<PAGE>
File No. 33-17324
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
AMENDMENT NO. 9 TO FORM S-1 REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
HARTFORD LIFE INSURANCE COMPANY
(Exact name of registrant as specified in its character)
CONNECTICUT
(State or other jurisdiction of incorporation or organization)
6355
(Primary Standard Industrial Classification Code Number)
06-094148
(I.R.S. Employer Identification Number)
P.O. BOX 2999
HARTFORD, CONNECTICUT 06104-2999
(Address of Principal Executive Office)
SCOTT K. RICHARDSON, ESQ.
ITT HARTFORD LIFE INSURANCE COMPANIES
P.O. BOX 2999
HARTFORD, CONNECTICUT 06104-2999
(860) 843-7563
(Name, address, including zip code, and telephone
number, including area code, 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>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of Each Class Amount to Offering Aggregate Amount of
of Securities to be be Price Offering Registration
Registered Registered per Unit Price Fee
- - ---------- ---------- -------- ----- ------
<S> <C> <C> <C> <C>
Deferred Annuity
Contracts & * * $100,000,000* PAID
Participating
Interests Therein
</TABLE>
*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.
<PAGE>
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
------------------------------------------------------
<TABLE>
<S> <C> <C>
1. Forepart of the Registration Statement
and Outside Front Cover Page of Outside Front Cover
Prospectus Page
2. Inside Front and Outside Back Cover
Pages of Prospectus Inside Front Cover
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges Description of Contracts; Financial
Statements
4. Use of Proceeds Investments by Hartford Life
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 The General Account
Registered Option
10. Interests and Named Experts and
Counsel Not Applicable
11. Information with Respect to the The Company; Executive Officers
Registrant and Directors; Executive
Compensation; Financial Statements;
Legal Proceedings
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities Not Applicable
</TABLE>
<PAGE>
HARTFORD
LIFE INSURANCE COMPANY
THE GENERAL ACCOUNT OPTION
Under Group Annuity Contracts Issued By
Hartford Life Insurance Company
P.O. Box 2999
Hartford, CT 06104-2999
[LOGO]
This Prospectus describes the General Account Option available under group
variable annuity contracts (hereinafter the "contract" or "contracts") which
are issued by Hartford Life Insurance Company ("Hartford Life" or the
"Company") with respect to DC Variable Account I or Separate Account Two
(DC-II) (individually, the "Separate Account"). This Prospectus must be
accompanied by and read in conjunction with the prospectus for the applicable
group variable annuity contract and the Separate Account options thereunder.
During the Accumulation Period under the contracts, net contributions to the
contract and/or Participants' Individual Account Values under the contract may
be allocated, in whole or in part, to the General Account Option or to one or
more of the Separate Account options. Contract values allocated to the General
Account Option are credited with interest at a rate at least equal to the
Guaranteed Interest Rate stated in the Contract. Rates of interest in excess
of the applicable Guaranteed Interest may be declared by Hartford Life from
time to time (See, "Guaranteed Interest Rates and Declared Interest Rates,"
Pages 6).
While the Mortality and Expense Risk Charges applicable to the values held
in Separate Account options do not apply to the General Account Option, all
other charges, including the Annual Policy Fee, Contingent Deferred Sales
Charges, Transfer Charges and Premium Taxes described in the contract
prospectus accompanying this Prospectus apply equally to values held in the
General Account Option.
Distributions and transfers from the General Account Option are generally
made within a reasonable period of time after a request is received and
reflect the full value of Participants' Individual Accounts allocated to the
General Account less any applicable charges. However, under certain conditions
transfers may be limited or deferred (See, "Transfers from the General Account
Option," Page 7) and distributions may be deferred or subject to a market
value adjustment. (See, "Surrenders," Page 7.)
------------------------------------------------------------------------------
PLEASE READ THIS PROSPECTUS AND KEEP IT FOR FUTURE REFERENCE. IT IS
ACCOMPANIED BY CURRENT PROSPECTUS FOR THE RELATED GROUP VARIABLE ANNUITY
CONTRACT AND THE SEPARATE ACCOUNT OPTIONS THEREUNDER.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
THESE SECURITIES MAY BE SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE AND
MARKET VALUE ADJUSTMENT WHICH COULD RESULT IN YOUR RECEIPT OF LESS THAN THE
TOTAL OF YOUR PURCHASE PAYMENT(S). SEE "SURRENDERS," PAGE 7.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
THE COMPANY CANNOT PREDICT OR GUARANTEE FUTURE GUARANTEED INTEREST RATES OR
DECLARED INTEREST RATES.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
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.
------------------------------------------------------------------------------
Prospectus Dated: May 1, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company 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.
The Company 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 the Company 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, 1995
heretofore filed by the Company 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.
The Company 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 Hartford Life Insurance
Company, c/o New Business Unit, P.O. Box 2999, Hartford, Connecticut,
06104-2999.
2
<PAGE>
GLOSSARY OF SPECIAL TERMS
ACCUMULATION PERIOD: The period before the commencement of annuity payments.
ACTIVE LIFE FUND: A term used to describe the sum of all Participants'
Individual Account value(s) under a contract during the Accumulation Period.
ANNUITANT: A Participant on whose behalf Annuity payments are to be made under a
contract.
ANNUITY: A series of payments for life, or for life with a minimum number of
payments or a determinable sum guaranteed, or for a joint lifetime and
thereafter during the lifetime of the survivor, or for payments for a designated
period.
ANNUITY COMMENCEMENT DATE: The date on which Annuity payments are to commence.
ANNUITY PERIOD: The period following the commencement of Annuity payments.
CALENDAR YEAR: The period of time from January 1 to December 31 of each year.
CONTRACT OWNER: The Employer or entity owning the contract.
CONTRACT YEAR: A period of 12 months commencing with the effective date of the
contract or with any anniversary thereof.
CONTRIBUTION(S): The amount(s) paid or transferred to Hartford Life on behalf of
Participants pursuant to the terms of the contracts.
DECLARED INTEREST RATE(S): One or more rates of interest which may be declared
by Hartford Life. Such rates will never be less than the applicable Guaranteed
Interest Rates and may apply to some or all of the values under the General
Account option Fund for periods of time determined by Hartford Life.
GENERAL ACCOUNT: The General Account of Hartford Life.
GUARANTEED INTEREST RATE(S): The minimum rate(s) of interest to be credited on
the General Account portion of the Active Life Fund as set forth in the
contract.
HARTFORD LIFE: Hartford Life Insurance Company (sometimes referred to as the
"Company").
IN WRITING: A written form satisfactory to us and received at our offices at
P.O. Box 2999, Hartford, Connecticut 06104-2999.
MARKET VALUE LUMP SUM OPTION: At contract termination a lump sum payment which
includes the market value of the underlying assets as described on page .
PARTICIPANT: A term used to describe, for recordkeeping purposes only, any
Employee electing to participate in the Deferred Compensation Plan of the
Employer/Contract Owner.
PARTICIPANT'S CONTRACT YEAR: A period of twelve (12) months commencing with the
Date of Coverage of a Participant and each successive 12 month period
thereafter.
PARTICIPANT'S INDIVIDUAL ACCOUNT: An account in which the Contributions of the
Contract Owner on behalf of a Participant under the contract are allocated
during the Accumulation Period.
PREMIUM TAX: A tax charged by a state or municipality on premiums, contributions
or contract values.
SEPARATE ACCOUNT: The Account entitled Hartford Life Insurance Company DC
Variable Account-I ("DC-I") and Hartford Life Insurance Company Separate Account
Two (DC-II).
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GLOSSARY OF SPECIAL TERMS............................................... 3
SUMMARY................................................................. 5
INTRODUCTION............................................................ 5
THE GENERAL ACCOUNT OPTION.............................................. 6
A. The Accumulation Period............................................ 6
1. Contributions.................................................... 6
2. Guaranteed Interest Rates and Declared Interest Rates............ 6
3. Participants' Individual Account Values.......................... 7
4. Transfers from the General Account Option........................ 7
5. Transfers to the General Account Option.......................... 7
6. Surrenders....................................................... 7
(a) General....................................................... 7
(b) Payment of Full or Partial Surrenders......................... 8
(c) Contract Termination.......................................... 8
B. Annuity Period..................................................... 9
INVESTMENTS BY HARTFORD LIFE............................................ 9
DISTRIBUTION OF CONTRACTS............................................... 10
FEDERAL TAX CONSIDERATIONS.............................................. 10
A. Taxation of Hartford Life.......................................... 10
B. Information Regarding Deferred Compensation Plans for State and
Local Governments.................................................... 10
THE COMPANY............................................................. 10
A. Business of Hartford Life.......................................... 10
B. Selected Financial Data............................................ 12
C. Management Discussion and Analysis................................. 13
1. Results of Operations............................................ 13
2. Division Information............................................. 15
D. Reinsurance........................................................ 15
E. Reserves........................................................... 15
F. Investments........................................................ 15
G. Competition........................................................ 15
H. Employees.......................................................... 15
I. Properties......................................................... 16
J. State Regulation................................................... 16
EXECUTIVE OFFICERS AND DIRECTORS........................................ 17
EXECUTIVE COMPENSATION.................................................. 19
LEGAL PROCEEDINGS....................................................... 21
EXPERTS................................................................. 21
LEGAL MATTERS...........................................................
APPENDIX A (MARKET VALUE ADJUSTMENT).................................... 22
FINANCIAL STATEMENTS....................................................
</TABLE>
4
<PAGE>
SUMMARY
This Prospectus describes the General Account Option under group variable
annuity contracts designed for use in conjunction with deferred compensation
plans of tax-exempt and governmental employers under Internal Revenue Code
Section 457 ("Deferred Compensation Plans"). The contracts are issued by
Hartford Life Insurance Company ("Hartford Life" or the "Company") with respect
to DC Variable Account-I or Separate Account Two (DC-II) (individually the
"Separate Account") and contributions to the General Account Option become a
part of the General Account of Hartford Life. Contributions to the contracts may
also be allocated to one or more Separate Account options. The contracts and the
Separate Account options are described in a separate prospectus. The prospectus
for the applicable contract will always accompany this Prospectus. Please read
it and this Prospectus carefully.
During the Accumulation Period under the contracts, the General Account
Option provides for specified Guaranteed Interest Rates for the first five (5)
Calendar Years on Contributions received during the Calendar Year in which the
contract was issued. Prior to each Calendar Year thereafter, Hartford Life will
establish Guaranteed Interest Rates (for five (5) Calendar Years) for
contributions received in the following year. At the end of each five year
guarantee period for a particular year's contribution, one year Guaranteed
Interest Rates are established annually by Hartford Life. Declared Interest
Rates in excess of any Guaranteed Interest Rates may be established periodically
by Hartford Life. These rates may apply to some or all of the values under the
General Account Option for periods of time determined by Hartford Life. The
rates of interest credited will affect Participants' Individual Account values
(See, "Participants' Individual Account Values," page 7) and are used to
determine amounts payable upon termination of the contracts. (See, "Surrenders
- - -- Contract Termination," page 8).
Generally, Hartford Life intends to invest the General Account assets
attributable to the contracts in investment grade securities. Hartford Life has
no specific formula for determining the rates of interest that it will establish
as Declared Interest Rates or Guaranteed Interest Rates in the future. However,
their determination will generally be reflective of interest rates available on
the types of debt instruments in which Hartford Life intends to invest the
proceeds attributable to the General Account Option. (See, "Investments by
Hartford Life," page 9.) In addition, Hartford Life's management may also
consider various other factors in determining Declared and Guaranteed Interest
Rates for a given period, including, regulatory and tax requirements; sales
commission and administrative expenses borne by Hartford Life; general economic
trends; and competitive factors. (See, "Investments by Hartford Life," page 9 .)
The Contract Owner may, during the Accumulation Period, allocate all or a
portion of a Participant's Individual Account value held under the General
Account Option to one or more of the investment options of the Separate Account.
No Contingent Deferred Sales Charges will be deducted on such transfers.
However, there are restrictions which may limit the amount that may be so
allocated and transfers may be deferred in certain cases. (See, "Transfers from
the General Account Option," page 7.) Distributions from the General Account
Option are generally made within a reasonable period of time after a request is
received and reflect the full value of Participants' Individual Account values
less certain charges, if applicable, described in the contract prospectus.
However, under certain conditions, distributions may be deferred or subject to a
market value adjustment. (See, "Surrenders," page 7.)
INTRODUCTION
This Prospectus has been designed to provide you with the necessary
information to make a decision on participating in the General Account Option
under contracts issued in conjunction with a Deferred Compensation Plan. This
Prospectus describes only the elements of the contracts pertaining to the
General Account Option. The contracts also contain various Separate Account
options. The contracts and the Separate Account options are described in a
separate prospectus which must accompany this Prospectus. Please read that
prospectus and its Glossary of Special Terms prior to reading this Prospectus to
familiarize yourself with the terms being used which, unless defined in the
Glossary of Special Terms to this Prospectus, have the same meaning as defined
in that prospectus.
5
<PAGE>
THE GENERAL ACCOUNT OPTION
The General Account Option is available under contracts issued in
conjunction with a Deferred Compensation Plan of an Employer. The contracts
provide for both an Accumulation Period and an Annuity Period. During the
Accumulation Period, Contributions made by the Employer to the General Account
Option, and the values attributable thereto, are a part of Hartford Life's
General Account. During the Annuity Period Participants' Individual Account
values are used to purchase Fixed or Variable Annuities. The operation of the
contract during the Annuity Period is described in the contract prospectus
accompanying this Prospectus.
A. THE ACCUMULATION PERIOD
1. CONTRIBUTIONS
During the Accumulation Period under the contracts, Contributions (less any
Premium Taxes) made by the Employer under the contract, and Participants'
Individual Account values, may be allocated, in whole or in part, to the General
Account Option.
2. GUARANTEED INTEREST RATES AND DECLARED INTEREST RATES
The General Account Option provides for specified Guaranteed Interest Rates
for the first five (5) Calendar Years on Contributions received during the
Calendar Year in which the Contract is issued. Prior to each Calendar Year
thereafter, Hartford Life will establish Guaranteed Interest Rates (for each of
the next five (5) Calendar Years) for Contributions received in the following
year. The Guaranteed Interest Rate for each year during a five year guarantee
period may not be the same as for other years. At the end of each five year
guarantee period for a particular year's Contribution(s), one year Guaranteed
Interest Rates are established annually by Hartford Life. These one year
Guaranteed Interest Rates will automatically commence at the end of a five year
guarantee period and at the end of each subsequent one year guarantee period.
