<PAGE>
File No.
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
------
AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
------
HARTFORD LIFE INSURANCE COMPANY
(Exact name of registrant as specified in its charter)
CONNECTICUT 06-094148
----------- ---------
(State or other jurisdiction of Identification (I.R.S. Employer Number)
incorporation or organization)
6355
--------------------------------------------------------
(Primary Standard Industrial Classification Code Number)
------
P.O. Box 2999
Hartford, Connecticut 06104-2999
(Address of Principal Executive Office)
------
Rodney J. Vessels
Counsel
Hartford Life Companies
P.O. Box 2999, Hartford, Connecticut 06104-2999
(203) 843-8847
(Name, address, and telephone number of agent for service)
------
Approximate date of commencement of proposed sale to the public:
The Annuity covered by this registration statement is to be issued from time to
time after the effective date of this registration statement.
------
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. /X/
--
------
<PAGE>
-2-
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Title of Each Class Amount Proposed Proposed Amount of
of Securities to be to be Offering Price Aggregate Registration
Registered Registered Per Unit Offering Price Fee
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Deferred Annuity
Contracts & Participating * * $2,000,000,000* $689,660.00
Interests Therein
- ----------------------------------------------------------------------------------------
<FN>
* The maximum aggregate offering price is estimated solely for the purpose of
determining the registration fee. The amount being registered and the proposed
maximum offering price per unit are not applicable in that these Contracts are
not issued in predetermined amounts or units.
</TABLE>
The Registrant hereby amends this Registration Statement on such date or dated
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
<PAGE>
-3-
HARTFORD LIFE INSURANCE COMPANY
Cross Reference Sheet Pursuant to
Regulation S-K, Item 501(b)
FORM S-1 ITEM NUMBER AND CAPTION HEADING IN PROSPECTUS
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus . . . Outside Front Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus. . . . . . . . . . . . . Inside Front Cover
3. Summary Information, Risk Factors and Description of Contracts;
Ratio of Earnings to Fixed Charges . . . . . Financial Statements
4. Use of Proceeds. . . . . . . . . . . . . . . Investments by HLIC
5. Determination of Offering Price. . . . . . . Not Applicable
6. Dilution . . . . . . . . . . . . . . . . . . Not Applicable
7. Selling Security Holders . . . . . . . . . . Not Applicable
8. Plan of Distribution . . . . . . . . . . . . Distribution of Contracts
9. Description of Securities to be Registered . Description of Contracts
10. Interests and Named Experts and Counsel. . . Not Applicable
11. Information with Respect to the Registrant . The Company; Executive
Officers and Directors;
Executive Compensation;
Financial Statements;
Legal Proceedings
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities. . . . . . . . . . . . . . . . . Not Applicable
<PAGE>
-4-
P R 0 S P E C T U S
[Outside front cover]
page of Prospectus]
MODIFIED GUARANTEED
ANNUITY CONTRACTS
Hartford Life Insurance Company
P.O. Box 5085
Hartford, Connecticut 06102-5085
------------------------------
This Prospectus describes participating interests in a group deferred annuity
Contract and individual deferred annuity Contracts. Both are designed and
offered to provide retirement programs for you if you are an eligible
individual. With respect to the Group Contract, eligible individuals include
persons who have established Accounts with certain broker-dealers which have
entered into a distribution agreement to offer participating interests in the
Contract, and members of other eligible groups. (See "Distribution of
Contracts," page ____ .) An individual deferred annuity Contract is offered in
certain states and certain trusts. Certain Qualified Plans may also purchase
the Contract. (See Appendix A).
For a description of individual Contracts issued in certain states where this
revised Contract has not been approved, see Appendix B. Participation in a
Group Contract will be separately accounted for by the issuance of a Certificate
evidencing your interest under the Contract. Participation in an Individual
Contract is evidenced by the issuance of an Individual Annuity Contract. The
Certificate and Individual Annuity Contract are hereafter referred to as the
"Contract".
A minimum single purchase payment of at least $5,000 must accompany the
application for a Contract. Hartford Life Insurance Company ("HLIC") reserves
the right to limit the maximum single purchase payment amount. No additional
payment is permitted on a Contract although eligible individuals may purchase
more than one Contract. (See "Application and Purchase Payment," page ____ .)
Purchase payments become part of the general assets of HLIC. HLIC intends
generally to invest proceeds from the Contracts in investment-grade securities.
(See "Investments by HLIC," page____.)
--------------------
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-5-
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.
--------------------
MUTUAL FUNDS, ANNUITIES AND INSURANCE PRODUCTS ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR GUARANTEED BY ANY BANK, NOR ARE THEY INSURED BY THE FDIC; THEY ARE
SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
INVESTED.
--------------------
The date of this Prospectus is ___________, 1995.
<PAGE>
-6-
Upon application, or purchase order, you select an initial Guarantee Period from
among those then offered by HLIC. (See, "Initial and Subsequent Guarantee
Periods," page ____ and "Establishment of Guarantee Rates and Current Rates,"
page ____.) Your purchase payment (less surrenders and less applicable premium
taxes, if any) will earn interest at the Initial Guarantee Rate which is any
effective annual rate after taking into account daily compounding of interest.
At the end of each Guarantee Period, a subsequent Guarantee Period of the same
duration will begin unless, within the thirty day period prior to the end of
such Guarantee Period, you elect a different duration from among those offered
by us at that time. In no event may subsequent Guarantee Periods extend beyond
the Annuity Commencement Date then in effect.
The Account Value as of the first day of each subsequent Guarantee Period will
earn interest at the Subsequent Guarantee Rate. HLIC's MANAGEMENT WILL MAKE THE
FINAL DETERMINATION AS TO GUARANTEE RATES TO BE DECLARED. WE CANNOT PREDICT NOR
CAN WE GUARANTEE FUTURE GUARANTEE RATES. (See, "Initial and Subsequent
Guarantee Periods," page _____ and "Establishment of Guarantee Rates and Current
Rates," page _____.)
Subject to certain restrictions, partial and total surrenders are permitted.
However, such surrenders may be subject to a surrender charge and/or a Market
Value Adjustment. A full or partial surrender made prior to the end of a
Guarantee Period will be subject to a Market Value Adjustment. Except as
described below, the surrender charge will be deducted from any partial or full
surrender made before the end of the seventh Contract Year. The surrender
charge will be equal to seven percent of the Gross Surrender Value in the first
Contract Year, and be reduced by one percentage point for each of the next six
Contract Years. FOR A SURRENDER MADE AT THE END OF THE INITIAL GUARANTEE
PERIOD, NO SURRENDER CHARGE WILL BE APPLIED PROVIDED SUCH SURRENDER OCCURS ON OR
AFTER THE END OF THE THIRD CERTIFICATE YEAR. FOR A SURRENDER MADE AT THE END OF
ANY OTHER GUARANTEE PERIOD, NO SURRENDER CHARGE WILL BE APPLIED PROVIDED SUCH
SURRENDER OCCURS ON OR AFTER THE END OF THE FIFTH CERTIFICATE YEAR. A REQUEST
FOR SURRENDER AT THE END OF A GUARANTEE PERIOD MUST BE RECEIVED IN WRITING
WITHIN 30 DAYS PRECEDING THE END OF THE GUARANTEE PERIOD. A MARKET VALUE
ADJUSTMENT WILL NOT BE APPLIED.
No surrender charges will be applicable to the application of your Account Value
to purchase an annuity on the Annuity Commencement Date. A Market Value
Adjustment will be applied if the Annuity Commencement Date is not at the end of
a Guarantee Period. To elect an Annuity Option you must notify us at least 30
days before the Annuity Commencement Date.
<PAGE>
-7-
In addition, we will send you any interest that has been credited during the
prior twelve months if you so request in writing. No surrender charge or Market
Value Adjustment will be imposed on such interest payments. Any such surrender
may, however, be subject to tax. (See, "Surrenders", page ____ and "Tax
Considerations", page ____.)
The Market Value Adjustment reflects the relationship between the Current Rate
for the duration remaining in the Guarantee Period at the time you request the
surrender and the then applicable Guarantee Rate being applied to your Account
Value. Since Current Rates are based in part upon the investment yields
available to HLIC (see "Investments By HLIC", page ____), the effect of the
Market Value Adjustment will be closely related to the levels of such yields.
It is possible, therefore, that, should such yields increase significantly from
the time you purchased your Contract, the amount you would receive upon a full
surrender of your Contract may be less than your original purchase payment. If
such yields should decrease significantly, the amount you would receive upon a
full surrender may be more than your original purchase payment.
We may defer payment of any partial or full surrender for a period not exceeding
6 months from the date of our receipt of your written notice of surrender or the
period permitted by state insurance law, if less, but such a deferral of payment
will be for a period greater than thirty days only under highly unusual
circumstances. Interest of at least 4 1/2% per annum will be paid on any
amounts deferred for more than 30 days if HLIC chooses to exercise this deferral
right. (See, "Payment Upon Partial or Full Surrender", page ____.)
On the Annuity Commencement Date specified by you, HLIC will make a lump-sum
payment or start to pay a series of payments based on the Annuity Options
selected by you. (See, "Annuity Period", page ____.)
The Contract provides for a Death Benefit. If the Annuitant dies before the
Annuity Commencement Date and there is no designated Contingent Annuitant
surviving, or if the Participant dies before the Annuity Commencement Date, the
Death Benefit will be payable to the Beneficiary as determined under the
Contract Control Provisions. With regard to Joint Participants, at the first
death of a Joint Participant prior to the Annuity Commencement Date, the
Beneficiary will be the surviving Participant notwithstanding that the
Designated Beneficiary may be different. The Death Benefit is calculated as of
the date we receive written notification of Due Proof of Death at the offices of
the HLIC.
The Death Benefit will equal the Account Value. If the named Beneficiary is the
spouse of the Participant and the Annuitant is living, the spouse may elect, in
lieu of receiving the Death Benefit, to become the Participant and continue the
Contract. (See, "Death Benefit", page ____.)
<PAGE>
-8-
A deduction will be made for Premium Taxes for Contracts sold in certain states.
(See "Premium Taxes," page ____.)
Certain special provisions apply only with respect to Contracts issued in the
states of California, Missouri, New York, Oregon, South Carolina, Texas,
Virginia and Wisconsin. These are set forth in detail in Appendix B. For
Contracts issued as individual retirement annuities, HLIC will refund the
purchase payment to the Participant if the Contract is returned to HLIC within
seven days after Contract delivery.
AVAILABLE INFORMATION
HLIC is subject to the informational requirements of the Securities Exchange Act
of 1934 (the "1934 Act"), as amended, and in accordance therewith files reports
and other information with the Securities and Exchange Commission (the
"Commission"). Such reports and other information can be inspected and copied
at the public reference facilities of the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. and at the Commission's Regional Offices located
at 75 Park Place, New York, New York and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
materials also can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates.
HLIC has filed registration statements (the "Registration Statements") with the
Commission under the Securities Act of 1933 relating to the Contracts offered by
this Prospectus. This Prospectus has been filed as a part of the Registration
Statements and does not contain all of the information set forth in the
Registration Statements and exhibits thereto, and reference is hereby made to
such Registration Statements and exhibits for further information relating to
HLIC and the Contracts. The Registration Statements and the exhibits thereto may
be inspected and copied, and copies can be obtained at prescribed rates, in the
manner set forth in the preceding paragraph.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Report on Form 10-K for the year ended December 31, 1994 heretofore
filed by HLIC with the Commission under the 1934 Act is incorporated by
reference in this Prospectus.
Any statement contained in a document incorporated by reference here in shall be
deemed modified or superseded hereby to the extent that a statement contained in
a later-filed document or herein shall modify or supersede such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Prospectus.
<PAGE>
-9-
HLIC will furnish, without charge, to each person to whom a copy of this
Prospectus is delivered, upon the written or oral request of such person, a copy
of the document referred to above which has been incorporated by reference in
the Prospectus, other than exhibits to such document (unless such exhibits are
specifically incorporated by reference in the Prospectus). Requests for such
document should be directed to HLIC, c/o Individual Annuity Operations, P.O. Box
5085, Hartford, Connecticut, 06102-5085, telephone 1-800-862-6668.
<PAGE>
-10-
TABLE OF CONTENTS
PAGE
----
GLOSSARY OF SPECIAL TERMS. . . . . . . . . . . . . . . . . . . . . . .
DESCRIPTION OF CONTRACTS . . . . . . . . . . . . . . . . . . . . . . .
A. Application and Purchase Payment . . . . . . . . . . . . . . . . .
B. Accumulation Period. . . . . . . . . . . . . . . . . . . . . . . .
1. Initial and Subsequent Guarantee Periods . . . . . . . . . . .
2. Establishment of Guarantee Rates and Current Rates . . . . . .
3. Surrenders . . . . . . . . . . . . . . . . . . . . . . . . . .
(a) General. . . . . . . . . . . . . . . . . . . . . . . . . .
(b) Surrender Charge . . . . . . . . . . . . . . . . . . . . .
(c) Market Value Adjustment. . . . . . . . . . . . . . . . . .
(d) Special Surrenders . . . . . . . . . . . . . . . . . . . .
4. Guarantee Period Exchange Option . . . . . . . . . . . . . . .
5. Premium Taxes. . . . . . . . . . . . . . . . . . . . . . . . .
6. Death Benefit. . . . . . . . . . . . . . . . . . . . . . . . .
7. Payment upon Partial or Full Surrender . . . . . . . . . . . .
C. Annuity Period . . . . . . . . . . . . . . . . . . . . . . . . . .
1. Electing the Annuity Commencement Date and Form of Annuity . .
2. Change of Annuity Commencement Date or Annuity Option . . . .
3. Annuity Options. . . . . . . . . . . . . . . . . . . . . . . .
4. Annuity Payment . . . . . . . . . . . . . . . . . . . . . . .
5. Death of Annuitant After Annuity Commencement Date . . . . . .
INVESTMENTS BY HLIC. . . . . . . . . . . . . . . . . . . . . . . . . .
AMENDMENT OF CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
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ASSIGNMENT OF CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . .
DISTRIBUTION OF CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . .
TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
I. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
II. Taxation of HLIC. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
III. Taxation of Annuities in General-Non-Tax Qualified Purchasers . . . .
A. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B. Aggregation of Two or More Annuity Contracts . . . . . . . . . . . . .
C. Non-Natural Persons, Corporations, Etc . . . . . . . . . . . . . . . .
D. Other Participants (Natural Persons) . . . . . . . . . . . . . . . . .
1. Distributions Prior to the Annuity Commencement Date . . . . . . .
2. Distributions After Annuity Commencement Date. . . . . . . . . . .
3. Required Distributions in the Event of Participant's Death--
Applicable to Contracts issued after January 18, 1985. . . . . . .
4. Penalty--Applicable to Certain Withdrawals and Annuity Payments. .
5. Special Provisions Affecting Contracts Obtained through a
Tax-Free Exchange of Other Annuity or Life Insurance
Contracts Purchased Prior to August 14, 1982 . . . . . . . . . . .
E. Tax Qualified Purchasers . . . . . . . . . . . . . . . . . . . . . . .
1. Contributions . . . . . . . . . . . . . . . . . . . . . . . . . .
a. Pension and Profit Sharing Plans. . . . . . . . . . . . . . . .
b. Tax-Deferred Annuity Plans for Public School Teachers and
Employers and Employees of Certain Tax-Exempt Organizations. .
c. Deferred Compensation Plans for State and Local Governments. .
d. Individual Retirement Annuities ("IRA'S"). . . . . . . . . . .
2. Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . .
F. Federal Income Tax Withholding . . . . . . . . . . . . . . . . . . . .
1. Eligible Rollover Distribution . . . . . . . . . . . . . . . . . .
<PAGE>
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2. Non-Eligible Rollover Distributions. . . . . . . . . . . . . . . .
A. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B. Selected Financial Data. . . . . . . . . . . . . . . . . . . . . . . . . .
C. Management Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . .
1. Results of Operations. . . . . . . . . . . . . . . . . . . . . . . . .
2. Segment Information. . . . . . . . . . . . . . . . . . . . . . . . . .
D. Reinsurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E. Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F. Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
G. Competition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
H. Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
I. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
J. State Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXECUTIVE OFFICERS AND DIRECTORS . . . . . . . . . . . . . . . . . . . . . . .
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
APPENDIX A (MODIFIED GUARANTEED ANNUITY FOR QUALIFIED PLANS) . . . . . . . . .
APPENDIX B (SPECIAL PROVISIONS FOR INDIVIDUAL CONTRACTS ISSUED
IN THE STATES OF CALIFORNIA, MISSOURI, NEW YORK, OREGON, SOUTH
CAROLINA, TEXAS, VIRGINIA AND WISCONSIN) . . . . . . . . . . . . . . . . . . .
APPENDIX C (MARKET VALUE ADJUSTMENT)
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
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GLOSSARY OF SPECIAL TERMS
In this Prospectus "We", "Us", "Our", and "HLIC" refer to Hartford Life
Insurance Company. With respect to a group deferred annuity Contract, "You",
"Yours", and "Participant" refer to a person/persons who has/have been issued a
Certificate. With respect to an individual annuity Contract, "You", "Yours",
and "Participant" refer to a person/persons who has/have been issued a Contract.
In addition, as used in this Prospectus, the following terms have the indicated
meanings:
Account Value As of any date, the Account Value is the sum of the
purchase payment and all interest earned to date less
the sum of the Gross Surrender Value of any
surrenders made to that date.
Annuitant The person upon whose life the Contract is issued.
Annuity Commencement Date The date designated in the Contract or otherwise by
the Participant on which annuity payments are to
start.
Beneficiary The person entitled to receive benefits per the terms
of the Contract in case of the death of the Annuitant
or the Participant, or Joint Participant, as
applicable.
Contract For a group Contract, the Certificate evidencing a
participating interest in the group annuity Contract
as set forth in this Prospectus. Any reference in
this Prospectus to Contract includes the underlying
group annuity Contract. For an Individual Contract,
the individual annuity Contract.
Contract Date The effective date of participation under the group
annuity Contract as designated in the Contract or
date of issue of an individual annuity Contract.
Contract Year A continuous 12 month period commencing on the
Contract Date and each anniversary thereof.
Contingent Annuitant The person so designated by the Participant, who upon
the Annuitant's death, prior to the Annuity
Commencement Date, becomes the Annuitant.
Current Rate The applicable interest rate contained in a schedule
of rates established by us from time to time for
various durations.
<PAGE>
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Guarantee Period The period for which either an Initial or Subsequent
Guarantee Rate is credited.
Gross Surrender Value As of any date, that portion of the Account Value
specified by you for a full or a partial surrender.
Initial Guarantee Rate The rate of interest credited and compounded annually
during the initial Guarantee Period.
In Writing A written form satisfactory to us and received at our
offices Attention: Individual Annuity Operations,
P.O. Box 5085, Hartford, Connecticut 06102-5085.
Net Surrender Value The amount payable to you on a full or partial
surrender under the Contract after the application of
any Contract charges and/or Market Value Adjustment.
Subsequent Guarantee Rate The rate of interest established by us for the
applicable subsequent Guarantee Period.
<PAGE>
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DESCRIPTION OF CONTRACTS
A. APPLICATION AND PURCHASE PAYMENT
To apply for a Contract, you must complete an application form or an order to
purchase. This application must be submitted to Hartford Life Insurance Company
along with your purchase payment for its approval.
The Contracts are issued within a reasonable time after the payment of a single
purchase payment. You may not contribute additional purchase payments to a
Contract in the future. You may, however, purchase additional Contracts, if you
are an eligible individual, at then prevailing Guarantee Rates and terms.
The minimum purchase payment in relation to a Contract is $5,000. HLIC retains
the right to limit the amount of the maximum purchase payment.
Your purchase payment becomes part of our general assets and is credited to an
account we establish for you. We will confirm your purchase payment in writing
within five business days of receipt. You start earning interest on your
account the day the purchase payment is applied.
In the event that your application or an order to purchase is not properly
completed, we will attempt to contact you in writing or by telephone. We will
return the purchase payment three weeks after its receipt by us if the
application or an order to purchase has not, by that time, been properly
completed.
B. ACCUMULATION PERIOD
1. INITIAL & SUBSEQUENT GUARANTEE PERIODS
Upon application, you will select the duration of your Initial Guarantee
Period from among those durations offered by us. The duration you select
will determine your Initial Guarantee Rate. YOUR PURCHASE PAYMENT (LESS
SURRENDERS AND LESS APPLICABLE PREMIUM TAXES, IF ANY) WILL EARN INTEREST AT
THE INITIAL GUARANTEE WHICH IS AN EFFECTIVE ANNUAL RATE AFTER TAKING INTO
ACCOUNT DAILY COMPOUNDING OF INTEREST.
