<PAGE>
FILE NO. 33-19944
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- - --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
------------------------
FORM N-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PRE-EFFECTIVE AMENDMENT NO. / /
------------------------
POST-EFFECTIVE AMENDMENT NO. 9 /X/
AND/OR
REGISTRATION STATEMENT
UNDER THE
INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 9
(check appropriate box or boxes)
HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT TWO (DC VARIABLE ACCOUNT-II)
(Exact Name of Registrant)
HARTFORD LIFE INSURANCE COMPANY
(Name of Depositor)
P.O. Box 2999
Hartford, CT 06104-2999
(Address of Depositor's Principal Offices)
Depositor's Telephone Number: (203) 843-8847
RODNEY J. VESSELS, ESQUIRE
P.O. Box 2999
Hartford, CT 06104-2999
(Name and Address of Agent for Service)
------------------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
------------------------
It is proposed that this filing will become effective:
/ / immediately upon filing pursuant to paragraph (b) of Rule 485
/X/ on (May 1, 1995) pursuant to paragraph (b) of Rule 485
/ / 60 days after filing pursuant to paragraph (a) of Rule 485
/ / on May 1, 1995 pursuant to paragraph (a) of Rule 485
------------------------
CALCULATION OF REGISTRATION FEE UNDER SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------
PROPOSED PROPOSED
TITLE OF AMOUNT MAXIMUM MAXIMUM AMOUNT OF
SECURITIES BEING OFFERING AGGREGATE REGISTRATION
BEING REQUESTED REGISTERED PRICE PER UNIT OFFERING PRICE FEE
<S> <C> <C> <C> <C>
- - --------------------------------------------------------------------------------------------------
Hartford Life Insurance Pursuant to Regulation 270.24f-2 Paid
Company Separate Account Two under the Investment Company Act
(DC Variable Account-II) of 1940, Registrant has
Units of Interest previously elected to register
an indefinite number of units of
interest in this Separate
Account
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</TABLE>
------------------------
THE RULE 24F-2 NOTICE FOR THE REGISTRANT'S MOST RECENT FISCAL YEAR WAS FILED
ON OR ABOUT FEBRUARY 28, 1995.
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<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(A)
<TABLE>
<CAPTION>
N-4 ITEM NO. PROSPECTUS HEADING
- - ---------------------------------------------------------------- -----------------------------------------------------------
<C> <S> <C>
1. Cover Page........................................... Cover Page
2. Definitions.......................................... Glossary of Special Terms
3. Synopsis or Highlights............................... Summary
4. Condensed Financial Information...................... Accumulation Unit Values
5. General Description of Registrant,
Depositor, and Portfolio Companies.................. The DC-I and DC-II Contract and Separate Account DC-I and
Separate Account Two (DC-II); Hartford Life Insurance
Company and the Funds; Miscellaneous
6. Deductions........................................... Charges Under the Contract
7. General Description of Variable
Annuity Contracts................................... Operation of the Contract Payment of Benefits; Separate
Accounts DC-I and DC-II Contract and Separate Accounts
DC-I and DC-II
8. Annuity Period....................................... Payment of Benefits
9. Death Benefit........................................ Payment of Benefits; Operation of the Contract
10. Purchases and Contract Value......................... Operation of the Contract
11. Redemptions.......................................... Payment of Benefits
12. Taxes................................................ Federal Tax Considerations
13. Legal Proceedings.................................... Miscellaneous--Are there any material legal proceedings
affecting the Separate Accounts?
14. Table of Contents of the Statement
of Additional Information........................... Table of Contents of the Statement of Additional
Information
</TABLE>
<PAGE>
HARTFORD
LIFE INSURANCE COMPANY
GROUP VARIABLE ANNUITY CONTRACTS
ISSUED BY HARTFORD LIFE INSURANCE COMPANY
WITH RESPECT TO DC-I AND DC-II
[LOGO]
The variable annuity contracts (hereinafter the "contract" or "contracts" or
"Master Contracts") described in this Prospectus are issued by Hartford Life
Insurance Company ("HL"). The contracts provide for both an Accumulation
Period and an Annuity Period.
On contracts issued in conjunction with a Deferred Compensation Plan of an
Employer, variable account Contributions are held in Hartford Life Insurance
Company DC Variable Account-I ("DC-I") during the Accumulation Period and in a
series of Hartford Life Insurance Company Separate Account Two ("DC-II")
during the Annuity Period.
On contracts issued in conjunction with a Qualified Plan of an employer, all
variable account Contributions during both the Accumulation Period and Annuity
Period are held in DC-II.
The contracts to which contributions may be made may contain a General
Account option or a separate General Account contract may be issued in
conjunction with the contracts described herein. The General Account option or
contract may contain restrictions on a Contract Owner's ability to transfer
Participant Account Values to or from such contract or option. The General
Account option or contract and these restrictions, if any, are not described
in this Prospectus.
The contracts are used in conjunction with Deferred Compensation Plans of
tax-exempt and governmental employers as well as with Qualified Plans
established by Employers generally (tax-exempt and non-tax-exempt).
The following Sub-Accounts are available under the contracts. Opposite each
Sub-Account is the name of the underlying investment for that Account.
Advisers Fund -- shares of Hartford Advisers Fund, Inc.
Sub-Account ("Advisers Fund")
Capital Appreciation -- shares of Hartford Capital Appreciation Fund,
Fund Sub-Account Inc. (formerly "Hartford Aggressive Growth Fund,
Inc.") ("Capital Appreciation Fund")
Bond Fund Sub-Account -- shares of Hartford Bond Fund, Inc. ("Bond Fund")
Dividend and Growth Fund -- shares of Hartford Dividend and Growth Fund,
Sub-Account Inc. ("Dividend and Growth Fund")
Index Fund Sub-Account -- shares of Hartford Index Fund, Inc. ("Index
Fund")
International -- shares of Hartford International Opportunities
Opportunities Fund Fund, Inc. ("International Opportunities Fund")
Sub-Account
Money Market Fund Sub- -- shares of HVA Money Market Fund, Inc. ("Money
Account Market Fund")
Mortgage Securities Fund -- shares of Hartford Mortgage Securities Fund,
Sub-Account Inc. ("Mortgage Securities Fund")
Socially Responsive Fund -- shares of Hartford Socially Responsive Fund,
Sub-Account which is the Calvert Socially Responsible series
of Acacia Capital Corporation ("Socially
Responsive Fund")
Stock Fund Sub-Account -- shares of Hartford Stock Fund, Inc. ("Stock
Fund")
U.S. Government Money -- shares of Hartford U.S. Government Money Market
Market Fund Fund, Inc. ("U.S. Government Money Market Fund")
Sub-Account
This Prospectus sets forth the information concerning the Separate Account
that investors ought to know before investing. This Prospectus should be kept
for future reference. Additional information about the Separate Account has
been filed with the Securities and Exchange Commission and is available
without charge upon request. To obtain the Statement of Additional Information
send a written request to Hartford Life Insurance Company, Attn: RPVA
Administration, P.O. Box 2999, Hartford, CT 06104-2999. The Table of Contents
for the Statement of Additional Information may be found on page of this
Prospectus. The Statement of Additional Information is incorporated by
reference to this Prospectus.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------------------------------------------------------------------------
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THIS PROSPECTUS IS NOT VALID UNLESS ATTACHED TO THE CURRENT PROSPECTUS OF THE
APPLICABLE ELIGIBLE FUNDS LISTED ABOVE WHICH CONTAINS A FULL DESCRIPTION OF
THOSE FUNDS. INVESTORS ARE ADVISED TO RETAIN THESE PROSPECTUSES FOR FUTURE
REFERENCE.
------------------------------------------------------------------------------
Prospectus Dated: May 1, 1995
Statement of Additional Information Dated: May 1, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GLOSSARY OF SPECIAL TERMS............................................... 3
SUMMARY (INCLUDING EXPENSE TABLE)....................................... 5
ACCUMULATION UNIT VALUES................................................ 9
PERFORMANCE RELATED INFORMATION......................................... 13
INTRODUCTION............................................................ 13
THE DC-I AND DC-II CONTRACT AND SEPARATE ACCOUNT DC-I AND
SEPARATE ACCOUNT TWO (DC-II)......................................... 14
What are the DC-I and DC-II contracts?................................ 14
Who can buy these contracts?.......................................... 14
What are the Separate Accounts and how do they operate?............... 14
OPERATION OF THE CONTRACT............................................... 15
How are Contributions credited?....................................... 15
May I make changes in the amounts of my Contributions?................ 16
May I transfer assets between Sub-Accounts?........................... 16
What happens if the Contract Owner fails to make Contributions?....... 16
May I assign or transfer the contract?................................ 16
How do I know what my account is worth?............................... 17
How is the Accumulation Unit value determined?........................ 17
How are the underlying Fund shares valued?............................ 17
PAYMENT OF BENEFITS..................................................... 18
What would my Beneficiary receive as death proceeds?.................. 18
How can a contract be redeemed or surrendered?........................ 18
Can payment of the redemption or surrender value ever be postponed
beyond the seven day period?......................................... 19
May I surrender once Annuity payments have started?................... 19
Are there differences in the contract related to the type of plan in
which the Participant is enrolled?................................... 19
Can a contract be suspended by a Contract Owner?...................... 19
How do I elect an Annuity Commencement Date and Form of Annuity?...... 19
What is the minimum amount that I may select for an Annuity
payment?............................................................. 20
How are Contributions made to establish my Annuity account?........... 20
What are the available Annuity options under the contracts?........... 20
How are Variable Annuity payments determined?......................... 21
Can a contract be modified?........................................... 22
CHARGES UNDER THE CONTRACT.............................................. 23
How are the charges under these contracts made?....................... 23
Is there ever a time when the sales charges do not apply?............. 23
What do the sales charges cover?...................................... 23
What is the mortality, expense risk and administrative charge?........ 23
Are there any other administrative charges?........................... ?
Are there any other deductions?....................................... 24
How much are the deductions for Premium Taxes on these contracts?..... 24
HARTFORD LIFE INSURANCE COMPANY AND THE FUNDS........................... 25
What is HL?........................................................... 25
What are the Funds?................................................... 25
Does HL have any interest in the Funds?............................... 27
FEDERAL TAX CONSIDERATIONS.............................................. 27
What are some of the federal tax consequences which affect these
contracts?........................................................... 27
MISCELLANEOUS........................................................... 31
What are my voting rights?............................................ 31
Will other contracts be participating in the Separate Accounts?....... 32
How are the contracts sold?........................................... 32
Who is the custodian of the Separate Accounts' assets?................ 32
Are there any material legal proceedings affecting the Separate
Accounts?............................................................ 32
Are you relying on any experts as to any portion of this
Prospectus?.......................................................... 32
How may I get additional information?................................. 32
APPENDIX................................................................ ?
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION............... 33
</TABLE>
*** The purpose of the fee tables is to assist Contract Owners in understanding
the various costs and expenses which a Contract Owner will bear. These
tables reflect the expenses of the Separate Account and Portfolio Company
(in underlying mutual funds). Premium tax may also be applicable.
2
<PAGE>
GLOSSARY OF SPECIAL TERMS
ACCUMULATION PERIOD: The period before the commencement of Annuity payments.
ACCUMULATION UNIT: An accounting unit of measure used to calculate values before
Annuity payments begin.
ACTIVE LIFE FUND: A term used to describe the sum of all Participants'
Individual Account value(s) in the Separate Account under a contract during the
Accumulation Period.
ANNUITANT: A Participant on whose behalf Annuity payments are to be made under a
contract.
ANNUITANT'S ACCOUNT: An account established at the commencement of the Annuity
Period under which Annuity payments are made under the contracts.
ANNUITY: A series of payments for life, or for life with a minimum number of
payments or a determinable sum guaranteed, or for a joint lifetime and
thereafter during the lifetime of the survivor, or for payments for a designated
period.
ANNUITY COMMENCEMENT DATE: The date on which Annuity payments are to commence.
ANNUITY PERIOD: The period following the commencement of Annuity payments.
ANNUITY RIGHTS: The Contract Owner's right in situations where the contract is
issued in conjunction with a Deferred Compensation Plan to apply up to five
times the gross Contributions made to the contract during the Accumulation
Period (in DC-I only), at the Annuity rates set forth in the contract at the
time of issue, at the commencement of the Annuity Period to effect Annuity
payments.
ANNUITY UNIT: An accounting unit of measure in the Separate Account used to
calculate the amount of Variable Annuity payments.
BENEFICIARY: The person(s) designated to receive contract values in the event of
the Participant's or Annuitant's death.
CODE: The Internal Revenue Code of 1986, as amended.
COMMISSION: Securities and Exchange Commission.
CONTRACT OWNER: The Employer or entity owning the contract.
CONTRACT YEAR: A period of 12 months commencing with the effective date of the
contract or with any anniversary thereof.
CONTRIBUTION(S): The amount(s) paid or transferred to HL on behalf of
Participants pursuant to the terms of the contracts.
DATE OF COVERAGE: The date on which the application on behalf of a Participant
is received by HL.
DC VARIABLE ACCOUNT II: A series of Hartford Life Insurance Company Separate
Account Two.
DEFERRED COMPENSATION PLAN: A plan established and maintained in accordance with
the provisions of Section 457 of the Internal Revenue Code and the regulations
issued thereunder.
EMPLOYER: A governmental or tax-exempt Employer maintaining a Deferred
Compensation Plan for its Employees or an Employer establishing a Qualified Plan
for its Employees.
FIXED ANNUITY: An Annuity providing for guaranteed payments which remain fixed
in amount throughout the payment period and which do not vary with the
investment experience of a separate account.
FUNDS: Currently, the Funds described commencing on page of this Prospectus.
GENERAL ACCOUNT: The General Account of HL in which reserves are maintained for
Fixed Annuities during the Annuity Period.
HL: Hartford Life Insurance Company.
MINIMUM DEATH BENEFIT: The minimum amount payable upon the death of Participant
prior to age 65 and before Annuity payments have commenced.
PARTICIPANT: A term used to describe, for recordkeeping purposes only, any
Employee electing to participate in the Deferred Compensation or Qualified Plan
of the Employer/Contract Owner.
PARTICIPANT'S CONTRACT YEAR: A period of twelve (12) months commencing with the
Date of Coverage of a Participant and each successive 12 month period
thereafter.
PARTICIPANT'S INDIVIDUAL ACCOUNT: An account to which the Separate Account
Accumulation Units held by the Contract Owner on behalf of Participant under the
contract are allocated.
PLAN: The unfunded Deferred Compensation Plan or Qualified Plan of an Employer.
PREMIUM TAX: A tax charged by a state or municipality on premiums, purchase
payments or contract values.
3
<PAGE>
QUALIFIED PLAN: A voluntary plan of an Employer which qualifies for special tax
treatment under a section of the Internal Revenue Code.
SEPARATE ACCOUNT: The Account entitled Hartford Life Insurance Company DC
Variable Account-I ("DC-I") and a series of Hartford Life Insurance Company
Separate Account Two ("DC-II").
SUB-ACCOUNT: Accounts established within the Separate Account with respect to a
Fund.
VALUATION DAY: Every day the New York Stock Exchange is open for business
exclusive of the following national and local business holidays: Martin Luther
King Day, Lincoln's Birthday, Columbus Day, Veteran's Day, the day before
Independence Day and the day after Thanksgiving. The value of the Separate
Account is determined at the close of the New York Stock Exchange (currently
4:00 p.m. Eastern Time) on such days.
VALUATION PERIOD: The period between successive Valuation Days.
VARIABLE ANNUITY: An Annuity providing for payments varying in amount in
accordance with the investment experience of the assets held in the underlying
securities of the Separate Account.
4
<PAGE>
SUMMARY
Contract Owner Transaction Expense
(All Sub Accounts)
<TABLE>
<S> <C>
Sales Load Imposed on Purchases (as a percentage of premium
payments)....................................................... None
Transfer Fee...................................................... $0
Contingent Deferred Sales Charge (as a percentage of amounts
withdrawn)......................................................
First through Sixth Year...................................... 5%
Seventh and Eighth Year....................................... 4%
Ninth and Tenth Year.......................................... 3%
Eleventh and Twelfth Year..................................... 2%
Thirteenth Year............................................... 0%
Annual Contract Fee............................................... $0
Annual Expenses--Separate Account (as a percentage of average
account value)
Mortality and Expense Risk (DC I)............................. 1.100%
Mortality and Expense Risk (DC II)............................ 1.250%
</TABLE>
The Transfer Fee, Contingent Deferred Sales Charge, Annual Contract Fee and
Mortality and Expense Risk charge may be reduced or eliminated. See "Experience
Rating of Contracts" on page .
Annual Fund Operating Expense
(as a percentage of net assets)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
FEES EXPENSES EXPENSES
---------- -------- ----------
<S> <C> <C> <C>
Hartford Bond Fund.............................. 0.500% 0.047% 0.547%
Hartford Stock Fund............................. 0.462% 0.039% 0.501%
HVA Money Market Fund........................... 0.425% 0.049% 0.474%
Hartford Advisers Fund.......................... 0.615% 0.040% 0.655%
Hartford U.S. Government Money Market Fund...... 0.425% 0.157% 0.582%
Hartford Capital Appreciation Fund.............. 0.675% 0.045% 0.720%
Hartford Mortgage Securities Fund............... 0.425% 0.052% 0.477%
Hartford Index Fund............................. 0.375% 0.079% 0.454%
Hartford International Opportunities Fund....... 0.725% 0.126% 0.851%
Calvert Socially Responsive Series.............. 0.700% 0.100% 0.800%
Dividend and Growth Fund........................ 0.668% 0.166% 0.834%
</TABLE>
EXAMPLE - SEPARATE ACCOUNT ONE DC-II
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
If you surrender your contract
at the end of the applicable
time period: You would pay the
following expenses on a $1,000
investment, assuming a 5%
annual return on assets:
If you annuitize at the end of If you do not surrender your
the applicable time period: You contract: You would pay the
would pay the following following expenses on a $1,000
expenses on a $1,000 investment, assuming a 5%
investment, assuming a 5% annual return on assets:
annual return on assets:
<CAPTION>
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>
Bond Fund..................... $ 70 $ 112 $ 157 $ 254 $ 18 $ 57 $ 98 $ 213 $ 18 $ 57 $ 98 $ 213
Stock Fund.................... 69 110 154 248 18 55 95 206 18 55 95 206
Money Market Fund............. 69 110 153 246 18 55 94 205 18 55 94 205
Advisers Fund................. 71 114 159 260 19 59 101 219 19 59 101 219
U.S. Government Money
Market Fund................. 70 113 158 257 19 58 100 216 19 58 100 216
Capital Appreciation Fund..... 71 116 153 267 20 61 105 227 20 61 105 227
Mortgage Securities Fund...... 69 110 153 246 18 55 94 205 18 55 94 205
Index Fund.................... 65 96 129 195 13 40 69 152 13 40 69 152
International Opportunities
Fund........................ 73 121 172 285 22 66 114 245 22 66 114 245
Socially Responsive Fund...... 72 119 169 280 21 65 111 240 21 65 111 240
Dividend and Growth Fund...... 73 120 171 283 21 66 113 243 21 66 113 243
</TABLE>
The purpose of this table is to assist the contract owner in understanding
various costs and expenses that a contract owner will bear directly or
indirectly. The table reflects expenses of the Separate Account and underlying
Funds. Premium taxes may also be applicable.
This EXAMPLE should not be considered a representation of past or future
expenses and actual expenses may be greater or less than those shown.
5
<PAGE>
SUMMARY
A. CONTRACTS OFFERED
Group contracts issued in conjunction with a Deferred Compensation Plan or a
Qualified Plan of an employer are offered.
The Qualified Plan contracts available with respect to DC-II are limited to
plans established and sponsored by Employers for their Employees. Qualified
Plans provide a way for an Employer to establish a funded retirement plan for
its Employees. The contract is normally issued to the Employer or to the trustee
or custodian of the Employer's Plan.
Contract Owners who have purchased a prior series of contracts may continue
to make Contributions to such contracts subject to the terms and provisions of
their contracts. New Participants may be added to existing contracts of the
prior series but no new contracts of that series will be issued. Prior Contract
Owners are referred to the Appendix (commencing on page ) for a description of
the sales charges and other expenses applicable to earlier series of contracts.
B. ACCUMULATION PERIOD UNDER THE CONTRACTS
During the Accumulation Period under the contracts, Contributions made by
the Employer to the contracts are used to purchase variable account interests.
Contributions allocated to purchase variable interests may, after the deductions
described hereafter, be invested in selected Sub-Accounts of DC-I or DC-II, as
appropriate.
C. CONTINGENT DEFERRED SALES CHARGES
No deduction for sales expense is made at the time of allocation of
Contributions to the contracts. A deduction for contingent deferred sales
charges is made if there is any surrender of contract values during the first 12
Participant Contract Years. During the first 6 years thereof, a maximum
deduction of 5% will be made against the full amount of any such surrender.
During the next 2 years thereof, a maximum deduction of 4% will be made against
the full amount of any such surrender. During the next 2 years thereof, a
maximum deduction of 3% will be made against the full amount of any such
surrender. During the next 2 years thereof, a maximum deduction of 2% will be
made against the full amount of any such surrender. Such charges will in no
event exceed 8.50% when applied as a percentage against the sum of all
Contributions to a Participant's Individual Account. The amount or term of the
contingent deferred sales charge may be reduced (see "Experience Rating of
Contracts," page ).
No deduction for contingent deferred sales charges will be made in certain
cases. (See "Is there ever a time when the sales charges do not apply?"
commencing on page .)
HL reserves the right to limit any increase in the Contributions made to a
Participant's Individual Account under any contract to no more than three times
the total Contributions made on behalf of such Participant during the initial 12
consecutive months following the Date of Coverage. Increases in excess of those
described will be accepted only with the consent of HL and subject to the then
current deductions being made under the contracts.
D. TRANSFER BETWEEN ACCOUNTS
During the Accumulation Period a Contract Owner may allocate monies held in
the Separate Account among the available Sub-Accounts of the Separate Account.
Each transfer under the contract may be subject to a $5.00 Transfer Fee (see
"Experience Rating of Contracts," page ). However, there may be additional
restrictions under certain circumstances (see "May I transfer assets between
Sub-Accounts?" commencing on page ).
6
<PAGE>
E. ANNUITY PERIOD UNDER THE CONTRACTS
Contract values held with respect to Participants' Individual Accounts with
respect to DC-I or DC-II, as appropriate, at the end of the Accumulation Period
(and any additional Contributions that a Deferred Compensation Plan Contract
Owner (DC-I, only) elects to make at the commencement of the Annuity Period)
will, at the direction of the Contract Owner, be allocated to establish
Annuitants' Accounts to provide Fixed and/or Variable Annuities under the
contracts.
Additional Contributions made under the contracts (on Deferred Compensation
Plans written with respect to DC-I only) at the beginning of the Annuity Period,
to effect increased Fixed and/or Variable Annuity payments, will be subject to a
sales charge deduction in the maximum amount of 3.50% of such Contribution. (See
"How are Contributions made to establish my Annuity account?" commencing on page
.)
F. MINIMUM DEATH BENEFITS
A Minimum Death Benefit is provided in the event of death of the Participant
under a Participant's Individual Account prior to the earlier of the
Participant's 65th birthday or the Annuity Commencement Date. (See "What would
my Beneficiary receive as death proceeds?" commencing on page .)
G. ANNUITY OPTIONS
The Annuity Commencement Date will not be deferred beyond the Participant's
75th birthday or such earlier date may be required by applicable law and/or
regulation. If a Contract Owner does not elect otherwise, HL reserves the right
to begin Annuity payments automatically at age 65 under an option providing for
a life Annuity with 120 monthly payments certain. (See "What are the available
Annuity Options under the contracts?" commencing on page .) However, HL will
not assume responsibility in determining or monitoring minimum distributions
beginning at age 70 1/2.
H. DEDUCTIONS FOR PREMIUM TAXES
Deductions will be made during the Accumulation Period and Annuity Period,
as appropriate, for the payment of any Premium Taxes that may be levied against
the contract. The range is generally between 0% and 4.00%. (See "Charges Under
The Contract" on page .)
I. ASSET CHARGE IN THE SEPARATE ACCOUNT
During both the Accumulation Period and the Annuity Period a charge is made
by HL for providing the expense, mortality and administrative undertakings under
the contracts. With respect to contract values held in DC-I, such charge is an
annual rate of 1.10% (.70% for mortality, .15% for expense and .25% for
administrative undertakings) of the average daily net assets of DC-I. With
respect to contract values held in DC-II, such charge is an annual rate of 1.25%
(.85% for mortality, .15% for expense and .25% for administrative undertakings)
of the average daily net assets of DC-II. The rate charged for the expense,
mortality and administrative undertakings under the contracts may be reduced
(see "Experience Rating of Contracts," page ). The rate charged for the
expense, mortality and administrative undertakings may be periodically increased
by HL subject to a maximum annual rate of 2.00%, provided, however, that no such
increase will occur unless the Commission shall have first approved any such
increase. (See "Charges Under The Contract," page .)
J. MINIMUM PAYMENT
The minimum Contribution that may be made each month on behalf of a
Participant's Individual Account under a contract is $30.00 unless the
Employer's plan provides otherwise.
K. PAYMENT ALLOCATION TO DC-I AND DC-II
The contracts permit the allocation of Contributions, in multiples of ten
percent of each Contribution among the several Sub-Accounts of DC-I and DC-II.
The minimum amount that may be allocated to or invested in Accumulation Units of
any Sub-Account in a Separate Account shall not be less than $10.00.
L. VOTING RIGHTS OF CONTRACT OWNERS
Contract Owners and/or vested Participants will have the right to vote on
matters affecting the underlying Fund to the extent that proxies are solicited
by such Fund. If a Contract Owner does not vote, HL shall vote such interest in
the same proportion as shares of the Fund for which instructions have been
received by HL (see "What are my voting rights?" commencing on page ).