All Guaranteed Interest Rates and Declared Interest Rates are effective annual
rates after taking into account daily compounding of interest.
The following example is for illustrative purposes only. It contains
hypothetical rates of interest. Actual rates for any given time may be more or
less than those illustrated.
EXAMPLE: A contract is issued July 1, 1995. At issue the Guaranteed Interest
Rates for Calendar Years 1995 through 1999 are set as follows:
<TABLE>
<CAPTION>
GUARANTEED INTEREST RATE
CALENDAR YEAR (APPLICABLE TO 1995 CONTRIBUTIONS)
------------- ----------------------------------
<S> <C>
1995 6.50%
1996 6.00%
1997 5.50%
1998 5.25%
1999 5.00%
</TABLE>
Assume that $1,000 in contributions are received during 1995 and $1,500 in
contributions are received during 1996. The 1995 contributions of $1,000 will be
credited at least 6.50% (i.e., the Guaranteed Interest Rate for 1995) for 1995.
During 1996 the 1995 contributions, with interest credited from 1995, will be
credited at least 6.00% per year. Similarly for Calendar Years 1997, 1998, and
1999 the 1995 contributions, with interest credited from prior years, will be
credited at least 5.50%, 5.25% and 5.00% per year respectively. At the end of
1998, a one year Guaranteed Interest Rate will be set for 2000. This procedure
of setting a one year Guaranteed Interest Rate will be followed for each
subsequent year.
At the end of 1995 the Guaranteed Interest Rates for Calendar Years 1996
through 2000 will be set for the contributions of $1,500 received in 1995. At
the end of 2000 and annually thereafter one year Guaranteed Interest Rates will
be set for the 1996 contributions of $1,500 and the interest which was credited
on the $1,500 in prior years.
For contributions received in 1997 and later the same procedure would be
followed. At the end of each Calendar Year, Guaranteed Interest Rates for each
of the next five Calendar Years will be set for the following year's
contributions. At the end of each five years guaranteed period for a particular
year's contributions, one year Guaranteed Interest Rates will be established
annually.
6
<PAGE>
Declared Interest Rates in excess of any Guaranteed Interest Rates may be
established periodically by Hartford Life. These rates may apply to some or all
of the values under the General Account Option for periods of time determined by
Hartford Life. For example, Hartford Life could determine to declare an interest
rate in excess of the otherwise applicable Guaranteed Interest Rate(s) for a
nine month period and which applied only to Participants' individual account
values attributable to Contributions received in a particular time period. The
rates of interest credited will affect Participants' Individual Account Values
(See, "Participants' Individual Account Values," page 7) and are used to
determine amounts payable upon termination of the contracts (See, "Surrenders --
Contract Termination," page 8). Notification in writing of the Declared Interest
Rate, and the values to which it will apply, will be provided by Hartford Life.
Hartford Life has no specific formula for determining the rate of interest
that it will establish as Declared Interest Rates or Guaranteed Interest Rates
in the future. However, their determination will be reflective of interest rates
available on the types of debt instruments in which Hartford Life intends to
invest the proceeds attributable to the General Account Option (see,
"Investments by Hartford Life," page 9). In addition, Hartford Life's management
may also consider various other factors in determining Declared and Guaranteed
Interest Rates for a given period, including, regulatory and tax requirements;
sales commission and administrative expenses borne by Hartford Life; general
economic trends; and competitive factors. HARTFORD LIFE'S MANAGEMENT WILL MAKE
THE FINAL DETERMINATION AS TO ANY DECLARED INTEREST RATES AND ANY GUARANTEED
INTEREST RATES IN EXCESS OF THE CONTRACTUALLY GUARANTEED RATE. WE CANNOT PREDICT
NOR CAN WE GUARANTEE THE RATES OF ANY FUTURE DECLARED INTEREST OR OF
ANY GUARANTEED INTEREST RATES IN EXCESS OF THE CONTRACTUALLY GUARANTEED RATE.
3. PARTICIPANTS' INDIVIDUAL ACCOUNT VALUES
Participants' Individual Account values held under the General Account
Option are credited with interest at rates at least equal to the applicable
Guaranteed Interest Rates. Contributions are credited to Participants'
Individual Accounts, and begin earning interest, the day Hartford Life receives
the Contribution at its Home Office. Interest is credited to Participants'
Individual Account values daily.
4. TRANSFERS FROM THE GENERAL ACCOUNT OPTION
The Contract Owner may make transfers of Participants' Individual Account
values held in the General Account Option to one or more of the Separate Account
options under the contract. The charges for transfers are described in the
contract prospectus which accompanies this Prospectus. No deduction is made for
Contingent Deferred Sales Charges when a transfer is made. All transfers will be
made on a last in, first out basis; that is, that portion of the Participant's
Individual Account attributable to older Contributions or transfers will be
transferred only after the portion attributable to the most recent Contribution
or transfer has been transferred.
This right to transfer values is subject to Hartford Life's right to limit
any such transfer in any Calendar Year, to one-sixth (1/6) of the Participant's
Individual Account value under the General Account Option under the contract as
of the end of the preceding Calendar Year. (See also "Surrenders," page 7.)
Transfers of assets presently held in the General Account, or which were
held in the General Account at any time during the preceding three (3) month
period, to the Money Market Fund Account or to the U.S. Government Money Market
Fund Account are prohibited. Similarly, transfers of assets presently held in
the Money Market Fund Account or U.S. Government Money Market Fund Account, or
which were held in either of these two (2) Accounts or the General Account
during the preceding three (3) months, to the General Account are prohibited.
5. TRANSFERS TO THE GENERAL ACCOUNT OPTION
Participants' Individual Account values in a Separate Account may be
transferred to the General Account Option at any time. The charges for transfers
are described in the contract prospectus which accompanies this Prospectus. No
deduction is made for Contingent Deferred Sales Charges when a transfer is made.
Such transfers will be treated like contributions to the General Account Option
on the date of such transfer.
6. SURRENDERS
(a) GENERAL
7
<PAGE>
Subject to the termination provisions described below, the Contract Owner
may request a full or partial surrender of Participants' Individual Account
values at any time. However, if the sum of all surrenders and transfers from the
General Account Option in a Calendar Year, including the currently requested
surrender, exceeds one-sixth (1/6th) of the aggregate values held in the General
Account Option under the contract at the end of the preceding Calendar Year,
Hartford Life reserves the right to defer surrenders in excess of the limit to
the next Calendar Year. At such time, unless Hartford Life is directed in
writing otherwise, deferred surrenders will be made in the order originally
received up to the limit, if applicable. This method will be used until all
surrenders have been satisfied.
(b) PAYMENT OF FULL OR PARTIAL SURRENDERS (PARTICIPANT'S INDIVIDUAL ACCOUNT
ONLY)
In the event of a partial surrender of a Participant's Individual Account,
Hartford Life will pay the requested value less any applicable Contingent
Deferred Sales Charge. All partial surrenders of a Participant's Individual
Account will be made on a last in, first out basis; that is, that portion of the
Participant's Individual Account attributable to his most recent Contribution
(or transfer) will be surrendered first. In the event of a full surrender of a
Participant's Individual Account, Hartford Life will pay the account value less
any applicable Premium Tax not previously deducted, the Annual Policy Fee and
applicable Contingent Deferred Sales Charges.
The applicable Contingent Deferred Sales Charges, depending on which of the
three separate group variable annuity contracts involved, are as follows: (1) a
deduction for the Contingent Deferred Sales Charges is made if there is any
surrender of contract values during the first 15 Participant Contract Years.
During the first 8 years, a maximum deduction of 5% will be made against the
full amount of the surrender; during the next 7 years, a maximum deduction of 3%
will be made against the full amount of the surrender, (2) a deduction for the
Contingent Deferred Sales Charges is made if there is any surrender of contract
values during the first 12 Participant Contract Years. During the first 6 years,
a maximum deduction of 7% will be made against the full amount of the surrender;
during the next 6 years, a maximum deduction of 5% will be made against the full
amount of the surrender and (3) a deduction for Contingent Deferred Sales
Charges is made if there is any surrender of contract values during the first 12
Participant Contract Years. During the first 6 years, a maximum deduction of 5%
will be made against the full amount of any such surrender; during the next 2
years, a maximum deduction of 4% will be made against the full amount of any
such surrender; during the next 2 years, a maximum deduction of 3% will be made
against the full amount of any such surrender; during the next 2 years, a
maximum deduction of 2% will be made against the full amount of any such
surrender. Such charges will in no event exceed 8.5% where applied as a
percentage against the sum of all Contributions to a Participant's Individual
Account. Please consult the Prospectus for the related group variable annuity
contract and the Separate Account for applicable Contingent Deferred Sales
Charges.
(c) CONTRACT TERMINATION (CONTRACT OWNERS ONLY)
If the Contract Owner requests a full surrender of the contract or of all
contract values held in the General Account Option, the Contract Owner may
select one of the two optional methods of payment, as described below. The terms
utilized have the following meanings:
i = the rate of interest (expressed as a percent, e.g. .05 = 5%) to be
credited, subject to a minimum rate of 0% and a maximum rate of B%.
A = The weighted average interest rate (expressed as a decimal, e.g. 1% =
.01) being credited under the General Account Option as of the date of
termination.
B = The average yield (expressed as decimal, e.g. 1% = .01) for the month
prior to the date of termination of the higher of the Salomon Brothers
weekly index of new Long Term Public Utilities rated Aa by Moody's
Investors Services and the Salomon Brothers weekly Index of Current
Coupon 30 year Federal National Mortgage Association Securities, or
their equivalents.
(i) BOOK VALUE SPREAD OPTION (PERIODIC PAYMENT NOT TO EXCEED FIVE (5)
YEARS):
Under this option, Hartford Life will pay an amount equal to the contract
values held in the General Account Option less applicable Premium Taxes, any
Annual Policy Fee and applicable Contingent Deferred Sales Charges. Hartford
Life reserves the right to make such payment in level annual installments
over a period not to exceed five (5) years from the date of the request, in
which event interest will be credited on the unpaid balance at a rate per
annum produced by the following formula:
i = (A - 2(B - A)) - .005
8
<PAGE>
Example: If A = 6% and B = 7%, then interest on the unpaid balance would be
paid at a rate of (.06 -2(.07-.06)) - .005 or 3.5 %
This formula may result in an interest rate which is less than the weighted
average interest rate being credited under the General Account Option as of
the date of termination.
(ii) MARKET VALUE LUMP SUM OPTION:
Under this option, Hartford Life will pay a lump sum amount equal to the
contract values held in the General Account Option, less any applicable
Contingent Deferred Sales Charges, Annual Policy Fee, and Premium Taxes
multiplied by the appropriate market value factor. The amount payable on
surrender may be adjusted down by application of the market value
adjustment. This market value factor is determined as follows:
(a) if B is greater than A, the market value factor equals 1 -(6 (B-A)) or,
(b) if A is greater than B, the market value factors equals 1.00
Example: If A = 7% and B = 9%, then the market value factor would be 1 - (6
(.09 - .07) = .88.
Under this option, it is possible that the amount payable on surrender would
be more or less than your contribution(s).
Additional examples of both optional methods of payment are contained in
Appendix A, page .
B. ANNUITY PERIOD
Annuity payments will normally be made within fifteen business days after
the receipt of claim for settlement or any other later specified date, and
subsequent payments will be made periodically on the anniversaries of the first
payment.
The prospectus for the contract and the Separate Account options describes
more fully the Annuity Period and annuity options under the contracts. It should
be noted, however, that once fixed Annuity payments have commenced, no surrender
of the annuity benefit can be made for the purpose of receiving a lump sum
settlement in lieu thereof.
INVESTMENTS BY HARTFORD LIFE
General Account assets of Hartford Life 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 recent investments of Hartford Life.) All General Account assets of
Hartford Life would be available to meet Hartford Life's guarantee under the
General Account Option. The proceeds from the General Account Option will become
part of Hartford Life's general assets and are available to fund the claims of
all classes of customers of Hartford Life.
In establishing Guaranteed and Declared Interest Rates, Hartford Life
intends to take into account the yields available on the instruments in which it
intends to invest the assets attributable to the contracts. (See, "Establishment
of Guaranteed Interest Rates and Declared Interest Rates," page 6.) Hartford
Life's investment strategy with respect to the assets attributable to the
General Account Option under the contracts will generally be to invest in
investment-grade debt instruments including:
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 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.
9
<PAGE>
Other debt instruments, including but not limited to, issues of or
guaranteed by banks or bank holding companies and of corporations, which
obligations, although not rated by Moody's or Standard & Poor's, are deemed by
Hartford Life'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, WE ARE NOT
OBLIGATED TO INVEST THE ASSETS ATTRIBUTABLE TO THE CONTRACTS ACCORDING TO ANY
PARTICULAR STRATEGY, EXCEPT AS MAY BE REQUIRED BY CONNECTICUT AND OTHER STATE
INSURANCE LAWS AND WE HAVE THE RIGHT TO ALTER THIS EXPECTED STRATEGY, CONSISTENT
WITH APPLICABLE LAW.
DISTRIBUTION OF CONTRACTS
Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the General Account
Option. HSD is a wholly-owned subsidiary of Hartford Life. The principal
business address of HSD is the same as Hartford Life Insurance Company.
The securities will be sold by salespersons of HSD, who represent Hartford
Life as insurance and Variable Annuity agents and who are registered
representatives or Broker-Dealers who have entered into distribution agreements
with HSD.
HSD is registered with the Commission under the Securities and Exchange Act
of 1934 as a Broker-Dealer and is a member of the National Association of
Securities Dealers, Inc.
FEDERAL TAX CONSIDERATIONS
A. TAXATION OF HARTFORD LIFE
Hartford Life is taxed as a life insurance company under the Internal
Revenue Code ("Code"). The assets underlying the General Account Option under
the contracts will be owned by Hartford Life. The income earned on such assets
will be Hartford Life's income.
B. INFORMATION REGARDING DEFERRED COMPENSATION PLANS FOR STATE AND LOCAL
GOVERNMENTS
The tax treatment of contributions and distributions is briefly described in
the accompanying prospectus for the contract.
