<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
/X/ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1995
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to .
Commission file number 2-89516
HARTFORD LIFE INSURANCE COMPANY
Incorporated in the State of Connecticut
06-0974148
(I.R.S. Employer Identification No.)
P.O. Box 2999, Hartford, Connecticut 06104-2999
(Principal Executive Offices)
Telephone number 203-843-8291
Indicate by check mark whether the registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements
for the past 90 days. Yes / X / No / /.
As of November 13, 1995 there were outstanding 1,000 shares of common stock,
$5,690 par value per share, of the registrant, all of which were directly
owned by Hartford Life and Accident Insurance Company.
The registrant meets the conditions set forth in General Instruction H(1)(a)
and (b) of Form 10-Q and is therefore filing this form with the reduced
disclosure format.
(1)
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HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
TABLE OF CONTENTS
PART 1. FINANCIAL INFORMATION: PAGE
Item 1. Financial Statements:
Consolidated Statements of Income --
Quarter and Nine Months Ended September 30, 1995 and 1994 .............. 3
Consolidated Balance Sheets --
September 30, 1995 and December 31, 1994 ................................. 4
Consolidated Statements of Cash Flows --
Nine Months Ended September 30, 1995 and 1994 ............................ 5
Item 2. Management's Narrative Analysis of Results of Operations*
Quarter and Nine Months Ended September 30, 1995 and 1994 ................ 6
PART II. OTHER INFORMATION:*
Item 6. Exhibits and Reports on Form 8-K ................................. 9
Signature ................................................................10
Exhibit Index ............................................................11
(*) Item prepared in accordance with General Instruction H(2) of Form 10-Q.
(2)
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PART I. FINANCIAL INFORMATION
Item 1.
FINANCIAL STATEMENTS
The following unaudited financial statements, reflect, in the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, the results of operations
and the cash flows for the periods presented. Interim results are not
indicative of the results which may be expected for any other interim period
or the full year. For a description of accounting policies, see Notes to
Consolidated Financial Statements in the 1994 Form 10-K.
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Millions)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
-------------------- ------------------
1995 1994 1995 1994
-------- -------- -------- --------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
REVENUES:
Premiums and other considerations $ 385 $ 200 $1,105 $ 707
Net investment income 357 269 1,032 828
Net realized (losses) gains on investments (4) 6 (10) 12
----- ----- ------ ------
738 475 2,127 1,547
----- ----- ------ ------
BENEFITS, CLAIMS AND EXPENSES:
Benefits, claims and claim adjustment expenses 446 301 1,162 899
Amortization of deferred policy acquisition costs 48 46 140 123
Dividends to policyholders 152 27 449 212
Other insurance expenses 47 40 240 145
----- ----- ------ ------
693 414 1,991 1,379
----- ----- ------ ------
INCOME BEFORE INCOME TAX 45 61 136 168
Income tax expense 15 22 45 59
----- ----- ------ ------
NET INCOME $ 30 $ 39 $ 91 $ 109
----- ----- ------ ------
----- ----- ------ ------
</TABLE>
(3)
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HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Millions)
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- -------------
(unaudited)
<S> <C> <C>
ASSETS:
Investments
Fixed maturities, available for sale,
at fair value $ 14,279 $ 13,429
Equity securities, at fair value 97 68
Mortgage loans, at outstanding principal
balance 286 316
Policy loans, at outstanding balance 4,453 2,614
Other investments 104 107
--------- --------
19,219 16,534
Cash 23 20
Premiums and amounts receivable 235 160
Reinsurance recoverable 6,067 5,466
Accrued investment income 413 378
Deferred policy acquisition costs 2,066 1,809
Deferred income tax 465 590
Other assets 168 83
Separate account assets 31,391 22,809
--------- --------
$ 60,047 $ 47,849
--------- --------
--------- --------
LIABILITIES AND STOCKHOLDER'S EQUITY
Future policy benefits $ 2,311 $ 1,890
Other policyholder funds 23,432 21,328
Other liabilities 1,364 1,000
Separate account liabilities 31,391 22,809
--------- --------
58,498 47,027
--------- --------
