the value of your Contract prior to the
Annuity Calculation Date.
ACCUMULATION UNIT VALUE: The daily price of Accumulation Units on any Valuation
Day.
ADMINISTRATIVE OFFICE OF THE COMPANY: Our location and overnight mailing address
is: 200 Hopmeadow Street, Simsbury, Connecticut 06089. Our standard mailing
address is: Investment Product Services, P.O. Box 5085, Hartford, CT 06102-5085.
ANNIVERSARY VALUE: The value equal to the Contract Value as of a Contract
Anniversary, increased by the dollar amount of any Premium Payments made and any
Payment Enhancements credited since that anniversary and reduced by the dollar
amount of any partial Surrenders since that anniversary.
ANNUAL MAINTENANCE FEE: An annual $30 charge deducted on a Contract Anniversary
or upon full Surrender if the Contract Value at either of those times is less
than $50,000. The charge is deducted proportionately from each Account in which
you are invested.
ANNUAL WITHDRAWAL AMOUNT: This is the amount you can Surrender per Contract Year
without paying a Contingent Deferred Sales Charge. This amount is
non-cumulative, meaning that it cannot be carried over from one year to the
next.
ANNUITANT: The person on whose life the Contract is based. The Annuitant may not
be changed after your Contract is issued.
ANNUITY CALCULATION DATE: The date we calculate the first Annuity Payout.
ANNUITY COMMENCEMENT DATE: The date we start to make Annuity Payouts.
ANNUITY PAYOUT: The money we pay out after the Annuity Commencement Date for the
duration and frequency you select.
ANNUITY PAYOUT OPTION: Any of the options available for payout after the Annuity
Commencement Date or death of the Contract Owner or Annuitant.
ANNUITY UNIT: The unit of measure we use to calculate the value of your Annuity
Payouts under a variable dollar amount Annuity Payout Option.
ANNUITY UNIT VALUE: The daily price of Annuity Units on any Valuation Day.
BENEFICIARY: The person(s) entitled to receive a Death Benefit upon the death of
the Contract Owner or Annuitant.
CHARITABLE REMAINDER TRUST: An irrevocable trust, where an individual donor
makes a gift to the trust, and in return receives an income tax deduction. In
addition, the individual donor has the right to receive a percentage of the
trust earnings for a specified period of time.
CODE: The Internal Revenue Code of 1986, as amended.
COMMUTED VALUE: The present value of any remaining guaranteed Annuity Payouts.
This amount is calculated using the Assumed Investment Return for variable
dollar amount Annuity Payouts or the underlying rate of return for fixed dollar
amount Annuity Payouts.
CONTINGENT ANNUITANT: The person you may designate to become the Annuitant if
the original Annuitant dies before the Annuity Commencement Date. You must name
a Contingent Annuitant before the original Annuitant's death.
CONTINGENT DEFERRED SALES CHARGE: The deferred sales charge that may apply when
you make a full or partial Surrender.
CONTRACT: The individual Annuity Contract and any endorsements or riders. Group
participants and some individuals will receive a certificate rather than a
Contract.
CONTRACT ANNIVERSARY: The anniversary of the date we issued your Contract. If
the Contract Anniversary falls on a Non-Valuation Day, then the Contract
Anniversary will be the next Valuation Day.
CONTRACT VALUE: The total value of the Accounts on any Valuation Day.
CONTRACT YEAR: Any 12 month period between Contract Anniversaries, beginning
with the date the Contract was issued.
DEATH BENEFIT: The amount payable after the Contract Owner or the Annuitant
dies.
DOLLAR COST AVERAGING: A program that allows you to systematically make
transfers between Accounts available in your Contract.
FIXED ACCUMULATION FEATURE: Part of our General Account, where you may allocate
all or a portion of your Contract Value. In your Contract, this is defined as
the "Fixed Account".
GENERAL ACCOUNT: The General Account includes our company assets and any money
you have invested in the Fixed Accumulation Feature.
HARTFORD, WE OR OUR: Hartford Life and Annuity Insurance Company. Only Hartford
is a capitalized term in the prospectus.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 5
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JOINT ANNUITANT: The person on whose life Annuity Payouts are based if the
Annuitant dies after the Annuity Calculation Date. You may name a Joint
Annuitant only if your Annuity Payout Option provides for a survivor. The Joint
Annuitant may not be changed.
MAXIMUM ANNIVERSARY VALUE: This is the highest Anniversary Value prior to the
deceased's 81st birthday or the date of death, if earlier.
NET INVESTMENT FACTOR: This is used to measure the investment performance of a
Sub-Account from one Valuation Day to the next, and is also used to calculate
your Annuity Payout amount.
NON-VALUATION DAY: Any day the New York Stock Exchange is not open for trading.
PAYEE: The person or party you designate to receive Annuity Payouts.
PAYMENT ENHANCEMENT: An amount that Hartford credits your Contract Value at the
time a premium payment is made. The amount of a Payment Enhancement is based on
the cumulative premium payments you make to your Annuity.
PREMIUM PAYMENT: Money sent to us to be invested in your Annuity.
PREMIUM TAX: A tax charged by a state or municipality on Premium Payments.
REQUIRED MINIMUM DISTRIBUTION: A federal requirement that individuals age 70 1/2
and older must take a distribution from their tax-qualified retirement account
by December 31, each year. For employer sponsored Qualified Contracts, the
individual must begin taking distributions at the age of 70 1/2 or upon
retirement, whichever comes later.
SUB-ACCOUNT VALUE: The value on or before the Annuity Calculation Date, which is
determined on any day by multiplying the number of Accumulation Units by the
Accumulation Unit Value for that Sub-Account.
SURRENDER: A complete or partial withdrawal from your Contract.
SURRENDER VALUE: The amount we pay you if you terminate your Contract before the
Annuity Commencement Date. The Surrender Value is equal to the Contract Value
minus any applicable charges.
VALUATION DAY: Every day the New York Stock Exchange is open for trading. Values
of the Separate Account are determined as of the close of the New York Stock
Exchange, generally 4:00 p.m. Eastern Time.
VALUATION PERIOD: The time span between the close of trading on the New York
Stock Exchange from one Valuation Day to the next.
<PAGE>
6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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FEE TABLE
CONTRACT OWNER TRANSACTION EXPENSES
<TABLE>
<S> <C>
SALES CHARGE IMPOSED ON PURCHASES (as a percentage of
Premium Payments) None
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CONTINGENT DEFERRED SALES CHARGE (as a percentage of amounts
Surrendered) (1)
First Year (2) 8%
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Second Year 8%
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Third Year 8%
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Fourth Year 8%
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Fifth Year 7%
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Sixth Year 6%
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Seventh Year 5%
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Eighth Year 0%
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ANNUAL MAINTENANCE FEE (3) $30
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SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of average
daily Sub-Account Value)
Mortality and Expense Risk Charge 1.50%
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Administrative Charge 0.15%
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Total Separate Account Charges 1.65%
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OPTIONAL CHARGES (as a percentage of average daily
Sub-Account Value)
Optional Death Benefit Charge 0.15%
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TOTAL SEPARATE ACCOUNT CHARGES WITH THE OPTIONAL DEATH
BENEFIT CHARGE (as a percentage of average daily Sub-Account
Value) 1.80%
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</TABLE>
(1) Each Premium Payment has its own Contingent Deferred Sales Charge Schedule.
(2) Length of time from Premium Payment.
(3) An annual $30 charge deducted on a Contract Anniversary or upon full
Surrender if the Contract Value at either of those times is less than
$50,000. The charge is deducted proportionately from each Account in which
you are invested.
The purpose of the Fee Table and Examples is to assist you in understanding
various costs and expenses that you will pay directly or indirectly. The Fee
Table and Examples reflect expenses of the Separate Account and underlying
Funds. We will deduct any Premium Taxes that apply.
The Examples should not be considered a representation of past or future
expenses and actual expenses may be greater or less than those shown. The Annual
Maintenance Fee has been reflected in the Examples by a method intended to show
the "average" impact of the Annual Maintenance Fee on an investment in the
Separate Account. We do this by approximating an "average" 0.06% annual charge.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 7
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Annual Fund Operating Expenses As of the Fund's Year End
(As a percentage of average net assets)
<TABLE>
<CAPTION>
TOTAL FUND
OTHER OPERATING
MANAGEMENT FEES EXPENSES EXPENSES
UNDERLYING FUND (WITH WAIVERS) 12B-1 FEES (WITH WAIVERS) (WITH WAIVERS)
<S> <C> <C> <C> <C>
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American Funds Asset Allocation Fund 0.44% 0.25% 0.01% 0.70%
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American Funds Bond Fund 0.52% 0.25% 0.02% 0.79%
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American Funds Global Growth Fund 0.69% 0.25% 0.06% 1.00%
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American Funds Global Small Capitalization Fund (1) 0.79% 0.25% 0.04% 1.08%
- -------------------------------------------------------------------------------------------------------------------------
American Funds Growth Fund 0.40% 0.25% 0.01% 0.66%
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American Funds Growth-Income Fund 0.35% 0.25% 0.01% 0.61%
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American Funds International Fund 0.57% 0.25% 0.09% 0.91%
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American Funds New World Fund (2) 0.85% 0.25% 0.08% 1.18%
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Real Estate Securities Fund -- Class 2 0.52% 0.25% 0.02% 0.79%
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Small Cap Fund -- Class 2 (3) 0.75% 0.25% 0.02% 1.02%
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Franklin Strategic Income Investments Fund (4) 0.43% N/A 0.32% 0.75%
- -------------------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS Fund 0.43% 0.18% 0.02% 0.63%
- -------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Capital Opportunities
Series-SM- (5)(6) 0.75% N/A 0.27% 1.02%
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MFS-Registered Trademark- Emerging Growth Series-SM- (6) 0.75% N/A 0.10% 0.85%
- -------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Global Equity Series-SM- (5)(6) 1.00% N/A 0.25% 1.25%
- -------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Growth Series-SM- (5)(6) 0.75% N/A 0.25% 1.00%
- -------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Growth with Income Series-SM-
(6) 0.75% N/A 0.13% 0.88%
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MFS-Registered Trademark- High Income Series-SM- (6) 0.75% N/A 0.28% 1.03%
- -------------------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- New Discovery Series-SM- (5)(6) 0.90% N/A 0.27% 1.17%
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MFS-Registered Trademark- Total Return Series-SM- (6) 0.75% N/A 0.16% 0.91%
- -------------------------------------------------------------------------------------------------------------------------
Mutual Shares Securities Fund -- Class 2 (3) 0.74% 0.25% 0.03% 1.02%
- -------------------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund -- Class 2 0.60% 0.25% 0.18% 1.03%
- -------------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets Equity Fund -- Class 1 (7) 1.25% N/A 0.16% 1.41%
- -------------------------------------------------------------------------------------------------------------------------
Templeton Global Growth Fund -- Class 2 (3) 0.83% 0.25% 0.05% 1.13%
- -------------------------------------------------------------------------------------------------------------------------
Templeton International Fund -- Class 2 0.69% 0.25% 0.17% 1.11%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) These expenses are annualized. The Fund began operations on April 30, 1998.
(2) These expenses are estimated amounts for the current fiscal year.
(3) "Management Fees" include fund administration fees. Because Class 2 shares
are new, figures (other than Rule 12b-1 fees) are based on experience of
each Fund's Class 1 shares in the most recent fiscal year; Rule 12b-1 fees
are based on estimates.
(4) Figures are estimates for the current fiscal year. The fund's manager is
contractually obligated to limit management fees and other expenses so that
Total Fund Operating Expenses will not exceed .75% during the current fiscal
year. Without these limitations, estimated Other Expenses and Total
Operating Expenses would be as follows:
<TABLE>
<CAPTION>
TOTAL FUND
OTHER OPERATING
UNDERLYING FUND MANAGEMENT FEES 12B-1 FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
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Franklin Strategic Income Investments Fund 0.43% N/A 0.52% 0.95%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
The Fund's advisor or administrator has entered into an arrangement with
Hartford Life under which Hartford Life is compensated for services it
provides to the Fund.
<PAGE>
8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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(5) MFS has contractually agreed to bear expenses for these Series so that
"Other Expenses" will not exceed 0.25% of the average daily net assets of
the Series during the current fiscal year. Without this waiver the following
would have been deducted:
<TABLE>
<CAPTION>
TOTAL FUND
OTHER OPERATING
UNDERLYING FUND MANAGEMENT FEES 12B-1 FEES EXPENSES EXPENSES
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Capital Opportunities
Series-SM- 0.75% N/A 0.36% 1.11%
- -------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Global Equity Series-SM- 1.00% N/A 3.28% 4.28%
- -------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- Growth Series-SM- 0.75% N/A 3.28% 4.03%
- -------------------------------------------------------------------------------------------------------------
MFS-Registered Trademark- New Discovery Series-SM- 0.90% N/A 4.32% 5.22%
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(6) Each Series has an expense offset arrangement which reduces the Series'
custodian fee based upon the amount of cash maintained by the Series with
its custodian and dividend disbursing agent. Each Series may enter into
other such arrangements and directed brokerage arrangements, which would
also have the effect of reducing the Series' expenses. Expenses do not take
into account these expense reductions, and are therefore higher than the
actual expenses of the Series.
(7) "Management Fees" include fund administration fees. The fund's adviser or
administrator has entered into an arrangement with Hartford Life under which
Hartford Life is compensated for services it provides to the fund.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 9
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EXAMPLE
THE FOLLOWING EXAMPLE ILLUSTRATES SITUATIONS WHERE THE OPTIONAL DEATH BENEFIT IS
SELECTED AND TAKES INTO ACCOUNT THE PAYMENT ENHANCEMENT CREDITED ON A $1,000
INVESTMENT.
<TABLE>
<CAPTION>
If you annuitize your Contract at the
end of the applicable time
period you would pay the
following expenses on a
If you surrender your Contract at the $1,000 investment, assuming If you do not surrender your
end of the applicable time period you a 5% annual return on assets. Contract, you would pay the
would pay the following expenses on This assumes recapture of the following expenses on a $1,000
a $1,000 investment, assuming a 5% Payment Enhance- investment, assuming a 5% annual
annual return on assets: ments: return on assets:
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------------------------
American Funds
Asset
Allocation $101 $157 $207 $301 $56 $ 82 $141 $300 $27 $ 83 $142 $301
-----------------------------------------------------------------------------------------------------------------------------------
American Funds
Bond $102 $160 $212 $310 $57 $ 85 $146 $310 $28 $ 86 $146 $310
-----------------------------------------------------------------------------------------------------------------------------------
American Funds
Global Growth $105 $167 $222 $332 $60 $ 92 $157 $331 $30 $ 92 $157 $332
-----------------------------------------------------------------------------------------------------------------------------------
American Funds
Global Small
Capitalization $105 $169 $227 $340 $60 $ 94 $161 $339 $31 $ 95 $161 $340
-----------------------------------------------------------------------------------------------------------------------------------
American Funds
Growth $101 $156 $205 $297 $56 $ 81 $139 $296 $27 $ 82 $140 $297
-----------------------------------------------------------------------------------------------------------------------------------
American Funds
Growth-Income $100 $155 $202 $292 $55 $ 80 $136 $291 $26 $ 80 $137 $292
-----------------------------------------------------------------------------------------------------------------------------------
American Funds
International $104 $164 $218 $323 $59 $ 89 $152 $322 $29 $ 90 $153 $323
-----------------------------------------------------------------------------------------------------------------------------------
American Funds
New World $106 $173 $232 $350 $61 $ 97 $166 $349 $32 $ 98 $167 $350
-----------------------------------------------------------------------------------------------------------------------------------
Franklin Real
Estate
Securities $102 $160 $212 $310 $57 $ 85 $146 $310 $28 $ 86 $146 $310
-----------------------------------------------------------------------------------------------------------------------------------
Franklin Small
Cap $105 $167 $223 $334 $60 $ 92 $158 $333 $30 $ 93 $158 $334
-----------------------------------------------------------------------------------------------------------------------------------
Franklin
Stategic
Income
Investments $102 $159 $209 $306 $57 $ 84 $144 $305 $28 $ 85 $144 $306
-----------------------------------------------------------------------------------------------------------------------------------
Hartford Money
Market $ 99 $150 $194 $275 $54 $ 74 $128 $274 $24 $ 75 $129 $275
-----------------------------------------------------------------------------------------------------------------------------------
MFS Capital
Opportunities $105 $167 $223 $334 $60 $ 92 $158 $333 $30 $ 93 $158 $334
-----------------------------------------------------------------------------------------------------------------------------------
MFS Emerging
Growth $103 $162 $215 $316 $58 $ 87 $149 $316 $29 $ 88 $150 $316
-----------------------------------------------------------------------------------------------------------------------------------
MFS Global
Equity $107 $175 $235 $356 $62 $100 $170 $356 $33 $100 $170 $356
-----------------------------------------------------------------------------------------------------------------------------------
MFS Growth $105 $167 $222 $332 $60 $ 92 $157 $331 $30 $ 92 $157 $332
-----------------------------------------------------------------------------------------------------------------------------------
MFS Growth with
Income $103 $163 $216 $320 $58 $ 88 $150 $319 $29 $ 89 $151 $320
-----------------------------------------------------------------------------------------------------------------------------------
MFS High Income $105 $168 $224 $335 $60 $ 93 $158 $334 $31 $ 93 $159 $335
-----------------------------------------------------------------------------------------------------------------------------------
MFS New
Discovery $106 $172 $231 $349 $61 $ 97 $165 $348 $32 $ 98 $166 $349
-----------------------------------------------------------------------------------------------------------------------------------
MFS Total
Return $104 $164 $218 $323 $59 $ 89 $152 $322 $29 $ 90 $153 $323
-----------------------------------------------------------------------------------------------------------------------------------
Mutual Shares
Securities $105 $167 $223 $334 $60 $ 92 $158 $333 $30 $ 93 $158 $334
-----------------------------------------------------------------------------------------------------------------------------------
Templeton Asset
Allocation $105 $168 $224 $335 $60 $ 93 $158 $334 $31 $ 93 $159 $335
-----------------------------------------------------------------------------------------------------------------------------------
Templeton
Developing
Markets $109 $180 $243 $372 $64 $105 $178 $371 $35 $105 $178 $372
-----------------------------------------------------------------------------------------------------------------------------------
Templeton
Global Growth $106 $171 $229 $345 $61 $ 96 $163 $344 $32 $ 97 $164 $345
-----------------------------------------------------------------------------------------------------------------------------------
Templeton
International $106 $170 $228 $343 $61 $ 95 $162 $342 $31 $ 96 $163 $343
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
EXAMPLE
THE FOLLOWING EXAMPLE ILLUSTRATES SITUATIONS WHERE THE OPTIONAL DEATH BENEFIT IS
NOT SELECTED AND TAKES INTO ACCOUNT THE PAYMENT ENHANCEMENT CREDITED ON A $1,000
INVESTMENT.
<TABLE>
<CAPTION>
If you annuitize your Contract at the
end of the applicable time
period you would pay the
following expenses on a
If you surrender your Contract at the $1,000 investment, assuming If you do not surrender your
end of the applicable time period you a 5% annual return on assets. Contract, you would pay the
would pay the following expenses on This assumes recapture of the following expenses on a $1,000
a $1,000 investment, assuming a 5% Payment Enhance- investment, assuming a 5% annual
annual return on assets: ments: return on assets:
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------------------------
American Funds
Asset
Allocation $100 $153 $199 $285 $55 $78 $133 $285 $25 $ 78 $134 $285
-----------------------------------------------------------------------------------------------------------------------------------
American Funds
Bond $101 $156 $204 $295 $56 $80 $138 $294 $26 $ 81 $139 $295
-----------------------------------------------------------------------------------------------------------------------------------
American Funds
Global Growth $103 $162 $215 $316 $58 $87 $149 $316 $29 $ 88 $150 $316
-----------------------------------------------------------------------------------------------------------------------------------
American Funds
Global Small
Capitalization $104 $165 $219 $325 $59 $90 $153 $324 $29 $ 90 $154 $325
-----------------------------------------------------------------------------------------------------------------------------------
American Funds
Growth $ 99 $151 $197 $281 $54 $76 $131 $280 $25 $ 77 $132 $281
-----------------------------------------------------------------------------------------------------------------------------------
American Funds
Growth-Income $ 99 $150 $194 $276 $54 $75 $128 $275 $24 $ 75 $129 $276
-----------------------------------------------------------------------------------------------------------------------------------
American Funds
International $102 $159 $210 $307 $57 $84 $144 $306 $28 $ 85 $145 $307
-----------------------------------------------------------------------------------------------------------------------------------
American Funds
New World $105 $168 $224 $335 $60 $93 $158 $334 $31 $ 93 $159 $335
-----------------------------------------------------------------------------------------------------------------------------------
Franklin Real
Estate
Securities $101 $156 $204 $295 $56 $80 $138 $294 $26 $ 81 $139 $295
-----------------------------------------------------------------------------------------------------------------------------------
Franklin Small
Cap $103 $163 $216 $319 $58 $88 $150 $318 $29 $ 88 $151 $319
-----------------------------------------------------------------------------------------------------------------------------------
Franklin
Strategic
Income
Investments $100 $154 $202 $291 $55 $79 $136 $290 $26 $ 80 $136 $291
-----------------------------------------------------------------------------------------------------------------------------------
Hartford Money
Market $ 97 $145 $186 $259 $52 $70 $120 $258 $23 $ 70 $121 $259
-----------------------------------------------------------------------------------------------------------------------------------
MFS Capital
Opportunities $103 $163 $216 $319 $58 $88 $150 $318 $29 $ 88 $151 $319
-----------------------------------------------------------------------------------------------------------------------------------
MFS Emerging
Growth $101 $157 $207 $301 $56 $82 $141 $300 $27 $ 83 $142 $301
-----------------------------------------------------------------------------------------------------------------------------------
MFS Global
Equity $106 $170 $228 $342 $61 $95 $162 $341 $31 $ 96 $163 $342
-----------------------------------------------------------------------------------------------------------------------------------
MFS Growth $103 $162 $215 $316 $58 $87 $149 $316 $29 $ 88 $150 $316
-----------------------------------------------------------------------------------------------------------------------------------
MFS Growth with
Income $102 $158 $208 $304 $57 $83 $143 $303 $27 $ 84 $143 $304
-----------------------------------------------------------------------------------------------------------------------------------
MFS High Income $103 $163 $216 $320 $58 $88 $150 $319 $29 $ 89 $151 $320
-----------------------------------------------------------------------------------------------------------------------------------
MFS New
Discovery $105 $167 $223 $334 $60 $92 $158 $333 $30 $ 93 $158 $334
-----------------------------------------------------------------------------------------------------------------------------------
MFS Total
Return $102 $159 $210 $307 $57 $84 $144 $306 $28 $ 85 $145 $307
-----------------------------------------------------------------------------------------------------------------------------------
Mutual Shares
Securities $103 $163 $216 $319 $58 $88 $150 $318 $29 $ 88 $151 $319
-----------------------------------------------------------------------------------------------------------------------------------
Templeton Asset
Allocation $103 $163 $216 $320 $58 $88 $150 $319 $29 $ 89 $151 $320
-----------------------------------------------------------------------------------------------------------------------------------
Templeton
Developing
Markets $107 $175 $236 $357 $62 $100 $170 $357 $33 $101 $171 $357
-----------------------------------------------------------------------------------------------------------------------------------
Templeton
Global Growth $104 $166 $221 $330 $59 $91 $156 $329 $30 $ 92 $156 $330
-----------------------------------------------------------------------------------------------------------------------------------
Templeton
International $104 $166 $220 $328 $59 $91 $155 $327 $30 $ 91 $155 $328
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 11
- --------------------------------------------------------------------------------
HIGHLIGHTS
HOW DO I PURCHASE THIS ANNUITY?
You must complete our application or order request and submit it to us for
approval with your first Premium Payment. Your first Premium Payment must be at
least $10,000 and subsequent Premium Payments must be at least $500, unless you
take advantage of our InvestEase-Registered Trademark- Program or are part of
certain retirement plans.
- For a limited time, usually within ten days after you receive your Contract,
you may cancel your Annuity without paying a Contingent Deferred Sales
Charge. You may bear the investment risk for your Premium Payment prior to
our receipt of your request for cancellation.
WHAT ARE PAYMENT ENHANCEMENTS?
Each time you make a Premium Payment, Hartford will credit your Contract Value
with a Payment Enhancement. The amount of the Payment Enhancement is based on
your cumulative Premium Payments.
Hartford has developed a variety of variable annuities to help you meet your
goals. We issue variable annuities that do not have Payment Enhancements, but
that do have lower Mortality and Expense Risk Charges and shorter Contingent
Deferred Sales Charge periods than this annuity. When you talk to your financial
adviser, you should make sure that an annuity with a Payment Enhancement is a
suitable investment for you.
WHAT TYPE OF SALES CHARGE WILL I PAY?
You don't pay a sales charge when you purchase your Annuity. We may charge you a
Contingent Deferred Sales Charge when you partially or fully Surrender your
Annuity. The Contingent Deferred Sales Charge will depend on the length of time
the Premium Payment you made has been in your Annuity. Each Premium Payment has
its own Contingent Deferred Sales Charge period. The Contingent Deferred Sales
Charge is a percentage of the amount surrendered and is equal to:
<TABLE>
<CAPTION>
NUMBER OF YEARS
FROM CONTINGENT DEFERRED
PREMIUM PAYMENT SALES CHARGE
<S> <C>
- ----------------------------------------
One Year 8%
- ----------------------------------------
Two Years 8%
- ----------------------------------------
Three Years 8%
- ----------------------------------------
Four Years 8%
- ----------------------------------------
Five Years 7%
- ----------------------------------------
Six Years 6%
- ----------------------------------------
Seven Years 5%
- ----------------------------------------
Eight Years 0%
- ----------------------------------------
</TABLE>
You won't be charged a Contingent Deferred Sales Charge on:
x The Annual Withdrawal Amount
x Premium Payments that have been in your Annuity for more than seven years.
x Payment Enhancements or earnings
x Distributions made due to death
x Most payments we make to you as part of your Annuity Payout
IS THERE AN ANNUAL MAINTENANCE FEE?
We deduct this $30.00 fee each year on your Contract Anniversary or when you
fully Surrender your Annuity, if, on either of those dates, the value of your
Annuity is less than $50,000.
WHAT CHARGES WILL I PAY ON AN ANNUAL BASIS?
In addition to the Annual Maintenance Fee, you pay three other types of charges
each year. The first type of charge is the fee you pay for insurance. This
charge is:
A mortality and expense risk charge that is subtracted daily and is equal to an
annual charge of 1.50% of your Contract Value invested in the Funds.
The second type of charge is the fee you pay for the Separate Account. This
charge is:
An administrative charge is .15% per annum of the Contract Value held in the
Separate Account.
The third type of charge is the fee you pay for the Funds. Please see the Annual
Fund Operating Expenses table for more complete information and the Funds'
prospectuses accompanying this prospectus.
If you elect the Optional Death Benefit, we will subtract an additional charge
on a daily basis until we begin to make Annuity Payouts that is equal to an
annual charge of .15% of your Contract Value invested in the Funds.
CAN I TAKE OUT ANY OF MY MONEY?
You may Surrender all or part of the amounts you have invested at any time
before we start making Annuity Payouts. Once Annuity Payouts begin, you may take
full or partial Surrenders under the Payments for a Period Certain, Life Annuity
with Payments for a Period Certain or the Joint and Last Survivor Annuity with
Payments for a Period Certain Annuity Options, but only if you selected the
variable dollar amount Annuity Payouts.
- You may have to pay income tax on the money you take out and, if you
Surrender before you are age 59 1/2, you may have to pay an income tax
penalty.
- You may have to pay a Contingent Deferred Sales Charge on the money you
Surrender.
WILL HARTFORD PAY A DEATH BENEFIT?
There is a Death Benefit if the Contract Owner, joint owner or the Annuitant die
before we begin to make Annuity Payouts. The
<PAGE>
12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
Death Benefit will be calculated as of the date we receive a certified death
certificate or other legal document acceptable to us. The Death Benefit amount
will remain invested in the Sub-Accounts according to your last instructions and
will fluctuate with the performance of the underlying Funds.
The Death Benefit is the greater of:
- - The total Premium Payments you have made to us minus the dollar amount of any
partial Surrenders, or
- - The Contract Value of your Annuity minus any Payment Enhancements credited in
the 12 months prior to the date we calculate the Death Benefit, or,
- - Your Maximum Anniversary Value, which is described below, minus any Payment
Enhancements credited in the 12 months prior to the date we calculate the
Death Benefit.
The Maximum Anniversary Value is based on a series of calculations on Contract
Anniversaries of Contract Values, Premium Payments, Payment Enhancements and
partial Surrenders. We will calculate an Anniversary Value for each Contract
Anniversary prior to the deceased's 81st birthday or date of death, whichever is
earlier. The Anniversary Value is equal to the Contract Value as of a Contract
Anniversary, increased by the dollar amount of any Premium Payments and Payment
Enhancements made since that anniversary and reduced by the dollar amount of any
partial Surrenders since that anniversary. The Maximum Anniversary Value is
equal to the greatest Anniversary Value attained from this series of
calculations.
If you elect the Optional Death Benefit at an additional charge, the Death
Benefit will be the greater of:
- - The total Premium Payments you have made to us minus the dollar amount of any
partial Surrenders;
- - The Contract Value of your Annuity minus any Payment Enhancements in the
12 months prior to the date we calculate the Death Benefit;
- - Your Maximum Anniversary Value, minus any Payment Enhancements credited in the
12 months prior to the date we calculate the Death Benefit;
- - your Interest Accumulation Value.
The Optional Death Benefit may not be available if the Contract Owner or
Annuitant is age 75 or older. The Optional Death Benefit Rider is not available
in the state of Washington.
The Optional Death Benefit calculation will be different if you elect to add the
Optional Death Benefit after you purchase your Annuity.
WHAT ANNUITY PAYOUT OPTIONS ARE AVAILABLE?
When it comes time for us to make Annuity Payouts, you may choose one of the
following Annuity Payout Options: Life Annuity, Life Annuity with Cash Refund,
Life Annuity with Payments for a Period Certain, Joint and Last Survivor Life,
Joint and Last Survivor Life with Payments for a Period Certain and Payment For
a Period Certain. We may make other Annuity Payout Options available at any
time.
You must begin to take Annuity Payouts by the Annuitant's 90th birthday or the
end of the 10th Contract Year, whichever is later, unless you elect a later date
to begin receiving payments subject to the laws and regulations then in effect
and our approval. In Maryland, Massachusetts, Oregon or Alabama, you must begin
to take Annuity Payouts by the Annuitant's 90th birthday or the end of the 12th
Contract Year. If you do not tell us what Annuity Payout Option you want before
that time, we will make payments under Life Annuity with a 10 year Period
Certain Annuity Option.
GENERAL CONTRACT INFORMATION
- --------------------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
Hartford Life and Annuity Insurance Company is a stock life insurance company
engaged in the business of writing life insurance and annuities, both individual
and group, in all states of the United States, the District of Columbia and
Puerto Rico, except New York. On January 1, 1998, Hartford's name changed from
ITT Hartford Life and Annuity Insurance Company to Hartford Life and Annuity
Insurance Company. We were originally incorporated under the laws of Wisconsin
on January 9, 1956, and subsequently redomiciled to Connecticut. Our offices are
located in Simsbury, Connecticut; however, our mailing address is P.O. Box 2999,
Hartford, CT 06104-2999. We are ultimately controlled by The Hartford Financial
Services Group, Inc., one of the largest financial service providers in the
United States.
HARTFORD'S RATINGS
<TABLE>
<CAPTION>
EFFECTIVE DATE
RATING AGENCY OF RATING RATING BASIS OF RATING
<S> <C> <C> <C>
- ------------------------------------------------------------------------------
A.M. Best and
Company, Inc. 1/1/99 A+ Financial performance
- ------------------------------------------------------------------------------
Standard & Poor's 5/3/99 AA Insurer financial strength
Duff & Phelps 12/21/98 AA+ Claims paying ability
- ------------------------------------------------------------------------------
</TABLE>
THE SEPARATE ACCOUNT
The Separate Account is where we set aside and invest the assets of some of our
annuity contracts, including this Contract. The Separate Account was established
on December 8, 1986 and is registered as a unit investment trust under the
Investment Company Act of 1940. This registration does not involve supervision
by the Commission of the management or the investment practices of the Separate
Account or Hartford. The Separate Account meets the definition of "Separate
Account" under federal
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 13
- --------------------------------------------------------------------------------
securities law. This Separate Account holds only assets for variable annuity
contracts. The Separate Account:
- - Holds assets for the benefit of you and other Contract Owners, and the persons
entitled to the payments described in the Contract.
- - Is not subject to the liabilities arising out of any other business Hartford
may conduct.
- - Is not affected by the rate of return of Hartford's General Account or by the
investment performance of any of Hartford's other Separate Accounts.
- - May be subject to liabilities from a Sub-Account of the Separate Account which
holds assets of other variable annuity contracts offered by the Separate
Account which are not described in this Prospectus.
- - Is credited with income and gains, and takes losses, whether or not realized,
from the assets it holds.
We do not guarantee the investment results of the Separate Account. There is no
assurance that the value of your Annuity will equal the total of the payments
you make to us.
THE FUNDS
The American Funds Asset Allocation Fund, American Funds Bond Fund, American
Fund Global Growth Fund, American Funds Global Small Capitalization Fund,
American Funds Growth Fund, American Funds Growth-Income Fund, American Funds
International Fund and American Funds New World Fund are all part of American
Funds Insurance Series. American Funds Insurance Series is a fully managed,
diversified, open-end investment company organized as a Massachusetts business
trust in 1983. American Funds Insurance Series offers two classes of fund
shares: Class 1 shares and Class 2 shares. This Annuity invests only in Class 2
shares of American Funds Insurance Series. The investment adviser for each of
the funds of American Funds Insurance Series is Capital Research and Management
Company located at 333 South Hope Street, Los Angeles, California 90071. Capital
Research and Management Company is a wholly owned subsidiary of The Capital
Group Companies, Inc.
The Hartford Money Market HLS Fund is sponsored and administered by Hartford
Life Insurance Company. HL Investment Advisers, LLC located at 200 Hopmeadow
Street, Simsbury, Connecticut, serves as the investment adviser to the Fund. The
Hartford Investment Management Company serves as sub-investment adviser and
provides day to day investment services. The Fund is a separate Maryland
corporation registered with the Securities and Exchange Commission as an
open-end management investment company. Shares of the Fund have been divided
into Class IA and Class IB. Only Class IA shares are available in this Annuity.
The MFS-Registered Trademark- Capital Opportunities Series,
MFS-Registered Trademark- Emerging Growth Series, MFS-Registered Trademark-
Global Equity Series, MFS-Registered Trademark- Growth Series,
MFS-Registered Trademark- Growth with Income Series, MFS-Registered Trademark-
High Income Series, MFS-Registered Trademark- New Discovery Series, and
MFS-Registered Trademark- Total Return Series are series of the
MFS-Registered Trademark- Variable Insurance Trust-SM-. The MFS Variable
Insurance Trust-SM- is a professionally managed open-end management investment
company. The MFS Variable Insurance Trust-SM- is registered as a Massachusetts
business trust. MFS Investment Management-Registered Trademark- serves as the
investment adviser to each of the Series of the MFS-Registered Trademark-
Variable Insurance Trust-SM-. MFS Investment Management-Registered Trademark- is
located at 500 Boylston Street, Boston, Massachusetts 02116.
Franklin Strategic Income Investments Fund, Templeton Asset Allocation Fund and
Templeton International Fund are all part of the Templeton Variable Products
Series Fund. The Templeton Variable Products Series Fund is an open-end, managed
investment company which was organized as a Massachusetts business trust on
February 25, 1988. Templeton Variable Product Series Fund offers Class 1 and
Class 2 shares. Class 2 shares of Templeton Asset Allocation Fund and Templeton
International Fund are currently available in this Annuity. The investment
manager of these funds is Templeton Investment Counsel, Inc. located at
500 East Broward Boulevard, Fort Lauderdale, Florida 33394-3091. Class 1 shares
of the Franklin Strategic Income Investments Fund are currently available in
this annuity. The investment manager of this fund is Franklin Advisers, Inc.,
located at 777 Mariners Island Blvd, P.O. Box 7777, San Mateo, California,
94403-7777. Templeton Investment Counsel, Inc. and Franklin Advisers, Inc. are
wholly owned by Franklin Resources, Inc. a publicly owned company engaged in the
financial services industry through its subsidiaries.
The Real Estate Securities Fund, Small Cap Fund, Mutual Shares Securities Fund,
Templeton Developing Markets Equity Fund and Templeton Global Growth Fund are
all part of the Franklin Templeton Variable Insurance Products Trust. The
Franklin Templeton Variable Insurance Products Trust is an open-end managed
investment company which was organized as a Massachusetts business trust on
April 26, 1988. Franklin Templeton Variable Insurance Products Trust currently
offers Class 1 and Class 2 shares. Class 2 shares of each Fund are available in
this Annuity, except that Class 1 shares of Templeton Developing Markets Equity
Fund are available. The investment manager of the Real Estate Securities Fund
and the Small Cap Fund is Franklin Advisers, Inc. located at 777 Mariners Island
Blvd. P.O. Box 7777, San Mateo, California 94403-777. The investment manager of
Mutual Shares Securities Fund is Franklin Mutual Advisers, LLC, located at 51
John F. Kennedy Parkway, Short Hills, New Jersey, 07078. The investment manager
of Templeton Global Growth Fund is Templeton Global Advisers Limited, located at
Lyford Cay, Nassau, N.P. Bahamas. The investment manager of Templeton Developing
Markets Equity Fund is Templeton Asset Management Ltd., located at 7 Temasek
Blvd. #38-03, Suntec Tower One, Singapore, 038987. The funds' investment
managers and their affiliates manage over $216 billion in assets as of March 31,
1999.
We do not guarantee the investment results of any of the underlying Funds. Since
each underlying Fund has different investment objectives, each is subject to
different risks. These risks and the Funds' expenses are more fully described in
the accompanying
<PAGE>
14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
Funds' prospectus and Statement of Additional Information, which may be ordered
from us. The Funds' prospectus should be read in conjunction with this
Prospectus before investing.
The Funds may not be available in all states contact your registered
representative for current information about availability.
The investment goals of each of the Funds are as follows:
AMERICAN FUNDS ASSET ALLOCATION FUND -- Seeks high total return, including
income and capital gains, consistent with the preservation of capital over the
long term through a diversified portfolio that can include common stocks and
other equity-type securities, bonds and other intermediate and long-term fixed
income securities and money market instruments in any combination.