THE COMPANY
A. BUSINESS OF HARTFORD LIFE INSURANCE COMPANY
Hartford Life Insurance Company ("Hartford Life" or the "Company") was
organized in 1902 and is incorporated under the laws of the State of
Connecticut. It is a direct subsidiary of Hartford Life and Accident Insurance
Company ("HLA") and is ultimately a wholly-owned subsidiary of Hartford Fire
Insurance Company ("Hartford Fire") which is ultimately a subsidiary of ITT
Hartford Group, Inc. ("ITT Hartford Group"), formerly a wholly-owned subsidiary
of ITT Corporation. On December 19, 1995, ITT Corporation distributed all of the
outstanding shares of ITT Hartford Group to ITT Corporation shareholders of
record in an action known herein as the "Distribution". As a result of the
Distribution, ITT Hartford became an independent, publicly traded company.
Hartford Life is the parent of ITT Hartford Life and Annuity Insurance Company
("ILA"), formerly ITT Life Insurance Corporation, and ITT Hartford International
Life Reassurance Corporation ("HLRe"), formerly American Skandia Life
Reinsurance Corporation, which was purchased in 1993.
Hartford Life provides for the insurance and retirement needs of millions of
Americans and has been among the fastest-growing major life insurance companies
in the United States for the past several years as measured by assets. At
December 31, 1995, Hartford Life's total assets of $64.2 billion included 22.4%
of fixed maturities and 56.5% of separate accounts with the remainder
representing equity securities, cash, mortgage loans, policy loans, reinsurance
recoverables and other assets. Hartford Life is engaged in a business that is
highly competitive due to the large number of stock and mutual life insurance
companies and other entities
10
<PAGE>
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 June 26, 1995 edition of NATIONAL UNDERWRITER LIFE-HEALTH INSURANCE
magazine, Hartford Life ranked 12th among all life insurance companies in the
United States based upon total assets. A.M. Best assigned Hartford Life its
second highest ranking classification, A+, as of December 31, 1994.
The reportable divisions of Hartford Life and its subsidiaries are:
Individual Life and Annuity
Asset Management Services
Specialty Insurance Operations
Revenue, income before taxes and identifiable assets by reportable division
are set forth in Note 6 in Notes to Consolidated Financial Statements.
The following is a description of Hartford Life's key products and services,
distribution methods, competition and certain other relative data for each of
its reportable divisions.
INDIVIDUAL LIFE AND ANNUITY ("ILAD")
Hartford Life is a leader in the annuity marketplace, selling both variable
and fixed products through a wide distribution of broker-dealers, financial and
other institutions. Hartford Life was the number one writer of variable
annuities for 1995 (excluding TIAA-CREF) with an 11.0% market share according to
VARDS (Variable Annuity Research and Data Service). The individual annuity
market is highly competitive with insurance companies and other financial
institutions selling similar products. Selection depends on fund performance,
the array of fund and product options, product design, credited rates and a
company's financial strength ratings.
Hartford Life earns fees for managing ILAD assets and maintaining
policyholders' accounts. The policyholder has a variety of fund and product
choices, some of which are managed internally; however, most of the investment
funds are managed by Wellington Management Company, Putnam, NBD First Chicago,
Fidelity, Twentieth Century or Dean Witter.
New sales of individual annuities reached $6.9 billion in 1995 bringing
assets under management to $31.0 billion as of December 31, 1995. Of the total
assets under management, $21.0 billion relate to variable annuities with $18.8
billion of these assets held in separate accounts where the policyholder selects
the investment vehicle and bears the risk of asset performance, and $2.2 billion
of these assets, representing the fixed option, held in the general account. The
remaining $10.0 billion of assets under management, in the Individual Annuity
line of business, are in guaranteed separate accounts. The guaranteed separate
account products offer fixed rate guarantees if held to maturity, but are market
value adjusted, and the majority of which have no minimum guarantees should
policyholders withdraw early. The guaranteed rates, when held to maturity, range
from 3.0% to 9.3% with durations from one to ten years. These guarantees are
supported by the general account of Hartford Life. 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 policy years. Fixed and variable annuity policyholder reserves are held at
account value. The minimum death benefits associated with some 1994 and 1995
annuity sales were reinsured to a third party. Guaranteed policyholders' account
balances are primarily held at market value with amounts held for deferred
expenses.
Products sold by the Individual Life line of business 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
Hartford Life's own sales offices or other marketing groups. Hartford Life
competes primarily in the up-scale estate and business planning markets.
Significant competition comes from large, financially strong insurers based on
price, product, 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, 1995, the outstanding policy loan balance on
individual life policies was $236 million. 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. Hartford Life reinsures all
individual life business written by HLA. The maximum retention on any one
individual life is $1.25 million.
11
<PAGE>
ASSET MANAGEMENT SERVICES ("AMS")
This division offers retirement products and services to employer groups
marketed to plan administrators through a direct sales force, assisted by home
office personnel. The services include managing assets and acting as plan
administrator for plans qualified under sections 401(k), 403(b) and 457 of the
Internal Revenue Code. The division markets several products for which the
investments and reserves are held in separate accounts. AMS reported total
assets of $14.0 billion as of December 31, 1995, of which $4.0 billion were
separate account assets. The separate account options include Twentieth Century
funds, Fidelity and Hartford Life's own funds which are managed by Wellington
Management Company 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.
The Guaranteed Rate Contract ("GRC") line of business offers fixed or
indexed rates that are guaranteed for a specific period. The GRC line of
business results have been negatively impacted by lower investment earnings on
mortgage-backed securities due to prepayments experienced in excess of assumed
levels. The GRC line of business was also affected by the interest rate rise in
1994 when the duration of assets lengthened relative to that of the liabilities.
Hartford Life has positioned itself to enhance its competitive position in the
401(k) full service and group tax deferred annuity markets. The Section 457 plan
market is a mature market for which growth is primarily achieved through
takeover business from competing companies and through increased contributions
from existing participants.
SPECIALTY INSURANCE OPERATIONS
Hartford Life's Corporate Owned Life Insurance ("COLI") line of business is
a leader in the market. Through the purchase of COLI, corporations are able to
use the favorable tax treatment of life insurance to efficiently fund a variety
of employee benefit liabilities such as postretirement health care and
non-qualified benefit programs. The Company also sees significant growth
opportunities in the rapidly expanding market for funding non-qualified benefit
programs. Current legislative proposals would phase out the deductibility of
interest on policy loans under COLI, thus eliminating all future sales of
leveraged COLI; however, it should not affect variable COLI product sales or
inforce. Through its specialty insurance subsidiary, HLRe, focus is on niche
reinsurance markets and not on traditional reinsurance products where
competition is often based solely on price. Products and services are generally
geared to developing, underwriting and marketing innovative financial solutions
to customers who use reinsurance to manage financial risk. Specialty Insurance
Operations has growth opportunities through variable COLI and other
non-qualified deferred compensation vehicles, reinsurance and international
acquisitions.
In order to diversify its risk exposure and seek above average profits in
its Specialty Insurance Operations division, the Company, through its parent,
HLA, initiated an international expansion strategy. In June 1994, HLA completed
its initial international investment outside North America by joint venturing
with an Argentine insurance company, Cenit Seguros, S.A. Through this joint
venture, HLA operates several subsidiaries devoted to life insurance, retirement
annuities, mutual funds, life insurance brokerage and pensions and expects to
make further investments in South America. In 1995, HLRe expanded its activity
into Argentina by providing reinsurance to a developing life insurance market.
Additionally, Hartford Life and HLA, have an Employee Benefits division
("EBD") which markets group life, group short and long-term managed disability,
stop loss and supplementary medical coverage to employers and employer-sponsored
plans. It also offers voluntary accidental death and dismemberment, 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 HLA.
B. SELECTED FINANCIAL DATA
The following selected financial data for Hartford Life, 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 .
12
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF INCOME
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
REVENUES
Premiums and other considerations................................. $ 1,487 $ 1,100 $ 747 $ 259 $ 158
Net investment income............................................. 1,328 1,292 1,051 907 753
Net realized (losses) gains....................................... (11) 7 16 5 11
--------- --------- --------- --------- ---------
Total Revenues.................................................. 2,804 2,399 1,814 1,171 922
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
BENEFITS, CLAIMS AND EXPENSES
Benefits, claims and claim adjustment expenses.................... 1,422 1,405 1,046 797 689
Dividends to policyholders........................................ 675 419 227 47 1
Amortization of deferred policy acquisition costs................. 199 145 113 55 40
Other insurance expenses.......................................... 317 227 210 138 96
--------- --------- --------- --------- ---------
Total Benefits, Claims and Expenses............................. 2,613 2,196 1,596 1,037 826
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
INCOME BEFORE INCOME TAX EXPENSE.................................... 191 203 218 134 96
Income tax expense................................................ 62 65 75 45 32
--------- --------- --------- --------- ---------
Income before cumulative effect of changes in accounting
principles....................................................... 129 138 143 89 64
Cumulative effect of changes in accounting principles net of tax
benefits of $7................................................... 0 0 0 (13) 0
NET INCOME.......................................................... $ 129 $ 138 $ 143 $ 76 $ 64
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>
C. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION (DOLLAR AMOUNTS IN MILLIONS)
1. RESULTS OF OPERATIONS
1995 COMPARED TO 1994
<TABLE>
<CAPTION>
ILAD AMS SPECIALTY TOTAL
-------------------- -------------------- -------------------- ---------
1995 1994 1995 1994 1995 1994 1995
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues...................................... $ 797 $ 691 $ 734 $ 789 $ 1,273 $ 919 $ 2,804
Benefits, claims, expenses and taxes.......... 642 595 786 765 1,247 901 2,675
--------- --------- --------- --------- --------- --------- ---------
Net Income (Loss)............................. $ 155 $ 96 ($ 52) $ 24 $ 26 $ 18 $ 129
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
<CAPTION>
1994
---------
<S> <C>
Revenues...................................... $ 2,399
Benefits, claims, expenses and taxes.......... 2,261
---------
Net Income (Loss)............................. $ 138
---------
---------
</TABLE>
INDIVIDUAL LIFE & ANNUITY ("ILAD")
Revenues of $797 in 1995 increased by $106, or 15%, over 1994 as a result of
several factors. In the Individual Annuity line of business, deposits on fixed
and variable annuity contracts (which are not recorded as revenues) and strong
market value appreciation in policyholder accounts increased the assets in this
line of business 52% to $31 billion. Asset growth resulted in a corresponding
increase in policy charges which are based primarily as a percentage of assets.
This division has been the market leader in sales of individual variable annuity
contracts in each of the last three years. In the Individual Life line of
business, the full year benefits of the Pacific Standard assumption reinsurance
agreement (described below), in conjunction with new business sales, have
enabled premiums and other considerations (net of reinsurance and acquisitions)
to grow 15% over 1994. In addition, significant expense savings have resulted
from the consolidation of several functions in the Minneapolis and Simsbury
locations. The combination of the above items resulted in earnings growth of 61%
for the total reportable division.
In 1994, the division assumed life and annuity policies from Pacific
Standard Life Insurance Company, adding $219 million of life and $181 million of
annuity assets. In 1993, ILAD assumed $3.2 billion in fixed and variable annuity
assets and $0.9 billion of modified guaranteed life insurance from Fidelity
Bankers Life
13
<PAGE>
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. 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.
ASSET MANAGEMENT SERVICES ("AMS")
With revenues down 7% and a net loss, after-tax, of $52, AMS's 1995 results
were significantly below that of the prior year. This operating decline was
primarily due to the results of the GRC line of business, which offers fixed or
indexed rates that are guaranteed for a specific period. The GRC line of
business results have been negatively impacted by lower investment earnings on
mortgage-backed securities due to prepayments experienced in excess of assumed
levels. The GRC line of business results were also affected by the interest rate
rise in 1994 when the duration of assets lengthened relative to that of the
liabilities. The impact of these factors, which resulted in a $68 loss in 1995,
is expected to decline 10% to 25% per year over the next two years and will run
out in its entirety by the end of the year 2000. Hedging and other funding
strategies have been developed to address potential future liquidity needs.
Excluding the losses described above, AMS net income was $16 in 1995 as
compared with $23 in 1994. Although 1995 results were below the historic high of
1994, management does not expect this trend to continue.
SPECIALTY INSURANCE OPERATIONS
Specialty Operations reported net income of $26 in 1995 representing a 44%
increase over its 1994 net income of $18 and represents over 20% of the
Company's total 1995 net income. The increase in 1995 net income was primarily
due to substantial growth in the existing COLI line of business.
Total division revenues of $1,273 in 1995 increased by $354 to 39% over 1994
levels and were driven by substantial increases in COLI sales. In 1994, this
reportable division began to offer a variable COLI product which accounted for
nearly 69% of all new 1995 sales.
1994 COMPARED TO 1993
ILAD
ILAD is the largest of Hartford Life'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.
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.
14
<PAGE>
SPECIALTY INSURANCE OPERATIONS
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. Hartford Life's Specialty segment is one of the
industry's leading underwriters and reinsurers of COLI products.
2. DIVISION INFORMATION
For division information, see Note 6 to Notes to Consolidated Financial
Statements
D. REINSURANCE
Hartford Life cedes insurance to non-affiliated insurers in order to limit
its maximum loss. Such transfer does not relieve Hartford Life of its primary
liability. Hartford Life also assumes insurance from other insurers. Group life
and health insurance is substantially reinsured to affiliated companies.
E. RESERVES
In accordance with the insurance laws and regulations under which Hartford
Life 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 Hartford Life'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 collateralized 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.
G. COMPETITION
Hartford Life is engaged in a business that is highly competitive due to 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 June 26, 1995 edition of NATIONAL UNDERWRITER LIFE-HEALTH INSURANCE
magazine, Hartford Life ranked 12th among all life insurance companies in the
United States based upon total assets. A.M. Best assigned Hartford Life its
second highest ranking classification, A+, as of December 31, 1994.
H. EMPLOYEES
As of December 31, 1995, Hartford Life and HLA have 3,045 direct employees,
1,741 of whom are employed at the home office in Simsbury, Connecticut, and
1,304 of whom are employed at various branch offices throughout the United
States, Canada and elsewhere. ILA employs 381 people in Minneapolis, Minnesota,
and HLRe has 19 employees in Westport, Connecticut.
15
<PAGE>
I. PROPERTIES
Hartford Life occupies office space leased by Hartford Fire. Expenses
associated with these offices are allocated on a direct and indirect basis to
the Life subsidiaries by Hartford Fire.
J. REGULATION
The insurance business of Hartford Life 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, and regulating the type and
amounts of investments permitted. In addition, several states, including
Connecticut, regulate affiliated groups of insurers, such as Hartford Life,
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 established
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, 1995, Hartford Life's risk based
capital result was better than the NAIC requirements.