Common stock -- authorized 1,000 shares,
$5,690 par value, issued and outstanding
1,000 shares 6 6
Capital surplus 1,009 826
Unrealized loss on securities, net of tax (201) (654)
Retained earnings 735 644
--------- --------
1,549 822
--------- --------
$ 60,047 $ 47,849
--------- --------
--------- --------
</TABLE>
(4)
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
--------------------
1995 1994
--------- ---------
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES:
NET INCOME $ 91 $ 109
Adjustments to net income:
Net realized investment losses (gains) before tax 10 (12)
Net policyholder investment losses (gains) before tax (3) 6
Net deferred policy acquisition costs (257) (286)
Net amortization of premium on fixed maturities 15 35
Deferred income tax benefits (128) (54)
(Increase) decrease in premiums and amounts receivable (168) 27
(Increase) decrease in other assets (102) 17
(Increase) decrease in reinsurance recoverable (61) 7
Increase in liability for future policy benefits 434 206
Increase in other liabilities 261 60
Decrease in accrued investment income (36) (72)
--------- --------
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES 56 43
--------- --------
INVESTING ACTIVITIES:
Purchases of fixed maturity investments (3,752) (8,501)
Proceeds from sales of fixed maturity investments 3,211 4,899
Maturities and principal paydowns of long-term investments 1,078 1,680
Net purchases of other investments (1,931) (621)
Net (purchases) sales of short-term investments (184) 720
--------- --------
CASH USED FOR INVESTING ACTIVITIES (1,578) (1,823)
--------- --------
FINANCING ACTIVITIES:
Net receipts from investment and UL-type contracts
credited to policyholder account balances 1,525 1,708
Capital contributions 0 100
--------- --------
CASH PROVIDED BY FINANCING ACTIVITIES 1,525 1,808
--------- --------
NET INCREASE IN CASH 3 28
Cash at beginning of period 20 1
--------- --------
CASH AT END OF PERIOD $ 23 $ 29
--------- --------
--------- --------
</TABLE>
(5)
<PAGE>
Item 2. MANAGEMENT'S NARRATIVE ANALYSIS OF
RESULTS OF OPERATIONS
(In Millions)
QUARTER ENDED SEPTEMBER 30, 1995 AND 1994
<TABLE>
<CAPTION>
ILAD AMS SPECIALTY TOTAL
------------ ------------ ------------ ----------
1995 1994 1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES $203 $195 $177 $194 $358 $ 86 $738 $475
BENEFITS, CLAIMS, EXPENSES AND TAXES 166 165 191 188 351 83 708 436
---- ---- ---- ---- ---- ---- ---- ----
NET INCOME (LOSS) $ 37 $ 30 $(14) $ 6 $ 7 $ 3 $ 30 $ 39
---- ---- ---- ---- ---- ---- ---- ----
---- ---- ---- ---- ---- ---- ---- ----
</TABLE>
INDIVIDUAL LIFE AND ANNUITY DIVISION (ILAD)
The premiums, investment income, management and maintenance fees and cost of
insurance associated with this growing asset base continue to be the source
of ILAD's increased revenues. New deposits of fixed and variable annuities
in the three months ended September 30, 1995 were approximately $1 billion, a
decrease from prior year sales of $1.7 billion, but are not reported as
revenues. New business sales have slowed, however the past two years have seen
unprecedented growth for this line of business and the current trend is more
indicative of stable continual growth. Net income, up 23% for the same period
last year, continues to grow due to the nature of these products in that
revenues and earnings are earned primarily on the existing asset base.
ASSET MANAGEMENT SERVICES (AMS)
Third quarter results remain consistent with first and second quarter
experience but are down from the same period last year. The guaranteed rate
contract (GRC) line was particularly impacted by investment prepayment
activity. Additionally, since interest credited to contractholders is fixed,
this expense remains constant even as investment income declines.
SPECIALTY
The growth of the Specialty line is based primarily on increased sales of
corporate owned life insurance. New deposit premiums (not reported as
revenues) during the third quarter were approximately $600 million. Revenues
for the third quarter of 1994 are reflected net of a one time reinsurance
transaction of approximately $280 million. Revenues increased due to the
continued growth in this line of business resulting in increases in cost
of insurance and maintenance fees and interest earned on policy loans.
In part, this reflects the 1994 recapture of reinsurance previously ceded
to a third party. The corresponding increase in benefits, claims and
expenses is primarily due to increases in dividends to policyholders,
as a significant portion of this block is written on a participating basis.