7
<PAGE>
ACCUMULATION UNIT VALUES
(FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT THE PERIOD)
The following information has been examined by Arthur Andersen LLP,
independent public accountants, whose report thereon is included in the
Statement of Additional Information, which is incorporated by reference to this
Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
-------- -------- -------- ------- ------- ------- ------- ------- ------- ------- -------
DC-I (1.25%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BOND FUND SUB-ACCOUNT
Accumulation unit value
at beginning of
period.................. $ 3.689 $ 3.388 $ 3.251 $ 2.827 $ 2.640 $ 2.384 $ 2.244 $ 2.273 $ 2.052 $ 1.722 $ 1.541
Accumulation unit value
at end of period........ $ 3.499 $ 3.689 $ 3.388 $ 3.251 $ 2.827 $ 2.640 $ 2.384 $ 2.244 $ 2.273 $ 2.052 $ 1.722
Number of accumulation
units outstanding at
end of period (in
thousands).............. 9,090 10,092 10,253 10,201 9,871 9,462 9,015 8,461 9,640 8,335 8,464
DC-II (1.25%)
BOND FUND SUB-ACCOUNT
Accumulation unit value
at beginning of
period.................. $ 3.689 $ 3.389 $ 3.251 $ 2.827 $ 2.641 $ 2.385 $ 2.244 $ 2.273 $ 2.052 $ 1.723 $ 1.541
Accumulation unit value
at end of period........ $ 3.500 $ 3.689 $ 3.389 $ 3.251 $ 2.827 $ 2.641 $ 2.385 $ 2.244 $ 2.273 $ 2.052 $ 1.723
Number of accumulation
units outstanding at
end of period (in
thousands).............. 1,123 992 816 732 724 594 433 320 224 145 113
DC-I (1.25%)
STOCK FUND SUB-ACCOUNT
Accumulation unit value
at beginning of
period.................. $ 6.990 $ 6.190 $ 5.695 $ 4.628 $ 4.875 $ 3.916 $ 3.332 $ 3.201 $ 2.886 $ 2.222 $ 2.238
Accumulation unit value
at end of period........ $ 6.773 $ 6.990 $ 6.190 $ 5.695 $ 4.628 $ 4.875 $ 3.916 $ 3.332 $ 3.201 $ 2.886 $ 2.222
Number of accumulation
units outstanding at
end of period (in
thousands).............. 39,551 37,542 34,861 32,700 29,962 28,198 25,658 25,694 21,622 19,566 17,831
DC-II (1.25%)
STOCK FUND SUB-ACCOUNT
Accumulation unit value
at beginning of
period.................. $ 6.988 $ 6.188 $ 5.694 $ 4.627 $ 4.874 $ 3.915 $ 3.331 $ 3.200 $ 2.885 $ 2.222 $ 2.238
Accumulation unit value
at end of period........ $ 6.771 $ 6.988 $ 6.188 $ 5.694 $ 4.627 $ 4.874 $ 3.915 $ 3.331 $ 3.200 $ 2.885 $ 2.222
Number of accumulation
units outstanding at
end of period (in
thousands).............. 3,885 3,181 2,517 1,885 1,467 1,156 1,011 951 772 437 253
DC-I (1.25%)
MONEY MARKET FUND
SUB-ACCOUNT
Accumulation unit value
at beginning of
period.................. $ 2.450 $ 2.410 $ 2.354 $ 2.248 $ 2.106 $ 1.954 $ 1.842 $ 1.752 $ 1.661 $ 1.550 $ 1.417
Accumulation unit value
at end of period........ $ 2.515 $ 2.450 $ 2.410 $ 2.354 $ 2.248 $ 2.106 $ 1.954 $ 1.842 $ 1.752 $ 1.661 $ 1.550
Number of accumulation
units outstanding at
end of period (in
thousands).............. 9,548 9,298 9,999 10,936 11,181 8,871 8,703 7,521 6,321 7,068 8,416
DC-II (1.25%)
MONEY MARKET FUND
SUB-ACCOUNT
Accumulation unit value
at beginning of
period.................. $ 2.447 $ 2.407 $ 2.351 $ 2.245 $ 2.103 $ 1.951 $ 1.840 $ 1.749 $ 1.659 $ 1.548 $ 1.415
Accumulation unit value
at end of period........ $ 2.512 $ 2.447 $ 2.407 $ 2.351 $ 2.245 $ 2.103 $ 1.951 $ 1.840 $ 1.749 $ 1.659 $ 1.548
Number of accumulation
units outstanding at
end of period (in
thousands).............. 905 886 884 929 881 718 628 389 351 235 349
<CAPTION>
1983 1982
------- ------
DC-I (1.25%)
<S> <C> <C>
BOND FUND SUB-ACCOUNT
Accumulation unit value
at beginning of
period.................. $ 1.519 $1.318(a)
Accumulation unit value
at end of period........ $ 1.541 $1.519
Number of accumulation
units outstanding at
end of period (in
thousands).............. 4,693 187
DC-II (1.25%)
BOND FUND SUB-ACCOUNT
Accumulation unit value
at beginning of
period.................. $ 1.519 $1.366(b)
Accumulation unit value
at end of period........ $ 1.541 $1.519
Number of accumulation
units outstanding at
end of period (in
thousands).............. 88 28
DC-I (1.25%)
STOCK FUND SUB-ACCOUNT
Accumulation unit value
at beginning of
period.................. $ 1.989 $1.548(a)
Accumulation unit value
at end of period........ $ 2.238 $1.989
Number of accumulation
units outstanding at
end of period (in
thousands).............. 10,598 332
DC-II (1.25%)
STOCK FUND SUB-ACCOUNT
Accumulation unit value
at beginning of
period.................. $ 1.989 $1.551(c)
Accumulation unit value
at end of period........ $ 2.238 $1.989
Number of accumulation
units outstanding at
end of period (in
thousands).............. 141 26
DC-I (1.25%)
MONEY MARKET FUND
SUB-ACCOUNT
Accumulation unit value
at beginning of
period.................. $ 1.312 $1.258(d)
Accumulation unit value
at end of period........ $ 1.417 $1.312
Number of accumulation
units outstanding at
end of period (in
thousands).............. 2,654 2,007
DC-II (1.25%)
MONEY MARKET FUND
SUB-ACCOUNT
Accumulation unit value
at beginning of
period.................. $ 1.310 $1.235(c)
Accumulation unit value
at end of period........ $ 1.415 $1.310
Number of accumulation
units outstanding at
end of period (in
thousands).............. 67 66
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
-------- -------- -------- ------- ------- ------- ------- ------- ------- ------- -------
DC-I (1.25%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ADVISERS FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period........... $ 2.993 $ 2.700 $ 2.524 $ 2.123 $ 2.123 $ 1.766 $ 1.566 $ 1.497 $ 1.345 $ 1.074 $ 1.013
Accumulation unit
value at end of
period.............. $ 2.876 $ 2.993 $ 2.700 $ 2.524 $ 2.123 $ 2.123 $ 1.766 $ 1.566 $ 1.497 $ 1.345 $ 1.074
Number of accumulation
units outstanding at
end of period (in
thousands).......... 126,437 119,064 105,648 93,981 84,223 74,660 62,335 56,502 36,266 22,051 14,035
DC-II (1.25%)
ADVISERS FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period........... $ 2.993 $ 2.700 $ 2.524 $ 2.123 $ 2.123 $ 1.766 $ 1.566 $ 1.497 $ 1.345 $ 1.074 $ 1.013
Accumulation unit
value at end of
period.............. $ 2.876 $ 2.993 $ 2.700 $ 2.524 $ 2.123 $ 2.123 $ 1.766 $ 1.566 $ 1.497 $ 1.345 $ 1.074
Number of accumulation
units outstanding at
end of period (in
thousands).......... 8,279 7,023 7,323 6,220 5,565 5,227 4,631 4,283 3,357 2,429 2,266
DC-I (1.25%)
U.S. GOVERNMENT MONEY
MARKET FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period........... $ 1.718 $ 1.694 $ 1.661 $ 1.593 $ 1.500 $ 1.400 $ 1.326 $ 1.269 $ 1.209 $ 1.133 $ 1.045
Accumulation unit
value at end of
period.............. $ 1.758 $ 1.718 $ 1.694 $ 1.661 $ 1.593 $ 1.500 $ 1.400 $ 1.326 $ 1.269 $ 1.209 $ 1.133
Number of accumulation
units outstanding at
end of period (in
thousands).......... 4,783 4,791 5,498 5,979 5,848 4,576 4,576 3,796 3,172 3,014 2,068
DC-II (1.25%)
U.S. GOVERNMENT MONEY
MARKET FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period........... $ 1.718 $ 1.694 $ 1.661 $ 1.593 $ 1.500 $ 1.400 $ 1.326 $ 1.269 $ 1.209 $ 1.133 $ 1.045
Accumulation unit
value at end of
period.............. $ 1.758 $ 1.718 $ 1.694 $ 1.661 $ 1.593 $ 1.500 $ 1.400 $ 1.326 $ 1.269 $ 1.209 $ 1.133
Number of accumulation
units outstanding at
end of period (in
thousands).......... 483 467 382 381 293 212 163 107 102 77 22
DC-I (1.25%)
CAPITAL APPRECIATION
FUND SUB-ACCOUNT
Accumulation unit
value at beginning
of period........... $ 4.204 $ 3.524 $ 3.050 $ 2.004 $ 2.278 $ 1.858 $ 1.490 $ 1.579 $ 1.467 $ 1.092 $ 1.000(f)
Accumulation unit
value at end of
period.............. $ 4.257 $ 4.204 $ 3.524 $ 3.050 $ 2.004 $ 2.278 $ 1.858 $ 1.490 $ 1.579 $ 1.467 $ 1.092
Number of accumulation
units outstanding at
end of period (in
thousands).......... 46,086 36,598 25,900 19,437 15,293 13,508 9,970 8,485 6,552 2,485 113
DC-II (1.25%)
CAPITAL APPRECIATION
FUND SUB-ACCOUNT
Accumulation unit
value at beginning
of period........... $ 4.204 $ 3.524 $ 3.050 $ 2.004 $ 2.278 $ 1.858 $ 1.490 $ 1.579 $ 1.467 $ 1.092 $ 1.000(f)
Accumulation unit
value at end of
period.............. $ 4.257 $ 4.204 $ 3.524 $ 3.050 $ 2.004 $ 2.278 $ 1.858 $ 1.490 $ 1.579 $ 1.467 $ 1.092
Number of accumulation
units outstanding at
end of period (in
thousands).......... 6,923 4,940 3,276 2,113 1,455 1,037 787 664 462 117 5
<CAPTION>
1983 1982
------- ------
DC-I (1.25%)
<S> <C> <C>
ADVISERS FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period........... $ 1.000(e) --
Accumulation unit
value at end of
period.............. $ 1.013 --
Number of accumulation
units outstanding at
end of period (in
thousands).......... 7,971 --
DC-II (1.25%)
ADVISERS FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period........... $ 1.000(e) --
Accumulation unit
value at end of
period.............. $ 1.013 --
Number of accumulation
units outstanding at
end of period (in
thousands).......... 837 --
DC-I (1.25%)
U.S. GOVERNMENT MONEY
MARKET FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period........... $ 1.000(e) --
Accumulation unit
value at end of
period.............. $ 1.045 --
Number of accumulation
units outstanding at
end of period (in
thousands).......... 944 --
DC-II (1.25%)
U.S. GOVERNMENT MONEY
MARKET FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period........... $ 1.000(e) --
Accumulation unit
value at end of
period.............. $ 1.045 --
Number of accumulation
units outstanding at
end of period (in
thousands).......... 2 --
DC-I (1.25%)
CAPITAL APPRECIATION
FUND SUB-ACCOUNT
Accumulation unit
value at beginning
of period........... -- --
Accumulation unit
value at end of
period.............. -- --
Number of accumulation
units outstanding at
end of period (in
thousands).......... -- --
DC-II (1.25%)
CAPITAL APPRECIATION
FUND SUB-ACCOUNT
Accumulation unit
value at beginning
of period........... -- --
Accumulation unit
value at end of
period.............. -- --
Number of accumulation
units outstanding at
end of period (in
thousands).......... -- --
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
-------- -------- -------- ------- ------- ------- ------- ------- ------- -------
DC-I (1.25%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MORTGAGE SECURITIES FUND
SUB-ACCOUNT
Accumulation unit value
at beginning of
period................. $ 2.093 $ 1.993 $ 1.929 $ 1.702 $ 1.571 $ 1.406 $ 1.313 $ 1.296 $ 1.181 $ 1.000(g)
Accumulation unit value
at end of period....... $ 2.034 $ 2.093 $ 1.993 $ 1.929 $ 1.702 $ 1.571 $ 1.406 $ 1.313 $ 1.296 $ 1.181
Number of accumulation
units outstanding at
end of period (in
thousands)............. 10,782 11,722 12,046 11,855 10,291 8,919 9,005 8,139 7,902 5,130
DC-II (1.25%)
MORTGAGE SECURITIES FUND
SUB-ACCOUNT
Accumulation unit value
at beginning of
period................. $ 2.093 $ 1.993 $ 1.929 $ 1.702 $ 1.571 $ 1.406 $ 1.313 $ 1.296 $ 1.181 $ 1.000(g)
Accumulation unit value
at end of period....... $ 2.034 $ 2.093 $ 1.993 $ 1.929 $ 1.702 $ 1.571 $ 1.406 $ 1.313 $ 1.296 $ 1.181
Number of accumulation
units outstanding at
end of period (in
thousands)............. 994 942 802 736 582 845 764 598 431 247
DC-I (1.25%)
INDEX FUND SUB-ACCOUNT
Accumulation unit value
at beginning of
period................. $ 1.735 $ 1.605 $ 1.522 $ 1.190 $ 1.255 $ 0.975 $ 0.850 $ 1.000(h) -- --
Accumulation unit value
at end of period....... $ 1.738 $ 1.735 $ 1.605 $ 1.522 $ 1.190 $ 1.255 $ 0.975 $ 0.850 -- --
Number of accumulation
units outstanding at
end of period (in
thousands)............. 15,356 13,489 11,720 8,519 6,350 3,639 1,946 1,323 -- --
DC-II (1.25%)
INDEX FUND SUB-ACCOUNT
Accumulation unit value
at beginning of
period................. $ 1.735 $ 1.605 $ 1.522 $ 1.190 $ 1.255 $ 0.975 $ 0.850 $ 1.000(h) -- --
Accumulation unit value
at end of period....... $ 1.738 $ 1.735 $ 1.605 $ 1.522 $ 1.190 $ 1.255 $ 0.975 $ 0.850 -- --
Number of accumulation
units outstanding at
end of period (in
thousands)............. 2,376 1,862 1,437 871 595 275 116 49 -- --
DC-I (1.25%)
SOCIALLY RESPONSIVE FUND
SUB-ACCOUNT
Accumulation unit value
at beginning of
period................. $ 1.573 $ 1.475 $ 1.388 $ 1.207 $ 1.173 $ 1.000(i) -- -- -- --
Accumulation unit value
at end of period....... $ 1.504 $ 1.573 $ 1.475 $ 1.388 $ 1.207 $ 1.173 -- -- -- --
Number of accumulation
units outstanding at
end of period (in
thousands)............. 7,899 7,199 5,215 3,508 2,036 629 -- -- -- --
DC-II (1.25%)
SOCIALLY RESPONSIVE FUND
SUB-ACCOUNT
Accumulation unit value
at beginning of
period................. $ 1.483 $ 1.391 $ 1.308 $ 1.138 $ 1.106 $ 1.000(i) -- -- -- --
Accumulation unit value
at end of period....... $ 1.417 $ 1.483 $ 1.391 $ 1.308 $ 1.138 $ 1.106 -- -- -- --
Number of accumulation
units outstanding at
end of period (in
thousands)............. 693 498 317 187 94 18 -- -- -- --
<CAPTION>
1984 1983 1982
------- ------- ------
DC-I (1.25%)
<S> <C> <C> <C>
MORTGAGE SECURITIES FUND
SUB-ACCOUNT
Accumulation unit value
at beginning of
period................. -- -- --
Accumulation unit value
at end of period....... -- -- --
Number of accumulation
units outstanding at
end of period (in
thousands)............. -- -- --
DC-II (1.25%)
MORTGAGE SECURITIES FUND
SUB-ACCOUNT
Accumulation unit value
at beginning of
period................. -- -- --
Accumulation unit value
at end of period....... -- -- --
Number of accumulation
units outstanding at
end of period (in
thousands)............. -- -- --
DC-I (1.25%)
INDEX FUND SUB-ACCOUNT
Accumulation unit value
at beginning of
period................. -- -- --
Accumulation unit value
at end of period....... -- -- --
Number of accumulation
units outstanding at
end of period (in
thousands)............. -- -- --
DC-II (1.25%)
INDEX FUND SUB-ACCOUNT
Accumulation unit value
at beginning of
period................. -- -- --
Accumulation unit value
at end of period....... -- -- --
Number of accumulation
units outstanding at
end of period (in
thousands)............. -- -- --
DC-I (1.25%)
SOCIALLY RESPONSIVE FUND
SUB-ACCOUNT
Accumulation unit value
at beginning of
period................. -- -- --
Accumulation unit value
at end of period....... -- -- --
Number of accumulation
units outstanding at
end of period (in
thousands)............. -- -- --
DC-II (1.25%)
SOCIALLY RESPONSIVE FUND
SUB-ACCOUNT
Accumulation unit value
at beginning of
period................. -- -- --
Accumulation unit value
at end of period....... -- -- --
Number of accumulation
units outstanding at
end of period (in
thousands)............. -- -- --
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984
-------- -------- -------- ------- ------- ------- ------- ------- ------- ------- -------
DC-I (1.25%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL
OPPORTUNITIES FUND
SUB-ACCOUNT
Accumulation unit value
at beginning of
period................. $ 1.220 $ 0.924 $ 0.979 $ 0.877 $ 1.000(j) -- -- -- -- -- --
Accumulation unit value
at end of period....... $ 1.181 $ 1.220 $ 0.924 $ 0.979 $ 0.877 -- -- -- -- -- --
Number of accumulation
units outstanding at
end of period (in
thousands)............. 38,270 19,894 8,061 4,663 2,564 -- -- -- -- -- --
DC-II (1.25%)
INTERNATIONAL
OPPORTUNITIES FUND
SUB-ACCOUNT
Accumulation unit value
at beginning of
period................. $ 1.220 $ 0.924 $ 0.979 $ 0.877 $ 1.000(j) -- -- -- -- -- --
Accumulation unit value
at end of period....... $ 1.181 $ 1.220 $ 0.924 $ 0.979 $ 0.877 -- -- -- -- -- --
Number of accumulation
units outstanding at
end of period (in
thousands)............. 3,640 1,495 553 220 52 -- -- -- -- -- --
<CAPTION>
1983 1982
------- ------
DC-I (1.25%)
<S> <C> <C>
INTERNATIONAL
OPPORTUNITIES FUND
SUB-ACCOUNT
Accumulation unit value
at beginning of
period................. -- --
Accumulation unit value
at end of period....... -- --
Number of accumulation
units outstanding at
end of period (in
thousands)............. -- --
DC-II (1.25%)
INTERNATIONAL
OPPORTUNITIES FUND
SUB-ACCOUNT
Accumulation unit value
at beginning of
period................. -- --
Accumulation unit value
at end of period....... -- --
Number of accumulation
units outstanding at
end of period (in
thousands)............. -- --
</TABLE>
11
<PAGE>
PERFORMANCE RELATED INFORMATION
The Separate Account may advertise certain performance related information
concerning its Sub-Accounts. Performance information about the Sub-Account is
based on the Sub-Account's past performance only and is no indication of future
performance.
The Advisers Fund, Capital Appreciation Fund, Bond Fund, Dividend and Growth
Fund, Index Fund, International Opportunities Fund, Money Market Fund, Mortgage
Securities Fund, Socially Responsive Fund, Stock Fund and U.S. Government Money
Market Fund Sub-Accounts may include total return in advertisements or other
sales material.
When the Sub-Account advertises its total return, it will usually be
calculated 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 (assuming the deduction of any contingent
deferred sales charge which would be payable if the investment were redeemed at
the end of the period).
The Bond Fund and Mortgage Securities Fund 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 reflects
the recurring charges on the Separate Account level including the Annual
Contract Fee.
The Money Market Fund and U.S. Government Money Market Fund Sub-Accounts may
advertise yield and effective yield. The yield of the 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 reflect
the recurring charges on the Separate Account level including the Annual
Contract Fee.
Total return at the Separate Account level includes all contract charges:
sales charges, mortality and expense risk charges, and the Annual Contract Fee
and is therefore lower than total return at the Fund level, with no comparable
charges. Likewise, yield at the Separate Account level includes all recurring
charges (except sales charges), and is therefore lower than yield at the Fund
level, with no comparable charges.
INTRODUCTION
This Prospectus has been designed to provide you with the necessary
information to make a decision on purchasing contracts issued in conjunction
with a Deferred Compensation Plan or Qualified Plan of an Employer offered by HL
in Separate Account DC-I or DC-II. This Prospectus describes only the elements
of the contracts pertaining to the variable portion of the contract. The
contracts may contain a General Account option which is not described in this
Prospectus. Please read the Glossary of Special Terms on pages and prior to
reading this Prospectus to familiarize yourself with the terms being used.
12
<PAGE>
THE DC-I AND DC-II CONTRACT AND
SEPARATE ACCOUNT DC-I AND
SEPARATE ACCOUNT TWO (DC-II)
WHAT ARE THE DC-I AND DC-II CONTRACTS?
On contracts issued in conjunction with a Deferred Compensation Plan of an
Employer, variable account Contributions are held in Hartford Life Insurance
Company DC Variable Account-I ("DC-I") during the Accumulation Period and in a
series of Hartford Life Insurance Company Separate Account Two ("DC-II")
during the Annuity Period.
On contracts issued in conjunction with a Qualified Plan of an Employer,
Contributions are held in DC-II during both the Accumulation Period and
Annuity Period.
The Qualified Plan contracts available with respect to DC-II are limited to
voluntary plans established and sponsored by Employers for their Employees.
Qualified Plans provide a way for an Employer to establish a funded retirement
plan for its Employees. The contract is normally issued to the Employer or to
the trustee or custodian of the Employer's Plan.
Deferred Compensation Plans provide a way for an Employer and its Employees
to arrange for eligible employees to defer a certain portion of their income
("Deferred Compensation") to a determinable future date and thereby defer
current federal income taxes on such deferred compensation until actually
received by the Employee according to the terms of the Employer's Plan. An
Employer contemplating the offering of such a Plan should consult with its
legal counsel with respect to any securities aspects of interest in such
Plans. At all times, the Employer is the sole and exclusive owner of the
contract issued with respect to the Plan. An Employee electing to participate
in the Employer's Plan is, at all times, a general creditor of the Employer
establishing the Plan.
During the Accumulation Period under the contracts, Contributions made by
the Employer to the contracts are used to purchase variable account interests.
Contributions allocated to purchase variable interests may, after the
deductions described hereafter, be invested in selected Sub-Accounts of DC-I
or DC-II, as appropriate.
WHO CAN BUY THESE CONTRACTS?
The group variable annuity contracts offered under this Prospectus are for
use in connection with plans qualified under Sections 401(a) or 403(a) of the
Internal Revenue Code, including annuity purchase plans adopted by public
school systems and certain tax-exempt organizations according to Section
403(b) of the Internal Revenue Code; annuity purchase plans adopted according
to Section 408 of the Internal Revenue Code, including employee pension plans
established for employees by a state, a political subdivision of a state, or
an agency or instrumentality of either a state or a political subdivision of a
state, and certain eligible deferred compensation plans as defined in Section
457 of the Internal Revenue Code; and pension or profit-sharing plans
described in Section 401(a) and 401(k) ("Qualified Contracts").
WHAT ARE THE SEPARATE ACCOUNTS AND HOW DO THEY OPERATE?
Provision has been made for two different Separate Accounts (DC-I and a
series of Separate Account Two (DC-II)), to be operative during the life of
the contracts which are issued in conjunction with Deferred Compensation
Plans. This arrangement provides for tax treatment of DC-I which may provide
tax advantages to Deferred Compensation Plan Contract Owners. (See "Federal
Tax Considerations," commencing on page .) Provision has been made for DC-II
only, to be operative during the life of a contract issued in conjunction with
a Qualified Plan. DC-I and a series of Separate Account Two (DC-II) have been
organized as unit investment trust types of investment companies and have been
registered as such with the Commission under the Investment Company Act of
1940, as amended. The Separate Accounts meet the definition of "separate
account" under federal securities law.
Registration of the Separate Accounts with the Commission does not involve
supervision of the management or investment practices or policies of the
Separate Account or of HL by the Commission. However, HL and the Separate
Accounts are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut.
13
<PAGE>
Under Connecticut law, the assets of the Separate Accounts attributable to
the contracts offered under this Prospectus are held for the benefit of the
owners of, and the persons entitled to payments under, those contracts. Also,
in accordance with the contracts, the assets in the Separate Accounts
attributable to contracts participating in the Separate Accounts are not
chargeable with liabilities arising out of any other business HL may conduct.
So, you will not be affected by the rate of return of HL's general account,
nor by the investment performance of any of HL's other separate accounts.
Your investment is allocated to one or more Sub-Accounts of the Separate
Account. Each Sub-Account is invested exclusively in the assets of one
underlying Fund. Net Purchase Payments and proceeds of transfers between
Sub-Accounts are applied to purchase shares in the appropriate Fund at net
asset value determined as of the end of the Valuation Period during which the
payments were received or the transfer made. All distributions from the Fund
are reinvested at net asset value. The value of your investment during the
Accumulation Period will therefore vary in accordance with the net income and
fluctuation in the individual investments within the underlying Fund portfolio
or portfolios. During the Variable Annuity payout period, both your annuity
payments and reserve values will vary in accordance with these factors.
HL DOES NOT GUARANTEE THE INVESTMENT RESULTS OF THE SUB-ACCOUNTS OR ANY OF
THE UNDERLYING INVESTMENTS. THERE IS NO ASSURANCE THAT THE VALUE OF A CONTRACT
DURING THE YEARS PRIOR TO RETIREMENT OR THE AGGREGATE AMOUNT OF THE VARIABLE
ANNUITY PAYMENTS WILL EQUAL THE TOTAL OF PURCHASE PAYMENTS MADE UNDER THE
CONTRACT. SINCE EACH UNDERLYING FUND HAS DIFFERENT INVESTMENT OBJECTIVES, EACH
IS SUBJECT TO DIFFERENT RISKS. THESE RISKS ARE MORE FULLY DESCRIBED IN THE
ACCOMPANYING FUND PROSPECTUS.
HL reserves the right, subject to compliance with the law, to substitute the
shares of any other registered investment company for the shares of any Fund
held by the Separate Account. Substitution may occur if shares of the Fund(s)
become unavailable or due to changes in applicable law or interpretations of
law. Current law requires notification to you of any such substitution and
approval of the Securities and Exchange Commission.
HL also reserves the right, subject to compliance with the law to offer
additional Sub-Accounts with differing investment objectives.
The Separate Account may be subject to liabilities arising from series whose
assets are attributable to other variable annuity contracts or variable life
insurance policies offered by the Separate Account which are not described in
this Prospectus.
HL may offer additional Separate Account options from time to time under
these contracts. Such new options will be subject to the then in effect
charges, fees, and or transfer restrictions for the contracts for such
additional separate accounts.
14
<PAGE>
OPERATION OF THE CONTRACT
HOW ARE CONTRIBUTIONS CREDITED?
A group contract is issued to an Employer adopting a Plan and will cover all
present and future Participants in the Employer's Plan. Contracts provide for
a variable (Separate Account) Contributions during the Accumulation Period.
The net Contributions to a Participant's Individual Account under a contract
are applied to purchase Accumulation Units in the selected Sub-Accounts. In
order to reflect such Contributions on behalf of a Participant, except with
respect to an initial Contribution, there is credited to each Participant's
Individual Account under a contract such Sub-Account Accumulation Units with
respect to DC-I or DC-II, as appropriate, determined by dividing the net
Contribution by the appropriate Accumulation Unit value next computed
following receipt of the payment by HL at its home office, P.O. Box 2999,
Hartford, Connecticut 06104-2999. With respect to an initial Contribution, the
net Contribution is credited to the Participant's Individual Account within
two business days of receipt of a properly completed application and the
initial Contribution. If an application or any other information is incomplete
when received, the net Contribution will be credited to the Participant's
Individual Account within five business days. If an initial Contribution is
not credited within five business days, it will be immediately returned unless
you have been informed of the delay and request that the Contribution not be
returned. Subsequent payments cannot be credited on the same day of receipt
unless they are accompanied by adequate instructions.
The number of Sub-Account Accumulation Units will not change because of a
subsequent change in an Accumulation Unit's value, but the dollar value of an
Accumulation Unit will vary to reflect the investment experience of the
appropriate Fund shares that serve as the underlying investment for the
Sub-Account.
MAY I MAKE CHANGES IN THE AMOUNTS OF MY CONTRIBUTION?
Yes, however the minimum Contribution that may be made at any one time on
behalf of a Participant during the Accumulation Period under a contract is $30
unless the Employer's Plan provides otherwise. If the Plan adopted by the
Contract Owner so provides, the contract permits the allocation of
Contributions, in multiples of 10% among the several Sub-Accounts of DC-I and
DC-II. The minimum amount that may be allocated to any Sub-Account in a
Separate Account shall not be less than $10. Such changes must be requested in
writing and will be effected as of the date the request is received by HL at
its home office, P.O. Box 2999, Hartford, Connecticut 06104-2999.
MAY I TRANSFER ASSETS BETWEEN SUB-ACCOUNTS?
Yes, during the Accumulation Period you may transfer the values of your
Sub-Account allocations from one or more Sub-Accounts to another.
The following transfer restrictions apply to contracts issued or amended on
or after May 1, 1992.
Transfers of assets presently held in the General Account, or which were
held in the General Account at any time during the preceding 3 months, to the
Money Market Fund Sub-Account or to the U.S. Government Money Market
Sub-Account are prohibited.
Similarly, transfers of assets presently held in the Money Market Fund
Sub-Account or U.S. Government Money Market Sub-Account, or which were held in
either of these two Sub-Accounts or the General Account during the preceding 3
months, to the General Account are prohibited.
Such transfers must be requested in writing and will be effected as of the
date the request is received by HL at its home office, P.O. Box 2999,
Hartford, Connecticut 06104-2999. Each transfer may be subject to a $5.00
transfer fee (see "Experience Rating of Contracts," page ).
In addition, the right, with respect to a Participant's Individual Account,
to transfer monies between Sub-Accounts is subject to modification if HL
determines, in its sole opinion, that the exercise of that right by the
Contract Owner/Participant is, or would be, to the disadvantage of other
Contract Owners/Participants. Any modification could be applied to transfers
to or from the same or all of the Accounts and could include, but not be
limited to, the requirement of a minimum time period between each transfer,
not accepting transfer requests of an agent acting under a power of attorney
on behalf of more than one Participant or Contract Owner, or limiting the
dollar amount that may be transferred between Sub-Accounts by a Contract
Owner/
15
<PAGE>
Participant at other time. Such restrictions may be applied in any manner
reasonably designed to prevent any use of the transfer right which is
considered by HL to be to the disadvantage of other Contract Owners/
Participants.
WHAT HAPPENS IF THE CONTRACT OWNER FAILS TO MAKE CONTRIBUTIONS?
A contract will be deemed paid-up within 30 days after any anniversary date
of the contract if the Contract Owner has not remitted a Contribution to HL
during the preceding 12 month period. Effective with a change of the contract
to paid-up status, no further Contributions will be accepted by HL and each
Participant's Individual Account will be considered an inactive account until
the commencement of Annuity payments or until the value of the Participant's
Individual Account is disbursed or applied in accordance with the termination
provisions (see "How can a Contract be redeemed or surrendered?" on page ).
Once a contract has been placed on a paid-up status it may not be reinstated.
Persons receiving Annuity payments at the time of any change to paid-up status
will continue to receive their payments.
MAY I ASSIGN OR TRANSFER THE CONTRACT?
The group contracts issued with respect to Deferred Compensation Plans may
be assigned by the Contract Owner. Some forms of Qualified Plans prohibit the
assignment of a contract or any interest therein. No assignment will be
effective until a copy has been filed at the offices of HL at Hartford,
Connecticut, prior to settlement for HL's liability under the contract. HL
assumes no responsibility for the validity of any such assignments.
Participants may not assign their individual account interests.
HOW DO I KNOW WHAT MY ACCOUNT IS WORTH?
The value of the Accumulation Units in DC-I or DC-II representing an
interest in the appropriate Fund shares that are held under the contract were
initially established on the date that Contributions were first contributed to
the appropriate Sub-Account of the Separate Account. The value of the
respective Accumulation Units for any subsequent day is determined by
multiplying the Accumulation Unit value for the preceding day by the net
investment factor of the appropriate Sub-Account, as appropriate (see "How is
the Accumulation Unit value determined?" below).
The value of a Participant's Individual Account under a contract at any time
prior to the commencement of Annuity payments can be determined by multiplying
the total number of Sub-Account Accumulation Units credited to a Participant's
Individual Account by the current Accumulation Unit value for the respective
Sub-Account. There is no assurance that the value in the Sub-Accounts will
equal or exceed the Contributions made by the Contract Owner to such
Sub-Accounts.
HOW IS THE ACCUMULATION UNIT VALUE DETERMINED?
The Accumulation Unit value for each Sub-Account will vary to reflect the
investment experience of the applicable Fund and will be determined on each
"Valuation Day" by multiplying the Accumulation Unit value of the particular
Sub-Account on the preceding Valuation Day by a "Net Investment Factor" for
that Sub-Account for the Valuation Period then ended. The Net Investment
Factor for each of the Sub-Accounts is equal to the net asset value per share
of the corresponding Fund at the end of the Valuation Period (plus the per
share amount of any dividends or capital gains by that Fund if the ex-dividend
date occurs in the Valuation Period then ended) divided by the net asset value
per share of the corresponding Fund at the beginning of the Valuation Period
and subtracting from that amount the amount of any charges assessed during the
Valuation Period then ending. You should refer to the Prospectuses for each of
the Funds which accompany this Prospectus for a description of how the assets
of each Fund are valued since each determination has a direct bearing on the
Accumulation Unit value of the Sub-Account and therefore the value of a
contract.
HOW ARE THE UNDERLYING FUND SHARES VALUED?
The shares of the Fund are valued at net asset value on a daily basis. A
complete description of the valuation method used in valuing Fund shares may
be found in the accompanying Prospectus of each Fund.
16
<PAGE>
PAYMENT OF BENEFITS
WHAT WOULD MY BENEFICIARY RECEIVE AS DEATH PROCEEDS?
The contracts provide that in the event the Participant dies before the
selected Annuity Commencement Date or the Participant's age 65 (whichever
occurs first) the Minimum Death Benefit payable on such contract will be the
greater of (a) the value of the Participant's Individual Account determined as
of the day written proof of death of such person is received by HL, or (b)
100% of the total Contributions made to such Account, reduced by any prior
partial surrenders.
The benefit may be taken by the Contract Owner in a single sum, in which
case payment will be made within seven days of receipt of proof of death by
HL, unless subject to postponement as explained below. In lieu of payment in
one sum, a Contract Owner may elect that the amount be applied, subject to the
suspension provisions described below, under any one of the optional Annuity
forms provided under DC-II (see "What are the available Annuity options under
the contracts?" commencing on page ) to provide Annuity payments to the
Beneficiary.
An election to receive death benefits under a form of Annuity must be made
prior to a lump sum settlement with HL and within one year after the death by
written notice to HL at its offices in Hartford, Connecticut. Benefit proceeds
due on death may be applied to provide variable payments, fixed payments, or a
combination of variable and fixed payments. No election to provide Annuity
payments will become operative unless the initial Annuity payment is at least
$20.00 on either a variable or fixed basis, or $20.00 on each basis when a
combination benefit is elected. The manner in which the Annuity payments are
determined and in which they may vary from month to month are the same as
applicable to a Participant's Individual Account after retirement (see "How
are Contributions made to establish my Annuity account?" page ).
HOW CAN A CONTRACT BE REDEEMED OR SURRENDERED?
THERE ARE CERTAIN RESTRICTIONS ON SECTION 403(b) TAX-SHELTERED ANNUITIES. AS
OF DECEMBER 31, 1988, ALL SECTION 403(b) ANNUITIES HAVE LIMITS ON FULL AND
PARTIAL SURRENDERS. CONTRIBUTIONS TO THE CONTRACT MADE AFTER DECEMBER 31, 1988
AND ANY INCREASES IN CASH VALUE AFTER DECEMBER 31, 1988 MAY NOT BE DISTRIBUTED
UNLESS THE CONTRACT OWNER/EMPLOYEE HAS (A) ATTAINED AGE 59 1/2, (B) TERMINATED
EMPLOYMENT, (C) DIED, (D) BECOME DISABLED OR (E) EXPERIENCED FINANCIAL
HARDSHIP.
DISTRIBUTIONS DUE TO FINANCIAL HARDSHIP OR SEPARATION FROM SERVICE MAY STILL
BE SUBJECT TO A PENALTY TAX OF 10%.
HL WILL NOT ASSUME ANY RESPONSIBILITY IN DETERMINING WHETHER A WITHDRAWAL IS
PERMISSIBLE, WITH OR WITHOUT TAX PENALTY, IN ANY PARTICULAR SITUATION; OR IN
MONITORING WITHDRAWAL REQUESTS REGARDING PRE OR POST JANUARY 1, 1989 ACCOUNT
VALUES.
On termination of Contributions to a contract by the Contract Owner on
behalf of a Participant prior to the selected Annuity Commencement Date for
such Participant, the Contract Owner will have the following options:
1. To continue a Participant's Individual Account in force under the
contract. Under this option, when the selected Annuity Commencement Date
arrives, the Contract Owner will begin to receive Annuity payments under the
selected Annuity option under the contract. (See "What are the available
Annuity options under the contracts?" commencing on page .) At any time in
the interim, a Contract Owner may surrender a Participant's Individual
Account for a lump sum cash settlement in accordance with 3. below.
2. To provide Annuity payments immediately. The values in a
Participant's Individual Account may be applied, subject to contractual
provisions, to provide for Fixed or Variable Annuity payments, or a
combination thereof, commencing immediately, under the selected Annuity
option under the contract. (See "What are the available Annuity options
under the contracts?" commencing on page .)
3. To surrender a Participant's Individual Account under the contract
for a lump sum cash settlement, in which event the Annual Contract Fee and
any applicable contingent deferred sales charges will be deducted. (See "How
are the charges under these contracts made?" commencing on page .) The
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<PAGE>
amount received will be the net termination value next computed after
receipt by HL at its home office, P.O. Box 2999, Hartford, CT 06104-2999, of
a written surrender request for complete surrender. Payment will normally be
made as soon as possible but not later than seven days after the written
request is received by HL.