Set forth below is an illustration of how interest will be credited to your
Account Value during each Guarantee Period. For the purpose of this
example we have made the assumptions as indicated.
NOTE: THE FOLLOWING EXAMPLE ASSUMES NO SURRENDERS OF ANY AMOUNT OR
PRE-AUTHORIZED PAYMENT OF INTEREST DURING THE ENTIRE FIVE YEAR PERIOD. A MARKET
VALUE ADJUSTMENT OR SURRENDER CHARGE MAY APPLY
<PAGE>
-16-
TO ANY SUCH INTERIM SURRENDER (SEE "SURRENDERS," PAGE ____). THE HYPOTHETICAL
INTEREST RATES ARE ILLUSTRATIVE ONLY AND ARE NOT INTENDED TO PREDICT FUTURE
INTEREST RATES TO BE DECLARED UNDER THE CONTRACT. ACTUAL INTEREST RATES
DECLARED FOR ANY GIVEN TIME MAY BE MORE OR LESS THAN THOSE SHOWN.
<TABLE>
<CAPTION>
Example of Compounding at the Initial Guarantee Rate
----------------------------------------------------
<S> <C>
Beginning Account Value: $50,000
Guarantee Period: 5 years
Guarantee Rate: 5.50% per annum
</TABLE>
<TABLE>
<CAPTION>
End of Contract Year:
---------------------
Year 1 Year 2 Year 3 Year 4 Year 5
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Beginning Account Value $50,000.00
X (1+Guarantee Rate) 1.055
----------
$52,750.00
Account Value at end of $52,750.00
Contract Year 1 1.055
----------
X (1+Guarantee Rate) $55,651.25
Account Value at end of $55,651.25
Contract Year 2 1.055
----------
X (1+Guarantee Rate) $58,712.07
Account Value at end of $58,712.07
Contract Year 3 1.055
----------
X (1+Guarantee Rate) $61,941.23
Account Value at end of $61,941.23
Contract Year 4 1.055
----------
X (1+Guarantee Rate) $65,348.00
Account Value at end of Guarantee Period $65,348.00
Total Interest Credited in Guarantee Period- $65,348.00 - 50,000.00= $15,348.00
----------
----------
Account Value at end of Guarantee Period- $50,000.00 + 15,348.00= $65,348.00
Account Value after 180 days from the
Contract Date - $50,000(1.055)(180/365)=$51,337.77
</TABLE>
<PAGE>
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Unless you elect to make a surrender (see "Surrenders", page ______), a
subsequent Guarantee Period will automatically commence at the end of a
Guarantee Period. Each subsequent Guarantee Period will be the same
duration as the previous Guarantee Period unless you elect in writing on
any day within the thirty day period prior to the end of the current
Guarantee Period, a Guarantee Period of a different duration from among
those offered by us at that time.
In no event may subsequent Guarantee Periods extend beyond the Annuity
Commencement Date then in effect. For example, if you are age 62 upon the
expiration of a Guarantee Period and you have chosen age 65 as an Annuity
Commencement Date, we will provide a three year Guarantee Period to equal
the number of years remaining before your Annuity Commencement Date. Your
Account Value will then earn interest at a Guarantee Rate which we have
declared for that duration. The Guarantee Rate for the Guarantee Period
automatically applied in these circumstances may be higher or lower than
the Guarantee Rate for longer durations.
The Account Value at the beginning of any subsequent Guarantee Period will
be equal to the Account Value at the end of the Guarantee Period just
ending. This Account Value (less surrenders made since the beginning of
the subsequent Guarantee Period) will earn interest compounded annually at
the Subsequent Guarantee Rate.
Within thirty days prior to the end of a Guarantee Period, we will notify
you of the expiry of the current rate guarantee period.
2. ESTABLISHMENT OF GUARANTEE RATES AND CURRENT RATES
You will know the Initial Guarantee Rate for the Guarantee Period you
choose at the time you purchase your Contract. Under certain
circumstances, HLIC may offer a bonus of .50% above the Guarantee Rate for
the first year only of a subsequent Guarantee Period. Current Rates will
be established periodically along with the Guarantee Rates which will be
applicable to subsequent Guarantee Periods. After the end of each Contract
Year, we will send you a statement which will show (a) your Account Value
as of the end of the preceding Contract Year, (b) all transactions
regarding your Contract during the Contract Year, (c) your Account Value at
the end of the current Contract Year, and (d) the rate of interest being
credited to your Contract.
HLIC has no specific formula for determining the rate of interest that it
will declare as Current Rates or Guarantee Rates in the future. The
determination of Current Rates and Guarantee Rates will be reflective of
interest rates available on the types of debt instruments in which HLIC
intends to invest the proceeds attributable to the Contracts. (See
"Investments by HLIC", page ____.) In addition, HLIC's Management may also
consider various other factors in determining Current Rates and Guarantee
Rates for a
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given period, including, regulatory and tax requirements; sales commissions
and administrative expenses borne by HLIC; general economic trends; and
competitive factors. HLIC's MANAGEMENT WILL MAKE THE FINAL DETERMINATION
AS TO CURRENT AND GUARANTEE RATES TO BE DECLARED. WE CANNOT PREDICT NOR
CAN WE GUARANTEE FUTURE CURRENT RATES OR GUARANTEE RATES.
3. SURRENDERS
(a) GENERAL
Full surrenders may be made under a Contract at any time. Partial
surrenders may only be made if:
i. the Gross Surrender Value is at least $1,000.00; and
ii. the remaining Account Value after the Gross Surrender Value
has been deducted is at least $5,000.00.
In the case of all surrenders, the Account Value will be reduced
by the Gross Surrender Value on the Surrender Date and the Net
Surrender Value will be payable to you. The Net Surrender Value
equals:
(A - B) x C, where:
A = the Gross Surrender Value,
B = the surrender charge plus any unpaid premium tax, (see pages
____ and ____),
C = the Market Value Adjustment (see page ____).
HLIC will, upon request, inform you of the amount payable upon a
full or partial surrender.
Any full, partial or special surrender may be subject to tax.
(See "Tax Considerations," page ____.)
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
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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%.
HLIC 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.
(b) SURRENDER CHARGE
No deduction for a sales charge is made from the purchase payment when
received. A surrender charge, however, may be deducted from the Gross
Surrender Value (before application of any Market Value Adjustment) of
any partial or full surrender made before the end of the seventh
Contract Year. The amount of any surrender charge is computed as a
percentage of the Gross Surrender Value. The chart below indicates
the percentage charge applied during the specified Contract Year:
CONTRACT YEAR CHARGE AS PERCENTAGE OF
IN WHICH SURRENDER IS MADE GROSS SURRENDER VALUE
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
Thereafter 0%
No surrender charge will be made for surrenders after Contract Year 7
or certain surrenders effective at the end of a Guarantee Period.
(See, "Special Surrenders", page ____).
The above specified surrender charges will apply to partial or full
surrenders, irrespective of the length of the Guarantee Period
selected. For example, assume a Participant designates an initial
Guarantee Period of five years. Further assume the
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Participant takes no action to change the duration of the second
Guarantee Period, resulting in a second Guarantee Period also with a
duration of five years. In this hypothetical case, any surrenders the
Participant makes during the sixth Contract Year will be subject to a
two-percent surrender charge even though the Participant could have
made a surrender up to the Account Value at the end of the initial
five year Guarantee Period which would not have been subject to a
surrender charge. (See "Special Surrenders", page _____.)
(c) MARKET VALUE ADJUSTMENT
The amount payable on a partial or full surrender made prior to the
end of any Guarantee Period may be adjusted up or down by the
application of the Market Value Adjustment. Where applicable, the
Market Value Adjustment is applied to Gross Surrender Value, net of
any surrender charge.
In the case of either a partial or full surrender, the Market Value
Adjustment will reflect the relationship between the Current Rate for
the duration remaining in the Guarantee Period at the time you request
the surrender, and the Guarantee Rate then applicable to your
Contract.
Generally, if your Guarantee Rate is lower than the applicable Current
Rate, then the application of the Market Value Adjustment will result
in a lower payment upon surrender.
Similarly, if your Guarantee Rate is higher than the applicable
Current Rate, the application of the Market Value Adjustment will
result in a higher payment upon surrender.
For example, assume you purchase a Contract and select an initial
Guarantee Period of ten years and our Guarantee Rate for that duration
is 8% per annum. Assume at the end of seven years you make a partial
surrender. If the three year Current Rate is then 6%, the amount
payable upon partial surrender will increase after the application of
the Market Value Adjustment. On the other hand, if such Current Rate
is higher than your Guarantee Rate, for example, 10%, the application
of the Market Value Adjustment will cause a decrease in the amount
payable to you upon this partial surrender.
Since Current Rates are based in part upon the investment yields
available to HLIC (see, "Investments By HLIC", page ____), the effect
of the Market Value Adjustment will be closely related to the levels
of such yields. It is theoretically possible, therefore, that, should
such yields increase significantly from the time you purchased your
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Contract, coupled with the application of the surrender charges, the
amount you would receive upon a full surrender of your Contract could
be less than your original purchase payment.
The formula for calculating the Market Value Adjustment is set forth
in Appendix C to this Prospectus, which also contains an additional
illustration of the application of the Market Value Adjustment.
(d) SPECIAL SURRENDERS
For a surrender made at the end of the initial guarantee period, no
surrender charge will be applied provided such surrender occurs on or
after the end of the third Certificate Year. For a surrender made at
the end of any other Guarantee Period, no surrender charge will be
applied provided such surrender occurs on or after the end of the
fifth Certificate Year. A request for surrender at the end of a
Guarantee Period must be received in writing during the 30 day period
preceding the end of that Guarantee Period.
No surrender charges will be applicable to the application of your
Account Value to purchase an annuity on the Annuity Commencement Date.
A Market Value Adjustment will be applied if the Annuity Commencement
Date is not at the end of a Guarantee Period. To elect an Annuity
Option you must notify us at least 30 days before the end of that
Guarantee Period.
In addition, we will send you any interest that has been credited
during the prior twelve months if you so request in writing. No
surrender charge or Market Value Adjustment will be imposed on such
interest payments. Any such surrender may, however, be subject to
tax.
For certain tax-qualified plans, we reserve the right to offer by
rider an extended surrender privilege, without imposing a surrender
charge or market value adjustment.
4. GUARANTEE PERIOD EXCHANGE OPTION
Once each Contract Year you may elect to transfer from your current rate
guarantee period into a new rate guarantee period of a different duration.
A Market Value Adjustment will be applied to your current Account Value at
the time of transfer. There will be no surrender charge for this exchange.
However, surrender charges will continue to be based on time elapsed from
the original Contract Date. We reserve the right to charge a fee of up to
$50 for such transfers, but do not impose a transfer charge as of the date
of this Prospectus.
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5. PREMIUM TAXES
A deduction is also made for premium taxes, if applicable, imposed by a
state or other governmental entity. Certain states impose a premium tax,
currently ranging up to 3.5%. Some states assess the tax at the time
purchase payments are made; others assess the tax at the time of
annuitization. HLIC will pay premium taxes at the time imposed under
applicable law. At its sole discretion, HLIC may deduct premium taxes at
the time HLIC pays such taxes to the applicable taxing authorities, upon
surrender, or when annuity payments commence.
6. DEATH BENEFIT
If the Annuitant dies before the Annuity Commencement Date and there is no
designated Contingent Annuitant surviving, or if the Participant dies
before the Annuity Commencement Date, the Death Benefit will be payable to
the Beneficiary as determined under the Contract Control Provisions. With
regard to Joint Participants, at the first death of a Joint Participant
prior to the Annuity Commencement Date, the Beneficiary will be the
surviving Participant notwithstanding that the Designated Beneficiary may
be different. The Death Benefit is calculated as of the date we receive
written notification of Due Proof of Death at the offices of HLIC. The
Death Benefit will equal the Account Value.
The Death Benefit may be taken in one sum, to be paid within six months
after the date we receive Due Proof of Death, or under any of the Annuity
Options available under the Contract, provided, however, that: (a) if any
Participant dies prior to the Annuity Commencement Date, any Annuity Option
selected must provide that any amount payable as a Death Benefit will be
distributed within 5 years of the date of death; and (b) if any Participant
or Annuitant dies on or after the Annuity Commencement Date, any remaining
interest in the Contract will be paid at least as rapidly as under the
method of distribution in effect at the time of death, or, 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. Notwithstanding the
foregoing, in the event of the Participant's death where the sole
Beneficiary is the spouse of the Participant and the Annuitant or
Contingent Annuitant is living, such spouse may elect, in lieu of receiving
the Death Benefit, to be treated as the Participant.
If the Contract is owned by a corporation or other non-individual, the
Death Benefit payable upon the death of the Annuitant prior to the Annuity
Commencement Date will be payable only as one sum or under the same Annuity
Options and in the same manner as if an individual Contract Owner died on
the date of the Annuitant's death.
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7. PAYMENT UPON PARTIAL OR FULL SURRENDER
We may defer payment of any partial or full surrender for a period not
exceeding 6 months from date of our receipt of your notice of surrender or
the period permitted by state insurance law, if less. Only under highly
unusual circumstances will we defer a surrender payment more than thirty
days, and if we defer payment for more than 30 days, we will pay interest
of at least 4 l/2% per annum on the amount deferred. While all
circumstances under which we could defer payment upon surrender may not be
foreseeable at this time, such circumstances could include, for example, a
time of an unusually high surrender rate among Participants, accompanied by
a radical shift in interest rates. If we intend to withhold payment for
more than thirty days, we will notify you in writing. We will not,
however, defer payment for more than thirty days for any surrender which is
to be effective at the end of any Guarantee Period.
C. ANNUITY PERIOD
1. ELECTING THE ANNUITY COMMENCEMENT DATE AND FORM OF ANNUITY
Upon application for a Contract, you select an Annuity Commencement Date.
Within 30 days prior to your Annuity Commencement Date you may elect to
have all or a portion of your Net Surrender Value paid in a lump sum on
your Annuity Commencement Date. Alternatively, or with respect to any
portion of your Net Surrender Value not paid in a lump sum, you may elect,
at least 30 days prior to the Annuity Commencement Date, to have your
Account Value with a Market Value Adjustment, if applicable, or a portion
thereof multiplied by the Market Value Adjustment (less applicable premium
taxes, if any) applied on the Annuity Commencement Date under any of the
Annuity Options described below. In the absence of such election, Account
Value with a Market Value Adjustment, if applicable, will be applied on the
Annuity Commencement Date under the Second Option to provide a life annuity
with 120 monthly payments certain. This Contract may not be surrendered
for its Termination Value after the commencement of annuity payments,
except with respect to Option Six.
2. CHANGE OF ANNUITY COMMENCEMENT DATE OR ANNUITY OPTION
You may change the Annuity Commencement Date and/or the Annuity Option from
time to time, but any such change must be made in writing and received by
us at least 30 days prior to the scheduled Annuity Commencement Date.
Also, the proposed Annuity Commencement Date may not be beyond the later of
the Annuitant's 90th birthday, except in certain states where the proposed
Annuity Commencement Date may not be beyond the Annuitant's 85th birthday.
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3. ANNUITY OPTIONS
Any one of the following Annuity Options may be elected:
First Option - Life Annuity
An annuity payable monthly during the lifetime of the Annuitant, and
terminating with the last monthly payment due preceding the death of the
Annuitant. 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 payments if he died before the due date of the
third Annuity payment and so on.
Second Option - Life Annuity with 120, 180, or 240 Monthly Payments Certain
An annuity providing monthly income to the Annuitant for a fixed period of
120 months, 180 months, or 240 months (as selected), and for as long
thereafter as the Annuitant shall live.
Third Option - Cash Refund Life Annuity
An annuity payable monthly during the lifetime of the Annuitant provided
that, at the death of the Annuitant, the Beneficiary will receive an
additional payment equal to (a) minus (b) where (a) is the Account Value
applied on the Annuity Commencement Date under this Option and (b) is the
dollar amount of annuity payments already paid.
Fourth Option - Joint and Last Survivor Life 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 the 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.
Fifth Option - Payments for a Designated Period
An amount payable monthly for the number of years selected which may be
from 5 to 30 years.
The Tables in the Contract provide for guaranteed dollar amounts of monthly
payments for each $1,000 applied under the five Annuity Options. Under the
First, Second, or Third Options, the amount of each payment will depend
upon the age and sex of the
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Annuitant at the time the first payment is due. Under the Fourth Option,
the amount of each payment will depend upon the sex of both payees and
their ages at the time the first payment is due.
The Tables for the First, Second, Third and Fourth Options are based on the
1983 A Individual Annuity Mortality Table with ages set back one year and a
net investment rate of 4% per annum.
The table for the Fifth Option is based on a net investment rate of 4% per
annum. We may, from time to time, at our discretion if mortality appears
more favorable and interest rates justify, apply other tables which will
result in higher monthly payments for each $1,000 applied under one or more
of the five Annuity Options.
Sixth Option - Annuity Proceeds Settlement Option
Proceeds from the Death Benefit left with HLIC for a period not to exceed
five years from the date of the Participant's death prior to the Annuity
Commencement Date. The proceeds will remain in the same Guarantee Period
and continue to earn the same interest rate as at the time of death. If
the Guarantee Period ends before the end of the five year period, the
Beneficiary may elect a new Guarantee Period with a duration closest to but
not to exceed the time remaining in the period of five years from the date
of the Particpant's death. Full or partial surrenders may be made at any
time. In the event of surrenders, the remaining value will equal the
proceeds left with HLIC, minus any surrenders, plus any interest earned. A
Market Value Adjustment will be applied to all surrenders except those
occurring at the end of a Guarantee Period.
4. ANNUITY PAYMENT
The first payment under any Annuity Option will be made following the
Annuity Commencement Date. Subsequent payments will be made on the same
day in accordance with the manner of payment selected.
The option elected must result in a payment of an amount at least equal to
the minimum payment amount according to HLIC rules then in effect. If at
any time payments are less than the minimum payment amount, HLIC has the
right to change the frequency to an interval resulting in a payment at
least equal to the minimum. If any amount due is less than the minimum per
year, HLIC may make other arrangements that are equitable to the Annuitant.
Once annuity payments have commenced, no surrender of the annuity benefit
(including benefits under the Fifth Option) can be made for the purpose of
receiving a lump sum settlement in lieu thereof.
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5. DEATH OF ANNUITANT AFTER ANNUITY COMMENCEMENT DATE
In the event of the death of the Annuitant after the Annuity Commencement
Date, the present values on the date of death of the current dollar amount
of any remaining guaranteed payments will be paid in one sum to the
Beneficiary designated by you unless other provisions shall have been made
and approved by us. Calculations of such present value will be based on
the interest rate that is used by us to determine the amount of each
certain payment.
INVESTMENTS BY HLIC
Assets of HLIC must be invested in accordance with the requirements established
by applicable state laws regarding the nature and quality of investments that
may be made by life insurance companies and the percentage of their assets that
may be committed to any particular type of investment. In general, these laws
permit investments, within specified limits and subject to certain
qualifications, in federal, state, and municipal obligations, corporate bonds,
preferred and common stocks, real estate mortgages, real estate and certain
other investments. (See page ____ for percentage breakdown of investments of
HLIC.)
Contract reserves will be accounted for in a non-utilized separate account. CRC
Contract Owners have no priority claims on assets accounted for in this separate
account. All assets of HLIC, including those accounted for in this separate
account, are available to meet the guarantees under the Annuity and are
available to meet the general obligations of HLIC.
Nonetheless, in establishing Guarantee Rates and Current Rates, HLIC intends to
take into account the yields available on the instruments in which it intends to
invest the proceeds from the Contracts. (See, "Establishment of Guarantee Rates
and Current Rate", page ____.) HLIC's investment strategy with respect to the
proceeds attributable to the Contracts will generally be to invest in
investment-grade debt instruments having durations tending to match the
applicable Guarantee Periods.
Investment-grade debt instruments in which HLIC intends to invest the proceeds
from the Contracts include:
Securities issued by the United States Government or its agencies or
instrumentalities, which issues may or may not be guaranteed by the United
States Government.
Debt securities which have an investment grade, at the time of purchase, within
the four highest grades assigned by Moody's Investors Services, Inc. (Aaa, Aa, A
or Baa), Standard & Poor's Corporation (AAA, AA, A or BBB) or any other
nationally recognized rating service.
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Other debt instruments, including but not limited to, issues of or guaranteed by
banks or bank holding companies and corporations, which obligations, although
not rated by Moody's or Standard & Poor's are deemed by HLIC's management to
have an investment quality comparable to securities which may be purchased as
stated above.