AMERICAN FUNDS BOND FUND -- Seeks to provide as high a level of current income
as is consistent with the preservation of capital by investing primarily in
fixed-income securities.
AMERICAN FUNDS GLOBAL GROWTH FUND -- Seeks long-term growth of capital by
investing primarily in common stocks of issuers domiciled around the world.
AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION FUND -- Seeks long-term growth of
capital by investing primarily in equity securities of smaller companies located
around the world that typically have market capitalizations of $50 million to
$1.2 billion.
AMERICAN FUNDS GROWTH FUND -- Seeks long-term growth of capital by investing
primarily in common stocks which demonstrate the potential for appreciation.
AMERICAN FUNDS GROWTH-INCOME FUND -- Seeks growth of capital and income by
investing primarily in common stocks or other securities which demonstrate the
potential for appreciation and/or dividends.
AMERICAN FUNDS INTERNATIONAL FUND -- Seeks long-term growth of capital by
investing primarily in common stocks of issuers domiciled outside of the United
States.
AMERICAN FUNDS NEW WORLD FUND -- Seeks long-term growth of capital by investing
primarily in common stocks of issuers with significant exposure to countries
with developing economies and/or markets. The Fund may also invest in debt
securities, including high-yield, high risk bonds.
REAL ESTATE SECURITIES FUND -- Seeks capital appreciation. Its secondary goal is
to earn current income.
SMALL CAP FUND -- Seeks long-term capital growth.
FRANKLIN STRATEGIC INCOME INVESTMENTS FUND -- Seeks to earn a high level of
current income. Its secondary goal is long-term capital appreciation.
HARTFORD MONEY MARKET HLS FUND -- Seeks maximum current income consistent with
liquidity and preservation of capital.
MFS-REGISTERED TRADEMARK- CAPITAL OPPORTUNITIES SERIES -- Seeks capital
appreciation.
MFS-REGISTERED TRADEMARK- EMERGING GROWTH SERIES -- Seeks to provide long-term
growth of capital.
MFS-REGISTERED TRADEMARK- GLOBAL EQUITY SERIES -- Seeks capital appreciation.
MFS-REGISTERED TRADEMARK- GROWTH SERIES -- Seeks to provide long-term growth of
capital and future income rather than current income.
MFS-REGISTERED TRADEMARK- GROWTH WITH INCOME SERIES -- Seeks to provide
reasonable current income and long-term growth of capital and income.
MFS-REGISTERED TRADEMARK- HIGH INCOME SERIES -- Seeks high current income by
investing primarily in a professionally managed diversified portfolio of fixed
income securities, some of which may involve equity features.
MFS-REGISTERED TRADEMARK- NEW DISCOVERY SERIES -- Seeks capital appreciation.
MFS-REGISTERED TRADEMARK- TOTAL RETURN SERIES -- Seeks primarily to provide
above-average income (compared to a portfolio invested in equity securities)
consistent with the prudent employment of capital, and secondarily to provide a
reasonable opportunity for growth of capital and income.
MUTUAL SHARES SECURITIES FUND -- Seeks capital appreciation. Its secondary goal
is income.
TEMPLETON ASSET ALLOCATION FUND -- Seeks high total return.
TEMPLETON DEVELOPING MARKETS EQUITY FUND -- Seeks long-term capital
appreciation.
TEMPLETON GLOBAL GROWTH FUND -- Seeks long-term capital growth.
TEMPLETON INTERNATIONAL FUND -- Seeks long-term capital growth
MIXED AND SHARED FUNDING -- Shares of the Funds may be sold to our other
separate accounts and our insurance company affiliates or other unaffiliated
insurance companies to serve as the underlying investment for both variable
annuity contracts and variable life insurance policies, a practice known as
"mixed and shared funding." As a result, there is a possibility that a material
conflict may arise between the interests of Contract Owners, and of owners of
other contracts whose contract values are allocated to one or more of these
other separate accounts investing in any one of the Funds. In the event of any
such material conflicts, we will consider what action may be appropriate,
including removing the Fund from the Separate Account or replacing the Fund with
another underlying fund. There are certain risks associated with mixed and
shared funding, as disclosed in the Funds' prospectus.
VOTING RIGHTS -- We are the legal owners of all Fund shares held in the Separate
Account and we have the right to vote at the Fund's shareholder meetings. To the
extent required by federal securities laws or regulations, we will:
- - Notify you of any Fund shareholders' meeting if the shares held for your
Contract may be voted.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 15
- --------------------------------------------------------------------------------
- - Send proxy materials and a form of instructions that you can use to tell us
how to vote the Fund shares held for your Contract.
- - Arrange for the handling and tallying of proxies received from Contract
Owners.
- - Vote all Fund shares attributable to your Contract according to instructions
received from you, and
- - Vote all Fund shares for which no voting instructions are received in the same
proportion as shares for which instructions have been received.
If any federal securities laws or regulations, or their present interpretation,
change to permit us to vote Fund shares on our own, we may decide to do so. You
may attend any Shareholder Meeting at which shares held for your Contract may be
voted. After we begin to make Annuity Payouts to you, the number of votes you
have will decrease.
SUBSTITUTIONS, ADDITIONS, OR DELETIONS OF FUNDS -- We reserve the right, subject
to any applicable law, to make certain changes to the Funds offered under Your
Contract. We may, in our sole discretion, establish new Funds. New Funds will be
made available to existing Contract Owners as we determine appropriate. We may
also close one or more Funds to additional Payments or transfers from existing
Sub-Accounts.
We reserve the right to eliminate the shares of any of the Funds for any reason
and to substitute shares of another registered investment company for the shares
of any Fund already purchased or to be purchased in the future by the Separate
Account. To the extent required by the Investment Company Act of 1940 (the "1940
Act"), substitutions of shares attributable to your interest in a Fund will not
be made until we have the approval of the Commission and we have notified you of
the change.
In the event of any substitution or change, we may, by appropriate endorsement,
make any changes in the Contract necessary or appropriate to reflect the
substitution or change. If we decide that it is in the best interest of the
Contract Owners, the Separate Account may be operated as a management company
under the 1940 Act or any other form permitted by law, may be de-registered
under the 1940 Act in the event such registration is no longer required, or may
be combined with one or more other Separate Accounts.
THE FIXED ACCUMULATION FEATURES
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IMPORTANT INFORMATION YOU SHOULD KNOW: THIS PORTION OF THE PROSPECTUS RELATING
TO THE FIXED ACCUMULATION FEATURE IS NOT REGISTERED UNDER THE SECURITIES ACT OF
1933 ("1933 ACT") AND THE FIXED ACCUMULATION FEATURE IS NOT REGISTERED AS AN
INVESTMENT COMPANY UNDER THE 1940 ACT. THE FIXED ACCUMULATION FEATURE OR ANY OF
ITS INTERESTS ARE NOT SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT
OR THE 1940 ACT, AND THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
REVIEWED THE DISCLOSURE REGARDING THE FIXED ACCUMULATION FEATURE. THE FOLLOWING
DISCLOSURE ABOUT THE FIXED ACCUMULATION FEATURE MAY BE SUBJECT TO CERTAIN
GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING THE
ACCURACY AND COMPLETENESS OF DISCLOSURE.
Premium Payments, Payment Enhancements and Contract Values allocated to the
Fixed Accumulation Feature become a part of our General Account assets. We
invest the assets of the General Account according to the laws governing the
investments of insurance company General Accounts.
Currently, we guarantee that we will credit interest at a rate of not less than
3% per year, compounded annually, to amounts you allocate to the Fixed
Accumulation Feature. We reserve the right to change the rate subject only to
applicable state insurance law. We may credit interest at a rate in excess of 3%
per year. We will periodically publish the Fixed Accumulation Feature interest
rates currently in effect. There is no specific formula for determining interest
rates. Some of the factors that we may consider in determining whether to credit
excess interest are; general economic trends, rates of return currently
available and anticipated on our investments, regulatory and tax requirements
and competitive factors. We will account for any deductions, Surrenders or
transfers from the Fixed Accumulation Feature on a "first-in first-out" basis.
IMPORTANT: ANY INTEREST CREDITED TO AMOUNTS YOU ALLOCATE TO THE FIXED
ACCUMULATION FEATURE IN EXCESS OF 3% PER YEAR WILL BE DETERMINED AT OUR SOLE
DISCRETION. YOU ASSUME THE RISK THAT INTEREST CREDITED TO THE FIXED ACCUMULATION
FEATURE MAY NOT EXCEED THE MINIMUM GUARANTEE OF 3% FOR ANY GIVEN YEAR.
From time to time, we may credit increased interest rates under certain programs
established in our sole discretion.
DOLLAR COST AVERAGING PLUS ("DCA PLUS") PROGRAMS -- Currently, you may enroll in
a special pre-authorized transfer program known as our DCA Plus Program (the
"Program"). Under this Program, Contract Owners who enroll may allocate a
minimum of $5,000 of their Premium Payment into the Program (we may allow a
lower minimum Premium Payment for qualified plan transfers or rollovers,
including IRAs) and pre-authorize transfers to any of the Sub-Accounts under
either the 6-Month Transfer Program or 12-Month Transfer Program. The 6-Month
Transfer Program and the 12-Month Transfer Program will generally have different
credited interest rates. Under the 6-Month Transfer Program, the interest rate
can accrue up to 6 months and all Premium Payments and accrued interest must be
transferred from the Program to the selected Sub-Accounts in 3 to 6 months.
Under the 12-Month Transfer Program, the interest rate can accrue up to 12
months and all Premium Payments and accrued interest must be transferred to the
selected Sub-Accounts in 7 to 12 months. This will be accomplished by
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16 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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monthly transfers for the period selected and a final transfer of the entire
amount remaining in the Program.
The pre-authorized transfers will begin within 15 days of receipt of the Program
payment provided we receive complete enrollment instructions. If we do not
receive complete Program enrollment instructions within 15 days of receipt of
the initial Program payment, the Program will be voided and the entire balance
in the Program will be transferred to the Accounts designated by you. If you do
not designate an Account, you will receive the Fixed Accumulation Feature's
current effective interest rate. Any subsequent payments we receive within the
Program period selected will be allocated to the Sub-Accounts over the remainder
of that Program transfer period.
You may elect to terminate the pre-authorized transfers by calling or writing us
of your intent to cancel enrollment in the Program. Upon cancellation, you will
no longer receive the Program interest rate and unless we receive instructions
to the contrary, the amounts remaining in the Program may accrue the interest
rate currently in effect for the Fixed Accumulation Feature.
We reserve the right to discontinue, modify or amend the Program or any other
interest rate program we establish. Any change to the Program will not affect
Contract Owners currently enrolled in the Program. This Program may not be
available in all states; please contact us to determine if it is available in
your state.
You may only have one DCA program in place at one time. There is no charge for
Dollar Cost Averaging.
THE CONTRACT
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PURCHASES AND CONTRACT VALUE
WHAT TYPES OF CONTRACTS ARE AVAILABLE?
The Contract is an individual or group tax-deferred variable annuity contract.
It is designed for retirement planning purposes and may be purchased by any
individual, group or trust, including:
- - Any trustee or custodian for a retirement plan qualified under Sections 401(a)
or 403(a) of the Code;
- - Annuity purchase plans adopted by public school systems and certain tax-exempt
organizations according to Section 403(b) of the Code;
- - Individual Retirement Annuities adopted according to Section 408 of the Code;
- - Employee pension plans established for employees by a state, a political
subdivision of a state, or an agency of either a state or a political
subdivision of a state, and
- - Certain eligible deferred compensation plans as defined in Section 457 of the
Code.
The examples above represent Qualified Contracts, as defined by the Code. In
addition, individuals and trusts can also purchase Contracts that are not part
of a tax qualified retirement plan. These are known as Non-Qualified Contracts.
HOW DO I PURCHASE A CONTRACT?
You may purchase a Contract by completing and submitting an application or an
order request along with an initial Premium Payment. For most Contracts, the
minimum Premium Payment is $10,000. For additional Premium Payments, the minimum
Premium Payment is $500. Under certain situations, we may allow smaller Premium
Payments, for example, if you enroll in our InvestEase-Registered Trademark-
Program or are part of certain tax qualified retirement plans. Prior approval is
required for Premium Payments of $1,000,000 or more. In Maryland, Massachusetts,
Oregon and Alabama, Premium Payments may only be made during the first Contract
Year.
You and your Annuitant must not be older than age 85 on the date that your
Contract is issued. You must be of legal age in the state where the Contract is
being purchased or a guardian must act on your behalf.
HOW ARE PREMIUM PAYMENTS APPLIED TO MY CONTRACT?
Your initial Premium Payment will be invested within two Valuation Days of our
receipt of a properly completed application or an order request and the Premium
Payment. If we receive your subsequent Premium Payment before the close of the
New York Stock Exchange, it will be priced on the same Valuation Day. If we
receive your Premium Payment after the close of the New York Stock Exchange, it
will be invested on the next Valuation Day. If we receive your Premium Payment
on a Non-Valuation Day, the amount will be invested on the next Valuation Day.
Unless we receive new instructions, we will invest the Premium Payment based on
your last allocation instructions. We will send you a confirmation when we
invest your Premium Payment.
If the request or other information accompanying the Premium Payment is
incomplete when received, we will hold the money in a non-interest bearing
account for up to five Valuation Days while we try to obtain complete
information. If we cannot obtain the information within five Valuation Days, we
will either return the Premium Payment and explain why the Premium Payment could
not be processed or keep the Premium Payment if you authorize us to keep it
until you provide the necessary information.
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 17
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WHAT ARE PAYMENT ENHANCEMENTS?
Each time you make a Premium Payment to your Contract, Hartford will credit your
Contract Value with a Payment Enhancement. The Payment Enhancement is based on
your cumulative Premium Payments and is equal to:
x 3% of the Premium Payment if your cumulative Premium Payments are less than
$50,000
x 4% of the Premium Payment if your cumulative Premium Payments are $50,000 or
more
If you make a subsequent Premium Payment that increases your cumulative Premium
Payments to $50,000 or more, Hartford will credit an additional Payment
Enhancement to your Contract Value equal to 1% of your prior Premium Payments.
The Payment Enhancements will be allocated to the same Accounts and in the same
proportion as your Premium Payment.
DO I ALWAYS GET TO KEEP MY PAYMENT ENHANCEMENTS?
You won't always get to keep the Payment Enhancements credited to your Contract
Value. Hartford will take back or "recapture" some or all of the Payment
Enhancements under certain circumstances:
- - Hartford will take back the Payment Enhancements we credit to your Contract
Value if you cancel your Contract during the "Right to Examine" period
described in your Contract.
- - Hartford will deduct any Payment Enhancements credited to your Contract Value
in the 24 months prior to the Annuity Calculation Date when we determine the
amount available for Annuity Payouts.
- - Hartford will also exclude any Payment Enhancements credited to your Contract
Value in the 12 months prior to the date we calculate the Death Benefit when
determining the Death Benefit payable.
- - Hartford will deduct all Payment Enhancements credited during a period of
eligible confinement to a hospital, nursing home or other qualified long-term
care facility under the Waiver of Sales Charge Rider if you request a full or
partial Surrender.
DO PAYMENT ENHANCEMENTS ALWAYS BENEFIT ME?
Not all of the time. Hartford issues a variety of variable annuities designed to
meet different retirement planning goals. Some of our variable annuities have no
Payment Enhancement, some have lower mortality and expense risk charges and
still others have no Contingent Deferred Sales Charge. You and your financial
adviser should decide if you may be better off in certain circumstances with one
of our other variable annuities. You and your financial adviser should consider
some of the following factors when determining which annuity is appropriate for
you:
- - The length of time that you plan to continue to own your Contract.
- - The frequency, amount and timing of any partial Surrenders.
- - The amount of your Premium Payments.
- - When you plan to annuitize your Contract.
- - Whether you might experience an event that results in the loss of some or all
of the Payment Enhancements.
We recapture the Payment Enhancements credited in the 24 months prior to the
Annuity Calculation Date, in the 12 months prior to the date we receive notice
of death, and under certain circumstances, if you are confined to a nursing
home. It might not be beneficial to purchase this Annuity if you know that you
will experience an event that will require Hartford to take back these Payment
Enhancements. In addition, although this Annuity's fees and charges are lower
than many annuities that add a "bonus" or Payment Enhancement, the expenses are
higher than some variable annuities without a Payment Enhancement. Over the life
of the Annuity, the Payment Enhancements you receive may be more than offset by
the higher expenses.
CAN I CANCEL MY CONTRACT AFTER I PURCHASE IT?
We want you to be satisfied with the Contract you have purchased. We urge you to
closely examine its provisions. If for any reason you are not satisfied with
your Contract, simply return it within ten days after you receive it with a
written request for cancellation that indicates your tax-withholding
instructions. In some states, you may be allowed more time to cancel your
Contract. We will not deduct any Contingent Deferred Sales Charges during this
time. We may require additional information, including a signature guarantee,
before we can cancel your Contract.
You bear the investment risk from the time the Contract is issued until we
receive your complete cancellation request.
The amount we pay you upon cancellation depends on the requirements of the state
where you purchased your Contract, the method of purchase, the type of Contract
you purchased and your age. Hartford will not pay you the Payment Enhancements
credited to your Contract Value if you elect to cancel your Contract.
HOW IS THE VALUE OF MY CONTRACT CALCULATED BEFORE THE ANNUITY CALCULATION DATE?
The Contract Value is the sum of all Accounts. There are two things that affect
your Sub-Account value: (1) the number of Accumulation Units and (2) the
Accumulation Unit Value. The Sub-Account value is determined by multiplying the
number of Accumulation Units by the Accumulation Unit Value. Therefore, on any
Valuation Day your Contract Value reflects the investment performance of the
Sub-Accounts and will fluctuate with the performance of the underlying Funds.
When Premium Payments and Payment Enhancements are credited to your
Sub-Accounts, they are converted into Accumulation Units by dividing the sum of
your Premium Payments and Payment Enhancements, minus any Premium Taxes, by the
Accumulation Unit Value for that day. The more Premium Payments you put into
your Contract, the more Accumulation Units you will own. You decrease the number
of Accumulation Units you have by requesting Surrenders, transferring money out
of a
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18 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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Sub-Account, settling a Death Benefit claim or by annuitizing your Contract.
To determine the current Accumulation Unit Value, we take the prior Valuation
Day's Accumulation Unit Value and multiply it by the Net Investment Factor for
the current Valuation Day.
The Net Investment Factor is used to measure the investment performance of a
Sub-Account from one Valuation Day to the next. The Net Investment Factor for
each Sub-Account equals:
- - The net asset value per share of each Fund held in the Sub-Account at the end
of the current Valuation Day divided by
- - The net asset value per share of each Fund held in the Sub-Account at the end
of the prior Valuation Day; minus
- - The daily mortality and expense risk charge and any other applicable charges,
including administrative charges or the Optional Death Benefit Charge,
adjusted for the number of days in the period.
We will send you a statement in each calendar quarter, which tells you how many
Accumulation Units you have, their value and your total Contract Value.
CAN I TRANSFER FROM ONE SUB-ACCOUNT TO ANOTHER?
TRANSFERS BETWEEN SUB-ACCOUNTS -- You may transfer from one Sub-Account to
another before and after the Annuity Commencement Date at no extra charge. Your
transfer request will be processed on the day that it is received as long as it
is received on a Valuation Day before the close of the New York Stock Exchange.
Otherwise, your request will be processed on the following Valuation Day. We
will send you a confirmation when we process your transfer. You are responsible
for verifying transfer confirmations and promptly advising us of any errors
within 30 days of receiving the confirmation.
SUB-ACCOUNT TRANSFER RESTRICTIONS -- We reserve the right to limit the number of
transfers to 12 per Contract Year, with no transfers occurring on consecutive
Valuation Days. We also have the right to restrict transfers if we believe that
the transfers could have an adverse effect on other Contract Owners. In all
states except Florida, Maryland and Oregon, we may:
- - Require a minimum time period between each transfer,
- - Limit the dollar amount that may be transferred on any one Valuation Day, and
- - Not accept transfer requests from an agent acting under a power of attorney
for more than one Contract Owner.
We also have a restriction in place that involves individuals who act under a
power of attorney for multiple Contract Owners. If the value of the Contract
Owners' Accounts add up to more than $2 million, we will not accept transfer
instructions from the power of attorney unless the power of attorney has entered
into a Third Party Transfer Services Agreement with us.
Some states may have different restrictions.
FIXED ACCUMULATION FEATURE TRANSFERS -- During each Contract Year, you may make
transfers out of the Fixed Accumulation Feature to Sub-Accounts. All transfer
allocations must be in whole numbers (e.g., 1%). You may transfer either:
- - 30% of your total amount in the Fixed Accumulation Feature, or
- - An amount equal to the largest previous transfer.
These transfer limits do not include transfers done through Dollar Cost
Averaging or the DCA Plus Program.
If your interest rate renews at a rate at least 1% lower than your prior
interest rate, you may transfer an amount equal to up to 100% of the amount to
be invested at the renewal rate. You must make this transfer request within 60
days of being notified of the renewal rate.
FIXED ACCUMULATION FEATURE TRANSFER RESTRICTIONS -- We reserve the right to
defer transfers from the Fixed Accumulation Feature for up to 6 months from the
date of your request. After any transfer, you must wait six months before moving
Sub-Account Values back to the Fixed Accumulation Feature.
TELEPHONE TRANSFERS -- In most states, you can make transfers by calling us at
(800) 862-6668. Hartford, our agents or our affiliates are not responsible for
losses resulting from telephone requests that we believe are genuine. We will
use reasonable procedures to confirm that telephone instructions are genuine,
including requiring that callers provide certain identification information and
recording all telephone transfer instructions. We reserve the right to suspend,
modify, or terminate telephone transfer privileges at any time.
POWER OF ATTORNEY -- You may authorize another person to make transfers on your
behalf by submitting a completed Power of Attorney form. Once we have the
completed form on file, we will accept transfer instructions, subject to our
transfer restrictions, from your designated third party until we receive new
instructions in writing from you. You will not be able to make transfers or
other changes to your Contract if you have authorized someone else to act under
a power of attorney.
CHARGES AND FEES
There are 6 charges and fees associated with the Contract and The Optional Death
Benefit Charge:
1. THE CONTINGENT DEFERRED SALES CHARGE
The Contingent Deferred Sales Charge covers some of the expenses relating to the
sale and distribution of the Contract, including commissions paid to registered
representatives and the cost of preparing sales literature and other promotional
activities.
We assess a Contingent Deferred Sales Charge when you request a full or partial
Surrender. The percentage of the Contingent Deferred Sales Charge is based on
how long your Premium Payments have been in the Contract. Each Premium Payment
has its own Contingent Deferred Sales Charge schedule. Premium Payments are
Surrendered in the order in which they
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 19
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were received. The longer you leave your Premium Payments in the Contract, the
lower the Contingent Deferred Sales Charge will be when you Surrender. The
Contingent Deferred Sales Charge assessed will not exceed the total amount of
the Premium Payments.
The Contingent Deferred Sales Charge is a percentage of the amount Surrendered
and is equal to:
<TABLE>
<CAPTION>
NUMBER OF YEARS FROM CONTINGENT DEFERRED
PREMIUM PAYMENT SALES CHARGE
<S> <C>
- -----------------------------------------
1 8%
- -----------------------------------------
2 8%
- -----------------------------------------
3 8%
- -----------------------------------------
4 8%
- -----------------------------------------
5 7%
- -----------------------------------------
6 6%
- -----------------------------------------
7 5%
- -----------------------------------------
8 or more 0%
- -----------------------------------------
</TABLE>
________________________________________________________________________________
For example, you made an initial Premium Payment of $10,000 five years ago and
an additional Premium Payment of $20,000 one year ago. If you request a partial
withdrawal of $15,000 and you have not taken your Annual Withdrawal Amount for
the year, we will deduct a Contingent Deferred Sales Charge as follows:
- - Hartford will Surrender the Annual Withdrawal Amount which is equal to 10% of
your total Premium Payments or $3,000, without charging a Contingent Deferred
Sales Charge.
- - We will then Surrender the Premium Payments that have been in the Annuity the
longest.
- - That means we would Surrender the entire $10,000 initial Premium Payment and
deduct a Contingent Deferred Sales Charge of 7% on that amount or $700.00.
- - The remaining $2,000 will come from the additional Premium Payment made one
year ago and we will deduct a Contingent Deferred Sales Charge of 8% of the
$2,000 or $160.00.
- - Your total Contingent Deferred Sales Charge is $860.00
If you have any questions about these charges, please contact your financial
advisor or Hartford.
________________________________________________________________________________
THE FOLLOWING SURRENDERS ARE NOT SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE:
- - ANNUAL WITHDRAWAL AMOUNT -- During the first seven Contract Years, you may,
each Contract Year, take partial Surrenders up to 10% of the total Premium
Payments. If you do not take 10% one year, you may not take more than 10% the
next year. These amounts are different for Contracts issued to a Charitable
Remainder Trust.
- - SURRENDERS MADE FROM PREMIUM PAYMENTS AFTER THE SEVENTH CONTRACT YEAR -- After
the seventh Contract Year, you may take the total of: (a) all of your
earnings, (b) all Premium Payments held in your Contract for more than seven
years, (c) Payment Enhancements credited for more than seven years, and
(d) 10% of your Premium Payments made during the last seven years.
UNDER THE FOLLOWING SITUATIONS, THE CONTINGENT DEFERRED SALES CHARGE IS WAIVED:
- - Upon eligible confinement as described in the Waiver of Sales Charge Rider. We
will waive any Contingent Deferred Sales Charge applicable to a partial or
full Surrender if you, the joint owner or the Annuitant, is confined for at
least 180 consecutive calendar days to a: (a) facility recognized as a general
hospital by the proper authority of the state in which it is located; or
(b) facility recognized as a general hospital by the Joint Commission on the
Accreditation of Hospitals; or (c) facility certified by Medicare as a
hospital or long-term care facility; or (d) nursing home licensed by the state
in which it is located and offers the services of a registered nurse 24 hours
a day. If you, the joint owner or the Annuitant is confined when you purchase
the Contract, this waiver is not available. For it to apply, you must:
(a) have owned the Contract continuously since it was issued, (b) provide
written proof of confinement satisfactory to us, and (c) request the Surrender
within 91 calendar days of the last day of confinement. This waiver may not be
available in all states. Please contact your Registered Representative or us
to determine if it is available for you. ONCE YOU ELECT THIS WAIVER, HARTFORD
WILL NOT ACCEPT ANY SUBSEQUENT PREMIUM PAYMENTS. IN ADDITION, IF YOU REQUEST A
FULL OR PARTIAL SURRENDER DURING CONFINEMENT, WE WILL DEDUCT FROM YOUR
CONTRACT VALUE ANY PAYMENT ENHANCEMENTS CREDITED DURING THE TIME YOU WERE
CONFINED.
- - For Required Minimum Distributions. This allows Annuitants who are age 70 1/2
or older, with a Contract held under an Individual Retirement Account or
403(b) plan, to Surrender an amount equal to the Required Minimum Distribution
for the Contract without a Contingent Deferred Sales Charge. All requests for
Required Minimum Distributions must be in writing.
THE FOLLOWING SITUATIONS ARE NOT SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE:
- - Upon death of the Annuitant or Contract Owner. No Contingent Deferred Sales
Charge will be deducted if the Annuitant or Contract Owner dies, unless the
Contract Owner is not a natural person (e.g. a trust).
- - Upon the commencement of Annuity Payouts. The Contingent Deferred Sales Charge
is not deducted when we begin to make Annuity Payouts. We will charge a
Contingent Deferred Sales Charge if the Contract is fully or partially
Surrendered during the Contingent Deferred Sales Charge period under an
Annuity Payout Option which allows Surrenders.
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20 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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- - Upon cancellation during the Right to Cancel Period.
2. MORTALITY AND EXPENSE RISK CHARGE
For assuming mortality and expense risks under the Contract, we deduct a daily
charge at an annual rate of 1.50% of Sub-Account Value (estimated at 0.95% for
mortality and 0.55% for expenses). The mortality and expense risk charge is
broken into charges for mortality risks and for an expense risk:
- - MORTALITY RISK -- There are two types of mortality risks that we assume, those
made while your Premium Payments are accumulating and those made once Annuity
Payouts have begun.
During the period your Premium Payments are accumulating, we are required to
cover any difference between the Death Benefit paid and the Surrender Value.
These differences may occur during periods of declining value or in periods
where the Contingent Deferred Sales Charges would have been applicable. The
risk that we bear during this period is that actual mortality rates, in
aggregate, may exceed expected mortality rates.
Once Annuity Payouts have begun, we may be required to make Annuity Payouts as
long as the Annuitant is living, regardless of how long the Annuitant lives.
We would be required to make these payments if the Payout Option chosen is the
Life Annuity, Life Annuity With Payments for a Period Certain or Joint and
Last Survivor Life Annuity Payout Option. The risk that we bear during this
period is that the actual mortality rates, in aggregate, may be lower than the
expected mortality rates.
- - EXPENSE RISK -- We also bear an expense risk that the Contingent Deferred
Sales Charges and the Annual Maintenance Fee collected before the Annuity
Commencement Date may not be enough to cover the actual cost of selling,
distributing and administering the Contract.
Although variable Annuity Payouts will fluctuate with the performance of the
underlying Fund selected, your Annuity Payouts will NOT be affected by (a) the
actual mortality experience of our Annuitants, or (b) our actual expenses if
they are greater than the deductions stated in the Contract. Because we cannot
be certain how long our Annuitants will live, we charge this percentage fee
based on the mortality tables currently in use. The mortality and expense risk
charge enables us to keep our commitments and to pay you as planned.
3. ANNUAL MAINTENANCE FEE
The Annual Maintenance Fee is a flat fee that is deducted from your Contract
Value to reimburse us for expenses relating to the administrative maintenance of
the Contract and the Accounts. The annual $30 charge is deducted on a Contract
Anniversary or when the Contract is fully Surrendered if the Contract Value at
either of those times is less than $50,000. The charge is deducted
proportionately from each Account in which you are invested.
WHEN IS THE ANNUAL MAINTENANCE FEE WAIVED?
We will waive the Annual Maintenance Fee if your Contract Value is $50,000 or
more on your Contract Anniversary or when you fully Surrender your Contract. In
addition, we will waive one Annual Maintenance Fee for Contract Owners who own
more than one Contract with a combined Contract Value between $50,000 and
$100,000. If you have multiple Contracts with a combined Contract Value of
$100,000 or greater, we will waive the Annual Maintenance Fee on all Contracts.
However, we reserve the right to limit the number of waivers to a total of six
Contracts. We also reserve the right to waive the Annual Maintenance Fee under
certain other conditions.
4. ADMINISTRATIVE CHARGE
For administration, we apply a daily charge at the rate of .15% per annum
against all Contract Values held in the Separate Account during both the
accumulation and annuity phases of the Contract. There is not necessarily a
relationship between the amount of administrative charge imposed on a given
Contract and the amount of expenses that may be attributable to that Contract;
expenses may be more or less than the charge.
5. PREMIUM TAXES
We deduct Premium Taxes, if required, by a state or other government agency.
Some states collect the taxes when Premium Payments are made; others collect
when Annuity Payouts begin. Since we pay Premium Taxes when they are required by
applicable law, we may deduct them from your Contract when we pay the taxes,
upon Surrender, or on the Annuity Calculation Date. The Premium Tax rate varies
by state or municipality. Currently, the maximum rate charged by any state is
3.5% and 4% in Puerto Rico.
6. CHARGES AGAINST THE FUNDS
The Separate Account purchases shares of the Funds at net asset value. The net
asset value of the Fund reflects investment advisory fees and administrative
expenses already deducted from the assets of the Funds. These charges are
described in the Funds' prospectuses accompanying this Prospectus.
OPTIONAL DEATH BENEFIT CHARGE -- If you elect the Optional Death Benefit, we
will subtract an additional charge on a daily basis until we begin to make
Annuity Payouts that is equal to an annual charge of .15% of your Contract Value
invested in the Funds.
PAYMENT ENHANCEMENTS -- No specific charges are assessed to cover the expenses
of the Payment Enhancement. Rather, the combination of charges and fees within
the Annuity, including the Mortality and Expense Risk Charge and the Contingent
Deferred Sales Charge, are set at a level sufficient to cover the cost of
offering the enhancements. As with all of its investment products, Hartford
expects to make a profit on the sale of these Annuities, however, there are no
additional profits inherent with the structure of this Annuity when compared
with any other product we offer.
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 21
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WE MAY OFFER, IN OUR DISCRETION, REDUCED FEES AND CHARGES INCLUDING, BUT NOT
LIMITED TO CONTINGENT DEFERRED SALES CHARGES, THE MORTALITY AND EXPENSE RISK
CHARGE, ANY APPLICABLE ADMINISTRATIVE CHARGE, THE OPTIONAL DEATH BENEFIT CHARGE
AND THE ANNUAL MAINTENANCE FEE, FOR CERTAIN CONTRACTS (INCLUDING EMPLOYER
SPONSORED SAVINGS PLANS) WHICH MAY RESULT IN DECREASED COSTS AND EXPENSES.
REDUCTIONS IN THESE FEES AND CHARGES WILL NOT BE UNFAIRLY DISCRIMINATORY AGAINST
ANY CONTRACT OWNER.
DEATH BENEFIT
WHAT IS THE DEATH BENEFIT AND HOW IS IT CALCULATED?
The Death Benefit is the amount we will pay upon the death of the Contract Owner
or the Annuitant. The Death Benefit is calculated when we receive a certified
death certificate or other legal document acceptable to us.
The calculated Death Benefit will remain invested in the same Accounts,
according to the Contract Owner's last instructions until we receive complete
written settlement instructions from the Beneficiary. Therefore, the Death
Benefit amount will fluctuate with the performance of the underlying Funds. When
there is more than one Beneficiary, we will calculate the Accumulation Units for
each Sub-account and the dollar amount for the Fixed Accumulation Feature for
each Beneficiary's portion of the proceeds.
If death occurs before the Annuity Commencement Date, the Death Benefit is the
greatest of:
- - The total Premium Payments you have made to us minus the dollar amount of any
partial Surrenders; or
- - The Contract Value of your Annuity minus any Payment Enhancements credited in
the 12 months prior to the date we calculate the Death Benefit; or
- - The Maximum Anniversary Value, which is described below, minus any Payment
Enhancements credited in the 12 months prior to the date we calculate the
Death Benefit.
The Maximum Anniversary Value is based on a series of calculations on Contract
Anniversaries of Contract Values, Premium Payments, Payment Enhancements and
partial Surrenders. We will calculate an Anniversary Value for each Contract
Anniversary prior to the deceased's 81st birthday or date of death, whichever is
earlier. The Anniversary Value is equal to the Contract Value as of a Contract
Anniversary, increased by the dollar amount of any Premium Payments made and
Payment Enhancements credited since that anniversary and reduced by the dollar
amount of any partial Surrenders since that anniversary. The Maximum Anniversary
Value is equal to the greatest Anniversary Value attained from this series of
calculations.
You may also elect the Optional Death Benefit for an additional fee. The
Optional Death Benefit adds the Interest Accumulation Value to the Death Benefit
calculation.
If you elect the Optional Death Benefit, the Death Benefit prior to the
deceased's date of death or the deceased's 81st birthday, whichever is earlier,
will be the greater of:
- - The total Premium Payments you have made to us minus the dollar amount of any
partial Surrenders; or
- - The Contract Value of your Annuity minus any Payment Enhancements credited in
the 12 months prior to the date we calculate the death benefit; or
- - The Maximum Anniversary Value, minus any Payment Enhancements credited in the
12 months prior to the date we calculate the Death Benefit.
- - The Interest Accumulation Value described below.
The Interest Accumulation Value prior to the deceased's date of death or 81st
birthday, whichever is earlier is equal to:
- - Your Contract Value of your Annuity minus any Payment Enhancements credited in
the 12 months prior to the date we calculate the Death Benefit;
- - Plus any Premium Payments made, but not including any Payment Enhancements
credited;
- - Minus any partial Surrenders;
- - Compounded daily at an annual rate of 5.0%.
If you have taken any partial Surrenders, the Interest Accumulation Value will
be adjusted to reduce the Optional Death Benefit proportionally for any partial
Surrenders.
On or after the deceased's 81st birthday or date of death, the Interest
Accumulation Value will not continue to compound, but will be adjusted to add
any Premium Payments and Payment Enhancements or subtract any partial
Surrenders.
The Optional Death Benefit is limited to a maximum of 200% of any Premium
Payments made less proportional adjustments for any Surrenders..
If you elect the Optional Death Benefit, we will subtract an additional charge
on a daily basis until we begin to make Annuity Payouts that is equal to an
annual charge of .15% of your Contract Value invested in the Funds. The Optional
Death Benefit Rider may not be available if the Contract Owner or Annuitant is
age 75 or older. The Optional Death Benefit Rider is not available in the state
of Washington.
If you elect the Optional Death Benefit after you purchase your Annuity, your
Optional Death Benefit calculation will be:
- - Your Contract Value on the date we add the Optional Death Benefit to your
Annuity;
- - Minus any Payment Enhancements credited on or before we add the Optional Death
Benefit;
- - Plus any Premium Payments made after the Optional Death Benefit is added, but
not including any Payment Enhancements credited;
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22 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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- - Minus any partial surrenders after the Optional Death Benefit is added;
- - Compounded daily at an annual interest rate of 5%.
HOW IS THE DEATH BENEFIT PAID?
The Death Benefit may be taken in one lump sum or under any of the Annuity
Payout Options then being offered by us. On the date we receive complete
instructions from the Beneficiary, we will compute the Death Benefit amount to
be paid out or applied to a selected Annuity Payout Option. When there is more
than one Beneficiary, we will calculate the Death Benefit amount for each
Beneficiary's portion of the proceeds and then pay it out or apply it to a
selected Annuity Payout Option according to each Beneficiary's instructions. If
we receive the complete instructions on a Non-Valuation Day, computations will
take place on the next Valuation Day.
The Beneficiary may elect under the Annuity Proceeds Settlement Option "Death
Benefit Remaining with the Company" to leave proceeds from the Death Benefit
with us for up to five years from the date of the death if the death occurred
before the Annuity Commencement Date. Once we receive a certified death
certificate or other legal documents acceptable to us, the Beneficiary can: (a)
make Sub-Account transfers and (b) take Surrenders without paying Contingent
Deferred Sales Charges.