4. In the case of a partial surrender the amount requested is either
taken out of the specified Sub-Account(s) or if no Sub-Account(s) are
specified, the requested amount is taken out of all applicable Sub-
Account(s) on a pro rata basis. Within this context, the contingent deferred
sales charges are taken as a percentage of the amount withdrawn (see "How
are the charges under these contracts made?" page ). If the contingent
deferred sales charges have been experience rated (see "How are the charges
under these contracts made?" page ), any amounts not subject to the
contingent deferred sales charge will be deemed to be surrendered last.
CAN PAYMENT OF THE REDEMPTION OR SURRENDER VALUE EVER BE POSTPONED BEYOND THE
SEVEN DAY PERIOD?
Yes. It may be postponed whenever (a) the New York Stock Exchange is closed,
except for holidays or weekends, or trading on the New York Stock Exchange is
restricted as determined by the Securities and Exchange Commission; (b) the
Securities and Exchange Commission permits postponement and so orders; or (c)
the Securities and Exchange Commission determines that an emergency exists
making valuation of the amounts or disposal of securities not reasonably
practicable.
MAY I SURRENDER ONCE ANNUITY PAYMENTS HAVE STARTED?
Except with respect to Option 5 (on a variable payout), once Annuity
payments have commenced for an Annuitant, no surrender of a life Annuity
benefit can be made for the purpose of receiving a partial withdrawal or a
lump sum settlement in lieu thereof. Any surrender out of Option 5 will be
subject to contingent deferred sales charges, if applicable.
ARE THERE DIFFERENCES IN THE CONTRACT RELATED TO THE TYPE OF PLAN IN WHICH THE
PARTICIPANT IS ENROLLED?
Annuity Rights are provided under contracts issued only in conjunction with
Deferred Compensation Plans, with respect to DC-I only, entitling the Contract
Owner to have Annuity payments at the rates set forth in the contract at the
time of issue. Such rates will be made applicable to all amounts held in a
Participant's Individual Account during the Annuity Period under such contract
which do not exceed five times the gross Contributions made during the
Accumulation Period with respect to such Participant's Individual Account
thereunder. To the extent that the value of a Participant's Individual Account
at the end of the Accumulation Period is insufficient to fund the Annuity
Rights provided, the Contract Owner shall have the right to apply additional
Contributions to the values held in a Participant's Individual Account in
order to exercise all of the Annuity Rights provided. Any amounts in excess
thereto may be applied by HL at Annuity rates then being offered by HL.
CAN A CONTRACT BE SUSPENDED BY A CONTRACT OWNER?
A contract may be suspended by the Contract Owner by giving written notice
at least 90 days prior to the effective date of such suspension to HL at its
home office, P.O. Box 2999, Hartford, Connecticut 06104-2999. A contract will
be suspended automatically on its anniversary if the Contract Owner fails to
assent to any modification of a contract, as described under the caption "Can
a contract be modified?" which modifications would have become effective on or
before that anniversary. Upon suspension, Contributions will continue to be
accepted by HL under the contract, and subject to the terms thereof, as they
are applicable to Participant's Individual Accounts under the contracts prior
to such suspension, but no Contributions will be accepted on behalf of any new
Participant's Individual Accounts. Annuitants at the time of any suspension
will continue to receive their Annuity payments. The suspension of a contract
will not preclude the Contract Owner's applying existing Participant's
Individual Accounts under DC-I or DC-II, as appropriate, to the purchase of
Fixed or Variable Annuity benefits.
HOW DO I ELECT AN ANNUITY COMMENCEMENT DATE AND FORM OF ANNUITY?
The Contract Owner selects an Annuity Commencement Date, usually between a
Participant's 50th and 75th birthdays, and an Annuity Option. The Annuity
Commencement Date may not be deferred beyond a Participant's 75th birthday or
such earlier date as may be required by applicable law and/or regulation. The
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Annuity Commencement Date and/or the Annuity option may be changed from time
to time, but any such change must be made at least 30 days prior to the date
on which Annuity payments are scheduled to begin. Annuity payments will
normally be made on the first business day of each month.
The contract contains five optional annuity forms which may be selected on
either a Fixed or Variable Annuity basis, or a combination thereof. If a
Contract Owner does not elect otherwise, HL reserves the right to begin
Annuity payments at age 65 under Option 2 with 120 monthly payments certain.
However, HL will not assume responsibility in determining or monitoring
minimum distributions beginning at age 70 1/2.
When an Annuity is purchased by a Contract Owner for an Annuitant, unless
otherwise specified, DC-I or DC-II Accumulation Unit values will be applied to
provide a Variable Annuity under DC-II.
WHAT IS THE MINIMUM AMOUNT THAT I MAY SELECT FOR AN ANNUITY PAYMENT?
The minimum Annuity payment is $20.00. No election may be made which results
in a first payment of less than $20.00. If at any time Annuity payments are or
become less than $20.00, HL has the right to change the frequency of payment
to intervals that will result in payments of at least $20.00.
HOW ARE CONTRIBUTIONS MADE TO ESTABLISH MY ANNUITY ACCOUNT?
During the Annuity Period, contract values and any allowable additional
Contributions made by the Contract Owner for the purpose of effecting Annuity
payments under the contract (Deferred Compensation Plans Only) are, based upon
the information received from the Contract Owner, applied to establish
Annuitant's Accounts under the contracts to provide Fixed or Variable Annuity
payments.
At the end of the Accumulation Period with respect to a Participant's
Individual Account there is an automatic transfer of all DC-I values to DC-II
which are used to establish Annuitant's Accounts with respect to DC-II. Such
transfer will be effected by a transfer of ownership of DC-I interests in the
underlying securities to DC-II. The value of a Participant's Individual
Account that is transferred to DC-II hereunder will be without application of
any sales charges or other expenses, with the exception of any applicable
Premium Taxes. DC-II values held during the Accumulation Period under a
contract are retained in DC-II.
In addition to having the right to allocate the value of a Participant's
Individual Account held in the Separate Account during the Accumulation Period
to establish an Annuitant's Account during the Annuity Period, a Deferred
Compensation Plan Contract Owner (with respect to DC-I, only) may make
additional Contributions at the beginning of the Annuity Period for the
purpose of effecting increased Annuity payments for Participants. All such
additional Contributions shall be subject to a deduction for sales expenses,
as well as any applicable Premium Taxes as follows:
<TABLE>
<CAPTION>
ADDITIONAL CONTRIBUTION TO AN ANNUITANT'S ACCOUNT TOTAL DEDUCTION
------------------------------------------------------------ ---------------
<S> <C>
On the first $50,000.................................... 3.50 %
On the next $50,000..................................... 2.00 %
On the excess over $100,000............................. 1.00 %
</TABLE>
WHAT ARE THE AVAILABLE ANNUITY OPTIONS UNDER THE CONTRACTS?
OPTION 1: LIFE ANNUITY
A Life Annuity is an Annuity payable during the lifetime of the Annuitant
and terminating with the last monthly payment preceding the death of the
Annuitant. Life Annuity options (options 1-4) offer the maximum level of
monthly payments of any of the options since there is no guarantee of a
minimum number of payments nor a provision for a death benefit payable to a
Beneficiary.
It would be possible under this option for an Annuitant to receive only one
Annuity payment if he died prior to the due date of the second Annuity
payment, two if he died before the due date of the third Annuity payment, etc.
*OPTION 2: LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN
This Annuity option is an Annuity payable monthly during the lifetime of an
Annuitant with the provision that if, at the death of the Annuitant, payments
have been made for less than 120, 180 or 240 months, as elected, then the
present value as of the date of the Participant's death at the current dollar
amount at the date of death of any remaining guaranteed monthly payments will
be paid in one sum to the Beneficiary or Beneficiaries designated unless other
provisions will have been made and approved by HL.
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*OPTION 3: UNIT REFUND LIFE ANNUITY
This Annuity option is an Annuity payable monthly during the lifetime of the
Annuitant terminating with the last payment due prior to the death of the
Annuitant except that an additional payment will be made to the Beneficiary or
Beneficiaries if (a) below exceeds (b) below:
total amount applied under the option
(a) = at the Annuity Commencement Date
--------------------------------------------------------------------
Annuity Unit value at the Annuity Commencement Date
number of Annuity Units represented number of monthly
(b) = by each monthly Annuity payment made X Annuity payments made
The amount of the additional payments will be determined by multiplying such
excess by the Annuity Unit value as of the date that proof of death is
received by HL.
OPTION 4: JOINT AND LAST SURVIVOR ANNUITY
An Annuity payable monthly during the joint lifetime of the Annuitant and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
It would be possible under this Option for an Annuitant and designated
second person in the event of the common or simultaneous death of the parties
to receive only one payment in the event of death prior to the due date for
the second payment and so on.
*OPTION 5: PAYMENTS FOR A DESIGNATED PERIOD
An amount payable monthly for the number of years selected. Under the
contracts the minimum number of years is three.
In the event of the Annuitant's death prior to the end of the designated
period, any then remaining balance of proceeds will be paid in one sum to the
Beneficiary or Beneficiaries designated unless other provisions will have been
made and approved by HL. Option 5 is an option that does not involve life
contingencies and thus no mortality guarantee.
Surrenders are subject to the limitations set forth in the contract and any
applicable contingent deferred sales charges (see "How are charges on these
contracts made?" page ).
* ON QUALIFIED PLANS, OPTIONS 2, 3 AND 5 ARE AVAILABLE ONLY IF THE GUARANTEED
PAYMENT PERIOD IS LESS THAN THE LIFE EXPECTANCY OF THE ANNUITANT AT THE TIME
THE OPTION BECOMES EFFECTIVE. SUCH LIFE EXPECTANCY SHALL BE COMPUTED ON THE
BASIS OF THE MORTALITY TABLE PRESCRIBED BY THE IRS, OR IF NONE IS
PRESCRIBED, THE MORTALITY TABLE THEN IN USE BY HL.
- - --------------------------------------------------------------------------------
UNDER ANY OF THE ANNUITY OPTIONS ABOVE, EXCEPT OPTION 5 (ON A VARIABLE BASIS),
NO SURRENDERS ARE PERMITTED AFTER ANNUITY PAYMENTS COMMENCE.
- - --------------------------------------------------------------------------------
HOW ARE VARIABLE ANNUITY PAYMENTS DETERMINED?
The value of the Annuity Unit for each Sub-Account in the Separate Account
for any day is determined by multiplying the value for the preceding day by
the product of (1) the net investment factor (see "How is the Accumulation
Unit value determined?" commencing on page ) for the day for which the Annuity
Unit value is being calculated, and (2) a factor to neutralize the assumed net
investment rate discussed below.
When Annuity payments are to commence, the value of the contract is
determined as the product of the value of the Accumulation Unit credited to
each Sub-Account as of the close of business on the fifth business day
preceding the date the first Annuity payment is due and the number of
Accumulation Units credited to each Sub-Account as of the date the Annuity is
to commence.
The contract contains tables indicating the dollar amount of the first
monthly payment under the optional forms of Annuity for each $1,000 of value
of a Sub-Account under a contract. The first monthly payment varies according
to the form of Annuity selected. The contract contains Annuity tables derived
from the 1983a Individual Annuity Mortality Table with an assumed interest
rate ("A.I.R.") of 4.00% or 5.00% per annum. The total first monthly Annuity
payment is determined by multiplying the value (expressed in
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thousands of dollars) of a Sub-Account (less any applicable Premium Taxes) by
the amount of the first monthly payment per $1,000 of value obtained from the
tables in the contracts. With respect to fixed annuities only, the current
rate will be applied if it is higher than the rate under the tables in the
contract.
Level Annuity payments would be provided if the net investment rate remained
constant and equal to the A.I.R. In fact, payments will vary up or down in the
proportion that the net investment rate varies up or down from the A.I.R. A
higher assumed interest rate may produce a higher initial payment but more
slowly rising and more rapidly falling subsequent payments than would a lower
interest rate assumption.
The amount of the first monthly Annuity payment, determined as described
above, is divided by the value of an Annuity Unit for the appropriate
Sub-Account as of the close of business on the fifth business day preceding
the day on which the payment is due in order to determine the number of
Annuity Units represented by the first payment. This number of Annuity Units
remains fixed during the Annuity Period, and in each subsequent month the
dollar amount of the Annuity payment is determined by multiplying this fixed
number of Annuity Units by the then current Annuity Unit value.
The Annuity payments will be made on the date selected. The Annuity Unit
value used in calculating the amount of the Annuity payments will be based on
an Annuity Unit value determined as of the close of business on a day not more
than the fifth business day preceding the date of the Annuity payment.
Here is an example of how a variable annuity is determined:
ILLUSTRATION OF ANNUITY PAYMENTS:
(UNISEX) AGE 65, LIFE ANNUITY WITH 120 PAYMENTS CERTAIN
<TABLE>
<C> <S> <C>
1. Net amount applied........................................ $ 139,782.50
2. Initial monthly income per $1,000 of payment applied...... 6.13
3. Initial monthly payment (1 x 2 DIVIDED BY 1,000)......... 856.87
4. Annuity Unit Value........................................ 3.125
5. Number of monthly annuity units (3 DIVIDED BY 4)......... 274.198
6. Assume annuity unit value of second month equal to........ 2.897
7. Second monthly payment (6 X 5)............................ 794.35
8. Assume annuity unit value for third month equal to........ 3.415
9. Third month payment (8 X 5)............................... 936.39
</TABLE>
The above figures are simply to illustrate the calculation of a variable
annuity and have no bearing on the actual historical record of any Separate
Account.
CAN A CONTRACT BE MODIFIED?
The contracts may, subject to any federal and state regulatory restrictions,
be modified at any time by written agreement between the Contract Owner and
HL. No modification will affect the amount or term of any Annuities begun
prior to the effective date of the modification, unless it is required to
conform the contract to, or give the Contract Owner the benefit of, any
federal or state statutes or any rule or regulation of the U.S. Treasury
Department or Internal Revenue Service.
On or after the fifth anniversary of any contract HL may change, from time
to time, any or all of the terms of the contracts by giving 90 days advance
written notice to the Contract Owner, except that the Annuity tables,
guaranteed interest rates and the contingent deferred sales charges which are
applicable at the time a Participant's Individual Account is established under
a contract, will continue to be applicable. In addition, the limitations on
the deductions for the Mortality, Expense Risks and Administrative
Undertakings and the Annual Contract Fee will continue to apply in all
Contract Years.
HL reserves the right to modify the contract, but only if such modification:
(i) is necessary to make the contract or the Separate Account comply with any
law or regulation issued by a governmental agency to which HL is subject; or
(ii) is necessary to assure continued qualification of the contract under the
Code or other federal or state laws relating to retirement annuities or
annuity contracts; or (iii) is necessary to reflect In the event of any such
modification HL will provide notice to the Contract Owner or to the payee(s)
during the Annuity period. HL may also make appropriate endorsement in the
contract to reflect such modification.
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CHARGES UNDER THE CONTRACT
HOW ARE THE CHARGES UNDER THESE CONTRACTS MADE?
No deduction for sales expense is made at the time of allocation of
Contributions to the contracts. A deduction for contingent deferred sales
charges is made if there is any surrender of contract values during the first
12 Participant Contract Years. During the first 6 years thereof, a maximum
deduction of 5% will be made against the full amount of any such surrender.
During the next 2 years thereof, a maximum deduction of 4% will be made
against the full amount of any such surrender. During the next 2 years
thereof, a maximum deduction of 3% will be made against the full amount of any
such surrender. During the next 2 years thereof, a maximum deduction of 2%
will be made against the full amount of any such surrender. Such charges will
in no event ever exceed 8.50% when applied as a percentage against the sum of
all Contributions to a Participant's Individual Account. The amount or term of
the contingent deferred sales charge may be reduced (see "Experience Rating of
Contracts," page ).
In the case of a redemption in which you request a certain dollar amount be
withdrawn, the sales charge is deducted from the amount withdrawn and the
balance is paid to you. Example: You request a total withdrawal, your account
value is $1,000 and the applicable sales load is 5%. Your Sub-Account(s) will
be surrendered by $1,000 and you will receive $950 (i.e., the $1,000 total
withdrawal less the 5% sales charge). This is the method applicable on a full
surrender of your contract. In the case of a partial redemption in which you
request to receive a specified amount, the sales charge will be calculated on
the total amount that must be withdrawn from your Sub-Account(s) in order to
provide you with the amount requested. Example: You request to receive $1,000
and the applicable sales load is 5%. Your Sub-Account(s) will be reduced by
$1,052.63 (i.e., a total withdrawal of $1,052.63 which results in a $52.63
sales charge ($1,052.63 x 5%) and a net amount paid to you of $1,000 as
requested).
HL reserves the right to limit any increase in the Contributions made to a
Participant's Individual Account under any contract to not more than three
times the total Contributions made on behalf of such Participant during the
initial 12 consecutive months following the Date of Coverage. Increases in
excess of those described will be accepted only with the consent of HL and
subject to the then current deductions being made under the contracts.
IS THERE EVER A TIME WHEN THE SALES CHARGES DO NOT APPLY?
No deduction for contingent deferred sales charges will be made on
contracts: (1) in the event of death of a Participant, (2) if the value of a
Participant's Individual Account is paid out under one of the available
Annuity options under the contracts (except that a surrender out of Annuity
Option 5 is subject to sales charges, if applicable) or (3) if on Public
Employee Deferred Compensation Plans only, a Participant in a Plan makes a
financial hardship withdrawal as defined in the Regulations issued by the IRS
with respect to the IRC Section 457 governmental deferred compensation plans.
The Plan of the Employer must also provide for such hardship withdrawals.
WHAT DO THE SALES CHARGES COVER?
The contingent deferred sales charges, when applicable, will be used to
cover expenses relating to the sale and distribution of the contracts,
including commissions paid to any distribution organization and its sales
personnel, the cost of preparing sales literature and other promotional
activities. It is anticipated that gross commissions paid on the sale of the
contracts will not exceed 5% of a Contribution. To the extent that these
charges do not cover such distribution expenses they will be borne by HL from
its general assets, including surplus or possible profit from mortality and
expense risk charges.
WHAT IS THE MORTALITY, EXPENSE RISK AND ADMINISTRATIVE CHARGE?
Although Variable Annuity payments made under the contracts will vary in
accordance with the investment performance of the underlying Fund shares held
in the Sub-Account(s), the payments will not be affected by (a) HL's actual
mortality experience among Annuitants before or after retirement or (b) HL's
actual expenses, including certain administrative expenses, if greater than
the deductions provided for in the contracts because of the expense and
mortality undertakings by HL.
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In providing an expense undertaking with respect to both DC-I and DC-II, HL
assumes the risk that the deductions for contingent deferred sales charges,
and the Annual Contract Fee under the contracts may be insufficient to cover
the actual future costs.
The mortality undertaking provided by HL under the contracts, assuming the
selection of one of the forms of life annuities, is to make monthly Annuity
payments (determined in accordance with the annuity tables and other
provisions contained in the contract) to Contract Owners on Annuitants'
Accounts regardless of how long all Annuitants may live and regardless of how
long all Annuitants as a group may live. This undertaking assures a Contract
Owner that neither the longevity of an Annuitant nor an improvement in life
expectancy will have any adverse effect on the monthly Annuity payments the
Employee will receive under the contract. It thus relieves the Contract Owner
from the risk that Participants in the Plan will outlive the funds
accumulated. The mortality undertaking is based on HL's present actuarial
determination of expected mortality rates among all Annuitants.
If actual experience among Annuitants deviates from HL's actuarial
determination of expected mortality rates among Annuitants because, as a
group, their longevity is longer than anticipated, HL must provide amounts
from its general funds to fulfill its contract obligations. In that event, a
loss will fall on HL. Conversely, if longevity among Annuitants is lower than
anticipated, a gain will result to HL. HL also assumes the liability for
payment of the Minimum Death Benefit provided under the contract.
The administrative undertaking provided by HL assures the Contract Owner
that administration will be provided throughout the entire life of the
contract.
For assuming these risks HL presently charges 1.10% (.70% for mortality,
.15% for expense and .25% for administrative undertakings) of the average
daily net assets of DC-I and 1.25% (.85% for mortality, .15% for expense and
.25% for administrative undertakings) of the average daily net assets of
DC-II, as appropriate. The rate charged for expense, mortality and
administrative undertakings under the contracts may be reduced (see
"Experience Rating of Contracts," page ). The rate charged for expense,
mortality and administrative undertakings may be periodically increased by HL
subject to a maximum of 2.0%, provided, however, that no such increase will
occur unless the Commission shall have first approved such increase.
EXPERIENCE RATING OF CONTRACTS
Certain of the charges and fees described in this Prospectus may be reduced
("experience rated") for contracts depending on the total number of
Participants, the total of all Participants' Individual Accounts and/or
anticipated present or future expense levels. HL, in its discretion, may
experience rate a contract (either prospectively or retrospectively) by: (1)
reducing the amount or term of any applicable contingent deferred sales
charge, (2) reducing the Transfer Fee, (3) reducing the mortality and expense
risk charge, or (4) by any combination of the above. Reductions in these
charges will not be unfairly discriminatory against any person, including the
affected Contract Owners/Participants funded by the Separate Account.
Experience rating credits have been given on certain cases.
ARE THERE ANY OTHER DEDUCTIONS?
Reallocation of monies between or among Sub-Accounts under the contracts may
be subject to a $5.00 charge for each such transfer (see "Experience Rating of
Contracts," page ).
HOW MUCH ARE THE DEDUCTIONS FOR PREMIUM TAXES ON THESE CONTRACTS?
A deduction is also made for Premium Taxes, if applicable, imposed by a
state or other governmental entity. Certain states impose a Premium Tax,
ranging up to 4.0%. On any contract subject to Premium Taxes, HL will pay the
taxes when imposed by the applicable taxing authorities. HL, at its sole
discretion, will deduct the taxes from Contributions when received, from the
proceeds at surrender, or from the amount applied to effect an Annuity at the
time Annuity payments commence.
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<PAGE>
HARTFORD LIFE INSURANCE COMPANY
AND THE FUNDS
WHAT IS HL?
HL was originally incorporated under the laws of Massachusetts on June 5,
1902. It was subsequently redomiciled to Connecticut. It is a stock life
insurance company engaged in the business of writing health and life
insurance, both ordinary and group, in all states of the United States and the
District of Columbia. The offices of HL are located in Simsbury, Connecticut;
however, its mailing address is P.O. Box 2999, Hartford, CT 06104-2999. HL is
ultimately 100% owned by Hartford Fire Insurance Company, one of the largest
multiple lines insurance carriers in the United States. Hartford Life
Insurance Company has an A++ (superior) rating from A.M. Best and Company,
Inc. on the basis of its financial soundness and operating performance, the
highest ratings provided by this service. HL has an AA+ rating from Standard &
Poor's and Duff and Phelps highest rating (AAA) on the basis of its claims
paying ability.
These ratings do not apply to the performance of the Separate Account.
However, the contractual obligations under this variable annuity are the
general corporate obligations of HL. These ratings do apply to HL's ability to
meet its insurance obligations under the contracts.
WHAT ARE THE FUNDS?
Hartford Stock Fund, Inc. was organized on March 11, 1976. The Hartford
Socially Responsive Fund (Calvert Socially Responsible Series) is a series of
the Acacia Capital Corporation, which was incorporated on September 27, 1982.
Hartford Advisers Fund, Inc., Hartford Bond Fund, Inc., Hartford U.S.
Government Money Market Fund, Inc. and HVA Money Market Fund, Inc. were all
organized on December 1, 1982. Hartford Index Fund, Inc. was organized on May
16, 1983. Hartford Capital Appreciation Fund, Inc. was organized on September
20, 1983. Hartford Mortgage Securities Fund, Inc. was organized on October 5,
1984. Hartford International Opportunities Fund, Inc. was organized on January
25, 1990. Hartford Dividend and Growth Fund, Inc. was organized on March 16,
1994. All of the Funds were incorporated under the laws of the State of
Maryland and are collectively referred to as the "Funds."
The investment objectives of each of the Funds are as follows:
HARTFORD ADVISERS FUND, INC.
To achieve maximum long term total rate of return consistent with prudent
investment risk by investing in common stock and other equity securities,
bonds and other debt securities, and money market instruments. The investment
adviser will vary the investments of the Fund among equity and debt securities
and money market instruments depending upon its analysis of market trends.
Total rate of return consists of current income, including dividends, interest
and discount accruals and capital appreciation.
HARTFORD CAPITAL APPRECIATION FUND, INC.
To achieve growth of capital by investing in securities selected solely on
the basis of potential for capital appreciation; income, if any, is an
incidental consideration.
HARTFORD BOND FUND, INC.
To achieve maximum current income consistent with preservation of capital by
investing primarily in fixed-income securities.
HARTFORD DIVIDEND AND GROWTH FUND, INC.
To seek a high level of current income consistent with growth of capital and
reasonable investment risk.
HARTFORD INDEX FUND, INC.
To provide investment results that correspond to the price and yield
performance of publicly-traded common stocks in the aggregate, as represented
by the Standard & Poor's 500 Composite Stock Price Index (the "Index"). The
Fund is neither sponsored by, nor affiliated with, Standard & Poor's
Corporation.
HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC.
To achieve long-term total return consistent with prudent investment risk
through investment primarily in equity securities issued by foreign companies.
24
<PAGE>
HARTFORD MORTGAGE SECURITIES FUND, INC.
To achieve maximum current income consistent with safety of principal and
maintenance of liquidity by investing primarily in mortgage-related
securities, including securities issued by the Government National Mortgage
Association ("GNMA").
HARTFORD SOCIALLY RESPONSIVE FUND (CALVERT SOCIALLY RESPONSIBLE SERIES,
ACACIA CAPITAL
CORPORATION)
To seek growth of capital through investments in enterprises which make a
significant contribution to society through products and services and through
the way they do business.
HARTFORD STOCK FUND, INC.
To achieve long-term capital growth primarily through capital appreciation,
with income a secondary consideration, by investing in equity-type securities.
HARTFORD U.S. GOVERNMENT MONEY MARKET FUND, INC.
To achieve maximum current income consistent with preservation of capital by
investing in short-term, marketable obligations issued or guaranteed by the
United States Government or by agencies or instrumentalities of the United
States Government whether or not they are guaranteed by the full faith and
credit of the federal government.
HVA MONEY MARKET FUND, INC.
To achieve maximum current income consistent with liquidity and preservation
of capital by investing in money market securities.
ALL FUNDS
The Funds are available only to serve as the underlying investment for the
variable annuity and variable life insurance contracts issued by HL.
It is conceivable that in the future it may be disadvantageous for variable
annuity separate accounts and variable life insurance separate accounts to
invest in the Funds simultaneously. Although HL and the Funds do not currently
foresee any such disadvantages either to variable annuity Contract Owners or
to variable life insurance Policy Owners, the Funds' Board of Directors
intends to monitor events in order to identify any material conflicts between
such Contract Owners and Policy Owners and to determine what action, if any,
should be taken in response thereto. If the Board of Directors of the Funds
were to conclude that separate funds should be established for variable life
and variable annuity separate accounts, the variable annuity Contract Owners
would not bear any expenses attendant to the establishment of such separate
funds, but variable annuity Contract Owners and variable life insurance Policy
Owners would no longer have the economics of scale resulting from a larger
combined fund.
Shares of Hartford Socially Responsive Fund, a series of Acacia Capital
Corporation which is unaffiliated with HL, are offered to other unaffiliated
separate accounts. HL and the Board of Trustees of Acacia Capital Corporation
intend to monitor events to identify any material irreconcilable conflicts
which may arise and to determine what action, if any, should be taken in
response thereto.
HL reserves the right, subject to compliance with the law, to substitute the
shares of any other registered investment company for the shares of any Fund
held by the Separate Account. Substitution may occur if shares of the Fund(s)
become unavailable or due to changes in applicable law or interpretations of
law. Current law requires notification to you of any such substitution and
approval of the Securities and Exchange Commission. HL also reserves the
right, subject to compliance with the law to offer additional Funds with
differing investment objectives.
The U.S. Government Money Market Fund and Advisers Fund Sub-Accounts were
not available under contracts issued prior to May 2, 1983. The Capital
Appreciation Fund Sub-Account was not available under contracts issued prior
to May 1, 1984. The Mortgage Securities Fund Sub-Account was not available
under contracts issued prior to January 15, 1985. The Index Fund Sub-Account
was not available under contracts issued prior to May 1, 1987. The Dividend
and Growth Fund Sub-Account was not available under contracts issued prior to
May 1, 1995. Funds not available prior to the issue date of a contract may be
requested in writing by the Contract Owner.
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<PAGE>
The Hartford Investment Management Company ("HIMCO") has been serving as
investment manager or adviser to each of the Funds. In addition, Wellington
Management Company ("Wellington") has served as sub-investment adviser to
certain of the Funds since August 1984.
HIMCO serves as investment manager for Hartford Advisers, Hartford Capital
Apprciation, Hartford Dividend and Growth, Hartford International
Opportunities and Hartford Stock Funds pursuant to an Investment Management
Agreement between each. Wellington serves as sub-investment adviser to each of
these funds pursuant to a Sub-Investment Advisory Agreement between Wellington
and HIMCO on behalf of each fund.
HIMCO serves as the investment adviser to Hartford Bond, Hartford Index,
Hartford Mortgage Securities, Hartford U.S. Government Money Market and HVA
Money Market Funds pursuant to an Investment Advisory Agreement between these
funds and HIMCO.
The Calvert Asset Management Company serves as investment adviser and United
States Trust Company of Boston serves as sub-investment-adviser to Hartford
Socially Responsive Fund.
A full description of the Funds, their investment policies and restrictions,
risks, charges and expenses and all other aspects of their operations is
contained in the accompanying Funds' Prospectus which should be read in
conjunction with this Prospectus before investing, and in the Funds' Statement
of Additional Information which may be ordered from HL.
DOES HL HAVE ANY INTEREST IN THE FUNDS?
At December 31, 1994, certain HL group pension contracts held direct
interest in shares as follows:
<TABLE>
<CAPTION>
PERCENT OF
SHARES TOTAL SHARES
---------- ------------
<S> <C> <C>
Hartford Advisers Fund, Inc...................... 10,709,364 0.56%
Hartford Capital Appreciation Fund, Inc......... 5,313,800 1.31%
Hartford Index Fund, Inc........................ 9,462,900 9.14%
Hartford International Opportunities Fund,
Inc............................................ 5,547,408 1.16%
Hartford Mortgage Securities Fund, Inc.......... 16,249,689 5.26%
Hartford Stock Fund, Inc........................ 65,899 0.02%
</TABLE>
FEDERAL TAX CONSIDERATIONS
WHAT ARE SOME OF THE FEDERAL TAX CONSEQUENCES WHICH AFFECT THESE CONTRACTS?
A. GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING
TO THE ACTUAL STATUS OF THE CONTRACT OWNER INVOLVED AND THE TYPE OF PLAN UNDER
WHICH THE CONTRACT IS PURCHASED, LEGAL AND TAX ADVICE MAY BE NEEDED BY A
PERSON, EMPLOYER OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A CONTRACT
DESCRIBED HEREIN.
It should be understood that any detailed description of the federal income
tax consequences regarding the purchase of these contracts cannot be made in
this Prospectus and that special tax rules may be applicable with respect to
certain purchase situations not discussed herein. For detailed information, a
qualified tax adviser should always be consulted. This discussion is based on
HL's understanding of current federal income tax laws as they are currently
interpreted.
B. HL AND DC-I AND DC-II
DC-I is not taxed as a part of HL. The taxation of DC-I is governed by
Subchapter M of Chapter 1 of the Internal Revenue Code pursuant to an IRS
Private Letter Ruling issued with respect to DC-I. By distributing
substantially all of the net income and realized capital gains of DC-I to
Contract Owners no federal income tax liability will be incurred by DC-I on
the income and gain so distributed. While HL has no reason to believe that the
above referenced Private Letter Ruling will ever be withdrawn by the IRS, in
the event that it is the taxation of DC-I and DC-II would be identical from
the effective date of any such withdrawal.
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DC-II is taxed as part of HL which is taxed as a life insurance company in
accordance with the Internal Revenue Code. Accordingly, DC-II will not be
taxed as a "regulated investment company" under Subchapter M of the Code.
Investment income and any realized capital gains on the assets of DC-II are
reinvested and are taken into account in determining the value of the
Accumulation and Annuity Units. (See "How is the Accumulation Unit value
determined?" commencing on page .) 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 DC-II with respect to qualified or non-qualified contracts.