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,
changes in Medicare coverage, ERISA regulations and Social Security, tax law
changes affecting the taxation of insurance companies, 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. Current
legislative proposals would phase out the deductibility of interest on policy
loans under COLI, thus eliminating all future sales of leveraged COLI; however,
the current proposals would not affect variable COLI product sales or inforce
which accounted for approximately 69% of 1995 sales.
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. Hartford Life prepares its statutory financial statements in
accordance with accounting practices prescribed or permitted by the State of
Connecticut Insurance Department. Prescribed statutory accounting practices
include publications of the NAIC, as well as state laws, regulations, and
general administrative rules. In accordance with the insurance laws and
regulations under which Hartford Life 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 actual 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
Hartford Life'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.
16
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS PROFESSION,
HARTFORD LIFE, VOCATION OR EMPLOYMENT FOR
NAME, AGE YEAR OF ELECTION PAST 5 YEARS; OTHER DIRECTORSHIPS
- - ------------------------------- --------------------------------- ---------------------------------------------
<S> <C> <C>
Louis J. Abdou 53 Vice President, 1987 Vice President (1987-Present), Hartford Life.
Wendell J. Bossen 62 Vice President, 1992** President (1992-Present), International
Corporate Marketing Group, Inc.; Executive
Vice President (1984-1992), Mutual Benefit.
Gregory A. Boyko 44 Vice President, 1995 Vice President and Controller (1995-Present),
Hartford Life; Chief Financial Officer
(1994-1995), IMG American Life; Senior Vice
President (1992-1994), Connecticut Mutual
Life Insurance Company.
Peter W. Cummins 59 Vice President, 1989 Vice President, Individual Annuity Operations
(1989-Present), Hartford Life.
Ann M. deRaismes 45 Vice President, 1994 Vice President (1994-Present); Assistant Vice
President (1992); Director of Human
Resources (1991-Present), Hartford Life.
Timothy M. Fitch 43 Vice President, 1995 Vice President (1995-Present); Assistant Vice
President (1993); Director (1991), Hartford
Life.
Donald R. Frahm 64 Chairman and Chief Executive Chairman and Chief Executive Officer of the
Officer, 1988 Director, 1988* Hartford Insurance Group (1988-Present).
Bruce D. Gardner 45 Vice President, 1996 Vice President (1996-Present); General
Counsel and Director, 1994* Corporate
Secretary (1991-1996), Hartford Life.
Joseph H. Gareau 49 Executive Vice President and Executive Vice President and Chief Investment
Chief Investment Officer, 1993 Officer, (1993-Present), Hartford Life;
Director, 1993* Senior Vice President and Chief Investment
Officer (1992), ITT Hartford's
Property-Casualty Companies.
J. Richard Garrett 51 Treasurer, 1994 Treasurer (1994-Present); Vice President
Vice President, 1993 (1993-Present) Hartford Life; Treasurer
(1977), Hartford Insurance Group.
John P. Ginnetti 50 Executive Vice President, 1994 Executive Vice President and Director Asset
Management Services (1994-Present); Senior
Vice President, (1988), Hartford Life.
Lynda Godkin 42 Assoc. General Counsel, Corporate Associate General Counsel and Corporate
Secretary, 1995 Secretary (1995-Present); Assistant General
Counsel and Secretary (1994); Counsel
(1990), Hartford Life.
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS PROFESSION,
HARTFORD LIFE, VOCATION OR EMPLOYMENT FOR
NAME, AGE YEAR OF ELECTION PAST 5 YEARS; OTHER DIRECTORSHIPS
- - ------------------------------- --------------------------------- ---------------------------------------------
Lois W. Grady 51 Vice President, 1993 Vice President (1993-Present); Assistant Vice
President (1988), Hartford Life.
<S> <C> <C>
David A. Hall 42 Senior Vice President and Senior Vice President and Actuary
Actuary, 1992 (1992-Present), Hartford Life.
Joseph Kanarek 48 Vice President, 1991 Vice President (1991-Present), Hartford Life.
Robert A. Kerzner 44 Vice President, 1994 Vice President (1994-Present); Regional Vice
President (1991); Life Sales Manager (1990),
Hartford Life.
Kevin J. Kirk 44 Vice President, 1992 Vice President (1992-Present); Assistant Vice
President; Assistant Director, Asset
Management Services (1985); Hartford Life.
Andrew W. Kohnke 47 Vice President, 1992 Vice President (1992-Present); Assistant Vice
President (1989), Hartford Life.
Steven M. Maher 41 Vice President and Actuary, 1993 Vice President and Actuary (1993-Present);
Assistant Vice President (1987), Hartford
Life.
William B. Malchodi, Jr. 45 Vice President, 1994 Vice President (1994-Present); Director of
Director or Taxes, 1992 Taxes (1992-Present); Assistant General
Counsel and Assistant Director of Taxes
(1986), Hartford Insurance Company.
Thomas M. Marra 37 Executive Vice President, 1996 Executive Vice President and Director
Director, 1994* Individual Life and Annuity Division
(1996-Present); Senior Vice President and
Director, Individual Life and Annuity
Division (1993-1996); Director of Individual
Annuities (1991), Hartford Life.
Robert F. Nolan 41 Vice President, 1995 Vice President (1995-Present), Assistant Vice
President Hartford Life; Manager Public
Relations (1986), Aetna Life and Casualty
Insurance Company.
Joseph J. Noto 44 Vice President, 1989 Vice President (1989-Present), Hartford Life.
Leonard E. Odell, Jr. 51 Senior Vice President, 1994 Senior Vice President (1994-Present); Vice
President and Chief Actuary (1982), Hartford
Life. Director, 1994*
Michael C. O'Halloran 49 Vice President, 1994 Associate Vice President (1994-Present); Senior
General Counsel, 1988 Associate General Counsel and Director
(1988-Present), Law Department, Hartford
Fire Insurance Company.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS PROFESSION,
HARTFORD LIFE, VOCATION OR EMPLOYMENT FOR
NAME, AGE YEAR OF ELECTION PAST 5 YEARS; OTHER DIRECTORSHIPS
- - ------------------------------- --------------------------------- ---------------------------------------------
Craig D. Raymond 35 Vice President, 1993 Vice President and Chief Actuary
Chief Actuary, 1994 (1994-Present); Vice President (1993);
Assistant Vice President (1992); Actuary
(1989-1994), Hartford Life.
<S> <C> <C>
Lowndes A. Smith 56 President and Chief Operating President and Chief Operating Officer
Officer, 1989 Director, 1981* (1989-Present), Hartford Life; Senior Vice
President and Group Controller (1987),
Hartford Insurance Group.
Edward J. Sweeney 39 Vice President, 1993 Vice President (1993-Present); Chicago
Regional Manager (1985-1993), Hartford Life.
James E. Trimble 39 Vice President and Actuary, 1990 Vice President (1990-Present); Assistant Vice
President (1987-1990), Hartford Life.
Raymond P. Welnicki 47 Senior Vice President, 1993 Senior Vice President (1994-Present); Vice
Director, 1994* President (1993), Hartford Life; Board of
Directors, Ethix Corp., formerly employed by
Aetna Life & Casualty.
Walter C. Welsh 49 Vice President, 1995 Vice President (1995-Present); Assistant Vice
President (1993), Hartford Life.
James J. Westervelt 49 Senior Vice President, Group Senior Vice President and Group Controller
Controller, 1994 (1994-Present); Vice President and Group
Controller (1989), Hartford Insurance Group.
Lizabeth H. Zlatkus 37 Vice President, 1994 Director, Vice President (1994-Present); Assistant Vice
1994* President (1992); Hartford Life; formerly
Director, Hartford Insurance Group.
</TABLE>
- - ------------------------
* Denotes date of election to Board of Directors.
** ITT Hartford Affiliated Company.
EXECUTIVE COMPENSATION
Executive officers of Hartford Life also serve one or more affiliated
companies of Hartford Life. Allocations have been made as to each individual's
time devoted to his duties as an executive officer of Hartford Life. The
following table shows the cash compensation paid, based on these allocations, to
the Chief Operating Officer and top five executive officers of Hartford Life
whose allocated compensation exceeds $100,000 and to all executive officers of
Hartford Life as a group for services rendered in all capacities in Hartford
Life during 1995. Directors of Hartford Life receive no compensation in addition
to their compensation as employees of Hartford Life.
19
<PAGE>
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------------------------
AWARDS
ANNUAL COMPENSATION SECURITIES PAYOUTS ALL
NAME AND ----------------------- UNDERLYING LTIP OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) PAYOUTS ($)(1) COMPENSATION ($)(3)
- - ---------------------------------- ---- ---------- ---------- ----------- -------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
DONALD R. FRAHM 1995 38,640 16,851 5,959 46,080 3,467
CHAIRMAN AND CHIEF EXECUTIVE
OFFICER 1994 36,213 17,280 5,959 -- 1,381
1993 34,560 17,920 4,401 -- 1,307
LON A. SMITH 1995 243,530 130,526 35,733 170,400 21,978
PRESIDENT AND CHIEF OPERATING
OFFICER 1994 189,333 113,600 35,733 -- 7,638
1993 158,567 82,360 31,249 -- 6,132
JOHN P. GINNETTI 1995 245,250 223,178 6,583 78,480 25,444
EXECUTIVE VICE PRESIDENT 1994 158,050 147,150 18,103 -- --
1993 134,288 39,894 8,996 -- 35,113
PETER W. CUMMINS 1995 182,698 -- 1,665 39,696 320,865
VICE PRESIDENT 1994 118,654 -- 2,081 -- 391,171
1993 102,300 -- 1,819 -- 217,708
THOMAS M. MARRA 1995 160,800 258,084 8,093 27,336 17,739
EXECUTIVE VICE PRESIDENT 1994 113,096 131,052 20,140 -- --
1993 81,472 -- 2,949 -- 71,103
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF STOCK
NUMBER OF % OF TOTAL PRICE APPRECIATION
SECURITIES OPTIONS FOR OPTION TERM
UNDERLYING GRANTED ($) (2)
OPTIONS TO EMPLOYEES EXERCISE PRICE EXPIRATION ------------------
NAME GRANTED (#) IN 1995 ($/SHARE) DATE 5% 10%
- - -------------------------------- ----------- -------------- -------------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Donald R. Frahm 5,959 0.005 43.22 5/11/2005 161,965 410,454
Lon A. Smith 35,733 0.032 43.22 5/11/2005 971,235 2,461,320
John P. Ginnetti 6,583 0.006 43.22 5/11/2005 178,930 453,448
Peter W. Cummins 1,665 0.001 43.22 5/11/2005 45,248 114,668
Thomas M. Marra 8,093 0.007 43.22 5/11/2005 219,970 557,450
</TABLE>
(1) Percentages indicated are based on options to purchase a total of 1,129,120
shares of common stock granted to 235 employees during 1995.
(2) At the end of the term of the options granted in 1995, the projected price
of a share of common stock would be $70.40 and $112.10 at assumed annual
appreciation rates of 5% and 10%.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
ACQUIRED OPTIONS AT FISCAL YEAR-END IN-THE- MONEY OPTIONS HELD
ON VALUE (#) AT FISCAL YEAR-END ($)
EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---------------------------- ----- ------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Donald R. Frahm 1,749 98,571 10,360 5,959 155,140 30,748
Lon A. Smith 9,670 678,155 80,148 35,733 1,362,804 184,385
John P. Ginnetti -- -- 9,032 21,651 137,061 263,323
Peter W. Cummins -- -- 1,905 3,659 28,508 38,462
Thomas M. Marra -- -- 8,678 22,503 116,094 229,932
</TABLE>
20
<PAGE>
LEGAL PROCEEDINGS
The Company 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 the Company.
EXPERTS
The financial statements and schedules of Hartford Life included in this
Prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance on the authority of said firm as experts in
accounting and auditing in giving said report. Reference is made to said reports
of Hartford Life Insurance Company which include an explanatory paragraph with
respect to the adoption of a new accounting standard changing the methods of
accounting for debt and equity securities. The principal business address of
Arthur Andersen LLP is One Financial Plaza, Hartford, Connecticut 06103.
21
<PAGE>
APPENDIX A
MARKET VALUE LUMP SUM OPTION
If A is greater than B, the Market Value Adjustment factor equals 1.
If B is greater than A, the Market Value Adjustment factor equals 1 -
(6(B-A))
WHERE:
A = The weighted average interest rate (expressed as a decimal, e.g., 1% =
.01) being credited under the General Account Option as of the date of
termination.
B = The average yield (expressed as a decimal, e.g. 1% = .01) for the
month prior to the date of termination of the higher of the Salomon
Brothers weekly index of new Long Term Public Utilities rated Aa by
Moody's Investors Service and the Salomon Brothers weekly Index of Current
Coupon 30 year Federal National Mortgage Association Securities, or their
equivalents.
BOOK VALUE SPREAD OPTION
Interest to be credited on unpaid balance ("i") equals (A - 2(B-A)) - .005,
where A and B are defined as above.
<TABLE>
<S> <C>
Examples of Contract Termination: (Assuming a 5% Contingent Deferred Sales
Charge, and No Policy Fees or Premium Taxes
are Applicable)
</TABLE>
<TABLE>
<CAPTION>
INTEREST RATE CREDITED TO ACTIVE LIFE FUND ATTRIBUTABLE
CONTRIBUTIONS DEPOSITED TO CONTRIBUTIONS DEPOSITED IN
IN THE GIVEN YEAR THE GIVEN YEAR
--------------------------------- ------------------------------------
<S> <C> <C>
1992 6.00% $ 300,000
1993 6.50% 600,000
1994 7.00% 700,000
--- -----------
TOTAL 6.63%* $ 1,600,000
</TABLE>
*Total = the weighted average interest rate being credited on the date of
termination ("A"). It is calculated as follows:
<TABLE>
<S> <C>
300,000 x .06 + 600,000 x .065 + 700,000 x
.07
300,000 + 600,000 + 700,000 = .0663 = 6.63%
</TABLE>
At termination the book value of the General Account Option portion of the
Active Life Fund would be $1,600,000. This amount is reduced by Contingent Sales
Charges of 5%, or $80,000. The remaining $1,520,000 would be payable under
either Option 1 (Book Value Spread Option) or Option 2 (Market Value Lump Sum
Option.)
EXAMPLE 1
B = .09
If the Book Value Spread Option is selected, then the Book Value Spread rate
of interest would equal (.0663 - 2 (.09 - .0663)) - .005 = .0139 or 1.39% and
the Contract Owner would receive six (6) annual payments (beginning immediately)
of $262,153.80.