REQUIRED DISTRIBUTIONS -- If the Contract Owner dies before the Annuity
Commencement Date, the Death Benefit must be distributed within five years after
death. The Beneficiary can choose any Annuity Payout Option that results in
complete Annuity Payout within five years.
If the Contract Owner dies on or after the Annuity Commencement Date under an
Annuity Payout Option with a Death Benefit, any remaining value must be
distributed at least as rapidly as under the payment method being used as of the
Contract Owner's death.
If the Contract Owner is not an individual (e.g. a trust), then the original
Annuitant will be treated as the Contract Owner in the situations described
above and any change in the original Annuitant will be treated as the death of
the Contract Owner.
WHAT SHOULD THE BENEFICIARY CONSIDER?
ALTERNATIVES TO THE REQUIRED DISTRIBUTIONS -- The selection of an Annuity Payout
Option and the timing of the selection will have an impact on the tax treatment
of the Death Benefit. To receive favorable tax treatment, the Annuity Payout
Option selected: (a) cannot extend beyond the Beneficiary's life or life
expectancy, and (b) must begin within one year of the date of death.
If these conditions are NOT met, the Death Benefit will be treated as a lump sum
payment for tax purposes. This sum will be taxable in the year in which it is
considered received.
SPOUSAL CONTRACT CONTINUATION -- If the Beneficiary is the Contract Owner's
spouse, the Beneficiary may elect to continue the Contract as the contract
owner, receive the death benefit in one lump sum payment or elect an Annuity
Payout Option. This spousal continuation is available only once for each
Contract. If the beneficiary elects to continue the Contract, we will adjust the
Contract Value to equal the amount that we would have paid as the Death Benefit.
WHO WILL RECEIVE THE DEATH BENEFIT?
The distribution of the Death Benefit is based on whether death is before, on or
after the Annuity Commencement Date.
IF DEATH OCCURS BEFORE THE ANNUITY COMMENCEMENT DATE:
<TABLE>
<S> <C> <C> <C>
IF THE DECEASED IS THE . . . AND . . . AND . . . THEN THE . . .
Contract Owner There is a surviving joint The Annuitant is living or Joint Contract Owner
Contract Owner deceased receives the Death
Benefit.
Contract Owner There is no surviving The Annuitant is living or Designated Beneficiary
joint Contract Owner deceased receives the Death
Benefit.
Contract Owner There is no surviving The Annuitant is living or Contract Owner's estate
joint Contract Owner and deceased receives the Death
the Beneficiary Benefit.
predeceases the Contract
Owner
Annuitant The Contract Owner is There is no named Death Benefit is paid to
living Contingent Annuitant the Contract Owner and not
the designated
Beneficiary.
Annuitant The Contract Owner is The Contingent Annuitant Contingent Annuitant
living is living becomes the Annuitant, and
the Contract continues.
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 23
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IF DEATH OCCURS ON OR AFTER THE ANNUITY COMMENCEMENT DATE:
<TABLE>
<CAPTION>
<S> <C> <C>
IF THE DECEASED IS THE . . . AND . . . THEN THE . . .
Contract Owner The Annuitant is living Designated Beneficiary becomes the
Contract Owner
Annuitant The Contract Owner is living Contract Owner receives the Death
Benefit.
Annuitant The Annuitant is also the Contract Owner Designated Beneficiary receives the
Death Benefit.
</TABLE>
THESE ARE THE MOST COMMON DEATH BENEFIT SCENARIOS, HOWEVER, THERE ARE OTHERS.
SOME OF THE ANNUITY PAYOUT OPTIONS MAY NOT RESULT IN A DEATH BENEFIT PAYOUT. IF
YOU HAVE QUESTIONS ABOUT THESE AND ANY OTHER SCENARIOS, PLEASE CONTACT YOUR
REGISTERED REPRESENTATIVE OR US.
SURRENDERS
WHAT KINDS OF SURRENDERS ARE AVAILABLE?
FULL SURRENDERS BEFORE THE ANNUITY COMMENCEMENT DATE -- When you Surrender your
Contract before the Annuity Commencement Date, the Surrender Value of the
Contract will be paid in a lump sum. The Surrender Value is the Contract Value
minus any applicable Premium Taxes, Contingent Deferred Sales Charges and the
Annual Maintenance Fee. The Surrender Value may be more or less than the amount
of the Premium Payments made to a Contract.
PARTIAL SURRENDERS BEFORE THE ANNUITY COMMENCEMENT DATE -- You may request a
partial Surrender of Contract Values at any time before the Annuity Commencement
Date. A Contingent Deferred Sales Charge may be deducted. There are two
restrictions:
- - The partial Surrender amount must be at least equal to $100, our current
minimum for partial Surrenders, and
- - The Contract must have a minimum Contract Value of $500 after the Surrender.
We reserve the right to close your Contract and pay the full Surrender Value
if the Contract Value is under the minimum after the Surrender. If your
Contract was issued in Texas, a remaining value of $500 is not required to
continue the Contract if Premium Payments were made in the last two Contract
Years.
FULL SURRENDERS AFTER THE ANNUITY COMMENCEMENT DATE -- You may Surrender your
Contract on or after the Annuity Commencement Date only if you selected the
Payment For a Period Certain Annuity Payout Option. Under this option, we pay
you the Commuted Value of your Contract minus any applicable Contingent Deferred
Sales Charges. The Commuted Value is determined on the day we receive your
written request for Surrender.
PARTIAL SURRENDERS AFTER THE ANNUITY COMMENCEMENT DATE -- Partial Surrenders are
permitted after the Annuity Commencement Date if you select the Life Annuity
with Payments for a Period Certain, Joint and Last Survivor Life Annuity with
Payments for a Period Certain or the Payment for a Period Certain Annuity Payout
Option. You may take partial Surrenders of amounts equal to the Commuted Value
of the payments that we would have made during the "Period Certain" or the
number of years you select under the Annuity Payout Option that we guarantee to
make Annuity Payouts.
To qualify for partial Surrenders under these Annuity Payout Options you must
elect a variable dollar amount Annuity Payout and you must make the Surrender
request during the Period Certain.
Hartford will deduct any applicable Contingent Deferred Sales Charges.
If you elect to take the entire Commuted Value of the Annuity Payouts we would
have made during the Period Certain, Hartford will not make any Annuity Payouts
during the remaining Period Certain. If you elect to take only some of the
Commuted Value of the Annuity Payouts we would have made during the Period
Certain, Hartford will reduce the remaining Annuity Payouts during the remaining
Period Certain. Annuity Payouts that are to be made after the Period Certain is
over will not change.
Please check with your tax adviser because there could be adverse tax
consequences for partial Surrenders after the Annuity Commencement Date.
HOW DO I REQUEST A SURRENDER?
Requests for full Surrenders must be in writing. Requests for partial Surrenders
can be made in writing or by telephone. We will send your money within seven
days of receiving complete instructions. However, we may postpone payment of
Surrenders whenever: (a) the New York Stock Exchange is closed, (b) trading on
the New York Stock Exchange is restricted by the SEC, (b) the SEC permits and
orders postponement or (c) the SEC determines that an emergency exists to
restrict valuation.
WRITTEN REQUESTS -- To request a full or partial Surrender, complete a Surrender
Form or send us a letter, signed by you, stating:
- - the dollar amount that you want to receive, either before or after we withhold
taxes and deduct for any applicable charges,
- - your tax withholding amount or percentage, if any, and
- - your mailing address.
If there are joint Contract Owners, both must authorize all Surrenders. For a
partial Surrender, specify the Accounts that
<PAGE>
24 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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you want your Surrender to come from, otherwise, the Surrender will be taken in
proportion to the value in each Account.
TELEPHONE REQUESTS -- To request a partial Surrender by telephone, we must have
received your completed Telephone Redemption Program Enrollment Form. If there
are joint Contract Owners, both must sign this form. By signing the form, you
authorize us to accept telephone instructions for partial Surrenders from either
Contract Owner. Telephone authorization will remain in effect until we receive a
written cancellation notice from you or your joint Contract Owner, we
discontinue the program; or you are no longer the owner of the Contract. There
are some restrictions on telephone surrenders. Please call us with any
questions.
We may record telephone calls and use other procedures to verify information and
confirm that instructions are genuine. We will not be liable for losses or
expenses arising from telephone instructions reasonably believed to be genuine.
WE MAY MODIFY THE REQUIREMENTS FOR TELEPHONE REDEMPTIONS AT ANY TIME.
Telephone Surrender instructions received before the close of the New York Stock
Exchange will be processed on that Valuation Day. Otherwise, your request will
be processed on the next Valuation Day.
COMPLETING A POWER OF ATTORNEY FORM FOR ANOTHER PERSON TO ACT ON YOUR BEHALF MAY
PREVENT YOU FROM MAKING SURRENDERS VIA TELEPHONE.
WHAT SHOULD BE CONSIDERED ABOUT TAXES?
There are certain tax consequences associated with Surrenders:
PRIOR TO AGE 59 1/2 -- If you make a Surrender prior to age 59 1/2, there may be
adverse tax consequences including a 10% federal income tax penalty on the
taxable portion of the Surrender payment. Surrendering before age 59 1/2 may
also affect the continuing tax-qualified status of some Contracts.
WE DO NOT MONITOR SURRENDER REQUESTS. TO DETERMINE WHETHER A SURRENDER IS
PERMISSIBLE, WITH OR WITHOUT FEDERAL INCOME TAX PENALTY, PLEASE CONSULT YOUR
PERSONAL TAX ADVISER.
MORE THAN ONE CONTRACT ISSUED IN THE SAME CALENDAR YEAR: If you own more than
one contract issued by us or our affiliates in the same calendar year, then
these contracts may be treated as one contract for the purpose of determining
the taxation of distributions prior to the Annuity Commencement Date. Please
consult your tax adviser for additional information.
INTERNAL REVENUE CODE SECTION 403(b) ANNUITIES -- As of December 31, 1988, all
section 403(b) annuities have limits on full and partial Surrenders.
Contributions to your Contract made after December 31, 1988 and any increases in
cash value after December 31, 1988 may not be distributed unless you are:
(a) age 59 1/2, (b) no longer employed, (c) deceased, (d) disabled, or
(e) experiencing a financial hardship (cash value increases may not be
distributed for hardships prior to age 59 1/2). Distributions prior to age
59 1/2 due to financial hardship; unemployment or retirement may still be
subject to a federal income tax penalty of 10%.
WE ENCOURAGE YOU TO CONSULT WITH YOUR TAX ADVISER BEFORE MAKING ANY SURRENDERS.
PLEASE SEE THE "FEDERAL TAX CONSIDERATIONS" SECTION FOR MORE INFORMATION.
ANNUITY PAYOUTS
- --------------------------------------------------------------------------------
THIS SECTION DESCRIBES WHAT HAPPENS WHEN WE BEGIN TO MAKE REGULAR ANNUITY
PAYOUTS FROM YOUR CONTRACT. YOU, AS THE CONTRACT OWNER, SHOULD ANSWER FIVE
QUESTIONS:
- - When do you want Annuity Payouts to begin?
- - What Annuity Payout Option do you want to use?
- - How often do you want to receive Annuity Payouts?
- - What is the Assumed Investment Return?
- - Do you want fixed dollar amount or variable dollar amount Annuity Payouts?
Please check with your financial advisor to select the Annuity Payout Option
that best meets your income needs.
1. WHEN DO YOU WANT ANNUITY PAYOUTS TO BEGIN?
You select an Annuity Commencement Date when you purchase your Contract or at
any time before you begin receiving Annuity Payouts. You may change the Annuity
Commencement Date by notifying us within thirty days prior to the date. The
Annuity Commencement Date cannot be deferred beyond the Annuitant's 90th
birthday or the end of the 10th Contract Year, whichever is later. You may elect
a later Annuity Commencement Date if we allow and subject to the laws and
regulations then in effect. In Maryland, Massachusetts, Oregon and Alabama, the
Annuity Commencement Date cannot be deferred beyond the Annuitant's 90th
birthday or the end of the 12th Contract Year. If this Contract is issued to the
trustee of a Charitable Remainder Trust, the Annuity Commencement Date may be
deferred to the Annuitant's 100th birthday.
The Annuity Calculation Date is when the amount of your Annuity Payout is
determined. This occurs within five Valuation Days before your selected Annuity
Commencement Date. We will deduct any Payment Enhancements credited in the 24
months before the Annuity Calculation Date from your Contract Value when we
determine the amount available for Annuity Payouts.
All Annuity Payouts, regardless of frequency, will occur on the same day of the
month as the Annuity Commencement Date. After the initial payout, if an Annuity
Payout date falls on a Non-Valuation Day, the Annuity Payout is computed on the
prior Valuation Day. If the Annuity Payout date does not occur in a
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 25
- --------------------------------------------------------------------------------
given month due to a leap year or months with more than 28 days (i.e. the 31st),
the Annuity Payout will be computed on the last Valuation Day of the month.
2. WHICH ANNUITY PAYOUT OPTION DO YOU WANT TO USE?
Your Contract contains the Annuity Payout Options described below. The Annuity
Proceeds Settlement Option "Death Benefit Remaining with the Company" is an
option that can be elected by the Beneficiary after the death of the Contract
Owner and is described in the "Death Benefit" section. We may at times offer
other Annuity Payout Options.
LIFE ANNUITY -- We make Annuity Payouts as long as the Annuitant is living. When
the Annuitant dies, we stop making Annuity Payouts. A Payee would receive only
one Annuity Payout if the Annuitant dies after the first payout, two Annuity
Payouts if the Annuitant dies after the second payout, and so forth.
LIFE ANNUITY WITH A CASH REFUND -- We will make Annuity Payouts as long as the
Annuitant is living. When the Annuitant dies the remaining value will be paid to
the Beneficiary. The remaining value is equal to the Contract Value on the
Annuity Calculation Date minus any Premium Tax and the Annuity Payouts already
made. This option is only available for Variable Dollar Amount Annuity Payouts
using the 5% Assumed Investment Return.
LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN -- We make monthly Annuity
Payouts during the lifetime of the Annuitant but Annuity Payouts are at least
guaranteed for the number of years you select with a minimum of 10 years. If, at
the death of the Annuitant, Annuity Payouts have been made for less than the
minimum elected number of months, then the Beneficiary may elect to continue the
remaining Annuity Payouts or receive the present value of the amount of the
remaining Annuity Payouts.
JOINT AND LAST SURVIVOR LIFE ANNUITY -- We will make Annuity Payouts as long as
the Annuitant and Joint Annuitant are living. When one Annuitant dies, we
continue to make Annuity Payouts to the other Annuitant until that second
Annuitant dies. When choosing this option, you must decide what will happen to
the Annuity Payouts; either fixed or variable, after the first Annuitant dies.
You must select Annuity Payouts that:
- - Remain the same at 100%, or
- - Decrease to 66.67%, or
- - Decrease to 50%.
For variable Annuity Payouts, these percentages represent Annuity Units; for
fixed Annuity Payouts, they represent actual dollar amounts. The percentage will
also impact the Annuity Payout amount we pay while both Annuitants are living.
If you pick a lower percentage, your original Annuity Payouts will be higher
while both Annuitants are alive.
JOINT AND LAST SURVIVOR LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN -- We
will make Annuity Payouts as long as either the Annuitant or Joint Annuitant are
living, but we at least guarantee to make Annuity Payouts for a time period you
select, between 10 years and 100 years minus the Annuitant's age. If the
Annuitant and the Joint Annuitant both die before the guaranteed number of years
have passed, then the Beneficiary has two options, (a) continue Annuity Payouts
for the remainder of the guaranteed number of years or (b) receive the Commuted
Value in one sum.
When choosing this option, you must decide what will happen to the Annuity
Payouts after the first Annuitant dies. You must select Annuity Payouts that:
- - Remain the same at 100%, or
- - Decrease to 66.67%, or
- - Decrease to 50%.
For variable dollar amount Annuity Payouts, these percentages represent Annuity
Units. For fixed-dollar amount Annuity Payouts, these percentages represent
actual dollar amounts. The percentage will also impact the Annuity Payout amount
we pay while both Annuitants are living. If you pick a lower percentage, your
original Annuity Payouts will be higher while both Annuitants are alive.
PAYMENT FOR A PERIOD CERTAIN -- We will make Annuity Payouts for the number of
years that you select. You can select any number of years between 10 years and
100 years minus the Annuitant's age. If, at the death of the Annuitant, Annuity
Payouts have been made for less than the time period selected, then the
Beneficiary may elect to continue the remaining Annuity Payouts or receive the
commuted value in one sum.
IMPORTANT INFORMATION:
- - YOU CANNOT SURRENDER YOUR CONTRACT ONCE ANNUITY PAYOUTS BEGIN, UNLESS YOU HAVE
SELECTED THE LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN, JOINT AND LAST
SURVIVOR LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN OR PAYMENT FOR A
PERIOD CERTAIN ANNUITY PAYOUT OPTIONS. A CONTINGENT DEFERRED SALES CHARGE MAY
BE DEDUCTED.
- - For Non-Qualified Contracts, if you do not elect an Annuity Payout Option,
fixed Annuity Payouts will automatically begin on the Annuity Commencement
Date under the Life Annuity with Payments for a 10 Year Period Certain.
- - For Qualified Contracts and Contracts issued in Texas, if you do not elect an
Annuity Payout Option, fixed Annuity Payouts will begin automatically on the
Annuity Commencement Date, under the Life Annuity Payout Option.
3. HOW OFTEN DO YOU WANT THE PAYEE TO RECEIVE ANNUITY PAYOUTS?
In addition to selecting an Annuity Commencement Date and an Annuity Payout
Option, you must also decide how often you want the Payee to receive Annuity
Payouts. You may choose to receive Annuity Payouts:
- - monthly,
- - quarterly,
<PAGE>
26 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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- - semi-annually, or
- - annually.
Once you select a frequency, it cannot be changed. If you do not make a
selection, the Payee will receive monthly Annuity Payouts. You must select a
frequency that results in an Annuity Payout of at least $50. If the amount falls
below $50, we have the right to change the frequency to bring the Annuity Payout
up to at least $50.
4. WHAT IS THE ASSUMED INVESTMENT RETURN?
The Assumed Investment Return ("AIR") is the investment return you select before
we start to make Annuity Payouts. It is a critical assumption for calculating
variable dollar amount Annuity Payouts. The first Annuity Payout will be based
upon the AIR. The remaining Annuity Payouts will fluctuate based on the
performance of the underlying Funds.
Subject to the approval of your State, you can select one of three AIRs: 3%, 5%
or 6%. The greater the AIR, the greater the initial Annuity Payout. A higher AIR
may result in smaller potential growth in the Annuity Payouts. On the other
hand, a lower AIR results in a lower initial Annuity Payout, but future Annuity
Payouts have the potential to be greater.
For example, if the second monthly Annuity Payout is the same as the first, the
sub-accounts earned exactly the same return as the AIR. If the second monthly
Annuity Payout is more than the first, the sub-accounts earned more than the
AIR. If the second Annuity Payout is less than the first, the sub-account earned
less than the AIR.
Level variable dollar amount Annuity Payouts would be produced if the investment
returns remained constant and equal to the AIR. In fact, Annuity Payouts will
vary up or down as the investment rate varies up or down from the AIR.
5. DO YOU WANT ANNUITY PAYOUTS TO BE FIXED-DOLLAR AMOUNT OR VARIABLE-DOLLAR
AMOUNT?
You may choose an Annuity Payout Option with fixed-dollar amounts or
variable-dollar amounts, depending on your income needs.
FIXED-DOLLAR AMOUNT ANNUITY PAYOUTS -- Once a fixed-dollar amount Annuity Payout
begins, you cannot change your selection to receive variable-dollar amount
Annuity Payout. You will receive equal fixed-dollar amount Annuity Payouts
throughout the Annuity Payout period. Fixed-dollar amount Annuity Payout amounts
are determined by multiplying the Contract Value, minus any applicable Premium
Taxes, by an Annuity rate. The annuity rate is set by us and is not less than
the rate specified in the fixed-dollar amount Annuity Payout Option tables in
your Contract.
VARIABLE-DOLLAR AMOUNT ANNUITY PAYOUTS -- A variable-dollar amount Annuity
Payout is based on the investment performance of the Sub-Accounts. The
variable-dollar amount Annuity Payouts may fluctuate with the performance of the
underlying Funds. To begin making variable-dollar amount Annuity Payouts, we
convert the first Annuity Payout amount to a set number of Annuity Units and
then price those units to determine the Annuity Payout amount. The number of
Annuity Units that determines the Annuity Payout amount remains fixed unless you
transfer units between Sub-Accounts.
The dollar amount of the first variable Annuity Payout depends on:
- - the Annuity Payout Option chosen,
- - the Annuitant's attained age and gender (if applicable), and,
- - the applicable annuity purchase rates based on the 1983a Individual Annuity
Mortality table
- - the Assumed Investment Return
The total amount of the first variable-dollar amount Annuity Payout is
determined by dividing the Contract Value minus any applicable Premium Taxes, by
$1,000 and multiplying the result by the payment factor defined in the Contract
for the selected Annuity Payout Option.
The dollar amount of each subsequent variable-dollar amount Annuity Payout is
equal to the total of:
Annuity Units for each Sub-Account multiplied by Annuity Unit Value of each
Sub-Account.
The Annuity Unit Value of each Sub-Account for any Valuation Period is equal to
the Accumulation Unit Value Net Investment Factor for the current Valuation
Period multiplied by the Annuity Unit factor, multiplied by the Annuity Unit
Value for the preceding Valuation Period.
TRANSFER OF ANNUITY UNITS -- After the Annuity Calculation Date, you may
transfer dollar amounts of Annuity Units from one Sub-Account to another. On the
day you make a transfer, the dollar amounts are equal for both Sub-Accounts and
the number of Annuity Units will be different. We will transfer the dollar
amount of your Annuity Units the day we receive your written request if received
before the close of the New York Stock Exchange. Otherwise, the transfer will be
made on the next Valuation Day.
OTHER PROGRAMS AVAILABLE
- --------------------------------------------------------------------------------
INVESTEASE-REGISTERED TRADEMARK- PROGRAM -- InvestEase is an electronic transfer
program that allows you to have money automatically transferred from your
checking or savings account, and invested in your Contract. It is available for
Premium Payments made after your initial Premium Payment. The minimum amount for
each transfer is $50. You can elect to have transfers occur either monthly or
quarterly, and they can be made into any Account available in your Contract.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 27
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AUTOMATIC INCOME PROGRAM -- The Automatic Income Program allows you to Surrender
up to 10% of your total Premium Payments each Contract Year. We can Surrender
from the Accounts you select systematically on a monthly, quarterly, semiannual,
or annual basis. The Automatic Income Program may change based on your
instructions after your seventh Contract Year.
ASSET ALLOCATION PROGRAM -- Asset Allocation is a program that allows you to
choose an allocation for your Sub-Accounts to help you reach your investment
goals. Some Contracts offer model allocations with pre-selected Sub-Accounts and
percentages that have been established for each type of investor - ranging from
conservative to aggressive. Over time, Sub-Account performance may cause your
Contract's allocation percentages to change, but under the Asset Allocation
Program, your Sub-Account allocations are rebalanced to the percentages in the
current model you have chosen. You can transfer freely between allocation models
up to twelve times per year. You can also allocate a portion of your investment
to Sub-Accounts that may not be part of the model. You can only participate in
one asset allocation model at a time.
ASSET REBALANCING -- Asset Rebalancing is another type of asset allocation
program in which you customize your Sub-Accounts to meet your investment needs.
You select the Sub-Accounts and the percentages you want allocated to each Sub-
Account. Based on the frequency you select, your model will automatically
rebalance to the original percentages chosen. You can transfer freely between
models up to twelve times per year. You can also allocate a portion of your
investment to Sub-Accounts that are not part of the model. You can only
participate in one asset rebalancing model at a time.
OTHER INFORMATION
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ASSIGNMENT -- Ownership of this Contract is generally assignable. However, if
the Contract is issued to a tax qualified retirement plan, it is possible that
the ownership of the Contract may not be transferred or assigned. An assignment
of a Non-Qualified Contract may subject the Contract Values or Surrender Value
to income taxes and certain penalty taxes.
CONTRACT MODIFICATION -- The Annuitant may not be changed. However, if the
Annuitant is still living, the Contingent Annuitant may be changed at any time
prior to the Annuity Commencement Date by sending us written notice. We may
modify the Contract, but no modification will effect the amount or term of any
Contract unless a modification is required to conform the Contract to applicable
Federal or State law. No modification will effect the method by which Contract
Values are determined.
HOW CONTRACTS ARE SOLD -- Hartford Securities Distribution Company, Inc. ("HSD")
serves as Principal Underwriter for the securities issued with respect to the
Separate Account. HSD is registered with the Securities and Exchange Commission
under the Securities Exchange Act of 1934 as a Broker-Dealer and is a member of
the National Association of Securities Dealers, Inc. HSD is an affiliate of
ours. Both HSD and Hartford are ultimately controlled by The Hartford Financial
Services Group, Inc. The principal business address of HSD is the same as ours.
The securities will be sold by individuals who represent us as insurance agents
and who are registered representatives of Broker-Dealers that have entered into
distribution agreements with HSD.
Commissions will be paid by Hartford and will not be more than 7% of Premium
Payments. From time to time, Hartford may pay or permit other promotional
incentives, in cash or credit or other compensation.
Broker-dealers or financial institutions are compensated according to a schedule
set forth by HSD and any applicable rules or regulations for variable insurance
compensation. Compensation is generally based on Premium Payments made by
policyholders or Contract Owners. This compensation is usually paid from the
sales charges described in this prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HSD, its affiliates or Hartford may also make compensation
arrangements with certain broker-dealers or financial institutions based on
total sales by the broker-dealer or financial institution of insurance products.
These payments, which may be different for different broker-dealers or financial
institutions, will be made by HSD, its affiliates or Hartford out of their own
assets and will not effect the amounts paid by the policyholders or Contract
Owners to purchase, hold or Surrender variable insurance products.
LEGAL MATTERS AND EXPERTS
There are no material legal proceedings pending to which the Separate Account is
a party.
Counsel with respect to federal laws and regulations applicable to the issue and
sale of the Contracts and with respect to Connecticut law is Lynda Godkin,
Senior Vice President, General Counsel and Corporate Secretary, Hartford Life
and Annuity Insurance Company, P.O. Box 2999, Hartford, Connecticut 06104-2999.
The audited financial statements included in this registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report.
Reference is made to the report on the statutory financial statements of
Hartford Life and Annuity Insurance Company which states the statutory financial
statements are presented in accordance with statutory accounting practices
prescribed or permitted by the National
<PAGE>
28 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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Association of Insurance Commissioners and the State of Connecticut Insurance
Department, and are not presented in accordance with generally accepted
accounting principles. The principal business address of Arthur Andersen LLP is
One Financial Plaza, Hartford, Connecticut 06103.
MORE INFORMATION
You may call your Representative if you have any questions or write or call us
at the address below:
Hartford Life and Annuity Insurance Company
Attn: Investment Product Services
P.O. Box 5085
Hartford, Connecticut 06102-5085.
Telephone: (800) 862-6668 (Contract Owners)
(800) 862-7155 (Registered Representatives)
FEDERAL TAX CONSIDERATIONS
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What are some of the federal tax consequences which affect these Contracts?
A. GENERAL
Since federal tax law is complex, the tax consequences of purchasing this
contract will vary depending on your situation. You may need tax or legal advice
to help you determine whether purchasing this contract is right for you.
Our general discussion of the tax treatment of this contract is based on our
understanding of federal income tax laws as they are currently interpreted. A
detailed description of all federal income tax consequences regarding the
purchase of this contract cannot be made in the prospectus. We also do not
discuss state, municipal or other tax laws that may apply to this contract. For
detailed information, you should consult with a qualified tax adviser familiar
with your situation.
B. TAXATION OF HARTFORD AND THE SEPARATE ACCOUNT
The Separate Account is taxed as part of Hartford which is taxed as a life
insurance company in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Separate Account will not be taxed as a
"regulated investment company" under subchapter M of Chapter 1 of the Code.
Investment income and any realized capital gains on the assets of the Separate
Account are reinvested and are taken into account in determining the value of
the Accumulation and Annuity Units (See "Value of Accumulation Units"). As a
result, such investment income and realized capital gains are automatically
applied to increase reserves under the Contract.
No taxes are due on interest, dividends and short-term or long-term capital
gains earned by the Separate Account with respect to Qualified or Non-Qualified
Contracts.
C. TAXATION OF ANNUITIES -- GENERAL PROVISIONS AFFECTING PURCHASES OTHER THAN
QUALIFIED RETIREMENT PLANS
Section 72 of the Code governs the taxation of annuities in general.
1. NON-NATURAL PERSONS, CORPORATIONS, ETC.
Code Section 72 contains provisions for contract owners which are not natural
persons. Non-natural persons include corporations, trusts, limited liability
companies, partnerships and other types of legal entities. The tax rules for
contracts owned by non-natural persons are different from the rules for
contracts owned by individuals. For example, the annual net increase in the
value of the contract is currently includible in the gross income of a
non-natural person, unless the non-natural person holds the contract as an agent
for a natural person. There are additional exceptions from current inclusion
for:
- - certain annuities held by structured settlement companies,
- - certain annuities held by an employer with respect to a terminated qualified
retirement plan and
- - certain immediate annuities.
A non-natural person which is a tax-exempt entity for federal tax purposes will
not be subject to income tax as a result of this provision.
If the contract owner is a non-natural person, the primary annuitant is treated
as the contract owner in applying mandatory distribution rules. These rules
require that certain distributions be made upon the death of the contract owner.
A change in the primary annuitant is also treated as the death of the contract
owner.
2. OTHER CONTRACT OWNERS (NATURAL PERSONS).
A Contract Owner is not taxed on increases in the value of the Contract until an
amount is received or deemed received, e.g., in the form of a lump sum payment
(full or partial value of a Contract) or as Annuity payments under the
settlement option elected.
The provisions of Section 72 of the Code concerning distributions are summarized
briefly below. Also summarized are special rules affecting distributions from
Contracts obtained in a tax-free exchange for other annuity contracts or life
insurance contracts which were purchased prior to August 14, 1982.
A. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
i. Total premium payments less amounts received which were not includable in
gross income equal the "investment in the contract" under Section 72 of the
Code.
ii. To the extent that the value of the Contract (ignoring any surrender
charges except on a full surrender) exceeds the "investment in the
contract," such excess constitutes the "income on the contract."
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 29
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iii. Any amount received or deemed received prior to the Annuity Commencement
Date (e.g., upon a partial surrender) is deemed to come first from any
such "income on the contract" and then from "investment in the contract,"
and for these purposes such "income on the contract" shall be computed by
reference to any aggregation rule in subparagraph 2.c. below. As a result,
any such amount received or deemed received (1) shall be includable in
gross income to the extent that such amount does not exceed any such
"income on the contract," and (2) shall not be includable in gross income
to the extent that such amount does exceed any such "income on the
contract." If at the time that any amount is received or deemed received
there is no "income on the contract" (e.g., because the gross value of the
Contract does not exceed the "investment in the contract" and no
aggregation rule applies), then such amount received or deemed received
will not be includable in gross income, and will simply reduce the
"investment in the contract."
iv. The receipt of any amount as a loan under the Contract or the assignment or
pledge of any portion of the value of the Contract shall be treated as an
amount received for purposes of this subparagraph a. and the next
subparagraph b.
v. In general, the transfer of the Contract, without full and adequate
consideration, will be treated as an amount received for purposes of this
subparagraph a. and the next subparagraph b. This transfer rule does not
apply, however, to certain transfers of property between spouses or incident
to divorce.
B. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE.
Annuity payments made periodically after the Annuity Commencement Date are
includable in gross income to the extent the payments exceed the amount
determined by the application of the ratio of the "investment in the contract"
to the total amount of the payments to be made after the Annuity Commencement
Date (the "exclusion ratio").
i. When the total of amounts excluded from income by application of the
exclusion ratio is equal to the investment in the contract as of the
Annuity Commencement Date, any additional payments (including surrenders)
will be entirely includable in gross income.
ii. If the annuity payments cease by reason of the death of the Annuitant and,
as of the date of death, the amount of annuity payments excluded from gross
income by the exclusion ratio does not exceed the investment in the
contract as of the Annuity Commencement Date, then the remaining portion of
unrecovered investment shall be allowed as a deduction for the last taxable
year of the Annuitant.
iii. Generally, nonperiodic amounts received or deemed received after the
Annuity Commencement Date are not entitled to any exclusion ratio and
shall be fully includable in gross income. However, upon a full surrender
after such date, only the excess of the amount received (after any
surrender charge) over the remaining "investment in the contract" shall be
includable in gross income (except to the extent that the aggregation rule
referred to in the next subparagraph c. may apply).
C. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS.
Contracts issued after October 21, 1988 by the same insurer (or affiliated
insurer) to the same Contract Owner within the same calendar year (other than
certain contracts held in connection with a tax-qualified retirement
arrangement) will be treated as one annuity Contract for the purpose of
determining the taxation of distributions prior to the Annuity Commencement
Date. An annuity contract received in a tax-free exchange for another annuity
contract or life insurance contract may be treated as a new Contract for this
purpose. Hartford believes that for any annuity subject to such aggregation, the
values under the Contracts and the investment in the contracts will be added
together to determine the taxation under subparagraph 2.a., above, of amounts
received or deemed received prior to the Annuity Commencement Date. Withdrawals
will first be treated as withdrawals of income until all of the income from all
such Contracts is withdrawn. As of the date of this Prospectus, there are no
regulations interpreting this provision.
D. 10% PENALTY TAX -- APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY
PAYMENTS.
i. If any amount is received or deemed received on the Contract (before or
after the Annuity Commencement Date), the Code applies a penalty tax equal
to ten percent of the portion of the amount includable in gross income,
unless an exception applies.
ii. The 10% penalty tax will not apply to the following distributions
(exceptions vary based upon the precise plan involved):
1. Distributions made on or after the date the recipient has attained the
age of 59 1/2.
2. Distributions made on or after the death of the holder or where the
holder is not an individual, the death of the primary annuitant.
3. Distributions attributable to a recipient's becoming disabled.
4. A distribution that is part of a scheduled series of substantially equal
periodic payments (not less frequently than annually) for the life (or
life expectancy) of the recipient (or the joint lives or life
expectancies of the recipient and the recipient's designated
Beneficiary).
5. Distributions of amounts which are allocable to the "investment in the
contract" prior to August 14, 1982 (see next subparagraph e.).
<PAGE>
30 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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E. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-FREE
EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS PURCHASED PRIOR TO
AUGUST 14, 1982.
If the Contract was obtained by a tax-free exchange of a life insurance or
annuity Contract purchased prior to August 14, 1982, then any amount received or
deemed received prior to the Annuity Commencement Date shall be deemed to come
(1) first from the amount of the "investment in the contract" prior to August
14, 1982 ("pre-8/14/82 investment") carried over from the prior Contract,
(2) then from the portion of the "income on the contract" (carried over to, as
well as accumulating in, the successor Contract) that is attributable to such
pre-8/14/82 investment, (3) then from the remaining "income on the contract" and
(4) last from the remaining "investment in the contract." As a result, to the
extent that such amount received or deemed received does not exceed such
pre-8/14/82 investment, such amount is not includable in gross income., In
addition, to the extent that such amount received or deemed received does not
exceed the sum of (a) such pre-8/14/82 investment and (b) the "income on the
contract" attributable thereto, such amount is not subject to the 10% penalty
tax. In all other respects, amounts received or deemed received from such post-
exchange Contracts are generally subject to the rules described in this
subparagraph 3.
F. REQUIRED DISTRIBUTIONS
i. Death of Contract Owner or Primary Annuitant
Subject to the alternative election or spouse beneficiary provisions in ii
or iii below:
1. If any Contract Owner dies on or after the Annuity Commencement Date and
before the entire interest in the Contract has been distributed, the
remaining portion of such interest shall be distributed at least as
rapidly as under the method of distribution being used as of the date of
such death;
2. If any Contract Owner dies before the Annuity Commencement Date, the
entire interest in the Contract will be distributed within 5 years after
such death; and
3. If the Contract Owner is not an individual, then for purposes of 1. or
2. above, the primary annuitant under the Contract shall be treated as
the Contract Owner, and any change in the primary annuitant shall be
treated as the death of the Contract Owner. The primary annuitant is the
individual, the events in the life of whom are of primary importance in
affecting the timing or amount of the payout under the Contract.
ii. Alternative Election to Satisfy Distribution Requirements
If any portion of the interest of a Contract Owner described in i. above is
payable to or for the benefit of a designated beneficiary, such beneficiary
may elect to have the portion distributed over a period that does not extend
beyond the life or life expectancy of the beneficiary. Distributions must
begin within a year of the Contract Owner's death.
iii. Spouse Beneficiary
If any portion of the interest of a Contract Owner is payable to or for the
benefit of his or her spouse, and the Annuitant or Contingent Annuitant is
living, such spouse shall be treated as the Contract Owner of such portion
for purposes of section i. above. This spousal continuation shall apply only
once for this contract.
3. DIVERSIFICATION REQUIREMENTS.
The Code requires that investments supporting your contract be adequately
diversified. Code Section 817 provides that a variable annuity contract will not
be treated as an annuity contract for any period during which the investments
made by the separate account or underlying fund are not adequately diversified.
If a contract is not treated as an annuity contract, the contract owner will be
subject to income tax on annual increases in cash value.
The Treasury Department's diversification regulations require, among other
things, that:
- - no more than 55% of the value of the total assets of the segregated asset
account underlying a variable contract is represented by any one investment,
- - no more than 70% is represented by any two investments,
- - no more than 80% is represented by any three investments and
- - no more than 90% is represented by any four investments.
In determining whether the diversification standards are met, all securities of
the same issuer, all interests in the same real property project, and all
interests in the same commodity are each treated as a single investment. In the
case of government securities, each government agency or instrumentality is
treated as a separate issuer.
A separate account must be in compliance with the diversification standards on
the last day of each calendar quarter or within 30 days after the quarter ends.
If an insurance company inadvertently fails to meet the diversification
requirements, the company may still comply within a reasonable period and avoid
the taxation of contract income on an ongoing basis. However, either the company
or the contract owner must agree to pay the tax due for the period during which
the diversification requirements were not met.
We monitor the diversification of investments in the separate accounts and test
for diversification as required by the Code. We intend to administer all
contracts subject to the diversification requirements in a manner that will
maintain adequate diversification.
4. OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT.
In order for a variable annuity contract to qualify for tax deferral, assets in
the separate accounts supporting the contract must be considered to be owned by
the insurance company and not by the contract owner. It is unclear under what
circumstances an investor is considered to have enough control over the assets
in
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 31
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the separate account to be considered the owner of the assets for tax purposes.
The IRS has issued several rulings discussing investor control. These rulings
say that certain incidents of ownership by the contract owner, such as the
ability to select and control investments in a separate account, will cause the
contract owner to be treated as the owner of the assets for tax purposes.
In its explanation of the diversification regulations, the Treasury Department
recognized that the temporary regulations "do not provide guidance concerning
the circumstances in which investor control of the investments of a segregated
asset account may cause the investor, rather than the insurance company, to be
treated as the owner of the assets in the account." The explanation further
indicates that "the temporary regulations provide that in appropriate cases a
segregated asset account may include multiple sub-accounts, but do not specify
the extent to which policyholders may direct their investments to particular
sub-accounts without being treated as the owners of the underlying assets.
Guidance on this and other issues will be provided in regulations or revenue
rulings under Section 817(d), relating to the definition of variable contract."
The final regulations issued under Section 817 did not provide guidance
regarding investor control, and as of the date of this prospectus, guidance has
yet to be issued. We do not know if additional guidance will be issued. If
guidance is issued, we do not know if it will have a retroactive effect.
Due to the lack of specific guidance on investor control, there is some
uncertainty about when a contract owner is considered the owner of the assets
for tax purposes. We reserve the right to modify the contract, as necessary, to
prevent you from being considered the owner of assets in the separate account.
D. FEDERAL INCOME TAX WITHHOLDING
Any portion of a distribution that is (or is deemed to be) current taxable
income to the Contract Owner will be subject to federal income tax withholding
and reporting under the Code. Generally, however, a Contract Owner may elect not
to have income taxes withheld or to have income taxes withheld at a different
rate by filing a completed election form with us. Election forms will be
provided at the time distributions are required.
E. GENERAL PROVISIONS AFFECTING QUALIFIED RETIREMENT PLANS
The Contract may be used for a number of qualified retirement plans. If the
Contract is being purchased with respect to some form of qualified retirement
plan, please refer to Appendix I for information relative to the types of plans
for which it may be used and the general explanation of the tax features of such
plans.
F. ANNUITY PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal income
tax consequences to annuity purchasers that are U.S. citizens or residents.
Purchasers that are not U.S. citizens or residents will generally be subject to
U.S. federal income tax and withholding on annuity distributions at a 30% rate,
unless a lower treaty rate applies. In addition, purchasers may be subject to
state premium tax, other state and/or municipal taxes, and taxes that may be
imposed by the purchaser's country of citizenship or residence. Prospective
purchasers are advised to consult with a qualified tax adviser regarding U.S.,
state, and foreign taxation with respect to an annuity purchase.
G. GENERATION-SKIPPING TRANSFERS
Under certain circumstances, the Internal Revenue Code may impose a "generation
skipping transfer tax" when all or part of an annuity is transferred to, or a
death benefit is paid to, an individual two or more generations younger than the
owner. Federal tax law may require us to deduct the tax from your contract, or
from any applicable payment, and pay it directly to the Internal Revenue
Service.
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32 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
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DESCRIPTION OF HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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SAFEKEEPING OF ASSETS
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INDEPENDENT PUBLIC ACCOUNTANTS
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DISTRIBUTION OF CONTRACTS
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CALCULATION OF YIELD AND RETURN
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PERFORMANCE COMPARISONS
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FINANCIAL STATEMENTS
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</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 33
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APPENDIX I -- INFORMATION REGARDING TAX-QUALIFIED RETIREMENT PLANS
This summary does not attempt to provide more than general information about the
federal income tax rules associated with use of a Contract by a tax-qualified
retirement plan. Because of the complexity of the federal tax rules, owners,
participants and beneficiaries are encouraged to consult their own tax advisors
as to specific tax consequences.
The federal tax rules applicable to owners of Contracts under tax-qualified
retirement plans vary according to the type of plan as well as the terms and
conditions of the plan itself. Contract owners, plan participants and
beneficiaries are cautioned that the rights and benefits of any person may be
controlled by the terms and conditions of the tax-qualified retirement plan
itself, regardless of the terms and conditions of a Contract. We are not bound
by the terms and conditions of such plans to the extent such terms conflict with
a Contract, unless we specifically consent to be bound.
Some tax-qualified retirement plans are subject to distribution and other
requirements that are not incorporated into our administrative procedures.
Contract owners, participants and beneficiaries are responsible for determining
that contributions, distributions and other transactions comply with applicable
law. Tax penalties may apply to transactions with respect to tax-qualified
retirement plans if applicable federal income tax rules and restrictions are not
carefully observed.
We do not currently offer the Contracts in connection with all of the types of
tax-qualified retirement plans discussed below and may not offer the Contracts
for all types of tax-qualified retirement plans in the future.
1. TAX-QUALIFIED PENSION OR PROFIT-SHARING PLANS -- Eligible employers can
establish certain tax-qualified pension and profit-sharing plans under section
401 of the Code. Rules under section 401(k) of the Code govern certain "cash or
deferred arrangements" under such plans. Rules under section 408(k) govern
"simplified employee pensions". Tax-qualified pension and profit-sharing plans
are subject to limitations on the amount that may be contributed, the persons
who may be eligible to participate and the time when distributions must
commence. Employers intending to use the Contracts in connection with
tax-qualified pension or profit-sharing plans should seek competent tax and
other legal advice.
2. TAX SHELTERED ANNUITIES UNDER SECTION 403(B) -- Public schools and certain
types of charitable, educational and scientific organizations, as specified in
section 501(c)(3) of the Code, can purchase tax-sheltered annuity contracts for
their employees. Tax-deferred contributions can be made to tax-sheltered annuity
contracts under section 403(b) of the Code, subject to certain limitations.
Generally, such contributions may not exceed the lesser of $10,000 (indexed) or
20% of the employee's "includable compensation" for such employee's most recent
full year of employment, subject to other adjustments. Special provisions under
the Code may allow some employees to elect a different overall limitation.
Tax-sheltered annuity programs under section 403(b) are subject to a PROHIBITION
AGAINST DISTRIBUTIONS FROM THE CONTRACT ATTRIBUTABLE TO CONTRIBUTIONS MADE
PURSUANT TO A SALARY REDUCTION AGREEMENT, unless such distribution is made:
- - after the participating employee attains age 59 1/2;
- - upon separation from service;
- - upon death or disability; or
- - in the case of hardship (and in the case of hardship, any income attributable
to such contributions may not be distributed).
Generally, the above restrictions do not apply to distributions attributable to
cash values or other amounts held under a section 403(b) contract as of December
31, 1988.
3. DEFERRED COMPENSATION PLANS UNDER SECTION 457 -- A governmental employer or a
tax-exempt employer other than a governmental unit can establish a Deferred
Compensation Plan under section 457 of the Code. For these purposes, a
"governmental employer" is a State, a political subdivision of a State, or an
agency or an instrumentality of a State or political subdivision of a State.
Employees and independent contractors performing services for a governmental or
tax-exempt employer can elect to have contributions made to a Deferred
Compensation Plan of their employer in accordance with the employer's plan and
section 457 of the Code.
Deferred Compensation Plans that meet the requirements of section 457(b) of the
Code are called "eligible" Deferred Compensation Plans. Section 457(b) limits
the amount of contributions that can be made to an eligible Deferred
Compensation Plan on behalf of a participant. Generally, the limitation on
contributions is 33 1/3% of a participant's includable compensation (typically
25% of gross compensation) or, for 1999, $8,000 (indexed), whichever is less.
The plan may provide for additional "catch-up" contributions during the three
taxable years ending before the year in which the participant attains normal
retirement age.
All of the assets and income of an eligible Deferred Compensation Plan
established by a governmental employer after August 20, 1996, must be held in
trust for the exclusive benefit of participants and their beneficiaries. For
this purpose, custodial accounts and certain annuity contracts are treated as
trusts. Eligible Deferred Compensation Plans that were in existence on
August 20, 1996 may be amended to satisfy the trust and exclusive benefit
requirements any time prior to January 1, 1999, and must be amended not later
than that date to continue to receive favorable tax treatment. The requirement
of a trust does not apply to amounts under a Deferred Compensation Plan of a
tax-
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34 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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exempt (non-governmental) employer. In addition, the requirement of a trust does
not apply to amounts under a Deferred Compensation Plan of a governmental
employer if the Deferred Compensation Plan is not an eligible plan within the
meaning of section 457(b) of the Code. In the absence of such a trust, amounts
under the plan will be subject to the claims of the employer's general
creditors.
In general, distributions from an eligible Deferred Compensation Plan are
prohibited under section 457 of the Code unless made after the participating
employee:
- - attains age 70 1/2,
- - separates from service,
- - dies, or
- - suffers an unforeseeable financial emergency as defined in the Code.
Under present federal tax law, amounts accumulated in a Deferred Compensation
Plan under section 457 of the Code cannot be transferred or rolled over on a
tax-deferred basis except for certain transfers to other Deferred Compensation
Plans under section 457 in limited cases.
4. INDIVIDUAL RETIREMENT ANNUITIES ("IRAS") UNDER SECTION 408
TRADITIONAL IRAS. Eligible individuals can establish individual retirement
programs under section 408 of the Code through the purchase of an IRA. Section
408 imposes limits with respect to IRAs, including limits on the amount that may
be contributed to an IRA, the amount of such contributions that may be deducted
from taxable income, the persons who may be eligible to contribute to an IRA,
and the time when distributions commence from an IRA. Distributions from certain
tax-qualified retirement plans may be "rolled-over" to an IRA on a tax-deferred
basis.
SIMPLE IRAS. Eligible employees may establish SIMPLE IRAs in connection with a
SIMPLE IRA plan of an employer under section 408(p) of the Code. Special
rollover rules apply to SIMPLE IRAs. Amounts can be rolled over from one SIMPLE
IRA to another SIMPLE IRA. However, amounts can be rolled over from a SIMPLE IRA
to a Traditional IRA only after two years have expired since the employee first
commenced participation in the employer's SIMPLE IRA plan. Amounts cannot be
rolled over to a SIMPLE IRA from a qualified plan or a Traditional IRA. Hartford
is a non-designated financial institution for purposes of the SIMPLE IRA rules.
ROTH IRAS. Eligible individuals may establish Roth IRAs under section 408A of
the Code. Contributions to a Roth IRA are not deductible. Subject to special
limitations, a Traditional IRA may be converted into a Roth IRA or a
distribution from a Traditional IRA may be rolled over to a Roth IRA. However, a
conversion or a rollover from a Traditional IRA to a Roth IRA is not excludable
from gross income. If certain conditions are met, qualified distributions from a
Roth IRA are tax-free.
5. FEDERAL TAX PENALTIES AND WITHHOLDING -- Distributions from tax-qualified
retirement plans are generally taxed as ordinary income under section 72 of the
Code. Under these rules, a portion of each distribution may be excludable from
income. The excludable amount is the portion of the distribution that bears the
same ratio as the after-tax contributions bear to the expected return.
(a) PENALTY TAX ON EARLY DISTRIBUTIONS Section 72(t) of the Code imposes an
additional penalty tax equal to 10% of the taxable portion of a distribution
from certain tax-qualified retirement plans. However, the 10% penalty tax
does not apply to a distributions that is:
- - Made on or after the date on which the employee reaches age 59 1/2;
- - Made to a beneficiary (or to the estate of the employee) on or after the death
of the employee;
- - Attributable to the employee's becoming disabled (as defined in the Code);
- - Part of a series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the employee or the
joint lives (or joint life expectancies) of the employee and his or her
designated beneficiary;
- - Except in the case of an IRA, made to an employee after separation from
service after reaching age 55; or
- - Not greater than the amount allowable as a deduction to the employee for
eligible medical expenses during the taxable year.
In addition, the 10% penalty tax does not apply to a distribution from an IRA
that is:
- - Made after separation from employment to an unemployed IRA owner for health
insurance premiums, if certain conditions are met;
- - Not in excess of the amount of certain qualifying higher education expenses,
as defined by section 72(t)(7) of the Code; or
- - A qualified first-time homebuyer distribution meeting the requirements
specified at section 72(t)(8) of the Code.
If you are a participant in a SIMPLE IRA plan, you should be aware that the 10%
penalty tax is increased to 25% with respect to non-exempt early distributions
made from your SIMPLE IRA during the first two years following the date you
first commenced participation in any SIMPLE IRA plan of your employer.
(b) MINIMUM DISTRIBUTION PENALTY TAX If the amount distributed is less than the
minimum required distribution for the year, the Participant is subject to a
50% penalty tax on the amount that was not properly distributed.
An individual's interest in a tax-qualified retirement plan generally must be
distributed, or begin to be distributed, not later than the Required Beginning
Date. Generally, the Required Beginning Date is April 1 of the calendar year
following the later of:
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 35
- --------------------------------------------------------------------------------
- - the calendar year in which the individual attains age 70 1/2; or
- - the calendar year in which the individual retires from service with the
employer sponsoring the plan.
The Required Beginning Date for an individual who is a five (5) percent owner
(as defined in the Code), or who is the owner of an IRA, is April 1 of the
calendar year following the calendar year in which the individual attains age
70 1/2.
The entire interest of the Participant must be distributed beginning no later
than the Required Beginning Date over:
- - the life of the Participant or the lives of the Participant and the
Participant's designated beneficiary, or
- - over a period not extending beyond the life expectancy of the Participant or
the joint life expectancy of the Participant and the Participant's designated
beneficiary.
Each annual distribution must equal or exceed a "minimum distribution amount"
which is determined by dividing the account balance by the applicable life
expectancy. This account balance is generally based upon the account value as of
the close of business on the last day of the previous calendar year. In
addition, minimum distribution incidental benefit rules may require a larger
annual distribution.
If an individual dies before reaching his or her Required Beginning Date, the
individual's entire interest must generally be distributed within five years of
the individual's death. However, this rule will be deemed satisfied, if
distributions begin before the close of the calendar year following the
individual's death to a designated beneficiary and distribution is over the life
of such designated beneficiary (or over a period not extending beyond the life
expectancy of the beneficiary). If the beneficiary is the individual's surviving
spouse, distributions may be delayed until the individual would have attained
age 70 1/2.
If an individual dies after reaching his or her Required Beginning Date or after
distributions have commenced, the individual's interest must generally be
distributed at least as rapidly as under the method of distribution in effect at
the time of the individual's death.
(c) WITHHOLDING In general, regular wage withholding rules apply to
distributions from IRAs and plans described in section 457 of the Code.
Periodic distributions from other tax-qualified retirement plans that are
made for a specified period of 10 or more years or for the life or life
expectancy of the participant (or the joint lives or life expectancies of
the participant and beneficiary) are generally subject to federal income tax
withholding as if the recipient were married claiming three exemptions. The
recipient of periodic distributions may generally elect not to have
withholding apply or to have income taxes withheld at a different rate by
providing a completed election form.
Mandatory federal income tax withholding at a flat rate of 20% will generally
apply to other distributions from such other tax-qualified retirement plans
unless such distributions are:
- - the non-taxable portion of the distribution;
- - required minimum distributions; or
- - direct transfer distributions.
Direct transfer distributions are direct payments to an IRA or to another
eligible retirement plan under Code section 401(a)(31).
Certain states require withholding of state taxes when federal income tax is
withheld.
<PAGE>
This form must be completed for all tax-sheltered annuities.
SECTION 403(b)(11) ACKNOWLEDGMENT FORM
The [Product Name] Variable Annuity Contract that you have recently purchased is
subject to certain restrictions imposed by the Tax Reform Act of 1986.
Contributions to the Contract after December 31, 1988 and any increases in cash
value after December 31, 1988 may not be distributed to you unless you have:
a. Attained age 59 1/2,
b. Separated from service,
c. Died, or
d. Become disabled.
Distributions of post December 31, 1988 contributions (excluding any income
thereon) may also be made if you have experienced a financial hardship.
Also, there may be a 10% penalty tax for distributions made prior to age 59 1/2
because of financial hardship or separation from service.
Also, please be aware that your 403(b) Plan may also offer other financial
alternatives other than your annuity. Please refer to your Plan.
Please complete the following and return to:
Hartford Life and Annuity Insurance Company
Investment Product Services
P.O. Box 5085
Hartford, CT 06102-5085
Name of Contract Owner/Participant: ___________________________________________
Address: ______________________________________________________________________
City or Plan/School District: _________________________________________________
Date: _________________________________________________________________________
Contract No: __________________________________________________________________
Signature: ____________________________________________________________________
<PAGE>
To obtain a Statement of Additional Information, please complete the form below
and mail to:
Hartford Life and Annuity Insurance Company
Attn: Investment Product Services
P.O. Box 5085
Hartford, CT 06102-5085
Please send a Statement of Additional Information to me at the following
address:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------
Name
- ------------------------------------------------------------
Address
- ------------------------------------------------------------
City/State Zip
Code
</TABLE>
<PAGE>
PART B
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT SEVEN
HARTFORD LEADERS PLUS VARIABLE ANNUITY
This Statement of Additional Information is not a prospectus. The information
contained herein should be read in conjunction with the prospectus.
To obtain a prospectus, send a written request to Hartford Life Insurance
Company Attn: Investment Product Services, P.O. Box 5085, Hartford, CT
06102-5085.
Date of Prospectus: March 1, 2000.
Date of Statement of Additional Information: March 1, 2000.
333-91921
<PAGE>
-2-
<TABLE>
<CAPTION>
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
<S> <C>
DESCRIPTION OF HARTFORD LIFE AND ANNUITY INSURANCE COMPANY........................ 3
SAFEKEEPING OF ASSETS ............................................................ 3
INDEPENDENT PUBLIC ACCOUNTANTS ................................................... 3
DISTRIBUTION OF CONTRACTS......................................................... 4
CALCULATION OF YIELD AND RETURN................................................... 4
PERFORMANCE RELATED INFORMATION................................................... 6
PERFORMANCE COMPARISONS........................................................... 9
FINANCIAL STATEMENTS .............................................................
</TABLE>
<PAGE>
-3-
DESCRIPTION OF HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
Hartford Life and Annuity Insurance Company is a stock life insurance company
engaged in the business of writing life insurance and annuities, both individual
and group, in all states of the United States, the District of Columbia and
Puerto Rico, except New York. On January 1, 1998, Hartford's name changed from
ITT Hartford Life and Annuity Insurance Company to Hartford Life and Annuity
Insurance Company. We were originally incorporated under the laws of Wisconsin
on January 9, 1956, and subsequently redomiciled to Connecticut. Our offices are
located in Simsbury, Connecticut; however, our mailing address is P.O. Box 2999,
Hartford, CT 06104-2999. We are ultimately controlled by The Hartford Financial
Services Group, Inc., one of the largest financial service providers in the
United States.
<TABLE>
<CAPTION>
HARTFORD'S RATINGS
- ------------------------------------------- ---------------------- -------------- ------------------------------------
Rating Agency Effective Rating Basis of Rating
Date of Rating
- ------------------------------------------- ---------------------- -------------- ------------------------------------
<S> <C> <C> <C>
A.M. Best and Company, Inc. 1/1/99 A+ Financial performance
- ------------------------------------------- ---------------------- -------------- ------------------------------------
Standard & Poor's 6/1/98 AA Insurer financial strength
- ------------------------------------------- ---------------------- -------------- ------------------------------------
Duff & Phelps 12/21/98 AA+ Claims paying ability
- ------------------------------------------- ---------------------- -------------- ------------------------------------
</TABLE>
SAFEKEEPING OF ASSETS
Title to the assets of the Separate Account is held by Hartford. The assets are
kept physically segregated and are held separate and apart from Hartford's
general corporate assets. Records are maintained of all purchases and
redemptions of Fund shares held in each of the Sub-Accounts.
INDEPENDENT PUBLIC ACCOUNTANTS
The audited financial statements included in this registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
Reference is made to the report on the statutory financial statements of
Hartford Life and Annuity Insurance Company which states the statutory financial
statements are presented in accordance with statutory accounting practices
prescribed or permitted by the National Association of Insurance Commissioners
and the State of Connecticut Insurance Department, and are not presented in
accordance with generally accepted accounting principles. The principal business
address of Arthur Andersen LLP is One Financial Plaza, Hartford, Connecticut
06103.
<PAGE>
-4-
DISTRIBUTION OF CONTRACTS
HOW CONTRACTS ARE SOLD
Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account. HSD
is an affiliate of Hartford. Both HSD and Hartford are ultimately controlled by
The Hartford Financial Services Group, Inc. The principal business address of
HSD is the same as that of Hartford.
The securities will be sold by salespersons of HSD who represent Hartford as
insurance and variable annuity agents and who are registered representatives of
Broker-Dealers who have entered into distribution agreements with HSD.
HSD is registered with the Commission under the Securities Exchange Act of 1934
as a Broker-Dealer and is a member of the National Association of Securities
Dealers, Inc.
Commissions will be paid by Hartford and will not be more than 7% of premium
payments. From time to time, Hartford may pay or permit other promotional
incentives, in cash or credit or other compensation.
Broker-dealers or financial institutions are compensated according to a schedule
set forth by HSD and any applicable rules or regulations for variable insurance
compensation. Compensation is generally based on premium payments made by
policyholders or contract owners. This compensation is usually paid from the
sales charges described in the prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HSD, its affiliates or Hartford may also make compensation
arrangements with certain broker-dealers or financial institutions based on
total sales by the broker-dealer or financial institution of insurance products.
These payments, which may be different for different broker-dealers or financial
institutions, will be made by HSD, its affiliates or Hartford out of their own
assets and will not effect the amounts paid by the policyholders or contract
owners to purchase, hold or Surrender variable insurance products.
For the past three years, Hartford has paid no underwriting commissions to HSD
related to the sales of this Contract.
CALCULATION OF YIELD AND RETURN
YIELD OF THE MONEY MARKET HLS SUB-ACCOUNT. The yield of the Money Market Fund
Sub-Account for a seven day period (the "base period") will be computed by
<PAGE>
-5-
determining the "net change in value" (calculated as set forth below) of a
hypothetical account having a balance of one accumulation unit of the
Sub-Account at the beginning of the period, subtracting a hypothetical charge
reflecting deductions from Contract Owner accounts, and dividing the difference
by the value of the account at the beginning of the base period to obtain the
base period return, and then multiplying the base period return by 365/7 with
the resulting yield figure carried to the nearest hundredth of one percent. Net
changes in value of a hypothetical account will include net investment income of
the account (accrued daily dividends as declared by the underlying funds, less
daily expense charges of the account) for the period, but will not include
realized gains or losses or unrealized appreciation or depreciation on the
underlying fund shares.
The effective yield is calculated by compounding the base period return by
adding 1, raising the sum to a power equal to 365/7 and subtracting 1 from the
result, according to the following formula:
365/7
Effective Yield = [(Base Period Return + 1) ] - 1
THE HARTFORD MONEY MARKET FUND SUB-ACCOUNT'S YIELD AND EFFECTIVE YIELD WILL VARY
IN RESPONSE TO FLUCTUATIONS IN INTEREST RATES AND IN THE EXPENSES OF THE
SUB-ACCOUNT. THE CURRENT YIELD AND EFFECTIVE YIELD REFLECT RECURRING CHARGES ON
THE SEPARATE ACCOUNT LEVEL, INCLUDING THE MAXIMUM ANNUAL MAINTENANCE FEE.
<TABLE>
<CAPTION>
Yield and effective yield for the seven day period ending December 31, 1999.
- ---------------------------------------- ------------------------------------- -------------------------------------
SUB-ACCOUNTS YIELD EFFECTIVE YIELD
- ---------------------------------------- ------------------------------------- -------------------------------------
<S> <C> <C>
Hartford Money Market HLS Fund 3.70% 3.76%
- ---------------------------------------- ------------------------------------- -------------------------------------
</TABLE>
YIELDS OF AMERICAN FUNDS BOND AND MFS HIGH INCOME SUB-ACCOUNTS. Yields of the
above Sub-Accounts will be computed by annualizing a recent month's net
investment income, divided by a Fund share's net asset value on the last
trading day of that month. Net changes in the value of a hypothetical account
will assume the change in the underlying mutual fund's "net asset value per
share" for the same period in addition to the daily expense charge assessed,
at the sub-account level for the respective period. The Sub-Accounts' yields
will vary from time to time depending upon market conditions and, the
composition of the underlying funds' portfolios. Yield should also be
considered relative to changes in the value of the Sub-Accounts' shares and
to the relative risks associated with the investment objectives and policies
of the
<PAGE>
-6-
underlying Fund.
THE YIELD REFLECTS RECURRING CHARGES ON THE SEPARATE ACCOUNT LEVEL, INCLUDING
THE ANNUAL MAINTENANCE FEE.
Yield calculations of the Sub-Accounts used for illustration purposes reflect
the interest earned by the Sub-Accounts, less applicable asset charges assessed
against a Contract Owner's account over the base period. Yield quotations based
on a 30 day period were computed by dividing the dividends and interest earned
during the period by the maximum offering price per unit on the last day of the
period, according to the following formula:
Example:
6
Current Yield Formula for the Sub-Account 2[((A-B)/(CD) + 1) - 1]
Where A = Dividends and interest earned during the period.
B = Expenses accrued for the period (net of reimbursements).
C = The average daily number of units outstanding during the
period that were entitled to receive dividends.
D = The maximum offering price per unit on the last day of the
period.
<TABLE>
<CAPTION>
Yield quotation based on a 30 day period ended December 31, 1999.
- ----------------------------------------------------------------------------- --------------------------------------
SUB-ACCOUNTS YIELD
- ----------------------------------------------------------------------------- --------------------------------------
<S> <C>
American Funds Bond Fund N/A
- ----------------------------------------------------------------------------- --------------------------------------
MFS High Income Series N/A
- ----------------------------------------------------------------------------- --------------------------------------
</TABLE>
The yield for the Hartford High Yield Fund is not yet available because the Fund
is new. At any time in the future, yields and total return may be higher or
lower than past yields and there can be no assurance that any historical results
will continue.
The method of calculating yields described above for these Sub-Accounts differs
from the method used by the Sub-Accounts prior to May 1, 1988. The denominator
of the fraction used to calculate yield was previously the average unit value
for the period calculated. That denominator will hereafter be the unit value of
the Sub-Accounts on the last trading day of the period calculated.
CALCULATION OF TOTAL RETURN. Total return is a measure of the change in value
of an investment in a Sub-Account over the period covered and assumes that
the Optional Death Benefit has not been elected. The formula for total return
used herein includes three steps: (1) calculating the value of the
hypothetical initial investment of $1,000 as
<PAGE>
-7-
of the end of the period by multiplying the total number of units owned at the
end of the period by the unit value per unit on the last trading day of the
period; (2) assuming redemption at the end of the period and deducting any
applicable contingent deferred sales charge and (3) dividing this account
value for the hypothetical investor by the initial $1,000 investment and
annualizing the result for periods of less than one year. Total return will
be calculated for one year, five years and ten years or some other relevant
periods if a Sub-Account has not been in existence for at least ten years.
PERFORMANCE RELATED INFORMATION
The Separate Account may advertise certain performance-related information
concerning the Sub-Accounts. Performance information about a Sub-Account is
based on the Sub-Account's past performance only and is no indication of future
performance.
When a Sub-Account advertises its STANDARDIZED TOTAL RETURN, it will usually be
calculated since the inception of the Separate Account for one year, five years,
and ten years or some other relevant periods if the Sub-Account has not been in
existence for at least ten years. Total return is measured by comparing the
value of an investment in the Sub-Account at the beginning of the relevant
period to the value of the investment at the end of the period.
The Separate Account may also advertise NON-STANDARD TOTAL RETURNS THAT PRE-DATE
THE INCEPTION DATE OF THE SEPARATE ACCOUNT. These non-standardized total returns
are calculated by assuming that the Sub-Accounts have been in existence for the
same periods as the underlying Funds and by taking deductions for charges equal
to those currently assessed against the Sub-Accounts. These non-standardized
returns must be accompanied by standardized total returns.
If applicable, the Sub-Accounts may advertise YIELD IN ADDITION TO TOTAL RETURN.
The yield will be computed in the following manner: The net investment income
per unit earned during a recent one month period is divided by the unit value on
the last day of the period. This figure includes the recurring charges at the
Separate Account level including the Annual Maintenance Fee.
The Hartford Money Market HLS Sub-Account may advertise YIELD AND EFFECTIVE
YIELD. The yield of a Sub-Account is based upon the income earned by the
Sub-Account over a seven-day period and then annualized, i.e. the income earned
in the period is assumed to be earned every seven days over a 52-week period and
stated as a percentage of the investment. Effective yield is calculated
similarly but when annualized, the income earned by the investment is assumed to
be reinvested in Sub-Account units and thus compounded in the course of a
52-week period. Yield and effective yield include the recurring charges at the
Separate Account level including the Annual Maintenance Fee.
The Separate Account may also disclose YIELD for periods prior to the date the
Separate Account commenced operations. For these periods, performance
information for the Sub-Accounts will be calculated based on the performance of
the underlying Funds and the assumption that the Sub-Accounts were in existence
for the same periods as those of the underlying Funds, with a level of charges
equal to those currently assessed against the Sub-Accounts. No yield disclosure
for periods prior to the date of the Separate Account will be used without the
yield disclosure for periods as of the date of the inception of the Separate
Account.
We may provide information on various topics to Contract Owners and prospective
Contract Owners in advertising, sales literature or other materials. These
topics may include the relationship between sectors of the economy and the
economy as a whole and its effect on various securities markets, investment
strategies and techniques (such as systematic investing, Dollar Cost Averaging
and asset allocation), the advantages and disadvantages of investing in
tax-deferred and taxable instruments, customer profiles and hypothetical
purchase scenarios, financial management and tax and retirement planning, and
other investment alternatives, including comparisons between the Contract and
the characteristics of and market for such alternatives.
The following are the standardized average annual total return quotations for
the Sub-Accounts:
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD
ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
SUB-ACCOUNT INCEPTION DATE 1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Funds Asset
Allocation Fund 04/01/1999 N/A N/A N/A -8.13%
- --------------------------------------------------------------------------------------------------------------------------------
American Funds Bond Fund 04/01/1999 N/A N/A N/A -10.32%
- --------------------------------------------------------------------------------------------------------------------------------
American Funds Global
Growth Fund 04/01/1999 N/A N/A N/A 42.51%
- --------------------------------------------------------------------------------------------------------------------------------
American Funds Global Small
Capitalization Fund 04/01/1999 N/A N/A N/A 60.42%
- --------------------------------------------------------------------------------------------------------------------------------
American Funds Growth Fund 04/01/1999 N/A N/A N/A 31.19%
- --------------------------------------------------------------------------------------------------------------------------------
American Funds Growth-
Income Fund 04/01/1999 N/A N/A N/A -3.84%
- --------------------------------------------------------------------------------------------------------------------------------
American Funds International
Fund 04/01/1999 N/A N/A N/A 49.60%
- --------------------------------------------------------------------------------------------------------------------------------
American Funds New World Fund 04/01/1999 N/A N/A N/A 6.30%
- --------------------------------------------------------------------------------------------------------------------------------
Franklin Real Estate
Securities Fund 04/01/1999 N/A N/A N/A -13.31%
- --------------------------------------------------------------------------------------------------------------------------------
Franklin Small Cap Fund 04/01/1999 N/A N/A N/A 81.27%
- --------------------------------------------------------------------------------------------------------------------------------
Franklin Strategic Income
Investments 07/01/1999 N/A N/A N/A -9.24%
- --------------------------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS Fund 04/01/1999 N/A N/A N/A -8.58%
- --------------------------------------------------------------------------------------------------------------------------------
MFS Capital Opportunities
Series 04/01/1999 N/A N/A N/A 27.94%
- --------------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Series 04/01/1999 N/A N/A N/A 56.15%
- --------------------------------------------------------------------------------------------------------------------------------
MFS Global Equity Series 05/03/1999 N/A N/A N/A 11.48%
- --------------------------------------------------------------------------------------------------------------------------------
MFS Growth Series 05/03/1999 N/A N/A N/A 27.48%
- --------------------------------------------------------------------------------------------------------------------------------
MFS Growth with Income Series 04/01/1999 N/A N/A N/A -6.81%
- --------------------------------------------------------------------------------------------------------------------------------
MFS High Income Series 04/01/1999 N/A N/A N/A -10.90%
- --------------------------------------------------------------------------------------------------------------------------------
MFS New Discovery Series 04/01/1999 N/A N/A N/A 61.65%
- --------------------------------------------------------------------------------------------------------------------------------
MFS Total Return Series 04/01/1999 N/A N/A N/A -9.10%
- --------------------------------------------------------------------------------------------------------------------------------
Mutual Shares Securities Fund 04/01/1999 N/A N/A N/A -1.82%
- --------------------------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund 04/01/1999 N/A N/A N/A 7.63%
- --------------------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets
Equity Fund 04/01/1999 N/A N/A N/A 27.88%
- --------------------------------------------------------------------------------------------------------------------------------
Templeton Global Growth Fund 04/01/1999 N/A N/A N/A 7.47%
- --------------------------------------------------------------------------------------------------------------------------------
Templeton International Fund 04/01/1999 N/A N/A N/A 9.03%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Performance figures above do not reflect any deductions for Optional Death
Benefit charges. Performance would have been lower had the Optional Death
Benefit been available and been chosen.
<PAGE>
-8-
In addition to the standardized total return, the Sub-Account may advertise a
non-standardized total return. This figure will usually be calculated for one
year, five years, and ten years or other periods. Non-standardized total return
is measured in the same manner as the standardized total return described above,
except that the contingent deferred sales charge and the Annual Maintenance Fee
are not deducted and the time periods used to calculate return are based on the
inception date of the underlying Funds. Therefore, non-standardized total return
for a Sub-Account is higher than standardized total return for a Sub-Account.
The following are the non-standardized annualized total return quotations for
the Sub-Accounts:
NON-STANDARDIZED ANNUALIZED TOTAL RETURN THAT PRE-DATE THE INCEPTION
OF THE SEPARATE ACCOUNT FOR THE PERIOD
ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
SUB-ACCOUNT S/A INCEPTION DATE 1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Funds Asset Allocation
Fund 08/01/1989 5.17% 14.79% 10.04% N/A
- -------------------------------------------------------------------------------------------------------------------
American Funds Bond Fund 01/02/1996 0.88% N/A N/A 3.77%
- -------------------------------------------------------------------------------------------------------------------
American Funds Global Growth
Fund 04/30/1997 66.90% N/A N/A 35.80%
- -------------------------------------------------------------------------------------------------------------------
American Funds Global Small
Capitalization Fund 04/30/1998 88.24% N/A N/A 47.18%
- -------------------------------------------------------------------------------------------------------------------
American Funds Growth Fund 02/08/1984 54.70% 30.74% 19.06% N/A
- -------------------------------------------------------------------------------------------------------------------
American Funds Growth-Income
Fund 02/08/1984 9.38% 18.98% 12.45% N/A
- -------------------------------------------------------------------------------------------------------------------
American Funds International
Fund 05/01/1990 73.09% 22.94% N/A 14.55%
- -------------------------------------------------------------------------------------------------------------------
American Funds New World Fund 06/17/1999 N/A N/A N/A 17.30%
- -------------------------------------------------------------------------------------------------------------------
Franklin Real Estate Securities
Fund 01/24/1989 -7.89% 6.21% 7.21% N/A
- -------------------------------------------------------------------------------------------------------------------
Franklin Small Cap Fund 11/01/1995 93.14% N/A N/A 28.18%
- -------------------------------------------------------------------------------------------------------------------
Franklin Strategic Income Fund 07/01/1999 N/A N/A N/A 1.76%
- -------------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS Fund 06/30/1980 3.18% 3.56% 3.38% N/A
- -------------------------------------------------------------------------------------------------------------------
MFS Capital Opportunities Series 08/14/1996 45.03% N/A N/A 30.08%
- -------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Series 07/24/1995 73.83% N/A N/A 34.18%
- -------------------------------------------------------------------------------------------------------------------
MFS Global Equity Series 05/03/1999 N/A N/A N/A 22.48%
- -------------------------------------------------------------------------------------------------------------------
MFS Growth Series 05/03/1999 N/A N/A N/A 38.48%
- -------------------------------------------------------------------------------------------------------------------
MFS Growth with Income Series 10/09/1995 4.94% N/A N/A 19.13%
- -------------------------------------------------------------------------------------------------------------------
MFS High Income Series 07/26/1995 4.70% N/A N/A 6.46%
- -------------------------------------------------------------------------------------------------------------------
MFS New Discovery Series 05/01/1998 70.57% N/A N/A 38.59%
- -------------------------------------------------------------------------------------------------------------------
MFS Total Return Series 01/03/1995 1.37% N/A N/A 13.52%
- -------------------------------------------------------------------------------------------------------------------
Mutual Shares Securities Fund 11/01/1996 11.73% N/A N/A 9.04%
- -------------------------------------------------------------------------------------------------------------------
Templeton Asset Allocation Fund 08/24/1988 21.62% 15.21% 11.25% N/A
- -------------------------------------------------------------------------------------------------------------------
Templeton Developing Markets
Equity Fund 03/15/1994 52.11% 4.97% N/A 3.23%
- -------------------------------------------------------------------------------------------------------------------
Templeton Global Growth Fund 03/15/1994 18.86% 13.49% N/A 11.87%
- -------------------------------------------------------------------------------------------------------------------
Templeton International Fund 05/01/1992 21.21% 15.12% N/A 13.35%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Performance figures above do not reflect any deductions for Optional Death
Benefit charges. Performance would have been lower had the Optional Death
Benefit been available and been chosen.
<PAGE>
-9-
PERFORMANCE COMPARISONS
YIELD AND TOTAL RETURN. Each Sub-Account may from time to time include its total
return in advertisements or in information furnished to present or prospective
shareholders. Each Sub-Account may from time to time include its yield and total
return in advertisements or information furnished to present or prospective
shareholders. Each Sub-Account may from time to time include in advertisements
its total return (and yield in the case of certain Sub-Accounts) the ranking of
those performance figures relative to such figures for groups of other annuities
analyzed by Lipper Analytical Services and Morningstar, Inc. as having the same
investment objectives.
The total return and yield may also be used to compare the performance of the
Sub-Accounts against certain widely acknowledged outside standards or indices
for stock and bond market performance. The Standard & Poor's Composite Index of
500 Stocks (the "S&P 500") is a market value-weighted and unmanaged index
showing the changes in the aggregate market value of 500 stocks relative to the
base period 1941-43. The S&P 500 is composed almost entirely of common stocks of
companies listed on the New York Stock Exchange, although the common stocks of a
few companies listed on the American Stock Exchange or traded over-the-counter
are included. The 500 companies represented include 400 industrial, 60
transportation and 40 financial services concerns. The S&P 500 represents about
80% of the market value of all issues traded on the New York Stock Exchange.