C. INFORMATION REGARDING TAX QUALIFIED PLANS
THE TAX REFORM ACT OF 1986 AND THE TECHNICAL AND MISCELLANEOUS REVENUE ACT
OF 1988 HAVE MADE SUBSTANTIAL CHANGES TO QUALIFIED PLANS. YOU SHOULD CONSULT
YOUR TAX ADVISER TO FULLY ADDRESS ALL CHANGES OCCURRING AS A RESULT OF THE TAX
REFORM ACT AND THEIR EFFECT ON QUALIFIED PLANS.
1. CONTRIBUTIONS
A. PENSION, PROFIT-SHARING AND SIMPLIFIED EMPLOYEE PENSION PLANS
Contributions to pension or profit-sharing plans (described in Section
401(a) and 401(k), if applicable, and exempt from taxation under Section
501(a) of the Code), and Simplified Employee Pension Plans (described in
Section 408(k)), which do not exceed certain limitations prescribed in the
Code are fully tax-deductible to the employer. Such Contributions are not
currently taxable to the covered employees, and increases in the value of
contracts purchased with such Contributions are not subject to taxation until
received by the covered employees or their Beneficiaries in the form of
Annuity payments or other distributions.
B. TAX-DEFERRED ANNUITY PLANS FOR PUBLIC SCHOOL TEACHERS AND EMPLOYERS AND
EMPLOYEES OF CERTAIN TAX-EXEMPT ORGANIZATIONS
Contributions to tax-deferred annuity plans (described in Section 403(a) and
403(b) of the Code) by employers are not includable within the employee's
income to the extent those Contributions do not exceed the lesser of $9,500 or
the exclusion allowance. Generally, the exclusion allowance is equal to 20% of
the employee's includable compensation for his most recent full year of
employment multiplied by the number of years of his service, less the
aggregate amount contributed by the employer for Annuity contracts which were
not included within the gross income of the employee for any prior taxable
year. There are special provisions which may allow an employee of an
educational institution, a hospital or a home health service agency to elect
an overall limitation different from the limitation described above.
C. DEFERRED COMPENSATION PLANS FOR TAX-EXEMPT ORGANIZATIONS AND STATE AND
LOCAL GOVERNMENTS
Employees may contribute on a before tax basis to the Deferred Compensation
Plan of their employer in accordance with the employer's Plan and Section 457
of the Code. Section 457 places limitations on Contributions to Deferred
Compensation Plans maintained by a State ("State" means a State, a political
sub-division of a State, and an agency or instrumentality of a State or
political sub-division of a State) or other tax-exempt organization.
Generally, the limitation is 33 1/3% of includable compensation (25% of gross
compensation) or $7,500, whichever is less. The plan may also provide for
additional Contributions during the three taxable years ending before normal
retirement age of a Participant for a total of up to $15,000 per year for such
three years.
An employee electing to participate in a plan should understand that his
rights and benefits are governed strictly by the terms of the plan, that he is
in fact a general creditor of the employer under the terms of the plan, that
the employer is legal owner of any contract issued with respect to the plan
and that the employer as owner of the contract(s) retains all voting and
redemption rights which may accrue to the contract(s) issued with respect to
the plan. The participating employee should look to the terms of his plan for
any charges in regard to participating therein other than those disclosed in
this Prospectus.
D. INDIVIDUAL RETIREMENT ANNUITIES ("IRA'S")
Individuals may contribute and deduct the lesser of $2,000 or 100 percent of
their compensation to an IRA. In the case of a spousal IRA, the maximum
deduction is the lesser of $2,250 or 100 percent of compensation. The
deduction for Contributions is phased out between $40,000 and $50,000 of
adjusted
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<PAGE>
gross income (AGI) for a married individual (and between $25,000 and $35,000
for single individuals) if either the individual or his or her spouse is an
active Participant in any Section 401(a), 403(a), 403(b) or 408(k) plan
regardless of whether the individual's interest is vested.
To the extent deductible Contributions are not allowed, individuals may make
designated non-deductible Contributions to an IRA, subject to the above
limits.
2. DISTRIBUTIONS
A. PENSION AND PROFIT-SHARING PLANS, TAX-SHELTERED ANNUITIES, INDIVIDUAL
RETIREMENT ANNUITIES
Annuity payments made under the contracts are taxable under Section 72 of
the Code as ordinary income, in the year of receipt, to the extent that they
exceed the "excludable amount." The investment in the contract is normally the
aggregate amount of the Contributions made by or on behalf of an employee
which were included as a part of his taxable income and not deducted. Thus,
annual contributions deducted for an IRA are not included in the investment in
the contract. The employee's investment in the contract is divided by the
expected number of payments to be made under the contract. The amount so
computed constitutes the "excludable amount," which is the amount of each
annuity payment considered a return of investment in each year and, therefore,
not taxable. Once the employee's investment in the contract is recouped, the
full amount of each payment will be fully taxable. If the employee dies prior
to recouping his or her investment in the contract, a deduction is allowed for
the last taxable year. The rules for determining the excludable amount are
contained in Section 72 of the Code.
Generally, distributions or withdrawals prior to age 59 1/2 may be subject
to an additional income tax of 10% of the amount includable in income. This
additional tax does not apply to distributions made after the employee's
death, on account of disability and distributions in the form of a life
annuity and, except in the case of an IRA, certain distributions after
separation from service at or after age 55 and certain distributions for
eligible medical expenses. A life annuity is defined as a scheduled series of
substantially equal periodic payments for the lives or life expectancies of
the Participant (or the joint lives or life expectancies of the Participant
and Beneficiary).
The taxation of withdrawals and other distributions varies depending on the
type of distribution and the type of plan from which the distribution is made.
With respect to the tax-deferred annuity contracts under Section 403(b),
contributions to the contract made after December 31, 1988 and any increases
in cash values after that date may not be distributed prior to attaining age
59 1/2, separation from service, death or disability. Contributions (but not
earnings) made after December 31, 1988 may also be distributed by reason of
financial hardship.
Generally, in order to avoid a penalty tax, annuity payments, periodic
payments or annual distributions must commence by April 1 of the calendar year
following the year in which the Participant attains age 70 1/2. The entire
interest of the Participant must be distributed beginning no later than this
required beginning date over a period which may not extend beyond a maximum of
the lives or life expectancies of the Participant and a 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. With respect to a Section 403(b) plan, this
account balance is based on earnings and Contributions after December 31,
1986. In addition, minimum distribution incidental benefit rules may require a
larger annual distribution based upon dividing the entire account balance as
of the close of business on the last day of the previous calendar year by a
factor promulgated by the Internal Revenue Service which ranges from 26.2 (at
age 70) to 1.8 (at age 115). Special rules apply to require that distributions
be made to Beneficiaries after the death of the Participant. A penalty tax of
up to 50% of the amount which should be distributed may be imposed by the
Internal Revenue Service for failure to make such distribution.
B. DEFERRED COMPENSATION PLANS FOR TAX-EXEMPT ORGANIZATIONS AND STATE AND
LOCAL GOVERNMENTS
Generally, in order to avoid a penalty tax, annuity payments, periodic
payments, or annual distributions must commence by April 1 of the calendar
year following the year in which the Participant attains age 70 1/2. Minimum
distributions under Section 457 Deferred Compensation Plan may be further
deferred if the participant remains employed. The entire interest of the
Participant must be distributed beginning no later than this required
beginning date over a period which may not extend beyond a maximum of the life
expectancy of the Participant and a 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 based upon dividing the account balance by a factor promulgated
by the
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<PAGE>
Internal Revenue Service which ranges from 26.2 (at age 70) to 1.8 (at age
115). Special rules apply to require that distributions be made to
Beneficiaries after the death of the Participant. A penalty tax of up to 50%
of the amount which should be distributed may be imposed by the Internal
Revenue Service for failure to make a distribution.
If the Contract Owner is a Section 457 plan, certain distributions are
required to be made upon the death of a Participant. In the event of the death
of a Participant prior to the Annuity Commencement Date, the entire interest
in the Participant's contract must be distributed within 5 years after the
Participant's death and in the event of the Participant's death which occurs
on or after the Annuity Commencement Date, any remaining interest in the
Contract must be paid at least as rapidly as under the method of distribution
in effect at the time of death; except that if the benefit is payable over a
period not extending beyond the life expectancy of the beneficiary or over the
life of the beneficiary, such distribution must commence within one year of
the date of death.
Upon receipt of any monies pursuant to the terms of a Deferred Compensation
Plan for a tax-exempt organization, state or local government under Section
457 of the Code, such monies are taxable to such employee as ordinary income
in the year in which it is received.
D. FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient will
be subject to federal income tax withholding, pursuant to Section 3405 of the
Internal Revenue Code. The application of this provision is summarized below:
1. ELIGIBLE ROLL-OVER DISTRIBUTIONS
a. The Unemployment Compensation Amendments Act of 1992 requires that
federal income taxes be withheld from certain distributions from
tax-qualified retirement plans and from tax-sheltered annuities under
Section 403(b). These provisions DO NOT APPLY to distributions from
individual retirement annuities under section 408(b) or from deferred
compensation programs under section 457.
b. If any portion of a distribution is an "eligible roll-over distribution,"
the law requires that 20% of that amount be withheld. This amount is sent
to the IRS as withheld income taxes. The following types of payments DO
NOT constitute an eligible roll-over distribution (and, therefore, the
mandatory withholding rules will not apply):
-- the non-taxable portion of the distribution;
-- distributions which are part of a series of equal (or substantially
equal) payments made at least annually for your lifetime (or your life
expectancy), or your lifetime and your Beneficiary's lifetime (or life
expectancies), or for a period of ten years or more;
-- required minimum distributions made pursuant to section 401(a)(9) of
the IRC.
c. However, these mandatory withholding requirements do not apply in the
event of all or a portion of any eligible roll-over distribution is paid
in a "direct roll-over." A direct roll-over is the direct payment of an
eligible roll-over distribution or portion thereof to an individual
retirement arrangement or annuity (IRA) or to another qualified employer
plan. IF A DIRECT ROLL-OVER IS ELECTED, NO INCOME TAX WILL BE WITHHELD.
d. If any portion of a distribution is not an eligible roll-over
distribution but is taxable, the mandatory withholding rules described
above do not apply. In this case, the voluntary withholding rules
described below apply.
2. NON-ELIGIBLE ROLL-OVER DISTRIBUTIONS
A. NON-PERIODIC DISTRIBUTIONS
The portion of a non-periodic distribution which constitutes taxable income
will be subject to federal income tax withholding unless the recipient elects
not to have taxes withheld. If an election not to have taxes withheld is not
provided, 10% of the taxable distribution will be withheld as federal income
tax. Election forms will be provided at the time distributions are requested.
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<PAGE>
B. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN
ONE YEAR)
The portion of a periodic distribution which constitutes taxable income will
be subject to federal income tax withholding as if the recipient were married
claiming three exemptions. A recipient may elect not to have income taxes
withheld or have income taxes withheld at a different rate by providing a
completed election form. Election forms will be provided at the time
distributions are requested.
E. ANY DISTRIBUTION FROM PLANS DESCRIBED IN SECTION 457 OF THE INTERNAL REVENUE
CODE IS SUBJECT TO THE REGULAR WAGE WITHHOLDING RULES.
F. DIVERSIFICATION REQUIREMENTS
Section 817 of the Code provides that a variable annuity contract (other
than a pension plan contract) will not be treated as an annuity for any period
during which the investments made by the separate account or underlying fund
are not adequately diversified in accordance with regulations prescribed by
the Treasury. If a contract is not treated as an annuity, the Contract Owner
will be subject to income tax on the annual increases in cash value. The
Treasury has issued diversification regulations which, among other things,
require that no more than 55% of the assets of mutual funds (such as the HL
mutual funds) underlying a variable annuity contract, be invested in any one
investment. In determining whether the diversification standards are met, each
United States Government Agency or instrumentality shall be treated as a
separate issuer. If the diversification standards are not met, non-pension
Contract Owners will be subject to current tax on the increase in cash value
in the contract.
G. NON-NATURAL PERSONS, CORPORATIONS
The annual increase in the value of the contract is currently includable in
gross income of a non-natural person. There is an exception for annuities held
by structured settlement companies and annuities held by an employer with
respect to a terminated pension plan. 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.
MISCELLANEOUS
WHAT ARE MY VOTING RIGHTS?
HL shall notify the Contract Owner of any Fund shareholders' meeting if the
shares held for the Contract Owner's accounts may be voted at such meetings.
HL shall also send proxy materials and a form of instruction by means of which
the Contract Owner can instruct HL with respect to the voting of the Fund
shares held for the Contract Owner's account. In connection with the voting of
Fund shares held by it, HL shall arrange for the handling and tallying of
proxies received from Contract Owners. HL as such, shall have no right, except
as hereinafter provided, to vote any Fund shares held by it hereunder which
may be registered in its name or the names of its nominees. HL will, however,
vote the Fund shares held by it in accordance with the instructions received
from the Contract Owners for whose accounts the Fund shares are held. If a
Contract Owner desires to attend any meeting at which shares held for the
Contract Owner's benefit may be voted, the Contract Owner may request HL to
furnish a proxy or otherwise arrange for the exercise of voting rights with
respect to the Fund shares held for such Contract Owner's account. In the
event that the Contract Owner gives no instructions or leaves the manner of
voting discretionary, HL will vote such shares of the appropriate Fund,
including any of its own shares, in the same proportion as shares of that Fund
for which instructions have been received.
Every Participant under a contract issued with respect to DC-II who has a
full (100%) vested interest under a group contract, shall receive proxy
material and a form of instruction by means of which Participants may instruct
the Contract Owner with respect to the number of votes attributable to his
individual participation under a group contract.
A Contract Owner or Participant, as appropriate, is entitled to one full or
fractional vote for each full or fractional Accumulation or Annuity Unit
owned. The Contract Owner has voting rights throughout the life of the
contract. The vested Participant has voting rights for as long as
participation in the contract continues. Voting rights attach only to Separate
Account interests.
During the Annuity period under a contract the number of votes will decrease
as the assets held to fund Annuity benefits decrease.
30
<PAGE>
WILL OTHER CONTRACTS BE PARTICIPATING IN THE SEPARATE ACCOUNTS?
In addition to the contracts described in this Prospectus, it is
contemplated that other forms of group or individual annuities may be sold
providing benefits which vary in accordance with the investment experience of
the Separate Accounts.
HOW ARE THE CONTRACTS SOLD?
Hartford Equity Sales Company, Inc. ("HESCO") currently serves as Principal
Underwriter for the securities issued with respect to the Separate Account.
Hartford Securities Distribution Company, Inc. ("HSD") will replace HESCO as
principal underwriter upon approval by the Commission, the National
Association of Securities Dealers, Inc. ("NASD") and applicable state
regulatory authorities.
Both HESCO and HSD are wholly-owned subsidiaries of Hartford Life Insurance
Company. The principal business address of HESCO and HSD is the same as
Hartford Life Insurance Company.
The securities will be sold by salespersons of HESCO, and subsequently, HSD,
who represent HL as insurance and Variable Annuity agents and who are
registered representatives or Broker-Dealers who have entered into
distribution agreements with HESCO, and subsequently HSD.
HESCO is registered with the Commission under the Securities Exchange Act of
1934 as a Broker-Dealer and is a member of the NASD. HSD will be registered
with the Commission under the Securities Exchange Act of 1934 as a
Broker-Dealer and will become a member of the NASD.
Compensation will be paid by HL to registered representatives for the sale
of contracts up to a maximum of 5% of initial Contributions and .50% on all
subsequent Contributions. Sales compensation may be reduced.
WHO IS THE CUSTODIAN OF THE SEPARATE ACCOUNTS' ASSETS?
HL is the custodian of the Separate Accounts' assets.
ARE THERE ANY MATERIAL LEGAL PROCEEDINGS AFFECTING THE SEPARATE ACCOUNTS?
No.
ARE YOU RELYING ON ANY EXPERTS AS TO ANY PORTION OF THIS PROSPECTUS?
The financial statements and schedules included in this prospectus and
elsewhere in the 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 accounting and auditing.
HOW MAY I GET ADDITIONAL INFORMATION?
Inquiries will be answered by calling your representative or by writing:
Hartford Life Insurance Company
Attn: RPVA Administration
P.O. Box 2999
Hartford, CT 06104-2999
31
<PAGE>
TABLE OF CONTENTS
FOR
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
SECTION PAGE
- - ----------------------------------------------------------------------------------------------------------------- -----
<S> <C>
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY...................................................................
SAFEKEEPING OF ASSETS............................................................................................
INDEPENDENT PUBLIC ACCOUNTANTS...................................................................................
DISTRIBUTION OF CONTRACTS........................................................................................
ANNUITY PERIOD...................................................................................................
A. Annuity Payments...........................................................................................
B. Electing the Annuity Commencement Date and Form of Annuity.................................................
C. Optional Annuity Forms.....................................................................................
Option 1: Life Annuity...................................................................................
Option 2: Life Annuity With 120, 180 or 240 Monthly Payments Certain.....................................
Option 3: Unit Refund Life Annuity.......................................................................
Option 4: Joint and Last Survivor Annuity................................................................
Option 5: Payments for a Designated Period...............................................................
CALCULATION OF YIELD AND RETURN..................................................................................
PERFORMANCE COMPARISONS..........................................................................................
FINANCIAL STATEMENTS.............................................................................................
</TABLE>
32
<PAGE>
This form must be completed for all tax-sheltered annuities.
SECTION 403(B)(11) ACKNOWLEDGMENT FORM
The Hartford variable annuity contract which 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. terminated employment
c. died, or
d. become disabled.
Distributions of post December 31, 1988 contributions may also be made if you
have experienced a financial hardship. Also there may be a 10% penalty tax for
distributions made 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 the Hartford variable annuity. Please refer to your
Plan.
Please complete the following and return to:
Hartford Life Insurance Company
Attn: RPVA Administration
P.O. Box 2999
Hartford, CT 06104-2999
Name of Contract Owner/Participant: ____________________________________________
Address: _______________________________________________________________________
City or Plan/School District: __________________________________________________
Date: __________________________________________________________________________
Participant No: ________________________________________________________________
Signature: _____________________________________________________________________
<PAGE>
To obtain a Statement of Additional
Information, complete the form below and mail to:
Attn: RPVA Administration
Hartford Life Insurance Companies
P.O. Box 2999
Hartford, CT 06104-2999
Please send a Statement of Additional
Information for Separate Account DC-I and Separate
Account Two (DC-II)(Form HV-1879-9) to me at the
following address.
_________________________________________
(name)
_________________________________________
(street)
_________________________________________
(city/state) (zip code)
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT DC-I AND
SEPARATE ACCOUNT TWO (DC-II)
Group Variable Annuity Contracts Issued by
Hartford Life Insurance Company
With Respect to DC-I and DC-II
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: RPVA Administration, P.O. Box 2999, Hartford, CT 06104-2999.
Date of Prospectus: May 1, 1995
Date of Statement of Additional Information: May 1, 1995
33
<PAGE>
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<PAGE>
THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY..........................
SAFEKEEPING OF ASSETS...................................................
INDEPENDENT PUBLIC ACCOUNTANTS..........................................
DISTRIBUTION OF CONTRACTS...............................................
ANNUITY PERIOD..........................................................
A. Annuity Payments..................................................
B. Electing the Annuity Commencement Date and Form of Annuity........
C. Optional Annuity Forms............................................
Option 1: Life Annuity..........................................
Option 2: Life Annuity With 120, 180 or 240 Monthly Payments
Certain..........................................................
Option 3: Unit Refund Life Annuity..............................
Option 4: Joint and Last Survivor Annuity.......................
Option 5: Payments for a Designated Period......................
CALCULATION OF YIELD AND RETURN.........................................
PERFORMANCE COMPARISONS.................................................
FINANCIAL STATEMENTS....................................................
</TABLE>
2
<PAGE>
DESCRIPTION OF HARTFORD LIFE
INSURANCE COMPANY
Hartford Life Insurance Company ("HL") was originally incorporated under the
laws of Massachusetts on June 5, 1902. It was subsequently redomiciled to
Connecticut. It is a stock life insurance company engaged in the business of
writing health and life insurance, both ordinary and group, in all states of the
United States and the District of Columbia. The offices of HL are located in
Simsbury, Connecticut; however its mailing address is P.O. Box 2999, Hartford,
Connecticut 06104-2999. HL is ultimately 100% owned by Hartford Fire Insurance
Company, one of the largest multiple lines insurance carriers in the United
States. Hartford Fire Insurance Company is a subsidiary of ITT Corporation.
At December 31, 1994, certain HL group pension contracts held direct
interest in shares as follows:
<TABLE>
<CAPTION>
PERCENT OF
SHARES TOTAL SHARES
---------- ------------
<S> <C> <C>
Hartford Advisers Fund, Inc....................... 10,709,364 0.56%
Hartford Capital Appreciation Fund, Inc........... 5,313,800 1.31%
Hartford Index Fund, Inc.......................... 9,462,900 9.14%
Hartford International Opportunities Fund, Inc.... 5,547,408 1.16%
Hartford Mortgage Securities Fund, Inc............ 16,249,689 5.26%
Hartford Stock Fund, Inc.......................... 65,899 0.02%
</TABLE>
SAFEKEEPING OF ASSETS
HL holds the assets of the Separate Account in its custody for safekeeping
and performs those services normally performed by a custodian.
INDEPENDENT PUBLIC ACCOUNTANTS
The financial statements and schedules included in this prospectus and
elsewhere in the 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 accounting and auditing.
DISTRIBUTION OF CONTRACTS
Hartford Equity Sales Company, Inc. ("HESCO") currently serves as Principal
Underwriter for the securities issued with respect to the Separate Account.
Hartford Securities Distribution Company, Inc. ("HSD") will replace HESCO as
principal underwriter upon approval by the Commission, the National Association
of Securities Dealers, Inc. ("NASD") and applicable state regulatory
authorities.
Both HESCO and HSD are wholly-owned subsidiaries of Hartford Life Insurance
Company. The principal business address of HESCO and HSD is the same as Hartford
Life Insurance Company.
The securities will be sold by salespersons of HESCO, and subsequently, HSD,
who represent HL as insurance and Variable Annuity agents and who are registered
representatives or Broker-Dealers who have entered into distribution agreements
with HESCO, and subsequently HSD.
HESCO is registered with the Commission under the Securities Exchange Act of
1934 as a Broker-Dealer and is a member of the NASD. HSD will be registered with
the Commission under the Securities Exchange Act of 1934 as a Broker-Dealer and
will become a member of the NASD.
Compensation will be paid by HL to registered representatives for the sale
of contracts up to a maximum of 5% on initial Contributions and .50% on all
subsequent Contributions. Sales compensation may be reduced.
3
<PAGE>
ANNUITY PERIOD
A. ANNUITY PAYMENTS
Variable Annuity payments are determined on the basis of (1) a mortality
table set forth in the contracts which reflects the age of the Annuitant and
the type of Annuity payment option selected, and (2) the investment
performance of the investment medium selected. Fixed Annuity payments will be
no less than those calculated at rates based on the annuity tables contained
in the contracts.
The amount of the Annuity payments will not be affected by adverse mortality
experience or by an increase in expenses in excess of the expense deduction
for which provision has been made (see "Charges Under the Contracts," in the
Prospectus).
The Annuitant will be paid the value of a fixed number of Annuity Units each
month. The value of such units and the amounts of the monthly Variable Annuity
payments will, however, reflect investment income occurring after retirement,
and thus the payments will vary with the investment experience of the Fund
shares selected.
<TABLE>
<C> <S> <C>
ILLUSTRATION OF CALCULATION OF ANNUITY UNIT VALUE
1. Net Investment Factor for period.............................. .000498
2. Adjustment for 4% Assumed Rate of Net Investment Return....... .999892
3. 2 x (1 + 1.000000)............................................ 1.000390
4. Annuity Unit value, beginning of period....................... .995995
5. Annuity Unit value, end of period (3 x 4)..................... .996383
</TABLE>
B. ELECTING THE ANNUITY COMMENCEMENT DATE AND FORM OF ANNUITY
Depending on the Contract involved, the Contract Owner or Participant
selects an Annuity Commencement Date, usually between a Participant's 50th and
75th birthdays, and an Annuity option. The Annuity Commencement Date may not
be deferred beyond the Participant's 75th birthday. The Annuity Commencement
Date and/or the Annuity option may be changed from time to time, but any such
change must be made at least 30 days prior to the date on which Annuity
payments are scheduled to begin. Annuity payments will be made on the first
business day of each month.
The contracts contain the five optional Annuity forms described below, which
may be selected on either a Fixed or Variable Annuity basis, or a combination
thereof. If a Contract Owner does not elect otherwise, HL reserves the right
to begin Annuity payments at age 65 under Option 2 with 120 monthly payments
certain.
When an Annuity is purchased for an Annuitant, unless otherwise specified,
DC-I or DC-II Accumulation Unit values will be applied to provide a Variable
Annuity under DC-II.
The minimum Annuity payment is $20. No election may be made which results in
a first payment of less than $20. If at any time Annuity payments are or
become less than $20.00, HL has the right to change the frequency of payment
to such intervals as will result in payments of at least $20.00.
C. OPTIONAL ANNUITY FORMS
OPTION 1: LIFE ANNUITY
A life Annuity is an Annuity payable during the lifetime of the Annuitant
and terminating with the last monthly payment preceding the death of the
Annuitant. Life Annuity Options (Options 1-4) offers the maximum level of
monthly payments of any of the options since there is no guarantee of a
minimum number of payments nor a provision for a death benefit payable to a
Beneficiary.
It would be possible under this option for an Annuitant to receive only one
Annuity payment if he died prior to the due date of the second Annuity
payment, two if he died before the due date of the third Annuity payment, etc.
*OPTION 2: LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN
This Annuity option is an Annuity payable monthly during the lifetime of an
Annuitant with the provision that if, at the death of the Annuitant, payments
have been made for less than 120, 180 or 240 months, as
4
<PAGE>
elected, then the present value as of the date of the Participant's death at
the current dollar amount at the date of death of any remaining guaranteed
monthly payments will be paid in one sum to the Beneficiary or Beneficiaries
designated unless other provisions will have been made and approved by HL.
<TABLE>
<C> <S> <C>
ILLUSTRATION OF ANNUITY PAYMENTS:
INDIVIDUAL AGE 65, LIFE ANNUITY WITH 120 PAYMENTS CERTAIN
1. Net amount applied...................................... $13,978.25
2. Initial monthly income per $1,000 of payment applied.... 5.93
3. Initial monthly payment (1 x 2 DIVIDED BY 1,000)....... 82.89
4. Annuity Unit value...................................... .953217
5. Number of monthly Annuity Units (3 DIVIDED BY 4)....... 86.959
6. Assume Annuity Unit value for second month equal to..... .963723
7. Second monthly payment (6 x 5).......................... 83.80
8. Assume Annuity Unit value for third month equal to...... .964917
9. Third month payment (8 x 5)............................. 83.91
</TABLE>
For the purpose of this illustration, purchase is assumed to have been made
on the 5th business day preceding the first payment date. In determining the
second and subsequent payments the annuity unit value of the 5th business day
preceding the annuity due date is used.
*OPTION 3: UNIT REFUND LIFE ANNUITY
This Annuity option is an Annuity payable monthly during the lifetime of the
Annuitant terminating with the last payment due prior to the death of the
Annuitant except that an additional payment will be made to the Beneficiary or
Beneficiaries if (a) below exceeds (b) below:
total amount applied under the option
(a) = at the Annuity Commencement Date
--------------------------------------------------------------
Annuity Unit value at the Annuity Commencement Date
number of Annuity Units represented number of monthly
(b) = by each monthly Annuity payment made X Annuity payments made
The amount of the additional payments will be determined by multiplying such
excess by the Annuity Unit value as of the date that proof of death is
received by HL.
For example, if $20,000 were applied to the purchase of an Annuity under
this option, the value of an Annuity Unit was $1.25 on the Annuity
Commencement Date, the number of Annuity Units represented by each monthly
payment was 91.68 (the number applicable to an individual electing this option
to commence at age 65), 60 monthly Annuity payments were made prior to the
date of death, and the value of an Annuity Unit on the date of receipt of
proof of an Annuitant's death was $1.50, the amount paid to the Beneficiary
would be $15,748.80, computed as follows:
$20,000
------- - (91.68 x 60) = 10,499.200
$1.25
or
16,000.000 - 5,500.800 = 10,499.200
10,499.200 x $1.50 = $15,748.80
OPTION 4: JOINT AND LAST SURVIVOR ANNUITY
An Annuity payable monthly during the joint lifetime of the Annuitant and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
It would be possible under this Option for an Annuitant and designated
second person in the event of the common or simultaneous death of the parties to
receive only one payment in the event of death prior to the due date for the
second payment and so on.
*OPTION 5: PAYMENTS FOR A DESIGNATED PERIOD
An amount payable monthly for the number of years. Under most group
contracts, the minimum number of years is three.
5
<PAGE>
In the event of the Annuitant's death prior to the end of the designated
period, any then remaining balance of proceeds will be paid in one sum to the
Beneficiary or Beneficiaries designated unless other provisions will have been
made and approved by HL.
Option 5 is an option that does not involve life contingencies and thus no
mortality guarantee.
Surrenders under Option 5 will be subject to the limitations set forth in
the Contract and any applicable contingent deferred sales charges (see "How do
I select an Annuity Commencement Date and Form of Annuity?" in the
Prospectus).
* ON QUALIFIED PLANS, OPTIONS 2, 3 AND 5 ARE AVAILABLE ONLY IF THE GUARANTEED
PAYMENT PERIOD IS LESS THAN THE LIFE EXPECTANCY OF THE ANNUITANT AT THE TIME
THE OPTION BECOMES EFFECTIVE. SUCH LIFE EXPECTANCY SHALL BE COMPUTED ON THE
BASIS OF THE MORTALITY TABLE PRESCRIBED BY THE IRS, OR IF NONE IS PRESCRIBED,
THE MORTALITY TABLE THEN IN USE BY HL.
CALCULATION OF YIELD AND RETURN
YIELD OF THE HVA MONEY MARKET FUND AND U.S. GOVERNMENT MONEY MARKET FUND
SUB-ACCOUNTS. As summarized in the Prospectus under the heading "Performance
Related Information," the yield of the Money Market Fund and U.S. Government
Money Market Fund Sub-Accounts for a seven-day period (the "base period") will
be computed by determining the "net change in value" (calculated as set forth
below) of a hypothetical account having a balance of one share at the beginning
of the period, dividing the net change in account value by the value of the
account at the beginning of the base period to obtain the base period return,
and 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 and
contract 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 Money Market Fund and U.S. Government Money Market Fund Sub-Accounts
yield and effective yield will vary in response to fluctuations in interest
rates and in the expenses of the two Sub-Accounts.
The current yield and effective yield reflect recurring charges on the
Separate Account level, including the maximum Annual Contract Fee.
MONEY MARKET FUND SUB-ACCOUNT
The yield and effective yield for the seven day period ending December 31,
1994 is as follows:
<TABLE>
<CAPTION>
($18 ANNUAL CONTRACT FEE)
<S> <C>
Yield 4.12%
Effective Yield 4.21%
</TABLE>
U.S. GOVERNMENT MONEY MARKET FUND SUB-ACCOUNT
The yield and effective yield for the sub-account for the seven day period
ending December 31, 1994 is as follows:
<TABLE>
<CAPTION>
($18 ANNUAL CONTRACT FEE)
<S> <C>
Yield 3.82%
Effective Yield 3.89%
</TABLE>
YIELDS OF HARTFORD BOND FUND AND HARTFORD MORTGAGE SECURITIES FUND
SUB-ACCOUNTS. As summarized in the Prospectus under the heading "Performance
Related Information," yields of these two 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 funds
"net asset value per share" for the same period in addition to the daily expense
charged assessed, at the sub-account level for the respective period. The Bond
Fund and Mortgage Securities Fund 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 Bond Fund and Mortgage Securities
Fund.
6
<PAGE>
The yield reflects recurring charges on the Separate Account level,
including the Annual Contract Fee.
The Bond Fund and Mortgage Securities Fund Sub-Accounts' yield 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 Funds.
BOND FUND SUB-ACCOUNT
Yield calculations of the Sub-Account used for illustration purposes reflect
the interest earned by the Sub-Account, less applicable asset charges assessed
against a Contract Owner's contract over the base period. The following is the
method used to determine the yield for the 30 day period ended December 31,
1994.
