<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 March 31, 1997
[ ] 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 860-843-5597
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 May 12, 1997 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 -
Three Months Ended March 31, 1997 and 1996 . . . . . . . . . . . . . . . 3
Consolidated Balance Sheets -
March 31, 1997 and December 31, 1996. . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1997 and 1996 . . . . . . . . . . . . . . . . 5
Item 2. Management's Narrative Analysis of Results of Operations*
Three Months Ended March 31, 1997 and 1996 . . . . . . . . . . . . . . . . 6
PART II. OTHER INFORMATION:*
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . 9
Signature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
(*) 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 are of normal recurring nature 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. Certain of the statements contained herein (other
than statements of historical fact) are forward-looking statements. Forward
looking statements are made based upon management's expectations and belief
concerning future developments and their potential effect upon Hartford Life
Insurance Company ("Hartford Life"). There can be no assurance that future
developments will be in accordance with management's expectation or that the
effect of future developments on Hartford Life will be those anticipated by
management. Actual results could differ materially from those expected by
Hartford Life, depending on the outcome of certain factors, including those
described with the forward-looking statements. For a description of
accounting policies, see Note 1 to Consolidated Financial Statements in the
1996 Form 10-K.
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in millions)
Three Months Ended
March 31,
--------------------
1997 1996
------- -------
(unaudited)
REVENUES
Premiums and other considerations $ 319 $ 644
Net investment income 337 333
Net realized capital gains 4 -
------ ------
TOTAL REVENUES 660 977
------ ------
BENEFITS, CLAIMS AND EXPENSES
Benefits, claims and claim adjustment expenses 351 396
Amortization of deferred policy acquisition costs 81 66
Dividends to policyholders 54 286
Other insurance expense 73 164
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TOTAL BENEFITS, CLAIMS AND EXPENSES 559 912
------ ------
INCOME BEFORE INCOME TAX EXPENSE 101 65
Income tax expense 38 22
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NET INCOME $ 63 $ 43
------ ------
------ ------
(3)
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HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---------- -----------
(unaudited)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities, available for sale,
at fair value
(amortized cost $13,599 and $13,579) $ 13,496 $ 13,624
Equity securities, available for sale,
at fair value 107 119
Mortgage loans, at outstanding balance - 2
Policy loans, at outstanding balance 3,754 3,836
Other investments, at cost 47 54
---------- -----------
Total investments 17,404 17,635
Cash 73 43
Premiums and amounts receivable 101 137
Reinsurance recoverable 6,200 6,259
Accrued investment income 350 407
Deferred policy acquisition costs 2,888 2,760
Deferred income tax 510 474
Other assets 332 357
Separate account assets 51,312 49,690
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TOTAL ASSETS $ 79,170 $ 77,762
---------- -----------
---------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Future policy benefits $ 2,632 $ 2,474
Other policyholder funds 21,498 22,134
Other liabilities 1,860 1,572
Separate account liabilities 51,312 49,690
---------- -----------
TOTAL LIABILITIES 77,302 75,870
---------- -----------
Common stock - authorized 1,000 shares, $5,690 par value,
issued and outstanding 1,000 shares 6 6
Additional paid-in capital 1,045 1,045
Unrealized (loss) gain on investments, net of tax (57) 30
Retained earnings 874 811
---------- -----------
TOTAL STOCKHOLDERS' EQUITY 1,868 1,892
---------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 79,170 $ 77,762
---------- -----------
---------- -----------
</TABLE>
(4)
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HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Three Months
Ended March 31,
1997 1996
----- -----
(unaudited)
OPERATING ACTIVITIES:
Net income $ 63 $ 43
Adjustments to net income:
Realized losses on investments (4) -
Net increase in deferred policy acquisition costs (128) (95)
Net amortization of premium on fixed maturities 5 7
Increase (decrease) in deferred income tax benefit 21 (40)
Decrease in premiums and amounts receivable 32 43
Decrease (increase) in other assets 25 (12)
Increase in reinsurance recoverable (112) (12)
Increase in liability for future policy benefits 158 (89)
Increase in other liabilities 349 262
Decrease in accrued investment income 57 60
----- -----
CASH PROVIDED BY OPERATING ACTIVITIES 466 167
----- -----
INVESTING ACTIVITIES:
Purchases of fixed maturities investments (1,525) (1,382)
Proceeds from sales of fixed maturities investments 985 701
Maturities and principal paydowns of
fixed maturities investments 664 640
Net sales (purchases) of other investments 111 (238)
Net purchases of short-term investments (224) (70)
----- -----
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 11 (349)
----- -----
FINANCING ACTIVITIES:
Net (disbursements for) receipts from investment
and universal life-type contracts (charged from)
credited to policyholder accounts (447) 188
----- -----
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES (447) 188
----- -----
NET INCREASE IN CASH 30 6
Cash at beginning of period 43 46
----- -----
CASH AT END OF PERIOD $ 73 $ 52
----- -----
(5)
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Item 2. MANAGEMENT'S NARRATIVE ANALYSIS OF
RESULTS OF OPERATIONS
(In Millions)
SEGMENT RESULTS
For the Three Months
Ended March 31,
1997 1996
----- -----
Annuity $ 43 $ 33
Individual Life Insurance 11 9
Employee Benefits 6 8
Guaranteed Investment Contracts - (15)
Corporate Operation 3 8
----- -----
Net Income $ 63 $ 43
----- -----
----- -----
Net income increased $20 or 47% to $63 in the first quarter of 1997 from $43
in the first quarter of 1996. This increase is reflective of continued,
solid growth in both the Annuity and Individual Life Insurance reported
segments. Net income in the Annuity segment grew $10 or 30% over the same
period last year. Net income in the Individual Life Insurance segment grew $2
or 22% over the first three months of 1996. Guaranteed Contracts reported no
net income in the first quarter of 1997, as compared with a $15 loss in the
first quarter of 1996 consistent with management's expectations that net
income subsequent to 1996 will be immaterial.