If the Market Value Lump Sum Option is selected, then the Market Value
Factor is 1 - (6(.09 - .0663)) = .8578 and the payout would be $1,520,000 x
.8578 = $1,303,856.
EXAMPLE 2
B = .07
If the Book Value Spread Option is selected, then the Book Value Spread rate
of interest would equal 7% (the maximum value of i) and the Contract Owner would
receive six (6) annual payments (beginning immediately) of $298,027.68.
If the Market Value Lump Sum Option is selected, then the Market Value
factor would be 1 and the payment would be $1,520,000.
The assessment of Policy Fees, if any, will reduce the amount of the payment
on contract termination.
22
<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, 1995 and 1994, 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, 1995. These consolidated financial statements are the
responsibility of Hartford Life Insurance 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, 1995
and 1994, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1995 in conformity with
generally accepted accounting principles.
As discussed in Note 1 in Notes to Consolidated Financial Statements,
Hartford Life Insurance 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.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 24, 1996
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS)
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------
- - --------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------
1995 1994 1993
------- ------- ------
<S> <C> <C> <C>
REVENUES
Premiums and other considerations $1,487 $1,100 $747
Net investment income 1,328 1,292 1,051
Net realized (losses) gains (11) 7 16
------ ------ -----
TOTAL REVENUES 2,804 2,399 1,814
------ ------ -----
BENEFITS, CLAIMS AND EXPENSES
Benefits, claims and claim
adjustment expenses 1,422 1,405 1,046
Dividends to policyholders 675 419 227
Amortization of deferred policy
acquisition costs 199 145 113
Other insurance expense 317 227 210
------ ------ -----
TOTAL BENEFITS, CLAIMS AND EXPENSES 2,613 2,196 1,596
------ ------ -----
INCOME BEFORE INCOME TAX EXPENSE 191 203 218
Income tax expense 62 65 75
------ ------ -----
NET INCOME $129 $138 $143
------ ------ -----
------ ------ -----
- - ---------------------------------------------------------------------------
- - ---------------------------------------------------------------------------
</TABLE>
The accompanying Notes are an integral part of these Consolidated Financial
Statements.
F-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------
- - -----------------------------------------------------------------------------
AS OF DECEMBER 31,
------------------
1995 1994
------- --------
ASSETS
<S> <C> <C>
Investments
Fixed maturities
available for sale, at market value
(amortized cost of $14,440 and $14,464) $14,400 $13,429
Equity securities, at market value
(cost of $61 and $76) 63 68
Mortgage loans, at outstanding balance 265 316
Policy loans, at outstanding balance 3,381 2,614
Other investments, at cost 156 107
------- -------
TOTAL INVESTMENTS 18,265 16,534
Cash 46 20
Premiums and amounts receivable 165 160
Reinsurance recoverable 6,221 5,466
Accrued investment income 394 378
Deferred policy acquisition costs 2,188 1,809
Deferred income tax 420 590
Other assets 234 83
Separate account assets 36,264 22,809
------- -------
TOTAL ASSETS $64,197 $47,849
------- -------
------- -------
LIABILITIES
Future policy benefits $2,373 $1,890
Other policyholder funds 22,598 21,328
Other liabilities 1,233 1,000
Separate account liabilities 36,264 22,809
------- -------
TOTAL LIABILITIES 62,468 47,027
------- -------
Commitments and contingencies (Note 9)
STOCKHOLDER'S EQUITY
Common stock
Authorized 1,000 shares, $5,690 par value
Issued and outstanding 1,000 shares 6 6
Additional paid-in capital 1,007 826
Retained earnings 773 644
Unrealized loss on investments, net of tax (57) (654)
------- -------
TOTAL STOCKHOLDER'S EQUITY 1,729 822
------- -------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $64,197 $47,849
------- -------
------- -------
- - -----------------------------------------------------------------------------
- - -----------------------------------------------------------------------------
</TABLE>
The accompanying Notes are an integral part of these Consolidated Financial
Statements.
F-3
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(IN MILLIONS)
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------
UNREALIZED LOSS TOTAL
COMMON ADDITIONAL RETAINED ON INVESTMENTS, STOCKHOLDER'S
STOCK PAID-IN-CAPITAL EARNINGS NET OF TAX EQUITY
------ --------------- -------- --------------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1992 $6 $498 $373 $0 $877
Net income - - 143 - 143
Capital contribution - 180 - - 180
Excess of assets over liabilities
on reinsurance assumed from affiliate - (2) - - (2)
Change in unrealized loss on investments, net of tax - - - (5) (5)
------ --------------- -------- --------------- -------------
BALANCE, DECEMBER 31, 1993 6 676 516 (5) 1,193
------ --------------- -------- --------------- -------------
Net income - - 138 - 138
Capital contribution - 150 - - 150
Dividend paid - - (10) - (10)
Change in unrealized loss on investments, net of tax* - - - (649) (649)
------ --------------- -------- --------------- -------------
BALANCE, DECEMBER 31, 1994 6 826 644 (654) 822
------ --------------- -------- --------------- -------------
Net income - - 129 - 129
Capital contribution - 181 - - 181
Change in unrealized loss on investments, net of tax - - - 597 597
------ --------------- -------- --------------- -------------
BALANCE, DECEMBER 31, 1995 $6 $1,007 $773 ($57) $1,729
------ --------------- -------- --------------- -------------
------ --------------- -------- --------------- -------------
- - ------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(*) The 1994 change in unrealized loss on investments, net of tax, included an
unrealized gain of $91 due to adoption of SFAS No. 115 as discussed in Note 1(b)
of Notes to Consolidated Financial Statements.
The accompanying Notes are an integral part of these Consolidated Financial
Statements.
F-4
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------------
- - -----------------------------------------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------
1995 1994 1993
------------- -------------- -------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $129 $138 $143
Adjustments to net income:
Net realized (losses) gains 11 (7) (16)
(Decrease) increase in liability to policyholders for realized gains (3) 5 (15)
Net amortization of premium on fixed maturities 21 41 2
Provision for deferred income taxes (172) (128) (121)
Increase in deferred policy acquisition costs (379) (441) (292)
(Increase) decrease in premiums and amounts receivable (81) 10 (28)
Increase in accrued investment income (16) (106) (4)
(Increase) decrease in other assets (177) 101 (36)
(Increase) decrease in reinsurance recoverable (35) 75 (121)
Increase in liability for future policy benefits 483 224 360
Increase in other liabilities 281 191 176
------------- -------------- -------------
CASH PROVIDED BY OPERATING ACTIVITIES 62 103 48
------------- -------------- -------------
INVESTING ACTIVITIES
Purchases of fixed maturities investments (6,228) (9,127) (12,406)
Proceeds from sales of fixed maturities investments 4,848 5,708 8,813
Maturities and principal paydowns of fixed maturities investments 1,741 1,931 2,596
Net purchases of other investments (871) (1,338) (206)
Net (purchases)/sales of short-term investments (24) 135 (564)
------------- -------------- -------------
CASH USED FOR INVESTING ACTIVITIES (534) (2,691) (1,767)
------------- -------------- -------------
FINANCING ACTIVITIES
Net receipts from investment and UL-type contracts credited to
policyholder account balances 498 2,467 1,513
Capital contribution 0 150 180
Dividends paid 0 (10) 0
------------- -------------- -------------
CASH PROVIDED BY FINANCING ACTIVITIES 498 2,607 1,693
------------- -------------- -------------
NET INCREASE (DECREASE) IN CASH 26 19 (26)
Cash at beginning of year 20 1 27
------------- -------------- -------------
CASH AT END OF YEAR $46 $20 $1
------------- -------------- -------------
------------- -------------- -------------
- - ------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying Notes are an integral part of these Consolidated Financial
Statements.
F-5
<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
and its wholly-owned subsidiaries ("Hartford Life" or the "Company"), ITT
Hartford Life and Annuity Insurance Company ("ILA") and ITT Hartford
International Life Reassurance Corporation ("HLRe"), formerly American Skandia
Life Reinsurance Corporation. Hartford Life is a wholly-owned subsidiary of
Hartford Life and Accident Insurance Company ("HLA"). Hartford Life is
ultimately owned by Hartford Fire Insurance Company ("Hartford Fire"), which is
ultimately owned by ITT Hartford Group, Inc. ("ITT Hartford"), formerly a
subsidiary of ITT Corporation ("ITT"). On December 19, 1995, ITT Corporation
distributed all of the outstanding shares of ITT Hartford Group to ITT
Corporation Shareholders of record in an action known herein as the
"Distribution". As a result of the Distribution, ITT Hartford became an
independent publicly traded company.
The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
Company offers life, annuity, pension, and disability insurance products.
These products are distributed and marketed by multiple distribution channels
which include broker-dealers, agents and banks, as well as a captive sales
force. Hartford Life conducts business primarily in the United States and is
licensed to write business in all 50 states. The Company is headquartered in
Simsbury, Connecticut and has 3,045 direct employees.
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.
(B) CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1994, Hartford Life adopted Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities". The new standard requires, among other things,
that securities be classified as "held-to-maturity", "available-for-sale" or
"trading" based on Hartford Life'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 and continue to
be recorded at fair value with the corresponding impact included in
Stockholder's Equity. Under SFAS No. 115, Hartford Life'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 investments, 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. Hartford Life's cash flows were not impacted by
this change in accounting principle.
(C) REVENUE RECOGNITION
Revenues for universal life policies and investment products consist of policy
charges for the cost of insurance, policy administration and surrender charges
assessed to policy account balances. 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.
F-6
<PAGE>
(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. Other
policyholder funds which represent liabilities for universal life insurance and
investment products reflect policy account balances before applicable surrender
charges.
(E) POLICYHOLDER REALIZED GAINS AND LOSSES
Realized gains and losses on security transactions associated with Hartford
Life'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
Hartford Life's investments in fixed maturities include bonds, redeemable
preferred stock and commercial paper which are classified as "available-for-
sale" and accordingly are carried at market value with the after-tax difference
from cost reflected as a component of Stockholder's Equity designated
"Unrealized loss on investments, net of tax". Equity securities, which include
common and non-redeemable preferred 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
Hartford Life uses a variety of derivative financial instruments including,
swaps, caps, floors, options, forwards and exchange traded financial futures as
part of an overall risk management strategy. These instruments, are used as a
means of hedging exposure to price, foreign currency and/or interest rate risk
on planned investment purchases or existing assets and liabilities. Hartford
Life does not hold or issue derivative financial instruments for trading
purposes. Hartford Life's accounting for derivative financial instruments used
to manage risk is in accordance with the concepts established in SFAS No. 80,
"Accounting for Futures Contracts," SFAS No. 52 , "Foreign Currency
Translation", American Institute of Certified Public Accountants Statement of
Position 86-2, "Accounting for Options" and various Emerging Issues Task Force
pronouncements. Written options are in all cases used in conjunction with other
assets and derivatives as part of an overall risk management strategy.
Derivative instruments are carried at values consistent with the asset or
liability being hedged. Derivatives used to hedge fixed maturities or equities
are carried at fair value with the after-tax difference from cost reflected in
Stockholder's Equity. Derivatives used to hedge other invested assets or
liabilities are carried at cost.
Derivatives, used as part of a risk management strategy, must be designated at
inception as a hedge and measured for effectiveness both at inception and on an
ongoing basis. Hartford Life's minimum correlation threshold for hedge
designation is 80%. If correlation, which is assessed monthly and measured
based on a rolling three month average, falls below 80%, hedge accounting will
be terminated. Derivatives used to create a synthetic asset must meet synthetic
accounting criteria including designation at inception and consistency of terms
between the synthetic and the instrument being replicated. Synthetic
instrument accounting, consistent with industry practice, provides that the
synthetic asset is accounted for like the financial instrument it is intended
to replicate. Derivatives which fail to meet risk management criteria are
marked to market with the impact reflected in the Consolidated Statements
of Income.
Gains or losses on financial futures contracts entered into in anticipation
of the future receipt of product cash flows are deferred and, at the time of
the ultimate purchase, reflected as 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
futures are closed, except for futures used in duration hedging which are
deferred and basis adjusted on a quarterly basis. The basis adjustments are
amortized into investment income over the remaining asset life.
F-7
<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 Consolidated
Statements of Income as a component of net investment income.
The cost of options entered into as part of a risk management strategy are
basis adjusted to the underlying asset or liability and amortized over the
remaining life of the hedge. Gains or losses on expiration or termination are
adjusted into the basis of the underlying asset or liability and amortized over
the remaining asset life.
Interest rate swaps involve the periodic exchange of payments without the
exchange of underlying principal or notional amounts. Net receipts or payments
are accrued and recognized over the life of the swap agreement as an
adjustment to income. Should the swap be terminated, the gain or loss is
adjusted into the basis of the asset or liability and amortized over the
remaining life. Should the hedged asset be sold or liability terminated without
terminating the swap position, any swap gains or losses are immediately
recognized in earnings. Interest rate swaps purchased in anticipation of an
asset purchase ("anticipatory transaction") are recognized consistent with the
underlying asset components such that the settlement component is recognized in
the Consolidated Statements of Income while the change in market value is
recognized as an unrealized gain or loss.
Premiums paid on purchased floor or cap agreements and the premium received on
issued floor or cap agreements (used for risk management), are adjusted into
the basis of the applicable asset and amortized over the asset life. Gains or
losses on termination of such positions are adjusted into the basis of the
asset or liability and amortized over the remaining asset life. Net payments
are recognized as an adjustment to income or basis adjusted and amortized
depending on the specific hedge strategy.
Forward exchange contracts and foreign currency swaps are accounted for in
accordance with SFAS No. 52.
(I) RELATED PARTY TRANSACTIONS
Transactions of Hartford Life 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 Hartford Life to fund pension
costs and claim annuities to settle casualty claims.
On June 30, 1995, the assets of Lyndon Insurance Company ("Lyndon") were
contributed to ILA. As a result, ILA received approximately $365 in fixed
maturities, equity securities and cash, $26 in receivables, $187 of current
tax liability, $20 in deferred tax liability, and $3 of other liabilities.
The excess of assets over liabilities of $181 were recorded as an increase to
paid-in capital.
Substantially all general insurance expenses related to Hartford Life,
including rent expenses, are initially paid by Hartford Fire. Direct expenses
are allocated to Hartford Life using specific identification and indirect
expenses are allocated using other applicable methods.