The NASDAQ-OTC Composite Price Index (The "NASDAQ Index") is a market
value-weighted and unmanaged index showing the changes in the aggregate market
value of approximately 3,500 stocks relative to the base measure of 100.00 on
February 5, 1971. The NASDAQ Index is composed entirely of common stocks of
companies traded over-the-counter and often through the National Association of
Securities Dealers Automated Quotations ("NASDAQ") system. Only those
over-the-counter stocks having only one market maker or traded on exchanges are
excluded.
The Morgan Stanley Capital International EAFE Index (the "EAFE Index") is an
<PAGE>
-10-
unmanaged index, which includes over 1,000 companies representing the stock
markets of Europe, Australia, New Zealand, and the Far East. The EAFE Index is
weighted by market capitalization, and therefore, it has a heavy representation
in countries with large stock markets, such as Japan.
The Shearson Lehman Government Bond Index (the "SL Government Index") is a
measure of the market value of all public obligations of the U.S. Treasury; all
publicly issued debt of all agencies of the U.S. Government and all
quasi-federal corporations; and all corporate debt guaranteed by the U.S.
Government. Mortgage-backed securities, flower bonds and foreign targeted issues
are not included in the SL Government Index.
The Shearson Lehman Government/Corporate Bond Index (the "SL
Government/Corporate Index") is a measure of the market value of approximately
5,300 bonds with a face value currently in excess of $1.3 trillion. To be
included in the SL Government/Corporate Index, an issue must have amounts
outstanding in excess of $1 million, have at least one year to maturity and be
rated "Baa" or higher ("investment grade") by a nationally recognized rating
agency.
<PAGE>
SEPARATE ACCOUNT SEVEN
- --------------------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES
DECEMBER 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
HARTFORD AMERICAN FUNDS
MONEY MARKET ASSET AMERICAN FUNDS AMERICAN FUNDS
FUND ALLOCATION BOND GLOBAL GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ -------------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Money Market HLS
Fund, Inc. - Class IA
Shares 4,834,594
Cost $4,834,594
Market Value.............. $4,834,594 -- -- --
Investments in American Funds:
Asset Allocation Fund
Shares 750,527
Cost $11,826,994
Market Value.............. -- $11,302,929 -- --
Bond Fund
Shares 403,982
Cost $3,967,969
Market Value.............. -- -- $3,934,782 --
Global Growth Fund
Shares 577,199
Cost $10,475,370
Market Value.............. -- -- -- $12,357,820
Global Small Capitalization
Fund
Shares 467,904
Cost $7,471,027
Market Value.............. -- -- -- --
Growth Fund
Shares 714,974
Cost $49,188,239
Market Value.............. -- -- -- --
Growth-Income Fund
Shares 1,508,680
Cost $55,632,088
Market Value.............. -- -- -- --
International Fund
Shares 635,091
Cost $14,985,288
Market Value.............. -- -- -- --
New World Fund
Shares 409,985
Cost $4,245,642
Market Value.............. -- -- -- --
Investments in Franklin
Templeton Variable Insurance
Product Trust:
Real Estate Securities Fund
Shares 26,404
Cost $388,845
Market Value.............. -- -- -- --
Small Cap Fund
Shares 128,525
Cost $2,708,869
Market Value.............. -- -- -- --
Franklin Strategic Income
Investment Fund
Shares 90,218
Cost $902,687
Market Value.............. -- -- -- --
Mutual Shares Securities
Fund
Shares 290,756
Cost $3,811,532
Market Value.............. -- -- -- --
Due from Hartford Life
Insurance Company............ -- 108,667 5,554 122,562
Receivable from fund shares
sold......................... 8,193 -- -- --
---------- ----------- ---------- -----------
Total Assets.................. 4,842,787 11,411,596 3,940,336 12,480,382
---------- ----------- ---------- -----------
LIABILITIES:
Due to Hartford Life Insurance
Company...................... 8,112 -- -- --
Payable for fund shares
purchased.................... -- 108,673 5,555 122,564
---------- ----------- ---------- -----------
Total Liabilities............. 8,112 108,673 5,555 122,564
---------- ----------- ---------- -----------
Net Assets (variable annuity
contract liabilities)........ $4,834,675 $11,302,923 $3,934,781 $12,357,818
========== =========== ========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 18
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
AMERICAN FUNDS FRANKLIN
GLOBAL SMALL AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS REAL ESTATE
CAPITALIZATION GROWTH GROWTH-INCOME INTERNATIONAL NEW WORLD SECURITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------- -------------- -------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Money Market HLS
Fund, Inc. - Class IA
Shares 4,834,594
Cost $4,834,594
Market Value.............. -- -- -- -- -- --
Investments in American Funds:
Asset Allocation Fund
Shares 750,527
Cost $11,826,994
Market Value.............. -- -- -- -- -- --
Bond Fund
Shares 403,982
Cost $3,967,969
Market Value.............. -- -- -- -- -- --
Global Growth Fund
Shares 577,199
Cost $10,475,370
Market Value.............. -- -- -- -- -- --
Global Small Capitalization
Fund
Shares 467,904
Cost $7,471,027
Market Value.............. $ 8,122,818 -- -- -- -- --
Growth Fund
Shares 714,974
Cost $49,188,239
Market Value.............. -- $50,455,740 -- -- -- --
Growth-Income Fund
Shares 1,508,680
Cost $55,632,088
Market Value.............. -- -- $49,892,033 -- -- --
International Fund
Shares 635,091
Cost $14,985,288
Market Value.............. -- -- -- $16,975,973 -- --
New World Fund
Shares 409,985
Cost $4,245,642
Market Value.............. -- -- -- -- $4,825,525 --
Investments in Franklin
Templeton Variable Insurance
Product Trust:
Real Estate Securities Fund
Shares 26,404
Cost $388,845
Market Value.............. -- -- -- -- -- $392,897
Small Cap Fund
Shares 128,525
Cost $2,708,869
Market Value.............. -- -- -- -- -- --
Franklin Strategic Income
Investment Fund
Shares 90,218
Cost $902,687
Market Value.............. -- -- -- -- -- --
Mutual Shares Securities
Fund
Shares 290,756
Cost $3,811,532
Market Value.............. -- -- -- -- -- --
Due from Hartford Life
Insurance Company............ 83,195 705,288 325,330 561,199 13,833 --
Receivable from fund shares
sold......................... -- -- -- -- -- --
----------- ----------- ----------- ----------- ---------- --------
Total Assets.................. 8,206,013 51,161,028 50,217,363 17,537,172 4,839,358 392,897
----------- ----------- ----------- ----------- ---------- --------
LIABILITIES:
Due to Hartford Life Insurance
Company...................... -- -- -- -- -- 30
Payable for fund shares
purchased.................... 83,194 705,279 325,325 561,200 13,833 --
----------- ----------- ----------- ----------- ---------- --------
Total Liabilities............. 83,194 705,279 325,325 561,200 13,833 30
----------- ----------- ----------- ----------- ---------- --------
Net Assets (variable annuity
contract liabilities)........ $ 8,122,819 50,455,749 $49,892,038 $16,975,972 $4,825,525 $392,867
=========== =========== =========== =========== ========== ========
<CAPTION>
FRANKLIN
FRANKLIN STRATEGIC MUTUAL SHARES
SMALL CAP INCOME INVESTMENTS SECURITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------------ -------------
<S> <C> <C> <C>
ASSETS:
Investments:
Hartford Money Market HLS
Fund, Inc. - Class IA
Shares 4,834,594
Cost $4,834,594
Market Value.............. -- -- --
Investments in American Funds:
Asset Allocation Fund
Shares 750,527
Cost $11,826,994
Market Value.............. -- -- --
Bond Fund
Shares 403,982
Cost $3,967,969
Market Value.............. -- -- --
Global Growth Fund
Shares 577,199
Cost $10,475,370
Market Value.............. -- -- --
Global Small Capitalization
Fund
Shares 467,904
Cost $7,471,027
Market Value.............. -- -- --
Growth Fund
Shares 714,974
Cost $49,188,239
Market Value.............. -- -- --
Growth-Income Fund
Shares 1,508,680
Cost $55,632,088
Market Value.............. -- -- --
International Fund
Shares 635,091
Cost $14,985,288
Market Value.............. -- -- --
New World Fund
Shares 409,985
Cost $4,245,642
Market Value.............. -- -- --
Investments in Franklin
Templeton Variable Insurance
Product Trust:
Real Estate Securities Fund
Shares 26,404
Cost $388,845
Market Value.............. -- -- --
Small Cap Fund
Shares 128,525
Cost $2,708,869
Market Value.............. $3,443,182 -- --
Franklin Strategic Income
Investment Fund
Shares 90,218
Cost $902,687
Market Value.............. -- $898,571 --
Mutual Shares Securities
Fund
Shares 290,756
Cost $3,811,532
Market Value.............. -- -- $3,852,516
Due from Hartford Life
Insurance Company............ -- -- 20,083
Receivable from fund shares
sold......................... 64,584 -- --
---------- -------- ----------
Total Assets.................. 3,507,766 898,571 3,872,599
---------- -------- ----------
LIABILITIES:
Due to Hartford Life Insurance
Company...................... 64,586 37 --
Payable for fund shares
purchased.................... -- -- 20,083
---------- -------- ----------
Total Liabilities............. 64,586 37 20,083
---------- -------- ----------
Net Assets (variable annuity
contract liabilities)........ $3,443,180 $898,534 $3,852,516
========== ======== ==========
</TABLE>
---------------------------------------------------- 19
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT SEVEN
- --------------------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
MFS
CAPITAL MFS MFS MFS
OPPORTUNITIES EMERGING GROWTH GLOBAL EQUITY GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- --------------- ------------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments in the MFS
Variable Insurance Trust:
MFS Captial Opportunities
Shares 265,821
Cost $4,927,430
Market Value.............. $5,776,295 -- -- --
MFS Emerging Growth
Shares 270,260
Cost $7,633,757
Market Value.............. -- $10,253,678 -- --
MFS Global Equity
Shares 23,361
Cost $257,939
Market Value.............. -- -- $281,497 --
MFS Growth
Shares 748,472
Cost $9,051,819
Market Value.............. -- -- -- $10,441,189
MFS Growth with Income
Shares 458,720
Cost $9,293,484
Market Value.............. -- -- -- --
MFS High Income
Shares 164,933
Cost $1,866,207
Market Value.............. -- -- -- --
MFS New Discovery
Shares 109,051
Cost $1,543,273
Market Value.............. -- -- -- --
MFS Total Return
Shares 155,736
Cost $2,740,072
Market Value.............. -- -- -- --
Investments in the Templeton
Variable Insurance Product
Fund:
Templeton Asset Allocation
Fund
Shares 43,631
Cost $946,759
Market Value.............. -- -- -- --
Templeton Developing Markets
Equity Fund
Shares 97,163
Cost $890,346
Market Value.............. -- -- -- --
Templeton Global Growth Fund
Shares 141,277
Cost $2,054,554
Market Value.............. -- -- -- --
Templeton International Fund
Shares 95,280
Cost $1,910,697
Market Value.............. -- -- -- --
Due from Hartford Life
Insurance Company............ 129,008 220,700 206 97,731
Receivable from fund shares
sold......................... -- -- -- --
---------- ----------- -------- -----------
Total Assets.................. 5,905,303 10,474,378 281,703 10,538,920
---------- ----------- -------- -----------
LIABILITIES:
Due to Hartford Life Insurance
Company...................... -- -- -- --
Payable for fund shares
purchased.................... 128,996 220,693 206 97,730
---------- ----------- -------- -----------
Total Liabilities............. 128,996 220,693 206 97,730
---------- ----------- -------- -----------
Net Assets (variable annuity
contract liabilities)........ $5,776,307 $10,253,685 $281,497 $10,441,190
========== =========== ======== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 20
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
MFS MFS TEMPLETON TEMPLETON
GROWTH MFS NEW MFS ASSET DEVELOPING
WITH INCOME HIGH INCOME DISCOVERY TOTAL RETURN ALLOCATION MARKETS EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ------------ ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in the MFS
Variable Insurance Trust:
MFS Captial Opportunities
Shares 265,821
Cost $4,927,430
Market Value.............. -- -- -- -- -- --
MFS Emerging Growth
Shares 270,260
Cost $7,633,757
Market Value.............. -- -- -- -- -- --
MFS Global Equity
Shares 23,361
Cost $257,939
Market Value.............. -- -- -- -- -- --
MFS Growth
Shares 748,472
Cost $9,051,819
Market Value.............. -- -- -- -- -- --
MFS Growth with Income
Shares 458,720
Cost $9,293,484
Market Value.............. $9,775,327 -- -- -- -- --
MFS High Income
Shares 164,933
Cost $1,866,207
Market Value.............. -- $1,895,083 -- -- -- --
MFS New Discovery
Shares 109,051
Cost $1,543,273
Market Value.............. -- -- $1,883,312 -- -- --
MFS Total Return
Shares 155,736
Cost $2,740,072
Market Value.............. -- -- -- $2,764,321 -- --
Investments in the Templeton
Variable Insurance Product
Fund:
Templeton Asset Allocation
Fund
Shares 43,631
Cost $946,759
Market Value.............. -- -- -- -- $1,015,298 --
Templeton Developing Markets
Equity Fund
Shares 97,163
Cost $890,346
Market Value.............. -- -- -- -- -- $1,019,242
Templeton Global Growth Fund
Shares 141,277
Cost $2,054,554
Market Value.............. -- -- -- -- -- --
Templeton International Fund
Shares 95,280
Cost $1,910,697
Market Value.............. -- -- -- -- -- --
Due from Hartford Life
Insurance Company............ 45,162 11,772 9,698 17,626 10,057 25,971
Receivable from fund shares
sold......................... -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total Assets.................. 9,820,489 1,906,855 1,893,010 2,781,947 1,025,355 1,045,213
---------- ---------- ---------- ---------- ---------- ----------
LIABILITIES:
Due to Hartford Life Insurance
Company...................... -- -- -- -- -- --
Payable for fund shares
purchased.................... 45,165 11,772 9,698 17,625 10,058 25,972
---------- ---------- ---------- ---------- ---------- ----------
Total Liabilities............. 45,165 11,772 9,698 17,625 10,058 25,972
---------- ---------- ---------- ---------- ---------- ----------
Net Assets (variable annuity
contract liabilities)........ $9,775,324 $1,895,083 $1,883,312 $2,764,322 $1,015,297 $1,019,241
========== ========== ========== ========== ========== ==========
<CAPTION>
TEMPLETON TEMPLETON
GLOBAL GROWTH INTERNATIONAL
SUB-ACCOUNT SUB-ACCOUNT
------------- -------------
<S> <C> <C>
ASSETS:
Investments in the MFS
Variable Insurance Trust:
MFS Captial Opportunities
Shares 265,821
Cost $4,927,430
Market Value.............. -- --
MFS Emerging Growth
Shares 270,260
Cost $7,633,757
Market Value.............. -- --
MFS Global Equity
Shares 23,361
Cost $257,939
Market Value.............. -- --
MFS Growth
Shares 748,472
Cost $9,051,819
Market Value.............. -- --
MFS Growth with Income
Shares 458,720
Cost $9,293,484
Market Value.............. -- --
MFS High Income
Shares 164,933
Cost $1,866,207
Market Value.............. -- --
MFS New Discovery
Shares 109,051
Cost $1,543,273
Market Value.............. -- --
MFS Total Return
Shares 155,736
Cost $2,740,072
Market Value.............. -- --
Investments in the Templeton
Variable Insurance Product
Fund:
Templeton Asset Allocation
Fund
Shares 43,631
Cost $946,759
Market Value.............. -- --
Templeton Developing Markets
Equity Fund
Shares 97,163
Cost $890,346
Market Value.............. -- --
Templeton Global Growth Fund
Shares 141,277
Cost $2,054,554
Market Value.............. $2,203,925 --
Templeton International Fund
Shares 95,280
Cost $1,910,697
Market Value.............. -- $2,108,545
Due from Hartford Life
Insurance Company............ -- 16,229
Receivable from fund shares
sold......................... -- --
---------- ----------
Total Assets.................. 2,203,925 2,124,774
---------- ----------
LIABILITIES:
Due to Hartford Life Insurance
Company...................... 87 --
Payable for fund shares
purchased.................... -- 16,230
---------- ----------
Total Liabilities............. 87 16,230
---------- ----------
Net Assets (variable annuity
contract liabilities)........ $2,203,838 $2,108,544
========== ==========
</TABLE>
---------------------------------------------------- 21
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT SEVEN
- --------------------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------ ---------- ------------
<S> <C> <C> <C>
DEFERRED ANNUITY CONTRACTS IN THE
ACCUMULATION PERIOD:
Hartford Money Market Fund
1.5%............................ 2,074,158 $ 1.016961 $ 2,109,338
Hartford Money Market Fund
1.65%........................... 71,247 1.016589 72,429
Hartford Money Market Fund
1.4%............................ 764,248 1.017478 777,606
Hartford Money Market Fund
.80%............................ 206,879 1.009271 208,797
Hartford Money Market Fund
1.25%........................... 1,636,654 1.018239 1,666,505
Asset Allocation Fund 1.5%....... 87,462 9.763857 853,968
Asset Allocation Fund 1.65%...... 375 9.760205 3,662
Asset Allocation Fund 1.25%...... 876,015 9.776112 8,564,018
Asset Allocation Fund 1.4%....... 175,200 9.768759 1,711,489
Asset Allocation Fund .80%....... 15,779 10.542607 166,355
Asset Allocation Fund .95%....... 326 10.539231 3,431
Bond Funds 1.5%.................. 52,995 10.093283 534,893
Bond Funds 1.65%................. 296 10.089521 2,985
Bond Funds 1.25%................. 260,877 10.105950 2,636,406
Bond Funds 1.4%.................. 74,247 10.098350 749,774
Bond Funds .80%.................. 1,050 10.215146 10,723
Global Growth Fund 1.5%.......... 104,986 13.962993 1,465,922
Global Growth Fund 1.65%......... 67 13.957799 935
Global Growth Fund 1.25%......... 642,755 13.980455 8,986,014
Global Growth Fund 1.4%.......... 121,545 13.969976 1,697,976
Global Growth Fund .80%.......... 14,192 13.738117 194,966
Global Growth Fund .95%.......... 874 13.733732 12,005
Global Small Capitalization Fund
1.5%............................ 83,214 13.767193 1,145,626
Global Small Capitalization Fund
1.65%........................... 203 13.762055 2,798
Global Small Capitalization Fund
1.25%........................... 405,681 13.784415 5,592,081
Global Small Capitalization Fund
1.4%............................ 96,623 13.774075 1,330,898
Global Small Capitalization Fund
.80%............................ 3,875 12.864359 49,845
Global Small Capitalization Fund
.95%............................ 122 12.860263 1,571
Growth Fund 1.5%................. 249,621 12.502121 3,120,797
Growth Fund 1.65%................ 896 12.497460 11,193
Growth Fund 1.25%................ 3,037,420 12.517781 38,021,763
Growth Fund 1.4%................. 669,105 12.508384 8,369,423
Growth Fund .80%................. 68,214 12.865591 877,609
Growth Fund .95%................. 4,274 12.861482 54,964
Growth-Income Fund 1.5%.......... 420,107 9.579464 4,024,401
Growth-Income Fund 1.65%......... 1,108 9.575882 10,606
Growth-Income Fund 1.25%......... 3,467,764 9.591485 33,261,005
Growth-Income Fund 1.4%.......... 1,221,950 9.584268 11,711,494
Growth-Income Fund .80%.......... 73,889 10.667962 788,243
Growth-Income Fund .95%.......... 9,029 10.664545 96,289
International Fund 1.5%.......... 173,580 14.644814 2,542,043
International Fund 1.65%......... 265 14.639368 3,885
International Fund 1.25%......... 763,939 14.663115 11,201,728
International Fund 1.4%.......... 211,632 14.652129 3,100,853
International Fund .80%.......... 6,859 13.799473 94,647
International Fund .95%.......... 2,379 13.795072 32,816
New World Fund 1.5%.............. 34,388 11.644005 400,413
New World Fund 1.25%............. 318,002 11.658593 3,707,459
New World Fund 1.4%.............. 43,228 11.649838 503,596
New World Fund .80%.............. 13,865 12.227288 169,536
New World Fund .95%.............. 3,642 12.223385 44,521
Real Estate Securities Fund
1.4%............................ 8,001 8.834957 70,687
Real Estate Securities Fund
1.5%............................ 556 8.830523 4,914
Real Estate Securities Fund
1.25%........................... 35,883 8.841604 317,266
Small Cap Fund 1.65%............. 68 16.630728 1,129
Small Cap Fund 1.4%.............. 55,787 16.645221 928,593
Small Cap Fund .80%.............. 3,281 15.792122 51,819
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 22
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------ ---------- ------------
<S> <C> <C> <C>
Small Cap Fund 1.25%............. 127,349 $16.657685 $ 2,121,333
Small Cap Fund 1.5%.............. 20,455 16.636909 340,306
Franklin Strategic Income
Investments Fund 1.5%........... 18,907 10.176193 192,402
Franklin Strategic Income
Investments Fund 1.4%........... 25,087 10.181293 255,423
Franklin Strategic Income
Investments Fund 1.25%.......... 44,235 10.188959 450,709
Mutual Shares Securities Fund
1.5%............................ 37,456 9.783931 366,469
Mutual Shares Securities Fund
1.4%............................ 58,310 9.788843 570,787
Mutual Shares Securities Fund
.80%............................ 878 10.820902 9,501
Mutual Shares Securities Fund
1.25%........................... 296,621 9.796213 2,905,759
MFS Capital Opportunities 1.5%... 26,869 12.203397 327,891
MFS Capital Opportunities
1.65%........................... 613 12.198850 7,476
MFS Capital Opportunities 1.4%... 115,379 12.209515 1,408,719
MFS Capital Opportunities .80%... 9,747 12.923763 125,969
MFS Capital Opportunities .95%... 251 12.919637 3,244
MFS Capital Opportunities
1.25%........................... 315,840 12.218688 3,859,154
MFS Emerging Growth 1.5%......... 48,459 15.402545 746,394
MFS Emerging Growth 1.65%........ 216 15.396821 3,324
MFS Emerging Growth 1.4%......... 97,184 15.410232 1,497,633
MFS Emerging Growth .80%......... 6,126 15.486126 94,865
MFS Emerging Growth 1.25%........ 510,071 15.421795 7,866,218
MFS Global Equity 1.5%........... 3,841 11.585770 44,498
MFS Global Equity 1.4%........... 5,874 11.591574 68,094
MFS Global Equity 1.25%.......... 14,560 11.600282 168,905
MFS Growth 1.5%.................. 48,051 12.001263 576,670
MFS Growth 1.65%................. 178 11.996788 2,141
MFS Growth 1.4%.................. 206,422 12.007270 2,478,566
MFS Growth .80%.................. 6,787 12.475323 84,672
MFS Growth .95%.................. 127 12.471334 1,581
MFS Growth 1.25%................. 603,672 12.016294 7,253,905
MFS Growth & Income 1.5%......... 57,782 9.950259 574,945
MFS Growth & Income 1.4%......... 260,156 9.955242 2,589,914
MFS Growth & Income .80%......... 24,789 11.140286 276,154
MFS Growth & Income .95%......... 682 11.136718 7,596
MFS Growth & Income 1.25%........ 635,038 9.962740 6,326,715
MFS High Income 1.5%............. 18,321 10.039968 183,942
MFS High Income 1.65%............ 199 10.036216 1,993
MFS High Income 1.4%............. 38,888 10.044992 390,628
MFS High Income .80%............. 4,284 10.256453 43,934
MFS High Income 1.25%............ 126,792 10.052557 1,274,586
MFS New Discovery 1.5%........... 18,944 14.318332 271,245
MFS New Discovery 1.4%........... 34,123 14.325485 488,834
MFS New Discovery .80%........... 2,276 15.447904 35,156
MFS New Discovery 1.25%.......... 75,897 14.336247 1,088,077
MFS Total Return 1.5%............ 27,654 9.688322 267,922
MFS Total Return 1.65%........... 512 9.684701 4,956
MFS Total Return 1.4%............ 52,252 9.693183 506,484
MFS Total Return .80%............ 10,142 10.346954 104,938
MFS Total Return 1.25%........... 193,807 9.700481 1,880,022
Templeton Asset Allocation Fund
1.5%............................ 5,725 10.855332 62,148
Templeton Asset Allocation Fund
1.4%............................ 12,669 10.860766 137,594
Templeton Asset Allocation Fund
.80%............................ 2,261 11.197144 25,315
Templeton Asset Allocation Fund
1.25%........................... 72,706 10.868937 790,240
Templeton Developing Markets
Equity Fund 1.5%................ 17,367 11.108629 192,923
Templeton Developing Markets
Equity Fund 1.4%................ 15,369 11.114200 170,818
Templeton Developing Markets
Equity Fund .80%................ 2,331 12.735770 29,681
Templeton Developing Markets
Equity Fund 1.25%............... 56,266 11.122555 625,819
Templeton Global Growth Fund
1.5%............................ 33,037 10.605862 350,387
Templeton Global Growth Fund
1.4%............................ 18,982 10.611177 201,425
</TABLE>
---------------------------------------------------- 23
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT SEVEN
- --------------------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------ ---------- ------------
<S> <C> <C> <C>
Templeton Global Growth Fund
.80%............................ 1,356 $11.265124 $ 15,279
Templeton Global Growth Fund
1.25%........................... 154,132 10.619149 1,636,747
Templeton International
Fund1.5%........................ 78,674 10.946563 861,205
Templeton International
Fund1.65%....................... 97 10.942481 1,058
Templeton International
Fund1.4%........................ 15,020 10.952050 164,501
Templeton International
Fund.80%........................ 83 11.343193 937
Templeton International
Fund1.25%....................... 83,869 10.960275 919,230
------------
SUB-TOTAL INDIVIDUAL............. 220,412,664
------------
ANNUITY CONTRACTS IN THE ANNUITY
PERIOD:
MFS Capital Opportunities........ 3,589 12.218688 43,854
MFS Emerging Growth.............. 2,934 15.421795 45,251
MFS Growth....................... 3,633 12.016294 43,655
Templeton International Fund..... 14,745 10.960275 161,613
------------
SUB-TOTAL........................ 294,373
------------
GRAND TOTAL:....................... $220,707,037
============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 24
----------------------------------------------------
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
SEPARATE ACCOUNT SEVEN
- --------------------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM INCEPTION, JULY 1, 1999, TO DECEMBER 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
HARTFORD AMERICAN FUNDS
MONEY MARKET ASSET AMERICAN FUNDS AMERICAN FUNDS
FUND ALLOCATION BOND GLOBAL GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ -------------- -------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends..................... $ 46,468 $ 107,085 $ 70,666 $ 48,518
EXPENSES:
Mortality and expense
undertakings................. (12,396) (24,079) (7,701) (21,470)
-------- --------- -------- ----------
Net investment income
(loss)..................... 34,072 83,006 62,965 27,048
-------- --------- -------- ----------
CAPITAL GAINS INCOME............ 2 625,352 -- 432,861
-------- --------- -------- ----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized (loss) gain on
security transactions........ -- (693) 80 4,145
Net unrealized (depreciation)
appreciation of investments
during the period............ -- (524,065) (33,186) 1,882,450
-------- --------- -------- ----------
Net (loss) gain on
investments................ -- (524,758) (33,106) 1,886,595
-------- --------- -------- ----------
Net increase in net assets
resulting from
operations................. $ 34,074 $ 183,600 $ 29,859 $2,346,504
======== ========= ======== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 26
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
AMERICAN FUNDS FRANKLIN
GLOBAL SMALL AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS REAL ESTATE
CAPITALIZATION GROWTH GROWTH-INCOME INTERNATIONAL NEW WORLD SECURITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------- -------------- -------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends..................... $ -- $ -- $ 217,556 $ 50,483 $ 16,169 $ 247
EXPENSES:
Mortality and expense
undertakings................. (17,908) (84,203) (107,465) (29,283) (13,461) (870)
---------- ---------- ----------- ---------- -------- ------
Net investment income
(loss)..................... (17,908) (84,203) 110,091 21,200 2,708 (623)
---------- ---------- ----------- ---------- -------- ------
CAPITAL GAINS INCOME............ 620,472 5,334,235 7,081,509 1,256,215 1,824 343
---------- ---------- ----------- ---------- -------- ------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized (loss) gain on
security transactions........ 1,272 1,809 52 1,316 (210) 3
Net unrealized (depreciation)
appreciation of investments
during the period............ 651,790 1,267,501 (5,740,055) 1,990,685 579,884 4,051
---------- ---------- ----------- ---------- -------- ------
Net (loss) gain on
investments................ 653,062 1,269,310 (5,740,003) 1,992,001 579,674 4,054
---------- ---------- ----------- ---------- -------- ------
Net increase in net assets
resulting from
operations................. $1,255,626 $6,519,342 $ 1,451,597 $3,269,416 $584,206 $3,774
========== ========== =========== ========== ======== ======
<CAPTION>
FRANKLIN
FRANKLIN STRATEGIC MUTUAL SHARES
SMALL CAP INCOME INVESTMENTS SECURITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------------ -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends..................... $ 24 $23,286 $ 33,504
EXPENSES:
Mortality and expense
undertakings................. (4,718) (1,838) (12,650)
-------- ------- --------
Net investment income
(loss)..................... (4,694) 21,448 20,854
-------- ------- --------
CAPITAL GAINS INCOME............ 3 -- --
-------- ------- --------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized (loss) gain on
security transactions........ 1,333 8 27
Net unrealized (depreciation)
appreciation of investments
during the period............ 734,313 (4,116) 40,984
-------- ------- --------
Net (loss) gain on
investments................ 735,646 (4,108) 41,011
-------- ------- --------
Net increase in net assets
resulting from
operations................. $730,955 $17,340 $ 61,865
======== ======= ========
</TABLE>
---------------------------------------------------- 27
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT SEVEN
- --------------------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE PERIOD FROM INCEPTION, JULY 1, 1999, TO DECEMBER 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
MFS
CAPITAL MFS MFS MFS
OPPORTUNITIES EMERGING GROWTH GLOBAL EQUITY GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- --------------- ------------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends..................... $ -- $ -- $ 342 $ 15,377
EXPENSES:
Mortality and expense
undertakings................. (10,787) (18,890) (556) (26,124)
-------- ---------- ------- ----------
Net investment income
(loss)..................... (10,787) (18,890) (214) (10,747)
-------- ---------- ------- ----------
CAPITAL GAINS INCOME............ -- -- 6,678 20,089
-------- ---------- ------- ----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions........ (178) 14,860 21 699
Net unrealized (depreciation)
appreciation of investments
during the period............ 848,865 2,619,921 23,558 1,389,371
-------- ---------- ------- ----------
Net (loss) gain on
investments................ 848,687 2,634,781 23,579 1,390,070
-------- ---------- ------- ----------
Net increase in net assets
resulting from
operations................. $837,900 $2,615,891 $30,043 $1,399,412
======== ========== ======= ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 28
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
MFS MFS TEMPLETON TEMPLETON
GROWTH MFS NEW MFS ASSET DEVELOPING
WITH INCOME HIGH INCOME DISCOVERY TOTAL RETURN ALLOCATION MARKETS EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ------------ ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends..................... $ -- $-- $ -- $-- $-- $ 280
EXPENSES:
Mortality and expense
undertakings................. (22,828) (4,690) (2,645) (6,708) (1,875) (1,763)
-------- ------- -------- ------- ------- --------
Net investment income
(loss)..................... (22,828) (4,690) (2,645) (6,708) (1,875) (1,483)
-------- ------- -------- ------- ------- --------
CAPITAL GAINS INCOME............ -- -- -- -- -- --
-------- ------- -------- ------- ------- --------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions........ 710 28 346 (779) 28 219
Net unrealized (depreciation)
appreciation of investments
during the period............ 481,842 28,875 340,039 24,249 68,538 128,896
-------- ------- -------- ------- ------- --------
Net (loss) gain on
investments................ 482,552 28,903 340,385 23,470 68,566 129,115
-------- ------- -------- ------- ------- --------
Net increase in net assets
resulting from
operations................. $459,724 $24,213 $367,980 $16,762 $66,691 $127,632
======== ======= ======== ======= ======= ========
<CAPTION>
TEMPLETON TEMPLETON
GLOBAL GROWTH INTERNATIONAL
SUB-ACCOUNT SUB-ACCOUNT
------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends..................... $ 2,556 $--
EXPENSES:
Mortality and expense
undertakings................. (5,111) (6,084)
-------- --------
Net investment income
(loss)..................... (2,555) (6,084)
-------- --------
CAPITAL GAINS INCOME............ 12,366 --
-------- --------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions........ 44 4,720
Net unrealized (depreciation)
appreciation of investments
during the period............ 149,371 197,847
-------- --------
Net (loss) gain on
investments................ 149,415 202,567
-------- --------
Net increase in net assets
resulting from
operations................. $159,226 $196,483
======== ========
</TABLE>
---------------------------------------------------- 29
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT SEVEN
- --------------------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION, JULY 1, 1999, TO DECEMBER 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
HARTFORD AMERICAN FUNDS
MONEY MARKET ASSET AMERICAN FUNDS AMERICAN FUNDS
FUND ALLOCATION BOND GLOBAL GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ -------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)....................... $ 34,072 $ 83,006 $ 62,965 $ 27,048
Capital gains income.......... 2 625,352 -- 432,861
Net realized (loss) gain on
security transactions........ -- (693) 80 4,145
Net unrealized (depreciation)
appreciation of investments
during the period............ -- (524,065) (33,186) 1,882,450
---------- ----------- ---------- -----------
Net increase in net assets
resulting from operations.... 34,074 183,600 29,859 2,346,504
---------- ----------- ---------- -----------
UNIT TRANSACTIONS:
Purchases..................... 7,967,520 7,618,821 2,124,047 6,076,761
Net transfers................. (3,055,671) 3,527,799 1,800,607 3,965,843
Surrenders for benefit
payments and fees............ (111,248) (27,297) (19,732) (31,290)
Net annuity transactions...... -- -- -- --
---------- ----------- ---------- -----------
Net increase in net assets
resulting from unit
transactions................. 4,800,601 11,119,323 3,904,922 10,011,314
---------- ----------- ---------- -----------
Net increase in net assets.... 4,834,675 11,302,923 3,934,781 12,357,818
NET ASSETS:
Beginning of period........... -- -- -- --
---------- ----------- ---------- -----------
End of period................. $4,834,675 $11,302,923 $3,934,781 $12,357,818
========== =========== ========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 30
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
AMERICAN FUNDS FRANKLIN
GLOBAL SMALL AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS AMERICAN FUNDS REAL ESTATE
CAPITALIZATION GROWTH GROWTH-INCOME INTERNATIONAL NEW WORLD SECURITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------- -------------- -------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)....................... $ (17,908) $ (84,203) $ 110,091 $ 21,200 $ 2,708 $ (623)
Capital gains income.......... 620,472 5,334,235 7,081,509 1,256,215 1,824 343
Net realized (loss) gain on
security transactions........ 1,272 1,809 52 1,316 (210) 3
Net unrealized (depreciation)
appreciation of investments
during the period............ 651,790 1,267,501 (5,740,055) 1,990,685 579,884 4,051
---------- ----------- ----------- ----------- ---------- --------
Net increase in net assets
resulting from operations.... 1,255,626 6,519,342 1,451,597 3,269,416 584,206 3,774
---------- ----------- ----------- ----------- ---------- --------
UNIT TRANSACTIONS:
Purchases..................... 4,912,426 29,873,970 30,646,309 9,369,647 3,017,760 198,158
Net transfers................. 2,009,812 14,242,350 17,985,180 4,406,012 1,232,526 194,010
Surrenders for benefit
payments and fees............ (55,045) (179,913) (191,048) (69,103) (8,967) (3,075)
Net annuity transactions...... -- -- -- -- -- --
---------- ----------- ----------- ----------- ---------- --------
Net increase in net assets
resulting from unit
transactions................. 6,867,193 43,936,407 48,440,441 13,706,556 4,241,319 389,093
---------- ----------- ----------- ----------- ---------- --------
Net increase in net assets.... 8,122,819 50,455,749 49,892,038 16,975,972 4,825,525 392,867
NET ASSETS:
Beginning of period........... -- -- -- -- -- --
---------- ----------- ----------- ----------- ---------- --------
End of period................. $8,122,819 $50,455,749 $49,892,038 $16,975,972 $4,825,525 $392,867
========== =========== =========== =========== ========== ========
<CAPTION>
FRANKLIN
FRANKLIN STRATEGIC MUTUAL SHARES
SMALL CAP INCOME INVESTMENTS SECURITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------------ -------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)....................... $ (4,694) $ 21,448 $ 20,854
Capital gains income.......... 3 -- --
Net realized (loss) gain on
security transactions........ 1,333 8 27
Net unrealized (depreciation)
appreciation of investments
during the period............ 734,313 (4,116) 40,984
---------- -------- ----------
Net increase in net assets
resulting from operations.... 730,955 17,340 61,865
---------- -------- ----------
UNIT TRANSACTIONS:
Purchases..................... 1,410,520 436,025 2,491,146
Net transfers................. 1,321,166 449,194 1,310,620
Surrenders for benefit
payments and fees............ (19,461) (4,025) (11,115)
Net annuity transactions...... -- -- --
---------- -------- ----------
Net increase in net assets
resulting from unit
transactions................. 2,712,225 881,194 3,790,651
---------- -------- ----------
Net increase in net assets.... 3,443,180 898,534 3,852,516
NET ASSETS:
Beginning of period........... -- -- --
---------- -------- ----------
End of period................. $3,443,180 $898,534 $3,852,516
========== ======== ==========
</TABLE>
---------------------------------------------------- 31
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT SEVEN
- --------------------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE PERIOD FROM INCEPTION, JULY 1, 1999, TO DECEMBER 31, 1999
UNAUDITED
<TABLE>
<CAPTION>
MFS
CAPITAL MFS MFS MFS
OPPORTUNITIES EMERGING GROWTH GLOBAL EQUITY GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- --------------- ------------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)....................... $ (10,787) $ (18,890) $ (214) $ (10,747)
Capital gains income.......... -- -- 6,678 20,089
Net realized gain (loss) on
security transactions........ (178) 14,860 21 699
Net unrealized appreciation
(depreciation) of investments
during the period............ 848,865 2,619,921 23,558 1,389,371
---------- ----------- -------- -----------
Net increase in net assets
resulting from operations.... 837,900 2,615,891 30,043 1,399,412
---------- ----------- -------- -----------
UNIT TRANSACTIONS:
Purchases..................... 3,171,521 4,835,008 158,130 6,014,916
Net transfers................. 1,789,502 2,803,121 95,487 3,039,764
Surrenders for benefit
payments and fees............ (65,866) (44,896) (2,163) (56,152)
Net annuity transactions...... 43,250 44,561 -- 43,250
---------- ----------- -------- -----------
Net increase (decrease) in net
assets resulting from unit
transactions................. 4,938,407 7,637,794 251,454 9,041,778
---------- ----------- -------- -----------
Net increase (decrease) in net
assets....................... 5,776,307 10,253,685 281,497 10,441,190
NET ASSETS:
Beginning of period........... -- -- -- --
---------- ----------- -------- -----------
End of period................. $5,776,307 $10,253,685 $281,497 $10,441,190
========== =========== ======== ===========
</TABLE>
* From inception, July 1, 1999 to December 31, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 32
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
MFS MFS TEMPLETON TEMPLETON
GROWTH MFS NEW MFS ASSET DEVELOPING
WITH INCOME HIGH INCOME DISCOVERY TOTAL RETURN ALLOCATION MARKETS EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ------------ ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)....................... $ (22,828) $ (4,690) $ (2,645) $ (6,708) $ (1,875) $ (1,483)
Capital gains income.......... -- -- 30,240 -- -- --
Net realized gain (loss) on
security transactions........ 710 28 346 (779) 28 219
Net unrealized appreciation
(depreciation) of investments
during the period............ 481,842 28,875 340,039 24,249 68,538 128,896
---------- ---------- ---------- ---------- ---------- ----------
Net increase in net assets
resulting from operations.... 459,724 24,213 367,980 16,762 66,691 127,632
---------- ---------- ---------- ---------- ---------- ----------
UNIT TRANSACTIONS:
Purchases..................... 5,093,520 1,427,075 764,906 1,487,466 394,881 485,858
Net transfers................. 4,249,461 455,887 752,518 1,271,385 559,125 410,542
Surrenders for benefit
payments and fees............ (27,381) (12,092) (2,092) (11,291) (5,400) (4,791)
Net annuity transactions...... -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net
assets resulting from unit
transactions................. 9,315,600 1,870,870 1,515,332 2,747,560 948,606 891,609
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net
assets....................... 9,775,324 1,895,083 1,883,312 2,764,322 1,015,297 1,019,241
NET ASSETS:
Beginning of period........... -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
End of period................. $9,775,324 $1,895,083 $1,883,312 $2,764,322 $1,015,297 $1,019,241
========== ========== ========== ========== ========== ==========
<CAPTION>
TEMPLETON TEMPLETON
GLOBAL GROWTH INTERNATIONAL
SUB-ACCOUNT SUB-ACCOUNT
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)....................... $ (2,555) $ (6,084)
Capital gains income.......... 12,366 --
Net realized gain (loss) on
security transactions........ 44 4,720
Net unrealized appreciation
(depreciation) of investments
during the period............ 149,371 197,847
---------- ----------
Net increase in net assets
resulting from operations.... 159,226 196,483
---------- ----------
UNIT TRANSACTIONS:
Purchases..................... 1,217,309 812,666
Net transfers................. 836,607 1,116,318
Surrenders for benefit
payments and fees............ (9,304) (164,889)
Net annuity transactions...... -- 147,966
---------- ----------
Net increase (decrease) in net
assets resulting from unit
transactions................. 2,044,612 1,912,061
---------- ----------
Net increase (decrease) in net
assets....................... 2,203,838 2,108,544
NET ASSETS:
Beginning of period........... -- --
---------- ----------
End of period................. $2,203,838 $2,108,544
========== ==========
</TABLE>
* From inception, July 1, 1999 to December 31, 1999.