While the foregoing generally describes our investment strategy with respect to
the proceeds attributable to the Contracts, we are not obligated to invest the
proceeds attributable to the Contract according to any particular strategy,
except as may be required by Connecticut and other state insurance laws.
AMENDMENT OF CONTRACTS
We reserve the right to amend the Contracts to meet the requirements of
applicable federal or state laws or regulations. We will notify you in writing
of any such amendments.
ASSIGNMENT OF CONTRACT
Your rights as evidenced by a Contract may be assigned as permitted by
applicable law. An assignment will not be binding upon us until we receive
notice from you in writing. We assume no responsibility for the validity or
effect of any assignment. You should consult your tax adviser regarding the tax
consequences of an assignment.
DISTRIBUTION OF CONTRACTS
The Contracts are sold by certain broker-dealers registered under the Securities
Exchange Act of 1934 to persons who have established an account with the
broker-dealer. In addition, the Contracts may be offered to members of certain
other eligible groups or certain individuals. HLIC will pay a maximum
commission of 5% for the sale of a Contract. From time to time, customers of
certain Broker-Dealers may be offered special initial Guarantee Rates and
negotiated commissions.
The securities may also be sold directly to employees of HLIC and Hartford Fire
Insurance Company, the ultimate parent of HLIC. The securities will be credited
with an additional 2% of the employee's purchase payment by HLIC. This
additional percentage of purchase payment in no way affects present or future
charges, rights, benefits or current values of other Contract Owners.
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FEDERAL TAX CONSIDERATIONS
A. GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING TO
THE ACTUAL STATUS OF THE PARTICIPANT INVOLVED, LEGAL AND TAX ADVICE MAY BE
NEEDED BY A PERSON, EMPLOYER OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A
CONTRACT DESCRIBED IN THIS PROSPECTUS.
It should be understood that any detailed description of the federal income tax
consequences regarding the purchase of the Contracts cannot be made in this
Prospectus and that special tax rules may be applicable with respect to certain
purchase situations not discussed herein. In addition, no attempt is made here
to consider any applicable state or other tax laws. For detailed information, a
qualified tax adviser should always be consulted. This discussion is based upon
HLIC's understanding of Federal income tax laws as they are currently
interpreted.
B. TAXATION OF HLIC
HLIC is taxed as a life insurance company under Part I of Subchapter L of
Chapter 1 of the Internal Revenue Code ("Code"). The assets underlying the
Contracts will be owned by HLIC. The income earned on such assets will be
HLIC's income.
C. TAXATION OF ANNUITIES -- GENERAL PROVISIONS AFFECTING PURCHASERS OTHER THAN
QUALIFIED PLANS
Section 72 of the Internal Revenue Code governs the taxation of annuities
in general.
1. NON-NATURAL PERSONS, CORPORATIONS, ETC. Section 72 contains
provisions for Contract Owners which are non-natural persons. Non-natural
persons include corporations, trusts, and partnerships. The annual net
increase in the value of the Contract is currently includable in the gross
income of a non-natural person unless the non-natural person holds the
Contract as an agent for a natural person. There is an exception from
current inclusion for certain annuities held by structured settlement
companies, certain annuities held by an employer with respect to a
terminated Qualified Plan and certain immediate annuities. A non-natural
person which is a tax-exempt entity for Federal tax purposes will not be
subject to income tax as a result of this provision.
If the Contract Owner is not an individual, the primary Annuitant shall be
treated as the Contract Owner for purposes of making distributions which
are required to be made upon the death of the Contract Owner. If there is
a change in the primary Annuitant, such change shall be treated as the
death of the Contract Owner.
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2. OTHER CONTRACT OWNERS (NATURAL PERSONS). A Contract Owner is not
taxed on increases in the value of the Contract until an amount is received
or deemed received, e.g., in the form of a lump sum payment (full or
partial value of a Contract) or as Annuity payments under the settlement
option elected.
The provisions of Section 72 of the Code concerning distributions are
summarized briefly below. Also summarized are special rules affecting
distributions from Contracts obtained in a tax-free exchange for other
annuity contracts or life insurance contracts which were purchased prior to
August 14, 1982.
a. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
i. Total premium payments less prior withdrawals which were not
includable in gross income equal the "investment in the contract"
under Section 72 of the Code.
ii. When the value of the Contract (ignoring any surrender
charges) exceeds the "investment in the contract," any amount
surrendered which is less than or equal to the difference between
such value of the Contract and the "investment in the contract"
will be included in gross income.
iii. When such value of the Contract is less than or equal to the
"investment in the contract," any amount surrendered which is
less than or equal to the "investment in the contract" shall be
treated as a return of "investment in the contract" and will not
be included in gross income.
iv. The receipt of any amount as a loan under the Contract or
the assignment or pledge of any portion of the value of the
Contract shall be treated as an amount surrendered which will be
covered by the provisions in subparagraph ii. or iii. above.
v. In general, the transfer of the Contract, without full and
adequate consideration, will be treated as an amount surrendered
which will be covered by the provisions in subparagraph ii. or
iii. above. This transfer rule does not apply, however, to
certain transfers of property between spouses or incident to
divorce.
b. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE.
Annuity payments made after the Annuity Commencement Date are
includable in gross income to the extent the payments exceed the
amount determined by the application of the ratio of the "investment
in the contract" to the total amount of the payments to be made after
the Annuity Commencement Date (the "exclusion ratio").
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i. When the total of amounts excluded from income by
application of the exclusion ratio is equal to the investment in
the contract as of the Annuity Commencement Date, any additional
payments (including surrenders) will be entirely includable in
gross income.
ii. If the annuity payments cease by reason of the death of the
Annuitant and, as of the date of death, the amount of annuity
payments excluded from gross income by the exclusion ratio does
not exceed the investment in the contract as of the Annuity
Commencement Date, then the remaining portion of unrecovered
investment shall be allowed as a deduction for the last taxable
year of the Annuitant.
iii. Certain distributions, such as surrenders made after the
Annuity Commencement Date, are not treated as annuity payments,
and shall be included in gross income.
c. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS.
Contracts issued after October 21, 1988 by the same insurer (or
affiliated insurer) to the same Contract Owner within the same
calendar year (other than certain contracts held in connection with a
tax-qualified retirement arrangement) will be treated as one annuity
Contract for the purpose of determining the taxation of distributions
prior to the Annuity Commencement Date. An annuity contract received
in a tax-free exchange for another annuity contract or life insurance
contract may be treated as a new Contract for this purpose. ITT
Hartford believes that for any annuity subject to such aggregation,
the values under the Contracts and the investment in the contracts
will be added together to determine the taxation of amounts received
or deemed received prior to the Annuity Commencement Date.
Withdrawals will first be treated as withdrawals of income until all
of the income from all such Contracts is withdrawn. As of the date of
this Prospectus, there are no regulations interpreting this provision.
d. PENALTY -- APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY
PAYMENTS.
i. If any amount is received or deemed received on the Contract
(before or after the Annuity Commencement Date), the Code applies
a penalty tax equal to ten percent of the portion of the amount
includable in gross income, unless an exception applies.
ii. The penalty will not apply to the following distributions
(exceptions vary based upon the precise plan involved):
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1. Distributions made on or after the date the recipient
has attained the age of 59 1/2.
2. Distributions made on or after the death of the holder
or where the holder is not an individual, the death of the
primary annuitant.
3. Distributions attributable to a recipient's becoming
disabled.
4. A distribution that is part of a scheduled series of
substantially equal periodic payments for the life (or life
expectancy) of the recipient (or the joint lives or life
expectancies of the recipient and the recipient's
Beneficiary).
5. Distributions of amounts which are allocable to
"investments in the contract" made prior to August 14, 1982.
e. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-
FREE EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS PURCHASED
PRIOR TO AUGUST 14, 1982.
If the Contract was obtained by a tax-free exchange of a life
insurance or annuity Contract purchased prior to August 14, 1982, then
any amount surrendered prior to the Annuity Commencement Date which
does not exceed the portion of the "investment in the contract"
(generally premiums paid into the prior Contract, less amounts deemed
received) prior to August 14, 1982, shall not be included in gross
income. In all other respects, the general provisions apply to
distributions from such Contracts.
f. REQUIRED DISTRIBUTIONS IN THE EVENT OF CONTRACT OWNER'S DEATH.
i. If any Contract Owner dies before the Annuity Commencement
Date, the entire interest must be distributed within five years
of the date of death; however, a portion or all of such interest
may be payable to a designated Beneficiary over the life of such
Beneficiary or for a period not extending beyond the life
expectancy of such Beneficiary with payments starting within one
year of the date of death.
ii. If any Contract Owner or Annuitant dies on or after the
Annuity Commencement Date and before the entire interest in the
Contract has been distributed, any remaining portion of such
interest must be distributed at least as rapidly as under the
method of distribution in effect at the time of death.
iii. If a spouse is designated as a Beneficiary at the time of
the Contract Owner's death and there is a surviving Annuitant or
Contingent Annuitant, then such spouse will be treated as the
Contract Owner under subparagraph i. and ii. above.
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iv. If the Contract Owner is not an individual, the primary
Annuitant shall be treated as the Contract Owner under
subparagraphs i. and ii. above. If there is a change in the
primary Annuitant, such change shall be treated as the death of
the Contract Owner.
D. TAX QUALIFIED PURCHASERS
THE TAX REFORM ACT OF 1986 HAS MADE SUBSTANTIAL CHANGES TO QUALIFIED PLANS.
SOME OF THESE CHANGES BECAME EFFECTIVE IN 1987 WHILE OTHERS BECAME
EFFECTIVE IN 1988. 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 AND PROFIT SHARING 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), 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.
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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 $2,500 or 100
percent of compensation. The deduction for contributions is
phased out between $40,000 and $50,000 of adjusted gross income
for a married individual (and between $25,000 and $30,000 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. The extent deductible contributions are not allowed,
individuals may make designated non-deductible contributions to
an IRA.
2. DISTRIBUTIONS
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. The employee's investment in the Contract is divided
by the expected number of payments to be made under the Contract. The
<PAGE>
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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 or separation
from service at or after age 55, certain distributions for eligible
medical expenses and distributions in the form of life annuity after a
separation from service. A life annuity is defined as a scheduled
series of substantially equal periodic payments for the life of the
Participant (or the joint lives 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 tax-deferred annuity Contracts
under Section 403(b), contributions to the Contract made after
December 31, 1988 and any increases in cash value after that date may
not be distributed prior to attaining age 59 1/2, termination of
employment, 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 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 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.
<PAGE>
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E. 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 ROLLOVER DISTRIBUTION
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 rollover
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 rollover 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 an eligible rollover
distribution is paid in a "direct rollover". A direct rollover
is the direct payment of an eligible rollover distribution or
portion thereof to an individual retirement arrangement or
annuity (IRA) or to another qualified employer plan. IF A DIRECT
ROLLOVER IS ELECTED, NO INCOME TAX WILL BE WITHHELD.
d. If any portion of a distribution is not an eligible rollover
distribution but is taxable, the mandatory withholding rules
described above do not apply. In this case, the voluntary
withholding rules described below apply.
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2. NON-ELIGIBLE ROLLOVER 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.
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.
c. Any distribution from plans described in Section 457 of the
IRC is subject to the regular wage withholding rules.
<PAGE>
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THE COMPANY
A. BUSINESS OF HARTFORD LIFE
Hartford Life Insurance Company (the Company or HLIC) covers the insurance and
retirement needs of millions of Americans. HLIC has been among the fastest-
growing major life insurance companies in the United States for the past several
years as measured by assets. HLIC's total assets of $47.8 billion at December
31, 1994, include 28.1% of fixed maturities and 47.6% of separate accounts with
the remainder representing stocks, cash, mortgage loans, policy loans,
reinsurance recoverables and other assets. HLIC is engaged in a business that
is highly competitive because of the large number of stock and mutual life
insurance companies and other entities marketing insurance products. There are
approximately 2,000 stock, mutual and other types of insurers in the life
insurance business in the United States. In the July 1994 edition of BEST'S
REVIEW, Life-Health Insurance magazine, HLIC ranked 14th among all life
insurance companies in the United States based upon total assets. AM Best
assigned HLIC its highest ranking classification, A++, as of December 31, 1993.
The Company was organized in 1902 and is incorporated under the laws of the
State of Connecticut. It is ultimately a wholly-owned subsidiary of Hartford
Fire Insurance (Hartford Fire) Company which is a subsidiary of ITT Hartford
Group, Inc., a wholly-owned subsidiary of ITT Corporation. HLIC is the parent
of ITT Hartford Life and Annuity Insurance Company (ILA), formerly ITT Life
Insurance Corporation, and ITT Hartford International Life Reassurance
Corporation (HLR), formerly American Skandia Life Reinsurance Corporation, which
was purchased in 1993.
The reportable segments and product groups of HLIC and its subsidiaries are:
INDIVIDUAL LIFE AND ANNUITIES
- - Individual Life
- - Fixed and variable retirement annuities
ASSET MANAGEMENT SERVICES
- - 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
Additionally, the Company has an Employee Benefits segment (EBD) which markets
group life, group short and long term managed disability, stop loss and
supplementary medical coverage to
<PAGE>
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employers and employer-sponsored plans. It also offers voluntary AD&D, travel
and special risk coverage primarily to associations. EBD also offers disability
underwriting administration and claims processing services to other insurers and
self-insured employer plans. These products are sold through brokers, licensed
agents and Third Party Administrators through an internal sales force. The
markets for group life and disability are highly competitive based on price and
quality of services. All of this business is reinsured to HLIC's parent,
Hartford Life and Accident Insurance Company (HLA).
INDIVIDUAL LIFE AND ANNUITIES (ILAD)
HLIC is a leader in the annuity marketplace, selling both variable and fixed
products through a wide distribution of broker-dealers, financial and other
institutions. HLIC ranks number one in the individual variable annuities market
with a 9.6% share per VARDS (Variable Annuity Research and Data Service) at the
end of 1994, excluding Teachers Insurance Annuity Association and College
Retirement Equities Fund (TIAA and CREF). The individual annuity market is
highly competitive with insurance companies and other financial institutions
selling these products. Selection depends on fund performance, an array of fund
and product options, product design, credited rates and a company's financial
strength ratings.
Company earns fees for managing these assets and maintaining policyholders'
accounts. The HLIC policyholder has a variety of fund and product choices, some
of which are managed internally; however, most of the HLIC's investment funds
are managed by Wellington Management Company, Putnam or Dean Witter.
Sales reached $7.0 billion in 1994 bringing assets under management to $20.1
billion as of December 31, 1994. Of the total assets under management, $13.1
billion relate to variable annuities with $11.6 billion of these assets held in
separate accounts where the policyholder selects the investment vehicle and
bears the risk of asset performance, and $1.5 billion represents the fixed
option assets that are held in the general accounts. The remaining $7.0 billion
of the individual annuity assets under management are in guaranteed separate
accounts. The guaranteed separate account's products offer fixed rate
guarantees if held to maturity, but are market value adjusted, the majority of
which have no minimum guarantees should policyholders withdraw early. The
guaranteed rates, when held to maturity, range from 3% to 12% with durations
from one to ten years. These guarantees are supported by the general account of
HLIC. Deposits to these fixed and variable annuity accumulation accounts are
subject to withdrawal restrictions and to surrender charges which dissipate on a
sliding scale, usually within seven years. Fixed and variable annuity
policyholder reserves are held at account value. The minimum death benefit
associated with some 1994 annuity sales was reinsured to a third party.
Guaranteed contractholders' account balances are held at book value with amounts
held for deferred expenses.
Individual Life products include: universal life, traditional and interest
sensitive whole life, term, modified guaranteed life, and variable life. These
products are primarily sold through life professionals, broker-dealers, and
property-casualty agents, assisted by HLIC's own sales offices
<PAGE>
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or other marketing groups. The Company competes primarily in the up-scale
estate and business planning markets. Significant competition comes from large,
financially strong insurers based on price, credit quality, and quality of
distribution systems. Some of these products permit borrowing against the
accumulated cash surrender value of the policy. As of December 31, 1994, the
outstanding policy loan balance on individual life policies was $227 million.
Interest rates on policy loans ranged from 6% to 8%. Investment income earned
on outstanding policy loans was $12.4 million for the year ended December 31,
1994. Universal life and interest sensitive whole life reserves are set equal
to premiums collected, plus interest credited, less charges. Other fixed death
benefit reserves are based on assumed investment yield, persistency, mortality
and morbidity per commonly used actuarial tables, expenses, and margins for
adverse deviation. HLIC reinsures all individual life business written by HLA.
The maximum retention on any one individual life is $1 million.
ASSET MANAGEMENT SERVICES (AMS)
This segment offers retirement products and services to employer groups marketed
to plan administrators through a direct sales force, assisted by home office
personnel. This includes managing assets and acting as plan administrator for
plans qualified under sections 401, 403 and 457 of the Internal Revenue Code.
The segment markets some products for which the investments and reserves are
held in separate accounts. The separate account assets as of December 31, 1994
totaled $2.8 billion. The separate account options were expanded to include
funds managed by Fidelity. Other options include 20th Century funds and HLIC's
own funds which are managed by Wellington Management Group or are internally
managed. Investment performance relative to non-guaranteed separate account
products is borne by the participants. For Group Pension products and services,
competition is significant from a number of financial institutions, including
other insurance companies, based on rate and credit quality. HLIC has
positioned itself to enhance its competitive position in the 401k full service
and group tax deferred annuity markets. This Section 457 plan market place is a
closed market for which growth is primarily through takeover business from
competing companies and through increased contributions from existing
participants.
The most significant product type in this segment is the guaranteed rate
contract (GRC) which represents $7.0 billion out of $13.7 billion of invested
assets under management (including separate accounts) for the entire segment.
GRC's offer fixed or indexed rates that are guaranteed for a specified period.
The remaining $6.7 billion represent assets managed for the various IRS
qualified plans and other pension plan products. Credited rates for these
product vary with interest rate conditions. The related policyholder
liabilities are held at account value with amounts held for deferred expenses.
SPECIALTY
Individual and group corporate owned life insurance (COLI) products are sold
through a marketing company in which Hartford Life & Accident owns a 60%
interest. Marketing for COLI is also done through HLR, a wholly owned
subsidiary of HLIC. As of December 31, 1994, the policy loans outstanding were
$2 billion. Investment income from these loans totaled $299 million during
1994. A significant portion of the COLI business is reinsured with third
<PAGE>
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party companies. Policy reserves are at gross cash surrender value; however,
the Company has the right of offset against outstanding policy loans.
Therefore, the net amount of risk relative to these policies is minimal. HLIC
earns fees for management and cost of insurance. Policyholders may receive
dividends based on experience. The Company began offering a new COLI product in
1994 for which the investments and liabilities are held in a separate account.
No policy loans are permitted under this product and the policy owner bears the
investment risks.
B. SELECTED FINANCIAL DATA
The following selected financial data for HLIC, its subsidiaries and affiliated
companies should be read in conjunction with the consolidated financial
statements and notes thereto included in this Prospectus beginning on page ____.