EXAMPLE:
Current Yield Formula for the Sub-Account 2*[((A - B)/(C*D) + 1)6 - 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.
Yield = 5.87%
MORTGAGE SECURITIES FUND SUB-ACCOUNT
Yield calculations of the Sub-Account used for illustration purposes reflect
the interest earned by the Sub-Account, less applicable asset charges assessed
against a Contract Owner's account over the base period. The following is the
method used to determine the yield for the 30 days period ended December 31,
1994.
EXAMPLE:
Current Yield Formula for the Sub-Account 2*[((A - B)/(C*D) + 1)6 - 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.
Yield = 4.41%
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. As summarized in the Prospectus under the
heading "Performance Related Information", total return is a measure of the
change in value of an investment in a Sub-Account over the period covered. The
formula for total return used herein includes three steps: (1) calculating the
value of the hypothetical initial investment of $1,000 as 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.
7
<PAGE>
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 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 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 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.
The manner in which total return and yield will be calculated for public use
is described above. The following table summarizes the calculation of total
return and yield for each Sub-Account, where applicable, through December 31,
1994.
8
<PAGE>
AVERAGE ANNUAL TOTAL RETURN
AS OF DECEMBER 31, 1994
DC I AND II--GROUP VARIABLE CONTRACTS (STAFF ENROLLED)
<TABLE>
<CAPTION>
PERIODS ENDED
-------------------------------------------------
INCEPTION 10 YR/
SUB-ACCOUNT DATE 1 YEAR 5 YEAR INCEPT.
- - ----------------------------------------------------------------------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Bond Fund Sub-Account
DC I and DC II (1.25%)............................................... 08/25/82 -9.88% 4.72% 7.02%
Stock Fund Sub-Account
DC I and DC II (1.25%)............................................... 06/29/82 -7.95% 5.71% 11.47%
Money Market Fund Sub-Account
DC I and DC II (1.25%)............................................... 06/14/82 -2.47% 2.56% 4.64%
Advisers Fund Sub-Account
DC I and DC II (1.25%)............................................... 05/02/83 -8.71% 5.17% 10.02%
U.S. Gov't. Money Market Fund Sub-Account
DC I and DC II (1.25%)............................................... 05/02/83 -2.74% 2.18% 4.17%
Aggressive Growth Fund Sub-Account
DC I and DC II (1.25%)............................................... 04/02/84 -3.80% 12.27% 14.33%
Mortgage Securities Fund Sub-Account
DC I and DC II (1.25%)............................................... 01/15/85 -7.69% 4.22% 7.13%
Index Fund Sub-Account
DC I and DC II (1.25%)............................................... 06/03/87 -5.29% 5.47% 7.00%
Hartford International Opportunities Fund Sub-Account
DC I and DC II (1.25%)............................................... 07/02/90 -7.99% N/A 2.60%
NOTE: Average annual total return assumes a hypothetical initial payment of $1,000. At the end of each period, a total
surrender is assumed. Maintenance fees and contingent deferred sales loads of up to 5%, if applicable, are deducted
to determine ending redeemable value of the original payment. Then, the ending redeemable value is divided by the
original investment to calculate total return.
</TABLE>
9
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hartford Life Insurance Company
DC Variable Account-I and to the
Owners of Units of Interest therein:
We have audited the accompanying statement of assets and liabilities of
Hartford Life Insurance Company DC Variable Account-I as of December 31, 1994,
and the related statement of operations for the year then ended and statement of
changes in net assets for each of the two years in the period then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Hartford Life Insurance
Company DC Variable Account-I as of December 31, 1994, the results of its
operations for the year then ended and the changes in its net assets for each of
the two years in the period then ended in conformity with generally accepted
accounting principles.
Hartford, Connecticut Arthur Andersen LLP
February 10, 1995
10
<PAGE>
THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY
11
<PAGE>
DC VARIABLE ACCOUNT-I
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ -----------
<S> <C> <C> <C>
ASSETS:
Investments
Hartford Bond Fund, Inc.
Shares 34,348,808
Cost $ 33,515,145
Market Value................... $31,807,683 -- --
Hartford Stock Fund, Inc.
Shares 95,620,296
Cost $229,866,862
Market Value................... -- $267,876,435 --
HVA Money Market Fund, Inc.
Shares 24,012,800
Cost $ 24,012,800
Market Value................... -- -- $24,012,800
Hartford Advisers Fund, Inc.
Shares 227,179,523
Cost $328,084,836
Market Value................... -- -- --
Hartford U.S. Government Money
Market Fund, Inc.
Shares 8,408,066
Cost $ 8,408,066
Market Value................... -- -- --
Hartford Aggressive Growth Fund,
Inc.
Shares 68,598,328
Cost $165,202,837
Market Value................... -- -- --
Hartford Mortgage Securities
Fund, Inc.
Shares 22,275,623
Cost $ 23,528,877
Market Value................... -- -- --
Hartford Index Fund, Inc.
Shares 17,531,675
Cost $ 22,769,098
Market Value................... -- -- --
Hartford International
Opportunities Fund, Inc.
Shares 38,451,786
Cost $ 43,057,374
Market Value................... -- -- --
Calvert Socially Responsive
Series, Inc.
Shares 7,986,993
Cost $ 11,110,489
Market Value................... -- -- --
Dividends Receivable............. -- -- --
Due from Hartford Life Insurance
Company......................... 41,956 248,874 114,338
Receivable from fund shares
sold............................ -- -- --
--------------- ------------ -----------
Total Assets..................... 31,849,639 268,125,309 24,127,138
--------------- ------------ -----------
LIABILITIES:
Due to Hartford Life Insurance
Company......................... -- -- --
Payable for fund shares
purchased....................... 41,953 248,852 114,725
--------------- ------------ -----------
Total Liabilities................ 41,953 248,852 114,725
--------------- ------------ -----------
Net Assets (variable annuity
contract liabilities)........... $31,807,686 $267,876,457 $24,012,413
--------------- ------------ -----------
--------------- ------------ -----------
DEFERRED ANNUITY CONTRACTS IN THE
ACCUMULATION PERIOD:
GROUP SUB-ACCOUNTS:
Units Owned by Participants........ 9,090,126 39,551,354 9,548,195
Unit Price......................... $ 3.499147 $ 6.772877 $ 2.514864
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT MORTGAGE
MONEY MARKET AGGRESSIVE SECURITIES
ADVISERS FUND FUND GROWTH FUND FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- --------------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments
Hartford Bond Fund, Inc.
Shares 34,348,808
Cost $ 33,515,145
Market Value................... -- -- -- -- --
Hartford Stock Fund, Inc.
Shares 95,620,296
Cost $229,866,862
Market Value................... -- -- -- -- --
HVA Money Market Fund, Inc.
Shares 24,012,800
Cost $ 24,012,800
Market Value................... -- -- -- -- --
Hartford Advisers Fund, Inc.
Shares 227,179,523
Cost $328,084,836
Market Value................... $363,596,283 -- -- -- --
Hartford U.S. Government Money
Market Fund, Inc.
Shares 8,408,066
Cost $ 8,408,066
Market Value................... -- $8,408,066 -- -- --
Hartford Aggressive Growth Fund,
Inc.
Shares 68,598,328
Cost $165,202,837
Market Value................... -- -- $196,182,987 -- --
Hartford Mortgage Securities
Fund, Inc.
Shares 22,275,623
Cost $ 23,528,877
Market Value................... -- -- -- $21,927,678 --
Hartford Index Fund, Inc.
Shares 17,531,675
Cost $ 22,769,098
Market Value................... -- -- -- -- $26,686,540
Hartford International
Opportunities Fund, Inc.
Shares 38,451,786
Cost $ 43,057,374
Market Value................... -- -- -- -- --
Calvert Socially Responsive
Series, Inc.
Shares 7,986,993
Cost $ 11,110,489
Market Value................... -- -- -- -- --
Dividends Receivable............. -- -- -- -- --
Due from Hartford Life Insurance
Company......................... 390,864 18,605 368,236 31,772 55,039
Receivable from fund shares
sold............................ -- -- -- -- --
------------- --------------- ------------ ------------- -----------
Total Assets..................... 363,987,147 8,426,671 196,551,223 21,959,450 26,741,579
------------- --------------- ------------ ------------- -----------
LIABILITIES:
Due to Hartford Life Insurance
Company......................... -- -- -- -- --
Payable for fund shares
purchased....................... 390,700 16,501 368,808 32,126 55,040
------------- --------------- ------------ ------------- -----------
Total Liabilities................ 390,700 16,501 368,808 32,126 55,040
------------- --------------- ------------ ------------- -----------
Net Assets (variable annuity
contract liabilities)........... $363,596,447 $8,410,170 $196,182,415 $21,927,324 $26,686,539
------------- --------------- ------------ ------------- -----------
------------- --------------- ------------ ------------- -----------
DEFERRED ANNUITY CONTRACTS IN THE
ACCUMULATION PERIOD:
GROUP SUB-ACCOUNTS:
Units Owned by Participants........ 126,436,533 4,782,693 46,086,072 10,782,266 15,356,013
Unit Price......................... $ 2.875723 $ 1.758459 $ 4.256870 $ 2.033647 $ 1.737856
<CAPTION>
INTERNATIONAL SOCIALLY
OPPORTUNITIES FUND RESPONSIVE FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ---------------
<S> <C> <C>
ASSETS:
Investments
Hartford Bond Fund, Inc.
Shares 34,348,808
Cost $ 33,515,145
Market Value................... -- --
Hartford Stock Fund, Inc.
Shares 95,620,296
Cost $229,866,862
Market Value................... -- --
HVA Money Market Fund, Inc.
Shares 24,012,800
Cost $ 24,012,800
Market Value................... -- --
Hartford Advisers Fund, Inc.
Shares 227,179,523
Cost $328,084,836
Market Value................... -- --
Hartford U.S. Government Money
Market Fund, Inc.
Shares 8,408,066
Cost $ 8,408,066
Market Value................... -- --
Hartford Aggressive Growth Fund,
Inc.
Shares 68,598,328
Cost $165,202,837
Market Value................... -- --
Hartford Mortgage Securities
Fund, Inc.
Shares 22,275,623
Cost $ 23,528,877
Market Value................... -- --
Hartford Index Fund, Inc.
Shares 17,531,675
Cost $ 22,769,098
Market Value................... -- --
Hartford International
Opportunities Fund, Inc.
Shares 38,451,786
Cost $ 43,057,374
Market Value................... $45,208,149 --
Calvert Socially Responsive
Series, Inc.
Shares 7,986,993
Cost $ 11,110,489
Market Value................... -- $11,509,257
Dividends Receivable............. -- 368,148
Due from Hartford Life Insurance
Company......................... 156,179 42,671
Receivable from fund shares
sold............................ -- --
------------------ ---------------
Total Assets..................... 45,364,328 11,920,076
------------------ ---------------
LIABILITIES:
Due to Hartford Life Insurance
Company......................... -- --
Payable for fund shares
purchased....................... 156,162 42,920
------------------ ---------------
Total Liabilities................ 156,162 42,920
------------------ ---------------
Net Assets (variable annuity
contract liabilities)........... $45,208,166 $11,877,156
------------------ ---------------
------------------ ---------------
DEFERRED ANNUITY CONTRACTS IN THE
ACCUMULATION PERIOD:
GROUP SUB-ACCOUNTS:
Units Owned by Participants........ 38,269,973 7,898,989
Unit Price......................... $ 1.181296 $ 1.503630
</TABLE>
13
<PAGE>
DC VARIABLE ACCOUNT-I
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends........................ $ 2,071,884 $ 5,659,865 $ 902,730
Expenses:
Mortality and expense
undertakings.................... (418,898) (3,285,871 ) (288,848 )
--------------- ------------ -----------
Net investment income (loss)... 1,652,986 2,373,994 613,882
--------------- ------------ -----------
Capital gains income............. 650,208 15,856,002 --
--------------- ------------ -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions........... (140,993) 39,836 --
Net unrealized appreciation
(depreciation) of investments
during the period............... (4,003,835) (26,606,667 ) --
--------------- ------------ -----------
Net gains (losses) on
investments..................... (4,144,828) (26,566,831 ) --
--------------- ------------ -----------
Net increase (decrease) in net
assets resulting from
operations.................... $(1,841,634) $(8,336,835 ) $ 613,882
--------------- ------------ -----------
--------------- ------------ -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT MORTGAGE
MONEY MARKET AGGRESSIVE SECURITIES
ADVISERS FUND FUND GROWTH FUND FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- --------------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends........................ $11,828,141 $ 300,443 $ 687,262 $ 1,506,010 $ 620,237
Expenses:
Mortality and expense
undertakings.................... (4,364,315) (103,643) (2,112,450 ) (282,729) (196,593)
------------- --------------- ------------ ------------- -----------
Net investment income (loss)... 7,463,826 196,800 (1,425,188 ) 1,223,281 423,644
------------- --------------- ------------ ------------- -----------
Capital gains income............. 10,712,050 -- 13,497,320 106,840 --
------------- --------------- ------------ ------------- -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions........... 28,808 -- (78,820 ) (44,959) 1,961
Net unrealized appreciation
(depreciation) of investments
during the period............... (32,581,374) -- (9,904,942 ) (1,952,973) (357,829)
------------- --------------- ------------ ------------- -----------
Net gains (losses) on
investments..................... (32,552,566) -- (9,983,762 ) (1,997,932) (355,868)
------------- --------------- ------------ ------------- -----------
Net increase (decrease) in net
assets resulting from
operations.................... $(14,376,690) $ 196,800 $ 2,088,370 $ (667,811) $ 67,776
------------- --------------- ------------ ------------- -----------
------------- --------------- ------------ ------------- -----------
<CAPTION>
INTERNATIONAL SOCIALLY
OPPORTUNITIES FUND RESPONSIVE FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ---------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends........................ $ 566,144 $ 368,148
Expenses:
Mortality and expense
undertakings.................... (503,691) (143,514)
------------------ ---------------
Net investment income (loss)... 62,453 224,634
------------------ ---------------
Capital gains income............. -- --
------------------ ---------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions........... (17,178) 2,432
Net unrealized appreciation
(depreciation) of investments
during the period............... (1,594,350) (737,526)
------------------ ---------------
Net gains (losses) on
investments..................... (1,611,528) (735,094)
------------------ ---------------
Net increase (decrease) in net
assets resulting from
operations.................... $(1,549,075) $ (510,460)
------------------ ---------------
------------------ ---------------
</TABLE>
15
<PAGE>
DC VARIABLE ACCOUNT-I
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ -----------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss)..... $ 1,652,986 $ 2,373,994 $ 613,882
Capital gains income............. 650,208 15,856,002 --
Net realized gain (loss) on
security transactions........... (140,993) 39,836 --
Net unrealized appreciation
(depreciation) of investments
during the period............... (4,003,835) (26,606,667 ) --
--------------- ------------ -----------
Net increase (decrease) in net
assets resulting from
operations...................... (1,841,634) (8,336,835 ) 613,882
--------------- ------------ -----------
UNIT TRANSACTIONS:
Purchases........................ 3,601,922 35,187,253 2,801,239
Net transfers.................... (6,164,436) (15,185,779 ) (1,191,454 )
Surrenders....................... (1,013,995) (6,193,345 ) (988,021 )
--------------- ------------ -----------
Net increase (decrease) in net
assets resulting from unit
transactions.................... (3,576,509) 13,808,129 621,764
--------------- ------------ -----------
Total increase (decrease) in net
assets.......................... (5,418,143) 5,471,294 1,235,646
NET ASSETS:
Beginning of period.............. 37,225,829 262,405,163 22,776,767
--------------- ------------ -----------
End of period.................... $31,807,686 $267,876,457 $24,012,413
--------------- ------------ -----------
--------------- ------------ -----------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1993
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ -----------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss)..... $ 2,283,120 $ 4,687,775 $ 382,359
Capital gains income............. 37,223 11,673,351 --
Net realized gain (loss) on
security transactions........... 19,433 46,917 --
Net unrealized appreciation
(depreciation) of investments
during the period............... 679,533 12,883,669 --
--------------- ------------ -----------
Net increase (decrease) in net
assets resulting from
operations...................... 3,019,309 29,291,712 382,359
--------------- ------------ -----------
UNIT TRANSACTIONS:
Purchases........................ 3,907,100 34,013,442 2,669,891
Net transfers.................... (3,258,555) (11,248,519 ) (3,286,587 )
Surrenders....................... (1,182,205) (5,435,566 ) (1,081,341 )
--------------- ------------ -----------
Net increase (decrease) in net
assets resulting from unit
transactions.................... (533,660) 17,329,357 (1,698,037 )
--------------- ------------ -----------
Total increase (decrease) in net
assets.......................... 2,485,649 46,621,069 (1,315,678 )
NET ASSETS:
Beginning of period.............. 34,740,180 215,784,094 24,092,445
--------------- ------------ -----------
End of period.................... $37,225,829 $262,405,163 $22,776,767
--------------- ------------ -----------
--------------- ------------ -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
16
<PAGE>
<TABLE>
<CAPTION>
U.S.
GOVERNMENT MORTGAGE INTERNATIONAL SOCIALLY
MONEY MARKET AGGRESSIVE SECURITIES OPPORTUNITIES RESPONSIVE
ADVISERS FUND FUND GROWTH FUND FUND INDEX FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------ ------------- ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income (loss)...... $ 7,463,826 $ 196,800 $ (1,425,188) $ 1,223,281 $ 423,644 $ 62,453 $ 224,634
Capital gains
income............. 10,712,050 -- 13,497,320 106,840 -- -- --
Net realized gain
(loss) on security
transactions....... 28,808 -- (78,820) (44,959) 1,961 (17,178) 2,432
Net unrealized
appreciation
(depreciation) of
investments during
the period......... (32,581,374) -- (9,904,942) (1,952,973) (357,829) (1,594,350) (737,526)
------------- ------------ ------------- ------------ ------------- ------------- ------------
Net increase
(decrease) in net
assets resulting
from operations.... (14,376,690) 196,800 2,088,370 (667,811) 67,776 (1,549,075) (510,460)
------------- ------------ ------------- ------------ ------------- ------------- ------------
UNIT TRANSACTIONS:
Purchases........... 57,966,836 1,166,725 40,896,682 3,455,947 5,768,930 12,504,519 3,457,379
Net transfers....... (28,384,065) (933,407) 3,087,541 (4,681,841) (2,082,307) 10,413,798 (2,115,714)
Surrenders.......... (7,931,157) (248,081) (3,745,743) (712,860) (477,506) (426,493) (282,097)
------------- ------------ ------------- ------------ ------------- ------------- ------------
Net increase
(decrease) in net
assets resulting
from unit
transactions....... 21,651,614 (14,763) 40,238,480 (1,938,754) 3,209,117 22,491,824 1,059,568
------------- ------------ ------------- ------------ ------------- ------------- ------------
Total increase
(decrease) in net
assets............. 7,274,924 182,037 42,326,850 (2,606,565) 3,276,893 20,942,749 549,108
NET ASSETS:
Beginning of
period............. 356,321,523 8,228,133 153,855,565 24,533,889 23,409,646 24,265,417 11,328,048
------------- ------------ ------------- ------------ ------------- ------------- ------------
End of period....... $363,596,447 $ 8,410,170 $196,182,415 $21,927,324 $ 26,686,539 $ 45,208,166 $11,877,156
------------- ------------ ------------- ------------ ------------- ------------- ------------
------------- ------------ ------------- ------------ ------------- ------------- ------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1993
<CAPTION>
U.S.
GOVERNMENT MORTGAGE INTERNATIONAL SOCIALLY
MONEY MARKET AGGRESSIVE SECURITIES OPPORTUNITIES RESPONSIVE
ADVISERS FUND FUND GROWTH FUND FUND INDEX FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------ ------------- ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income (loss)...... $ 8,450,786 $ 120,670 $ 987,805 $ 1,262,982 $ 298,769 $ (49,821) $ 203,399
Capital gains
income............. 8,908,166 -- 1,486,170 -- -- -- --
Net realized gain
(loss) on security
transactions....... 9,422 -- (916) (7,199) 5,966 1,751 (1,201)
Net unrealized
appreciation
(depreciation) of
investments during
the period......... 15,693,629 -- 18,747,507 (83,512) 1,362,300 3,986,688 404,529
------------- ------------ ------------- ------------ ------------- ------------- ------------
Net increase
(decrease) in net
assets resulting
from operations.... 33,062,003 120,670 21,220,566 1,172,271 1,667,035 3,938,618 606,727
------------- ------------ ------------- ------------ ------------- ------------- ------------
UNIT TRANSACTIONS:
Purchases........... 55,945,748 1,255,276 28,786,388 4,111,353 6,060,925 4,480,796 3,584,713
Net transfers....... (11,485,076) (2,233,756) 15,099,212 (4,262,060) (2,689,620) 8,627,961 (304,756)
Surrenders.......... (6,408,633) (226,652) (2,516,217) (502,235) (443,157) (226,403) (251,792)
------------- ------------ ------------- ------------ ------------- ------------- ------------
Net increase
(decrease) in net
assets resulting
from unit
transactions....... 38,052,039 (1,205,132) 41,369,383 (652,942) 2,928,148 12,882,354 3,028,165
------------- ------------ ------------- ------------ ------------- ------------- ------------
Total increase
(decrease) in net
assets............. 71,114,042 (1,084,462) 62,589,949 519,329 4,595,183 16,820,972 3,634,892
NET ASSETS:
Beginning of
period............. 285,207,481 9,312,595 91,265,616 24,014,560 18,814,463 7,444,445 7,693,156
------------- ------------ ------------- ------------ ------------- ------------- ------------
End of period....... $356,321,523 $ 8,228,133 $153,855,565 $24,533,889 $ 23,409,646 $ 24,265,417 $11,328,048
------------- ------------ ------------- ------------ ------------- ------------- ------------
------------- ------------ ------------- ------------ ------------- ------------- ------------
</TABLE>
17
<PAGE>
DC VARIABLE ACCOUNT-I
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
1. ORGANIZATION:
DC Variable Account-I (the Account) is a separate investment account with
Hartford Life 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.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting principles
in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments
sold is determined on the basis of identified cost. Dividend and capital
gains income are accrued as of the ex-dividend date.
b) SECURITY VALUATION--The investment in shares of the Hartford and Calvert
Socially Responsive Series mutual funds are valued at the closing net
asset value per share as determined by the appropriate fund as of
December 31, 1994.
c) FEDERAL INCOME TAXES--For Federal income tax purposes, the Account
intends to qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code by distributing substantially all of its
taxable income to variable annuity contract owners and otherwise
complying with the requirements for regulated investment companies.
Accordingly, no provision for Federal income taxes has been made. For
purposes of determining net realized taxable gains to be distributed, the
capital gains and losses of each Sub-Account are combined. Distribution
of any net realized capital gains so determined will be made to the
contract owners of the Sub-Account having net realized capital gains. The
cumulative realized losses used to offset realized capital gains in each
Sub-Account will be considered in the determination of future
distributions of realized capital gains to each Sub-Account.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
a) MORTALITY AND EXPENSE UNDERTAKINGS--The Company, as issuer of variable
annuity contracts, provides the mortality and expense undertakings and,
with respect to the Account, receives a maximum annual fee of 1.25% of
the Account's average daily net assets.
b) DEDUCTION OF ANNUAL MAINTENANCE FEE--Annual maintenance fees are
deducted through termination of units of interest from applicable
contract owners' accounts, in accordance with the terms of the contracts.
18
<PAGE>
4. DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS:
The Board of Directors of the Company declared distributions from net
investment income to contract owners of record on December 31, 1994.
<TABLE>
<CAPTION>
PER UNIT OF
SUB-ACCOUNT INTEREST ACCOUNT
- - ------------------------------------------------------------------ ----------------
<S> <C>
Bond Fund......................................................... $ .181844
Stock Fund........................................................ .060023
Money Market Fund................................................. .064293
Advisers Fund..................................................... .059032
U.S. Government Money Market Fund................................. .041148
Mortgage Securities Fund.......................................... .113453
Index Fund........................................................ .027588
International Opportunities Fund.................................. .001632
Socially Responsive Fund.......................................... .028438
</TABLE>
Additionally, distributions from net realized capital gains were declared by
the Board of Directors to contract owners on December 31, 1994.
<TABLE>
<CAPTION>
PER UNIT OF
SUB-ACCOUNT INTEREST ACCOUNT
- - ------------------------------------------------------------------ ----------------
<S> <C>
Bond Fund......................................................... $ .021769
Stock Fund........................................................ .401904
Advisers Fund..................................................... .084951
Aggressive Growth Fund............................................ .291162
Mortgage.......................................................... .005739
Index............................................................. .000128
Socially Responsive Fund.......................................... .000140
</TABLE>
19
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hartford Life Insurance Company and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Hartford Life
Insurance Company (a Connecticut corporation and wholly-owned subsidiary of
Hartford Life and Accident Insurance Company) and subsidiaries as of December
31, 1994 and 1993, and the related consolidated statements of income,
stockholder's equity and cash flow for each of the three years in the period
ended December 31, 1994. These consolidated financial statements and the
schedules referred to below are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and schedules 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 consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Hartford Life Insurance Company and subsidiaries as of December 31, 1994 and
1993, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994 in conformity with generally
accepted accounting principles.
As discussed in the accompanying notes to the consolidated financial statements,
the Company adopted new accounting standards promulgated by the Financial
Accounting Standards Board, changing its methods of accounting, as of January 1,
1994, for debt and equity securities, and, effective January 1, 1992, for
postretirement benefits other than pensions and postemployment benefits.
Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedules listed in the
Index to Consolidated Financial Statements and Schedules are presented for
purposes of complying with the Securities and Exchange Commission's rules and
are not a required part of the basic consolidated financial statements. These
schedules have been subjected to the auditing procedures applied in the audits
of the basic consolidated financial statements and, in our opinion, fairly
state in all material respects the financial data required to be set forth
therein in relation to the basic consolidated financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 30, 1995
F-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
1994 1993 1992
<S> <C> <C> <C>
REVENUES:
Premiums and other considerations $1,100 $ 747 $ 259
Net investment income 1,292 1,051 907
Net realized gains on investments 7 16 5
------ ------ ------
2,399 1,814 1,171
BENEFITS, CLAIMS AND EXPENSES:
Benefits, claims and claim
adjustment expenses 1,405 1,046 797
Amortization of deferred policy
acquisition costs 145 113 55
Dividends to policyholders 419 227 47
Other insurance expenses 227 210 138
------ ------ ------
2,196 1,596 1,037
INCOME BEFORE INCOME TAX AND
CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES 203 218 134
Income tax expense 65 75 45
------ ------ ------
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGES IN ACCOUNTING PRINCIPLES 138 143 89
Cumulative effect of changes in
accounting principles net of tax benefit of $7 - - (13)
------ ------ ------
NET INCOME $ 138 $ 143 $ 76
------ ------ ------
------ ------ ------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-3
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
1994 1993
-------- --------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities, available for sale, at fair
value in 1994 and at amortized cost in 1993
(amortized cost, $14,464 in 1994; fair
value, $12,845 in 1993) $13,429 $12,597
Equity securities, at fair value 68 90
Mortgage loans, at outstanding principal balance 316 228
Policy loans, at outstanding balance 2,614 1,397
Other investments 107 40
------- -------
16,534 14,352
Cash 20 1
Premiums and amounts receivable 160 327
Reinsurance recoverable 5,466 5,532
Accrued investment income 378 241
Deferred policy acquisition costs 1,809 1,334
Deferred income tax 590 114
Other assets 83 101
Separate account assets 22,809 16,284
------- -------
$47,849 $38,286
------- -------
------- -------
LIABILITIES AND STOCKHOLDER'S EQUITY
Future policy benefits $1,890 $1,659
Other policyholder funds 21,328 18,234
Other liabilities 1,000 916
Separate account liabilities 22,809 16,284
------- -------
47,027 37,093
Common stock - authorized 1,000 shares, $5,690
par value, issued and outstanding 1,000 shares 6 6
Capital surplus 826 676
Unrealized losses on securities, net of tax (654) (5)
Retained earnings 644 516
------- -------
822 1,193
------- -------
$47,849 $38,286
------- -------
------- -------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-4
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(IN MILLIONS)
<TABLE>
<CAPTION>
UNREALIZED
GAINS(LOSSES) TOTAL
COMMON CAPITAL ON RETAINED STOCKHOLDER'S
STOCK SURPLUS SECURITIES EARNINGS EQUITY
----- ------- ---------- -------- ------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1991 $ 6 $ 439 $ 1 $ 297 $ 743
Net Income 76 76
Capital Contribution - 25 - - 25
Excess of assets over liabilities on
reinsurance assumed from affiliate - 34 - - 34
Change in unrealized losses on equity
securities, net of tax - - (1) - (1)
------ ------- ------- ------- -------
BALANCE, DECEMBER 31, 1992 6 498 0 373 877
------ ------- ------- ------- -------
Net Income - - - 143 143
Capital Contribution - 180 - - 180
Excess of assets over liabilities on
reinsurance assumed from affiliate - (2) - - (2)
Change in unrealized losses on equity
securities, net of tax - - (5) - (5)
------ ------- ------- ------- -------
BALANCE, DECEMBER 31, 1993 6 676 (5) 516 1,193
------ ------- ------- ------- -------
Net Income - - - 138 138
Capital Contribution - 150 - - 150
Dividends Paid - - - (10) (10)
Change in unrealized losses on securities,
net of tax * - - (649) - (649)
------ ------- ------- ------- -------
BALANCE, DECEMBER 31, 1994 $ 6 $ 826 $ (654) $ 644 $ 822
------ ------- ------- ------- -------
------ ------- ------- ------- -------
<FN>
* The 1994 change in unrealized losses on securities, net of tax, includes a
gain of $91 due to adoption of SFAS #115 as discussed in note 1b to the
consolidated financial statements.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-5
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASHFLOW
(IN MILLIONS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES:
NET INCOME $ 138 $ 143 $ 76
Cumulative effect of accounting changes - - 13
Adjustments to net income:
Net realized investment gains before tax (7) (16) (5)
Net policyholder investment losses
(gains) before tax 5 (15) (15)
Net deferred policy acquisition costs (441) (292) (278)
Net amortization of premium (discount) on
fixed maturities 41 2 (16)
Deferred income tax benefits (128) (121) (14)
(Increase) decrease in premiums and
amounts receivable 10 (28) (14)
Increase in accrued investment income (106) (4) (116)
Decrease(increase) in other assets 101 (36) 88
Decrease(increase) in reinsurance
recoverable 75 (121) 0
Increase in liability for future policy
benefits 224 360 527
Increase in other liabilities 191 176 92
-------- --------- --------
CASH PROVIDED BY OPERATING ACTIVITIES 103 48 338
-------- --------- --------
INVESTING ACTIVITIES:
Purchases of fixed maturity investments (9,127) (12,406) (8,948)
Proceeds from sales of fixed maturity
investments 5,708 8,813 5,728
Maturities and principal paydowns of
long-term investments 1,931 2,596 1,207
Net purchases of other investments (1,338) (206) (106)
Net sales (purchases) of short-term
investments 135 (564) 221
-------- --------- --------
CASH USED FOR INVESTING ACTIVITIES (2,691) (1,767) (1,898)
-------- --------- --------
FINANCING ACTIVITIES:
Net receipts from investment and UL-type
contracts credited to policyholder account
balances 2,467 1,513 1,512
Capital contribution 150 180 25
Excess of assets over liabilities on
reinsurance assumed from affiliate - - 34
Dividends paid (10) - -
-------- --------- --------
CASH PROVIDED BY FINANCING
ACTIVITIES 2,607 1,693 1,571
-------- --------- --------
NET INCREASE(DECREASE) IN CASH 19 (26) 11
Cash at beginning of period 1 27 16
-------- --------- --------
CASH AT END OF PERIOD $ 20 $ 1 $ 27
-------- --------- --------
-------- --------- --------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-6
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN MILLIONS)
1. SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION:
These consolidated financial statements include Hartford Life
Insurance Company (the Company or HLIC) and its wholly-owned
subsidiaries, ITT Hartford Life and Annuity Company (ILA) and ITT
Hartford International Life Reassurance Corporation (HLR), formerly
American Skandia Life Reinsurance Corporation. HLIC is a wholly-owned
subsidiary of Hartford Life and Accident Insurance Company (HLA).
The Company is ultimately owned by Hartford Fire Insurance Company
(Hartford Fire), which is ultimately owned by ITT Hartford Group,
Inc., a subsidiary of ITT Corporation (ITT).