The rent paid to Hartford Fire for the space occupied by Hartford Life was $3
in 1995, 1994, and 1993 respectively. Hartford Life expects to pay rent of $3
in 1996, 1997, 1998, 1999, and 2000, respectively and $57 thereafter, over the
contract life of the lease.
(J) DIVIDEND TO POLICYHOLDERS
Dividends to policyholders primarily represent those amounts paid to corporate
owned life insurance ("COLI") policyholders. These dividend liabilities, which
appear as other policyholder funds on the Consolidated Balance Sheets, are
recorded when approved by the board of directors.
See Note (4) for the related party coinsurance agreements.
F-8
<PAGE>
2. INVESTMENTS
(a) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
<S> <C> <C> <C>
1995 1994 1993
------ ------ ------
Interest income $1,338 $1,247 $1,007
Income from other investments 1 54 53
------ ------ ------
GROSS INVESTMENT INCOME 1,339 1,301 1,060
Less: Investment expenses 11 9 9
------ ------ ------
NET INVESTMENT INCOME $1,328 $1,292 $1,051
------ ------ ------
------ ------ ------
(b) UNREALIZED GAINS/(LOSSES) ON EQUITY SECURITIES
As of December 31,
--------------------------
1995 1994 1993
------ ------ ------
Gross unrealized gains $4 $2 $3
Gross unrealized losses (2) (11) (11)
Deferred income tax expenses/(benefit) 1 (3) (3)
------ ------ ------
NET UNREALIZED GAINS (LOSSES) AFTER TAX 1 (6) (5)
Balance at the beginning of the year (6) (5) (0)
------ ------ ------
CHANGE IN NET UNREALIZED GAINS (LOSSES) ON EQUITY SECURITIES $7 ($1) ($5)
------ ------ ------
------ ------ ------
(c) UNREALIZED GAINS/(LOSSES) IN FIXED SECURITIES
As of December 31,
--------------------------
1995 1994 1993
------ ------ ------
Gross unrealized gains $529 $150 $538
Gross unrealized losses (569) (1,185) (290)
Unrealized (losses)/gains credited to policyholder (52) 37 0
Deferred income tax (benefit)/expense (34) (350) 87
------ ------ ------
NET UNREALIZED (LOSSES) GAINS AFTER TAX (58) (648) 161
Balance at the beginning of the year (648) 161 144
------ ------ ------
CHANGE IN NET UNREALIZED GAINS(LOSES)
ON FIXED MATURITIES $590 ($809) $17
------ ------ ------
------ ------ ------
(d) COMPONENTS OF NET REALIZED GAINS/(LOSSES)
Year ended December 31,
--------------------------
1995 1994 1993
------ ------ ------
Fixed maturities $23 ($34) ($12)
Equity securities (6) (11) 0
Real estate and other (25) 47 43
Less: (decrease)/increase in liability to policyholders
for realized gains (3) 5 (15)
------ ------ ------
NET REALIZED (LOSSES) GAINS ($11) $7 $16
------ ------ ------
------ ------ ------
</TABLE>
F-9
<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, 1995 :
<TABLE>
<CAPTION>
SUMMARY OF INVESTMENTS
AS OF DECEMBER 31, 1995
(CARRYING AMOUNT)
Caps, Floors & Options Foreign
Carrying ----------------------- Currency
Value Non-Derivative Issued(b) Purchased(c) Futures(d) Swaps(f) Swaps
-------- ----------- -------- ----------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Asset-backed securities $5,764 $5,752 ($1) $30 $0 ($17) $0
Inverse floaters(a) 711 794 (30) 16 0 (69) 0
Anticipatory(e) 0 0 0 0 0 0 0
-------- ----------- -------- ----------- --------- -------- -------
TOTAL ASSET-BACKED SECURITIES 6,475 6,546 (31) 46 0 (86) 0
Other bonds and notes 7,118 7,165 (1) 0 0 (22) (24)
Short-term investments 807 807 0 0 0 0 0
-------- ----------- -------- ----------- --------- -------- -------
TOTAL FIXED MATURITIES 14,400 14,518 (32) 46 0 (108) (24)
Other investments 3,865 3,865 0 0 0 0 0
-------- ----------- -------- ----------- --------- -------- -------
TOTAL INVESTMENTS $18,265 $18,383 ($32) $46 $0 ($108) ($24)
-------- ----------- -------- ----------- --------- -------- -------
-------- ----------- -------- ----------- --------- -------- -------
</TABLE>
<TABLE>
<CAPTION>
SUMMARY OF INVESTMENTS
AS OF DECEMBER 31, 1995
(NOTIONAL AMOUNT)
(EXCLUDING LIABILITY HEDGES)
Caps, Floors & Options Foreign
Notional ---------------------- Currency
Amount Issued(b) Purchased(c) Futures(d) Swaps(f) Swaps
-------- --------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Asset-backed securities $3,863 $118 $3,133 $322 $290 $0
Inverse floaters(a) 1,601 560 354 6 681 0
Anticipatory(e) 238 0 0 213 25 0
-------- --------- --------- ---------- --------- ---------
TOTAL ASSET-BACKED SECURITIES 5,702 678 3,487 541 996 0
Other bonds and notes 1,365 33 66 322 757 187
Short-term investments 0 0 0 0 0 0
-------- --------- --------- ---------- --------- ---------
TOTAL FIXED MATURITIES 7,067 711 3,553 863 1,753 187
Other investments 18 0 0 0 18 0
-------- --------- --------- ---------- --------- ---------
TOTAL INVESTMENTS $7,085 $711 $3,553 $863 $1,771 $187
-------- --------- --------- ---------- --------- ---------
-------- --------- --------- ---------- --------- ---------
</TABLE>
(a) Inverse floaters 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, Hartford Life uses a variety of
derivative instruments, primarily interest rate swaps and issued floors.
(b) Includes issued caps $475 with a weighted average strike rate of 8.5%
(ranging from 7.0% to 10.4%) and over 85% mature in 2000 through 2004. Issued
floors totaled $236, have a weighted average strike rate of 8.1% (ranging
from 5.3% to 10.9%) and mature through 2007 with 76% maturing by 2004.
(c) Comprised of purchased floors of $1.8 billion and purchased caps of $1.7
billion. The floors have a weighted average strike price of 5.8% (ranging from
3.7% to 6.8%) and over 85% mature in 1997 through 1999. The caps have a
weighted average strike price of 7.5% (ranging from 4.5% and 10.1%) and over
82% mature in 1997 through 1999.
(d) Over 95% of futures contracts expire before December 31, 1996.
(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, 1995, there were $5.3 in net deferred losses
for futures, interest rate swaps and purchased options.
(f) The following table summarizes the maturities by notional value of interest
rate swaps outstanding at December 31, 1995 and the related weighted average
interest pay rate or receive rate assuming current market conditions:
F-10
<PAGE>
<TABLE>
<CAPTION>
MATURITY OF SWAPS ON INVESTMENTS
AS OF DECEMBER 31, 1995
LAST
1996 1997 1998 1999 2000 THEREAFTER TOTAL MATURITY
---- ---- ---- ---- ---- ---------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST RATE SWAPS
PAY FIXED/RECEIVE VARIABLE
Notional Value $15 $50 $0 $453 $31 $229 $778 2004
Weighted Average Pay Rate 5.0% 7.2% 0.0% 8.1% 7.1% 7.8% 7.8%
Weighted Average Receive Rate 5.8% 5.9% 0.0% 5.8% 5.7% 5.9% 5.9%
PAY VARIABLE/RECEIVE FIXED
Notional Value $100 $68 $25 $25 $35 $190 $443 2007
Weighted Average Pay Rate 5.9% 8.6% 5.9% 0.0% 5.9% 5.4% 5.4%
Weighted Average Receive Rate 2.4% 7.9% 4.0% 0.0% 6.5% 6.9% 6.9%
PAY VARIABLE/RECEIVE DIFFERENT VARIABLE
Notional Value $50 $18 $36 $12 $200 $234 $550 2004
Weighted Average Pay Rate 5.8% 0.0% 3.7% 3.5% 4.5% 16.3% 5.7%
Weighted Average Receive Rate 5.4% 0.0% 5.6% 5.2% 6.8% 5.9% 6.4%
TOTAL INTEREST RATE SWAPS $165 $136 $61 $490 $266 $653 $1,771 2007
WEIGHTED AVERAGE PAY RATE 5.8% 7.8% 4.6% 7.6% 5.0% 7.3% 6.9%
WEIGHTED AVERAGE RECEIVE RATE 3.6% 7.2% 4.9% 5.4% 6.6% 6.3% 5.8%
</TABLE>
(g) The following table reconciles the derivative notional amounts by derivative
type and by strategy:
<TABLE>
<CAPTION>
BY DERIVATIVE TYPE
----------------------------------------------------------------------
12/31/94 MATURITIES/ 12/31/95
NOTIONAL AMOUNT ADDITIONS TERMINATIONS NOTIONAL AMOUNT
--------------- --------- ------------ ---------------
<S> <C> <C> <C> <C>
Caps $1,861 $2,666 $2,343 $2,184
Floors 2,131 237 188 2,180
Swaps/Collars/Forwards/Options 4,374 1,355 2,163 3,566
Futures 253 6,125 5,515 863
--------------- --------- ------------ ---------------
TOTAL $8,619 $10,383 $10,209 $8,793
--------------- --------- ------------ ---------------
--------------- --------- ------------ ---------------
BY STRATEGY
----------------------------------------------------------------------
12/31/94 MATURITIES/ 12/31/95
NOTIONAL AMOUNT ADDITIONS TERMINATIONS NOTIONAL AMOUNT
--------------- ---------- ------------ ---------------
Liability $1,725 $729 $746 $1,708
Anticipatory 626 1,564 1,952 238
Asset 3,048 3,153 3,217 2,984
Portfolio 3,220 4,937 4,294 3,863
--------------- ---------- ------------ --------------
TOTAL $8,619 $10,383 $10,209 $8,793
--------------- ---------- ------------ --------------
--------------- ---------- ------------ --------------
</TABLE>
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
F-11
<PAGE>
amount of the liability agreements in which Hartford Life generally pays one
variable rate in exchange for another, was $1.7 billion at December 31, 1995 and
1994 respectively. The weighted average pay rate is 5.9%; the weighted average
receive rate is 6.0% , and these agreements mature at various times through
2001.
(F) CONCENTRATION OF CREDIT RISK
Hartford Life has a reinsurance recoverable of $5.6 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 Hartford Life as sole beneficiary.
Excluding investments in U.S. government and agencies, Hartford Life has no
other significant concentrations of credit risk.
Included in fixed maturity investments at December 31, 1995 were $39 of
Orange County, California Pension Obligation Bonds, $17 of which were carried
in the general account and $22 which were included in Hartford Life's
guaranteed separate accounts. During 1995 all interest payments due were
received. While Orange County is currently operating under Protection of
Chapter 9 of the Federal Bankruptcy Laws, Hartford Life believes the bonds
are not impaired other than on a temporary basis.
(G) FIXED MATURITIES
The schedule below details the amortized cost and fair values of Hartford Life's
fixed maturities by component, along with the gross unrealized gains and losses:
<TABLE>
<CAPTION>
AS OF DECEMBER 31,1995
--------------------------------------------------
GROSS UNREALIZED
AMORTIZED --------------------- MARKET
COST GAINS LOSSES VALUE
---------- ------- ------ -----
<S> <C> <C> <C> <C>
U.S. Government and government agencies and
authorities;
Guaranteed and sponsored $502 $4 ($9) $497
Guaranteed and sponsored-asset backed 3,568 210 (387) 3,391
State, municipalities and political subdivisions 201 4 (3) 202
International governments 291 19 (4) 306
Public utilities 949 29 (2) 976
All other corporate-asset backed 3,065 76 (55) 3,086
All other corporate 5,056 187 (109) 5,134
Short-term investments 808 0 0 808
---------- ------- ----- -----
TOTAL INVESTMENTS $14,440 $529 ($569) $14,440
---------- ------- ----- -----
---------- ------- ----- -----
AS OF DECEMBER 31,1994
--------------------------------------------------
GROSS UNREALIZED
AMORTIZED --------------------- MARKET
COST GAINS LOSSES VALUE
---------- ------- ------ -----
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
State, municipalities and political subdivisions 148 1 (12) 137
International governments 189 1 (14) 176
Public utilities 531 1 (32) 500
All other corporate-asset backed 2,442 30 (121) 2,351
All other corporate 3,717 38 (297) 3,458
Short-term investments 1,665 0 (51) 1,614
--------- ------- -------- -------
TOTAL INVESTMENTS $14,464 $150 ($1,185) $13,429
--------- ------- -------- -------
--------- ------- -------- -------
</TABLE>
F-12
<PAGE>
The amortized cost and estimated fair value of fixed maturities at December 31,
1995, by maturity, are shown below. Asset backed securities are distributed to
maturity year based on estimates 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 MARKET
COST VALUE
---------- ---------
<S> <C> <C>
Due in one year or less $3,146 $3,133
Due after one year through five years 6,373 6,316
Due after five years through ten years 3,609 3,644
Due after ten years 1,312 1,307
---------- ---------
TOTAL $14,440 $14,400
---------- ---------
---------- ---------
</TABLE>
Sales of fixed maturities excluding short-term fixed maturities for the years
ended December 31, 1995, 1994, and 1993 resulted in proceeds of $4,848, $5,708,
and $8,813, respectively, resulting in gross realized gains of $91, $71, and
$192, respectively, and gross realized losses of $72, $100, and $219,
respectively, not including policyholder gains and losses. Sales of equity
securities and other investments for the years ended December 31, 1995, 1994,
and 1993 resulted in proceeds of $64, $159, and $127, respectively, resulting in
gross realized gains of $28, $3, and $0, respectively, and gross realized losses
of $59, $14, $0, respectively, not including policyholder gains and losses.
(H) FAIR VALUE OF FINANCIAL INSTRUMENTS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1995 AS OF DECEMBER 31, 1994
----------------------- -----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
ASSETS
Fixed maturities $14,400 $14,400 $13,429 $13,429
Equity securities 63 63 68 68
Policy loans 3,381 3,381 2,614 2,614
Mortgage loans 265 265 316 316
Investments in partnerships and trusts 94 97 36 42
Miscellaneous 62 62 67 67
LIABILITIES
Other policy claims and benefits $12,727 $12,767 $13,001 $12,374
</TABLE>
The following methods and assumptions were used to estimate the fair value of
each class of financial instrument: fair value for fixed maturities and equity
securities approximate those quotations published by applicable stock exchanges
or are received from other reliable sources; policy and mortgage loan carrying
amounts approximate fair value; investments in partnerships and trusts are based
on external market valuations from partnership and trust management; and other
policy claims and benefits payable are determined by estimating future cash
flows discounted at the current market rate.