<PAGE>
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HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF INCOME
For the Years Ended December 31, 1994, 1993, 1992, 1991, 1990, and 1989
(In Millions)
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ----
REVENUES
<S> <C> <C> <C> <C> <C> <C>
Premiums and other
considerations $1,100 $ 747 $ 259 $158 $106 $ 60
Net Realized Gains 7 16 5 11 8 0
Net Investment income 1,292 1,051 907 753 604 462
------ ------ ------ ----- ----- -----
2,399 1,814 1,171 922 718 522
------ ------ ------ ----- ----- -----
BENEFITS, CLAIMS AND EXPENSES
Benefits, claims and claim
adjustment expenses 1,405 1,046 797 689 558 426
Amortization of deferred
policy acquisition costs 145 113 55 40 29 15
Dividend to Policyholders 419 227 47 1 1 1
Other insurance expenses 227 210 138 96 64 55
------ ------ ------ ----- ----- -----
2,196 1,596 1,037 826 652 497
------ ------ ------ ----- ----- -----
INCOME BEFORE INCOME TAX 203 218 134 96 66 25
INCOME TAX 65 75 45 32 21 10
------ ------ ------ ----- ----- -----
Income Before Cumulative
Effect of Changes in
Accounting Principles 138 143 89 64 45 15
Cumulative effect of changes
in accounting principles net
of tax benefits of $7 0 0 (13) 0 0 0
------ ------ ------ ----- ----- -----
NET INCOME $ 138 $ 143 $ 76 $ 64 $ 45 $ 15
------ ------ ------ ----- ----- -----
</TABLE>
<PAGE>
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C. Management's Discussion and Analysis of Financial Condition and Results of
Operations (Dollar Amounts in Millions)
1. RESULTS OF OPERATIONS
1994 COMPARED TO 1993
MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
(DOLLAR AMOUNTS IN MILLIONS)
<TABLE>
<CAPTION>
ILAD AMS Specialty Total
1994 1993 1994 1993 1994 1993 1994 1993
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $691 $595 $789 $794 $919 $425 $2,399 $1,814
Benefits, claims
expenses and taxes 595 511 765 748 901 412 2,261 1,671
---- ---- ---- ---- ---- ---- ------ ------
NET INCOME $ 96 $ 84 $ 24 $ 46 $ 18 $ 13 $ 138 $ 143
---- ---- ---- ---- ---- ---- ------ ------
</TABLE>
INDIVIDUAL LIFE & ANNUITY (ILAD)
ILAD is the largest of HLIC's segments in terms of assets under management
and net income. The annuity line continues to be a leader in the industry
(see business section). In 1994, the segment assumed life and annuity
policies from Pacific Standard Life Insurance Company, adding $219 million
of annual life premiums and $181 million of annuity assets. In 1993, ILAD
assumed $3.2 billion in fixed and variable annuity assets and $.9 billion
of modified guaranteed life insurance from Fidelity Bankers Life Insurance
Company. The significant growth from these assumptions along with new
deposits from fixed and variable annuity sales of $7.0 billion in 1994 and
$4.2 billion in 1993 increased assets under management, but are not
reported as revenues. The management and maintenance fees and cost of
insurance associated with this growing policyholder base were the source of
ILAD's increased revenues and net income. The growth in this segment has
caused the ratio of benefits, claims and expenses to average assets under
management has declined from 3.6% in 1993 to 2.6% in 1994.
ASSET MANAGEMENT SERVICES (AMS)
Sales in the AMS segment have been strong relative to its competitors.
Market share has grown in its key products. Consistent with industry
experience, 1994 investment income declined due to interest rate drops
which occurred through the latter part of 1993. This particularly impacted
the GRC line which experienced prepayments in excess of expectations.
Though most of the underlying mortgage-backed securities for GRC were PAC
CMO's (planned amortization class collateralized mortgage obligations)
which fall into the lower end of the investment risk spectrum for this
investment class, offering some prepayment protection and less market
volatility, the portfolio was not completely insulated, which contributed
to the drop in net income in 1994.
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.
<PAGE>
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SPECIALTY
Specialty is growing in size from revenue and net income perspectives
relative to the total Company and in comparison to the prior year. The
segment assumed a large block of COLI business in 1994. Life insurance in
force has grown from this assumption and from new sales to $39.5 billion in
1994 from $16.7 billion in 1993. HLIC's Specialty segment is one of the
industry's leading underwriters and reinsurers of COLI products.
1993 COMPARED TO 1992
Income before cumulative effect of changes in accounting principles of $143
in 1993 increased $54 over 1992 primarily due to earnings on an increased
asset base from fixed and variable annuities sold. These products are sold
in the individual life and annuity and group pension (principally
guaranteed investment Contracts) lines of business.
Premiums and other revenue considerations of $747 increased $488 or 188.4%
over 1992. This increase principally reflects an increased level of
account charge revenues from the COLI line of business ($236), assumed from
Mutual Benefit Life (MBL), as well as from continued expansion of the
Company's individual life and annuity lines of business and the business
assumed from HLA in 1992 ($245). Net investment income of $1,051 increased
$144 or 15.9% over 1992 as a result of a larger investment base from
increased group pension, variable annuity and universal life deposit
premiums and COLI policy loans.
Benefits, claims and claim adjustment expenses of $1,046 increased $249, or
31.2%, over 1992. This increase was primarily a result of increased
interest credited to policyholders accounts in the group pension, COLI,
individual annuity and universal life lines of business. Amortization of
deferred policy acquisition costs of $113 increased $58 or 105.5%
principally due to growth in the individual life and annuity and universal
life lines of business. Dividends to policyholders reflects the assumption
of the COLI business from Mutual Benefit (November 1992), which was written
on a participating basis. Prior to the assumption, the Company had minimal
participating individual business in force. Other insurance expenses of
$210 increased $72 or 52.2% primarily as a result of continued expansion in
the life and annuity lines, as well as the life business assumed from HLA
in 1992.
During 1993, the Company's asset base of $38,286 increased 44.0% over the
prior year for the reasons discussed above.
For segment information, see Note 6 of Notes to Consolidated Financial
Statements.
2. SEGMENT INFORMATION
For segment information, see Note 8 as Notes to Consolidated Financial
Statements.
<PAGE>
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D. REINSURANCE
For a discussion of the Reinsurance of HLIC's life insurance risk, see
Section A. "Business of Hartford Life" page ____.
E. RESERVES
In accordance with the insurance laws and regulations under which HLIC
operates, it is obligated to carry on its books, as liabilities,
actuarially determined reserves to meet its obligations on its outstanding
life insurance contracts and reserves for its universal life and investment
contracts. Reserves for life insurance contracts are based on mortality
and morbidity tables in general use in the United States modified to
reflect Company experience. These reserves are computed at amounts that,
with additions from premiums to be received, and with interest on such
reserves compounded annually at certain assumed rates, will be sufficient
to meet HLIC's policy obligations at their maturities or in the event of an
insured's death. Reserves for universal life insurance and investment
products represent policy account balances before applicable surrender
charges. In the accompanying financial statements these life insurance
reserves are determined in accordance with generally accepted accounting
principles, which may vary from statutory requirements.
F. INVESTMENTS
Consistent with the nature of the Company's policyholder obligations,
invested assets are primarily intermediate to long-term taxable fixed
maturity investments and collaterized mortgage obligations (CMO's). The
majority of the investment income earned in the Company's investment
portfolios is credited to policyholders (group pension contractholders and
individual life and annuity policyholders). The investment objective is to
maximize after-tax yields consistent with acceptable risk while maintaining
appropriate liquidity and matching policyholder liabilities.
Investments in fixed maturities include bonds which are carried at fair
market value. Significant portfolio activity may occur to match contract
obligations and not for the purpose of trading. The impact on net income
and portfolio yields as a result of these sales has not been significant.
The net unrealized after-tax loss on securities was $654 million at
December 31, 1994.
G. COMPETITION
HLIC is engaged in a business that is highly competitive because of the
large number of stock and mutual life insurance companies and other
entities marketing insurance products. There are approximately 2,000
stock, mutual and other types of insurers in the life insurance business in
the United States.
In the July 1994 edition of BEST'S REVIEW, Life-Health Insurance magazine,
HLIC ranked 14th among all life insurance companies in the United States
based upon total assets. A.M. Best Insurance Reports assigned HLIC its
highest classification, A++, as of December 31, 1993.
<PAGE>
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H. EMPLOYEES
As of December 31, 1994, HLIC and its parent HLA have 3,481 direct
employees, 1,872 of whom are employed at its Home Office in Simsbury,
Connecticut, and 1,609 of whom are employed at various branch offices
throughout the United States and elsewhere. ILA employs 481 people in
Minneapolis, Minnesota and HLR has 19 employees in Westport, Connecticut.
I. PROPERTIES
HLIC occupies office space leased by Hartford Fire. Expenses associated
with these offices are allocated on a direct and indirect basis to the Life
subsidiaries of Hartford Fire.
J. STATE REGULATION
The insurance business of HLIC is subject to comprehensive and detailed
regulation and supervision throughout the United States. The laws of the
various jurisdictions establish supervisory agencies with broad
administrative powers with respect to licensing to transact business,
overseeing trade practices, licensing agents, approving policy forms,
establishing reserve requirements, fixing maximum interest rates on life
insurance policy loans and minimum rates for accumulation of surrender
values, prescribing the form and content of required statutory financial
statements and regulating the type and amounts of investments permitted.
Each insurance company is required to file detailed annual reports with
supervisory agencies in each of the jurisdictions in which it does business
and its operations and accounts are subject to examination by such agencies
at regular intervals. In the accompanying financial statements, insurance
reserves are determined in accordance with generally accepted accounting
principals, which may vary from statutory requirements.
In addition, several states, including Connecticut, regulate affiliated
groups of insurers, such as HLIC, under insurance holding company
legislation. Under such laws, intercompany transfers of assets and
dividend payments from insurance subsidiaries may be subject to prior
notice or approval, depending on the size of such transfers and payments in
relation to the financial positions of the companies.
The National Association of Insurance Commissioners (NAIC) has recently
developed new model solvency laws that relate an insurance company's
capital requirements to the risks inherent in its overall operations.
These new rules are known as Risk Based Capital (RBC). As of December 31,
1994, the Company exceeds the RBC standards.
Although the federal government does not directly regulate the business of
insurance, federal initiatives often have an impact on the business in a
variety of ways. Current and proposed federal measures which may
significantly affect the insurance business include removal of barriers
preventing banks from engaging in the insurance business, limits to medical
testing for insurability, tax law changes affecting the taxation of
insurance companies, the tax treatment of insurance products and its impact
on the relative desirability of various personal investment vehicles and
proposed legislation to prohibit the use of gender in determining insurance
and pension rates and benefits.
<PAGE>
-46-
In accordance with the insurance laws and regulations under which HLIC
operates, it is obligated to carry on its books, as liabilities,
actuarially determined reserves to meet its obligations on its outstanding
life insurance contracts and reserves for its universal life and investment
contracts. Reserves for life insurance contracts are based on mortality
and morbidity tables in general use in the United States modified to
reflect Company experience. These reserves are computed at amounts that,
with additions from premiums to be received, and with interest on such
reserves compounded annually at certain assumed rates, will be sufficient
to meet HLIC's policy obligations at their maturities or in the event of an
insured's death. Reserves for universal life insurance and investment
products represent policy account balances before applicable surrender
charges. In the accompanying financial statements these life insurance
reserves are determined in accordance with generally accepted accounting
principles, which may vary from statutory requirements.
<PAGE>
-47-
EXECUTIVE OFFICERS AND DIRECTORS
OTHER BUSINESS PROFESSION,
VOCATION OR EMPLOYMENT
HLIC, FOR POSITION WITH PAST 5
NAME, AGE YEAR OF ELECTION YEARS; OTHER DIRECTORSHIPS
- --------- ---------------- --------------------------
Louis J. Abdou Vice President, 1987 Vice President (1987-Present),
52 Hartford Insurance company.
David H. Annis, Vice President, 1994 Vice President (1994-Present);
43 Assistant Vice President (1986-1994).
Paul J. Boldischar, Vice President, Senior Vice President and Jr.,
53 1992 Director, Operations ITT Hartford
Life and Annuity Insurance Company,
1994; Senior Vice President and
Director of National Service Center,
ITT Life Insurance Corporation
(1987-1992).
Wendell J. Bossen Vice President, 1992** President (1992-Present),
61 International Corporate Marketing
Group, Inc.; Executive Vice President
(1984-1992), Mutual Benefit.
Peter W. Cummins Vice President, 1989 Vice President, Individual Annuity
57 Operations (1989-Present), Hartford
Life Insurance Company.
Julianna B. Dalton Vice President, 1992 Vice President, (1992-Present);
39 Assistant Vice President,
(1989-1992); Director of Research,
(1987-1989) Hartford Life Insurance
Company.
Ann M. deRaismes Vice President, 1994 Vice President, (1994) Assistant
44 Vice President (1992-1994); Director
of Human Resources (1991-Present);
Assistant Director of Human Resources
(1987-1991), Hartford Life Insurance
Company.
<PAGE>
-48-
Allen J. Duoma, M.D. Medical Director, Medical Director (1993-Present),
49 1993 Employee Benefits Division,
Hartford Life Insurance Company;
Medical Director (1990-1993),
Travelers' Managed Disability
Services; Medical Director
(1988-1990), Center for Corporate
Health.
Donald R. Frahm Chairman and Chief Chairman and Chief Executive
63 Executive Officer, Officer of the Hartford Insurance
1988 Group (1988-Present).
Bruce D. Gardner General Counsel, 1991 General Counsel Corporate
44 and Corporate Secretary Secretary (1991-Present)
Corporate Secretary (1988-
Present); Associate General
Counsel (1988-1991); Counsel,
(1986-1988) Hartford Life
Insurance Company.
Joseph H. Gareau Executive Vice President Executive Vice President and
47 and Chief Investment Chief Investment Officer,
Officer, 1993 (1993-Present), Hartford Life
Insurance Co.; Senior Vice
President and Chief Investment
Officer (1992-1993), ITT
Hartford's Property-Casualty
Companies.
J. Richard Garrett Vice President, 1988 Vice President and Treasurer
49 & Treasurer (1988-Present), Hartford Insurance
Group.
John P. Ginnetti Executive Vice Executive Vice President, 1994;
48 President and Director Senior Vice President, (1988-
Asset Management 1994); General Counsel and
Services, 1994 Corporate Secretary of
Hartford Life Insurance
Company (1982-1988).
Lois W. Grady Vice President, 1993 Vice President (1993-Present);
50 Assistant Vice President
(1988-1993), Hartford Life
Insurance Company.
David A. Hall Senior Vice President Senior Vice President and Actuary
40 and Actuary, 1992 of Hartford Life Insurance Company
(1992-Present).
Joseph Kanarek Vice President, 1991 Vice President (1991-Present);
47 Director (1992-Present), Hartford
Life Insurance Company.
<PAGE>
-49-
Kevin L. Kirk Vice President, 1992 Vice President (1992-Present);
43 Assistant Vice President;
Assistant Director (1985-1992),
Asset Management Services,
Hartford Life Insurance Company
(1985-1992).
Andrew W. Kohnke Vice President, 1992 Vice President (1992-Present);
36 Assistant Vice President
(1989-1992); Investment Officer
(1987-1989), Hartford Life
Insurance Company.
Steven M. Maher Vice President and Vice President and Actuary
40 Actuary, 1993 (1993-Present); Assistant Vice
President (1987-1993), Hartford
Life Insurance Company.
William B. Malchodi, Vice President and Director of Taxes (1992-Present),
Jr., 44 Director of Taxes 1992 Hartford Insurance Company.
Thomas M. Marra Senior Vice President Senior Vice President, 1994; Vice
36 and Actuary, 1994 President (1989-1994); Director of
Director, ILAD Individual Annuities
(1991-Present); Assistant Vice
President (1989); Actuary
(1987-1989), Hartford Life
Insurance Company.
David J. McDonald Senior Vice President, Senior Vice President and
58 1986 Director, Asset Management
Services (1986-Present); Vice
President (1980-1986), Hartford
Insurance Company.
Kevin A. North Vice President, 1991 Vice President, Hartford Insurance
42 Group and Director of Real Estate
(1991-Present); Vice President and
Deputy Director of Real Estate
(1989-1991); Assistant Vice
President and Deputy Director
of Real Estate (1987-1989).
<PAGE>
-50-
Joseph J. Noto Vice President, 1989 Vice President (1989-Present),
42 Hartford Life Insurance Company;
Controller (1983-1989), Personal
Lines Insurance Center; Vice
President (1986-1989), Personal
Lines Insurance Center;
Controller (1987-1989), Personal
Lines Market Segment, Hartford
Fire.
Leonard E. Odell, Jr. Senior Vice President, Senior Vice President
49 1994 (1994-Present); Vice President
(1982-1994); Actuary
(1976-1982), Hartford Life
Insurance Company.
Michael C. O'Halloran Vice President & Senior Vice President & Senior
46 Associate General Associate General Counsel and
Counsel, 1988 Director (1988-Present), Law
Department, Hartford Fire
Insurance Company.
Craig D. Raymond Vice President and Vice President and Chief
33 Chief Actuary, 1994 Actuary, 1994; Vice President
and Actuary (1993-1994);
Assistant Vice President and
Actuary (1992-1993); Actuary
(1989-1992), Hartford Life
Insurance Company; Consultant,
Tillinghast/ Towers Ferrin
(1988-1989).
Lowndes A. Smith President and Chief President and Chief Operating
55 Operating Officer, 1989 Officer (1989-Present), Hartford
Life Insurance Company; Senior
Vice President and Group
Controller; Vice President and
Group Controller (1980-1987),
Hartford Insurance Group.
Edward J. Sweeney Vice President, 1993 Vice President (1993-Present);
38 Chicago Regional Manager
(1985-1993), Hartford Life
Insurance Company.
James E. Trimble Vice President and Vice President (1990-Present);
38 Actuary, 1990 Assistant Vice President
(1987-1990), Hartford Life
Insurance Company.
<PAGE>
-51-
Raymond P. Welnicki, Senior Vice Senior Vice President 1994, Vice
46 President, 1994 President (1993-Present)
Hartford Life Insurance Company;
Board of Directors, Ethix Corp.,
formerly employed by Aetna Life
& Casualty.
James J. Westervelt, Vice President and Vice President and Group
47 Group Controller, 1989 Controller, (1989-Present);
Assistant Vice President and
Assistant Controller
(1983-1989), Hartford Insurance
Group.
Lizabeth H. Zlatkus, Vice President, 1994 Vice President (1994); Assistant
36 Vice President (1992-1994);
Hartford Life Insurance Company;
formerly Director, Hartford
Insurance Group.
Donald J. Znamierowski, Vice President and Vice President and Director of
60 Director of Strategic Strategic Operations, 1994; Vice
Operations, 1994 President and Comptroller
(1986-1994); Assistant Vice
President and Comptroller
(1976-1986); Director
(1976-1986), Hartford Life
Insurance Company, Hartford Life
& Accident Insurance Company,
ITT Hartford Life & Annuity
Insurance Company, and Ally
Canada.
_______________
* Denotes date of election to Board of Directors.
**ITT Hartford Affiliated Company.
<PAGE>
-52-
EXECUTIVE COMPENSATION
Executive officers of Hartford Life Insurance Company also serve one or more
affiliated companies of Hartford Life Insurance Company. Allocations have been
made as to each individual's time devoted to his duties as an executive officer
of HLIC. The following tables provide information on executive compensation
paid to the Chief Operating Officer and the five most highly compensated
executive officers of HLIC whose allocated compensation exceeded $100,000 in
1994. Directors of HLIC receive no compensation in addition to their
compensation as employees of HLIC.
[SEE INSERT ATTACHED]
LEGAL PROCEEDINGS
HLIC and its subsidiaries are involved in pending and threatened litigation in
which claims for monetary damages are asserted. Management, after consultation
with legal counsel, does not anticipate the ultimate liability arising from such
pending or threatened litigation to have a material effect on the results of
operations and financial position of HLIC.
EXPERTS
The financial statements of HLIC included in this Prospectus have been audited
by Arthur Andersen LLP, independent public accountants, as indicated in their
reports thereto, and are included herein in reliance on the authority of said
firm as experts in accounting and auditing.
<PAGE>
-53-
<TABLE>
<CAPTION>
----------------------------- --------------------------------------------------
S-1 Filing Annual Compensation Long Term Compensation
----------------------------- --------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Restricted Stock Options/ LTIP All Other
Name Title Salary($) Bonus($) Other($) Awards($) SARs(#) Payouts($) Compensation
---- ----- --------- -------- -------- -------------- -------- ----------- ------------
Frahm, Donald R. Chairman & CEO 41,872 20,720 102 0 0 0 0
Cummins, Peter W. Vice President 119,802 0 219,814 0 0 0 0
Kanarek, Joseph Vice President 167,122 0 133,163 0 0 0 0
Smith, Lowndes A. President & COO 161,333 70,180 667 0 0 0 0
Marra, Thomas S. Sr. Vice President 141,581 0 76,091 0 0 0 0
</TABLE>
<PAGE>
-54-
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
S-1 Filing Option Grants
-------------------------------------------------------------------------------------------------
Potential Realizable Value
at Assumed Annual Rate
of Stock Price Appreciation
% of Total for Option Term (2)
Number of Securities Options Granted Exercise --------------------------
Underlying Options to Employees Price Expiration 5% 10%
Granted in 1994 (1) ($/shr) Date ($) ($)
------- ----------- ------- ---- --- ---
<S> <C> <C> <C> <C> <C> <C>
Frahm, D.R. 2,738 0.1% $84.00 10/13/2004 144,649 366,536
Cummins, P. 835 0.0% $84.00 10/13/2004 44,113 111,781
Kanarek, J. 941 0.1% $84.00 10/13/2004 49,713 125,972
Smith, L.A. 12,100 0.6% $84.00 10/13/2004 639,243 1,619,827
Marra, T.M. 7,335 0.4% $91.14 2/10/2004 420,425 1,065,365
2,684 0.1% $84.00 10/13/2004 141,796 359,307
<FN>
(1) Based on total of 1,876,198 options granted to ITT employees during 1994.