The consolidated financial statements are prepared in conformity with
generally accepted accounting principles which differ in certain
material respects from the accounting practices prescribed or
permitted by various insurance regulatory authorities.
Certain reclassifications have been made to prior year financial
statements to conform to current year classifications.
(B) CHANGES IN ACCOUNTING PRINCIPLES:
Effective January 1, 1992, the Company adopted Statement of Financial
Accounting Standards (SFAS)No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions" and SFAS No. 112,
Employers' Accounting for Postemployment Benefits", using the
immediate recognition method. Accordingly, a cumulative adjustment
(through December 31, 1991) of $7 after-tax has been recognized at
January 1, 1992.
Effective January 1, 1994, the Company adopted SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities".
The new standard requires, among other things, that 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 effect those
intentions. The classification determines the appropriate accounting
carrying value (cost basis or fair value) and, in the case of fair
value, whether the adjustment impacts Stockholder's Equity directly or
is reflected in the Consolidated Statements of Income. Investments in
equity securities had previously been recorded at fair value with the
corresponding impact included in Stockholder's Equity. Under SFAS No.
115, the Company's fixed maturities are classified as "available for
sale" and accordingly, these investments are reflected at fair value
with the corresponding impact included as a component of Stockholder's
Equity designated as "Unrealized Loss on Securities, Net of Tax."
As with the underlying investment security, unrealized gains and
losses on derivative financial instruments are considered in
determining the fair value of the portfolios. The impact of adoption
was an increase to stockholder's equity of $91.
The Company's cash flows were not impacted by these changes in
accounting principles.
(C) REVENUE RECOGNITION:
Revenues for universal life policies and investment products consist
of policy charges for the cost of insurance,
F-7
<PAGE>
policy administration and surrender charges assessed to policy account
balances. Premiums for traditional life insurance policies are
recognized as revenues when they are due from policyholders. Deferred
acquisition costs are amortized using the retrospective deposit method
for universal life and other types of contracts where the payment
pattern is irregular or surrender charges are a significant source of
profit and the prospective deposit method is used where investment
margins are the primary source of profit.
(D) FUTURE POLICY BENEFITS AND OTHER POLICYHOLDER FUNDS:
Liabilities for future policy benefits are computed by the net level
premium method using interest rate assumptions varying from 3% to 11%
and withdrawal, mortality and morbidity assumptions which vary by
plan, year of issue and policy durations and include a provision for
adverse deviation. Liabilities for universal life insurance and
investment products represent policy account balances before
applicable surrender charges.
(E) POLICYHOLDER REALIZED GAINS AND LOSSES:
Realized gains and losses on security transactions associated with the
Company's immediate participation guaranteed contracts are excluded
from revenues, since under the terms of the contracts the realized
gains and losses will be credited to policyholders in future years as
they are entitled to receive them.
(F) DEFERRED POLICY ACQUISITION COSTS:
Policy acquisition costs, including commissions and certain
underwriting expenses associated with acquiring traditional life
insurance products, are deferred and amortized over the lesser of the
estimated or actual contract life. For universal life insurance and
investment products, acquisition costs are being amortized generally
in proportion to the present value of expected gross profits from
surrender charges, investment, mortality and expense margins.
(G) INVESTMENTS:
Investments in fixed maturities are classified as available for sale
and accordingly reflected at fair value with the corresponding impact
of unrealized gains and losses, net of tax, included as a component of
stockholder's equity. Securities and derivative instruments,
including swaps, caps, floors, futures, forward commitments and
collars, are based on dealer quotes or quoted market prices for the
same or similar securities. While the Company has the ability and
intent to hold all fixed income securities until maturity, due to
contract obligations, interest rates and tax laws, portfolio activity
occurs. These trades are motivated by the need to optimally position
investment portfolios in reaction to movements in capital markets or
distribution of policyholder liabilities. When an other than temporary
reduction in the value of publicly traded securities occurs, the
decrease is reported as a realized loss and the carrying value is
adjusted accordingly. Real estate is carried at cost less accumulated
depreciation. Equity securities, which include common stocks, are
carried at market value with the after-tax difference from cost
reflected in stockholder's equity. Realized investment gains and
losses, after deducting life and pension policyholders share are
reported as a component of revenue and are determined on a specific
identification basis.
(H) DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses a variety of derivative financial instruments as part
of an overall risk management strategy. These instruments, including
swaps, caps, collars and exchange traded financial futures, 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. The Company's minimum
correlation threshold for hedge designation is 80%. If correlation,
which is assessed monthly and measured based on a rolling three month
average, falls below 80%, hedge accounting will be terminated. Gains
or losses on futures purchased in anticipation of the future receipt
of product cash flows are deferred and, at the time of the ultimate
purchase, reflected as a basis adjustment to the purchased asset.
Gains or losses on futures used in invested asset risk management are
deferred and adjusted into the basis of the hedged asset when the
contract is closed. The basis adjustments are amortized into
investment income over the remaining asset life.
F-8
<PAGE>
Open forward commitment contracts are marked to market through
Stockholder's Equity. Such contracts are recorded at settlement by
recording the purchase of the specified securities at the previously
committed price. Gains or losses resulting from the termination of
the forward commitment contracts before the delivery of the securities
are recognized immediately in the income statement as a component of
investment income.
The Company's accounting for interest rate swaps and purchased or
written caps, floors, and options used to manage risk is in accordance
with the concepts established in SFAS 80, "Accounting for Futures
Contracts", the American Institute of Certified Public Accountants
Statement of Position 86-2, "Accounting for Options" and various EITF
pronouncements, except for written options which are written in all
cases in conjunction with other assets and derivatives as part of an
overall risk management strategy. Such synthetic instruments are
accounted for as hedges. Derivatives, used as part of a risk
management strategy, must be designated at inception and have
consistency of terms between the synthetic instrument and the
financial instrument being replicated. Synthetic instrument
accounting, consistent with industry practice, provides that the
synthetic asset is accounted for like the financial instrument it is
intended to replicate. Interest rate swaps and purchased or written
caps, floors and options which fail to meet management criteria are
accounted for at fair market value with the impact reflected in net
income.
Interest rate swaps involve the periodic exchange of payments without
the exchange of underlying principal or notional amounts. Net
payments are recognized as an adjustment to 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. The basis
of the underlying asset or liability is adjusted to reflect changing
market conditions such as prepayment experience. Should the asset be
sold or liability terminated, the gains or losses on the terminated
position are immediately recognized in earnings. Interest rate swaps
purchased in anticipation of an asset purchase ("anticipatory
transaction") are recognized consistent with the underlying asset
components. That is, the settlement component is recognized in the
Statement of Income while the change in market is recognized as an
unrealized gain or loss.
Premiums paid on purchased floor or cap agreements and the premium
received on issued cap or floor agreements used for risk management,
as well as the net payments, 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.
Forward exchange contracts and foreign currency swaps are accounted
for in accordance with SFAS 52. Changes in the spot rate of
instruments designated as hedges of the net investment in a foreign
subsidiary are reflected in the cumulative translation adjustment
component of stockholder's equity.
(I) RELATED PARTY TRANSACTIONS:
Transactions of the Company with its parent and affiliates relate
principally to tax settlements, insurance coverage, rental and service
fees and payment of dividends and capital contributions. In addition,
certain affiliated insurance companies purchased group annuity
contracts from the Company to fund pension costs and claim annuities
to settle casualty claims.
Substantially all general insurance expenses related to the Company,
including rent expenses, are initially paid by Hartford Fire. Direct
expenses are allocated to the Company using specific identification
and indirect expenses are allocated using other applicable methods.
The rent paid to Hartford Fire for the space occupied by the Company
was $3 in 1994, 1993, and 1992 respectively. The Company expects to
pay rent of $3 in 1995, 1996, 1997,1998, and 1999 respectively and
$60 thereafter, over the contract life of the lease.
See also Note (4) for the related party coinsurance agreements.
F-9
<PAGE>
2. INVESTMENTS
(A) COMPONENTS OF NET INVESTMENT INCOME:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Interest income $1,247 $1,007 $894
Income from other investments 54 53 15
------ ------ ------
GROSS INVESTMENT INCOME 1,301 1,060 909
Less: investment expenses 9 9 2
------ ------ ------
NET INVESTMENT INCOME $1,292 $1,051 $907
------ ------ ------
------ ------ ------
</TABLE>
(B) UNREALIZED GAINS (LOSSES) ON EQUITY SECURITIES:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Gross unrealized gains $ 2 $ 3 $ 2
Gross unrealized losses (11) (11) (2)
Deferred income tax expense (benefit) (3) (3) 0
------ ------ ------
NET UNREALIZED LOSSES AFTER TAX (6) (5) 0
Balance at beginning of year (5) 0 1
------ ------ ------
CHANGE IN NET UNREALIZED LOSSES ON
EQUITY SECURITIES $ (1) $ (5) $(1)
------ ------ ------
------ ------ ------
</TABLE>
(C) UNREALIZED GAINS (LOSSES) ON FIXED MATURITIES:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Gross unrealized gains $ 150 $ 538 $ 521
Gross unrealized losses (1,185) (290) (302)
-------- ------ ------
NET UNREALIZED (LOSSES) GAINS (1,035) 248 219
Unrealized losses credited to policyholders 37 0 0
Deferred income tax expense (benefit) (350) 87 75
-------- ------ ------
NET UNREALIZED (LOSSES) GAINS AFTER TAX (648) 161 144
Balance at beginning of year 161 144 297
-------- ------ ------
CHANGE IN NET UNREALIZED (LOSSES)GAINS ON
FIXED MATURITIES $ (809) $ 17 $(153)
-------- ------ ------
-------- ------ ------
</TABLE>
(D) COMPONENTS OF NET REALIZED GAINS:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Fixed maturities $(34) $(12) $20
Equity securities (11) 0 3
Real estate and other 47 43 (3)
Less: (decrease)increase in liability
to policyholders for realized gains (5) 15 15
------ ------ ------
NET REALIZED GAINS $ 7 $ 16 $ 5
------ ------ ------
------ ------ ------
</TABLE>
F-10
<PAGE>
(E) DERIVATIVE INVESTMENTS:
A summary of investments, segregated by major category along with the
types of derivatives and their respective notional amounts, are as
follows as of December 31, 1994 :
<TABLE>
<CAPTION>
SUMMARY OF INVESTMENTS
AS OF DECEMBER 31, 1994
(CARRYING AMOUNTS)
ISSUED CAPS, PURCHASED
TOTAL CARRYING NON- FLOORS & CAPS, FLOORS FUTURES SWAPS
VALUE DERIVATIVE OPTIONS (B) & OPTIONS (C) (D) (F)
-------------- ---------- ------------ ------------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Asset Backed Securities $5,670 $5,690 $(31) $24 $0 $(13)
Inverse Floaters (A) 474 482 (9) 4 0 (3)
Anticipatory (E) (30) 0 0 2 0 (32)
-------- ------- ------ ------ ------ ------
TOTAL ASSET BACKED SECURITIES 6,114 6,172 (40) 30 0 (48)
Other Bonds and Notes 6,533 6,606 0 0 0 (73)
Short-Term Investments 782 782 0 0 0 0
-------- ------- ------ ------ ------ ------
TOTAL FIXED MATURITIES 13,429 13,560 (40) 30 0 (121)
Other Investments 3,105 3,105 0 0 0 0
-------- ------- ------ ------ ------ ------
TOTAL INVESTMENTS $16,534 $16,665 $(40) $30 $0 $(121)
-------- ------- ------ ------ ------ ------
-------- ------- ------ ------ ------ ------
</TABLE>
SUMMARY OF INVESTMENTS IN DERIVATIVES
AS OF DECEMBER 31, 1994
(NOTIONAL AMOUNTS)
<TABLE>
<CAPTION>
ISSUED CAPS, PURCHASED
TOTAL NOTIONAL FLOORS, & CAPS, FLOORS, FUTURES SWAPS
AMOUNT OPTIONS (B) & OPTIONS (C) (D) (F)
-------------- ------------ ------------- -------- ------
<S> <C> <C> <C> <C> <C>
Asset Backed Securities $4,244 $1,311 $2,546 $75 $312
Inverse Floaters (A) 1,129 277 63 3 786
Anticipatory (E) 835 0 209 101 525
------- ------- ------- ------- -------
TOTAL ASSET BACKED 6,208 1,588 2,818 179 1,623
Other Bonds and Notes 670 0 72 74 524
Short-Term Investments 0 0 0 0 0
------- ------- ------- ------- -------
TOTAL FIXED MATURITIES 6,878 1,588 2,890 253 2,147
Other Investments 16 0 3 0 13
------- ------- ------- ------- -------
TOTAL INVESTMENTS $6,894 $1,588 $2,893 $253 $2,160
------- ------- ------- ------- -------
------- ------- ------- ------- -------
</TABLE>
F-11
<PAGE>
A summary of the notional and fair value of derivatives with off Balance Sheet
risk as of December 31, 1993 is as follows:
<TABLE>
<CAPTION>
ISSUED SWAPS, CAPS
FLOORS AND COLLARS FUTURES FORWARDS TOTAL
------------------ ------- -------- -----
<S> <C> <C> <C> <C>
Notional $7,015 $1,792 $91 $8,898
Fair Value $(4) $0 $1 $(3)
</TABLE>
(A) Inverse floaters, which are variations of CMO's for which the coupon
rates move inversely with an index rate (e.g. LIBOR). The risk to
principal is considered negligible as the underlying collateral for
the securities is guaranteed or sponsored by government agencies. To
address the volatility risk created by the coupon variability, the
Company uses a variety of derivative instruments, primarily interest
rate swaps and issued floors.
(B) Comprised primarily of caps ($1,459) with a weighted average strike
rate of 7.7% (ranging from 6.8% to 10.2%). Over 70% mature in 1997
and 1998. Issued floors total $125 with a weighted average strike
rate of 8.3% and mature in 2004.
(C) Comprised of purchased floors ($1,856), purchased options and collars
($633) and purchased caps ($404). The floors have a weighted average
strike price of 5.8% (ranging from 4.8% and 6.6%) and over 85% mature
in 1997 and 1998. The options and collars generally mature in 1995
and 2002. The caps have a weighted average strike price of 7.2%
(ranging from 4.5% and 8.9%) and over 66% mature in 1997 through
1999.
(D) Over 95% of futures contracts expire before December 31, 1995.
(E) Deferred gains and losses on anticipatory transactions are included in
the carrying value of bond investments in the consolidated balance
sheets. At the time of the ultimate purchase, they are reflected as
a basis adjustment to the purchased asset. At December 31, 1994,
these were $(33) million in net deferred losses for futures, interest
rate swaps and purchased options.
(F) The following table summarizes the maturities of interest rate and
foreign currency swaps outstanding at December 31, 1994 and the
related weighted average interest pay rate or receive rate assuming
current market conditions:
MATURITY OF SWAPS ON INVESTMENTS AS OF DECEMBER 31, 1994
<TABLE>
<CAPTION>
MATURITY
DERIVATIVE TYPE 1995 1996 1997 1998 1999 2000+ TOTAL LAST
--------------- ---- ---- ---- ---- ---- ----- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST RATE SWAPS:
PAY FIXED/RECEIVE VARIABLE:
Notional Value $0 $15 $50 $0 $446 $268 $779 2004
Weighted Average Pay Rate 0.0% 5.0% 7.2% 0.0% 8.2% 7.8% 7.9%
Weighted Average Receive Rate 0.0% 6.4% 5.7% 0.0% 7.5% 6.5% 7.0%
PAY VARIABLE/RECEIVE FIXED:
Notional Value $311 $50 $100 $25 $175 $100 $761 2002
Weighted Average Pay Rate 5.1% 5.3% 5.5% 5.3% 5.4% 6.0% 5.4%
Weighted Average Receive Rate 8.0% 8.0% 7.5% 4.0% 4.5% 7.2% 6.9%
PAY VARIABLE/RECEIVE DIFFERENT VARIABLE:
Notional Value $95 $50 $18 $15 $5 $232 $415 2005
Weighted Average Pay Rate 4.2% 6.4% 6.8% 6.2% 0.0% 6.0% 5.7%
Weighted Average Receive Rate 9.1% 6.3% 9.5% 6.4% 0.0% 6.3% 7.1%
TOTAL INTEREST RATE SWAPS $406 $115 $168 $40 $626 $600 $1,955 2004
Total Weighted Average Pay Rate 4.9% 5.7% 6.1% 5.6% 7.4% 6.8% 6.5%
Total Weighted Average Receive Rate 8.2% 7.1% 7.2% 4.9% 6.7% 6.5% 7.0%
FOREIGN CURRENCY SWAPS $35 $46 $29 $15 $10 $70 $205 2002
TOTAL SWAPS $441 $161 $197 $55 $636 $670 $2,160 2005
</TABLE>
F-12
<PAGE>
In addition to risk management through derivative financial
instruments pertaining to the investment portfolio, interest rate
sensitivity related to certain Company liabilities was altered
primarily through interest rate swap agreements. The notional amount
of the liability agreements in which the Company generally pays one
variable rate in exchange for another, was $1.7 billion and $1.3
billion at December 31, 1994 and 1993 respectively. The weighted
average pay rate is 6.2%; the weighted average receive rate is 6.6% ,
and these agreements mature at various times through 2004.
(F) CONCENTRATION OF CREDIT RISK:
The Company has a reinsurance recoverable of $4.4 billion from
Mutual Benefit Life Assurance Corporation (Mutual Benefit). The risk
of Mutual Benefit becoming insolvent is mitigated by the reinsurance
agreement's requirement that the assets be kept in a security trust
with the Company as sole beneficiary. Excluding investments in U.S.
government and agencies, the Company has no other significant
concentrations of credit risk.
The Company currently owns $39.2 million par value of Orange County,
California Pension Obligation Bonds, $17.1 million of which it
continues to carry as available for sale under FASB 115 and $22.1
million which are included in the Separate Account Assets. While
Orange County is currently operating under Protection of Chapter 9 of
the Federal Bankruptcy Laws, the Company believes it is probable that
it will collect all amounts due under the contractual terms of the
bonds and that the bonds are not permanently or other than temporarily
impaired.
As of December 31, 1994 the Company owned $66.1 million of Mexican
bonds, $52.3 million of which are payable in Mexican pesos but are
fully hedged back to U.S. dollars, and $13.8 million of U.S. Dollar
Denomination Mexican bonds. The primary risks associated with these
securities is a default by the Mexican government or imposition of
currency controls that prevent conversion of Mexican pesos to U.S.
dollars. The Company believes both of these risks are remote.
(G) FIXED MATURITIES:
The schedule below details the amortized cost and fair values of the
Company's fixed maturities by component, along with the gross
unrealized gains and losses:
<TABLE>
<CAPTION>
1994
----
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
--------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Government and government
agencies and authorities:
- - - guaranteed and sponsored $1,516 $1 $(87) $1,430
- - - guaranteed and sponsored
- asset backed 4,256 78 (571) 3,763
States, municipalities and
political subdivisions 148 1 (12) 137
International governments 189 1 (14) 176
Public utilities 531 1 (32) 500
All other corporate 3,717 38 (297) 3,458
All other corporate
- asset backed 2,442 30 (121) 2,351
Short-term investments 1,665 0 (51) 1,614
------- ----- -------- -------
TOTAL $14,464 $150 $(1,185) $13,429
------- ----- -------- -------
------- ----- -------- -------
</TABLE>
F-13
<PAGE>
<TABLE>
<CAPTION>
1993
----
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ------
<S> <C> <C> <C> <C>
U.S. Government and government
agencies and authorities:
- - - guaranteed and sponsored $ 1,637 $ 15 $ (12) $ 1,640
- - - guaranteed and sponsored
- asset backed 4,070 235 (219) 4,086
States, municipalities and
political subdivisions 73 9 0 82
International governments 100 5 (3) 102
Public utilities 423 20 (2) 441
All other corporate 3,598 180 (42) 3,736
All other corporate
- asset backed 1,806 74 (12) 1,868
Short-term investments 890 0 0 890
-------- ------- -------- --------
TOTAL $12,597 $ 538 $ (290) $12,845
-------- ------- -------- --------
-------- ------- -------- --------
</TABLE>
The amortized cost and estimated fair value of fixed maturity
investments at December 31, 1994, by maturity, are shown below. Asset
backed securities are distributed to maturity year based on the
Company's estimate of the rate of future prepayments of principal over
the remaining life of the securities. Expected maturities differ from
contractual maturities reflecting the borrowers' rights to call or
prepay their obligations.
<TABLE>
<CAPTION>
AMORTIZED COST ESTIMATED FAIR VALUE
-------------- --------------------
MATURITY
- - --------
<S> <C> <C>
Due in one year or less $ 2,214 $ 2,183
Due after one year through five years 7,000 6,647
Due after five years through ten years 3,678 3,334
Due after ten years 1,572 1,265
--------- ---------
$14,464 $13,429
--------- ---------
--------- ---------
</TABLE>
Sales of fixed maturities excluding short-term fixed maturities for
the years ended 1994, 1993, and 1992 resulted in proceeds of $5,708,
$8,813, and $5,728, respectively, resulting in gross realized gains of
$71, $192, and $140, and gross realized losses of $100, $219, and
$135, respectively, not including policyholder gains and losses.
Sales of equity securities and other investments for the years ended
December 31, 1994, 1993, and 1992 resulted in proceeds of $159, $127
and $7, respectively, resulting in gross realized gains of $3, $0, and
$3, and gross realized losses of $14, $0, and $0, respectively, not
including policyholder gains and losses.
F-14
<PAGE>
(H) FAIR VALUE OF FINANCIAL INSTRUMENTS NOT DISCLOSED ELSEWHERE :
BALANCE SHEET ITEMS:
<TABLE>
<CAPTION>
1994 1993
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- ------ -------- ------
<S> <C> <C> <C> <C>
ASSETS
Other invested assets:
Policy loans $2,614 $2,614 $1,397 $1,397
Mortgage loans 316 316 228 228
Investments in partnership
and trusts 36 42 14 34
Miscellaneous 67 67 22 63
LIABILITIES
Other policy claims and
benefits $13,001 $12,374 $11,140 $11,415
</TABLE>
The following methods and assumptions were used to estimate the fair
value of each class of financial instrument:policy and mortgage loan
carrying amounts approximate fair value; investments in partnerships
and trusts are based on external market valuations from partnership
and trust management; and other policy claims and benefits payable are
determined by estimating future cash flows discounted at the current
market rate.
3. INCOME TAX
The Company is included in ITT's consolidated U.S. Federal income tax
return and remits to (receives from) ITT a current income tax
provision (benefit) computed in accordance with the tax sharing
arrangements between ITTand its insurance subsidiaries. The
effective tax rate was 32% in 1994, and approximates the U.S.
statutory tax rates of 35% in 1993 and 34% in 1992. The provision for
income taxes was as follows:
<TABLE>
<CAPTION>
INCOME TAX EXPENSE:
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Current $185 $ $ 190 $ $ 124
Deferred (120) (115) (79)
------- -------- --------
$ 65 $ $ 75 $ $ 45
------- -------- --------
------- -------- --------
</TABLE>
F-15
<PAGE>
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
TAX PROVISION AT U.S. STATUTORY RATE $71 $76 $46
Tax-exempt income (3) 0 0
Foreign tax credit (1) 0 0
Other (2) (1) (1)
----- ----- -----
PROVISION FOR INCOME TAX $ 65 $75 $45
----- ----- -----
----- ----- -----
</TABLE>
Income taxes paid were $ 244 , $301 and $36 in 1994, 1993, and 1992
respectively. The current taxes due from or (to) Hartford Fire were $46,
and $19 in 1994 and 1993 respectively.
Deferred tax assets include the following:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Tax deferred acquisition cost $284 $158
Book deferred acquisition costs and reserves (134) (30)
Employee benefits 7 7
Unrealized loss on "available for sale"
securities 353 3
Investments and other 80 (24)
------- -------
$590 $114
------- -------
------- -------
</TABLE>
Prior to the Tax Reform Act of 1984, the Life Insurance Company Income Tax
Act of 1959 permitted the deferral from taxation of a portion of statutory
income under certain circumstances. In these situations, the deferred
income was accumulated in a "Policyholders' Surplus Account" and will be
taxable in the future only under conditions which management considers to
be remote; therefore, no Federal income taxes have been provided on this
deferred income. The balance for tax return purposes of the Policyholders'
Surplus Account as of December 31, 1994 was $24.
4. REINSURANCE
The Company cedes insurance to non-affiliated insurers in order to limit
its maximum loss. Such transfer does not relieve the Company of its
primary liability. The Company also assumes insurance from other
insurers. Group life and accident and health insurance business is
substantially reinsured to affiliated companies.
Life insurance net retained premiums were comprised of the following:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Gross premiums $1,316 $1,135 $680
Reinsurance assumed 299 93 30
Reinsurance ceded 515 481 451
------- ------- -----
NET RETAINED PREMIUMS $1,100 $747 $259
------- ------- -----
------- ------- -----
</TABLE>
F-16
<PAGE>
Life reinsurance recoveries, which reduced death and other benefits, for
the years ended December 31, 1994, 1993 and 1992 approximated $164, $149,
and $73, respectively.
In December 1994, the Company assumed from a third party approximately
$500 million of corporate owned life insurance reserves on a coinsurance
basis. Also in December 1994, ILA ceded to ITT Lyndon Insurance Company
$1 billion in individual fixed and variable annuities on a modified
coinsurance basis. These transactions did not have a material impact on
consolidated net income.
In October 1994, HLR recaptured approximately $500 million of corporate
owned life insurance from a third party reinsurer. Subsequent to this
transaction, HLIC and HLR restructured their coinsurance agreement from
coinsurance to modified coinsurance, with the assets and policy liabilities
placed in the separate account. In May 1994, HLIC assumed and reinsured
the life insurance policies and the individual annuities of Pacific
Standard with reserves and account values of approximately $400 million.
The Company received cash and investment grade assets to support the life
insurance and individual annuity contract obligations assumed.
In June 1993, the Company assumed and partially reinsured the annuity, life
and accident and sickness insurance policies of Fidelity Bankers Life
Insurance Company in Receivership for Conservation and Rehabilitation, with
account values of $3.2 billion. The Company received cash and investment
grade assets to assume insurance and annuity contract obligations.
Substantially all of these contracts were placed in the Company's separate
accounts.
In November 1993, ILA acquired, through an assumption reinsurance
transaction, substantially all of the individual fixed and variable annuity
business of HLA. As a result of this transaction, the assets and
liabilities of the company increased approximately $1 billion. The excess
of liabilities assumed over assets received, of $2, was recorded as a
decrease to capital surplus. The impact on consolidated net income was not
significant.
On November 4, 1992, the Company entered into a definitive agreement
whereby the Company assumed the contract obligations of Mutual Benefit Life
Assurance Corporation's (Mutual Benefit) individual corporate owned life
insurance (COLI) contracts. The Company received $5.6 billion in cash and
invested assets, $5.3 billion of which were policy loans, from Mutual
Benefit for assuming the contract obligations. Simultaneously, the Company
coinsured approximately 84% of the contract obligations back to Mutual
Benefit, HLR and an unaffiliated reinsurer. In August 1993, the Company
received assets of $300 million for assuming the group COLI contract
obligations of Mutual Benefit, through an assumption reinsurance
transaction. Under the terms of the agreement, the Company coinsured back
75% of the liabilities to Mutual Benefit. All assets supporting Mutual
Benefit's reinsurance liability to HLIC are placed in a "security trust",
with Hartford Life as the sole beneficiary. The impact on 1992
consolidated net income was not significant.
In 1992, all ordinary individual life insurance written and in force in
HLA was assumed by HLIC. As a result of this transaction, the assets of
HLIC increased by approximately $437, liabilities increased approximately
$403. The excess of assets over liabilities of $34 was recorded as an
increase in capital.
5. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
The Company's employees are included in Hartford Fire's noncontributory
defined benefit pension plans. These plans provide pension benefits that
are based on years of service and the employee's compensation during the
last ten years of employment. The Company's funding policy is to
contribute annually an amount between the minimum funding requirements set
forth in the Employee Retirement Income Security Act of 1974 and the
maximum amount that can be deducted for Federal income tax purposes.
Generally, pension costs are funded through the purchase of the Company's
group pension contracts. The cost to the Company was approximately $2, $3
and $2 in 1994, 1993 and 1992, respectively.
The Company provides certain health care and life insurance benefits for
eligible retired employees. A substantial portion of the Company's
employees may become eligible for these benefits upon retirement.
Effective January 1, 1992, the Company adopted SFAS No. 106, using the
immediate recognition method for all benefits accumulated to date. As of
June 1992, the Company amended its plans, effective January 1, 1993,
whereby the Company's contribution for health care benefits will depend on
the retiree's date of retirement and years of service. In addition, the
plan amendments increased deductibles and set a defined dollar cap which
F-17
<PAGE>
limits average company contributions. The effect of these changes is not
material. The Company has prefunded a portion of the health care and life
insurance obligations through trust funds where such prefunding can be
accomplished on a tax effective basis. Postretirement health care and
life insurance benefits expense, allocated by Hartford Fire, was $1, $1,
and $1, for 1994, 1993, and 1992 respectively.
The assumed rate of future increases in the per capita cost of health care
(the health care trendrate) was 11% for 1994, decreasing ratably to 6 %
in the year 2001. Increasing the health care trend rates by one percent
per year would have an immaterial impact on the accumulated postretirement
benefit obligation and the annual expense. The assumed weighted average
discount rate was 8.5%. To the extent that the actual experience differs
from the inherent assumptions, the effect will be amortized over the
average future service of the covered employees.
6. BUSINESS SEGMENT INFORMATION
The reportable segments and product groups of HLIC and its subsidiaries are:
INDIVIDUAL LIFE AND ANNUITIES (ILAD)
- - -Individual life
- - -Fixed and variable retirement annuities
ASSET MANAGEMENT SERVICES (AMS)
- - -Group Pension Plans products and services
- - -Deferred Compensation Plans products and services
- - -Structured Settlements and lottery annuities
SPECIALTY
- - -Corporate Owned Life Insurance (COLI) and HLR
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
REVENUES:
ILAD $691 $595 $305
AMS 789 794 770
Specialty 919 425 96
------- ------- -------
$2,399 $1,814 $1,171
------- ------- -------
------- ------- -------
INCOME BEFORE INCOME TAX:
ILAD $139 $129 $73
AMS 38 71 56
Specialty 26 18 5
------- ------- -------
$203 $218 $134
------- ------- -------
------- ------- -------
IDENTIFIABLE ASSETS:
ILAD $26,668 $19,147 $9,474
AMS 13,334 12,416 11,198
Specialty 7,847 6,723 5,910
------- ------- -------
$47,849 $ 38,286 $ 26,582
------- ------- -------
------- ------- -------
</TABLE>
7. STATUTORY NET INCOME AND SURPLUS
Substantially all of the statutory surplus is permanently reinvested or is
subject to dividend restrictions relating to various state regulations
which limit the payment of dividends without prior approval.
Statutory net income and surplus as of December 31 were:
F-18
<PAGE>
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Statutory net income $58 $63 $65
Statutory surplus $941 $812 $614
</TABLE>
The Company prepares its statutory financial statements in accordance with
accounting practices prescribed by the State of Connecticut Insurance
Department. Prescribed statutory accounting practices include publications
of the National Association of Insurance Commissioners ("NAIC"), as well as
state laws, regulations, and general administrative rules.
8. SEPARATE ACCOUNTS:
The Company maintains separate account assets and liabilities totaling
$22.8 billion and $16.3 billion at December 31, 1994 and 1993, respectively
which are reported at fair value. Separate account assets are segregated
from other investments and are not subject to claims that arise out of any
other business of the Company. Investment income and gains and losses of
separate accounts accrue directly to the policyholder. Separate accounts
reflect two categories of risk assumption: non-guaranteed separate
accounts totaling $14.8 billion and $11.5 billion at December 31, 1994 and
1993, respectively, wherein the policyholder assumes the investment risk,
and guaranteed separate account assets totaling $8.0 billion and $4.8
billion at December 31, 1994 and 1993, respectively, wherein the Company
contractually guarantees either a minimum return or account value to the
policyholder. Investment income (including investment gains and losses) on
separate account assets are not reflected in the Consolidated Statements of
Income. Separate account management fees, net of minimum guarantees, were
$256, $189, and $92, in 1994, 1993, and 1992, respectively.