3. INCOME TAX
Hartford Life is included in ITT Hartford Group's consolidated U.S. Federal
income tax return and remits to (receives from) ITT Hartford Group, Inc. a
current income tax provision (benefit) computed in accordance with the tax
sharing arrangements between its insurance subsidiaries. The effective tax
rate was 32% in 1995 and 1994, and approximates the U.S. statutory tax rate
of 35% in 1993.
F-13
<PAGE>
The provision for income taxes was as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
INCOME TAX EXPENSES
Current $211 $185 $190
Deferred (149) (120) (115)
------- ------- -------
TOTAL $62 $65 $75
------- ------- -------
------- ------- -------
INCOME TAX PROVISION
Tax provision at U.S. statutory rate $67 $71 $76
Tax-exempt income (3) (3) 0
Foreign tax credit (4) (1) 0
Other 2 (2) (1)
------- ------- -------
PROVISION FOR INCOME TAX $62 $65 $75
------- ------- -------
------- ------- -------
</TABLE>
Income taxes paid were $162, $244, and $301 in 1995, 1994, and 1993
respectively. The current taxes due from Hartford Fire were $8 and $46 in 1995
and 1994, respectively.
Deferred tax assets(liabilities) include the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1995 1994
--------- ---------
<S> <C> <C>
Tax deferred acquisition costs $410 $284
Book deferred acquisition costs and reserves 138 (134)
Employee benefits 8 7
Unrealized net loss on investments 32 353
Investments and other (168) 80
--------- ---------
TOTAL DEFERRED TAX ASSET $420 $590
--------- ---------
--------- ---------
</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,
1995 was $37.
4. REINSURANCE
Hartford Life cedes insurance to non-affiliated insurers in order to limit its
maximum loss. Such transfer does not relieve Hartford Life of its primary
liability. Hartford Life 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>
YEAR ENDED DECEMBER 31,
---------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Gross premiums $1,545 $1,316 $1,135
Insurance assumed 591 299 93
Insurance ceded 649 515 481
------- ------- -------
NET RETAINED PREMIUMS $1,487 $1,100 $747
------- ------- -------
------- ------- -------
</TABLE>
F-14
<PAGE>
Life reinsurance recoveries, which reduced death and other benefits, for the
years ended December 31, 1995, 1994 and 1993 approximated $220, $164, and $149,
respectively.
In December 1994, Hartford Life assumed from a third party approximately $500
of corporate owned life insurance reserves on a coinsurance basis. In
December 1995, this block of business was reinsured to HLRe utilizing
modified coinsurance, with the assets and policy liabilities placed in a
separate account. In October 1994, HLRe recaptured approximately $500 of
corporate owned life insurance from a third party reinsurer. Subsequent to
this transaction, Hartford Life and HLRe restructured their coinsurance
agreement from coinsurance to modified coinsurance, with the assets and
policy liabilities placed in the separate account. These transactions did not
have a material impact on consolidated net income.
Also in December 1994, ILA ceded to a third party $1.0 billion in individual
fixed and variable annuities on a modified coinsurance basis. In December 1995,
Hartford Life ceded approximately $1.2 billion in individual variable annuities
on a modified coinsurance basis to a third party. These transactions did not
have a material impact on consolidated net income.
In May 1994, Hartford Life assumed the life insurance policies and the
individual annuities of Pacific Standard with reserves and account values of
approximately $400. Hartford Life received cash and investment grade assets
to support the life insurance and individual annuity contract obligations
assumed.
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 Hartford Life increased approximately $1 billion. The excess of
liabilities assumed over assets received, of $2, was recorded as a decrease
to capital surplus. The remaining $41 in assets and liabilities were
transferred in October 1995. The impact on consolidated net income was not
significant.
In August 1993, Hartford Life received assets of $300 for assuming the group
COLI contract obligations of Mutual Benefit Life Insurance Company, through
an assumption reinsurance transaction. Under the terms of the agreement,
Hartford Life coinsured back 75% of the liabilities to Mutual Benefit Life
Insurance Company. All assets supporting Mutual Benefit's reinsurance
liability to Hartford Life are placed in a "security trust", with Hartford
Life as the sole beneficiary. The impact on 1993 consolidated net income was
not significant.
5. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
Hartford Life'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. Hartford Life'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 Hartford Life's group pension contracts. The cost to
Hartford Life was approximately $2, $2, and $3 in 1995, 1994 and 1993,
respectively.
Hartford Life provides certain health care and life insurance benefits for
eligible retired employees. A substantial portion of Hartford Life's employees
may become eligible for these benefits upon retirement. Hartford Life's
contribution for health care benefits will depend on the retiree's date of
retirement and years of service. In addition, the plan has a defined dollar cap
which limits average company contributions. Hartford Life 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 were immaterial for 1995, 1994, and 1993 respectively.
The assumed rate of future increases in the per capita cost of health care (the
health care trend rate) was 10.1% for 1995, decreasing ratably to 6.0% in the
year 2001. Increasing the health care trend rates by one percent per year would
have an immaterial impact on the accumulated postretirement benefit obligation
and the annual expense. To the extent that the actual experience differs from
the inherent assumptions, the effect will be amortized over the average future
service of the covered employees.
F-15
<PAGE>
6. BUSINESS SEGMENT INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
REVENUES
Individual Life and Annuity $797 $691 $595
Asset Management Services 734 789 794
Specialty Insurance Operations 1,273 919 425
------ ------ ------
TOTAL REVENUES $2,804 $2,399 $1,814
------ ------- ------
------ ------- ------
- - ---------------------------------------------------------------
- - ---------------------------------------------------------------
YEAR ENDED DECEMBER 31
------------------------
1995 1994 1993
------ ------- -----
INCOME BEFORE INCOME TAX EXPENSE
Individual Life and Annuity $236 $139 $129
Asset Management Services (79) 38 71
Specialty Insurance Operations 34 26 18
------ ------ ------
TOTAL INCOME BEFORE INCOME
TAX EXPENSE $191 $203 $218
------ ------ ------
------ ------ ------
- - ---------------------------------------------------------------
- - ---------------------------------------------------------------
YEAR ENDED DECEMBER 31
---------------------------
1995 1994 1993
------- ------- -------
IDENTIFIABLE ASSETS
Individual Life and Annuity $36,741 $26,668 $19,147
Asset Management Services 13,962 13,334 12,416
Specialty Insurance Operations 13,494 7,847 6,723
------- ------- -------
TOTAL IDENTIFIABLE ASSETS $64,197 $47,849 $38,286
------- ------- -------
------- ------- -------
</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:
<TABLE>
<CAPTION>
1995 1994 1993
--------- -------- --------
<S> <C> <C> <C>
Statutory net income $112 $58 $63
Statutory surplus $1,125 $941 $812
</TABLE>
8. SEPARATE ACCOUNTS
Hartford Life maintains separate account assets and liabilities totaling $36.3
billion and $22.8 billion at December 31, 1995 and 1994, respectively which
are reported at fair value. Separate account assets are segregated from other
investments and investment income and gains and losses accrue directly to the
policyholder. Separate accounts reflect two categories of risk assumption:
non-guaranteed separate accounts totaling $25.9 billion and $14.8 billion at
December 31, 1995 and 1994, respectively, wherein the policyholder assumes the
investment risk, and guaranteed separate account assets totaling $10.4 billion
and $8.0 billion at December 31, 1995 and 1994, respectively, wherein Hartford
Life contractually guarantees either a minimum return or account value to the
policyholder. Included in the non-guaranteed category are policy loans
totaling $1.7 billion and $0.5 billion at December 31, 1995 and 1994,
respectively. Investment income (including investment gains and losses) and
interest credited to policyholders on separate account assets are not
reflected in the Consolidated Statements of Income. Separate account
management fees, net of minimum guarantees, were $387, $256, and $189, in
1995, 1994, and 1993, respectively.
F-16
<PAGE>
The guaranteed separate accounts include modified guaranteed individual
annuity, and modified guaranteed life insurance. The average credit interest
rate on these contracts is 6.62%. The assets that support these liabilities
were comprised of $10.4 billion in bonds at December 31, 1995. The portfolios
are segregated from other investments and are managed so as to minimize
liquidity and interest rate risk. In order to minimize the risk of
disintermediation associated with early withdrawals, individual annuity and
modified guaranteed life insurance contracts carry a graded surrender charge
as well as a market value adjustment. Additional investment risk is hedged
using a variety of derivatives which totaled $133 million in carrying value
and $2.7 billion in notional amounts at December 31, 1995.
9. COMMITMENTS AND CONTINGENCIES
In August 1994, Hartford Life renewed a two year note purchase facility
agreement which in certain instances obligates Hartford Life to purchase up to
$100 million in collateralized notes from a third party. Hartford Life is
receiving fees for this commitment. At December 31, 1995, Hartford Life had
not purchased any notes under this agreement.
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
Hartford Life 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. Hartford Life paid guaranty fund assessments of approximately
$10, $8 and $6 in 1995, 1994, and 1993, respectively.
Hartford Life 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
Hartford Life.
F-17
<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 Filed with this Registration
Agreement Statement.
3(a) Articles of Incorporated by reference to the
Incorporation Registration Statement File
No. 17324, dated May 1, 1995.
3(b) By-laws Incorporated by reference as stated
above.
4 Group Annuity Incorporated by reference as stated
Contract above.
5 Opinion re: Filed with this Registration
legality Statement
23 Consent of Filed with this Registration
experts Statement.
25 Power of Filed with this Registration
Attorney Statement.
<PAGE>
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-1,
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.
(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
<PAGE>
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 expense 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 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 22 day of April, 1996.
HARTFORD LIFE INSURANCE COMPANY
*By: /s/ John P. Ginnetti *By: /s/ Lynda Godkin
----------------------------------- ----------------------
John P. Ginnetti Lynda Godkin
Executive Vice President 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, Vice President,
Director *
Joseph H. Gareau, Executive Vice
President and Chief Investment
Officer, Director *
John P. Ginnetti, Executive Vice
President, Director *
Thomas M. Marra, Executive Vice *By: /s/ Lynda Godkin
President, Director * ----------------------
Leonard E. Odell, Jr., Senior Lynda Godkin
Vice President, Director * Attorney-in-Fact
Lowndes A. Smith, President,
Chief Operating Officer, Dated: April 22, 1996
Director * ---------------------
Raymond P. Welnicki, Senior Vice
President, Director *
Lizabeth H. Zlatkus, Vice President
Director *
<PAGE>
[Exhibit 1]
PRINCIPAL UNDERWRITER AGREEMENT
THIS AGREEMENT, dated as of the June 26, 1995, made by and between HARTFORD LIFE
INSURANCE COMPANY ("HLIC"), a corporation organized and existing under the laws
of the State of Connecticut, and HARTFORD SECURITIES DISTRIBUTION COMPANY, INC.
("HSD"), 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 ("1933 Act"), as amended;
and
WHEREAS, HSD 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 Principal Underwriter Agreement.
NOW THEREFORE, in consideration of the mutual agreements made herein, HLIC and
HSD agree as follows:
I.
HSD'S DUTIES
1. HSD, as successor principal underwriter to Hartford Equity Sales Company,
Inc. 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. HSD is
responsible for compliance with all applicable requirements of the 1933
Act, as amended, and the 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. HSD 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.
3. HSD 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 materials, HSD agrees that it will use only
sales materials which conform to the requirements of federal and state
insurance laws and regulations and
<PAGE>
which have been filed, where necessary, with the appropriate regulatory
authorities.
4. HSD agrees that it or its duly designated agent shall maintain records as
required by the Securities and Exchange Act of 1934, as amended.
5. HSD's services pursuant to this Agreement shall not be deemed to be
exclusive, and it may render similar services and act as an underwriter,
distributor, or dealer for other investment companies in the offering of
their shares.
6. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties hereunder on the part of
HSD, HSD shall not be subject to liability 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 30 days' written notice to HSD, except where the
notice period may be shortened because of legal action taken by any
regulatory agency.
2. HLIC agrees to advice HSD immediately:
(a) Of any request by the Securities and Exchange Commission for amendment
of its 1933 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 1933 Act registration
statement relating to units of interest issued with respect to the
Contract or of the initiation of any proceedings for that purpose;
(c) Of the happening of any material event, if known, which makes untrue
any statement in said 1933 Act registration statement or which
requires a change therein in order to make any statement therein not
misleading.
HLIC will furnish to HSD such information with respect to the Contract
in such form and signed by such of its officers and directors as HSD
may reasonably 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 HSD may reasonably request.
2
<PAGE>
III.
COMPENSATION
In accordance with an Expense Reimbursement Agreement between HLIC and HSD, HLIC
is obligated to reimburse HSD for all operating expenses associated with the
services provided on behalf of HLIC under this Principal Underwriter Agreement.
No additional compensation is payable in excess of that required under the
Expense Reimbursement Agreement.
IV.
RESIGNATION AND REMOVAL OF PRINCIPAL UNDERWRITER
HSD may resign as a 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 HSD as Principal Underwriter at any time by written
notice.
V.
MISCELLANEOUS
1. This Agreement may not be assigned by any of the parties hereto without the
written consent of the other party.
2. All notices and other communications provided for hereunder shall be in
writing and shall be delivered by hand or mailed first class, postage
prepaid, addressed as follows:
(a) If to HLIC - Hartford Life Insurance Company, P.O. Box 2999,
Hartford, Connecticut 06104.
(b) If to HSD - Hartford Securities Distribution Company, Inc.,
P.O. Box 2999, Hartford, Connecticut 06104.
or to such other address as HSD 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 open to inspection 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
3
<PAGE>
parties hereto.
5. This Agreement shall be construed and governed by and according to the laws
of the State of Connecticut.
6. This Agreement may be amended from time to time by the mutual agreement and
consent of the parties hereto.
7. (a) This Agreement shall become effective June 26, 1995 and shall continue
in effect for a period of two years from that date and, unless sooner
terminated in accordance with 7(b) below, shall continue in effect
from year to year thereafter provided that its continuance is
specifically approved at least annually by a majority of the members
of the Board of Directors of HLIC.