(2) At the end of the term of the options granted October 11, 1994, the projected price per
share of ITT Common Stock would be $136.83 and $217.87 at an assumed annual appreciation rate
of 5% and 10%, respectively. The projected price per share of ITT Common Stock of the
options granted February 8, 1994 would be $148.46 and $236.39 at an assumed appreciation
rate of 5% and 10%, respectively.
</TABLE>
<PAGE>
-55-
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Value of
Number of unexercised
unexercised in-the-money
options/SARs at options/SARs at
fiscal year-end fiscal year-end
Shares -----------------------------------------
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized Unexercisable Unexercisable
---- ------------ -------- ------------- -------------
<S> <C> <C> <C> <C>
Frahm, D.R. 0 0 0 0
Cummins, P. 0 0 0 0
Kanarek, J. 0 0 0 0
Marra, T.M. 0 0 0 0
Smith, L.A. 0 0 0 0
</TABLE>
<PAGE>
-56-
APPENDIX A
MODIFIED GUARANTEED ANNUITY FOR QUALIFIED PLANS
The Compound Rate Contract Annuity for Qualified Plans is a group deferred
annuity Contract under which one or more purchase payments may be made. Plans
eligible to purchase the Contract are pension and profit-sharing plans qualified
under Section 401(a) of the Internal Revenue Code, Keogh Plans and eligible
state deferred compensation plans under Section 457 of the Code ("Qualified
Plans").
To apply for a Group Annuity Contract, the trustee or other applicant need only
complete an application for the Group Annuity Contract and make its initial
purchase payment. A Group Annuity Contract will then be issued to the applicant
and subsequent Purchase Payments may be made subject to the same $5,000 minimum
applicable to non-qualified purchasers of Certificates. While no Certificates
are issued, each purchase payment and the Account established thereby, are
confirmed to the Contract Owner. The initial and subsequent purchase payments
operate to establish Accounts under the Group Annuity Contract in the same
manner as non-qualified purchases. Each Account will have its own Initial and
Subsequent Guarantee Periods and Guaranteed Rates. Surrenders under the Group
Annuity Contract may be made at the election of the Contract Owner, from one or
more of the Accounts established under the Contract. Account surrenders are
subject to the same limitations, adjustments and charges as surrenders made
under a certificate (see "Surrenders", p. _____). Net Surrender Values may be
taken in cash or applied to purchase annuities for the Contract Owners'
Qualified Plan Participants.
Because there are no individual participant accounts, the Qualified Group
Annuity Contract issued in connection with a Qualified Plan does not provide for
death benefits. Annuities purchased for Qualified Plan Participants may provide
for a payment upon the death of the Annuitant depending on the option chosen
(see "Annuity Options", p. _____). Additionally, since there are no Annuitants
prior to the actual purchase of an Annuity by the Contract Owner, the provisions
regarding the Annuity Commencement Date are not applicable.
<PAGE>
-57-
APPENDIX B
SPECIAL PROVISIONS FOR INDIVIDUAL CONTRACTS ISSUED IN THE STATE
OF MISSOURI, NEW YORK, OREGON, SOUTH CAROLINA, VIRGINIA AND WISCONSIN
The following provision, among others, applies only to individual Contracts
issued in the State of California, Missouri, New York, Oregon, South Carolina,
Texas, Virginia and Wisconsin:
(1) The Contract Owner has the right to request, in writing, a surrender
of the Contract within ten (10) days after it was purchased. In such
event, in California, Missouri, New York, Oregon, Texas, Virginia and
Wisconsin, HLIC will pay the Contract Owner an amount equal to the sum
of (a) the Account Value on the date the written request for surrender
was received multiplied by the Market Value Adjustment formula and (b)
any charges deducted from the Purchase Payment. In South Carolina,
the Contract will be cancelled and any premium paid will be refunded
in full.
<PAGE>
-58-
APPENDIX C
MARKET VALUE ADJUSTMENT
The formula which will be used to determine the Market Value Adjustment is:
(N/12)
[( 1 + I )/( 1 + J )]
I = The Guarantee Rate in effect for the Current Guarantee Period
(expressed as a decimal, e.g., 1% = .01)
J = The Current Rate (expressed as a decimal, e.g., 1% = .01) in effect for
durations equal to the number of years remaining in the current Guarantee
Period (years are rounded to the next highest number of years).
N = The number of complete months from the surrender date to the end of the
current Guarantee Period.
EXAMPLE OF MARKET VALUE ADJUSTMENT
Beginning Account Value: $50,000
Guarantee Period: 5 Years
Guarantee Rate: 5.50% per annum
Full Surrender: Middle of Contract Year 3
EXAMPLE 1:
Gross Surrender Value at middle of
(2.5)
Contract Year 3 = 50,000 (1.055) = 57,161.18
Net Surrender Value at middle of
Contract Year 3 = [57,161.18 - (0.05) x 57,161.18]
x Market Value Adjustment
= $54,303.12 x Market Value Adjustment
Market Value Adjustment
I = 0.055
J = 0.061
N = 30
(N/12)
Market Value Adjustment = [(1 + I)/(1 + J)]
(30/12)
= (1.055/1.061)
= 0.985922
<PAGE>
-59-
Net Surrender Value at middle of = $54,303.12 x 0.985922
Contract Year 3
= $53,538.64
EXAMPLE OF MARKET VALUE ADJUSTMENT
Beginning Account Value: $50,000
Guarantee Period: 5 Years
Guarantee Rate: 5.50% per annum
Full Surrender: Middle of Contract Year 3
EXAMPLE 2:
Gross Surrender Value at middle of
(2.5)
Contract Year 3 = 50,000 (1.055) = 57,161.18
Net Surrender Value at middle of
Contract Year 3 = [57,161.18 - (0.05) x 57,161.18]
x Market Value Adjustment
= $54,303.12 x Market Value Adjustment
Market Value Adjustment
I = 0.055
J = 0.050
N = 30
(N/12)
Market Value Adjustment = [(1 + I)/(1 + J)]
(30/12)
= (1.055/1.05)
= 1.011947
Net Surrender Value at middle of
Contract Year 3 = $54,303.12 x 1.011947
= $54,951.88
This example does not include any applicable taxes.
<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 II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Not applicable.
Item 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article VIII, Section 1 of the By-laws of Hartford Life Insurance Company
provides for indemnification of Directors and Officers as follows:
"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."
Item 15. RECENT SALES OF UNREGISTERED SECURITIES
Not applicable.
Item 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibit
Number Description Method of Filing
-------- ------------ -----------------
1 Underwriting Agreement Filed with this Registration
Statement
3(a) Articles of Incorporation Filed with this Registration
Statement
3(b) By-laws Filed with this Registration
Statement
4(a) Group Annuity Contract Filed with this Registration
Statement
<PAGE>
-2-
4(b) Group Annuity Certificate Filed with this
Individual Certificate Registration Statement
4(c) Individual Annuity Contract Filed with this Registration
Statement
5 Opinion re: legality Filed with this Registration
Statement
23 Consents of experts and Filed with this
counsel Registration Statement
Financial Statement Filed with this Registration
Schedules Statement
Item 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
i. To include any Prospectus required by section 10(a)(3) of
the Securities Act of 1933;
ii. To reflect in the Prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement;
iii. To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement, including (but not limited to) any
addition or deletion of a managing underwriter;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the registration statement is on Form S-3 or Form
S-8, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the registration pursuant to Section 13
or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
<PAGE>
-3-
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 (and where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Hartford, State of
Connecticut on this 5th day of April, 1995.
HARTFORD LIFE INSURANCE COMPANY
By /s/ Rodney J. Vessels
-------------------------------
Rodney J. Vessels
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities 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 *
Thomas M. Marra, Senior Vice *By: /s/ Rodney J. Vessels
President, Director * ------------------------------
Rodney J. Vessels
Leonard E. Odell, Jr., Senior Attorney-in-Fact
Vice President, Director *
Dated: 4/5/95
Lowndes A. Smith, President, ---------------------------
Chief Operating Officer,
Director *
Raymond P. Welnicki, Senior Vice
President, Director *
Lizabeth H. Zlatkus, Vice President
Director *
Donald J. Znamierowski, Vice President
Director *
<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 $ 178 $ 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 $ 259 $ 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>
SPECIMEN
PRINCIPAL UNDERWRITER AGREEMENT
THIS AGREEMENT, dated as of the 16th day of May, 1994, made by and between
HARTFORD LIFE INSURANCE COMPANY ("HLIC"), 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 HLIC has registered interests in an
individual and group annuity Contract, designated Current Rate Compounding
Annuity Contract (referred to as the "Contract") with the Securities and
Exchange Commission under the Securities Act of 1933, as amended; and
WHEREAS, HESCO has previously agreed to act as distributor in connection with
offers and sales of the Contract under the terms and conditions set forth in
this Distribution Agreement.
NOW THEREFORE, in consideration of the mutual agreements made herein, the
Sponsor and HESCO agree as follows:
I.
HESCO'S DUTIES
1. HESCO, as principal underwriter for the Contract, will use its best efforts
to effect offers and sales of the Contract 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 HLIC.
HESCO is responsible for compliance with all applicable requirements of the
Securities Act of 1933, as amended, and the rules and regulations
thereunder, and all other applicable laws, rules and regulations relating
to the sales and distribution of the Contract, the need for which arises
out of its duties as principal underwriter of said Contract.
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 the Contract if
any of the foregoing in any way represent the duties, obligations, or
liabilities of HLIC 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.
<PAGE>
3. HESCO agrees that it will utilize the then currently effective Prospectus
relating to the Contract in connection with its selling efforts.
As to the other types of sales material, 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 as
required by the Securities and Exchange Act of 1934, as amended.
5. HESCO's services pursuant to this Agreement shall not be deemed to be
exclusive, and it may also render similar services and act as an
underwriter, distributor, or dealer for other 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 any Contract Owner or
party in interest under a Contract for any act or omission in the course,
or connected with, rendering services hereunder.
II.
1. HLIC reserves the right at any time to suspend or limit the public offering
of the Contract 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. HLIC agrees to advise HESCO immediately:
(a) Of any request by the Securities and Exchange Commission for amendment
of its Securities Act registration statement or for additional
information;
(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 units of interest issued with respect to the
Contract or of the initiation of any proceeding for that purpose;
(c) Of the happening of any material event, if known, which makes untrue
any statement in said Securities Act registration statement or which
requires change therein in order to make any statement therein not
misleading.
HLIC will furnish to HESCO such information with respect to the
Contract in such form and signed by such of its officers and directors
as HESCO may reasonably
<PAGE>
request and will warrant that the statements therein contained when so
signed will be true and correct. HLIC will also furnish, from time to
time, such additional information regarding HLIC's financial condition
as HESCO may reasonably request.
III.
COMPENSATION
For providing the principal underwriting functions on behalf of HLIC, HESCO
shall be entitled to receive compensation as agreed upon from time to time by
HLIC and HESCO.
IV.
RESIGNATION AND REMOVAL OF
PRINCIPAL UNDERWRITER
HESCO may resign as Principal Underwriter hereunder, upon 120 days' prior
written notice to HLIC. However, such resignation shall not become effective
until a successor Principal Underwriter has been designated and has accepted its
duties. HLIC may remove HESCO as Principal Underwriter at any time by written
notice.
V.
MISCELLANEOUS
1. This Agreement may not be assigned by any of the parties hereto with 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
prepaid, addressed as follows:
(a) If to HLIC - Hartford Life Insurance Company, Hartford Plaza,
Hartford, Connecticut 06115
(b) If to HESCO - Hartford Equity Sales Company, Inc., Hartford Plaza,
Hartford, Connecticut 06115 or to such other address as HESCO or HLIC
shall designate by written notice to the other.
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 HLIC and shall be
<PAGE>
open to inspection at any time during the business hours of the HLIC.
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.
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:
- ----------------------------------- --------------------------------
Secretary Vice President
(SEAL) HARTFORD EQUITY SALES
COMPANY, INC.
Attest:
By:
- ----------------------------------- -------------------------------
Secretary Vice President
<PAGE>
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 /s/ Robert
-------------------------------
Attest:
/s/ William A. McMahon
- ---------------------------------------
<PAGE>
Exhibit 3(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>
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>
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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>
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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>
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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>
GROUP ANNUITY CONTRACT
HARTFORD LIFE INSURANCE COMPANY
P.O. BOX 2999
HARTFORD, CONNECTICUT 06104-2999
(A STOCK INSURANCE COMPANY)
AGREES WITH THE CONTRACT OWNER TO
PROVIDE BENEFITS AS PROVIDED HEREIN.
SIGNED FOR THE COMPANY
/S/ B. GARDNER
B. GARDNER, SECRETARY
/S/ LON A. SMITH
LON A. SMITH, PRESIDENT
NONPARTICIPATING
GROUP ANNUITY CONTRACT
FORM HL-12506
Printed in U.S.A.
<PAGE>
TABLE OF CONTENTS
PAGE
Contract Specifications 3
Definitions 4
Purchase Payment 5
Control Provisions 5
General Provisions 6
Crediting of Interest and Guarantee Periods 6
Annual Maintenance Fee 7
Premium Taxes 7
Termination Provisions 7
Purchase of Annuity Benefits 9
- 2 -
FORM HL-12506
Printed in U.S.A.
<PAGE>
DEFINITIONS
The definitions in this section apply to the following words and phrases
whenever and wherever they appear in this contract.
ACCOUNT -- An account established for each Purchase Payment for purposes of
crediting interest, annual maintenance fees, Guarantee Periods and Surrenders.
ACCOUNT VALUE -- The sum of the Purchase Payment and all interest earned to
that date; less the sum of the Gross Surrender Value of any surrenders made
to that date; and less the sum of the annual maintenance fees deducted to
that date.
ACCOUNT YEARS -- Account Years are measured from the applicable Payment Date.
ANNUITANT -- Any Participant for whom the Contract Owner has purchased an
annuity under this contract.
ANNUITY COMMENCEMENT DATE -- The date payment of an annuity is to begin under
this contract. The determination of such date shall be made by the Contract
Owner in accordance with the terms of the plan, but will always be the tenth
day of a calendar month.
BENEFICIARY -- The person named within the Plan documents/enrollment forms by
each Participant entitled to receive benefits as per the terms of the
contract in case of the death of the Participant.
COMPANY -- The Hartford Life Insurance Company.
CONTRACT OWNER -- The person or entity specified on page 3.
CURRENT RATE -- The applicable interest rate contained in a schedule of rates
established by the Company from time to time for various durations.
DUE PROOF OF DEATH -- A certified copy of the death certificate, an order of a
court of competent jurisdiction, a statement from a physician who attended
the deceased, or any other proof acceptable to the Company.
GROSS SURRENDER VALUE -- The portion of the Account Value specified by the
Contract Owner for a full or partial surrender.
GUARANTEE PERIOD -- The period for which either an Initial or Subsequent
Guarantee Rate will be credited with respect to each Account.
INITIAL GUARANTEE PERIOD -- The Guarantee Period chosen by the Contract Owner
on the Payment Date.
INITIAL GUARANTEE RATE -- The rate of interest credited to a Purchase Payment
as described in the Crediting of Interest and Guarantee Periods section. This
rate of interest is specified in each Payment Confirmation.
IN WRITING -- A written form satisfactory to the Company and received at their
Home Office in Hartford, Connecticut. All correspondence should be sent to
P.O. Box 2999, Hartford, Connecticut 06104-2999.
NET SURRENDER VALUE -- The amount payable to the Contract Owner on full
surrender or partial surrender from an Account after the application of any
contract charges and/or Market Value Adjustment. It is described in the
Termination Provisions.
- 4 -
<PAGE>
DEFINITIONS (CONTINUED)
PARTICIPANT -- The person(s) covered by the Plan.
PAYMENT CONFIRMATION -- The confirmation issued by the Company to the Contract
Owner which evidences that a Purchase Payment has been made under this
contract and which indicates the applicable Payment Date, Initial Guarantee
Rate and Guarantee Period.
PAYMENT DATE -- The effective date of each Account under this contract and is
the date shown on each Payment Confirmation.
PLAN -- The pension or profit sharing plan maintained by the contract owner
which is qualified under Section 401 (a) of the Internal Revenue Code, Keogh
Plans and eligible state deferred compensation plans under Section 457 of the
Code.
SUBSEQUENT GUARANTEE RATE -- The rate of interest established by the Company
for the applicable subsequent Guarantee Period, but in no event less than 3%.
SURRENDER DATE -- The date the Company receives the Contract Owner's written
request for a surrender or the date requested for surrender by the Contract
Owner, if later.
PURCHASE PAYMENT
No Purchase Payment will be accepted by the Company unless it equals or
exceeds the Minimum Purchase Payment Amount specified on page 3 and is
accompanied by a properly completed purchase order request. The amount of the
Purchase Payment will be reflected in the Payment Confirmation issued upon
receipt of the payment. The Company reserves the right to limit the amount of
the Purchase Payment which will be accepted. The Company also reserves the
right to cease accepting Purchase Payments altogether after 30 days notice to
the Contract Owner.
ALLOCATION OF PURCHASE PAYMENTS
Each Purchase Payment (less applicable premium taxes, if any) will be
allocated to an Account. The Account Value will be determined in accordance
with the terms of this contract.
CONTROL PROVISIONS
CONTRACT OWNER
The designation of Contract Owner will remain in effect until changed by the
Contract Owner. Changes in the designation of the Contract Owner may be made
by written notice to the Company.
The Contract Owner has the sole power to exercise all the rights, options and
privileges granted by this contract or permitted by the Company and to agree
with the Company to any change in or amendments to the contract. The rights
of the Contract Owner shall be subject to the rights of any assignee of
record with the Company.
- 5 -
<PAGE>
CONTROL PROVISIONS (CONTINUED)
BENEFICIARY
The beneficiary is designated by the Plan to receive the death benefit in the
event of the Participant's death. If a Participant has not designated a
Beneficiary or if the Beneficiary is no longer living, the Contract Owner is
the designated Beneficiary. The Contract Owner is solely responsible for
maintaining records identifying Beneficiaries designated by each Participant.
GENERAL PROVISIONS
ENTIRE CONTRACT
This contract constitutes the entire contract.
MODIFICATION OF THE CONTRACT
This contract may be modified at any time by written agreement between the
Contract Owner and the Company. The modification must be signed by the
President, a Vice President, Secretary or an Assistant Secretary of the
Company. 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. No modification of this contract will affect the
method by which any then existing Account Value will be determined.
NON-PARTICIPATING
This contract is non-participating. It does not earn dividends.
TRANSFERS BETWEEN GUARANTEE PERIODS
Once each Account Year, the Contract Owner may elect, in writing, to transfer
out of the current Guarantee Period and into a Guarantee Period of different
duration. At that time, a new Guarantee Period will be established for the
duration chosen by the Contract Owner, and the Account Value at the beginning
of the new Guarantee Period will equal the Account Value for the current
Guarantee Period multiplied by the Market Value Adjustment for the current
Guarantee Period. The Company reserves the right to charge for any such
transfer by reducing the Account Value at the beginning of the new Guarantee
Period by an amount not to exceed $50.00.
Surrender charges will continue to be based on the appropriate Account Year as
determined from the original, applicable purchase payment date.
MISSTATEMENT OF AGE
If the age of an Annuitant has been misstated, the amount of the annuity
payable by the Company shall be that provided by that portion of the amounts
allocated to effect such annuity on the basis of the corrected information
without changing the date of the first payment of such annuity. Any
underpayments by the Company shall be made up immediately and any overpayments
shall be charged against future amounts becoming payable.
If the age of the Participant has been misstated, the amount of any death
benefit shall be determined based upon the correct age of the Participant.
CREDITING OF INTEREST AND GUARANTEE PERIODS
Each Purchase Payment (less the Gross Surrender Value of all surrenders made
and less applicable Premium Taxes, if any) will earn interest at the Initial
Guarantee Rate, compounded annually, each Account Year during the initial
Guarantee Period.
- 6 -
<PAGE>
Within 30 days prior to the end of any Guarantee Period, the Company will
notify the Contract Owner of the expiry of the current Guarantee Period, and
that a subsequent Guarantee Period of the same duration will commence, unless
the Contract Owner has:
a) requested, In Writing, a full surrender within 30 days prior to
the end of the current Guarantee Period; or
b) elected, In Writing, a Guarantee Period of a different duration
from among those offered by the Company at any time within 45
days prior to the end of the current Guarantee Rate is determined.
