<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 1996
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from..........to...........
Commission file number 2-89516
HARTFORD LIFE INSURANCE COMPANY
Incorporated in the State of Connecticut
06-0974148
(I.R.S. Employer
Identification No.)
P.O. Box 2999, Hartford, Connecticut 06104-2999
(Principal Executive Offices)
Telephone number 203-843-8291
Indicate by check mark whether the registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months and (2) has been subject to such filing requirements for the
past 90 days. Yes X No .
--- ---
As of August 12, 1996 there were outstanding 1,000 shares of common stock,
$5,690 par value per share, of the registrant, all of which were directly owned
by Hartford Life and Accident Insurance Company.
The registrant meets the conditions set forth in General Instruction H (1) (a)
and (b) of Form 10-Q and is therefore filing this form with the reduced
disclosure format.
(1)
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HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION: Page
----
Item 1. Financial Statements:
Consolidated Statements of Income -
Quarter and Six Months Ended June 30, 1996 and 1995 ................... 3
Consolidated Balance Sheets -
June 30, 1996 and December 31,
1995................................................................... 4
Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1996 and 1995................................ 5
Item 2. Management's Narrative Analysis of Results of Operations*
Quarter and Six Months Ended June 30, 1996 and 1995.................... 6
PART II. OTHER INFORMATION:*
Item 6. Exhibits and Reports on Form
8-K.................................................................... 8
Signature.............................................................. 9
(*) Item prepared in accordance with General Instruction H (2) of Form 10-Q.
(2)
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PART I. FINANCIAL INFORMATION
Item 1.
FINANCIAL STATEMENTS
The following unaudited financial statements, reflect, in the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, the results of operations
and the cash flows for the periods presented. Certain reclassifications of
prior year results were made to conform to current presentation. Interim
results are not indicative of the results which may be expected for any other
interim period or the full year. For a description of accounting policies, see
Notes to Consolidated Financial Statements in the 1995 Form 10-K.
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Millions)
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
-------- --------
1996 1995 1996 1995
---- ---- ---- ----
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues:
Premiums and other considerations $ 299 $ 270 $ 943 $ 720
Net investment income 318 336 651 675
Net realized losses on investments (1) (7) (1) (6)
----- ----- ----- -----
616 599 1,593 1,389
----- ----- ----- -----
Benefits, Claims and Expenses:
Benefits, claims and claim adjustment expenses 392 350 788 716
Amortization of deferred policy acquisition costs 63 50 129 92
Dividends to policyholders 61 69 347 297
Other insurance expenses 34 85 198 193
----- ----- ----- -----
550 554 1,462 1,298
----- ----- ----- -----
Income Before Income Tax 66 45 131 91
Income tax expense 23 15 45 30
----- ----- ----- -----
Net Income $ 43 $ 30 $ 86 $ 61
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
(3)
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HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In Millions)
June 30, December 31,
1996 1995
-------- -----------
(unaudited)
Assets:
Investments:
Fixed maturities, available for sale, at fair value $ 13,683 $ 14,400
Equity securities, at fair value 65 63
Mortgage loans, at outstanding principal balance 57 265
Policy loans, at outstanding balance 3,756 3,381
Other investments 99 156
------ ------
17660 18,265
Cash 46 46
Premiums and amounts receivable 121 165
Reinsurance recoverable 6,696 6,221
Accrued investment income 399 394
Deferred policy acquisition costs 2,488 2,188
Deferred income tax 601 420
Other assets 205 234
Separate account assets 42,569 36,264
------ ------
$ 70,785 $ 64,197
------ ------
------ ------
Liabilities and Stockholder's Equity
Future policy benefits $ 2,677 $ 2,373
Other policyholder funds 22,570 22,598