(b) This Agreement (1) may be terminated at any time, without the payment
of any penalty, either by a vote of a majority of the members of the
Board of Directors of HLIC on 60 days' prior written notice to HSD;
(2) shall immediately terminate in the event of its assignment and (3)
may be terminated by HSD on 60 days' prior written notice to HLIC, but
such termination will not be effective until HLIC shall have an
agreement with one or more persons to act as successor principal
underwriter of the Contract. HSD hereby agrees that it will continue
to act as successor principal underwriter until its successor or
successors assume such undertaking.
4
<PAGE>
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
BY: /s/ Thomas M. Marra
---------------------------------
Thomas M. Marra
Senior Vice President
Attest: HARTFORD SECURITIES DISTRIBUTION
COMPANY, INC.
/s/ Lynda Godkin BY: /s/ George Jay
- - ----------------------------------- ---------------------------------
Lynda Godkin George Jay
Secretary Controller
<PAGE>
[Exhibit 5]
March 15, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: GENERAL ACCOUNT OPTION
HARTFORD LIFE INSURANCE COMPANY ("COMPANY")
FILE NO. 33-17324
-----------------
Dear Sir/Madam:
In my capacity as Associate General Counsel of the Company, I have supervised
the establishment of the Separate Account by the Board of Directors of the
Company as a separate account for assets applicable to Contracts offered by the
Company pursuant to Connecticut law. I have participated in the preparation of
the registration statement on Form S-1 under the Securities Act of 1933 with
respect to the Contracts.
I am of the following opinion:
1. The Separate Account is a separate account of the Company validly existing
pursuant to Connecticut law and the regulations issued thereunder.
2. The assets held in the Separate Account are not chargeable with liabilities
arising out of any other business the Company may conduct.
3. The Contracts are legally issued and represent binding obligations of the
Company.
In arriving at the foregoing opinion, I have made such examination of the law
and examined such records and other documents as in my opinion as are necessary
or appropriate.
I hereby consent to the filing of this opinion as an exhibit to the registration
statement under the Securities Act of 1933.
Sincerely,
/s/ Lynda Godkin
Lynda Godkin
Associate General Counsel & Secretary
<PAGE>
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. 17324 on Form S-1 for Hartford Life Insurance
Company.
/s/ Arthur Andersen LLP
Hartford, Connecticut
<PAGE>
Exhibit 9
HARTFORD LIFE INSURANCE COMPANY, INC.
AND
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY, INC.
POWER OF ATTORNEY
Donald R. Frahm
Bruce D. Gardner
Joseph H. Gareau
John P. Ginnetti
Thomas M. Marra
Leonard E. Odell, Jr.
Lowndes A. Smith
Raymond P. Welnicki
Lizabeth H. Zlatkus
do hereby jointly and severally authorize Lynda Godkin and/or Scott K.
Richardson to sign as their agent, any Registration Statement, pre-effective
amendment, post-effective amendment and any application for exemptive relief of
the Hartford Life Insurance Company, Inc. and Hartford Life and Accident
Insurance Company, Inc. under the Securities Act of 1933 and/or the Investment
Company Act of 1940.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for the
purpose herein set forth.
/s/ Donald R. Frahm Dated: 10/19/95
- - ----------------------------------- ---------------------
Donald R. Frahm
/s/ Bruce D. Gardner Dated: 10/19/95
- - ----------------------------------- ---------------------
Bruce D. Gardner
/s/ Joseph H. Gareau Dated: 10/19/95
- - ----------------------------------- ---------------------
Joseph H. Gareau
/s/ John P. Ginnetti Dated: 10/26/95
- - ----------------------------------- ---------------------
John P. Ginnetti
/s/ Thomas M. Marra Dated: 10/19/95
- - ----------------------------------- ---------------------
Thomas M. Marra
/s/ Leonard E. Odell, Jr. Dated: 10/20/95
- - ----------------------------------- ---------------------
Leonard E. Odell, Jr.
/s/ Lowndes A. Smith Dated: 10/19/95
- - ----------------------------------- ---------------------
Lowndes A. Smith
<PAGE>
/s/ Raymond P. Welnicki Dated: 10/24/95
- - ----------------------------------- ---------------------
Raymond P. Welnicki
/s/ Lizabeth H. Zlatkus Dated: 10/20/95
- - ----------------------------------- ---------------------
Lizabeth H. Zlatkus
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE I - SUMMARY OF INVESTMENTS (OTHER THAN INVESTMENTS IN AFFILIATES)
AS OF DECEMBER 31, 1995
(IN MILLIONS)
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------
FAIR REPORTED ON
COST VALUE BALANCE SHEET
-------------- ------------- -----------------
<S> <C> <C> <C>
FIXED MATURITIES
Bonds
U.S. Government and government agencies and authorities
Guaranteed and sponsored $502 $497 $497
Guaranteed and sponsored - asset backed 3,568 3,391 $3,391
States, municipalities and political subdivisions 201 202 $202
International governments 291 306 $306
Public utilities 949 976 $976
All other corporate 5,056 5,134 $5,134
All other corporate - asset backed 3,065 3,086 $3,086
Short-term investments 808 808 $808
---------- --------- ---------
TOTAL FIXED MATURITIES $14,440 $14,400 $14,400
EQUITY SECURITIES
Common stocks - industrial, miscellaneous and all other 61 63 63
TOTAL FIXED MATURITIES AND EQUITY SECURITIES $14,501 $14,463 $14,463
POLICY LOANS 3,381 3,381 3,381
MORTGAGE LOANS 265 265 265
OTHER INVESTMENTS 156 159 156
--------- -------- -------
TOTAL INVESTMENTS $18,303 $18,268 $18,265
--------- -------- -------
--------- -------- -------
- - ----------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------
</TABLE>
Fair value 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 loans carrying amounts approximate fair value.
S-1
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE III - SUPPLEMENTAL INSURANCE INFORMATION
(in millions)
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------------------
- - -----------------------------------------------------------------------------------------------------------------------------------
Amort. of
Deferred Future Other Premiums and Net Benefits, Claims Deferred Other
Policy Policy Policyholder Other Investment and Claim Adj. Policy Insurance
Acq. Costs Benefits Funds Considerations Income Expenses Acq. Costs Expenses
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
As of December 31, 1995 Year ended December 31, 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Individual Life and Annuity $2,088 $706 $4,371 $514 $283 $277 $176 $108
Asset Management Services 87 1,169 8,942 51 683 722 23 68
Specialty Insurance
Operations 13 498 9,285 922 351 423 0 816
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
TOTAL $2,188 $2,373 $22,598 $1,487 $1,317 $1,422 $199 $992
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
As of December 31, 1994 Year ended December 31, 1994
Individual Life and
Annuity $1,708 $582 $4,257 $492 $199 $334 $137 $80
Asset Management Services 101 845 10,160 39 750 695 8 48
Specialty Insurance
Operations 0 463 6,911 569 350 376 0 518
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
TOTAL $1,809 $1,890 $21,328 $1,100 $1,299 $1,405 $145 $646
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
As of December 31, 1993 Year ended December 31, 1993
Individual life and Annuity $1,237 $428 $3,535 $423 $172 $249 $97 $120
Asset Management Services 97 703 9,026 35 759 662 16 45
Specialty Insurance
Operations 0 528 5,673 289 136 135 0 272
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
TOTAL $1,334 $1,659 $18,234 $747 $1,067 $1,046 $113 $437
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
- - -----------------------------------------------------------------------------------------------------------------------------------
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Investment income is allocated to the reportable division based on each
division's share of investable funds or on a direct basis, where applicable,
including realized capital gains and losses.
Benefits, claims and claims adjustment expenses include the increase in
liability for future policy benefits and death, disability and other contract
benefits payments.
Other insurance expenses are allocated to the division based upon specific
identification, where possible.
S-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE IV - REINSURANCE
(in millions)
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------
Percentage of
Gross Ceded to Assumed from Net Amount Assumed
Amount Other Companies Other Companies Amount to Net Amount
-------- ----------------- ----------------- -------- ----------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995
LIFE INSURANCE IN FORCE $182,716 $112,774 $26,996 $96,938 27.8%
PREMIUMS AND OTHER CONSIDERATIONS
Individual Life and Annuity $549 $163 $122 $508 24.0%
Asset Management Services 51 0 0 51 0.0%
Specialty Insurance Operations 632 162 452 922 49.0%
313 324 17 6 283.3%
-------- ----------------- ----------------- --------
TOTAL $1,545 $649 $591 $1,487 39.7%
-------- ----------------- ----------------- --------
-------- ----------------- ----------------- --------
YEAR ENDED DECEMBER 31, 1994
LIFE INSURANCE IN FORCE $136,929 $87,553 $35,016 $84,392 41.5%
PREMIUMS AND OTHER CONSIDERATIONS
Individual Life and Annuity $448 $71 $106 $483 21.9%
Asset Management Services 39 0 0 39 0.0%
Specialty Insurance Operations 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
Individual Life and Annuity $417 $85 $91 $423 21.5%
Asset Management Services 25 0 0 25 0.0%
Specialty Insurance Operations 386 97 0 289 0.0%
Accident and Health 307 299 2 10 20.0%
-------- ----------------- ----------------- --------
TOTAL $1,135 $481 $93 $747 12.4%
-------- ----------------- ----------------- --------
-------- ----------------- ----------------- --------
</TABLE>
S-3
<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 24, 1996. 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 in all material respects the
financial data required to be set forth therein in relation to the basic
consolidated financial statements taken s a whole.
Our report on the financial statements includes an explanatory paragraph with
respect to the change in the methods of accounting for debt and equity
securities as discussed in Note 1 to the consolidated financial statements.
Hartford, Connecticut
January 24, 1996
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE I - SUMMARY OF INVESTMENTS (OTHER THAN INVESTMENTS IN AFFILIATES)
AS OF DECEMBER 31, 1995
(IN MILLIONS)
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------
FAIR REPORTED ON
COST VALUE BALANCE SHEET
-------------- ------------- -----------------
<S> <C> <C> <C>
FIXED MATURITIES
Bonds
U.S. Government and government agencies and authorities
Guaranteed and sponsored $502 $497 $497
Guaranteed and sponsored - asset backed 3,568 3,391 $3,391
States, municipalities and political subdivisions 201 202 $202
International governments 291 306 $306
Public utilities 949 976 $976
All other corporate 5,056 5,134 $5,134
All other corporate - asset backed 3,065 3,086 $3,086
Short-term investments 808 808 $808
---------- --------- ---------
TOTAL FIXED MATURITIES $14,440 $14,400 $14,400
EQUITY SECURITIES
Common stocks - industrial, miscellaneous and all other 61 63 63
TOTAL FIXED MATURITIES AND EQUITY SECURITIES $14,501 $14,463 $14,463
POLICY LOANS 3,381 3,381 3,381
MORTGAGE LOANS 265 265 265
OTHER INVESTMENTS 156 159 156
--------- -------- -------
TOTAL INVESTMENTS $18,303 $18,268 $18,265
--------- -------- -------
--------- -------- -------
- - ----------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------
</TABLE>
Fair value 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 loans carrying amounts approximate fair value.
S-1
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE III - SUPPLEMENTAL INSURANCE INFORMATION
(in millions)
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------------------
- - -----------------------------------------------------------------------------------------------------------------------------------
Amort. of
Deferred Future Other Premiums and Net Benefits, Claims Deferred Other
Policy Policy Policyholder Other Investment and Claim Adj. Policy Insurance
Acq. Costs Benefits Funds Considerations Income Expenses Acq. Costs Expenses
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
As of December 31, 1995 Year ended December 31, 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Individual Life and Annuity $2,088 $706 $4,371 $514 $283 $277 $176 $108
Asset Management Services 87 1,169 8,942 51 683 722 23 68
Specialty Insurance
Operations 13 498 9,285 922 351 423 0 816
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
TOTAL $2,188 $2,373 $22,598 $1,487 $1,317 $1,422 $199 $992
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
As of December 31, 1994 Year ended December 31, 1994
Individual Life and
Annuity $1,708 $582 $4,257 $492 $199 $334 $137 $80
Asset Management Services 101 845 10,160 39 750 695 8 48
Specialty Insurance
Operations 0 463 6,911 569 350 376 0 518
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
TOTAL $1,809 $1,890 $21,328 $1,100 $1,299 $1,405 $145 $646
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
As of December 31, 1993 Year ended December 31, 1993
Individual life and Annuity $1,237 $428 $3,535 $423 $172 $249 $97 $120
Asset Management Services 97 703 9,026 35 759 662 16 45
Specialty Insurance
Operations 0 528 5,673 289 136 135 0 272
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
TOTAL $1,334 $1,659 $18,234 $747 $1,067 $1,046 $113 $437
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
---------- -------- ------------ -------------- ---------- ---------------- ---------- ---------
- - -----------------------------------------------------------------------------------------------------------------------------------
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Investment income is allocated to the reportable division based on each
division's share of investable funds or on a direct basis, where applicable,
including realized capital gains and losses.
Benefits, claims and claims adjustment expenses include the increase in
liability for future policy benefits and death, disability and other contract
benefits payments.
Other insurance expenses are allocated to the division based upon specific
identification, where possible.
S-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE IV - REINSURANCE
(in millions)
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------
Percentage of
Gross Ceded to Assumed from Net Amount Assumed
Amount Other Companies Other Companies Amount to Net Amount
-------- ----------------- ----------------- -------- ----------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1995
LIFE INSURANCE IN FORCE $182,716 $112,774 $26,996 $96,938 27.8%
PREMIUMS AND OTHER CONSIDERATIONS
Individual Life and Annuity $549 $163 $122 $508 24.0%
Asset Management Services 51 0 0 51 0.0%
Specialty Insurance Operations 632 162 452 922 49.0%
313 324 17 6 283.3%
-------- ----------------- ----------------- --------
TOTAL $1,545 $649 $591 $1,487 39.7%
-------- ----------------- ----------------- --------
-------- ----------------- ----------------- --------
YEAR ENDED DECEMBER 31, 1994
LIFE INSURANCE IN FORCE $136,929 $87,553 $35,016 $84,392 41.5%
PREMIUMS AND OTHER CONSIDERATIONS
Individual Life and Annuity $448 $71 $106 $483 21.9%
Asset Management Services 39 0 0 39 0.0%
Specialty Insurance Operations 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
Individual Life and Annuity $417 $85 $91 $423 21.5%
Asset Management Services 25 0 0 25 0.0%
Specialty Insurance Operations 386 97 0 289 0.0%
Accident and Health 307 299 2 10 20.0%
-------- ----------------- ----------------- --------
TOTAL $1,135 $481 $93 $747 12.4%
-------- ----------------- ----------------- --------
-------- ----------------- ----------------- --------
</TABLE>
S-3