The Account Value at the beginning of any subsequent Guarantee Period will be
equal to the Account Value at the end of the Guarantee Period just ending.
The Account Value will earn interest at the subsequent Guarantee Rate,
compounded annually, in the subsequent Guarantee Period. This rate will be at
least equal to the Initial Guarantee Rates being credited to Purchase Payments
for new contracts at the time the subsequent Guarantee Rate is determined.
ANNUAL MAINTENANCE FEE
With respect to each Account, at the end of each Account Year and in the event
of a full surrender of an Account prior to the end of an Account Year, a fee
will be deducted from each Account. The annual maintenance fee for each
Account Year is shown on page 3.
PREMIUM TAXES
A deduction is also made for premium taxes, if applicable. The tax will be
deducted, as provided under applicable law, from the Purchase Payment when
received, or from the Gross Surrender Value upon surrender, or from the amount
applied to effect an annuity at the time the annuity is purchased.
TERMINATION PROVISIONS
GENERAL SURRENDERS
Full surrenders may be made from an Account at any time. Partial surrenders
may only be made if:
a) the Gross Surrender Value is at least $1,000; and
b) the remaining Account Value after the Gross Surrender Value has
been deducted is at least $5,000.
In the case of all surrenders the Account Value will be reduced by the Gross
Surrender Value on the Surrender Date and the Net Surrender Value will be
payable to the Contract Owner. Except as provided for in the Special
Surrenders Section, the Net Surrender Value is calculated by the Company on a
daily basis as follows:
(A - B) x C, where:
A = the Gross Surrender Value reduced by any applicable annual
maintenance fee;
B = the surrender charge shown on page 3, plus any unpaid
premium taxes;
C = the Market Value Adjustment described below.
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<PAGE>
TERMINATION PROVISIONS (CONTINUED)
MARKET VALUE ADJUSTMENT
The formula which will be used to determine the Market Value Adjustment is
calculated by the Company on a daily basis as follows:
-- --
: 1 + I : N/12
: -------- :
: 1 + J :
-- --
I = Guaranteed Rate in effect for the current Guarantee Period
(expressed as a decimal, e.g. - 1% = .01).
J = The Current Rate (expressed as a decimal, e.g. - 1% = .01) in
effect for durations equal to the number of years remaining in
the current Guarantee Period (years are rounded to the next
highest number of years). If not available, the Company will
utilize a rate equal to the most recent Moody's Corporate Bond
Yield Average -- Monthly Average Corporates (for the applicable
duration) as published by Moody's Investors Service, Inc.
N = The number of complete months from the Surrender Date to the end
of the current Guarantee Period.
SPECIAL SURRENDERS
A full or partial surrender made at the end of a Guarantee Period may be
subject to a surrender charge as set forth on page 3. A Market Value
Adjustment will not be applied. A request for a surrender at the end of a
Guarantee Period must be received In Writing at least 30 days prior to the
end of such Guarantee Period.
In addition, if the Contract Owner notifies the Company In Writing, the
Company will send the Contract Owner any interest credited during the twelve
month period prior to the written request. No Surrender Charge or Market
Value Adjustment will be imposed on such interest payments.
PAYMENT UPON SURRENDER -- DEFERRAL OF PAYMENT
The Company may defer payment of any partial or total surrender for the period
permitted by law. In no event will this deferral of payment exceed 6 months
from date of receipt of the election to partially or totally surrender. If
the Company defers payment for more than 30 days, interest of at least 4 1/2%
per annum on the amount deferred will be paid. The Company will not, however,
defer payment for more than 30 days for any surrender effective at the end of
any Guarantee Period or for any surrender applied to purchase an annuity.
DEATH BENEFIT
In order to maintain the death benefit as described, the Company requires that
detailed accounting of cumulative purchase payments, cumulative gross
surrenders and current Account Value attached to each Plan Participant be
submitted to the Company on an annual basis by the Contract Owner. Failure to
submit accurate data satisfactory to the Company will give the Company the
right to terminate this extension of benefits.
- 8 -
<PAGE>
TERMINATION PROVISIONS (CONTINUED)
If the Participant dies before the Annuity Commencement Date established by
the Plan, a death benefit will be payable to the designated beneficiary or
Contract Owner as determined by the Plan. The death benefit equals the
proportional Account Value allocated to the Participant as of the date the
Company receives written notification of Due Proof of Death. Notification
should be accompanied by a detailed accounting of cumulation purchase
payments, cumulation gross surrenders and current Account Values updated for
the Participant from the date of the last annual report to the date of death.
The death benefit will be due and payable within a reasonable period of time
(not to exceed 6 months) after the date the Company receives Due Proof of
Death. The death benefit may be taken in one sum or under any of the
settlement options then being offered by the Company. If accounting
requirements are not provided to the satisfaction of the Company, the
Contract Owner may elect partial surrender of the Account Value, with charges
as applicable, to provide settlement.
PURCHASE OF ANNUITY BENEFITS
ANNUITY BENEFIT
In order to maintain the Annuitization benefit as described, the Company
requires that detailed accounting of cumulative purchase payments, cumulative
gross surrenders and current Account Value attached to each Participant be
submitted on an annual basis by the Contract Owner. Failure to submit
accurate data satisfactory to the Company will give the Company the right to
terminate this extension of benefits.
On the Annuity Commencement Date established by the Plan for each
Participant, the Company will, as directed by the Contract Owner, apply the
proportional Account Value allocated to the Participant multiplied by the
Market Value Adjustment, if any, less applicable premium taxes, if any, to
purchase the monthly income payments according to the Annuity Option elected.
Any annuity benefits payable hereunder are nonassignable.
An annuity election should be accompanied by a detailed accounting of
cumulative purchase payments, cumulative gross surrenders and current Account
Value updated for the Participant from the date of the last semi-annual
report to the date of request for annuity.
If accounting requirements are not provided to the satisfaction of the
Company, the Contract Owner may elect partial surrender of Account Values,
with charges as applicable, to purchase an annuity.
ELECTION
Election of any of these options or any of the settlement options then being
offered by the Company must be made In Writing to the office of the Company
in Hartford, Connecticut at least 30 days prior to the date such election is
to become effective. The amount and form of such annuity shall be determined
by the Contract Owner in accordance with the terms of the Plan. The following
information must be provided with any such request:
a) the Participants name, address, date of birth, social security
number; and
b) the amount which is to be distributed to the Participant in the form
of an annuity; and
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<PAGE>
PURCHASE OF ANNUITY BENEFITS (CONTINUED)
c) the form of annuity which is to be purchased for the Participant as
determined in accordance with the provisions of the Annuity Options
and the date annuity payments are to commence; and
d) if the form of annuity applicable to the Participant provides a death
benefit in the event of his death, the name, relationship and address
of the Beneficiary most recently designated by the Participant in
accordance with the provisions of the Plan; and
e) if the form of annuity applicable to the Participant is the Fourth
Option, Joint and Last Survivor Life Annuity, the name, address and
date of birth of the designated secondary payee together with the
percentage (from those percentages then being made available by the
Company) of the annuity payments which are to be continued and paid
to the surviving payee; and
f) any other data that may reasonably be required by the Company.
DATE OF PAYMENT
The first payment under any option shall be made on the tenth day of the
month following the Annuity Commencement Date. Subsequent payments shall be
made on the tenth day of each month in accordance with the manner of payment
selected.
DEATH OF ANNUITANT
In the event of the death of the Annuitant while receiving annuity payments,
the present values at the current dollar amount on the date of death of any
remaining guaranteed payments, or any then remaining balance of proceeds under
the Fifth Option, will be paid in one sum to the Beneficiary unless other
provisions have been requested and approved by the Company. Calculations of
such present value of the guaranteed payments remaining will be based on the
interest rate that is used by the Company to determine the amount of each
certain payment.
TERMINATION AFTER THE ANNUITY COMMENCEMENT DATE
An annuity effected under this Contract may not be surrendered after the
commencement of annuity payments.
ANNUITY OPTIONS
FIRST OPTION -- Life Annuity -- An annuity payable monthly during the lifetime
of Annuitant, ceasing with the last payment due prior to the death of the
Annuitant.
SECOND OPTION -- Life Annuity with 120, 180, or 240 Monthly Payments Certain --
An annuity providing monthly income to the Annuitant for a fixed period of
120 months, 180 months or 240 months (as selected), and for as long
thereafter as the Annuitant shall live.
THIRD OPTION -- Cash Refund Life Annuity -- An annuity payable monthly during
the lifetime of the Annuitant, ceasing with the last payment due prior to the
death of the Annuitant provided that, at the death of the Annuitant, the
Beneficiary will receive an additional payment equal to the excess, if any,
of (a) over (b) where (a) is the Account Value applied on the Annuity
Commencement Date under this option and (b) is the dollar amount of annuity
payments already paid.
- 10 -
<PAGE>
FOURTH OPTION -- Joint and Last Survivor Life Annuity -- An annuity payable
monthly during the joint lifetime of the Annuitant and a secondary payee, and
thereafter during the remaining lifetime of the survivor, ceasing with the
last payment prior to the death of the survivor.
*FIFTH OPTION -- Payments for a Designated Period -- An amount payable monthly
for the number of years selected which may be from 5 to 30 years.
* If this contract is issued to qualify under Section 401, 403, or 408 of the
Internal Revenue Code of 1954 as amended, these options shall be 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 will
be computed under the mortality table then in use by the Company.
ANNUITY TABLES
The attached tables show the dollar amount of the monthly payments for each
$1,000 applied under the five options. Under the First, Second, or Third
Options, the amount of each payment will depend upon the age of the Annuitant
at the time the first payment is due. Under the Fourth Option, the amount of
each payment will depend upon the age of both payees at the time first
payment is due.
DESCRIPTION OF TABLES
The tables for the First, Second, Third and Fourth Options are based on the
1983a Individual Annuity Mortality Table with ages set back one year and a
net investment rate of 4% per annum. The table for the Fifth Option is based
on a net investment rate of 4% per annum.
MINIMUM PAYMENT
The option elected must result in a payment of an amount at least equal to
the minimum payment amount according to Company rules then in effect. If at
any time payments are less than the minimum payment amount, the Company has
the right to change the frequency to an interval resulting in a payment at
least equal to the minimum. If any amount due is less than the minimum per
year, the Company may make other arrangements that are equitable to the
Annuitant.
- 11 -
<PAGE>
AMOUNT OF FIRST MONTHLY PAYMENT
FOR EACH $1,000 APPLIED
FIRST, SECOND AND THIRD OPTIONS--SINGLE LIFE ANNUITIES WITH:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Payee's Cash
Age Monthly Payments Guaranteed Refund
- ------------------------------------------------------------------------------------------
None 120 180 240
---- ----- ----- -----
<S> <C> <C> <C> <C> <C>
35 $3.94 $3.94 $3.93 $3.92 $3.91
40 4.11 4.10 4.09 4.07 4.07
45 4.33 4.31 4.29 4.25 4.25
50 4.61 4.58 4.54 4.48 4.50
51 4.68 4.64 4.59 4.53 4.54
52 4.75 4.70 4.65 4.58 4.60
53 4.82 4.77 4.71 4.63 4.66
54 4.89 4.84 4.78 4.69 4.73
55 4.98 4.92 4.85 4.74 4.79
56 5.06 5.00 4.92 4.80 4.86
57 5.15 5.08 4.99 4.86 4.94
58 5.25 5.17 5.07 4.92 5.02
59 5.35 5.26 5.14 4.98 5.09
60 5.46 5.36 5.23 5.05 5.20
61 5.58 5.46 5.31 5.11 5.27
62 5.70 5.57 5.40 5.18 5.38
63 5.84 5.68 5.49 5.24 5.48
64 5.98 5.80 5.59 5.30 5.60
65 6.13 5.93 5.69 5.37 5.73
66 6.30 6.06 5.78 5.43 5.86
67 6.48 6.20 5.88 5.49 5.97
68 6.66 6.35 5.99 5.55 6.13
69 6.87 6.50 6.09 5.60 6.29
70 7.08 6.66 6.19 5.65 6.47
75 8.44 7.52 6.67 5.85 7.49
80 10.41 8.43 7.03 5.96 8.96
</TABLE>
FOURTH OPTION--JOINT AND LAST SURVIVOR ANNUITY
<TABLE>
<CAPTION>
First Payee's Age of Second Payee
Age 35 40 45 50 55 60 65 70 75 80
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
35 $3.62 $3.66 $3.70 $3.73 $3.76 $3.78 $3.80 $3.82 $3.83 $3.84
40 3.66 3.73 3.78 3.83 3.87 3.91 3.94 3.96 3.98 3.99
45 3.70 3.78 3.86 3.93 4.00 4.06 4.10 4.14 4.16 4.19
50 3.73 3.83 3.93 4.04 4.13 4.22 4.29 4.35 4.39 4.43
55 3.76 3.87 4.00 4.13 4.27 4.39 4.51 4.60 4.67 4.73
60 3.78 3.91 4.06 4.22 4.39 4.57 4.74 4.90 5.02 5.12
65 3.80 3.94 4.10 4.29 4.51 4.74 4.99 5.23 5.44 5.60
70 3.82 3.96 4.14 4.35 4.60 4.90 5.23 5.57 5.90 6.20
75 3.83 3.98 4.16 4.39 4.67 5.02 5.44 5.90 6.40 6.87
80 3.84 3.99 4.19 4.43 4.73 5.12 5.60 6.20 6.87 7.58
</TABLE>
The monthly payment for any combination of ages not shown will be quoted upon
request.
FIFTH OPTION--PAYMENTS FOR A DESIGNATED PERIOD
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Amount Amount Amount Amount Amount Amount
No. of No. of No. of No. of No. of No. of
of Monthly of Monthly of Monthly of Monthly of Monthly of Monthly
Years Payments Years Payments Years Payments Years Payments Years Payments Years Payments
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 $18.32 10 $10.06 15 $7.34 20 $6.00 25 $5.22 30 $4.72
6 15.56 11 9.31 16 7.00 21 5.81 26 5.10
7 13.59 12 8.69 17 6.71 22 5.64 27 5.00
8 12.12 13 8.17 18 6.44 23 5.49 28 4.90
9 10.97 14 7.72 19 6.21 24 5.35 29 4.80
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
[LOGO] THE HARTFORD
DISABILITY RIDER
This rider is issued as a part of the Contract to which it is attached. The
Date of Issue and Contract Date applicable to this rider are the same as that
of the Contract. Except where this rider provides otherwise, it is subject to
all conditions and limitations of such Contract.
WAIVER OF CONTINGENT DEFERRED SALES CHARGE
THE BENEFIT
In order to maintain the Waiver of Contingent Deferred Sales Charge Benefit
as described, the Company requires that detailed accounting of cumulative
purchase payments, cumulative gross surrenders and current Account Value
attached to each Participant be submitted on an annual basis by the Contract
Owner. Failure to submit accurate data satisfactory to the Company will give
the Company the right to terminate this Waiver of Deferred Sales Charge
Benefit.
We will waive the contingent deferred sales charge which would occur as a
result of partial or full surrender of the Contract Values if, prior to age
65, the Participant becomes totally disabled and is totally disabled at the
time of surrender request.
To qualify for this benefit, the Contract Owner must provide written proof,
satisfactory to the Company, that the Participant is totally disabled.
DEFINITION OF TOTAL DISABILITY
Total Disability means a disability which:
(a) results from bodily injury or disease;
(b) begins while this contract and this rider are in force;
(c) has existed continuously for at least 12 months; and
(d) prevents the Participant from engaging in an occupation.
During the first 12 months of disability, occupation means the Participant's
regular occupation. Thereafter, occupation means that for which the
Participant is reasonably fitted by:
(a) education;
(b) training; or
(c) experience.
If accounting requirements are not provided to the satisfaction of the
Company, the Contract Owner may elect partial surrender of Account Values,
with charges as applicable, to provide settlement.
Signed for THE HARTFORD LIFE INSURANCE COMPANY
/s/ Bruce D. Gardner /s/ Lowndes A. Smith
Bruce D. Gardner, SECRETARY Lowndes A. Smith, PRESIDENT
<PAGE>
EXHIBIT 4(b)
GROUP ANNUITY CERTIFICATE
HARTFORD LIFE INSURANCE COMPANY
P.O. BOX 2999
HARTFORD, CONNECTICUT 06104-2999
(A stock insurance company)
Certifies that a Group Annuity Contract has been issued to the
Contract Owner specified in this Certificate.
This Certificate is a summary of the provisions of the Group Annuity Contract
issued to the Contract Owner.
Signed for the Company
/s/ Bruce D. Gardner /s/ Lowndes A. Smith
Bruce D. Gardner, Secretary Lowndes A. Smith, President
Form HL-12524 Printed in U.S.A. [LOGO]
<PAGE>
ANNUITY SPECIFICATIONS
DESIGNATED BENEFICIARY DR JOSHY ABRAHAM
CONTINGENT BENEFICIARY BAIJUABRAHAM
PURCHASE PAYMENT $10,000.00
INITIAL GUARANTEE PERIOD 6 YEARS
INITIAL GUARANTEE RATE 6.70%
ANNUAL MAINTENANCE FEE $0.00
SURRENDER CHARGE
THIS CHARGE IS A PERCENTAGE OF THE GROSS SURRENDER VALUE FOR ANY AMOUNT
SURRENDERED DURING THE FIRST 7 CERTIFICATE YEARS. THIS CHARGE EQUALS:
CERTIFICATE YEARS CHARGE
----------------- ------
1 7%
2 6%
3 5%
4 4%
5 3%
6 2%
7 1%
THEREAFTER 0%
FOR A SURRENDER MADE AT THE END OF THE INITIAL GUARANTEE PERIOD, NO SURRENDER
CHARGE WILL BE APPLIED PROVIDED SUCH SURRENDER OCCURS ON OR AFTER THE END OF
THE 3RD CERTIFICATE YEAR. FOR A SURRENDER MADE AT THE END OF ANY OTHER
GUARANTEE PERIOD, NO SURRENDER CHARGE WILL BE APPLIED PROVIDED SUCH SURRENDER
OCCURS ON OR AFTER THE END OF THE 5TH CERTIFICATE YEAR. A REQUEST FOR
SURRENDER AT THE END OF A GUARANTEE PERIOD MUST BE RECEIVED IN WRITING DURING
THE 30 DAY PERIOD PRECEDING THE END OF THAT GUARANTEE PERIOD.
ANNUITANT DR MARIAMMA ABRAHAM
CONTINGENT ANNUITANT NONE
PARTICIPANT SAME
PARTICIPANT
CERTIFICATE ANNUITY COMMENCEMENT
NUMBER 196530 DATE OCTOBER 14, 2034
CERTIFICATE ANNUITANT'S AGE
DATE JULY 20, 1994 ON CERTIFICATE DATE 49
CONTRACT OWNER HTFD MULTI BROKER DEALER TRST
GROUP ANNUITY CONTRACT NUMBER 12000
<PAGE>
ANNUITY SPECIFICATIONS
ANNUITANT DR MARIAMMA ABRAHAM
CONTINGENT ANNUITANT NONE
CERTIFICATE NO. 196530
FORM NUMBERS DESCRIPTION OF BENEFITS
HL-
GROUP ANNUITY CERTIFICATE
12524, 12525
12526, 12527
12528, 12529
12129
FORM HL-12525 PRINTED IN U.S.A. PAGE 3 (CONTINUED)
<PAGE>
DEFINITIONS The definitions in this section apply to the following
words and phrases whenever and wherever they appear in this
certificate.
ACCOUNT VALUE -- The sum of the Purchase Payment and all
interest earned to that date; less the sum of the Gross
Surrender Value of any surrenders made to that date; and
less the sum of the annual maintenance fees deducted to
that date.
ANNUITANT -- The person on whose life a certificate is
issued.
ANNUITY COMMENCEMENT DATE -- The date shown on page 3.
BENEFICIARY -- The person entitled to receive benefits as
per the terms of the Contract in case of the death of the
Annuitant or the Participant or the joint Participant, as
applicable.
CERTIFICATE DATE -- The date shown on page 3. Certificate
years are measured from the Certificate Date.
COMPANY -- The Hartford Life Insurance Company.
CONTINGENT ANNUITANT -- The person designated by the
Participant who, upon the Annuitant's death prior to the
Annuity Commencement Date, becomes the Annuitant.
CONTRACT -- The group annuity contract issued to the
Contract Owner specified on page 3.
CURRENT RATE -- The applicable interest rate contained in
a schedule of rates established by the Company from time to
time for various durations.