ANNUITY
For the Three Months
Ended March 31,
1997 1996
----- -----
Revenues $ 280 $ 234
Expenses 237 201
----- -----
NET INCOME $ 43 $ 33
----- -----
----- -----
Revenues, which are primarily comprised of investment income and management
and maintenance fees, grew 20% to $280 in the first quarter of 1997 from $234
in 1996. This growth resulted from a 32% increase in the average account
value to $52 billion in 1997, as well as an increase in new sales of $495 or
21% over the same period last year. Growth in the assets under management by
this segment also resulted in increased expenses of $36 or 18% to $237 in
1997 from $201 in 1996. Net income increased $10 or 30% to $43 in 1997 from
$33 in 1996.
(6)
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INDIVIDUAL LIFE INSURANCE
For the Three Months
Ended March 31,
1997 1996
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Revenues $ 111 $ 115
Expenses 100 106
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NET INCOME $ 11 $ 9
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Revenues decreased $4 or 4% to $111 in 1997 from $115 in 1996 due to the
assumption of traditional life premium from Investor's Equity Life of $9 into
segment operations in 1996. Sales increased $2 or 9% in the first quarter of
1997 over the first quarter of 1996 and insurance in-force increased $3.7
billion or 8% in the first quarter of 1997 as compared to the first quarter
of 1996. Expenses in this segment declined 6% or $6 to $100 in 1997 from
$106 in 1996 due to the one time assumption of Investor's Equity Life in
1996. Net income increased $2 or 22% to $11 in 1997 from $9 in 1996.
EMPLOYEE BENEFITS
For the Three Months
Ended March 31,
1997 1996
------ ------
Revenues $ 179 $ 544
Expenses 173 536
------ ------
NET INCOME $ 6 $ 8
------ ------
------ ------
Revenues declined $365 or 67% to $179 in the first quarter of 1997 from $544
in the first quarter of 1996. This decline is mainly related to the passage
of the HIPA Act of 1996, which effectively eliminated all future sales of
leveraged COLI. Accordingly, expenses in this segment declined $363 or 68%
for the same time period. Net income decreased 25% or $2 to $6 in 1997 from
$8 in 1996.
GUARANTEED INVESTMENT CONTRACTS
For the Three Months
Ended March 31,
1997 1996
------ ------
Revenues $ 72 $ 73
Expenses 72 88
------ ------
NET LOSS $ - $ (15)
------ ------
------ ------
This segment had no net income in the first quarter of 1997, as compared with
a $15 loss in the first quarter of 1996, consistent with management's
expectations that net income (loss) from Closed Book GRC in the years
subsequent to 1996 will be immaterial based on the Company's current
projections for the performance of the assets and liabilities associated with
Closed Book GRC.
(7)
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
HARTFORD LIFE INCORPORATED INITIAL PUBLIC OFFERING
On February 10, 1997, Hartford Life Incorporated ("HLI") filed a registration
statement with the Securities and Exchange Commission relating to an initial
public offering of up to 20% of HLI common stock. HLI is the holding company
parent of The Hartford's significant life insurance and related subsidiaries.
Management intends to use the proceeds from the offering to reduce certain
debt outstanding, to fund growth initiatives, and for other general corporate
purposes. Management of The Hartford Financial Services Group, Inc. believes
the offering will strengthen Hartford Life Insurance Company's financial
position and flexibility. If and when the offering is completed, The
Hartford's current intent is to continue to beneficially own at least 80% of
HLI, but it is under no contractual obligation to do so. The offering is
expected to be completed in the second quarter of 1997.
HARTFORD LIFE INCORPORATED DEBT OFFERING
On February 14, 1997, HLI filed a shelf registration statement for the
issuance and sale of up to $1.0 billion in the aggregate of senior debt
securities, subordinated debt securities and preferred stock of HLI.
Management intends to use the proceeds from any offering for the repayment of
debt, including outstanding commercial paper and other third party
indebtedness and the satisfaction of other obligations, for working capital,
capital expenditures, investments in or loans to subsidiaries and for other
general corporate purposes.
(8)
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PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) None.
(b) None.
(9)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Hartford Life Insurance Company
(Registrant)
by /S/ GREGORY A. BOYKO
--------------------------
May 12, 1997 Gregory A. Boyko
Senior Vice-President, Chief Financial
Officer and Treasurer
(10)
<TABLE> <S> <C>
<PAGE>
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<CIK> 0000045947
<NAME> HARTFORD LIFE INSURANCE COMPANY
<MULTIPLIER> 1,000,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 13,496
<DEBT-CARRYING-VALUE> 0
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<TOTAL-INVEST> 17,404
<CASH> 73
<RECOVER-REINSURE> 6,200
<DEFERRED-ACQUISITION> 2,888
<TOTAL-ASSETS> 79,170
<POLICY-LOSSES> 2,632
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0
0
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319
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