---------------------------------------------------- 33
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT SEVEN
- --------------------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31,1999
1. ORGANIZATION:
Separate Account Seven (the Account) is a separate investment account within
Hartford Life & Annuity Insurance Company (the Company) and is registered
with the Securities and Exchange Commission (SEC) as a unit investment trust
under the Investment Company Act of 1940, as amended. Both the Company and
the Account are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut and the SEC. The Account invests
deposits by variable life contractholders of the Company in various mutual
funds (the Funds) as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed. Realized gains and
losses on the sales of securities are computed on the basis of identified
cost of the fund shares sold. Dividend and capital gains income is
accrued as of the ex-dividend date. Capital gains income represents
dividends from the Funds which are characterized as capital gains under
tax regulations.
b) SECURITY VALUATION--The investment in shares of the Funds are valued at
the closing net asset value per share as determined by the appropriate
Fund as of December 31, 1999.
c) UNIT TRANSACTIONS--Unit transactions are executed based on the unit
values calculated at the close of the business day.
d) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no
Federal income taxes are payable with respect to the operations of the
Account.
e) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported
amounts of income and expenses during the period. Operating results in
the future could vary from the amounts derived from management's
estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
Deductions and Charges -- Certain amounts are deducted from the Contracts,
as described below:
a) MORTALITY AND EXPENSE RISK CHARGES--The Company will make deductions at a
maximum annual rate of 1.25% of the contract's value for the mortality
and expense risks which the company undertakes. These expenses are
included in surrenders for benefit payments and fees on the accompanying
statements of changes in net assets.
b) TAX EXPENSE CHARGE--If applicable, the Company will make deductions at a
maximum rate of 4.0% of the contract's value to meet premium tax
requirements. An additional tax charge based on a percentage of the
contract's value may be assessed to partial withdrawals or surrenders.
c) ADMINISTRATIVE CHARGE--The Company will make deductions to cover
administrative expenses at a maximum annual rate of 0.15% of the
contract's value. These expenses are included in surrenders for benefit
payments and fees on the accompanying statements of changes in net
assets.
d) ANNUAL MAINTENANCE FEE--An annual maintenance fee in the amount of $30
may be deducted from the contract's value each contract year. However,
this fee is not applicable to contracts with values of $50,000 or more,
as determined on the most recent contract anniversary. These expenses are
included in surrenders for benefit payments and fees on the accompanying
statements of changes in net assets.
______________________________________ 34 ______________________________________
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-1
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Hartford Life and Annuity Insurance Company:
We have audited the accompanying statutory balance sheets of Hartford Life and
Annuity Insurance Company (a Connecticut Corporation and wholly owned subsidiary
of Hartford Life Insurance Company) (the Company) as of December 31, 1998 and
1997, and the related statutory statements of operations, changes in capital and
surplus, and cash flows for each of the three years in the period ended December
31, 1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these statutory
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The Company presents its financial statements in conformity with statutory
accounting practices as described in Note 1 of notes to statutory financial
statements. When statutory financial statements are presented for purposes other
than for filing with a regulatory agency, generally accepted auditing standards
require that an auditors' report on them state whether they are presented in
conformity with generally accepted accounting principles. The accounting
practices used by the Company vary from generally accepted accounting principles
as explained and quantified in Note 1.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the statutory financial statements referred to above do not present
fairly, in conformity with generally accepted accounting principles, the
financial position of the Company as of December 31, 1998 and 1997, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1998.
However, in our opinion, the statutory financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of December 31, 1998 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998 in
conformity with statutory accounting practices as described in Note 1.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 26, 1999
<PAGE>
F-2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
BALANCE SHEETS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------
1998 1997
----------- -----------
<S> <C> <C>
Assets
Bonds........................................... $ 1,453,792 $ 1,501,311
Common stocks................................... 40,650 64,408
Mortgage loans.................................. 59,548 85,103
Policy loans.................................... 47,212 36,533
Cash and short-term investments................. 469,955 309,432
Other invested assets........................... 2,188 20,942
----------- -----------
Total cash and invested assets................ 2,073,345 2,017,729
Investment income due and accrued............... 20,126 15,878
Premium balances receivable..................... 333 389
Receivables from affiliates..................... -- 1,269
Other assets.................................... 45,358 22,788
Separate account assets......................... 32,876,278 23,208,728
----------- -----------
Total Assets.................................. $35,015,440 $25,266,781
----------- -----------
----------- -----------
Liabilities
Aggregate reserves for future benefits.......... $ 579,140 $ 605,183
Policy and contract claims...................... 5,667 5,672
Liability for premium and other deposit funds... 2,011,672 1,795,149
Asset valuation reserve......................... 21,782 13,670
Payable to affiliates........................... 19,271 20,972
Other liabilities............................... (974,882) (754,393)
Separate account liabilities.................... 32,876,278 23,208,728
----------- -----------
Total liabilities............................. 34,538,928 24,894,981
----------- -----------
Capital and Surplus
Common stock.................................... 2,500 2,500
Gross paid-in and contributed surplus........... 226,043 226,043
Unassigned funds................................ 247,969 143,257
----------- -----------
Total capital and surplus..................... 476,512 371,800
----------- -----------
Total liabilities, capital and surplus............ $35,015,440 $25,266,781
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-3
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Revenues
Premiums and annuity considerations............. $ 469,343 $ 296,645 $ 250,244
Annuity and other fund deposits................. 2,051,251 1,981,246 1,897,347
Net investment income........................... 129,982 102,285 98,441
Commissions and expense allowances on
reinsurance ceded.............................. 444,241 396,921 370,637
Reserve adjustment on reinsurance ceded......... 3,185,590 3,672,076 3,864,395
Other revenues.................................. 458,190 288,632 161,906
----------- ----------- -----------
Total revenues................................ 6,738,597 6,737,805 6,642,970
----------- ----------- -----------
Benefits and expenses
Death and annuity benefits...................... 43,390 66,176 60,194
Disability and other benefit payments........... 6,114 7,316 6,555
Surrenders...................................... 739,663 454,417 270,165
Commissions and other expenses.................. 666,515 564,077 491,637
Increase (Decrease) in aggregate reserves for
future benefits................................ (26,043) 33,213 27,351
Increase in liability for premium and other
deposit funds.................................. 216,523 640,006 207,156
Net transfers to separate accounts.............. 4,956,007 4,914,980 5,492,964
----------- ----------- -----------
Total benefits and expenses................... 6,602,169 6,680,185 6,556,022
----------- ----------- -----------
Net gain from operations
Before federal income tax (benefit) expense..... 136,428 57,620 86,948
Federal income tax (benefit) expense............ 35,887 (14,878) 19,360
----------- ----------- -----------
Net gain from operations.......................... 100,541 72,498 67,588
Net realized capital gains, after tax........... 2,085 1,544 407
----------- ----------- -----------
Net income........................................ $ 102,626 $ 74,042 $ 67,995
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
<PAGE>
F-4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Common stock,
Beginning and end of year....................... $ 2,500 $ 2,500 $ 2,500
----------- ----------- -----------
Gross paid-in and contributed surplus,
Beginning and end of year....................... $ 226,043 $ 226,043 $ 226,043
----------- ----------- -----------
Unassigned funds
Balance, beginning of year...................... $ 143,257 $ 74,570 $ 9,791
Net income...................................... 102,626 74,042 67,995
Change in net unrealized capital gains (losses)
on common stocks and other invested assets..... 1,688 2,186 (5,171)
Change in asset valuation reserve............... (8,112) (6,228) 568
Change in non-admitted assets................... (1,277) (1,313) 1,387
Credit on reinsurance ceded..................... 9,787 -- --
----------- ----------- -----------
Balance, end of year............................ $ 247,969 $ 143,257 $ 74,570
----------- ----------- -----------
Capital and surplus,
End of year..................................... $ 476,512 $ 371,800 $ 303,113
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-5
- --------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Operations
Premiums and annuity considerations............. $ 2,520,655 $ 2,277,874 $ 2,147,627
Investment income............................... 127,425 101,991 106,178
Other income.................................... 4,092,964 4,381,718 4,396,892
----------- ----------- -----------
Total income.................................. 6,741,044 6,761,583 6,650,697
----------- ----------- -----------
Benefits paid................................... 790,051 529,733 338,998
Federal income taxes (received) paid on
operations..................................... 25,780 (14,499) 28,857
Other expenses.................................. 5,859,063 5,754,725 6,254,139
----------- ----------- -----------
Total benefits and expenses................... 6,674,894 6,269,959 6,621,994
----------- ----------- -----------
Net cash from operations...................... 66,150 491,624 28,703
----------- ----------- -----------
Proceeds from investments
Bonds........................................... 633,926 614,413 871,019
Common stocks................................... 34,010 11,481 72,100
Mortgage loans.................................. 85,275 -- --
Other........................................... 127 152 10
----------- ----------- -----------
Net investment proceeds....................... 753,338 626,046 943,129
----------- ----------- -----------
Taxes paid on capital gains..................... -- -- 936
Other cash provided............................. 1,269 -- 41,998
----------- ----------- -----------
Total proceeds................................ 820,757 1,117,670 1,012,894
----------- ----------- -----------
Cost of investments acquired
Bonds........................................... 586,913 848,267 914,523
Common stocks................................... 7,012 28,302 82,495
Mortgage loans.................................. 59,702 85,103 --
Other........................................... 1,168 18,548 130
----------- ----------- -----------
Total investments acquired.................... 654,795 980,220 997,148
----------- ----------- -----------
Other cash applied
Other........................................... 5,439 4,848 12,220
----------- ----------- -----------
Total other cash applied...................... 5,439 4,848 12,220
----------- ----------- -----------
Total applications............................ 660,234 985,068 1,009,368
----------- ----------- -----------
Net change in cash and short-term investments..... 160,523 132,602 3,526
Cash and short-term investments, beginning of
year............................................. 309,432 176,830 173,304
----------- ----------- -----------
Cash and short-term investments, end of year...... $ 469,955 $ 309,432 $ 176,830
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
<PAGE>
F-6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION
Hartford Life and Annuity Insurance Company ("ILA" or "the Company"),
formerly known as ITT Hartford Life and Annuity Insurance Company, is a wholly
owned subsidiary of Hartford Life Insurance Company ("HLIC"), which is an
indirect subsidiary of Hartford Life, Inc. ("HLI"), which is majority owned by
The Hartford Financial Services Group, Inc. ("The Hartford"), formerly a wholly
owned subsidiary of ITT Corporation ("ITT"). On February 10, 1997, HLI filed a
registration statement, as amended, with the Securities and Exchange Commission
relating to the initial public offering of HLI Class A Common Stock (the
"Offering"). Pursuant to the Offering on May 22, 1997, HLI sold to the public 26
million shares, representing 18.6% of the equity ownership of HLI. On December
19, 1995, ITT Corporation distributed all the outstanding shares of The Hartford
to ITT shareholders of record in an action known herein as the "Distribution".
As a result of the Distribution, The Hartford became an independent, publicly
traded company. During 1996, ILA re-domesticated from the State of Wisconsin to
the State of Connecticut.
ILA offers a complete line of ordinary and universal life insurance,
individual annuities and certain supplemental accident and health benefit
coverages.
BASIS OF PRESENTATION
The accompanying ILA statutory basis financial statements were prepared in
conformity with statutory accounting practices prescribed or permitted by the
National Association of Insurance Commissioners ("NAIC"), the State of
Connecticut Department of Insurance and the State of Wisconsin for the 1996
period, as applicable. Certain prior year amounts and balances have been
reclassified to conform with current year presentation.
Current prescribed statutory accounting practices include accounting
publications of the National Association of Insurance Commissioners ("NAIC"), as
well as state laws, regulations and general administrative rules. Permitted
statutory accounting practices encompass accounting practices approved by State
Insurance Departments. The Company does not follow any permitted statutory
accounting practices that have a material effect on statutory surplus, statutory
net income or risk-based capital.
Final approval of the NAIC's proposed "Comprehensive Guide" on statutory
accounting principles was distributed in 1998. The requirements are effective
January 1, 2001, and are not expected to have a material impact on statutory
surplus of the Company.
The preparation of financial statements in conformity with statutory
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates. The most significant estimates
include those used in determining the liability for aggregate reserves for
future benefits and the liability for premium and other deposit funds. Although
some variability is inherent in these estimates, management believes the amounts
provided are adequate.
Statutory accounting practices and generally accepted accounting principles
("GAAP") differ in certain significant respects. These differences principally
involve:
(1) treatment of policy acquisition costs (commissions, underwriting and selling
expenses, premium taxes, etc.) which are charged to expense when incurred
for statutory purposes rather than on a pro-rata basis over the expected
life of the policy for GAAP purposes;
(2) recognition of premium revenues, which for statutory purposes are generally
recorded as collected or when due during the premium paying period of the
contract and which for GAAP purposes, for universal life policies and
investment products, generally, are only recorded for policy charges for the
cost of insurance, policy administration and surrender charges assessed to
policy account balances. Also, for GAAP purposes, premiums for traditional
life insurance policies are recognized as revenues when they are due from
policyholders and the retrospective deposit method is used in accounting for
universal life and other types of contracts where the payment pattern is
irregular or surrender charges are a significant source of profit. The
prospective deposit method is used for GAAP purposes where investment
margins are the primary source of profit;
(3) development of liabilities for future policy benefits, which for statutory
purposes predominantly use interest rate and mortality assumptions
prescribed by the NAIC which may vary considerably from interest and
mortality assumptions used for GAAP financial reporting;
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-7
- --------------------------------------------------------------------------------
(4) providing for income taxes based on current taxable income (tax return) only
for statutory purposes, rather than establishing additional assets or
liabilities for deferred Federal income taxes to recognize the tax effect
related to reporting revenues and expenses in different periods for
financial reporting and tax return purposes;
(5) excluding certain GAAP assets designated as non-admitted assets (e.g.,
negative Interest Maintenance Reserve, past due agents' balances and
furniture and equipment) from the balance sheet for statutory purposes by
directly charging surplus;
(6) establishing accruals for post-retirement and post-employment health care
benefits currently, or using a twenty year phase-in approach, whereas GAAP
liabilities are recorded upon adoption of the applicable standard;
(7) establishing a formula reserve for realized and unrealized losses due to
default and equity risk associated with certain invested assets (Asset
Valuation Reserve); as well as the deferral and amortization of realized
gains and losses, motivated by changes in interest rates during the period
the asset is held, into income over the remaining life to maturity of the
asset sold (Interest Maintenance Reserve); whereas on a GAAP basis, no such
formula reserve is required and realized gains and losses are recognized in
the period the asset is sold;
(8) the reporting of reserves and benefits net of reinsurance ceded, where risk
transfer has taken place, whereas on a GAAP basis, reserves are reported
gross of reinsurance with reserve credits presented as recoverable assets;
as well as, the accounting for retroactive reinsurance which is immediately
charged to surplus for statutory accounting purposes whereas GAAP precludes
immediate gain recognition unless the ceding enterprise's liability to its
policyholders is extinguished; as well as reinsurance ceded that fails to
meet GAAP risk transfer guidelines would result in deposit accounting for
GAAP where as for statutory, reserves ceded and assumed would be reflected
in the statutory basis statements of operations;
(9) the reporting of fixed maturities at amortized cost, whereas GAAP requires
that fixed maturities be classified as "held-to-maturity",
"available-for-sale" or "trading", based on the Company's intentions with
respect to the ultimate disposition of the security and its ability to
affect those intentions. The Company's bonds were classified on a GAAP basis
as "available-for-sale" and accordingly, those investments and common stocks
were reflected at fair value with the corresponding impact included as a
component of Stockholder's Equity designated as "Net unrealized capital
gains (losses) on securities net of tax". For statutory reporting purposes,
Change in Net Unrealized Capital Gains (Losses) on Common Stocks and Other
Invested Assets includes the change in unrealized gains (losses) on common
stock reported at fair value; and
(10) separate account liabilities are valued on the Commissioner's Annuity
Reserve Valuation Method ("CARVM"), with the surplus generated recorded as a
liability to the general account (and a contra liability on the balance
sheet of the general account), whereas GAAP liabilities are valued at
account value.
As of and for the years ended December 31, the significant differences
between Statutory and GAAP basis net income and capital and surplus for the
Company are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
GAAP Net Income.................... $ 74,525 $ 58,050 $ 41,202
Amortization and deferral of policy
acquisition costs, net............ (331,882) (345,657) (341,571)
Change in unearned revenue
reserve........................... 22,131 4,641 55,504
Deferred taxes..................... 2,476 47,092 2,090
Separate accounts.................. 259,287 282,818 306,978
Asset impairments and
write-downs....................... 17,250 -- --
Benefit reserve adjustment......... 32,759 24,666 (1,013)
Deposit accounting for Lyndon
reinsurance (Note 3).............. 24,627 -- --
Other, net......................... 1,453 2,432 4,805
------------ ------------ ------------
Statutory Net Income............... $ 102,626 $ 74,042 $ 67,995
------------ ------------ ------------
------------ ------------ ------------
GAAP Capital and Surplus........... $ 648,097 $ 570,469 $ 503,887
Deferred policy acquisition
costs............................. (1,615,653) (1,283,771) (938,114)
Unearned revenue reserve........... 156,920 134,789 130,148
Deferred taxes..................... 68,936 64,522 12,823
Separate accounts.................. 1,183,642 924,355 640,101
Asset impairments and
write-downs....................... 17,250 -- --
Unrealized gains on bonds.......... (26,119) (21,451) (7,978)
Benefit reserve adjustment......... 65,029 16,378 7,035
Asset valuation reserve............ (21,782) (13,670) (7,442)
Adjustment relating to Lyndon
contribution (Note 3)............. -- (23,671) (36,126)
Other, net......................... 192 3,850 (1,221)
------------ ------------ ------------
Statutory Capital and Surplus...... $ 476,512 $ 371,800 $ 303,113
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
As more fully described in Note 3, Lyndon Insurance Company (Lyndon) was
contributed to the Company on June 30, 1995. The GAAP net assets contributed
exceeded the statutory basis net assets by $41,277 as of December 31, 1995,
relating primarily to statutory reserves for future
<PAGE>
F-8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
benefits, GAAP deposit accounting receivables and deferred tax liabilities. In
1998, the majority of the former Lyndon's assumed business was recaptured by the
unaffiliated direct writer.
AGGREGATE RESERVES FOR FUTURE BENEFITS AND LIABILITY FOR PREMIUM AND OTHER
DEPOSIT FUNDS
Aggregate reserves for payment of future life, health and annuity benefits
were computed in accordance with actuarial standards. Reserves for life
insurance policies are generally based on the 1958 and 1980 Commissioner's
Standard Ordinary Mortality Tables and various valuation rates ranging from 2.5%
to 6%. Accumulation and on-benefit annuity reserves are based principally on
individual annuity tables at various rates ranging from 2.5% to 8.75% and using
CARVM. Accident and health reserves are established using a two year preliminary
term method and morbidity tables based on Company experience.
ILA has established separate accounts to segregate the assets and
liabilities of certain annuity contracts that must be segregated from the
Company's general assets under the terms of the contracts. The assets consist
primarily of marketable securities reported at market value. Premiums, benefits
and expenses of these contracts are reported in the statutory basis statements
of operations.
INVESTMENTS
Investments in bonds are carried at amortized cost. Bonds that are deemed
ineligible to be held at amortized cost by the NAIC Securities Valuation Office
("SVO") are carried at the appropriate SVO published value. When a permanent
reduction in the value of publicly traded securities occurs, the decrease is
reported as a realized loss and the carrying value is adjusted accordingly.
Short-term investments consist of money market funds and are stated at cost,
which approximates fair value. Common stocks are carried at fair value with the
current year change in the difference from cost reflected in surplus. Other
invested assets are generally recorded at fair value.
The Company uses a variety of derivative financial instruments as part of an
overall risk management strategy. These instruments, including interest rate and
foreign currency swaps, caps, and floors are used as a means of hedging exposure
to price, foreign currency and/or interest rate risk on planned investment
purchases or existing assets and liabilities. The Company does not hold or issue
derivative financial instruments for trading purposes. Derivatives must be
designated at inception as a hedge measured for effectiveness both at inception
and on an ongoing basis. The Company's correlation threshold for hedge
designation is 80% to 120%. If correlation, which is assessed monthly and
measured based on a rolling three month average, falls outside the 80% to 120%
range, hedge accounting will be terminated.
Interest rate swaps involve the periodic exchange of payments without the
exchange of underlying principal or notional amounts. Net receipts or payments
are accrued and recognized over the life of the swap agreement as an adjustment
to net investment income. Should the swap be terminated the gains or losses are
adjusted into the basis of the asset or liability and amortized over the
remaining life. Should the hedged asset be sold or liability terminated without
terminating the swap position, any swap gains or losses are immediately
recognized in net investment income. Interest rate swaps purchased in
anticipation of an asset purchase ("anticipatory transaction") are recognized
consistent with the underlying asset components such that the settlement
component is recognized in the statutory basis statements of operations while
the change in market value is recognized as an unrealized gain or loss. Foreign
currency swaps are similar to interest rate swaps except there is an initial
exchange of principal in two currencies and an agreement to re-exchange the
currencies at a future date, at an agreed upon exchange rate.
Premiums paid on purchased floor or cap agreements and the premium received
on issued cap or floor agreements (used for risk management) are adjusted into
the basis of the applicable asset and amortized over the asset life. Gains or
losses on termination of such positions are adjusted into the basis of the asset
or liability and amortized over the remaining asset life. Net payments are
recognized as an adjustment to income or basis adjusted and amortized depending
on the specific hedge strategy.
Derivatives used to create a synthetic asset must meet synthetic accounting
criteria, including designation at inception and consistency of terms between
the synthetic and the instrument being replicated. Consistent with industry
practice, synthetic instruments are accounted for like the financial instrument
they are intended to replicate. Derivatives which fail to meet risk management
criteria subsequent to acquisition, are accounted for at fair market value with
the impact reflected in the statutory basis statements of operations.
Open forward commitment contracts are marked to market through surplus. Such
contracts are accounted for at settlement by recording the purchase of specified
securities at the previously committed price. Gains or losses resulting from
termination of the forward commitment contracts before the delivery of the
securities are recognized immediately in the statutory basis statements of
operations as a component of Net Realized Capital Gains, after tax.
The Asset Valuation Reserve ("AVR") is designed to provide a standardized
reserving process for realized and unrealized losses due to default and equity
risks associated with invested assets. The reserve increased $8,112 and $6,228
in 1998 and 1997, respectively and decreased $(568) in 1996. Additionally, the
Interest Maintenance Reserve ("IMR") captures net realized capital gains and
losses, net
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-9
- --------------------------------------------------------------------------------
of applicable income taxes, resulting from changes in interest rates and
amortizes these gains or losses into income over the life of the mortgage loan
or bond sold. The IMR balance as of December 31, 1998 and December 31, 1997 was
$452 and $(193), respectively and is reflected in Other Liabilities and as a
component of non-admitted assets in Unassigned Funds for each of the years then
ended. For the years ended December 31, 1998, 1997 and 1996, amortization of IMR
is included in Other Revenues and was $(207), $(85) and $(392), respectively.
Realized capital gains and losses, net of taxes not included in IMR are reported
in the statutory basis statements of operations. Realized investment gains and
losses are determined on a specific identification basis.
OTHER LIABILITIES
The amount reflected in other liabilities includes a receivable from the
separate accounts of $1,187 million and $923 million as of December 31, 1998 and
1997, respectively. The balances are classified in accordance with NAIC
prescribed practices.
MORTGAGE LOANS
Mortgage loans, which are carried at cost and approximate fair value,
include investments in assets backed by mortgage loan pools.
2. INVESTMENTS:
(a) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ---------
<S> <C> <C> <C>
Interest income from bonds and
short-term investments.......... $ 123,370 $ 100,475 $ 89,940
Interest income from policy
loans........................... 3,133 1,958 1,846
Interest and dividends from other
investments..................... 4,482 1,005 7,864
---------- ---------- ---------
Gross investment income.......... 130,985 103,438 99,650
Less: investment expenses........ 1,003 1,153 1,209
---------- ---------- ---------
Net investment income............ $ 129,982 $ 102,285 $ 98,441
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
(b) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON COMMON STOCKS
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Gross unrealized capital gains.. $ 2,204 $ 537 $ 713
Gross unrealized capital
losses......................... (1,871) (1,820) (4,160)
--------- --------- ---------
Net unrealized capital
(losses)/gains................. 333 (1,283) (3,447)
Balance, beginning of year...... (1,283) (3,447) 1,724
--------- --------- ---------
Change in net unrealized capital
gains (losses) on Common
stocks......................... $ 1,616 $ 2,164 $ (5,171)
--------- --------- ---------
--------- --------- ---------
</TABLE>
(c) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON BONDS AND SHORT-TERM
INVESTMENTS
<TABLE>
<CAPTION>
1998 1997 1996
---------- --------- ----------
<S> <C> <C> <C>
Gross unrealized capital
gains........................ $ 10,905 $ 23,357 $ 11,821
Gross unrealized capital
losses....................... (833) (1,906) (3,842)
---------- --------- ----------
Net unrealized capital
gains........................ 10,072 21,451 7,979
Balance, beginning of year.... 21,451 7,979 20,877
---------- --------- ----------
Change in net unrealized
capital gains on bonds and
short-term investments....... $ (11,379) $ 13,472 $ (12,898)
---------- --------- ----------
---------- --------- ----------
</TABLE>
(d) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Bonds and short-term investments.... $ 1,314 $ (120) $ 2,756
Common stocks....................... 1,624 -- --
Real estate and other............... (1) 114 --
--------- --------- ---------
Realized capital (losses) gains..... 2,937 (6) 2,756
Capital gains (benefit) tax......... -- (831) 936
--------- --------- ---------
Net realized capital gains.......... 2,937 825 1,820
Amounts transferred to IMR.......... 852 (719) 1,413
--------- --------- ---------
Net realized capital gains.......... $ 2,085 $ 1,544 $ 407
--------- --------- ---------
--------- --------- ---------
</TABLE>
(e) OFF-BALANCE SHEET INVESTMENTS
The Company had no significant financial instruments with off-balance sheet
risk as of December 31, 1998.
(f) CONCENTRATION OF CREDIT RISK
The Company has invested in securities of a single issuer, Bankers Trust
Corporation, in an amount greater than 10% of the Company's statutory capital
and surplus. The statement value of this investment was $105,221 as of December
31, 1998. The NAIC ratings on these holdings were 1z and 2. Excluding this and
U.S. government and government agency investments, the Company had no other
significant concentrations of credit risk as of December 31, 1998.
<PAGE>
F-10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
(g) BONDS, SHORT-TERM INVESTMENTS AND COMMON STOCKS
<TABLE>
<CAPTION>
1998
------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. government and government agencies and authorities:
-- Guaranteed and sponsored.................................... $ 4,982 $ 35 $ (2) $ 5,015
-- Guaranteed and sponsored -- asset-backed.................... 75,615 -- -- 75,615
States, municipalities and political subdivisions................ 10,402 415 -- 10,817
International governments........................................ 7,466 568 -- 8,034
Public utilities................................................. 94,475 1,330 (39) 95,766
All other corporate.............................................. 607,679 8,473 (792) 615,360
All other corporate -- asset-backed.............................. 505,900 -- -- 505,900
Short-term investments........................................... 343,783 -- -- 343,783
Certificates of deposit.......................................... 130,216 84 -- 130,300
Parents, subsidiaries and affiliates............................. 117,057 -- -- 117,057
---------- ---------- ---------- ----------
Total bonds and short-term investments........................... $1,897,575 $10,905 $(833) $1,907,647
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Common stock -- unaffiliated................................. $ 4,933 $ 290 $ (50) $ 5,173
Common stock -- affiliated................................... 35,384 1,914 (1,821) 35,477
--------- ---------- ---------- ----------
Total common stocks.......................................... $40,317 $2,204 $(1,871) $40,650
--------- ---------- ---------- ----------
--------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
1997
------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. government and government agencies and authorities:
-- Guaranteed and sponsored.................................... $ 11,114 $ 55 $ (51) $ 11,118
-- Guaranteed and sponsored -- asset-backed.................... 55,506 1,056 (269) 56,293
States, municipalities and political subdivisions................ 26,404 329 -- 26,733
International governments........................................ 7,609 500 -- 8,109
Public utilities................................................. 73,024 754 (132) 73,646
All other corporate.............................................. 517,715 14,110 (704) 531,121
All other corporate -- asset-backed.............................. 630,069 5,005 (739) 634,335
Short-term investments........................................... 277,330 33 (8) 277,355
Certificates of deposit.......................................... 93,770 1,515 (3) 95,282
Parents, subsidiaries and affiliates............................. 86,100 -- -- 86,100
---------- ---------- ---------- ----------
Total bonds and short-term investments........................... $1,778,641 $23,357 $(1,906) $1,800,092
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Common stock -- unaffiliated................................. $30,307 $537 $ -- $30,844
Common stock -- affiliated................................... 35,384 -- (1,820) 33,564
--------- ----- ---------- ----------
Total common stocks.......................................... $65,691 $537 $(1,820) $64,408
--------- ----- ---------- ----------
--------- ----- ---------- ----------
</TABLE>
The amortized cost and estimated fair value of bonds and short-term
investments as of December 31, 1998 by estimated maturity year are shown below.
Asset-backed securities, including mortgage backed securities and
collaterialized mortgage obligations, are distributed to maturity year based on
ILA's estimates of the rate of future prepayments of principal over the
remaining lives of the securities. Expected maturities differ from contractual
maturities due to call or repayment provisions.
<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
MATURITY COST FAIR VALUE
- ----------------------------------- ------------ ------------
<S> <C> <C>
One year or less................... $ 788,845 $ 792,826
Over one year through five years... 689,025 692,811
Over five years through ten
years............................. 308,661 310,357
Over ten years..................... 111,044 111,653
------------ ------------
Total.............................. $ 1,897,575 $ 1,907,647
------------ ------------
------------ ------------
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-11
- --------------------------------------------------------------------------------
Proceeds from sales and maturities of investments in bonds and short-term
investments during 1998, 1997 and 1996 were $1,354,563, $1,435,820 and
$1,139,073, respectively, resulting in gross realized gains of $1,705, $964 and
$3,675, respectively, and gross realized losses of $391, $1,084 and $919,
respectively, before transfers to IMR.
(h) FAIR VALUE OF FINANCIAL INSTRUMENTS BALANCE SHEET ITEMS (IN MILLIONS):
<TABLE>
<CAPTION>
1998 1997
-------------------------- --------------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Bonds and short-term
investments..................... $ 1,898 $ 1,908 $ 1,779 $ 1,800
Common stocks.................... 41 41 64 64
Policy loans..................... 47 47 37 37
Mortgage loans................... 60 60 85 85
Other invested assets............ 2 2 21 21
LIABILITIES
Liabilities on investment
contracts....................... $ 2,053 $ 2,129 $ 1,911 $ 1,835
</TABLE>
The estimated fair value of bonds and short-term investments was determined
by the Company primarily using NAIC market values. The carrying amounts for
policy loans approximates fair value. The fair value of mortgage loans was
determined by discounting future expected cash flows using interest rates
currently being offered for similar loans. The fair value of liabilities on
investment contracts is determined by forecasting future cash flows and
discounting the forecasted cash flows at current market interest rates.
3. AGGREGATE RESERVES FOR FUTURE BENEFITS
The Company's existing reserves consist of life, health, annuity and
supplementary contracts. The Company cedes and assumes insurance to and from
non-affiliated insurers in order to limit its maximum loss. Such transfers do
not relieve the Company or the unaffiliated reinsured of their primary
liabilities. The Company cedes to RGA Reinsurance Company and its affiliate
Employers Reassurance Corporation, on a modified coinsurance basis, 80% of the
variable annuity business written since 1994 and 100% of the variable life and
variable universal life excess sales load refund obligation effective 1998.
There were no material reinsurance recoverables from reinsurers outstanding as
of, and for the years ended, December 31, 1998 and 1997.
A summary of reinsurance information as of and for the years ended December
31, follows:
<TABLE>
<CAPTION>
1998 DIRECT ASSUMED CEDED NET
- ----------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Premium and Annuity
Considerations.................... $ 483,328 $ 24,954 $ (38,939) $ 469,343
Death, Annuity, Disability and
Other Benefits.................... $ 64,331 $ 1,574 $ (16,401) $ 49,504
Surrenders......................... $ 739,663 $ -- $ -- $ 739,663
Aggregate Reserves for Future
Benefits.......................... $ 713,425 $ -- $ (134,285) $ 579,140
Policy and Contract Claims......... $ 5,895 $ 85 $ (313) $ 5,667
<CAPTION>
1997 DIRECT ASSUMED CEDED NET
- ----------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Premium and Annuity
Considerations.................... $ 266,427 $ 51,630 $ (21,412) $ 296,645
Death, Annuity, Disability and
Other Benefits.................... $ 79,779 $ 839 $ (7,126) $ 73,492
Surrenders......................... $ 454,417 $ -- $ -- $ 454,417
Aggregate Reserves for Future
Benefits.......................... $ 651,820 $ -- $ (46,637) $ 605,183
Policy and Contract Claims......... $ 5,861 $ 157 $ (346) $ 5,672
<CAPTION>
1996 DIRECT ASSUMED CEDED NET
- ----------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Premium and Annuity
Considerations.................... $ 226,612 $ 33,817 $ (10,185) $ 250,244
Death, Annuity, Disability and
Other Benefits.................... $ 34,950 $ 35,138 $ (3,339) $ 66,749
Surrenders......................... $ 270,165 $ -- $ -- $ 270,165
</TABLE>
In connection with the distribution described in Note 1, on June 30, 1995,
the assets of Lyndon were contributed to the Company. The statutory basis assets
in excess of statutory basis liabilities was approximately $112 million and was
reflected as an increase in Gross Paid-In and Contributed Surplus at December
31, 1995. In 1998, the majority of former Lyndon's assumed business was
recaptured by the unaffiliated direct writer. A ceding commission of $25,622 and
change in reserve of $26,404 for the year ended December 31, 1998, is reflected
in Other Revenue and Increase/(Decrease) in Aggregate Reserves for Future
Benefits in the statutory basis statements of operations, respectively.