Other liabilities 1,294 1,233
Separate account liabilities 42,569 36,264
------ ------
69,110 62,468
------ ------
Common stock - authorized 1,000 shares, $5,690 par value,
Issued and outstanding 1,000 shares 6 6
Capital surplus 1,045 1,007
Unrealized loss on investments, net of tax (235) (57)
Retained earnings 859 773
------ ------
1,675 1,729
------ ------
$ 70,785 $ 64,197
------ ------
------ ------
(4)
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HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
Six Months
Ended June 30,
--------------
1996 1995
---- ----
(unaudited)
Operating Activities:
Net Income $ 86 $ 61
Adjustments to net income:
Net realized investment losses before tax 1 4
Net policyholder investment (gains) losses before tax (4) 2
Net deferred policy acquisition costs (300) (181)
Net amortization of premium on fixed maturities 7 7
Deferred income tax benefits (88) (120)
Decrease in premiums and amounts receivable 20 3
Decrease (increase) in other assets 26 (33)
Increase in reinsurance recoverable (264) (60)
Increase in liability for future policy benefits 304 354
Increase in other liabilities 150 57
(Increase) decrease in accrued investment income (5) 7
---- ----
Cash (Used For) Provided By Operating Activities (67) 101
---- ----
Investing Activities:
Purchases of fixed maturity investments (2,717) (2,150)
Proceeds from sales of fixed maturity investments 1,348 2,835
Maturities and principal paydowns of long-term investments 1,469 574
Net purchases of other investments (116) (1,240)
Net sales (purchases) of short-term investments 232 (894)
---- ----
Cash Provided By (Used For) Investing Activities 216 (875)
---- ----
Financing Activities:
Net (disbursements) receipts for investment and
UL-type contracts (debited)
credited to policyholder account balances (187) 837
Capital contributions 38 --
---- ----
Cash (Used For) Provided By Financing Activities (149) 837
---- ----
Net Increase In Cash -- 63
Cash at beginning of period 46 20
---- ----
Cash At End Of Period $ 46 $ 83
---- ----
---- ----
(5)
<PAGE>
Item 2. MANAGEMENT'S NARRATIVE ANALYSIS OF
RESULTS OF OPERATIONS
(In Millions)
Quarter Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
ILAD AMS SPECIALTY RUNOFF TOTAL
---- --- --------- ------ -----
1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $252 $218 $100 $90 $210 $199 $54 $92 $616 $599
Benefits, Claims, Expenses and Taxes 204 186 96 85 204 193 69 105 573 569
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Net Income (Loss) $48 $32 $4 $5 $6 $6 $(15) $(13) $43 $30
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
</TABLE>
Individual Life and Annuity Division (ILAD)
The premiums, investment income, management and maintenance fees and
cost of insurance associated with this growing asset base continue to
be the source of ILAD's increased revenues, up 16% from prior year.
New deposits of fixed and variable annuities in the three months ended
June 30, 1996 were approximately $2.7 billion, an increase of over 90%
from prior year sales or $1.4 billion, but are not reported as
revenues. Net income, up 50% from the same period last year,
continues to grow as earnings are generated from an existing asset
base. Revenue, new deposit, and net income increases are all
indicative of exceptionally strong, stable growth.
Asset Management Services (AMS)
Continuing to be an industry leader in deferred compensation products,
revenues in this segment grew by approximately 14% over the same
period last year. Included in 1995 results is a one time benefit of
approximately $2 million. Excluding this benefit, net income rose 33%
over prior year. Asset Management Services is currently engaged in a
restructuring process that is anticipated to result in new product
development as well as expense reductions.
Specialty
Net Income in the Specialty segment held steady in the second
quarter as compared to the same period last year. In August of 1996,
Congress passed COLI legislation which provides for a three year
phase-out of the interest deduction on loans. It is expected that the
President will sign this bill. In anticipation of unfavorable tax
legislation there were no new deposits of leveraged COLI, but new
products, such as variable COLI and other non-qualified deferred
compensation vehicles, and new international ventures are being
developed to mitigate lost earnings due to leveraged COLI.