DUE PROOF OF DEATH -- A certified copy of the death
certificate, an order of a court of competent jurisdiction,
a statement from a physician who attended the deceased, or
any other proof acceptable to the Company.
GROSS SURRENDER VALUE -- The portion of the Account Value
specified by the Participant for a full or partial
surrender.
GUARANTEE PERIOD -- The period for which either an
Initial or Subsequent Guarantee Rate will be credited.
HOME OFFICE OF THE COMPANY -- Currently located at 200
Hopmeadow St., Simsbury CT. All correspondence concerning
this certificate should be sent to our mailing address at
P.O. Box 2999, Attn: Individual Annuity Operations,
Hartford, CT 06104-2999.
INITIAL GUARANTEE PERIOD -- The Guarantee Period chosen
by the Participant on the Certificate Date.
INITIAL GUARANTEE RATE -- The rate of interest credited
to a Purchase Payment as described in the Crediting of
Interest and Guarantee Periods section. This rate of
interest is specified on page 3.
IN WRITING -- A written form satisfactory to the Company
and received at their Home Office as defined.
Page 4
<PAGE>
CONTROL
PROVISIONS
(CONTINUED) In the event of the death of the Annuitant when there is
no surviving Contingent Annuitant the Beneficiary will be
as follows. If the Annuitant is a joint Participant and
the death of the Annuitant occurs prior to the Annuity
Commencement Date, the Beneficiary shall be the surviving
Participant, notwithstanding that the Designated
Beneficiary may be different. Otherwise, the Beneficiary
will be the Designated Beneficiary then in effect. If there
is no Designated Beneficiary in effect or if the Designated
Beneficiary is no longer living, the Participant will be
the Beneficiary. If the Annuitant is the sole Participant
and there is no Designated Beneficiary in effect, the
Annuitant's estate will be the Beneficiary.
In the event of the death of the Participant prior to the
Annuity Commencement Date, the Beneficiary will be as
follows. Upon the death of the joint Participant, the
Beneficiary will be the surviving joint Participant,
notwithstanding that the Designated Beneficiary may be
different. If the Participant was the sole Participant, the
Beneficiary shall be the Designated Beneficiary then in
effect. If no Beneficiary designation is in effect or if
the Designated Beneficiary has predeceased the Participant,
the Participant's estate will be the Beneficiary. At the
first death of a joint Participant prior to the Annuity
Commencement Date, the Beneficiary shall be the surviving
Participant notwithstanding that the Designated Beneficiary
may be different.
GENERAL
PROVISIONS THE CONTRACT
The Contract is an agreement between the Contract Owner
and the Company. This certificate is a summary of the Group
Annuity Contract. The certificate constitutes the entire
certificate.
MODIFICATION
The only way the Contract and Certificate may be modified
is by a written agreement with the Contract Owner signed by
the Company's President, a Vice President, Secretary, or an
Assistant Secretary. No modification will affect the amount
or term of any annuity begun prior to the modification
unless it is required to conform the Contract to any
Federal or State Statutes. No modification of the Contract
will affect the method by which the Participant's Account
Value will be determined.
NON-PARTICIPATING
This certificate is nonparticipating. It does not earn
dividends.
MISSTATEMENT OF AGE
If the age of the Annuitant and/or Participant is
incorrectly stated, death benefits or annuity payments will
be adjusted to the payment which would have been provided
at the correct age adjusted for any overpayments or
underpayments which had been made.
Page 6
<PAGE>
ANNUAL
MAINTENANCE FEE At the end of each Certificate Year prior to the Annuity
Commencement Date and in the event of a full surrender of
this certificate prior to the end of a Certificate Year, a
fee will be deducted from the Account Value. The annual
maintenance fee for each Certificate Year is shown on
page 3.
PREMIUM TAXES A deduction is also made for premium taxes, if
applicable. On any certificate subject to premium tax, the
tax will be deducted, as provided under applicable law,
from the Purchase Payment when received, from the Gross
Surrender Value upon surrender, or from the amount applied
to effect any annuity at the time annuity payments commence.
TERMINATION GENERAL SURRENDERS
PROVISIONS
Full surrenders may be made under this Certificate at any
time. Partial surrenders may only be made if:
a) the Gross Surrender Value is at least $1,000; and
b) the remaining Account Value after the Gross
Surrender Value has been deducted is at least $5,000.
In the case of all surrenders, the Account Value will be
reduced by the Gross Surrender Value on the Surrender Date
and the Net Surrender Value will be payable to the
Participant. Except as provided for in the special
Surrenders Section, the Net Surrender Value is calculated
by the Company on a daily basis as follows:
(A - B) x C, where:
A = the Gross Surrender Value reduced by an applicable
annual maintenance fee;
B = the surrender charge shown on page 3, plus any
unpaid premium taxes;
C = the Market Value Adjustment described below.
MARKET VALUE ADJUSTMENT
The formula which will be used to determine the Market
Value Adjustment is calculated by the Company on a daily
basis as follows:
| 1 + I | N/12
|-------|
| 1 + J |
I = Guarantee Rate in effect for the Current Guarantee
Period (expressed as a decimal, e.g., - 1% = .01).
Page 8
<PAGE>
ANNUITY OPTIONS ANNUITY BENEFIT
On the Annuity Commencement Date, unless directed
otherwise, the Company will apply the Participant's
Account Value multiplied by the Market Value Adjustment,
less applicable premium taxes, if any, to purchase the
monthly income payments according to the Annuity Option
elected. If the Annuity Commencement Date coincides with
the end of any Guaranteed Period, no Market Value
Adjustment will be applied in the determination of the
monthly income payments.
ELECTION OF ANNUITY OPTIONS
The Participant may elect to have the Account Value (less
applicable premium taxes, if any) applied on the Annuity
Commencement Date under any of the Annuity Options
described below or any other Annuity Option being offered
by the Company at the time of annuitization. In the absence
of such election the Account Value will be applied on the
Annuity Commencement Date under the Second Option to
provide a life annuity with 120 monthly payments certain.
Election of any of these options must be made in Writing
to the Company at least 30 days prior to the date such
election is to become effective.
DATE OF PAYMENT
The first payment under any option shall be made on the
tenth day of the month following the Annuity Commencement
Date. Subsequent payments shall be made on the tenth day of
each month in accordance with the manner of payment
selected.
The Participant, or in the case the Participant shall
have not done so, the Beneficiary after the death of the
Participant or Annuitant, as applicable, may elect in lieu
of payment in one sum, that any amount or part thereof due
by the Company under this Certificate to the Beneficiary
shall be applied under any one of the options stated below.
Such election must be made within one year after death of
the Participant or Annuitant, as applicable, by written
notice to the office of the Company.
DEATH OF ANNUITANT
In the event of the death of the Annuitant while receiving
annuity payments, the present values at the current dollar
amount on the date of death of any remaining guaranteed
number of payments, or any then remaining balance of
proceeds under the Fifth Option will be paid in one sum to
the Beneficiary unless other provisions shall have been
made and approved by the Company. However, if the
Participant was also the Annuitant, any method of
distribution must provide that any amount payable as a
death benefit will be distributed at least as rapidly as
under the method of distribution in effect at the time of
the Participant's death. Calculations of such present value
of the guaranteed payments remaining will be based on the
interest rate that is issued by the Company to determine
the amount of each certain payment.
TERMINATION AFTER THE ANNUITY COMMENCEMENT DATE
An annuity effected under a certificate may not be
surrendered after the commencement of annuity payments.
Page 10
<PAGE>
AMOUNT OF FIRST MONTHLY PAYMENT
FOR EACH $1,000 APPLIED
FIRST, SECOND AND THIRD OPTIONS -- SINGLE LIFE ANNUITIES WITH:
<TABLE>
<CAPTION>
Male Payee Female Payee
---------------------------------- ----------------------------------
Age Monthly Payments Guaranteed Cash Monthly Payments Guaranteed Cash
---------------------------------- Refund ---------------------------------- Refund
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NONE 120 180 240 NONE 120 180 240
35 $4.03 $4.02 $4.01 $3.99 $3.99 $3.86 $3.86 $3.85 $3.84 $3.84
40 4.22 4.21 4.19 4.16 4.16 4.01 4.00 3.99 3.98 3.98
45 4.47 4.44 4.41 4.36 4.36 4.19 4.18 4.17 4.15 4.15
50 4.79 4.74 4.68 4.60 4.63 4.44 4.42 4.39 4.36 4.37
51 4.86 4.81 4.74 4.65 4.68 4.50 4.47 4.45 4.40 4.41
52 4.94 4.88 4.80 4.71 4.74 4.56 4.53 4.50 4.45 4.47
53 5.02 4.95 4.87 4.76 4.81 4.62 4.59 4.56 4.50 4.51
54 5.10 5.03 4.94 4.82 4.88 4.69 4.66 4.62 4.56 4.58
55 5.19 5.11 5.01 4.88 4.95 4.76 4.72 4.68 4.61 4.64
56 5.29 5.20 5.09 4.94 5.03 4.84 4.80 4.74 4.67 4.70
57 5.39 5.29 5.17 5.00 5.11 4.92 4.87 4.81 4.73 4.77
58 5.49 5.38 5.25 5.06 5.20 5.00 4.95 4.88 4.79 4.84
59 5.61 5.48 5.33 5.12 5.28 5.09 5.03 4.96 4.85 4.91
60 5.73 5.59 5.42 5.18 5.38 5.19 5.12 5.04 4.91 5.02
61 5.86 5.70 5.51 5.24 5.48 5.29 5.22 5.12 4.98 5.07
62 6.00 5.82 5.60 5.31 5.59 5.40 5.32 5.21 5.05 5.17
63 6.16 5.95 5.69 5.37 5.71 5.52 5.42 5.30 5.11 5.26
64 6.32 6.08 5.79 5.43 5.84 5.65 5.53 5.39 5.18 5.36
65 6.49 6.21 5.89 5.48 5.98 5.78 5.65 5.49 5.25 5.48
66 6.68 6.35 5.98 5.54 6.13 5.92 5.77 5.58 5.32 5.59
67 6.88 6.50 6.08 5.59 6.23 6.08 5.90 5.69 5.39 5.72
68 7.09 6.65 6.18 5.64 6.40 6.24 6.04 5.79 5.45 5.86
69 7.31 6.81 6.28 5.69 6.58 6.42 6.19 5.90 5.51 6.01
70 7.56 6.97 6.37 5.73 6.77 6.61 6.34 6.01 5.58 6.18
75 9.05 7.83 6.80 5.89 7.89 7.83 7.21 6.54 5.82 7.21
80 11.16 8.66 7.10 5.97 9.86 9.65 8.19 6.97 5.94 8.68
</TABLE>
FOURTH OPTIONS -- JOINT AND LAST SURVIVOR ANNUITY
<TABLE>
<CAPTION>
Age of
Male Age of Female Payee
Payee 35 40 45 50 55 60 65 70 75 80
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
35 $3.62 $3.68 $3.73 $3.77 $3.81 $3.84 $3.87 $3.89 $3.90 $3.91
40 3.65 3.73 3.80 3.86 3.92 3.97 4.01 4.04 4.07 4.09
45 3.68 3.77 3.86 3.95 4.04 4.12 4.18 4.23 4.27 4.30
50 3.70 3.80 3.92 4.04 4.16 4.27 4.37 4.45 4.52 4.57
55 3.72 3.83 3.96 4.11 4.27 4.43 4.58 4.71 4.81 4.89
60 3.73 3.85 4.00 4.17 4.36 4.57 4.79 4.99 5.17 5.30
65 3.74 3.87 4.03 4.21 4.44 4.70 4.99 5.29 5.57 5.80
70 3.75 3.88 4.05 4.25 4.50 4.81 5.17 5.57 5.99 6.38
75 3.76 3.89 4.06 4.27 4.54 4.88 5.31 5.82 6.40 7.00
80 3.76 3.90 4.07 4.29 4.57 4.94 5.41 6.01 6.75 7.58
</TABLE>
FIFTH OPTION -- PAYMENTS FOR A DESIGNATED PERIOD
<TABLE>
<CAPTION>
Amount Amount Amount Amount Amount Amount
No of No of No of No of No of No of
of Monthly of Monthly of Monthly of Monthly of Monthly of Monthly
Years Payments Years Payments Years Payments Years Payments Years Payments Years Payments
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 $18.32 10 $10.06 15 $7.34 20 $6.00 25 $5.22 30 $4.72
6 15.56 11 9.31 16 7.00 21 5.81 26 5.10
7 13.59 12 8.69 17 6.71 22 5.64 27 5.00
8 12.12 13 8.17 18 6.44 23 5.49 28 4.90
9 10.97 14 7.72 19 6.21 24 5.35 29 4.80
</TABLE>
The monthly payment for any age not shown will be quoted upon request.
[LOGO]
<PAGE>
Form HL-12524 Printed in U.S.A.
<PAGE>
[LOGO]
ITT HARTFORD
This notice is to advise you that should any complaints arise regarding this
annuity contract, you may contact the following:
ITT Hartford Life Insurance Companies
P.O. Box 2999
Hartford, CT 06104-2999
Telephone: (800) 862-6668
If the problem is not resolved, you may write to the Illinois Insurance
Department at the following address:
Illinois Department of Insurance
Consumer Division
320 West Washington Street
Springfield, Illinois 62767
HL-A13885-1
<PAGE>
IMPORTANT
-------------------------------------------
PLEASE SIGN AND RETURN THE
ENCLOSED ANNUITY CONFIRMATION FORM
-------------------------------------------
Please take a few minutes to look over your
enclosed annuity contract and confirm that it
accurately reflects your decisions.
It is important that we have certain key
information to properly establish this contract
and that your signature be added to your
contract record. Therefore, we ask that you
complete, sign and return the enclosed
ANNUITY CONFIRMATION FORM in the
postage-paid envelope.
If you have any questions about the form or any
of the information requested, you may call your
local registered representative or contact ITT
Hartford Customer Service staff toll-free at
1-800-862-6668 week days between 8:00 AM
and 7:00 PM (Eastern Time).
PLEASE NOTE: If this form is not signed and
returned, a signature guarantee will be required
prior to processing any provision in your
contract, including withdrawals.
Thank you
<PAGE>
HARTFORD ANNUITY CONFIRMATION FORM
DEAR ANNUITY CONTRACT OWNER(S) OR PARTICIPANT(S):
1. PLEASE FILL-IN YOUR DESIGNATED BENEFICIARY(IES) BELOW,
2. CORRECT YOUR SOCIAL SECURITY NUMBER BELOW, IF NEEDED,
3. SIGN AND DATE THE BOTTOM OF THIS FORM,
4. ENCLOSE THIS COMPLETED FORM IN THE POSTAGE-PAID ENVELOPE
AND DROP IT IN THE U.S. MAIL AT YOUR EARLIEST CONVENIENCE.
RE: ANNUITY CONTRACT/CERTIFICATE NUMBER: 12000 / 196530
------------------------
ANNUITANT: DR MARIAMMA ABRAHAM
-------------------------------------------------
OWNER SOCIAL SECURITY (TAX ID) NUMBER: (X ###-##-####
--------------------
SS # CORRECTION - -
--- --- --- --- --- --- --- --- ---
BENEFICIARY: PLEASE NOTE THE DESIGNATED BENEFICIARY(IES) FOR THIS
ANNUITY BELOW IF OTHER THAN THE ESTATE OF THE OWNER/PARTICIPANT:
NAME(S) RELATIONSHIP PERCENTAGE
PRIMARY DR JOSHY ABRAHAM SPOUSE
--------------------------- ------------ ----------
CONTINGENT BAI JUABRAHAM CHILD
--------------------------- ----------- ----------
PLEASE USE REVERSE SIDE OR THE ENCLOSED CHANGE REQUEST FORM TO
PROVIDE ADDITIONAL BENEFICIARIES OR ANY OTHER ADDITIONS/CORRECTIONS
YOU WISH TO MAKE TO THIS ANNUITY NOW.
I CERTIFY THAT MY SOCIAL SECURITY/TAX I.D. NUMBER IS CORRECT AS
NOTED ABOVE AND AFFIRM THAT THIS ANNUITY IS NOT A REPLACEMENT OF
ONE OR MORE ANNUITY OR LIFE INSURANCE CONTRACTS.
- -----------------------------------
CONTINGENT ANNUITANT, IF ANY
X
------------------------------------------------------------------------------
OWNER/PARTICIPANT SIGNATURE -- DR MARIAMMA ABRAHAM
------------------------------------------------
X
------------------------------------------------------------------------------
JOINT OWNER/PARTICIPANT, IF ANY, --
-----------------------------------------
DATE:
-------------------------------
IF YOU HAVE ANY QUESTIONS OR REQUIRE ANY ASSISTANCE IN COMPLETING
THIS FORM, PLEASE CONTACT YOUR LOCAL REGISTERED REPRESENTATIVE, OR
CALL THE HARTFORD'S TOLL FREE CUSTOMER SERVICE LINE: 1-800-862-6668.
THANK YOU FOR SELECTING A HARTFORD ANNUITY, COMPLETING THIS FORM,
AND MAILING IT BACK TO US IN THE POSTAGE-PAID ENVELOPE PROVIDED.
<PAGE>
Please forward to
Hartford Life Insurance Companies ANNUITY CHANGE REQUEST
Attn: Individual Annuity Operations
P.O. Box 2999
Hartford, CT 06104-2999
[LOGO]
ITT HARTFORD
- -------------------------------------------------------------------------------
Annuitant Name Account No.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NAME CHANGE/REVISION
/ / Annuitant / / Contract Owner(s)/ / / Contingent Beneficiary
Participant(s) (Include Relationship)
/ / Agent / / Contingent Annuitant / / Beneficiary
(Include Relationship)
*NOTE: The designated annuitant and contingent annuitant cannot be changed.
The space provided is for name corrections only.
From:
-------------------------------------------------------------------------
To:
-------------------------------------------------------------------------
ADDRESS CHANGE
/ / Annuitant / / Contract Owner(s)/ / / Agent / / Broker-Dealer Firm
Participant(s)
From:
-------------------------------------------------------------------------
To:
-------------------------------------------------------------------------
SOCIAL SECURITY CHANGE/TAX I.D. NUMBER CHANGE
/ / Annuitant / / Contract Owner/ / / Joint Owner/Participant
Participant
/ / Beneficiary / / Contingent Beneficiary
From:
-------------------------------------------------------------------------
To:
-------------------------------------------------------------------------
DATE OF BIRTH CHANGE
/ / Annuitant / / Contract Owner/Participant / / Joint Owner/Participant
From:
-------------------------------------------------------------------------
To:
-------------------------------------------------------------------------
- -------------------------- ------------------------------------ -------------
(Signature of Contract (Signature of Joint Owner/ (Date)
Owner/Participant) Participant, if applicable)
Form HL-12524 Printed in U.S.A.
<PAGE>
INDIVIDUAL SINGLE PREMIUM DEFERRED ANNUITY CONTRACT
HARTFORD LIFE INSURANCE COMPANY
P.O. BOX 2999
HARTFORD, CONNECTICUT 06104-2999
(A stock life insurance company, herein after called the Company)
The Company agrees with the Contract Owner to provide the benefits as described
in this contract.
Signed for the Company
/s/ Bruce D. Gardner /s/ Lowndes A. Smith
Bruce D. Gardner, Secretary Lowndes A. Smith, President
READ THIS CONTRACT CAREFULLY
This is a legal contract between the Contract Owner and the Company.
MARKET VALUE ADJUSTMENT FORMULA
This contract contains a Market Value Adjustment formula. The formula may result
in both upward and downward adjustments in the Gross Surrender Value. Details of
the Market-Value Adjustment are described on page 9.
The Market-Value Adjustment formula will not be applied when the Contract Owner
requests, In Writing:
a) a full or partial surrender at the end of any Guarantee Period if the
Company receives the request during the 30 day period preceding the end of
such Guarantee Period; or
b) any interest credited during the twelve month period prior to the written
request.
NONPARTICIPATING
RIGHT TO EXAMINE CONTRACT
The Company wants the Contract Owner to be satisfied with this contract. The
Company urges the Contract Owner to examine it closely. If for any reason the
Contract Owner is not satisfied with this contract, the Contract Owner may
surrender the contract by returning the contract within ten days after it was
purchased. A written request to surrender the contract must accompany the
contract. In such event the Company will pay the Contract Owner an amount equal
to the sum of a) Account Value on the date of surrender multiplied by the Market
Value Adjustment formula and b) any charges deducted from the purchase payment.
Form HL-12511 Printed in U.S.A.