<PAGE>
F-12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
Analysis of Annuity Actuarial Reserves and Deposit Liabilities by Withdrawal
Characteristics as of December 31, 1998 (including general and separate account
liabilities) are as follows:
<TABLE>
<CAPTION>
% OF
SUBJECT TO DISCRETIONARY WITHDRAWAL: AMOUNT TOTAL
- --------------------------------------- ------------- ---------
<S> <C> <C>
With market value adjustment........... $ 4,563 0.0%
At book value less current surrender
charge of 5% or more.................. 1,378,056 4.1%
At market value........................ 31,087,511 93.8%
------------- ---------
Total with adjustment or at market
value................................. 32,470,130 97.9%
At book value without adjustment
(minimal or no charge or
adjustment)........................... 665,159 2.0%
Not subject to discretionary
withdrawal............................ 19,739 0.1%
------------- ---------
Reinsurance ceded...................... 33,155,028
Total, net......................... $ 33,155,028
-------------
-------------
</TABLE>
4. RELATED PARTY TRANSACTIONS:
Transactions between the Company and its affiliates within The Hartford
relate principally to tax settlements, reinsurance, rental and service fees,
capital contributions and payments of dividends. The Company has also invested
in bonds of its affiliates, Hartford Financial Services Corporation and HL
Investment Advisors, Inc., and common stock of its subsidiary, ITT Hartford
Life, LTD.
5. FEDERAL INCOME TAXES:
The Company and The Hartford have entered into a tax sharing agreement under
which each member in the consolidated U.S. Federal income tax return will make
payments between them such that, with respect to any period, the amount of taxes
to be paid by the Company, subject to certain adjustments, generally will be
determined as though the Company were filing separate Federal, state and local
income tax returns.
As long as The Hartford continues to own at least 80% of the combined voting
power and 80% of the value of the outstanding capital stock of HLI, the Company
will be included for Federal income tax purposes in the consolidated group of
which The Hartford is the common parent. It is the intention of The Hartford and
its non-life subsidiaries to file a single consolidated Federal income tax
return. The life insurance companies will file a separate consolidated Federal
income tax return. Federal income taxes (received) paid by the Company for
operations and capital gains were $25,780, $(14,499) and $29,793 in 1998, 1997
and 1996, respectively. The effective tax rate was 26%, (26)% and 22% in 1998,
1997 and 1996, respectively.
The Company is currently under audit by the Internal Revenue Service (IRS)
for the three year tax period ending 1995. The audit is not yet complete. As of
December 31, 1998, the Company does not currently expect any material
adjustments to arise from this audit.
The following schedule provides a reconciliation of the tax provision at the
U.S. Federal Statutory rate to Federal income tax (benefit) expense (in
millions):
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Tax provision at U.S. Federal statutory
rate..................................... $ 48 $ 20 $ 30
Tax deferred acquisition costs............ 25 25 27
Statutory to tax reserve differences...... 8 1 --
Unrealized gain on separate accounts...... (41) (44) (21)
Investments and other..................... (4) (17) (17)
--------- --------- ---------
Federal income tax (benefit) expense...... $ 36 $ (15) $ 19
--------- --------- ---------
--------- --------- ---------
</TABLE>
6.CAPITAL AND SURPLUS AND SHAREHOLDER DIVIDEND RESTRICTIONS:
The maximum amount of dividends which can be paid, without prior approval,
by State of Connecticut insurance companies to shareholders is generally
restricted to the greater of 10% of surplus as of the preceding December 31st or
the net gain from operations for the previous year. Dividends are paid as
determined by the Board of Directors and are not cumulative. No dividends were
paid in 1998, 1997 and 1996. The amount available for dividend in 1999 is
$100,541.
7. PENSION PLANS AND OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS:
HLI's employees are included in The Hartford's non-contributory defined
benefit pension plans. These plans provide pension benefits that are based on
years of service and the employee's compensation during the last ten years of
employment. HLI's funding policy is to contribute annually an amount between the
minimum funding requirements set forth in the Employee Retirement Income
Security Act of 1974, as amended, and the maximum amount that can be deducted
for U.S. Federal income tax purposes. Generally, pension costs are funded
through the purchase of affiliated group pension contracts. The cost to HLI was
approximately $9,000 in 1998 and $7,000 in both 1997 and 1996.
HLI also provides, through The Hartford, certain health care and life
insurance benefits for eligible retired employees. A substantial portion of
HLI's employees may become eligible for these benefits upon retirement. HLI's
contribution for health care benefits will depend on the retiree's date of
retirement and years of service. In addition, the plan has a defined dollar cap
which limits average company contributions. HLI has prefunded a portion of the
health care and life insurance obligations through trust funds where such
prefunding can be accomplished on a tax effective basis. Postretirement health
care and life insurance
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-13
- --------------------------------------------------------------------------------
benefits expense, allocated by The Hartford, was immaterial to the results of
operations for 1998, 1997 and 1996.
The assumed rate in the per capita cost of health care (the health care
trend rate) was 7.8% for 1998, decreasing ratably to 5.0% in the year 2003.
Increasing the health care trend rates by one percent per year would have an
immaterial impact on the accumulated postretirement benefit obligation and the
annual expense. To the extent that the actual experience differs from the
inherent assumptions, the effect will be amortized over the average future
service of covered employees.
8. SEPARATE ACCOUNTS:
The Company maintains separate account assets and liabilities totaling $32.9
billion and $23.2 billion as of December 31, 1998 and 1997, respectively.
Separate account assets are reported at fair value and separate account
liabilities are determined in accordance with CARVM, which approximates the
market value less applicable surrender charges. Separate account assets are
segregated from other investments, the policyholder assumes the investment risk,
and the investment income and gains and losses accrue directly to the
policyholder. Separate account management fees, net of minimum guarantees, were
$360 million, $252 million and $144 million in 1998, 1997 and 1996,
respectively, and are recorded as a component of other revenues on the statutory
basis statements of operations.
9. COMMITMENTS AND CONTINGENCIES:
As of December 31, 1998, the Company had no material contingent liabilities,
nor had the Company committed any surplus funds for any contingent liabilities
or arrangements. The Company is involved in pending and threatened litigation in
the normal course of its business in which claims for monetary and punitive
damages have been asserted. Although there can be no assurances, at the present
time the Company does not anticipate that the ultimate liability arising from
such pending or threatened litigation, after consideration of provisions made
for potential losses and costs of defense, will have a material adverse effect
on the statutory capital and surplus of the Company.
As discussed in Note 5, issues may potentially be raised by the IRS in
future audits of open years. Management does not believe that possible audit
adjustments will have a material effect on the statutory capital and surplus of
the Company.
Under insurance guaranty fund laws in each state, insurers licensed to do
business can be assessed up to prescribed limits for policyholder losses
incurred by insolvent companies. The amount of any future assessments on ILA
under these laws cannot be reasonably estimated. Most of the laws do provide,
however, that an assessment may be excused or deferred if it would threaten an
insurer's own financial strength. Additionally, guaranty fund assessments are
used to reduce state premium taxes paid by the Company in certain states. ILA
paid guaranty fund assessments of $1,043, $1,544 and $1,262 in 1998, 1997 and
1996, respectively. ILA incurred guaranteed fund expense of $548 in 1998, 1997
and 1996.
<PAGE>
PART C
<PAGE>
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) All financial statements are included in Part A and Part B of the
Registration Statement.
(b) (1) Resolution of the Board of Directors of Hartford Life and Annuity
Insurance Company ("Hartford") authorizing the establishment of the
Separate Account to be filed by Amendment.(1)
(2) Not applicable.
(3) (a) Principal Underwriter Agreement.(2)
(3) (b) Form of Dealer Agreement.(2)
(4) Form of Individual Flexible Premium Variable Annuity Contract.(4)
(5) Form of Application.
(6) (a) Articles of Incorporation of Hartford.(3)
(6) (b) Bylaws of Hartford.(1)
(7) Not applicable.
(8) Not applicable.
(9) Opinion and Consent of Lynda Godkin, Senior Vice President,
General Counsel, and Corporate Secretary.
(10) Consent of Arthur Andersen LLP, Independent Public Accountants.
- ---------------------------------
(1) Incorporated by reference to Post-Effective Amendment No. 2, to
the Registration Statement File No. 33-73570, dated May 1, 1995.
(2) Incorporated by reference to Post Effective Amendment No. 3, to
the Registration Statement File No. 33-73570, dated April 29,
1996.
(3) Incorporated by reference to Post Effective Amendment No. 19, to
the Registration Statement File No. 33-73570, filed on April 14,
1997.
(4) Incorporated by reference to the Initial Filing to the Registration
Statement, File No. 333-91921, filed on December 1, 1999.
<PAGE>
(11) No financial statements are omitted.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) Copy of Power of Attorney.
(16) Organizational Chart.
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
- -------------------------------------------- -------------------------------------------------------------------------
NAME POSITION WITH HARTFORD
- -------------------------------------------- -------------------------------------------------------------------------
<S> <C>
David A. Carlson Vice President
- -------------------------------------------- -------------------------------------------------------------------------
Peter W. Cummins Senior Vice President
- -------------------------------------------- -------------------------------------------------------------------------
Bruce W. Ferns Vice President
- -------------------------------------------- -------------------------------------------------------------------------
Timothy M. Fitch Vice President & Actuary
- -------------------------------------------- -------------------------------------------------------------------------
Mary Jane B. Fortin Vice President & Chief Accounting Officer
- -------------------------------------------- -------------------------------------------------------------------------
David T. Foy Senior Vice President, Chief Financial Officer & Treasurer, Director*
- -------------------------------------------- -------------------------------------------------------------------------
Lynda Godkin Senior Vice President, General Counsel and Corporate Secretary,
Director*
- -------------------------------------------- -------------------------------------------------------------------------
Lois W. Grady Senior Vice President
- -------------------------------------------- -------------------------------------------------------------------------
Stephen T. Joyce Senior Vice President
- -------------------------------------------- -------------------------------------------------------------------------
Michael D. Keeler Vice President
- -------------------------------------------- -------------------------------------------------------------------------
Robert A. Kerzner Senior Vice President
- -------------------------------------------- -------------------------------------------------------------------------
Thomas M. Marra Executive Vice President, Director*
- -------------------------------------------- -------------------------------------------------------------------------
Steven L. Matthiesen Vice President
- -------------------------------------------- -------------------------------------------------------------------------
Craig R. Raymond Senior Vice President and Chief Actuary
- -------------------------------------------- -------------------------------------------------------------------------
Lowndes A. Smith President and Chief Executive Officer, Director*
- -------------------------------------------- -------------------------------------------------------------------------
David M. Znamierowski Senior Vice President and Chief Investment Officer, Director*
- -------------------------------------------- -------------------------------------------------------------------------
</TABLE>
Unless otherwise indicated, the principal business address of each of the
above individuals is P.O. Box 2999, Hartford, CT 06104-2999.
*Denotes Board of Directors.
<PAGE>
Item 26. Persons Controlled By or Under Common Control with the Depositor or
Registrant
Filed herewith as Exhibit 16.
Item 27. Number of Contract Owners
As of December 31, 1999, there were 3,833 Contract Owners.
Item 28. Indemnification
Under Section 33-772 of the Connecticut General Statutes,
unless limited by its certificate of incorporation, the
Registrant must indemnify a director who was wholly successful,
on the merits or otherwise, in the defense of any proceeding to
which he was a party because he is or was a director of the
corporation against reasonable expenses incurred by him in
connection with the proceeding.
The Registrant may indemnify an individual made a party to a
proceeding because he is or was a director against liability
incurred in the proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the
best interests of the Registrant, and, with respect to any
criminal proceeding, had no reason to believe his conduct was
unlawful. Conn. Gen. Stat. Section 33-771(a). Additionally,
pursuant to Conn. Gen. Stat. Section 33-776, the Registrant may
indemnify officers and employees or agents for liability
incurred and for any expenses to which they becomes subject by
reason of being or having been an employees or officers of the
Registrant. Connecticut law does not prescribe standards for
the indemnification of officers, employees and agents and
expressly states that their indemnification may be broader than
the right of indemnification granted to directors.
The foregoing statements are specifically made subject to the
detailed provisions of Section 33-770 et seq.
Notwithstanding the fact that Connecticut law obligates the
Registrant to indemnify a only a director that was successful
on the merits in a suit, under Article VIII, Section 1 of the
Registrant's bylaws, the Registrant must indemnify both
directors and officers of the Registrant for (1) any claims and
liabilities to which they become subject by reason of being or
having been a directors or officers of the company and legal
and (2) other expenses incurred in defending against such
claims, in each case, to the extent such is consistent with
statutory provisions.
Additionally, the directors and officers of Hartford and
Hartford Securities Distribution Company, Inc. ("HSD") are
covered under a directors and officers liability insurance
policy issued to The Hartford Financial Services Group, Inc.
and its subsidiaries. Such policy will reimburse the Registrant
for any
<PAGE>
payments that it shall make to directors and officers pursuant to law
and will, subject to certain exclusions contained in the
policy, further pay any other costs, charges and expenses and
settlements and judgments arising from any proceeding involving
any director or officer of the Registrant in his past or
present capacity as such, and for which he may be liable,
except as to any liabilities arising from acts that are deemed
to be uninsurable.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.
Item 29. Principal Underwriters
(a) HSD acts as principal underwriter for the following investment
companies:
Hartford Life Insurance Company - Separate Account One
Hartford Life Insurance Company - Separate Account Two
Hartford Life Insurance Company - Separate Account Two (DC Variable
Account I)
Hartford Life Insurance Company - Separate Account Two (DC Variable
Account II)
Hartford Life Insurance Company - Separate Account Two (QP Variable
Account)
Hartford Life Insurance Company - Separate Account Two (Variable
Account "A")
Hartford Life Insurance Company - Separate Account Two (NQ Variable
Account)
Hartford Life Insurance Company - Putnam Capital Manager Trust
Separate Account
Hartford Life Insurance Company - Separate Account Three
Hartford Life Insurance Company - Separate Account Five
Hartford Life Insurance Company - Separate Account Seven
Hartford Life and Annuity Insurance Company - Separate Account One
Hartford Life and Annuity Insurance Company - Putnam Capital Manager
<PAGE>
Trust Separate Account Two
Hartford Life and Annuity Insurance Company - Separate Account Three
Hartford Life and Annuity Insurance Company - Separate Account Five
Hartford Life and Annuity Insurance Company - Separate Account Six
Hartford Life and Annuity Insurance Company - Separate Account Seven
Hart Life Insurance Company - Separate Account One
Hart Life Insurance Company - Separate Account Two
American Maturity Life Insurance Company - Separate Account AMLVA
Servus Life Insurance Company - Separate Account One
Servus Life Insurance Company - Separate Account Two
<TABLE>
<CAPTION>
(b) Directors and Officers of HSD
Name and Principal Positions and Offices
Business Address With Underwriter
------------------ ---------------------
<S> <C>
Lowndes A. Smith President and Chief Executive Officer, Director
Thomas M. Marra Executive Vice President, Director
Peter W. Cummins Senior Vice President
Lynda Godkin Senior Vice President, General Counsel and
Corporate Secretary
David T. Foy Treasurer
George R. Jay Controller
</TABLE>
Unless otherwise indicated, the principal business address of
each of the above individuals is P.O. Box 2999, Hartford, CT
06104-2999.
Item 30. Location of Accounts and Records
All of the accounts, books, records or other documents required to be
kept by Section 31(a) of the Investment Company Act of 1940 and rules
thereunder, are maintained by Hartford at 200 Hopmeadow Street,
Simsbury, Connecticut 06089.
Item 31. Management Services
All management contracts are discussed in Part A and Part B of this
Registration Statement.
Item 32. Undertakings
(a) The Registrant hereby undertakes to file a post-effective amendment
to this Registration Statement as frequently as is necessary to
ensure that the audited financial statements in the Registration
Statement are never more than 16 months old so long as payments
under the variable annuity Contracts may be accepted.
<PAGE>
(b) The Registrant hereby undertakes to include either (1) as part of
any application to purchase a Contract offered by the Prospectus,
a space that an applicant can check to request a Statement of
Additional Information, or (2) a post card or similar written
communication affixed to or included in the Prospectus that the
applicant can remove to send for a Statement of Additional
Information.
(c) The Registrant hereby undertakes to deliver any Statement of
Additional Information and any financial statements required to be
made available under this Form promptly upon written or oral
request.
(d) Hartford hereby represents that the aggregate fees and charges
under the Contract are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks
assumed by Hartford.
The Registrant is relying on the no-action letter issued by the
Division of Investment Management to American Counsel of Life
Insurance, Ref. No. IP-6-88, November 28, 1988. The Registrant has
complied with conditions one through four of the no-action letter.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Registration Statement to be signed on its
behalf, in the Town of Simsbury, and State of Connecticut on this 4th day of
February, 2000.
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY -
SEPARATE ACCOUNT SEVEN
(Registrant)
By: THOMAS M. MARRA *By: /s/ MARIANNE O'DOHERTY
--------------------------------------- -----------------------
Thomas M. Marra, Executive Vice President* Marianne O'Doherty
Attorney-in-Fact
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
(Depositor)
*By: THOMAS M. MARRA
----------------------------------------
Thomas M. Marra, Executive Vice President*
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons and in the
capacity and on the date indicated.
David T. Foy, Senior Vice President, Chief
Financial Officer & Treasurer, Director*
Lynda Godkin, Senior Vice President,
General Counsel & Corporate Secretary, Director*
Thomas M. Marra, Executive Vice *By: /s/ MARIANNE O'DOHERTY
President, Director* -----------------------
Lowndes A. Smith, President & Marianne O'Doherty
Chief Executive Officer, Director* Attorney-In-Fact
David M. Znamierowski, Senior Vice President and
Chief Invesetment Officer, Director* Dated: February 4, 2000
<PAGE>
EXHIBIT INDEX
(5) Form of Application.
(9) Opinion and Consent of Lynda Godkin, Senior Vice President, General
Counsel and Corporate Secretary.
(10) Consent of Arthur Andersen LLP, Independent Public Accountants.
(15) Power of Attorney.
(16) Organizational Chart.
<PAGE>
<TABLE>
<S> <C> <C> <C>
- ----------------------------------- U.S.P.S.-First Class or Hartford Life - IPS
HARTFORD LEADERS PLUS (COUNTRYWIDE) Express-Mail to: P.O. Box 5085
- ----------------------------------- [LOGO] Hartford, CT 06102-5085
Private Express Mail: Hartford Life - IPS
REQUEST FOR HARTFORD LEADERS PLUS 200 Hopmeadow Street
VARIABLE ANNUITY Simsbury, CT 06089
/ / Hartford Life Insurance Company
/ / Hartford Life and Annuity Insurance Company
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
<S> <C>
1. CONTRACT OWNER Ownership Type: / / Individual / / Trust / / CRT / / UGMA / / UTMA / / NRA / / Corporation
/ / Other ___________
/ / Mr. / / Mrs. / / Ms. Sex: / / M / / F U.S. Citizen: / / Yes / / No
- -------------------------------------------------------------------------------------------------------------
First Name MI | Last Name
|
- -------------------------------------------------------------------------------------------------------------
ADDITIONAL OWNER INFORMATION (IE, NAME OF TRUST/CORPORATION) | Email Address
|
- -------------------------------------------------------------------------------------------------------------
Social Security Number/TIN | Date of Birth | Daytime Telephone Number
| |
- -------------------------------------------------------------------------------------------------------------
Street Address | City | State | ZIP
| | |
- -------------------------------------------------------------------------------------------------------------
2. JOINT CONTRACT OWNER (If any) | Date of Birth | Social Security Number/TIN
/ / Mr. / / Mrs. / / Ms. Sex: / / M / / F | |
U.S. Citizen: / / Yes / / No | |
- -------------------------------------------------------------------------------------------------------------
First Name MI | Last Name | Relationship to Contract Owner
| |
- -------------------------------------------------------------------------------------------------------------
3. ANNUITANT (If different from Contract Owner) | Date of Birth | Social Security Number/TIN
/ / Mr. / / Mrs. / / Ms. Sex: / / M / / F | |
- -------------------------------------------------------------------------------------------------------------
First Name MI | Last Name | Daytime Telephone Number
| |
- -------------------------------------------------------------------------------------------------------------
Street Address | City | State | ZIP
| | |
- -------------------------------------------------------------------------------------------------------------
4. CONTINGENT ANNUITANT (If applicable) | Date of Birth | Social Security Number/TIN
/ / Mr. / / Mrs. / / Ms. Sex: / / M / / F | |
- -------------------------------------------------------------------------------------------------------------
First Name MI | Last Name
|
- -------------------------------------------------------------------------------------------------------------
5. BENEFICIARY (IES) (Unless indicated otherwise, proceeds will be divided equally. Please attach a separate
sheet to add additional beneficiaries.)
- -------------------------------------------------------------------------------------------------------------
/ / Primary | Relationship to Contract Owner | Date of Birth | Social Security Number/TIN
% | | |
- -------------------------------------------------------------------------------------------------------------
First Name MI | Last Name
|
- -------------------------------------------------------------------------------------------------------------
/ / Primary / / Contingent | Relationship to Contract Owner | Date of Birth | Social Security Number/TIN
% | | |
- -------------------------------------------------------------------------------------------------------------
First Name MI | Last Name
|
- -------------------------------------------------------------------------------------------------------------
6. OPTIONAL DEATH BENEFIT / / Yes IF THE OPTIONAL DEATH BENEFIT IS NOT SELECTED, YOUR
(.15% charge during the accumulation phase.) BENEFICIARY(IES) WILL RECEIVE THE STANDARD DEATH BENEFIT.
PLEASE REFER TO THE PROSPECTUS FOR COMPLETE DETAILS
REGARDING THE DEATH BENEFIT. (NOT AVAILABLE IF OWNER(S) AND
ANNUITANT ARE OVER AGE 75 AND NOT AVAILABLE IN WA.)
- -------------------------------------------------------------------------------------------------------------
7. PURCHASE PAYMENT (Make check payable to HARTFORD LIFE INSURANCE COMPANY)
Monies remitted via: / / Check / / Wire / / 1035(a) Exchange / / Transfer/Rollover $______________
- -------------------------------------------------------------------------------------------------------------
8. PLAN PAYMENT TYPE (Complete Section A or B)
A. NON QUALIFIED / / Initial Purchase / / 1035(a) Tax-Free Exchange Cost Basis $______________
(please provide Cost Basis)
- -------------------------------------------------------------------------------------------------------------
B. QUALIFIED / / New Contribution / / Transfer / / Rollover Contribution for tax year ______________
- -------------------------------------------------------------------------------------------------------------
INDIVIDUALLY OWNED | EMPLOYER PLAN - / / ALLOCATED
- -------------------------------------------------------------------------------------------------------------
/ / Traditional IRA / / Roth IRA / / SEPIRA | / / 401(k) / / 401(a) / / Keogh/HR-10
/ / Custodial IRA / / 403(b) / / SIMPLE IRA (Non-DFI only)| / / Other:_________________________________
- -------------------------------------------------------------------------------------------------------------
9. RATE LOCK-90 DAY FIXED ACCUMULATION FEATURE/DCA PLUS/1035(A) EXCHANGE/TRANSFER RATE LOCK / / Yes _______%
ESTIMATED DOLLAR AMOUNT $____________________
IF RATE LOCK IS NOT SELECTED, THE RATE WILL BE DETERMINED WHEN HARTFORD LIFE RECEIVES THE FUNDS.
- -------------------------------------------------------------------------------------------------------------
HARTFORD LEADERS PLUS (COUNTRYWIDE)
HLASHAPP99 Order #: HL-16310
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
10. INVESTMENT SELECTION The invested amount will be allocated as selected here. If choosing an Asset Allocation Portfolio or
Dollar Cost Averaging Program, complete the appropriate enrollment form. Please note: Whole percentages only.
| %| | %| | %|
- -----------------------------------------------------------------------------------------------------------------------------
American Funds Asset Allocation Fund| | MFS-Registered Trademark-| | Templeton Global Growth Fund| |
| | Capital Opportunities Series| | | |
- -----------------------------------------------------------------------------------------------------------------------------
American Funds Bond Fund| | MFS-Registered Trademark-| | Templeton International Fund| |
| | Emerging Growth Series| | | |
- -----------------------------------------------------------------------------------------------------------------------------
American Funds Global Growth Fund| | MFS-Registered Trademark-| | Hartford Money Market HLS Fund| |
| | Global Equity Series| | | |
- -----------------------------------------------------------------------------------------------------------------------------
American Funds Global Small Cap. Fund| | MFS-Registered Trademark-| | Fixed Accumulation Feature*| |
| | Growth Series| | | |
- -----------------------------------------------------------------------------------------------------------------------------
American Funds Growth Fund| | MFS-Registered Trademark-| | DCAPlus 6-Month Program*| |
| | Growth with Income Series| | | |
- -----------------------------------------------------------------------------------------------------------------------------
American Funds Growth-Income Fund| | MFS-Registered Trademark-| | DCAPlus 12-Month Program*| |
| | High Income Series| | | |
- -----------------------------------------------------------------------------------------------------------------------------
American Funds International Fund| | MFS-Registered Trademark-| | | |
| | New Discovery Series| | | |
- -----------------------------------------------------------------------------------------------------------------------------
American Funds New World Fund| | MFS-Registered Trademark-| | Other | |
| | Total Return Series| | | |
- -----------------------------------------------------------------------------------------------------------------------------
Franklin Real Estate Securities Fund| | Mutual Shares Securities Fund| | | |
- -----------------------------------------------------------------------------------------------------------------------------
Franklin Small Cap Fund| | Templeton Asset Allocation Fund| | | |
- -----------------------------------------------------------------------------------------------------------------------------
Franklin Strategic| | Templeton Developing Markets| |*Subject to state | |
Income Investments Fund| | Equity Fund| | availability. Total |100%|
- -----------------------------------------------------------------------------------------------------------------------------------
11. SPECIAL REMARKS _______________________________________________________________________________________________________________
- -----------------------------------------------------------------------------------------------------------------------------------
12. OWNER(S) ACKNOWLEDGEMENTS
Will the annuity applied for replace one or more existing annuity or life insurance contracts? / / No / / Yes
- - If yes, please explain in "Special Remarks," Section 11.
Have you purchased another deferred annuity issued by Hartford Life during the current calendar year? / / No / / Yes
THE FOLLOWING STATES REQUIRE INSURANCE TO ACKNOWLEDGE A FRAUD WARNING STATEMENT. PLEASE REFER TO THE FRAUD WARNING STATEMENT FOR
YOUR STATE AS INDICATED BELOW. CHECK THE APPROPRIATE BOX PERTAINING TO YOUR RESIDENT STATE, SIGN AND DATE AT THE BOTTOM OF THIS
SECTION.
/ / ARKANSAS Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or knowingly presents
false information in an application for insurance is guilty of a crime and may be subject to fines and confinement in prison.
/ / ARIZONA Upon your written request we will provide you, within a reasonable period of time, reasonable, factual information
regarding the benefits and provisions of the annuity contract for which you are applying. If for any reason you are not satisfied
with the contract, you may return the contract within ten days after you receive it. If the contract you are applying for is a
variable annuity, you will receive an amount equal to the sum of (i) the difference between the premiums paid and the amounts
allocated to any account under the contract and (ii) the Contract Value on the date the returned contract is received by our
company or our agent.
/ / COLORADO It is unlawful to knowingly provide false, incomplete, misleading facts or information to an insurance company for
the purpose of defrauding or attempting to defraud the company. Penalties may include imprisonment, fines, denial of insurance,
and civil damages. Any insurance company or agent of an insurance company who knowingly provides false, incomplete or misleading
facts or information to a policyholder or claimant for the purpose of defrauding or attempting to defraud the policyholder or
claimant with regard to a settlement or award payable from insurance proceeds shall be reported to the Colorado Division of
Insurance within the Department of Regulatory Services.
/ / FLORIDA Any person who knowingly and with intent to injure, defraud or deceive any insurer files a statement of claim or an
application containing any false, incomplete or misleading information is guilty of a felony of the third degree.
/ / KENTUCKY Any person who, knowingly and with intent to defraud any insurance company or other person, files an application for
insurance containing any materially false information or conceals, for the purpose of misleading, information concerning any
fact thereto commits a fraudulent act, which is a crime.
/ / MAINE It is a crime to knowingly provide false, incomplete or misleading information to an insurance company for the purpose
of defrauding the company. Penalties may include imprisonment, fines or a denial of insurance benefits.
/ / NEW JERSEY Any person who includes any false or misleading information on an application for an insurance policy is subject
to criminal and civil penalties.
/ / NEW MEXICO Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or knowingly
presents false information in an application for insurance is guilty of a crime and may be subject to civil fines and criminal
penalties.
/ / OHIO Any person who, with intent to defraud or knowing that he/she is facilitating a fraud against an insurer, submits an
application or files a claim containing a false or deceptive statement is guilty of insurance fraud.
/ / PENNSYLVANIA Any person who knowingly and with intent to defraud any insurance company or other person files an application
for insurance or statement of claim containing any materially false information or conceals, for the purpose of misleading,
information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such person
to criminal and civil penalties.
I/we hereby represent my/our answers to the above questions to be true and correct to the best of my/our knowledge and belief.
I/WE UNDERSTAND THAT ANNUITY PAYMENTS OR SURRENDER VALUES, WHEN BASED UPON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE
VARIABLE AND NOT GUARANTEED AS TO A FIXED DOLLAR AMOUNT.
/ / RECEIPT OF A VARIABLE ANNUITY AND FUND PROSPECTUS IS HEREBY ACKNOWLEDGED. If not checked, the appropriate prospectus will
be mailed to you. Signed at: * / /
--------------------------- --------------- -----------------
City State Date
---------------------------------------------------------- ----------------------------------------------
Contract Owner Signature (Trustee/Custodian, if applicable) Joint Contract Owner Signature (If applicable)
* IF THE STATE ABOVE IS DIFFERENT THAN RESIDENCE STATE, PLEASE SUBMIT A POLICY SITUS FORM. (HL-15120)
- -----------------------------------------------------------------------------------------------------------------------------------
13. REGISTERED REPRESENTATIVE ACKNOWLEDGEMENTS
Do you, as agent, have reason to believe the contract requested __________________________________________
for will replace existing annuities or insurance? / / Yes / / No Licensed Agent Signature
- -----------------------------------------------------------------------------------------------------------------------------------
First Name MI | Last Name
|
- -----------------------------------------------------------------------------------------------------------------------------------
Broker/Dealer | Broker/Dealer Street Address | City | State | ZIP
| | |
- -----------------------------------------------------------------------------------------------------------------------------------
Business Telephone Number | Fax Number | Licensed Agent SSN
| |
- -----------------------------------------------------------------------------------------------------------------------------------
Select Commission Program: / / A / / B / / C Broker/Dealer Client Account Number
ONCE SELECTED THIS PROGRAM CANNOT BE CHANGED.
[__________________________________]
- -----------------------------------------------------------------------------------------------------------------------------------
HARTFORD LEADERS PLUS (COUNTRYWIDE)
HLASHAPP99 Order #: HL-16310
</TABLE>
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<S> <C> <C> <C>
- ---------------------------------------- U.S.P.S.-First Class or Hartford Life - IPS
HARTFORD LEADERS PLUS (COUNTRYWIDE/BANK) Express-Mail to: P.O. Box 5085
- ---------------------------------------- [LOGO] Hartford, CT 06102-5085
REQUEST FOR HARTFORD LEADERS PLUS Private Express Mail: Hartford Life - IPS
VARIABLE ANNUITY 200 Hopmeadow Street
Simsbury, CT 06089
/ / Hartford Life Insurance Company
/ / Hartford Life and Annuity Insurance Company
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
<S> <C>
1. CONTRACT OWNER Ownership Type: / / Individual / / Trust / / CRT / / UGMA / / UTMA / / NRA / / Corporation
/ / Other ___________
/ / Mr. / / Mrs. / / Ms. Sex: / / M / / F U.S. Citizen: / / Yes / / No
- -------------------------------------------------------------------------------------------------------------
First Name MI | Last Name
|
- -------------------------------------------------------------------------------------------------------------
ADDITIONAL OWNER INFORMATION (IE, NAME OF TRUST/CORPORATION) | Email Address
|
- -------------------------------------------------------------------------------------------------------------
Social Security Number/TIN | Date of Birth | Daytime Telephone Number
| |
- -------------------------------------------------------------------------------------------------------------
Street Address | City | State | ZIP
| | |
- -------------------------------------------------------------------------------------------------------------
2. JOINT CONTRACT OWNER (If any) | Date of Birth | Social Security Number/TIN
/ / Mr. / / Mrs. / / Ms. Sex: / / M / / F | |
U.S. Citizen: / / Yes / / No | |
- -------------------------------------------------------------------------------------------------------------
First Name MI | Last Name | Relationship to Contract Owner
| |
- -------------------------------------------------------------------------------------------------------------
3. ANNUITANT (If different from Contract Owner) | Date of Birth | Social Security Number/TIN
/ / Mr. / / Mrs. / / Ms. Sex: / / M / / F | |
- -------------------------------------------------------------------------------------------------------------
First Name MI | Last Name | Daytime Telephone Number
| |
- -------------------------------------------------------------------------------------------------------------
Street Address | City | State | ZIP
| | |
- -------------------------------------------------------------------------------------------------------------
4. CONTINGENT ANNUITANT (If applicable) | Date of Birth | Social Security Number/TIN
/ / Mr. / / Mrs. / / Ms. Sex: / / M / / F | |
- -------------------------------------------------------------------------------------------------------------
First Name MI | Last Name
|
- -------------------------------------------------------------------------------------------------------------
5. BENEFICIARY (IES) (Unless indicated otherwise, proceeds will be divided equally. Please attach a separate
sheet to add additional beneficiaries.)
- -------------------------------------------------------------------------------------------------------------
/ / Primary | Relationship to Contract Owner | Date of Birth | Social Security Number/TIN
% | | |
- -------------------------------------------------------------------------------------------------------------
First Name MI | Last Name
|
- -------------------------------------------------------------------------------------------------------------
/ / Primary / / Contingent | Relationship to Contract Owner | Date of Birth | Social Security Number/TIN
% | | |
- -------------------------------------------------------------------------------------------------------------
First Name MI | Last Name
|
- -------------------------------------------------------------------------------------------------------------
6. OPTIONAL DEATH BENEFIT / / Yes IF THE OPTIONAL DEATH BENEFIT IS NOT SELECTED, YOUR
(.15% charge during the accumulation phase.) BENEFICIARY(IES) WILL RECEIVE THE STANDARD DEATH BENEFIT.
PLEASE REFER TO THE PROSPECTUS FOR COMPLETE DETAILS
REGARDING THE DEATH BENEFIT. (NOT AVAILABLE IF OWNER(S) AND
ANNUITANT ARE OVER AGE 75 AND NOT AVAILABLE IN WA.)
- -------------------------------------------------------------------------------------------------------------
7. PURCHASE PAYMENT (Make check payable to HARTFORD LIFE INSURANCE COMPANY)
Monies remitted via: / / Check / / Wire / / 1035(a) Exchange / / Transfer/Rollover $______________
- -------------------------------------------------------------------------------------------------------------
8. PLAN PAYMENT TYPE (Complete Section A or B)
A. NON QUALIFIED / / Initial Purchase / / 1035(a) Tax-Free Exchange Cost Basis $______________
(please provide Cost Basis)
- -------------------------------------------------------------------------------------------------------------
B. QUALIFIED / / New Contribution / / Transfer / / Rollover Contribution for tax year ______________
- -------------------------------------------------------------------------------------------------------------
INDIVIDUALLY OWNED | EMPLOYER PLAN - / / ALLOCATED
- -------------------------------------------------------------------------------------------------------------
/ / Traditional IRA / / Roth IRA / / SEPIRA | / / 401(k) / / 401(a) / / Keogh/HR-10
/ / Custodial IRA / / 403(b) / / SIMPLE IRA (Non-DFI only)| / / Other:_________________________________
- -------------------------------------------------------------------------------------------------------------
9. RATE LOCK-90 DAY FIXED ACCUMULATION FEATURE/DCA PLUS/1035(A) EXCHANGE/TRANSFER RATE LOCK / / Yes _______%
ESTIMATED DOLLAR AMOUNT $____________________
IF RATE LOCK IS NOT SELECTED, THE RATE WILL BE DETERMINED WHEN HARTFORD LIFE RECEIVES THE FUNDS.
- -------------------------------------------------------------------------------------------------------------
HARTFORD LEADERS PLUS (COUNTRYWIDE/BANK)
HLASHAPP99 Order #: HL-16311
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
10. INVESTMENT SELECTION The invested amount will be allocated as selected here. If choosing an Asset Allocation Portfolio or
Dollar Cost Averaging Program, complete the appropriate enrollment form. Please note: Whole percentages only.
| %| | %| | %|
- -----------------------------------------------------------------------------------------------------------------------------
American Funds Asset Allocation Fund| | MFS-Registered Trademark-| | Templeton Global Growth Fund| |
| | Capital Opportunities Series| | | |
- -----------------------------------------------------------------------------------------------------------------------------
American Funds Bond Fund| | MFS-Registered Trademark-| | Templeton International Fund| |
| | Emerging Growth Series| | | |
- -----------------------------------------------------------------------------------------------------------------------------
American Funds Global Growth Fund| | MFS-Registered Trademark-| | Hartford Money Market HLS Fund| |
| | Global Equity Series| | | |
- -----------------------------------------------------------------------------------------------------------------------------
American Funds Global Small Cap. Fund| | MFS-Registered Trademark-| | Fixed Accumulation Feature*| |
| | Growth Series| | | |
- -----------------------------------------------------------------------------------------------------------------------------
American Funds Growth Fund| | MFS-Registered Trademark-| | DCAPlus 6-Month Program*| |
| | Growth with Income Series| | | |
- -----------------------------------------------------------------------------------------------------------------------------
American Funds Growth-Income Fund| | MFS-Registered Trademark-| | DCAPlus 12-Month Program*| |
| | High Income Series| | | |
- -----------------------------------------------------------------------------------------------------------------------------
American Funds International Fund| | MFS-Registered Trademark-| | | |
| | New Discovery Series| | | |
- -----------------------------------------------------------------------------------------------------------------------------
American Funds New World Fund| | MFS-Registered Trademark-| | Other | |
| | Total Return Series| | | |
- -----------------------------------------------------------------------------------------------------------------------------
Franklin Real Estate Securities Fund| | Mutual Shares Securities Fund| | | |
- -----------------------------------------------------------------------------------------------------------------------------
Franklin Small Cap Fund| | Templeton Asset Allocation Fund| | | |
- -----------------------------------------------------------------------------------------------------------------------------
Franklin Strategic| | Templeton Developing Markets| |*Subject to state | |
Income Investments Fund| | Equity Fund| | availability. Total |100%|
- -----------------------------------------------------------------------------------------------------------------------------------
11. SPECIAL REMARKS _______________________________________________________________________________________________________________
- -----------------------------------------------------------------------------------------------------------------------------------
12. OWNER(S) ACKNOWLEDGEMENTS
Will the annuity applied for replace one or more existing annuity or life insurance contracts? / / No / / Yes
- - If yes, please explain in "Special Remarks," Section 11.