The guaranteed separate accounts include modified guaranteed individual
annuity, and modified guaranteed life insurance. The average credit
interest rate on these contracts is 6.44%. The assets that support these
liabilities are comprised of $7.5 billion in bonds and $.5 billion in
policy loans. The portfolios are segregated from other investments and
are managed so as to minimize liquidity and interest rate risk. In order
to minimize the risk of disintermediation associated with early
withdrawals, individual annuity and modified guaranteed life insurance
contracts carry a graded surrender charge as well as a market value
adjustment. Additional investment risk is hedged using a variety of
derivatives which total $(16.2) million in carrying value and $3.2 billion
in notional amounts.
9. COMMITMENTS AND CONTINGENCIES
In August 1994, HLIC renewed a two year note purchase facility agreement
which in certain instances obligates the Company to purchase up to $100
million in collateralized notes from a third party. The Company is
receiving fees for this commitment. At December 31, 1994, the Company has
not purchased any notes under this agreement.
In March 1987, HLIC guaranteed the commercial mortgages (principal and
accrued interest) that were sold under a pooling and servicing agreement of
the same date. Mortgages aggregating approximately $53.0million were sold
in this transaction, and the remaining balance on these loans is $21.1
million. There was no impact on operations due to this guarantee.
Under insurance guaranty fund laws in most states, insurers doing business
therein can be assessed up to prescribed limits for policyholder losses
incurred by insolvent companies. The amount of any future assessments on
HLIC under these laws cannot be reasonably estimated. Most of these 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.
The Company is involved in various legal actions, some of which involve
claims for substantial amounts. In the opinion of management the ultimate
liability with respect to such lawsuits, as well as other contingencies, is
not considered material in relation to the consolidated financial position
of the Company.
F-19
<PAGE>
PART C
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 authorizing the establishment of the Separate
Account is filed herewith.
(2) Not applicable. HL maintains custody of all assets pursuant
to an exemptive order granted on December 1, 1981.
(3) Principal Underwriting Agreement is filed herewith.
(4) Form of Variable Annuity Contract to be filed by amendment.
(5) Form of Application to be filed by amendment.
(6) (a) Restated Certificate of Incorporation of Hartford Life
Insurance Company is filed herewith.
(b) Bylaws of Hartford Life Insurance Company are filed
herewith.
(7) Not applicable.
(8) Not applicable.
(9) Not applicable.
(10) Consent of Arthur Andersen LLP is filed herewith.
(11) Not applicable.
(12) Not applicable.
(13) Schedule of Performance Data is filed herewith.
(14) Fund Participation Agreement filed herewith.
20
<PAGE>
ITEM 25. Directors and Officers of the Depositor
Louis J. Abdou Vice President
David H. Annis Vice President
Paul J. Boldischar, Jr. Vice President
Wendell J. Bossen Vice President
Peter W. Cummins Vice President
Juliana B. Dalton Vice President
Ann M. deRaismes Vice President
Allen Douma, M.D. Medical Director
Donald R. Frahm Chairman & CEO
Bruce D. Gardner General Counsel & Secretary
Joseph H. Gareau Executive Vice President & Chief Investment
Officer
Richard J. Garrett Vice President & Treasurer
John P. Ginnetti Executive Vice President and Director Asset
Management Services
Lynda Godkin Assistant General Counsel & Secretary
Lois W. Grady Vice President
David A. Hall Senior Vice President & Actuary
Joseph Kanarek Vice President
Kevin J. Kirk Vice President
Andrew W. Kohnke Vice President
Stephen M. Maher Vice President & Actuary
William B. Malchodi, Jr. Vice President & Director of Taxes
Thomas M. Marra Senior Vice President & Actuary and Director
Individual Life and Annuity Division
David J. McDonald Senior Vice President
Kevin A. North Vice President
Joseph J. Noto Vice President
Leonard E. Odell, Jr. Senior Vice President
Michael C. O'Halloran Vice President & Senior Associate General Counsel
Craig R. Raymond Vice President & Chief Actuary
Lowndes A. Smith President & Chief Operating Officer
Edward J. Sweeney Vice President
James E. Trimble Vice President & Actuary
Raymond P. Welnicki Senior Vice President
James T. Westervelt Senior Vice President & Group Comptroller
Lizabeth H. Zlatkus Vice President
Donald J. Znamierowski Vice President
Unless otherwise indicated, the principal business address of each of the
above individuals is P.O. Box 2999, Hartford, CT 01604-2999.
ITEM 26. Persons Controlled By or Under Common Control with the Depositor or
Registrant
See Exhibit 26.
ITEM 27. Number of Contract Owners
As of December 31, 1994, there were Contract Owners of qualified
Contracts and Contract Owners of non-qualified Contracts.
21
<PAGE>
ITEM 28. Indemnification
Under Section 33-320a of the Connecticut General Statutes, the Registrant
must indemnify a director or officer against judgments, fines, penalties,
amounts paid in settlement and reasonable expenses, including attorneys'
fees, for actions brought or threatened to be brought against him in his
capacity as a director or officer when it is determined by certain
disinterested parties that he acted in good faith and in a manner he
reasonably believed to be in the best interests of the Registrant. In any
criminal action or proceeding, it also must be determined that the director
or officer had no reason to believe his conduct was unlawful. The director
or officer must also be indemnified when he is successful on the merits in
the defense of a proceeding or in circumstances where a court determines
that he is fairly and reasonably entitled to be indemnified, and the court
approves the amount. In shareholder derivative suits, the director or
officer must be finally adjudged not to have breached his duty to the
Registrant or a court must determine that he is fairly and reasonably
entitled to be indemnified and must approve the amount. In a claim based
upon the director's or officer's purchase or sale of the Registrant's
securities, the director of officer may obtain indemnification only if a
court determines that, in view of all the circumstances, he is fairly and
reasonably entitled to be indemnified, and then for such amount as the court
shall determine.
The foregoing statements are specifically made subject to the detailed
provisions of Section 33-320a.
The directors and officers of HL and HESCO are covered under a directors and
officers liability insurance policy issued to ITT Corporation and its
subsidiaries. Such policy will reimburse the Registrant for any payments
that it shall make to directors and officers pursuant to law and will,
subject to certain exclusions contained in the policy, further pay any other
costs, charges and expenses and settlements and judgments arising from any
proceeding involving any director or officer of the Registrant in his past
or present capacity as such, and for which he may be liable, except as to
any liabilities arising from acts that are deemed to be uninsurable.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, 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) HESCO acts as principal underwriter for the following investment
companies:
Hartford Life Insurance Company -- DC Variable Account I
Hartford Life Insurance Company -- Separate Account Two (DC Variable
Account II)
Hartford Life Insurance Company -- Separate Account Two (Variable
Account "A")
Hartford Life Insurance Company -- Separate Account Two (NQ Variable
Account)
Hartford Life Insurance Company -- Separate Account Two (QP Variable
Account)
Hartford Life Insurance Company -- Separate Account One
Hartford Life Insurance Company -- Separate Account Two (Director)
Hartford Life Insurance Company --Putnam Capital Manager Trust Separate
Account
Hartford Money Market Fund, Inc.
Hartford Life Insurance Company -- Separate Account Three
ITT Hartford Life and Annuity Insurance Company -- Separate Account
Three
Hartford Life Insurance Company -- Separate Account Five
22
<PAGE>
ITT Hartford Life and Annuity Insurance Company -- Separate Account Five
ITT Hartford Life and Annuity Insurance Company -- Separate Account Six
Hartford Life Insurance Company Separate Account VL I
(b) Directors and Officers of HESCO
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER
------------------------- ----------------------
Donald E. Waggaman, Jr. Treasurer
Bruce D. Gardner Secretary
George R. Jay Controller
Lowndes A. Smith President
ITEM 30. Location of Accounts and Records
Accounts and records are maintained by HL.
ITEM 31. Management Services
None
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.
(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.
The Registrant is relying on the no-action letter issued by the Division of
Investment Management to American Council of Life Insurance, Ref. No. IP-6-88,
November 28, 1988. The Registrant has complied with the four provisions of the
no-action letter.
23
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE 1 - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN AFFILIATES
DECEMBER 31, 1994
(IN MILLIONS)
<TABLE>
<CAPTION>
AMOUNT
SHOWN ON
BALANCE
TYPE OF INVESTMENT COST FAIR VALUE SHEET
------------------ ---------- ---------- ----------
<S> <C> <C> <C>
FIXED MATURITIES
BONDS
U.S. Government and government agencies
and authorities:
- guaranteed and sponsored $ 1,516 $ 1,429 $ 1,429
- guaranteed and sponsored - asset backed 4,256 3,763 3,763
States, municipalities and political subdivisions 148 137 137
International governments 189 176 176
Public utilities 531 500 500
All other corporate 3,717 3,458 3,458
All other corporate - asset backed 2,442 2,350 2,350
Short-term investments 1,665 1,616 1,616
------ ------ ------
TOTAL FIXED MATURITIES 14,464 13,429 13,429
EQUITY SECURITIES
Common Stocks - industrial, miscellaneous and all other 76 68 68
------ ------ ------
TOTAL FIXED MATURITIES AND EQUITY SECURITIES 14,540 13,497 13,497
Policy loans 2,614 2,614 2,614
Mortgage loans 316 316 316
Other investments 103 109 107
------ ------ ------
TOTAL INVESTMENTS $ 17,573 $ 16,536 $ 16,534
------ ------ ------
------ ------ ------
</TABLE>
Note: Fair values for stocks and bonds approximate those quotations published
by applicable stock exchanges or are received from other reliable
sources. The fair value for short - term investments approximates
cost.
Policy and mortgage loan carrying amounts approximate fair value.
S-1
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION
(IN MILLIONS)
<TABLE>
<CAPTION>
BENEFITS, AMORTIZ-
CLAIMS ATION OF
AND CLAIM DEFERRED
DEFERRED FUTURE OTHER PREMIUMS NET ADJUST- POLICY OTHER
POLICY POLICY POLICYHOL- AND OTHER INVESTMENT MENT ACQUISI- INSURANCE
ACQUISITION BENEFITS DER FUNDS CONSIDERA- INCOME EXPENSES TION EXPENSES
SEGMENT COSTS * * TIONS (1) (2) COSTS (3)
- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year ended
December 31,
1994
- - -------------
I LAD $ 1,708 $ 582 $ 4,257 $ 492 $ 199 $ 334 $ 137 $ 80
AMS 101 845 10,160 39 750 695 8 48
SPECIALTY 0 463 6,911 569 350 376 0 518
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 1,809 $ 1,890 $ 21,328 $ 1,100 $ 1,299 $ 1,405 $ 145 $ 646
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Year ended
December 31,
1993
- - -------------
I LAD $ 1,237 $ 428 $ 3,535 $ 423 $ 172 $ 249 $ 97 $ 120
AMS 97 703 9,026 35 759 662 16 45
SPECIALTY 0 528 5,673 289 136 135 0 272
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 1,334 $ 1,659 $ 18,234 $ 747 $ 1,067 $ 1,046 $ 113 $ 437
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Year ended
December 31,
1992
- - -------------
I LAD $ 698 $ 1,115 $ 1,004 $ 175 $ 127 $ 104 $ 49 $ 79
AMS 101 583 8,256 27 743 657 6 51
SPECIALTY 0 46 5,822 54 42 36 0 55
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 799 $ 1,744 $ 15,082 $ 256 $ 912 $ 797 $ 55 $ 185
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<FN>
(*) As Restated
(1) Investment income is allocated to the segments based on each segment's
share of investable funds or on a direct basis, where applicable, including
realized capital gains and losses.
(2) Benefits, claims and claim adjustment expenses includes the increase in
liability for future policy benefits and death, disability and other
contract benefit payments.
(3) Other insurance expenses are allocated to the segments based on specific
identification, where possible, and related activities, including dividends
to policyholders.
</TABLE>
S-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE IV - REINSURANCE
(IN MILLIONS)
<TABLE>
<CAPTION>
PERCENTAGE
CEDED TO ASSUMED OF AMOUNT
GROSS OTHER FROM OTHER NET ASSUMED
AMOUNT COMPANIES COMPANIES AMOUNT TO NET
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994
LIFE INSURANCE IN FORCE $ 136,929 $ 87,553 $ 35,016 $ 84,392 41.5%
--------- --------- --------- ---------
Premiums and other considerations
ILAD $ 448 $ 71 $ 106 $ 483 22.0%
AMS 39 0 0 39 0.0%
Specialty 521 140 188 569 33.0%
Accident and Health 308 304 5 9 55.6%
--------- --------- --------- ---------
TOTAL $ 1,316 515 299 1,100 27.2%
--------- --------- --------- ---------
--------- --------- --------- ---------
YEAR ENDED DECEMBER 31, 1993
LIFE INSURANCE IN FORCE $ 93,099 $ 71,415 $ 27,067 $ 48,751 55.5%
--------- --------- --------- ---------
Premiums and other considerations
ILAD $ 417 $ 85 $ 91 $ 423 21.5%
AMS 25 0 0 25 0.0%
Specialty 386 97 0 289 0.0%
Accident and Health 307 299 2 10 20.0%
--------- --------- --------- ---------
TOTAL $ 1,135 $ 481 $ 93 $ 747 12.4%
--------- --------- --------- ---------
--------- --------- --------- ---------
YEAR ENDED DECEMBER 31, 1992
LIFE INSURANCE IN FORCE $ 44,661 $ 64,207 $ 51,430 $ 31,884 161.3%
--------- ---------
Premiums and other considerations
ILAD $ 208 $ 71 $ 27 $ 164 16.5%
AMS 27 0 0 27 0.0%
Specialty 153 99 0 54 0.0%
Accident and Health 292 281 3 14 21.4%
--------- --------- --------- ---------
TOTAL $ 680 $ 451 $ 30 $ 259 37.9%
--------- --------- --------- ---------
</TABLE>
S-3
<PAGE>
HARTFORD LIFE INSURANCE COMPANY, INC.
AND
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY, INC.
POWER OF ATTORNEY
Donald R. Frahm
Bruce D. Gardner
Joseph H. Gareau
John P. Ginnetti
Thomas M. Marra
Leonard E. Odell, Jr.
Lowndes A. Smith
Raymond P. Welnicki
Lizabeth H. Zlatkus
Donald J. Znamierowski
do hereby jointly and severally authorize Bruce D. Gardner and/or Rodney J.
Vessels to sign as their agent, any Registration Statement, pre-effective
amendment, and any post-effective amendment of the Hartford Life Insurance
Company, Inc. and Hartford Life and Accident Insurance Company, Inc. under the
Securities Act of 1933 and/or the Investment Company Act of 1940.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for the
purpose herein set forth.
/s/ DONALD R. FRAHM Dated: ------------------------------
-----------------------------------
Donald R. Frahm
/s/ BRUCE D. GARDNER Dated: ------------------------------
-----------------------------------
Bruce D. Gardner
/s/ JOHN P. GINNETTI Dated: ------------------------------
-----------------------------------
John P. Ginnetti
/s/ THOMAS M. MARRA Dated: December 9, 1994
----------------------------------- ------------------------------
Thomas M. Marra
/s/ LEONARD E. ODELL, JR. Dated: December 2, 1994
----------------------------------- ------------------------------
Leonard E. Odell, Jr.
/s/ LOWNDES A. SMITH Dated: ------------------------------
-----------------------------------
Lowndes A. Smith
/s/ RAYMOND P. WELNICKI Dated: ------------------------------
-----------------------------------
Raymond P. Welnicki
/s/ LIZABETH H. ZLATKUS Dated: ------------------------------
-----------------------------------
Lizabeth H. Zlatkus
/s/ DONALD J. ZNAMIEROWSKI Dated: December 8, 1994
----------------------------------- ------------------------------
Donald J. Znamierowski
24
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities Act
Rule 485(b) for effectiveness of this Registration Statement and has caused this
Registration Statement to be signed on its behalf, in the City of Hartford, and
State of Connecticut on this 26th day of April, 1995.
HARTFORD LIFE INSURANCE COMPANY
(DC VARIABLE ACCOUNT II)
(Registrant)
*By: *By:
----------------------------------- -----------------------------------
John P. Ginnetti, Rodney J. Vessels
Senior Vice President Attorney-in-Fact
HARTFORD LIFE INSURANCE COMPANY
(Depositor)
*By:
-----------------------------------
John P. Ginnetti,
Senior 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.
Donald R. Frahm, Chairman and Chief
Executive Officer, Director*
Bruce D. Gardner, General Counsel
Corporate Secretary, Director*
Joseph H. Gareau, Executive Vice
President and Chief Investment
Officer, Director*
John P. Ginnetti, Senior Vice
President, Director*
*By:
Thomas M. Marra, Senior Vice --------------------------------------
President, Director* Rodney J. Vessels
Attorney-In-Fact
Leonard E. Odell, Jr., Senior Vice
President,
Director*
Lowndes A. Smith, President, Chief Dated: April 26, 1995
Operating Officer, Director* -------------------------------
Raymond P. Welnicki, Senior Vice
President, Director*
Lizabeth H. Zlatkus, Vice President
Director*
Donald J. Znamierowski, Vice
President Comptroller, Director*
25
<PAGE>
CERTIFICATION
I, John F. Ginnetti, Secretary of Hartford Life Insurance Company, hereby
certify that the attached is a true copy of a resolution adopted by the
Board of Directors of said Company on June 2, 1986.
/s/ John F. Ginnetti
---------------------------------------
June 13, 1986
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
CONSENT
The undersigned, being all of the Directors of Hartford Life Insurance
Company, hereby consent to the following resolution, such action to have the
same force and effect as if taken at a meeting duly called and held for such
purpose:
RESOLVED, That Hartford Life Insurance Company is hereby authorized to
establish a new separate account to be designated "Separate Account
Two" (the "Account") and to issue variable annuity contracts with
reserves for such contracts being segregated in such Account.
FURTHER RESOLVED, That the officers of Hartford Life Insurance Company
are hereby authorized and directed to take all actions necessary to:
(1) Comply with applicable state and federal laws and regulations
applicable to the establishment and operation of the Account;
(2) Establish, from time to time, the terms and conditions pursuant
to which interests in the Account will be sold to contract owners;
(3) Establish all procedures, standards and arrangements necessary or
appropriate for the operation of the Account including, but not
limited to, the establishment of the investment policies of the
Account; and
(4) Transfer funds to the Account, up to a maximum of $100,000 to
provide for its efficient operation, all on such terms and for
such periods as said officers deem to be necessary or appropriate.
/s/ Edward N. Bennett /s/ R. Fred Richardson
- - ------------------------------------- -------------------------------------
/s/ Joel P. Brightman /s/ Lowndes A. Smith
- - ------------------------------------- -------------------------------------
/s/ Larry A. Lance /s/ Donald R. Sondergeld
- - ------------------------------------- -------------------------------------
/s/ Leroy C. Thomas
------------------------------------
Dated: June 2, 1986
<PAGE>
EXHIBIT 3
PRINCIPAL UNDERWRITER AGREEMENT
THIS AGREEMENT, dated as of the 1st day of April, 1988, made by and between
HARTFORD LIFE INSURANCE COMPANY ("the Hartford"), a corporation organized and
existing under the laws of the State of Connecticut, and HARTFORD EQUITY SALES
COMPANY, INC. ("HESCO"), a corporation organized and existing under the laws
of the State of Connecticut,
WITNESSETH:
WHEREAS, the Board of Directors of the Hartford has made provision for the
establishment of separate accounts within the Hartford in accordance with the
laws of the State of Connecticut, which separate accounts were organized and are
established and registered as unit investment trust investment companies with
the Securities and Exchange Commission under the Investment Company Act of 1940,
as amended, and which are designated Hartford Life Insurance Company DC Variable
Account-I, Hartford Life Insurance Company Separate Account Two (DC Variable
Account-II), Hartford Life Insurance Company Separate Account Two (Variable
Account A), Hartford Life Insurance Company Separate Account Two (QP Variable
Account) and Hartford Life Insurance Company Separate Account Two (NQ Variable
Account), (referred to collectively as the "Separate Accounts"); and
WHEREAS, HESCO offers to the public certain Individual and Group Annuity
Contracts (the "Contracts") issued by the Hartford with respect to the Separate
Accounts and which are registered under the Securities Act of 1933, as amended;
and
WHEREAS, the Contracts authorize the Contract Owners of such Contracts to
direct that part or all of the net purchase payments to their Contract shall be
invested in shares of one or more of the underlying mutual funds which are
sponsored by the Hartford ("the Fund or Funds"). The Funds are registered as
open-end, diversified, management investment companies under the Investment
Company Act of 1940, as amended; and
WHEREAS, HESCO has previously agreed to act as distributor in connection
with offers and sales of the Contracts under the terms and conditions set forth
in this Distribution Agreement.
NOW THEREFORE, in consideration of the mutual agreements made herein, the
Hartford and HESCO agree as follows:
I.
HESCO'S DUTIES
1. HESCO, as principal underwriter for the Contracts, will use its best
efforts to effect offers and sales of the Contracts through broker-dealers that
are members of the National Association of Securities Dealers, Inc. and whose
registered representatives are duly licensed as insurance agents of the
Hartford. HESCO is responsible for compliance with all applicable requirements
of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934,
as amended, and the Investment Company Act of 1940, as
<PAGE>
amended, and the rules
and regulations thereunder, and all other applicable laws, rules and regulations
thereunder, and all other applicable laws, rules and regulations relating to the
sales and distribution of the Contracts, the need for which arises out of its
duties as principal underwriter of said Contracts and relating to the creation
of the Separate Accounts.
2. HESCO agrees that it will not use any prospectus, sales literature, or
any other printed matter or material or offer for sale or sell any Contract if
any of the foregoing in any way represent the duties, obligations, or
liabilities of the Hartford as being greater than, or different from, such
duties, obligations and liabilities as are set forth in this Agreement, as it
may be amended from time to time.
3. HESCO agrees that it will utilize the then currently effective
prospectuses relating to the Separate Accounts' variable annuity contracts in
connection with its selling efforts.
As to the other types of sales materials, HESCO agrees that it will use only
sales materials which conform to the requirements of federal and state insurance
laws and regulations and which have been filed, where necessary, with the
appropriate regulatory authorities.
4. HESCO agrees that it or its duly designated agent shall maintain records
of the name and address of, and the securities issued by the Separate Accounts
and held by, every holder of any security issued pursuant to this Agreement, as
required by Section 26(a)(4) of the Investment Company Act of 1940, as amended.
5. HESCO's services pursuant to this Agreement shall not be deemed to be
exclusive, and it may render similar services and act as an underwriter,
distributor, or dealer for other investment companies in the offering of their
shares.
6. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties hereunder on the part of HESCO,
HESCO shall not be subject to liability to the Separate Accounts or to any
Contract Owner or party in interest under a Contract for any act or omission in
the course, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security.
II.
1. The Separate Accounts reserve the right at any time to suspend or limit
the public offering of variable annuity contracts upon thirty days' written
notice to HESCO, except where the notice period may be shortened because of
legal action taken by any regulatory agency.
2. The Separate Accounts agree to advise HESCO immediately:
(a) Of any request by the Securities and Exchange Commission for
amendment of its Securities Act registration statements or for additional
information;
<PAGE>
(b) Of the issuance by the Securities and Exchange Commission of any
stop order suspending the effectiveness of the Securities Act registration
statement relating to the Separate Accounts or of the initiation of any
proceedings for that purpose;
(c) Of the happening of any material event, if known, which makes untrue
any statement in said Securities Act registration statements or which
requires change therein in order to make any statement therein not
misleading.
The Separate Accounts will furnish to HESCO such information with respect to
the Separate Accounts and the variable annuity contracts in such form and signed
by such of its officers and directors of the Separate Accounts as HESCO may
reasonably request and will warrant that the statements therein contained when
so signed will be true and correct. The Separate Accounts will also furnish,
from time to time, such additional information regarding the Separate Accounts'
financial condition as HESCO may reasonably request.
III.
COMPENSATION
For providing the principal underwriting functions on behalf of the Separate
Accounts, HESCO shall be entitled to receive compensation as agreed upon from
time to time by the Hartford and HESCO.
IV.
RESIGNATION AND REMOVAL OF
PRINCIPAL UNDERWRITER
HESCO may resign as Principal Underwriter hereunder, upon 120 days' prior
written notice to the Hartford. However, such resignation shall not become
effective until either the Separate Accounts have been completely liquidated and
the proceeds of the liquidation distributed through the Separate Accounts to the
Contract Owners or a successor Principal Underwriter has been designated and has
accepted its duties.
V.
MISCELLANEOUS
1. This Agreement may not be assigned by any of the parties hereto without
the written consent of the other party.
2. All notices and other communications provided for hereunder shall be in
writing and shall be delivered by hand or mailed first class, postage pre-paid,
addressed as follows:
(a) If to the Hartford -- Hartford Life Insurance Company, P.O. Box
2999, Hartford, Connecticut 06104-2999
(b) If to HESCO -- Hartford Equity Sales Company, Inc., Hartford,
Connecticut 06104-2999
or to such other address as HESCO, or the Hartford shall designate by written
notice to the other.
<PAGE>
3. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which shall be deemed one
instrument, and an executed copy of this Agreement and all amendments hereto
shall be kept on file by the Hartford and shall be open to inspection at any
time during the business hours of the Hartford.
4. This Agreement shall inure to the benefit of and be binding upon the
successor of the parties hereto.
5. This Agreement shall be construed and governed by and according to the
laws of the State of Connecticut.
6. This Agreement may be amended from time to time by the mutual agreement
and consent of the parties hereto.
7. This Amended and Restated Agreement shall supersede all prior agreements
among the parties hereto relating to the same subject matter.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
(SEAL) HARTFORD LIFE INSURANCE COMPANY
Attest:
- - ------------------------------------ By----------------------------------
Vice President
(SEAL) HARTFORD EQUITY SALES COMPANY, INC.
Attest:
- - ------------------------------------ By----------------------------------
Vice President
<PAGE>
EXHIBIT 6(A)
RESTATED CERTIFICATE OF INCORPORATION
HARTFORD LIFE INSURANCE COMPANY
This Restated Certificate of Incorporation gives effect to the amendment of
the Certificate of Incorporation of the corporation and otherwise purports
merely to restate all those provisions already in effect. This Restated
Certificate of Incorporation has been adopted by the Board of Directors and by
the sole shareholder.
Section 1. The name of the corporation is Hartford Life Insurance
Company and it shall have all the powers granted by the general
statutes, as now enacted or hereinafter amended to corporations formed
under the Stock Corporation Act.
Section 2. The corporation shall have the purposes and powers to write
any and all forms of insurance which any other corporation now or
hereafter chartered by Connecticut and empowered to do an insurance
business may now or hereafter may lawfully do; to accept and to cede
reinsurance; to issue policies and contracts for any kind or
combinations of kinds of insurance; to issue policies or contracts
either with or without participation in profits; to acquire and hold any
or all of the shares or other securities of any insurance corporation;
and to engage in any lawful act or activity for which corporations may
be formed under the Stock Corporation Act. The corporation is authorized
to exercise the powers herein granted in any state, territory or
jurisdiction of the United States or in any foreign country.
Section 3. The capital with which the corporation shall commence
business shall be an amount not less than one thousand dollars. the
authorized capital shall be two million five hundred thousand dollars
divided into one thousand shares of common capital stock with a par
value of twenty-five hundred dollars each.
We hereby declare, under the penalties of false statement that the
statements made in the foregoing Certificate are true.
Dated: February 10, 1982 HARTFORD LIFE INSURANCE COMPANY
By:-------------------------------
Attest:
- - --------------------------------------
<PAGE>
EXHIBIT 6(B)
By-Laws
of the
HARTFORD LIFE INSURANCE COMPANY
As passed and effective
February 13, 1978
and amended on
July 13, 1978
January 5, 1979
and
February 29, 1984
<PAGE>
-1-
ARTICLE I
Name - Home Office
Section 1. This corporation shall be named HARTFORD LIFE INSURANCE COMPANY.
Section 2. The principal place of business and Home Office shall be in
the City of Hartford, Connecticut.
ARTICLE II
Stockholders' Meetings - Notice - Quorum - Right to Vote
Section 1. All meetings of the Stockholders shall be held at the
principal business office of the Company unless the Directors shall otherwise
provide and direct.
Section 2. The annual meeting of the Stockholders shall be held on such
day and at such hour as the Board of Directors may decide. For cause the
Board of Directors may postpone or adjourn such annual meeting to any other
time during the year.
Section 3. Special meetings of the Stockholders may be called by the Board
of Directors, the Executive Committee, the Chairman of the Board, the
President or any Vice President.
Section 4. Notice of Stockholders' meetings shall be mailed to each
Stockholder, at his address as it appears on the records of the Company, at
least seven days prior to the meeting. The notice shall state the place, date
and time of the meeting and shall specify all matters proposed to be acted
upon at the meeting.
Section 5. At each annual meeting the Stockholders shall choose Directors
as hereinafter provided.
Section 6. Each Stockholder shall be entitled to one vote for each share
of stock held by him at all meetings of the Company. Proxies may be
authorized by written power of attorney.
Section 7. Holders of one-half of the whole amount of the stock issued and
outstanding shall constitute a quorum.
<PAGE>
-2-
Section 8. Each Stockholder shall be entitled to a certificate of stock
which shall be signed by the President or a Vice President, and either the
Treasurer or an Assistant Treasurer of the Company, and shall bear the seal of
the Company, but such signatures and seal may be facsimile if permitted by
the laws of the State of Connecticut.
ARTICLE III
Directors - Meetings - Quorum
Section 1. The property, business and affairs of the Company shall be
managed by a board of not less than three nor more than twenty Directors, who
shall be chosen by ballot at each annual meeting. Vacancies occurring between
annual meetings may be filled by the Board of Directors by election. Each
Director shall hold office until the next annual meeting of Stockholders and
until his successor is chosen and qualified.
Section 2. Meetings of the Board of Directors may be called by the
direction of the Chairman of the Board, the President, or any three Directors.
Section 3. Three days' notice of meetings of the Board of Directors shall
be given to each Director, either personally or by mail or telegraph, at his
residence or usual place of business, but notice may be waived, at any time,
in writing.
Section 4. One third of the number of existing directorships, but not
less than two Directors, shall constitute a quorum.
ARTICLE IV
Election of Officers - Duties of Board of
Directors and Executive Committee
Section 1. The President shall be elected by the Board of Directors. The
Board of Directors may also elect one of its members to serve as Chairman of
the Board of Directors. The Chairman of the Board, or an individual appointed
by him, shall have authority to appoint all other officers, except as stated
herein, including one or more Vice Presidents and Assistant Vice Presidents,
the Treasurer
<PAGE>
-3-
and one or more Associate or Assistant Treasurers, one or more Secretaries
and Assistant Secretaries and such other Officers as the Chairman of the
Board may from time to time designate. All Officers of the Company shall hold
office during the pleasure of the Board of Directors. The Directors may
require any Officer of the Company to give security for the faithful
performance of his duties.
Section 2. The Directors may fill any vacancy among the officers by
election for the unexpired term.
Section 3. The Board of Directors may appoint from its own number an
Executive Committee of not less than five Directors. The Executive Committee
may exercise all powers vested in and conferred upon the Board of Directors
at any time when the Board is not in session. A majority of the members of
said Committee shall constitute a quorum.
Section 4. Meetings of the Executive Committee shall be called whenever
the Chairman of the Board, the President or a majority of its members shall
request. Forty-eight hours' notice shall be given of meetings but notice may
be waived, at any time, in writing.
Section 5. The Board of Directors shall annually appoint from its own
number a Finance Committee of not less than three Directors, whose duties
shall be as hereinafter provided.
Section 6. The Board of Directors may, at any time, appoint such other
Committees, not necessarily from its own number, as it may deem necessary for
the proper conduct of the business of the Company, which Committees shall have
only such powers and duties as are specifically assigned to them by the Board
of Directors or the Executive Committee.
Section 7. The Board of Directors may make contributions, in such amounts
as it determines to be reasonable, for public welfare or for charitable,
scientific or educational purposes, subject to the limits and restrictions
imposed by law and to such rules and regulations consistent with law as it
makes.
ARTICLE V
Officers
Chairman of the Board
Section 1. The Chairman of the Board shall preside at the meetings of the
Board of Directors and the Executive Committee and, in the absence of the
Chairman of the Finance Committee, at the meetings of the Finance Committee.
In the absence or inability of the Chairman of the Board to so preside, the
President shall preside in his place.