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
<TABLE>
<CAPTION>
ILAD AMS SPECIALTY TOTAL
------------ ------------ ------------ ----------
1995 1994 1995 1994 1995 1994 1995 1994
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES $611 $517 $565 $588 $951 $442 $2,127 $1,547
BENEFITS, CLAIMS, EXPENSES AND TAXES 507 443 596 565 933 430 2,036 1,438
---- ---- ---- ---- ---- ---- ----- ------
NET INCOME (LOSS) $104 $ 74 $(31) $ 23 $ 18 $ 12 $ 91 $ 109
---- ---- ---- ---- ---- ---- ----- ------
---- ---- ---- ---- ---- ---- ----- ------
</TABLE>
(6)
<PAGE>
Item 2. MANAGEMENT'S NARRATIVE ANALYSIS OF
RESULTS OF OPERATIONS
(In Millions)
INDIVIDUAL LIFE AND ANNUITY DIVISION (ILAD)
Growth in fixed and variable annuity sales, as well as several assumption
reinsurance transactions in the last several years have increased the assets
under management in this segment to over $27 billion through September 1995.
The premiums, investment income, management and maintenance fees and cost of
insurance associated with this growing asset base continue to be the source
of ILAD's increased revenues. New deposits of fixed and variable annuities in
the first nine months of 1995 were approximately $4 billion, but are not
reported as revenues, a decrease from prior year sales of $4.9 billion.
ASSET MANAGEMENT SERVICES (AMS)
This segment, consistent with the industry, has experienced a decline in net
investment income due to interest rate drops. The guaranteed rate contract
(GRC) line was particularly impacted by investment prepayment activity in
excess of expectations. Additionally, since interest credited to
contractholders is fixed, this expense remains constant even as investment
income declines. Although income for this line will continue to be impacted
from these prepayments, hedging strategies are in place that limit volatility
against future interest rate movements.
SPECIALTY
The growth of the Specialty line is based primarily on increased sales of
corporate owned life insurance. New deposit premiums (not reported as
revenues) during the first nine months were $2.1 billion compared to $500
million in 1994. Revenues for 1994 are reflected net of a one time
reinsurance transaction of approximately $280 million. Revenues increased due
to the continued growth in this line of business resulting in increases in
cost of insurance and maintenance fees and interest earned on policy loans.
In part, this reflects the 1994 recapture of reinsurance previously ceded to
a third party, as well as revenues on a block of business assumed from a
third party in December of 1994. The corresponding increase in benefits,
claims and expenses is primarily due to increases in dividends to
policyholders, as a significant portion of this block is written on a
participating basis.
(7)
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NOTES TO THE FINANCIAL STATEMENTS:
On June 30, 1995, The Company received a non-cash capital contribution of
$183 million.
On September 21, 1995, at a Special Meeting of the Shareholders of ITT, ITT
Shareholders approved the Distribution by ITT of all of the outstanding shares
of common stock of ITT Hartford (the Distribution). In the Distribution,
shareholders of ITT common stock will receive, among other items, one share of
ITT Hartford Common stock for each share of ITT common stock held.
(8)
<PAGE>
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) See Exhibit Index
(b) None.
(9)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Hartford Life Insurance Company
(Registrant)
November 13, 1995 by ____________________________
Lizabeth H. Zlatkus
Vice President & Controller
(10)
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EXHIBIT INDEX
Exhibit
Number Description Location
- -------- ------------------------------------------------ --------
(2) Plan of acquisition, reorganization, arrangement
liquidation or succession None
(4) Instruments defining the rights of security
holders, including indentures None
(11) Statement re computation of per share earnings None
(15) Letter re unaudited interim financial information None
(18) Letter re change in accounting principles None
(19) Previously unfiled documents None
(20) Report furnished to security holders None
(23) Published report regarding matters submitted to None
vote of security holders
(24) Consents of experts and counsel None
(25) Power of attorney None
(28) Additional exhibits None
(11)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM QUARTERLY
REPORT FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<DEBT-HELD-FOR-SALE> 14,279
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 97
<MORTGAGE> 286
<REAL-ESTATE> 0
<TOTAL-INVEST> 19,219
<CASH> 23
<RECOVER-REINSURE> 6,067
<DEFERRED-ACQUISITION> 2,066
<TOTAL-ASSETS> 60,047
<POLICY-LOSSES> 2,311
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 23,311
<POLICY-HOLDER-FUNDS> 31,391
<NOTES-PAYABLE> 0
<COMMON> 6
0
0
<OTHER-SE> 1,543
<TOTAL-LIABILITY-AND-EQUITY> 60,047
1,105
<INVESTMENT-INCOME> 1,032
<INVESTMENT-GAINS> (10)
<OTHER-INCOME> 0
<BENEFITS> 1,162
<UNDERWRITING-AMORTIZATION> 140
<UNDERWRITING-OTHER> 689
<INCOME-PRETAX> 136
<INCOME-TAX> 45
<INCOME-CONTINUING> 91
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 91
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