<PAGE>
TABLE OF CONTENTS
Page
Contract Specifications 3
Definitions 4
Purchase Payment 5
Contract Control Provisions 5
General Provisions 8
Crediting of Interest and Guarantee Periods 8
Termination Provisions 8
Settlement Provisions 10
Annuity Tables 12
Form HL-12511 Printed in U.S.A
Page 2
<PAGE>
DEFINITIONS The definitions in this section apply to the following words and
phrases whenever and wherever they appear in this contract.
ACCOUNT VALUE -- The sum of the Purchase Payment and all interest
earned to that date; less the sum of the Gross Surrender Value of
any surrenders made to that date; and less the sum of the Annual
Contract Maintenance fees deducted to that date.
ANNUAL CONTRACT MAINTENANCE FEE -- An amount which is deducted
from the Account Value at the end of the Contract Year or on the
date of full surrender, if earlier. The amount is shown on Page 3.
ANNUITANT -- The person on whose life this contract is issued.
ANNUITY COMMENCEMENT DATE -- The date shown on page 3.
BENEFICIARY -- The person entitled to receive benefits as per the
terms of the contract in case of the death of the Annuitant or the
Contract Owner or joint Contract Owner as applicable.
COMPANY -- The Hartford Life Insurance Company.
CONTINGENT ANNUITANT -- The person designated by the Contract
Owner who, upon the Annuitant's death prior to the Annuity
Commencement Date, becomes the Annuitant.
CONTRACT DATE -- The date shown on Page 3. Contract Years are
measured from the Contract Date.
CONTRACT OWNER -- The owner(s) of the contract.
CURRENT RATE -- The applicable interest rate contained in a
schedule of rates established by the Company from time to time
for various durations.
DUE PROOF OF DEATH -- A certified copy of the death certificate,
an order of a court of competent jurisdiction, a statement from a
physician who attended the deceased, or any other proof acceptable
to the Company.
GROSS SURRENDER VALUE -- The portion of the Account Value
specified by the Contract Owner for a full or partial surrender.
GUARANTEE PERIOD --The period for which either an initial or
Subsequent Guarantee Rate is credited.
HOME OFFICE OF THE COMPANY -- Currently located at 200 Hopemeadow
St., Simsbury, CT. All correspondence concerning this contract
should be sent to our mailing address at P.O. Box 2999, Att:
Individual Annuity Operations, Hartford CT 06104-2999.
INITIAL GUARANTEE RATE -- The rate of interest credited to a
Purchase Payment as described in the Crediting of Interest and
Guarantee Periods section. This rate of interest is specified on
page 3.
IN WRITING -- A written form satisfactory to the Company and
received at their Home Office as defined.
Page 4
<PAGE>
DEFINITIONS NET SURRENDER VALUE -- The amount payable to the Contract Owner on
(CONTINUED) full surrender or partial surrender under this contract after the
application of any contract charges and/or Market Value Adjustment.
It is described in the General Surrenders section of the
Termination Provisions.
PREMIUM TAX -- The amount of tax, if any, charged by the state or
municipality on purchase payments, from Gross Surrender Value upon
Surrender, or from the amount applied to effect an annuity.
SUBSEQUENT GUARANTEE RATE -- The rate of interest established by
the Company for the applicable Subsequent Guarantee Period, but
in no event less than 3%.
SURRENDER DATE -- The date the Company receives the Contract
Owner's written request for a surrender or the date requested
for surrender by the Contract Owner, if later.
PURCHASE
PAYMENT PURCHASE PAYMENT -- The Purchase Payment is shown on Page 3.
Purchase Payments are payable at the designated office(s) of the
Company. The Company reserves the right to limit the amount of the
Purchase Payment which will be accepted.
CONTRACT ALLOCATION OF PURCHASE PAYMENT
CONTROL
PROVISIONS The Purchase Payment (less applicable Premium Taxes, if any)
will be allocated to an account established by the Company for
the Contract Owners of those contracts. A Contract Owner's
Account Value will be determined in accordance with the terms of
this contract.
ANNUITANT, CONTINGENT ANNUITANT, AND PARTICIPANT
The Annuitant may not be changed
The designations of Contract Owner and Contingent Annuitant will
remain in effect until changed by the Contract Owner. Changes in
the designation of the Contract Owner may be made during the
lifetime of the Annuitant by written notice to the Company. Changes
in the designation of the Contingent Annuitant may be made at any
time prior to the Annuity Commencement Date by written notice to
the Company. Notwithstanding the foregoing, if no Contingent
Annuitant has been named and the Contract Owner/Annuitant's spouse
is the Beneficiary, it will be assumed that the Contract
Owner/Annuitant's spouse is the Contingent Annuitant.
The Contract Owner has the sole power to exercise all rights,
options and privileges granted by this contract or permitted by
The Company and to agree with the Company to any change in or
amendment to the contract. The rights of the Contract Owner shall
be subject to the rights of any assignee of record with the Company
and of any irrevocably designated Beneficiary. In the case of joint
Contract Owners, each Contract Owner alone may exercise all rights,
options and privileges, except with respect to Termination
Provisions.
Form HL-12514 Printed in U.S.A
Page 5
<PAGE>
BENEFICIARY
GENERAL The Designated Beneficiary will remain in effect until changed by
CONTROL the Contract Owner. Changes in the designated Beneficiary may be
PROVISIONS made during the lifetime of the Annuitant by written notice to the
(CONTINUED) Company. If the designated Beneficiary has been designated
irrevocably, however, such designation cannot be changed or
revoked without such Beneficiary's written consent. Upon receipt
of such notice and written consent, if required, at the Home
Office of the Company, the new designation will take effect as of
the date the notice is signed, whether or not the Annuitant or
Contract Owner is alive at the time of receipt of such notice.
The change will be subject to any payments made or other action
taken by the Company before the receipt of the notice.
In the event of the death of the Annuitant when there is no
surviving Contingent Annuitant the Beneficiary will be as follows.
If the Annuitant is a joint Contract Owner and the death of the
Annuitant occurs prior to the Annuity Commencement Date, the
Beneficiary shall be the surviving Contract Owner, notwithstanding
that the Designated Beneficiary may be different. Otherwise, the
Beneficiary will be the Designated Beneficiary then in effect. If
there is no Designated Beneficiary in effect or if the Designated
Beneficiary is no longer living, the Contract Owner will be the
Beneficiary. If the Annuitant is the sole Contract Owner and there
is no Designated Beneficiary in effect, the Annuitant's estate will
be the Beneficiary.
In the event of the death of the Contract Owner prior to the
Annuity Commencement Date, the Beneficiary will be as follows.
Upon the death of the joint Contract Owner, the Beneficiary
will be the surviving joint Contract Owner, notwithstanding
that the Designated Beneficiary may be different. If the Contract
Owner was the sole Contract Owner, the Beneficiary shall be the
Designated Beneficiary then in effect. If no Beneficiary
designation is in effect or if the Designated Beneficiary has
predeceased the Contract Owner, the Contract Owner's estate will
be the beneficiary. At the first death of a joint Contract
Owner prior to the Annuity Commencement Date, the Beneficiary
shall be the surviving Contract Owner notwithstanding that the
Designated Beneficiary may be different.
GENERAL
PROVISIONS
THE CONTRACT
The contract, endorsements and application, if any, constitute the
entire contract.
MINIMUM VALUE STATEMENT
Any values available under the Termination or Surrender Provisions
of this contract equal or exceed those required by the state in
which the contract is delivered.
Page 6
<PAGE>
MODIFICATION
GENERAL The only way the contract may be modified is by a written agreement
PROVISIONS with the Contract Owner signed by our President, or one of our Vice
(CONTINUED) Presidents, Secretaries, or Assistant Secretaries. No modification
will affect the amount or term of any annuity begun prior to the
modification unless it is required to conform the contract to any
Federal or State statute. No modification of the contract will
affect the method by which the Contract Owners' Account Value will
be determined.
MISSTATEMENT OF AGE AND SEX
If the age and/or sex of the Annuitant is incorrectly stated, death
benefits or annuity payments will be adjusted to the payment which
would have been provided at the correct age and sex adjusted for
any overpayments or underpayments which had been made. The adjusted
annuity payment or death benefit will include interest of 3-1/2% in
the event of an underpayment or will deduct interest of 3-1/2% in
the event of an overpayment.
INCONTESTIBILITY
We cannot contest this contract from the date of issue.
CHANGE OF ANNUITY COMMENCEMENT DATE
The Contact Owner may change the Annuity Commencement Date provided
the Company is notified In Writing 30 days before the proposed
Annuity Commencement Date; and the proposed date selected is on or
before the Annuitant's attained age 90.
NON-PARTICIPATING
This contract is nonparticipating. It does not earn dividends.
ANNUAL REPORT
The Contract Owner will receive a report once each Contract Year
showing the Account Value of this contract and any other
information required by the Department of Insurance.
TRANSFER BETWEEN GUARANTEE PERIODS
Once each Contract Year, the Contract Owner may elect, In Writing
to transfer out of the current Guarantee Period and into a
Guarantee Period of different duration. At that time, a new
Guarantee Period will be established for the duration chosen by the
Contract Owner, and the Account Value at the beginning of the new
Guarantee Period will equal the Account Value for the current
Guarantee Period multiplied by the Market Value Adjustment for the
current Guarantee Period. The Company reserves the right to charge
for any such transfer by reducing the Account Value at the
beginning of the new Guarantee Period by an amount not to exceed
$50.00.
Form HL-12569 Printed in U.S.A
Page 7
<PAGE>
GENERAL
PROVISIONS Surrender charges will continue to be based on the appropriate
(CONTINUED) Contract Year as determined from the original Contract Date.
CREDITING OF
INTEREST
AND GUARANTEE
PERIODS The Purchase Payment (less the Gross Surrender Value of all
surrenders made and less applicable Premium Taxes, if any) will
earn interest at the Initial Guarantee Rate, compounded annually,
during the Initial Guarantee Period.
At the end of any Guarantee Period, a subsequent Guarantee Period
of the same duration will commence, unless the Contract Owner has:
a) requested, In Writing, a surrender within 30 days prior to
the end of the current Guarantee Period; or
b) elected, In Writing, a Guarantee Period of a different
duration from among those offered by the Company at any time
within 30 days prior to the end of the current Guarantee
Period; or
c) selected a subsequent Guarantee Period that extends beyond
the Annuity Commencement Date then in effect. In this case,
the Company will automatically establish a subsequent
Guarantee Period that will end nearest to the Annuity
Commencement Date then in effect, unless the Contract Owner
elects, In Writing, for a subsequent Guarantee Period of
shorter duration.
The Account Value at the beginning of any subsequent Guarantee
Period will be equal to the Account Value at the end of the
Guarantee Period just ending. The Account Value will earn interest
at the Subsequent Guarantee Rate, compounded annually, in the
subsequent Guarantee Period. This rate will be at least equal to
the Initial Guarantee Rates being credited to Purchase Payments
for new contracts at the time the Subsequent Guarantee Rate is
determined.
The initial Guarantee Rate and the Subsequent Guarantee Rate
will never be less than 3%. Surrenders made during a Guarantee
Period will be subject to a Market Value Adjustment.
TERMINATION
PROVISIONS GENERAL SURRENDERS
Full surrenders may be made under this contract at any time.
Partial surrenders may only be made if:
a) The Gross Surrender Value is at least $1,000; and
b) the remaining Account Value after the Gross Surrender Value
has been deducted is at least $5,000.
Page 8
<PAGE>
TERMINATION
PROVISIONS In the case of all surrenders, the Account Value will be reduced
(CONTINUED) by the Gross Surrender Value on the Surrender Date and the Net
Surrender Value will be payable to the Contract Owner. Except as
provided for in the Special Surrender Section, the Net Surrender
Value is calculated by the Company on a daily basis as follows:
(A - B) X C, where:
A = the Gross Surrender Value reduced by any applicable Annual
Contract Maintenance Fee;
B = The surrender charge, shown on Page 3, plus any unpaid
Premium Taxes;
C = the Market Value Adjustment described below.
MARKET VALUE ADJUSTMENT
The formula which will be used to determine the Market Value
Adjustment is calculated by the Company on a daily basis as
follows:
_ _ N/12
| 1 + I |
| ----- |
|_ 1 + J _|
I = Guarantee Rate in effect for the Current Guarantee Period
(expressed as a decimal, e.g., - 1% = .01).
J = The Current Rate (expressed as a decimal, e.g. - 1% = .01) in
effect for durations equal to the number of years remaining in
the current Guarantee Period (years are rounded to the next
highest number of years). If not available, the Company will
utilize a rate equal to the most recent Moody's Corporate Bond
Yield Average - Monthly Average Corporates (for the applicable
duration) as published by Moody's Investors Service, Inc. In
the event the Moody's Corporate Bond Yield Average - Monthly
Average Corporates is no longer available, a suitable
replacement index, subject to the approval of the Insurance
Department, would be utilized.
N = The number of complete months from the Surrender Date to the
end of the current Guarantee Period.
SPECIAL SURRENDERS
A full or partial surrender made at the end of a Guarantee Period
may be subject to a surrender charge as set forth on page 3. A
Market Value Adjustment will not be applied. A request for a
surrender at the end of a Guarantee Period must be received In
Writing during the 30 day period preceding the end of such
Guarantee Period.
In addition, if the Contract Owner notifies the Company, In
Writing, the Company will send the Contract Owner any interest
credited during the twelve month period prior to the written
request. No Surrender Charge or Market Value Adjustment will be
imposed on such interest payments.
TERMINATION AFTER THE ANNUITY COMMENCEMENT DATE
This contract may not be surrendered after the commencement of
annuity payments.
Form HL-12517 Printed in U.S.A
Page 9
<PAGE>
PAYMENT UPON SURRENDER -- DEFERRAL OF PAYMENT
TERMINATION
PROVISIONS The Company may defer payment of a partial or full surrender
(CONTINUED) request for up to six months from the date of the request. If
payment is deferred for more than 10 days from the date the request
is received, the Company will pay interest of 4-1/2% or the
interest rate currently being paid on proceeds left under the
interest settlement option, whichever is higher, on the amount
deferred.
DEATH BENEFIT
If the Annuitant dies prior to the Annuity Commencement Date and
there is no designated Contingent Annuitant surviving, or if the
Contract Owner dies before the Annuity Commencement Date, the death
benefit will be payable to the Beneficiary as determined under the
Control Provisions. The death benefit equals the Account Value as
of the date the Company receives written notification of Due Proof
of Death.
The death benefit will be due and payable within a reasonable
period of time (not to exceed 6 months) after the date of the
Company's receipt of Due Proof of Death. The death benefit may be
taken in one sum or under any of the settlement options then being
offered by the Company provided, however, that, in the event of a
Contract Owner's Death, any settlement option must provide that any
amount payable as a death benefit will commence upon notification
of Due Proof of Death and be completed within five years of the
date of death or, 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. Notwithstanding the foregoing, in the
event of the Contract Owner's death where the sole Beneficiary is
the spouse of the Contract Owner and the Annuitant or Contingent
Annuitant is living, such spouse may elect, in lieu of receiving
the death benefit, to be treated as the Contract Owner.
SETTLEMENT
PROVISIONS ANNUITY BENEFIT
On the Annuity Commencement Date, unless directed otherwise, the
Company will apply the Contract Owner's Account Value multiplied by
the Market Value Adjustment, if any, less any applicable Premium
Taxes, to purchase the monthly income payments according to the
Annuity Option elected. If the Annuity Commencement Date coincides
with the end of any Guarantee Period, no Market Value Adjustment
will be applied in the determination of the monthly income
payments. No surrender charge will be applied upon annuitization.
In no event will the annuity benefit, at the time of its
commencement, be less than that which would be provided by applying
the greater of the Net Surrender Value or 95 percent of what the
Net Surrender Value would be with no surrender charge, to purchase
a single premium immediate annuity contract offered by the Company
at that time to the same class of annuitants.
Page 10
<PAGE>
ELECTION OF ANNUITY OPTIONS
SETTLEMENT
PROVISIONS The Contract Owner may elect any of the Annuity Options described
(CONTINUED) below or any other Annuity Option being offered by the Company at
the time of Annuitization. In the absence of such election, the
second option providing a life annuity with 120 monthly payments
certain will apply.
Election of any of these options must be made In Writing to the
Company at least 30 days prior to the date such election is to
become effective.
DATE OF PAYMENT
The first payment under any option shall be made on the tenth day
of the month following the Annuity Commencement Date. Subsequent
payments shall be made on the tenth day of each month in accordance
with the manner of payment selected.
The Contract Owner, or in the event the Contract Owner has not done
so, the Beneficiary after the death of the Annuitant, may elect, in
lieu of payment in one sum, any amount or part thereof due by the
Company under this contract to the Beneficiary will be applied
under any of the options described below. Such election must be
made within one year after the death of the Annuitant by written
notice to the offices of the Company.
DEATH OF ANNUITANT
In the event of the death of the Annuitant while receiving annuity
payments, the present values of the current dollar amount on the
date of death of any remaining guaranteed number of payments, or
any then remaining balance of proceeds under the Fifth Option will
be paid in one sum to the Beneficiary unless other provisions shall
have been made and approved by the Company. However, if the
Contract Owner was also the Annuitant, any method of distribution
must provide that any amount payable as a death benefit will be
distributed at least as rapidly as under the method of distribution
in effect at the Contract Owner's death. Calculations of such
present value of the guaranteed payments remaining will be based on
the interest rate that is used by the Company to determine the
amount of each certain payment.
ANNUITY OPTIONS
FIRST OPTION -- Life Annuity -- An annuity payable monthly during
the lifetime of the Annuitant, ceasing with the last payment due
prior to the death of the Annuitant.
SECOND OPTION -- Life Annuity -- with 120, 180, or 240 Monthly
Payments Certain - An annuity providing monthly income to the
Annuitant for a fixed period of 120 months, 180 months, or 240
months (as selected), and for as long thereafter as the Annuitant
shall live.
THIRD OPTION -- Cash Refund Life Annuity -- An annuity payable
monthly during the lifetime of the Annuitant, ceasing with the last
payment due prior to the death of the Annuitant provided that, at
the death of the Annuitant the beneficiary will receive an
additional payment equal to the excess, if any, of (a) over (b)
where: (a) is the Account Value applied on the Annuity Commencement
Date under this option; and (b) is the dollar amount of annuity
payments already paid.
Form HL-12519 Printed in U.S.A
Page 11
<PAGE>
SETTLEMENT
PROVISIONS
(CONTINUED) FOURTH OPTION -- Joint and Last Survivor Life Annuity -- An annuity
payable monthly during the joint lifetime of the Annuitant and a
secondary payee, and thereafter during the remaining lifetime of
the survivor, ceasing with the last payment prior to the death of
the survivor.
FIFTH OPTION -- Payments for a designated Period -- An amount
payable monthly for the number of years selected which may be from
5 to 30 years.
ANNUITY
TABLES The attached tables show the dollar amount of the monthly payments
for each $1,000 applied under the five options. Under the First,
Second, or Third Options, the amount of each payment will depend
upon the age and sex of the Annuitant at the time the first payment
is due. Under the Fourth Option, the amount of each payment will
depend upon the sex of both payees and their ages at the time the
first payment is due.
MINIMUM PAYMENT
The option elected must result in a payment of at least $20.00. If
at any time payments are less than $20.00, the Company has the
right to change the frequency to an interval resulting in a payment
of at least $20.00. If any amount due is less than $20.00 per year,
the Company may make other arrangements that are equitable to the
Annuitant.
DESCRIPTION OF TABLES
The tables for the First, Second, Third and Fourth Options are
based on the 1983a Individual Annuity Mortality table with ages
set back one year and a net investment rate of 4% per annum. The
Table for the Fifth Option is based on a net investment rate of 4%
per annum.
Page 12
<PAGE>
ARTHUR ANDERSEN LLP
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 flows for each of the three years in the period
ended December 31, 1994. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the 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 in 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.
Arthur Andersen LLP
Hartford, Connecticut
January 30, 1995
<PAGE>
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To Hartford Life Insurance Company and Subsidiaries:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements of Hartford Life Insurance Company and
subsidiaries included in this registration statement and have issued our
report thereon dated January 30, 1995. Our audits were made for the purpose of
forming an opinion on the basic consolidated financial statements taken as a
whole. The accompanying schedules are the responsibility of the Company's
management and are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic consolidated
financial statements. These schedules have been subjected to the auditing
procedures applied in the audits of the basic consolidated financial
statements and, in our opinion, fairly state 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
<PAGE>
EXHIBIT 23
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. 33-88786 on Form S-1 for Hartford Life
Insurance Company.
Arthur Andersen LLP
Hartford, Connecticut
April 6, 1995