Have you purchased another deferred annuity issued by Hartford Life during the current calendar year? / / No / / Yes
- -----------------------------------------------------------------------------------------------------------------------------------
- - ANNUITIES ARE NOT FDIC INSURED.
- - ANNUITIES ARE NOT OBLIGATIONS OR DEPOSITS OF, AND ARE NOT UNDERWRITTEN OR GUARANTEED BY, ANY BANK OR
FINANCIAL INSTITUTION OR ANY OF ITS AFFILIATES.
- - NEITHER A FINANCIAL INSTITUTION, BANK, NOR ITS AFFILIATES, GUARANTEE PERFORMANCE BY THE ANNUITY ISSUER.
- - ANNUITIES INVOLVE INVESTMENT RISKS, INCLUDING INTEREST RATE RISK. THE MARKET VALUE OF THE INVESTMENT MAY
FLUCTUATE, CAUSING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
- - ANNUITIES ARE UNRELATED TO AND NOT A CONDITION OF THE PROVISION OR TERM OF ANY BANKING SERVICE OR ACTIVITY.
[LOGOS]
- -----------------------------------------------------------------------------------------------------------------------------------
THE FOLLOWING STATES REQUIRE INSURANCE TO ACKNOWLEDGE A FRAUD WARNING STATEMENT. PLEASE REFER TO THE FRAUD WARNING STATEMENT FOR
YOUR STATE AS INDICATED BELOW. CHECK THE APPROPRIATE BOX PERTAINING TO YOUR RESIDENT STATE, SIGN AND DATE AT THE BOTTOM OF THIS
SECTION.
/ / ARKANSAS Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or knowingly presents
false information in an application for insurance is guilty of a crime and may be subject to fines and confinement in prison.
/ / ARIZONA Upon your written request we will provide you, within a reasonable period of time, reasonable, factual information
regarding the benefits and provisions of the annuity contract for which you are applying. If for any reason you are not satisfied
with the contract, you may return the contract within ten days after you receive it. If the contract you are applying for is a
variable annuity, you will receive an amount equal to the sum of (i) the difference between the premiums paid and the amounts
allocated to any account under the contract and (ii) the Contract Value on the date the returned contract is received by our
company or our agent.
/ / COLORADO It is unlawful to knowingly provide false, incomplete, misleading facts or information to an insurance company for
the purpose of defrauding or attempting to defraud the company. Penalties may include imprisonment, fines, denial of insurance,
and civil damages. Any insurance company or agent of an insurance company who knowingly provides false, incomplete or misleading
facts or information to a policyholder or claimant for the purpose of defrauding or attempting to defraud the policyholder or
claimant with regard to a settlement or award payable from insurance proceeds shall be reported to the Colorado Division of
Insurance within the Department of Regulatory Services.
/ / FLORIDA Any person who knowingly and with intent to injure, defraud or deceive any insurer files a statement of claim or an
application containing any false, incomplete or misleading information is guilty of a felony of the third degree.
/ / KENTUCKY Any person who, knowingly and with intent to defraud any insurance company or other person, files an application
for insurance containing any materially false information or conceals, for the purpose of misleading, information concerning any
fact thereto commits a fraudulent act, which is a crime.
/ / MAINE It is a crime to knowingly provide false, incomplete or misleading information to an insurance company for the purpose
of defrauding the company. Penalties may include imprisonment, fines or a denial of insurance benefits.
/ / NEW JERSEY Any person who includes any false or misleading information on an application for an insurance policy is subject
to criminal and civil penalties.
/ / NEW MEXICO Any person who knowingly presents a false or fraudulent claim for payment of a loss or benefit or knowingly
presents false information in an application for insurance is guilty of a crime and may be subject to civil fines and criminal
penalties.
/ / OHIO Any person who, with intent to defraud or knowing that he/she is facilitating a fraud against an insurer, submits an
application or files a claim containing a false or deceptive statement is guilty of insurance fraud.
/ / PENNSYLVANIA Any person who knowingly and with intent to defraud any insurance company or other person files an application
for insurance or statement of claim containing any materially false information or conceals, for the purpose of misleading,
information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such person to
criminal and civil penalties.
I/we hereby represent my/our answers to the above questions to be true and correct to the best of my/our knowledge and belief.
I/WE UNDERSTAND THAT ANNUITY PAYMENTS OR SURRENDER VALUES, WHEN BASED UPON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE
VARIABLE AND NOT GUARANTEED AS TO A FIXED DOLLAR AMOUNT.
/ / RECEIPT OF A VARIABLE ANNUITY AND FUND PROSPECTUS IS HEREBY ACKNOWLEDGED. If not checked, the appropriate prospectus will
be mailed to you. Signed at: * / /
--------------------------- --------------- -----------------
City State Date
---------------------------------------------------------- ----------------------------------------------
Contract Owner Signature (Trustee/Custodian, if applicable) Joint Contract Owner Signature (If applicable)
* IF THE STATE ABOVE IS DIFFERENT THAN RESIDENCE STATE, PLEASE SUBMIT A POLICY SITUS FORM. (HL-15120)
- -----------------------------------------------------------------------------------------------------------------------------------
13. REGISTERED REPRESENTATIVE ACKNOWLEDGEMENTS
Do you, as agent, have reason to believe the contract requested __________________________________________
for will replace existing annuities or insurance? / / Yes / / No Licensed Agent Signature
- -----------------------------------------------------------------------------------------------------------------------------------
First Name MI | Last Name
|
- -----------------------------------------------------------------------------------------------------------------------------------
Broker/Dealer | Broker/Dealer Street Address | City | State | ZIP
| | |
- -----------------------------------------------------------------------------------------------------------------------------------
Business Telephone Number | Fax Number | Licensed Agent SSN
| |
- -----------------------------------------------------------------------------------------------------------------------------------
Select Commission Program: / / A / / B / / C Broker/Dealer Client Account Number
ONCE SELECTED THIS PROGRAM CANNOT BE CHANGED.
[__________________________________]
- -----------------------------------------------------------------------------------------------------------------------------------
HLASHAPP99 HARTFORD LEADERS PLUS (COUNTRYWIDE) Order #: HL-16311
</TABLE>
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<TABLE>
<S> <C> <C>
MAILING ADDRESSES: HARTFORD LEADERS PLUS
FOR STANDARD MAIL DELIVERY: INVESTEASE-REGISTERED TRADEMARK-, DCA, ASSET ALLOCATION
Hartford Life - IPS PO Box 5085 AND AUTOMATIC INCOME PROGRAM
Hartford, CT 06102-5085 ENROLLMENT FORM
FOR PRIVATE EXPRESS MAIL CARRIERS:
Hartford Life - IPS 200 Hopmeadow Street
[LOGO] Simsbury, CT 06089
- -----------------------------------------------------------------------------------------------------------------------------------
1. OWNER INFORMATION
- -----------------------------------------------------------------------------------------------------------------------------------
Contract/Certificate Owner Name Contract/Certificate Owner SSN/TIN
- -----------------------------------------------------------------------------------------------------------------------------------
Existing/Pending Contract/Certificate Number (if any) Contract Owner Phone Number
- -----------------------------------------------------------------------------------------------------------------------------------
2. INVESTEASE-REGISTERED TRADEMARK- ATTACH A VOIDED CHECK OR SAVINGS DEPOSIT SLIP TO THIS FORM.
- -----------------------------------------------------------------------------------------------------------------------------------
DESTINATION FUNDS:
Amount of Investment (Minimum: $50 per contract) Frequency : / / Monthly / / Quarterly ____________________
DATE OF TRANSFER* (1ST - 28TH OF THE MONTH):_____________ Source: / / Checking / / Savings ____________________
TRANSFERS WILL BE PROCESSED ON THE NEXT BUSINESS DAY. * YOU MAY SELECT MULTIPLE TRANSFER DATES PER FREQUENCY.
- ----------------------------------------------------------------- ---------------------------------------------------
Name of Bank (Must be a member of the ACH network to participate.) City, State (Branch location)
- ----------------------------------------------------------------- ---------------------------------------------------
Bank Checking/Savings Account Number ACH/Transit Routing Number
THIS MAY BE OBTAINED FROM YOUR BANK.
- -----------------------------------------------------------------------------------------------------------------------------------
3. DOLLAR COST AVERAGING | PROGRAM ENROLLMENT AMOUNT $___________________
a. PROGRAM | DCA PLUS PROGRAM STANDARD PROGRAM
Client can be enrolled in only | / / 6-Month Program OR | / / Fixed Dollar
ONE DCA program per contract. | / / 12-Month Program | / / Interest Only
| |
b. FREQUENCY | |
Identify the frequency. For monthly | Monthly Only _________ # of months | / / Monthly _________ # of months
frequencies, indicate the number of | (For 6-Month Program, indicate between | / / Quarterly _________ # of quarters
months. | 3-6 months) | / / Indefinitely
| (For 12-Month Program, indicate between |
| 7-12 months) | FIXED DOLLAR ONLY INTEREST ONLY
| | Fixed Accumulation $____ Fixed Accumulation $____
c. SOURCE FUND | | Feature Feature
Select the fund(s) from where the | |
transfer should occur. Indicate | Source fund will be as indicated in Plus | Hartford Money Hartford Money
which fund(s) and the total amount | Program selected. | Market HLS Fund $______ Market HLS Fund $______
that should be moved. | | (total amount must be
| | 50% to 100%)
| HARTFORD LIFE WILL CALCULATE THE MONTHLY | Other Funds ___________ ___________
| TRANSFER AMOUNT. | $__________ $__________
- -----------------------------------------------------------------------------------------------------------------------------------
Changes in the allocation of the destination funds are permitted during the life of the program. At the end of the program term,
there will be a final monthly transfer of the entire amount remaining in the program. Subsequent premium payments received during
the term selected will be transferred over the remaining months of the term.
DESTINATION FUNDS - PLEASE USE WHOLE PERCENTAGES.
American Funds Asset Allocation Fund ____% Franklin Real Estate Securities Fund ____% MFS-Registered Trademark-
American Funds Bond Fund ____% Franklin Small Cap Fund ____% High Income Series ____%
American Funds Global Growth Fund ____% Franklin Strategic Income Invest. Fund ____% MFS-Registered Trademark-
American Funds Global Small Cap. Fund ____% MFS-Registered Trademark- New Discovery Series ____%
American Funds Growth Fund ____% Capital Opportunities Series ____% MFS-Registered Trademark-
American Funds Growth-Income Fund ____% MFS-Registered Trademark- Total Return Series ____%
American Funds International Fund ____% Emerging Growth Series ____% Mutual Shares Securities Fund ____%
American Funds New World Fund ____% MFS-Registered Trademark- Templeton Asset Allocation Fund ____%
Global Equity Series ____% Templeton Devel. Markets Equity Fund ____%
MFS-Registered Trademark- Templeton Global Growth Fund ____%
Growth Series ____% Templeton International Fund ____%
MFS-Registered Trademark- Hartford Money Market HLS Fund ____%
Growth with Income Series ____%
- -----------------------------------------------------------------------------------------------------------------------------------
4. ASSET ALLOCATION SOURCE: / / Initial Payment / / Existing Contract / / DCAProgram (Complete Section 3)
DAY OF MONTH: _____ FREQUENCY: / / Quarterly / / Semi-Annually / / Annually
a. CUSTOMIZED PORTFOLIO SELECTION - PLEASE USE WHOLE PERCENTAGES.
American Funds Asset Allocation Fund ____% Franklin Real Estate Securities Fund ____% MFS-Registered Trademark-
American Funds Bond Fund ____% Franklin Small Cap Fund ____% High Income Series ____%
American Funds Global Growth Fund ____% Franklin Strategic Income Invest. Fund ____% MFS-Registered Trademark-
American Funds Global Small Cap. Fund ____% MFS-Registered Trademark- New Discovery Series ____%
American Funds Growth Fund ____% Capital Opportunities Series ____% MFS-Registered Trademark-
American Funds Growth-Income Fund ____% MFS-Registered Trademark- Total Return Series ____%
American Funds International Fund ____% Emerging Growth Series ____% Mutual Shares Securities Fund ____%
American Funds New World Fund ____% MFS-Registered Trademark- Templeton Asset Allocation Fund ____%
Global Equity Series ____% Templeton Devel. Markets Equity Fund ____%
MFS-Registered Trademark- Templeton Global Growth Fund ____%
Growth Series ____% Templeton International Fund ____%
MFS-Registered Trademark- Hartford Money Market HLS Fund ____%
Growth with Income Series ____%
PROGENR99 Order #: HL-16313 Printed in U.S.A. -C- Hartford Life Hartford, CT 06102-5085
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
5. AUTOMATIC INCOME PROGRAM ENROLLMENT
a. PAYMENT CYCLE: / / Monthly / / Quarterly / / Semi-Annually / / Annually
b. AMOUNT (Specify the amount per payment cycle to be distributed from each selected Investment Choice. Please refer to your
prospectus for the maximum amount available without a surrender charge. Minimum amount: $100.00)
AMOUNT INVESTMENT CHOICE AMOUNT INVESTMENT CHOICE
$___________________ ________________________ $___________________ ________________________
$___________________ ________________________ $___________________ ________________________
$___________________ TOTAL
c. INCOME TAX WITHHOLDING NOTICE AND CERTIFICATION
NOTICE OF INCOME TAX WITHHOLDING: Federal law requires withholding of 10% from taxable distributions unless you elect not to have
taxes withheld or specify a different withholding amount. Withholding will only apply to that portion of your distribution that
is includable in your income subject to federal income tax. For "nonqualified annuities", distributions will be assumed taken
first from earnings as of the liquidation date, if any, and second from purchase payments. The prospectus includes further
details on the treatment of variable annuity distributions for tax purposes. You may revoke this withholding election at any
time. To revoke or change your withholding election, please contact Hartford Life in writing. If you choose not to have
withholding apply to your distribution or if you do not have enough federal income tax withheld, you may be responsible for the
payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and tax payments are
insufficient. PLEASE NOTE: TAXABLE DISTRIBUTIONS OF EARNINGS PRIOR TO AGE 59 1/2 MAY BE SUBJECT TO A FEDERAL TAX PENALTY OF 10%,
THEREFORE, BEFORE ENROLLMENT IN THIS PROGRAM, YOU MAY WANT TO CONSULT WITH A QUALIFIED TAX ADVISOR. ALSO, DISTRIBUTION FROM
CERTAIN QUALIFIED PLANS (FOR EXAMPLE, 403(b)'S) MAY BE SUBJECT TO A MANDATORY 20% WITHHOLDING UNLESS THESE DISTRIBUTIONS ARE TO
SATISFY IRS MINIMUM DISTRIBUTION REQUIREMENTS.
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER: Under penalties of perjury, I certify that the number shown below is my correct
taxpayer identification number (or I am waiting for the number to be issued to me.) Furthermore, I am not subject to backup
withholding as a result of a failure to report all interest or dividends or the IRS has notified me that I am no longer subject
to backup withholding.
I HAVE READ THE ABOVE NOTICE AND ELECT TO HAVE** (CHECK ONE):
/ / No income tax withheld / / 10% withheld Federal: / / $_______________ or________% withheld
State: / / $_______________
d. EFT DIRECT DEPOSIT/CHECK MAILING INSTRUCTIONS (CHECK ONE):
/ / EFT Direct Deposit-PLEASE ATTACH A VOIDED CHECK OR SAVINGS DEPOSIT SLIP TO THIS FORM.
OR / / Special Address OR / / Current Address of Record
Financial Institution (Bank, Savings & Loan, Credit Union) or Special Check Mailing Instructions.
- -----------------------------------------------------------------------------------------------------------------------------------
Name
- -----------------------------------------------------------------------------------------------------------------------------------
Address City State Zip
- ---------------------------------------------
Bank Checking/Savings Account Number / / Checking / / Savings
- -----------------------------------------------------------------------------------------------------------------------------------
ACH/Transit Routing Number THIS MAY BE OBTAINED FROM YOUR BANK.
** NOT APPLICABLE FOR CUSTODIAL IRAS OR PENSION PROFIT SHARING PLANS
- -----------------------------------------------------------------------------------------------------------------------------------
6. OWNER ACKNOWLEDGEMENT
My signature below indicates that I have received a Hartford Leaders Plus variable annuity prospectus and have authorized the
program(s) selected above. The above program(s) may be modified at any time by me or Hartford Life by providing written notice to
the other party or if investment option balances are inadequate to execute the requested transfer/liquidation. In the unlikely
event that another financial transaction is received on the transfer/liquidation date, Hartford Life may delay processing the
scheduled transfer/liquidation. Hartford Life may credit increased interest rates, which are guaranteed up to a 12-month period
to contract owners under certain programs established. The number of months selected will determine the interest rate credited to
you. The 6-Month Program and the 12-Month Program will generally have different credited rates. The DCAPlus Program is subject to
state availability. All program transactions will be confirmed on quarterly statements. I agree to review the information on my
statements carefully. All errors or corrections must be reported to Hartford Life immediately to assure proper crediting to my
contract. Hartford Life reserves the right to discontinue, modify, or amend the program(s) at any time.
- -----------------------------------------------------------------------------------------------------------------------------------
Contract Owner Signature Investment Representative Name
- -----------------------------------------------------------------------------------------------------------------------------------
Joint Contract Owner Signature (if any) Broker Dealer/Financial Institution Name
- -----------------------------------------------------------------------------------------------------------------------------------
Contract Owner Phone Number Investment Representative Phone Number
PROGENR99 Order #: HL-16313 Printed in U.S.A. -C- Hartford Life Hartford, CT 06102-5085
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
MAILING ADDRESSES: HARTFORD LEADERS PLUS
FOR STANDARD MAIL DELIVERY: INVESTEASE-REGISTERED TRADEMARK-, DCA, ASSET ALLOCATION
Hartford Life - IPS PO Box 5085 AND AUTOMATIC INCOME PROGRAM
Hartford, CT 06102-5085 ENROLLMENT FORM INSTRUCTIONS
FOR PRIVATE EXPRESS MAIL CARRIERS:
Hartford Life - IPS 200 Hopmeadow Street
[LOGO] Simsbury, CT 06089
- -----------------------------------------------------------------------------------------------------------------------------------
SECTION 1. OWNER INFORMATION
- -----------------------------------------------------------------------------------------------------------------------------------
Complete information about the contract owner. For existing annuity contracts, please provide the annuity contract number.
SECTION 2. INVESTEASE PROGRAM ENROLLMENT
- -----------------------------------------------------------------------------------------------------------------------------------
- - Minimum Investment Amount: $50 per contract.
- - Select Frequency: Monthly or Quarterly.
- - Select date of transfer*: 1st through the 28th of the month.
- - Indicate Source: Checking or Savings Account.
- - Provide the name of your bank/financial institution. Must be a member of the ACH network in order for you to participate in the
InvestEase Program.
- - Provide branch location (city and state).
- - Provide ACH Routing Number. Obtain from your financial institution.
- - Provide your Checking/Savings account number.
- - Attach a voided check or savings deposit slip to this enrollment form.
- - Complete and sign Owner Acknowledgment section.
- - INVESTEASE IS NOT AVAILABLE FOR IRA CONTRACT OWNERS AFTER THE YEAR IN WHICH AGE 70 1/2 IS ATTAINED.
*YOU MAY SELECT MULTIPLE TRANSFER DATES PER FREQUENCY.
SECTION 3. DOLLAR COST AVERAGING ENROLLMENT
- -----------------------------------------------------------------------------------------------------------------------------------
- SELECT A DOLLAR COST AVERAGING PROGRAM. ONLY ONE DOLLAR COST AVERAGING PROGRAM IS ALLOWED AT ANY ONE TIME.
DCA PLUS PROGRAM*: This program is available on either a 6-Month or a 12-Month basis, allowing you to automatically transfer all
Program assets to the investment choices offered through Hartford Leaders Plus variable annuity. The 6-Month Program will
generally offer a higher interest rate and allows you to dollar cost average all Program assets over a 3-to-6 month period. The
12-Month Program also offers an attractive rate and allows you to dollar cost average all Program assets over a 7-to-12 month
period. At the end of the term, there will be a final monthly transfer of the entire amount remaining in the program.
- - Minimum Investment Amount: $5,000, ($2,000 for IRAs)
- - Subsequent Payments: If a subsequent premium payment is received while the Program is in progress, the new balance in the
Program will be prorated over the remainder of the transfer period selected but in no event beyond the initial program period.
Subsequent premium payments less than $5,000 (unless it is an IRA, Hartford reserves the right to reduce the subsequent minimum
premium required) will be allocated to the non-program Fixed Accumulation Feature and be credited at the interest rate then in
effect.
START DATE: The program start date will generally be the next business day following receipt of premium payment and complete DCA
instructions, but never later than 15 business days after the investment and complete instructions are received.
STANDARD PROGRAM OPTIONS
FIXED DOLLAR: Allows you to transfer a fixed dollar amount each month into any one or more destination fund(s).
- - Minimum Investment Amount: $5,000, ($2,000 for IRAs)
- - Minimum Transfer Amount into each Destination Fund: $50
START DATE: If a specific start date is not selected, the Program will start within 45 business days following the date the
investment and complete instructions are received.
INTEREST AVERAGING: Allows you to transfer a "percent of interest/earnings" from either the Hartford Money Market HLS Fund or the
Fixed Accumulation Feature.
- - Minimum Investment Amount: $5,000, ($2,000 for IRAs)
- - Minimum Transfer Amount into each Destination Fund: None.
DOLLAR COST AVERAGING ENROLLMENT INSTRUCTIONS CONTINUED ON BACK PAGE.
PROGINST99 Order #: HL-16312 Printed in U.S.A. -C- Hartford Life Hartford, CT 06102-5085
</TABLE>
<PAGE>
<TABLE>
<S> <C>
- - SELECT THE NUMBER OF MONTHLY TRANSFERS.
DCA PLUS PROGRAM: 6-Month Program - 3-to-6 months
12-Month Program - 7-to-12 months
FIXED DOLLAR AND INTEREST AVERAGING: Unlimited. (Minimum: 3 months)
- - SELECT ONE SOURCE FUND.
DCA PLUS PROGRAM: The source fund is either the DCAPlus 6-Month OR 12-Month Program.
FIXED DOLLAR: Select from the Fixed Accumulation Feature or any one of the investment choices.
INTEREST AVERAGING: Select from either the Hartford Money Market HLS Fund or the Fixed Accumulation Feature.
- - DETERMINE THE MONTHLY TRANSFER AMOUNT. MINIMUM $50 PER MONTH.
DCA PLUS PROGRAM: Hartford Life will calculate the monthly transfer amount.
FIXED DOLLAR: Take the total amount invested into the source fund divided by the number of months you would like the program
to run and split that amount among the destination funds selected.
INTEREST AVERAGING: Determine what percentage (using whole percentages, from 50% to 100%) of the earnings you would like
transferred from the Hartford Money Market HLS Fund or the Fixed Accumulation Feature.
- - SELECT DESTINATION FUNDS Select the investment choices you would like as destination funds. Please provide whole percentages.
The investment choice(s) selected cannot be both source fund and a destination fund. Changes in the allocation of the destination
funds are permitted during the life of the program.
- - COMPLETE AND SIGN OWNER ACKNOWLEDGMENT SECTION
* FROM TIME TO TIME, HARTFORD LIFE MAY CREDIT INCREASED INTEREST RATES, WHICH ARE GUARANTEED UP TO A 12 MONTH PERIOD TO CONTRACT
OWNERS UNDER CERTAIN PROGRAMS ESTABLISHED AT THE DISCRETION OF HARTFORD LIFE. THE NUMBER OF MONTHS SELECTED WILL DETERMINE THE
INTEREST RATE CREDITED TO YOU WITH IN THE DCA PLUS PROG RAM. THIS PROGRAM IS SUBJECT TO STATE AVAILABILITY.
SECTION 4. ASSET ALLOCATION PROGRAM ENROLLMENT
- -----------------------------------------------------------------------------------------------------------------------------------
- - Indicate Source of Investment: Initial Payment, Existing Contract or DCA Program**.
- - Determine rebalancing date.
- - Contract will be allocated into the model on the day we receive the request in good order. Future rebalancing will occur on the
next frequency cycle requested, based on the program establish date.
- - Select Rebalancing Frequency: Quarterly, Semi-Annually or Annually.
- - THE FIXED ACCUMULATION FEATURE IS NOT AVAILABLE.
- Customize your own portfolio using whole percentages, totaling 100%.
- - Complete and sign Owner Acknowledgment section.
**IF YOU CHOOSE TO DOLLAR COST AVERAGE INTO AN ASSET ALLOCATION PORTFOLIO, PLEASE COMPLETE SECTION 3.
SECTION 5. AUTOMATIC INCOME PROGRAM ENROLLMENT
- -----------------------------------------------------------------------------------------------------------------------------------
- - Select the payment cycle: Monthly, Quarterly, Semi-annually or Annually.
- - Determine Amount. Provide the dollar amount for each investment choice(s) that your scheduled surrenders will be taken from.
Maximum available amount - Please refer to your prospectus for amount available without a surrender charge.
Minimum amount - $100.00.
- - Income Tax Withholding Notice and Certification. Read Notice of Income Tax Withholding and Certification of Taxpayer
Identification Number. Select whether or not to have income taxes withheld from your scheduled surrenders. If you would like
to have a specific dollar amount withheld or a percentage other than 10%, please provide us with this information.
- - EFT Direct Deposit/Check Mailing Instructions
You may select one of the following:
- Have payment sent electronically to your financial institution via Direct Deposit into your Savings or Checking Account,
- Have your payment mailed to a special address, OR
- Have your payment mailed to your current address of record.
- - Complete and sign Owner Acknowledgment section.
PROGINST99 Order #: HL-16312 Printed in U.S.A. -C- Hartford Life Hartford, CT 06102-5085
</TABLE>
<PAGE>
[LOGO]
[HARTFORD LIFE]
February 4, 2000 LYNDA GODKIN
SENIOR VICE PRESIDENT, GENERAL COUNSEL &
CORPORATE SECRETARY
Board of Directors
Hartford Life and Annuity Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
RE: HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SEPARATE ACCOUNT SEVEN
FILE NO. 333-91921
Dear Sir/Madam:
I have acted as General Counsel to Hartford Life and Annuity Insurance Company
(the "Company"), a Connecticut insurance company, and Hartford Life and Annuity
Insurance Company Separate Account One (the "Account") in Connecticut with the
registration of an indefinite amount of securities in the form of flexible
premium variable annuity insurance contracts (the "Contracts") with the
Securities and Exchange Commission under the Securities Act of 1933, as amended.
I have examined such documents (including the Form N-4 Registration Statement)
and reviewed such questions of law as I considered necessary and appropriate,
and on the basis of such examination and review, it is my opinion that:
1. The Company is a corporation duly organized and validly existing as a stock
life insurance company under the laws of the State of Connecticut and is
duly authorized to by the Insurance Department of the State of Connecticut
to issue the Contacts.
2. The Account is a duly authorized and existing separate account established
pursuant to the provisions of Section 38a-433 of the Connecticut Statutes.
3. To the extent so provided under the Contracts, that portion of the assets
of the Account equal to the reserves and other contract liabilities with
respect to the Account will not be chargeable with liabilities arising out
of any other business that the Company may conduct.
4. The Contracts, when issued as contemplated by the Form N-4 registration
statement, will constitute legal, validly issued and binding obligations of
the Company.
I hereby consent to the filing of this opinion as an exhibit to the Form N-4
Registration Statement for the Contracts and the Account.
Sincerely yours,
/s/ Lynda Godkin
Lynda Godkin
<PAGE>
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accounts, we hereby consent to the use of our report
(and all references to our Firm) included in or made a part of this
Registration Statement File No. 333-91921 for Hartford Life and Annuity
Insurance Company Separate Account Seven on Form N-4.
Hartford, Connecticut /s/ Arthur Andersen LLP
February 16, 2000
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
POWER OF ATTORNEY
David T. Foy
Lynda Godkin
Thomas M. Marra
Lowndes A. Smith
David M. Znamierowski
do hereby jointly and severally authorize Lynda Godkin, Christine Repasy,
Marianne O'Doherty, Thomas S. Clark and Marta Czekajewski to sign as their agent
any Registration Statement, pre-effective amendment, post-effective amendment
and any application for exemptive relief of the Hartford Life and Annuity
Insurance Company under the Securities Act of 1933 and/or the Investment Company
Act of 1940, and do hereby ratify such signatures heretofore made by such
persons.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for the
purpose herein set forth.
/s/ David T. Foy
- -------------------------------- Dated as of January 15, 2000
David T. Foy
/s/ Lynda Godkin
- -------------------------------- Dated as of January 15, 2000
Lynda Godkin
/s/ Thomas M. Marra
- -------------------------------- Dated as of January 15, 2000
Thomas M. Marra
/s/ Lowndes A. Smith
- -------------------------------- Dated as of January 15, 2000
Lowndes A. Smith
/s/ David M. Znamierowski
- -------------------------------- Dated as of January 15, 2000
David M. Znamierowski
<PAGE>
ORGANIZATIONAL CHART
<TABLE>
<CAPTION>
<S> <C>
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(DELAWARE)
|
---------------------------------------------
NUTMEG INSURANCE COMPANY |
(CONNECTICUT) THE HARTFORD INVESTMENT
| MANAGEMENT COMPANY
HARTFORD FIRE INSURANCE COMPANY (DELAWARE)
(CONNECTICUT) |
| |
HARTFORD ACCIDENT AND INDEMNITY COMPANY HARTFORD INVESTMENT
(CONNECTICUT) SERVICES, INC.
| (CONNECTICUT)
HARTFORD LIFE, INC.
(DELAWARE)
|
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY
(CONNECTICUT)
|
|
|
-------------------------------------------------------------------------------------------------------------------------
| | | | | | | | |
HARTFORD LIFE | | | | | | PLANCO PLANCO
INTERNATIONAL, LTD.| | | | | | FINANCIAL INCORPORATED
(CONNECTICUT) | | | | | | SERVICES, (PENNSYLVANIA)
| | | | | | INCORPORATED
| | | | | | (PENNSYLVANIA)
| | | | | |
| HART LIFE HARTFORD FINANCIAL HARTFORD LIFE HARTFORD AMERICAN
| INSURANCE SERVICES LIFE INSURANCE COMPANY FINANCIAL MATURITY LIFE
| COMPANY INSURANCE COMPANY (CONNECTICUT) SERVICES, LLC INSURANCE COMPANY
| (CONNECTICUT) (CONNECTICUT) | (DELAWARE) (CONNECTICUT)
| | | |
| ------------------------------------- | AML FINANCIAL, INC.
| | | | | (CONNECTICUT)
|SERVUS LIFE HARTFORD HARTFORD |
| INSURANCE INTERNATIONAL LIFE AND |
| COMPANY LIFE REASSURANCE ANNUITY INSURANCE |
|(CONNECTICUT) CORPORATION COMPANY |
| (CONNECTICUT) (CONNECTICUT) |
| | |
| | |
| HARTFORD |
| LIFE, LTD. |
| (BERMUDA) |
| |
| |
----------| -----------------------------------------------------------------------
| | | | |
INTERNATIONAL HL INVESTMENT HARTFORD HARTFORD SECURITIES HARTFORD-COMPREHENSIVE
CORPORATE ADVISORS, LLC EQUITY SALES DISTRIBUTION EMPLOYEE
MARKETING GROUP, INC. (CONNECTICUT) COMPANY, INC. COMPANY, INC. BENEFIT SERVICE
(CONNECTICUT) | (CONNECTICUT) (CONNECTICUT) COMPANY
| | (CONNECTICUT)
| |
THE EVERGREEN HARTFORD INVESTMENT
GROUP, INC. FINANCIAL SERVICES
(NEW YORK) COMPANY
(DELAWARE)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(DELAWARE)
|
NUTMEG INSURANCE COMPANY
(CONNECTICUT)
|
HARTFORD FIRE INSURANCE COMPANY
(CONNECTICUT)
|
----------------------------------------------------------------------------------------------------------------------------
| | |
| | Hartford Accidental and Indemnity Company
| | (Connecticut)
| | |
| | Hartford Life, Inc
| | (Delaware)
| | |
| | Hartford Life and Accident Insurance Company
| | (Connecticut)
| | |
| | HARTFORD LIFE
| | -------INTERNATIONAL LTD.
| | | (CONNECTICUT)
| | | |
| | | ITT HARTFORD
| | | ----SUDAMERICANA
| | | | HOLDING S.A.
| | | | (ARGENTINA)
| | | |------------------------------------------------------
| | | | | |
| | | | ITT HARTFORD GALICIA INSTITUTO DE
| | | | SEGUROS VIDA COMPANIA SALTA COMPANIA DE
| | | |------DE VIDA S.A. DE SEGUROS S.A. SEGUROS DE VIDA S.A.
| | | | (URUGUAY) (ARGENTINA) (ARGENTINA)
| | | |
| | ICATU | | HARTFORD
| | HARTFORD | |---SEGUROS DE VIDA S.A.
| | SEGUROS S.A.----------| | (ARGENTINA)
| | (BRAZIL) |
| | | |
| | | | HARTFORD
| | -- ----------| |-------SEGUROS DE
| | | | | RETIRO S.A.
| | | | | (ARGENTINA)
|-----------|----------------|-------------------|--------------------------------------------------------------------------
| | | | |
| | | ICATU HARTFORD | CONSULTORA DE CAPITALES
| | | FUNDO DE PENSAO | S.A. SOCIEDAD GERENTE
| | | (BRAZIL) |----DE FONDOS COMUNES
| | | | | DE ENVERSION
| | | | | (ARGENTINA)
| | | ICATU HARTFORD |
| | | CAPITALIZACAO S.A. | CLARIDAD
| | | (BRAZIL) | ADMINISTRADORA DE
| | | | |---FONDOS DE JUBILACIONES
| | | BRAZILCAP | Y PENSIONES S.A.
| | | CAPITALIZACAO S.A. | (ARGENTINA)
| | | (BRAZIL) |
| | | |
| | -------------------------- |
| |--------------- | |
| | | |
HARTFORD FIRE HARTFORD FIRE | |------- SEGPOOL S.A.
INTERNATIONAL------------INTERNATIONAL, LTD. | | (ARGENTINA)
(GERMANY) GMBH (CONNECTICUT) | |
(WEST GERMANY) | |
| |
ICATU HARTFORD | | THESIS S.A.
ADMINISTRACAO | |-------- (ARGENTINA)
DE BENEFICIOS LTDA-- | |
(BRAZIL) |
|
|
|
|--------- U.O.R., S.A.
(ARGENTINA)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(DELAWARE)
|
NUTMEG INSURANCE COMPANY
(CONNECTICUT)
|
HARTFORD FIRE INSURANCE COMPANY
(CONNECTICUT)
|
- --------------------------------------------------------------------------------------------------------------------------------|
| |
THE HARTFORD INTERNATIONAL |
|-----------------------------------------------------------------------FINANCIAL SERVICES GROUP, INC. |
| | | (DELAWARE) |
| | | ----------------------|----------------- |
| | | | | | | |
ZWOLSCHE | | ITT HARTFORD LONDON AND | HARTFORD |
ALGEMEENE N.V. | | INTERNATIONAL, LTD. EDINBURGH | EUROPE, INC. |
(NETHERLANDS) | | (U.K.) INSURANCE GROUP, LTD.| (DELAWARE) |
| | | (U.K.) | |
| | | | | |
| | | ------------- | |
| | | | | |
| ITT ASSURANCES HARTFORD INTERNATIONAL | LONDON AND -THE HARTFORD |
| S.A. INSURANCE CO., N.V. |--- EDINBURGH INTERNATIONAL |
| ZWOLSCHE ALGEMEENE (FRANCE) (BELGIUM) | INSURANCE CO., LTD. FINANCIAL |
|----SCHADEVERZEKERING | | (U.K.) SERVICES |
--------| N.V.----------------------------------- | | | GROUP CIA |
| | (NETHERLANDS) | | | | DE SEGUROS Y |
Z.A. | | | | EXCESS INSURANCE REASEGUROS S.A.|
- --VERZEKERINGEN | | | | COMPANY LTD. (SPAIN) |
| N.V. | ZWOLSCHE ALGEMEENE | | | (U.K.) |
| (BELGIUM) |------HERVERZEKERING B.V. | | | |
| | -----| (NETHERLANDS) | | | LONDON AND |
| | | | | | |--- EDINBURGH LIFE |
| Z.A. LUX S.A. | | | | ASSURANCE CO., LTD. |
| (LUXEMBURG) | ZWOLSCHE ALGEMEENE | | | (U.K.) |
| |--LEVENS-VERZEKERING N.V.------------ | | | |
| | (NETHERLANDS) | | | | |
- ----------------|------------------------------------|------------|------|--------------|---------------------------------------|
| | | | | | |
| -------- | | | | |
| | | | | | | |
| ZWOLSCHE | ZWOLSCHE ALGEMEENE ZWOLSCHE ALGEMEENE | | | |
| ALGEMEENE |-----HYPOTHEKEN N.V. BELEGGINGEN III B.V. | | | |
| EUROPA B.V. | (NETHERLANDS) (NETHERLANDS) | | | |
| (NETHERLANDS) | ---------- | | |
- --------| | | | | |
| EXPLOITATIEMAAT- BELEGGINGSMAAT- | | |
|----- SCHAPPIJ SCHAPPIJ | | |
| BUIZERDLAAN B.V. BUIZERDLAAN B.V. | | |
| (NETHERLANDS) (NETHERLANDS) | | |
| | | |
| | | -----
| HOLLAND | |-------------------------- |
|---- BELEGGINGSGROEP B.V. | | | |
(NETHERLANDS) | |----------------- | |
| -------| | | |
| | | | | |
| | | | | |
F.A. KNIGHT | MACALISTER & LONDON AND | HARTFORD FIRE
& SON N.V. | DUNDAS, LTD. EDINBURGH | INTERNATIONAL
(BELGIUM) | (SCOTLAND) TRUSTEES, LTD. | SERVICIOS
| (U.K.) | (SPAIN)
------------------------- -----------
| | |
FENCOURT QUOTEL LONDON AND
PRINTERS, LTD. INSURANCE EDINBURGH
(U.K.) SYSTEMS, LTD. SERVICES, LTD.
(U.K.) (U.K.)
|
EUROSURE
INSURANCE
MARKETING, LTD.
(U.K.)
</TABLE>