<PAGE>
-4-
President
Section 2. The President, under the supervision and control of the
Chairman of the Board, shall have general charge and oversight of the
business and affairs of the Company. The President shall preside at the
meetings of the Stockholders. He shall be a member of and shall preside at
all meetings of all Committees not referred to in Section 1 of this ARTICLE
except that he may designate a Chairman for each such other Committee.
Section 3. In the absence or inability of the President to perform his
duties, the Chairman of the Board may designate a Vice President to exercise
the powers and perform the duties of the President during such absence or
inability.
Secretary
Section 4. The Secretary of the Corporation shall keep a record of all
the meetings of the Company, of the Board of Directors and of the Executive
Committee, and he shall discharge all other duties specifically required of
the Secretary by law. The other Secretaries and Assistant Secretaries shall
perform such duties as may be assigned to them by the Board of Directors or
by their senior officers and any Secretary or Assistant Secretary may affix
the seal of the Company and attest it and the signature of any officer to any
and all instruments.
Treasurer
Section 5. The Treasurer shall keep, or cause to be kept, full and
accurate accounts of the Company. He shall see that the funds of the Company
are disbursed as may be ordered by the Board of Directors or the Finance
Committee. He shall have charge of all moneys paid to the Company and on
deposit to the credit of the Company or in any other properly authorized
name, in such banks or depositories as may be designated in a manner provided
by these by-laws. He shall also discharge all other duties that may be
required of him by law.
Other Officers
Section 6. The other officers shall perform such duties as may be
assigned to them by the President or the Board of Directors.
<PAGE>
-5-
ARTICLE VI
Finance Committee
Section 1. If a Finance Committee is established it shall be the duty of
that committee to supervise the investment of the funds of the Company in
securities in which insurance companies are permitted by law to invest, and
all other matters connected with the management of investments. If no Finance
Committee is established this duty shall be performed by the Board of
Directors.
Section 2. All loans or purchases for the investment and reinvestment of
the funds of the Company shall be submitted for approval to the Finance
Committee, if not specifically approved by the Board of Directors.
Section 3. Sale or transfer of any stocks or bonds shall be made upon
authorization of the Finance Committee unless specifically authorized by the
Board of Directors.
Section 4. Transfers of stock and registered bonds, deeds, leases,
releases, sales, mortgages chattel or real, assignments or partial releases
of mortgages chattel or real, and in general all instruments of defeasance
of property and all agreements or contracts affecting the same, except
discharges of mortgages and entries to foreclose the same as hereinafter
provided, shall be authorized by the Finance Committee or the Board of
Directors, and be executed jointly for the Company by two persons, to wit:
The Chairman of the Board, the President or a Vice President, and a
Secretary, the Treasurer or an Assistant Treasurer, but may be acknowledged
and delivered by either one of those executing the instrument; provided,
however, that either a Secretary, the Treasurer, or an Assistant Treasurer
alone, when authorized as aforesaid, or any person specially authorized by
the Finance Committee as attorney for the Company, may make entry to
foreclose any mortgage, and a Secretary, the Treasurer or an Assistant
Treasurer alone is authorized, without the necessity of further authority, to
discharge by deed or otherwise any mortgage on payment to the Company of the
principal, interest and all charges due.
Section 5. The Finance Committee may fix times and places for regular
meetings. No notice of regular meetings shall be necessary. Reasonable notice
shall be given of special meetings but the action of a majority of the
Finance Committee at any meeting shall be valid notwithstanding any defect in
the notice of such meeting.
<PAGE>
-6-
Section 6. In the absence of specific authorization from the Board of
Directors or the Finance Committee, the Chairman of the Board, the President,
a Vice President or the Treasurer shall have the power to vote or execute
proxies for voting any shares held by the Company.
ARTICLE VII
Funds
Section 1. All monies belonging to the Company shall be deposited to the
credit of the Company, or in such other name as the Finance Committee, the
Chairman of the Finance Committee or such executive officers as are
designated by the Board of Directors shall direct, in such bank or banks as
may be designated from time to time by the Finance Committee, the Chairman of
the Finance Committee, or by such executive officers as are designated by the
Board of Directors. Such monies shall be drawn only on checks or drafts
signed by any two executive officers of the Company, provided that the Board
of Directors may authorize the withdrawal of such monies by check or draft
signed with the facsimile signature of any one or more executive officers,
and provided further, that the Finance Committee may authorize such
alternative methods of withdrawals as it deems proper.
The Board of Directors, the President, the Chairman of the Finance
Committee, a Vice President, or such executive officers as are designated by
the Board of Directors may authorize withdrawal of funds by checks or drafts
drawn at offices of the Company to be signed by Managers, General Agents or
employees of the Company, provided that all such checks or drafts shall be
signed by two such authorized persons, except checks or drafts used for the
payment of claims or losses which need be signed by only one such
authorized person, and provided further that the Board of Directors of the
Company or executive officers designated by the Board of Directors may impose
such limitations or restrictions upon the withdrawal of such funds as it
deems proper.
<PAGE>
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ARTICLE VIII
Indemnity of Directors and Officers
Section 1. The Company shall indemnify and hold harmless each Director
and officer now or hereafter serving the Company, whether or not then in
office, from and against any and all claims and liabilities to which he may
be or become subject by reason of his being or having been a Director or
officer of the Company, or of any other company which he serves as a Director
or officer at the request of the Company, to the extent such is consistent
with the statutory provisions pertaining to indemnification, and shall
provide such further indemnification for legal and/or all other expenses
reasonably incurred in connection with defending against such claims and
liabilities as is consistent with statutory requirements.
ARTICLE IX
Amendment of ByLaws
Section 1. The Directors shall have power to adopt, amend and repeal such
bylaws as may be deemed necessary or appropriate for the management of the
property and affairs of the Company.
Section 2. The Stockholders at any annual or special meeting may amend or
repeal these bylaws or adopt new ones if the notice of such meeting contains
a statement of the proposed alteration, amendment, repeal or adoption, or the
substance thereof.
<PAGE>
2
ARTICLE I
Name - Home Office
Section 1. This corporation shall be named Hartford Life Insurance
Company.
Section 2. The principal place of business and Home Office shall be in
the City of Hartford, Connecticut.
ARTICLE II
Stockholders' Meetings - Notice- Quorum - Right to Vote
Section 1. All meetings of the Stockholders shall be held at the
principal business office of the Company unless the Directors shall otherwise
provide and direct.
Section 2. The annual meeting of the Stockholders shall be held on such
day and at such hour as the Board of Directors may decide. For cause the
Board of Directors may postpone or adjourn such annual meeting to any other
time during the year.
Section 3. Special meetings of the Stockholders may be called by the
Board of Directors, the Executive Committee, the Chairman of the Board, the
President or any Vice President.
Section 4. Notice of Stockholders' meetings shall be mailed to each
Stockholder, at his address as it appears on the records of the Company, at
least seven days prior to the meeting. The notice shall state the place, date
and time of the meeting and shall specify all matters proposed to be acted
upon at the meeting.
Section 5. At each annual meeting the Stockholders shall choose Directors
as hereinafter provided.
Section 6. Each Stockholder shall be entitled to one vote for each share
of stock held by him at all meetings of the Company. Proxies may be
authorized by written power of attorney.
Section 7. Holders of one-half of the whole amount of the stock issued
and outstanding shall constitute a quorum.
<PAGE>
3
Section 8. Each Stockholder shall be entitled to a certificate of stock
which shall be signed by the President or a Vice President, and either the
Treasurer or an Assistant Treasurer of the Company, and shall bear the seal
of the Company, but such signatures and seal may be facsimile if permitted by
the laws of the State of Connecticut.
ARTICLE III
Directors - Meetings - Quorum
Section 1. The property, business and affairs of the Company shall be
managed by a board of not less than three nor more than twenty Directors, who
shall be chosen by ballot at each annual meeting. Vacancies occurring between
annual meetings may be filled by the Board of Directors by election. Each
Director shall hold office until the next annual meeting of Stockholders and
until his successor is chosen and qualified.
Section 2. Meetings of the Board of Directors may be called by the
direction of the Chairman of the Board, the President, or any three Directors.
Section 3. Three days' notice of meetings of the Board of Directors shall
be given to each Director, either personally or by mail or telegraph, at his
residence or usual place of business, but notice may be waived, at any time,
in writing.
Section 4. One third of the number of existing directorships, but not
less than two Directors, shall constitute a quorum.
ARTICLE IV
Election of Officers - Duties of Board of
Directors and Executive Committee
Section 1. The Board of Directors shall annually elect a Chairman of the
Board, a President, a Secretary of the Corporation and a Treasurer. It may
elect such Vice Presidents, other Secretaries, Assistant Secretaries,
Assistant Treasurers and such other officers as it may determine. All
officers of the Company shall hold office during the pleasure of the Board of
Directors.
<PAGE>
4
Section 2. The Directors may fill any vacancy among the officers by
election for the unexpired term.
Section 3. The Board of Directors may appoint from its own number an
Executive Committee of not less than five Directors. The Executive Committee
may exercise all powers vested in and conferred upon the Board of Directors
at any time when the Board is not in session. A majority of the members of
said Committee shall constitute a quorum.
Section 4. Meetings of the Executive Committee shall be called
whenever the Chairman of the Board, the President or a majority of its
members shall request. Forty-eight hours' notice shall be given of meetings
but notice may be waived, at any time, in writing.
Section 5. The Board of Directors may annually appoint from its own number
a Finance Committee of not less than three Directors, whose duties shall be
as hereinafter provided.
Section 6. The Board of Directors may, at any time, appoint such other
Committees, not necessarily from its own number, as it may deem necessary for
the proper conduct of the business of the Company, which Committees shall
have only such powers and duties as are specifically assigned to them by the
Board of Directors or the Executive Committee.
Section 7. the Board of Directors may make contributions, in such amounts
as it determines to be reasonable, for public welfare or for charitable,
scientific or educational purposes, subject to the limits and restrictions
imposed by law and to such rules and regulations consistent with law as it
makes.
ARTICLE V
Officers
Chairman of the Board
Section 1. The Chairman of the Board shall preside at the meetings of the
Board of Directors and the Executive Committee and, in the
<PAGE>
5
absence of the Chairman of the Finance Committee, at the meetings of the
Finance Committee. In the absence or inability of the Chairman of the Board
to so preside, the President shall preside in his place.
President
Section 2. The President, under the supervision and control of the Chairman
of the Board, shall have general charge and oversight of the business and
affairs of the Company. The President shall preside at the meetings of the
Stockholders. He shall be a member of and shall preside at all meetings of
all Committees not referred to in Section 2 of this ARTICLE except that he
may designate a Chairman for each such other Committee.
Section 3. In the absence or inability of the President to perform his
duties, the Chairman of the Board may designate a Vice President to exercise
the powers and perform the duties of the President during such absence or
inability.
Secretary
Section 4. The Secretary of the Corporation shall keep a record of all the
meetings of the Company, of the Board of Directors and of the Executive
Committee, and he shall discharge all other duties specifically required of
the Secretary by law. The other Secretaries and the Assistant Secretaries
shall perform such duties as may be assigned to them by the Board of
Directors or by their senior officers and any Secretary or Assistant Secretary
may affix the seal of the Company and attest it and the signature of any
officer to any and all instruments.
Treasurer
Section 5. The Treasurer shall keep, or cause to be kept, full and accurate
accounts of the Company. He shall see that the funds of the Company are
disbursed as may be ordered by the Board of Directors or the Finance
Committee. He shall have charge of all moneys paid to the Company and on
deposit to the credit of the Company or in any other properly authorized
name, in such banks or depositories as may be designated in a manner provided
by these bylaws. He shall also discharge all other duties that may be required
of him by law.
<PAGE>
6
Other Officers
Section 6. The other officers shall perform such duties as may be assigned
to them by the President or the Board of Directors.
ARTICLE VI
Finance Committee
Section 1. If a Finance Committee is established it shall be the duty of the
committee to supervise the investment of the funds of the Company in
securities in which insurance companies are permitted by law to invest, and
all other matters connected with the management of investments. If no Finance
Committee is established, this duty shall be performed by the Board of
Directors.
Section 2. All loans or purchases for the investment and reinvestment
of the funds of the Company shall be submitted for approval to the Finance
Committee, if not specifically approved by the Board of Directors.
Section 3. Sale or transfer of any stocks or bonds shall be made upon
authorization of the Finance Committee unless specifically authorized by the
Board of Directors.
Section 4. Transfers of stock and registered bonds, deeds, leases, releases,
sales, mortgages chattel or real, assignments or partial releases of
mortgages chattel or real, and in general all instruments of defeasance of
property and all agreements or contracts affecting the same, except
discharges of mortgages and entries to foreclose the same as hereinafter
provided, shall be authorized by the Finance Committee or the Board of
Directors, and be executed jointly for the Company by two persons, to wit:
the Chairman of the Board, the President or a Vice President, and a
Secretary, the Treasurer or an Assistant Treasurer, but may be acknowledged
and delivered by either one of those executing the instrument; provided,
however, that either a Secretary, the Treasurer, or an Assistant Treasurer
alone, when authorized as aforesaid, or any person specifically authorized by
the Finance Committee as attorney for the Company, may make entry to
foreclose any mortgage, and a Secretary, the Treasurer or an Assistant
Treasurer alone is authorized, without the necessity of further authority, to
discharge by deed or otherwise any mortgage on payment to the Company of the
principal, interest and all charges due.
<PAGE>
7
Section 5. The Finance Committee may fix times and places for regular
meetings. No notice of regular meetings shall be necessary. Reasonable notice
shall be given of special meetings but the action of a majority of the
Finance Committee at any meeting shall be valid notwithstanding any defect in
the notice of such meeting.
Section 6. In the absence of specific authorization from the Board of
Directors or the Finance Committee, the Chairman of the Board, the
President, a Vice President or the Treasurer shall have the power to vote or
execute proxies for voting any shares held by the Company.
ARTICLE VII
Funds
Section 1. All monies belonging to the Company shall be deposited to the
credit of the Company, or in such other name as the Finance Committee, the
Chairman of the Finance Committee or such executive officers as are
designated by the Board of Directors shall direct, in such bank or banks as
may be designated from time to time by the Finance Committee, the Chairman of
the Finance Committee or by such executive officers as are designated by the
Board of Directors. Such monies shall be drawn only on checks or drafts
signed by any two executive officers of the Company, provided that the Board
of Directors may authorize the withdrawal of such monies by check or draft
signed with the facsimile signature of any one or more executive officers,
and provided further, that the Finance Committee may authorize such
alternative methods of withdrawal as it deems proper.
The Board of Directors, the President, the Chairman of the Finance Committee,
a Vice President, or such executive officers as are designated by the Board
of Directors may authorize withdrawal of funds by checks or drafts drawn at
offices of the Company to be signed by Managers, General Agents or employees
of the Company, provided that all such checks or drafts shall be signed by
two such authorized persons, except checks or drafts used for the payment of
claims or losses which need be signed by only one such authorized person, and
provided further that the Board of Directors of the Company or executive
officers designated by the Board of Directors may impose such limitations or
restrictions upon the withdrawal of such funds as it deems proper.
<PAGE>
8
ARTICLE VIII
Indemnity of Directors and Officers
Section 1. The Company shall indemnify and hold harmless each Director and
officer now or hereafter serving the Company, whether or not then in office,
from and against any and all claims and liabilities to which he may be or
become subject by reason of his being or having been a director or officer of
the Company, or of any other company which he serves as a director or officer
at the request of the Company, to the extent such is consistent with
statutory provisions pertaining to indemnification, and shall provide such
further indemnification for legal and/or all other expenses reasonably
incurred in connection with defending against such claims and liabilities as
is consistent with statutory requirements.
ARTICLE IX
Amendment of Bylaws
Section 1. The Directors shall have power to adopt, amend and repeal such
bylaws as may be deemed necessary or appropriate for the management of the
property and affairs of the Company.
Section 2. The Stockholders at any annual or special meeting may amend or
repeal these bylaws or adopt new ones if the notice of such meeting contains
a statement of the proposed alteration, amendment, repeal or adoption, or
the substance thereof.
<PAGE>
1.0 FUND PARTICIPATION AGREEMENT
1.1 This Agreement, effective January 1, 1989, by and among Hartford
Life Insurance Company, a Connecticut stock life insurance
corporation with principal offices at 200 Mopmeadow Street,
Simsbury, Connecticut 06089 ("Hartford"). Acacia Capital
Corporation, a registered investment company with principal
offices at 51 Louisiana Avenue, N.W., Washington, D.C. 20001, (the
"Fund"), and Calvert Asset Management Company, Inc., registered
investment advisor to the Fund, with principal offices at 4550
Montgomery Avenue, Bethesda, Maryland 20814 ("Calvert").
1.2 In consideration of the promises, representations, warranties,
covenants, agreements and conditions contained herein, and in
order to set forth the terms and conditions of the transactions
contemplated hereby and the mode of carrying the same into effect;
and intending to be legally bound, the parties hereto agree to
the provisions set forth below.
2.0 THE VARIABLE ANNUITY CONTRACT AND THE SEPARATE ACCOUNT
2.1 Hartford shall maintain a variable annuity contract (the
"Contract") designed to provide, under current law, the benefits
of a tax-deferred accumulation of income for retirement and other
purposes.
2.2 Purchase payments for the Contracts shall be invested by Hartford
in a separate account or accounts. Such payments will constitute
the assets of the separate account and shall be invested, as
directed by purchasers, in certain open-end diversified
management companies registered under the Investment Company Act
of 1940 ("1940 Act").
2.3 One of the open-end diversified management companies is the Fund,
an open-end diversified management investment company with eight
separate series, registered under the 1940 Act. Each series is a
separate investment portfolio with distinct investment objectives.
2.4 Hartford will offer one or more of the series of the Fund,
including the Calvert Socially Responsible Series (the "Series"),
through the separate account
<PAGE>
to its Contract Owners, except that Hartford agrees not to offer
any series of the Fund until the exemptive order referenced in
Section 3.2.3 of this Agreement has been granted by the Securities
and Exchange Commission ("SEC"). Hartford will determine in its
discretion what separate account or accounts will offer the Series.
2.5 Hartford will use the name "Hartford Socially Responsive Fund" in
its marketing and sales literature when referring to the Series,
and agrees to indicate in such literature that "the investment
adviser of the Fund is Calvert Asset Management Company, Inc."
2.5.1 Hartford will use its best efforts to market and promote
the Series for its Contracts, and will market and promote
the Series in all of its markets, if the plan permits this
type of fund.
2.5.2 In marketing its Contracts, Hartford will comply with all
applicable State and Federal laws. Hartford and its agents
shall make no representations or warranties concerning the
Fund or Series shares except those contained in the then
current prospectuses of the Fund and in the Fund's current
printed sales literature. Copies of all advertising and
sales literature describing or concerning the Fund which
is prepared by Hartford or its agents for use in marketing
its Contracts (except those for internal or broker/dealer
use only) will be sent to Calvert when such material is
released to the public, agents or brokers or is submitted to
the Securities and Exchange Commission ("SEC"), National
Association of Securities Dealer, Inc. ("NASD"), or other
regulatory body for review. Hartford shall be responsible
for compliance with any state or federal filing or review
requirements concerning advertising and sales literature.
2.5.3 Hartford and its agents will not oppose voting
recommendations from Calvert or the Fund's Board of
Directors or interfere with the solicitation of proxies for
the Fund shares held for Hartford Contract Owners, unless
Hartford deems such recommendations detrimental to it or to
its Contract Owners. Hartford agrees to provide pass-through
voting privileges to all Hartford Contract Owners and to
assure that each of its separate accounts
<PAGE>
participating in the Fund calculates voting privileges in a
manner consistent with all other separate accounts of any
insurance company investing in the Fund, as required by the
exemptive order referenced in Section 3.2.3 of this
Agreement.
2.5.4 Hartford will responsible for reporting to the Fund's
Board of Directors any potential or existing conflicts
among the interests of the contract owners of all separate
accounts investing in the Fund, and to assist the Board by
providing it with all information reasonably necessary for
the Board to consider any issues raised. The Fund's Board of
Directors is responsible for monitoring any conflict of
interest situation. Hartford and the other relevant
insurance companies will be responsible for taking remedial
action in the event of a Board determination of an
irreconcilable material conflict and to bear the cost of
such remedial action and these responsibilities will be
carried out with a view only to the interests of contract
owners. For purposes of this Section 2.5.4, a majority of
the disinterested members of the Fund's Board shall
determine whether or not any proposed action adequately
remedies any irreconcilable material conflict, but in no
event will the Fund or Calvert be required to establish a
new funding medium for any variable contract. Hartford shall
not be required by this section to establish a new funding
medium for any variable contract if an offer to do so has
been declined by vote of a majority of contract owners
materially adversely affected by the irreconcilable material
conflict.
2.6 Hartford will bear the costs of, and have the primary
responsibility for:
2.6.1 Registering the Contracts and the separate account with the
SEC, including any Application for Exemptive Relief
necessary for the separate account to buy Fund shares;
2.6.2 Developing all policy forms, application forms,
confirmations and other administrative forms or documents
and filing such of these as are necessary to comply with the
requirements of all insurance laws and regulations in each
state in which the contracts are offered;
<PAGE>
2.6.3 Administration of the Contracts and the separate account,
including all policyholder service and communication
activities;
2.6.4 Preparing and approving all marketing and sales literature
involving the sale of Fund shares to the Hartford's separate
account;
2.6.5 Printing and distributing to Hartford Contract Owners
copies of the current prospectuses, statements of additional
information (as requested by Contract Owners) and periodic
reports for the separate account and the Fund;
2.6.6 Preparing and filing any reports or other filings as may be
required under state insurance laws or regulations with
respect to the contracts or the separate account; and
2.6.7 Reimbursing the Fund up to $1500 for the cost of obtaining
a separate audit opinion for the 1988 fiscal year for the
Series, distinct from the other seven series; and further,
Hartford agrees that for every year thereafter, it will
engage in good faith negotiations with Calvert and the Fund
regarding such reimbursement by Hartford.
3.0 THE SERIES
3.1 The Fund and Calvert shall make available shares of the Series as
the underlying investment media for Hartford Contract Owners.
3.2 Calvert shall bear the costs of, and subject to review by
Hartford, shall have, or shall cause the Fund and the Series to
assume, the primary responsibility for:
3.2.1 Registering the Fund with the SEC including a separate
prospectus for the Series which does not reference the other
seven series of the Fund. The costs of printing and
distributing such prospectus to Hartford Contract Owners
shall be borne by Hartford as provided in Section 2.6.5
above.
3.2.2 Preparing, producing and maintaining the effectiveness of
such registration statements for the Fund as are required
under federal and state securities laws, and clearing such
registration statements through the SEC and pursuant to the
securities laws and regulations in each state in which the
contracts are offered;
<PAGE>
3.2.3 Preparing and filing an Application for Exemptive Relief
requesting appropriate exemptive relief from the relevant
provisions of the 1940 Act ("Application") and clearing such
Application through the SEC, thereby permitting Hartford
contracts to use the Fund as an underlying investment
alternative for its variable annuity contracts.
3.2.4 Operating and maintaining the Fund in accordance with
applicable law, including the diversification standards of
the Internal Revenue Code of 1986 applicable to variable
annuity contracts;
3.2.5 Preparing and filing any reports or other filings as may be
required with respect to the Fund under federal or state
securities laws;
3.2.6 Providing Hartford with the daily net asset values of the
Fund by 6:00 p.m. E.S.T. on each day the New York Stock
Exchange is open.
3.2.7 Providing Hartford with camera-ready copy necessary for the
printing of the periodic shareholder reports for the Fund.
3.3 The Fund or Calvert shall maintain records in accordance with the
Investment Company Act of 1940 or other statutes, rules and
regulations applicable to the Fund's operation in connection with
the performance of its duties. Hartford shall have the right to
access such records, upon reasonable notice and during business
hours, in order to respond to regulatory requirements, inquiries,
complaints or judicial proceedings. Records of all transactions
with respect to the Contracts shall be retained for a period of
not less than six (6) years from each transaction.
3.4 The parties or their duly authorized independent auditors have
the right under this Agreement to perform on-site audits of
records pertaining to the Contracts and the Fund, at such
frequencies as each shall determine, upon reasonable notice and
during normal business hours. At the request of the other, each
will make available to the other's auditors and/or representatives
of the appropriate regulatory agencies, all requested records,
data, and access to operating procedures.
4.0 INDEMNIFICATION
4.1 Hartford shall indemnify and hold the Fund and Calvert and each
of their respective directors,
<PAGE>
officers, employees and agents harmless from any liability or
expense (including reasonable attorneys' fees) arising from any
failure of Hartford or the separate account to fulfill its
respective obligations under this Agreement.
4.2 The Fund and Calvert shall indemnify and hold Hartford and its
directors, officers, employees and agents harmless from all
liabilities or expenses (including reasonable attorneys' fees)
arising from any failure of the Fund or Calvert to fulfill its
respective obligations under this Agreement and Calvert shall
indemnify and hold such parties harmless from a failure of the
Fund's investment adviser to manage the Fund in compliance with
the diversification requirements of the Internal Revenue Code of
1986, as amended, or any regulations thereunder.
5.0 COST AND EXPENSES
5.1 Except for costs and expenses for which indemnification is
required pursuant to section 4.0 or as otherwise agreed by the
parties in specific instances or, as set forth herein, the
parties shall each pay their respective costs and expenses
incurred by them in connection with this Agreement.
6.0 TERM OF AGREEMENT
6.1 The term of this Agreement shall be indefinite unless terminated
pursuant to Section 7 of this Agreement.
7.0 TERMINATION
7.1 This Agreement will terminate:
7.1.1 At the option of any party upon six months' prior written
notice to the other parties, but no party may terminate
this Agreement prior to January 1, 1990. If a party
notifies the other parties that it intends to terminate
this Agreement, the affected parties shall immediately
file with the SEC such documents, if any, as are necessary
to permit the offering of shares of the Series to Hartford
Contract Owners to be discontinued; or
7.1.2 Upon assignment of this Agreement unless the assignment is
made with the written consent of the other party.
<PAGE>
7.1.3 In the event of termination of this Agreement pursuant to
this Section 7.0, the provisions of Sections 4.0, 5.0, and
8.0 shall survive such termination.
8.0 GENERAL PROVISIONS
8.1 This Agreement is the complete and exclusive statement of the
agreement between the parties as to the subject matter hereof
which supersedes all proposals or agreements, oral or written,
and all other communications between the parties related to the
subject matter of this Agreement.
8.2 This Agreement can only be modified by a written agreement duly
signed by the persons authorized to sign agreements on behalf of
the respective party.
8.3 If any provision or provisions of this Agreement shall be held
to be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any
way be affected of be impaired thereby.
8.4 This Agreement and the rights, duties and obligations of the
parties hereto shall not be assignable by either party hereto
without the prior written consent of the other.
8.5 Any controversy relating to this Agreement shall be determined
by arbitration in Washington, D.C. in accordance with the
Commercial Arbitration rules of the American Arbitration
Association using arbitrators who will follow substantive rules
of law. The dispute shall be determined by an arbitrator
acceptable to both parties who shall be selected within seven
(7) days of filing of notices of intention to arbitrate.
Otherwise, the dispute shall be determined by a panel of three
arbitrators selected as follows: Within seven (7) days of filing
notice of intention to arbitrate, each party will appoint one
arbitrator. These two arbitrators will then name a third
arbitrator, who shall be an attorney admitted before the bar of
any state of the United State, to preside over the panel. If
either party fails to appoint an arbitrator, or if the two
arbitrators do not name a third arbitrator within seven (7)
days, either party may request the American Arbitration
Association to appoint the necessary arbitrator(s) pursuant to
Rule 13 of the Commercial Arbitration Rules. Each party will pay
its own cost and expenses. All testimony shall be transcribed.
The award of the panel shall be accompanied by findings of fact
and a statement of
<PAGE>
reasons for the decision. All parties agree to be bound by the
results of this arbitration; judgment upon the award so rendered
may be entered and enforced in any court of competent
jurisdiction. To the extent reasonably practicable, both parties
agree to continue performing their respective obligations under
this Agreement while the dispute is being resolved. Nothing
contained in this subsection shall prohibit either party from
seeking equitable relief without resorting to arbitration under
such circumstances as said party reasonably believes that its
interests hereunder and in its property may be compromised. All
matters relating to such arbitration shall be maintained in
confidence.
8.6 No waiver by either party of any default by the other in the
performance of any promise, term or condition of this Agreement
shall be construed to be a waiver by such party of any other or
subsequent default in performance of the same or any other
covenant, promise, term or condition of this Agreement. No prior
transactions or dealings between the parties shall be deemed to
establish any custom or usage waiving or modifying any provision
hereof.
8.7 No liability shall result to any party, nor shall any party be
deemed to be in default hereunder, as the result of delay in its
performance or from its non-performance hereunder caused by
circumstances beyond its control, including but not limited to:
act of God, act or war, riot, epidemic; fire; flood or other
disaster; or act of government. Nevertheless, the party shall be
required to be diligent in attempting to remove such cause or
causes.
8.8 Each of the parties will act as an independent contractor under
the terms of this Agreement and neither is now, or in the
future, an agent or a legal representative of the other for any
purpose. Neither party has any right or authority to supervise
or control the activities of the other party's employees in
connection with the performance of this Agreement or to assign
or create any application of any kind, express or implied, on
behalf of the other party or to bind it in any way, to accept
any service of process upon it or to receive any notice of any
nature whatsoever on its behalf.
8.9 This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Connecticut.
<PAGE>
8.10 Nothing herein shall prevent either party from participating in
any proceeding before any regulatory authority having
jurisdiction over any matter relating to this Agreement, the
Contracts, the separate account or the Fund which may affect the
parties to it. The parties shall each give the others prompt
notice of any such proceeding.
8.11 In all matters relating to the preparation, review, prior
approval and filing of documents, the parties shall cooperate in
good faith. Neither party shall unreasonably withhold its
consent with respect to the filing of any document with any
federal or state regulatory authority having jurisdiction over
the Contracts, the separate account or the Fund.
8.12 Captions contained in this Agreement are for reference purposes
only and do not constitute part of this Agreement.
8.13 All notices which are required to be given or submitted pursuant
to this Agreement shall be in writing and shall be sent by
registered or certified mail, return receipt requested, to the
addresses set forth below:
President Secretary
Hartford Life Acacia Capital Corporation
Insurance Company 4550 Montgomery Avenue
200 Hopmeadow Street Suite 1000 N
Simsbury, CT 06089 Bethesda, MD 20814
or to such other address as the parties may from time to time
designate. Any notice of one party refused by the other shall be
deemed received as of the date of said refusal.
8.14 Each party hereto shall promptly notify the other in writing of
any claims, demands or actions having any bearing on this
Agreement.
8.15 Each party agrees to perform its obligations hereunder in
accordance with all applicable laws, rules and regulations now
or hereafter in effect.
8.16 In the event of a material breach by either party of any of the
provisions of this Agreement, the injured party, in addition to
any other remedies available to it under law, shall be entitled
to seek an injunction restraining the other party from the
performance of acts which constitute a breach of this Agreement,
and such other party agrees not to raise adequacy of legal
remedies as a defense thereof.
<PAGE>
8.17 If this Agreement is terminated for other than default, it is
specifically agreed that neither party shall be entitled to
compensation of any kind except as specifically set forth herein.
8.18 In any litigation or arbitration between the parties, the
prevailing party shall be entitled to reasonable attorneys' fees
and all costs of proceedings incurred in enforcing this
Agreement.
8.19 This Agreement shall be binding upon and inure to the benefit of
the parties hereto, their successors and permitted assigns.
8.20 Each party represents that it has full power and authority to
enter into and perform this Agreement, and the person signing
this Agreement on behalf of it has been properly authorized and
empowered to enter into this Agreement. Each party further
acknowledges that it has read this Agreement, understands it,
and agrees to be bound by it.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
ACACIA CAPITAL CORPORATION HARTFORD LIFE INSURANCE COMPANY
BY: /s/ Clifton S. Sorrell, Jr. BY: /s/ Charles A. Clinton
---------------------------- -----------------------
Clifton S. Sorrell, Jr. Charles A. Clinton
President Vice President
CALVERT ASSET MANAGEMENT
COMPANY, INC.
BY: /s/ Reno J. Martini
---------------------
Reno J. Martini
Vice President
swb6.5
<PAGE>
Exhibit (b)(10)
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this
Registration Statement File No. 33-19948 on Form N-4 for Hartford Life
Insurance Company.
Hartford, Connecticut
April 21, 1995
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<PAGE>
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