Runoff
The Runoff segment consists of a closed block of guaranteed rate
contracts (GRC) formerly part of the AMS segment of business. GRC
results have been negatively affected by lower investment earnings on
mortgaged-backed securities due to prepayments experienced in excess
of assumed levels. Hartford Life Insurance Company (HLIC) is
considering portfolio management strategies which may accelerate the
recognition of the closed book GRC loss as disclosed in HLIC's 1995
Form 10K Annual Report.
(6)
<PAGE>
Item 2. MANAGEMENT'S NARRATIVE ANALYSIS OF
RESULTS OF OPERATIONS
(In Millions)
Six Months Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
ILAD AMS SPECIALTY RUNOFF TOTAL
---- --- --------- ------ -----
1996 1995 1996 1995 1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $524 $407 $200 $196 $753 $593 $116 $193 $1,593 $1,389
Benefits, claims, expenses and taxes 430 340 192 187 739 582 146 219 1,507 1,328
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Net income (loss) $ 94 $67 $8 $9 $14 $11 $(30) $(26) $86 $61
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
</TABLE>
Individual Life and Annuity Division (ILAD)
Growth in fixed and variable annuity sales, as well as several
assumption reinsurance transactions in the last several years have
increased the assets under management in this segment to approximately
$39 billion through June 1996. The premiums, investment income,
management and maintenance fees and cost of insurance associated with
this growing asset base continue to be the source of ILAD's increased
revenues. New deposits of fixed and variable annuities in the first
six months of 1996 were approximately $5 billion, but are not reported
as revenues, an increase over prior year sales of $1.5 billion or
42%.
Asset Management Services (AMS)
This segment is one of the top providers of deferred compensation
products in the country. Net income increased by 14% over prior
year, excluding a one time benefit of approximately $2 million in
1995. Asset Management services is currently engaged in a
restructuring process that is anticipated to result in new product
development as well as expense reductions.
Specialty
Increased net income in the Specialty segment is attributable to net
investment income and other revenues on the existing block of
corporate owned life insurance (COLI) business. In August of 1996
Congress passed COLI legislation which provides for a three year
phase-out of the interest deduction on loans. It is anticipated that
the President will sign this bill. Although there were no new
deposits of leveraged COLI in the first half of 1996, new products,
including variable COLI and other non-qualified deferred compensation
vehicles, are being developed. Also, expansion into new international
ventures should further mitigate the earnings lost due to leveraged
COLI.
Runoff
The Runoff segment consists of a closed block of guaranteed rate
contracts (GRC) formerly part of the AMS segment of business. GRC
results have been negatively affected by lower investment earnings on
mortgaged-backed securities due to prepayments experienced in excess
of assumed levels. Hartford Life Insurance Company (HLIC) is
considering portfolio management strategies which may accelerate the
recognition of the closed book GRC loss as disclosed in HLIC's 1995
Form 10K Annual Report.
(7)
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PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) None.
(b) None.
(8)
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Hartford Life Insurance Company
(Registrant)
by /s/ Gregory A. Boyko
----------------------------------
August 12, 1996 Gregory A. Boyko
Vice-President and Controller
(9)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<DEBT-HELD-FOR-SALE> 13,683
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 65
<MORTGAGE> 57
<REAL-ESTATE> 0
<TOTAL-INVEST> 17,660
<CASH> 46
<RECOVER-REINSURE> 6,696
<DEFERRED-ACQUISITION> 2,488
<TOTAL-ASSETS> 70,785
<POLICY-LOSSES> 2,677
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 22,570
<POLICY-HOLDER-FUNDS> 42,569
<NOTES-PAYABLE> 0
0
0
<COMMON> 6
<OTHER-SE> 1,045
<TOTAL-LIABILITY-AND-EQUITY> 70,785
943
<INVESTMENT-INCOME> 651
<INVESTMENT-GAINS> (1)
<OTHER-INCOME> 0
<BENEFITS> 788
<UNDERWRITING-AMORTIZATION> 129
<UNDERWRITING-OTHER> 198
<INCOME-PRETAX> 131
<INCOME-TAX> 45
<INCOME-CONTINUING> 86
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 86
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
