<PAGE>
As filed with the Securities and Exchange Commission on April 14, 1997
File No. 33-59069
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 2 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 4 [X]
HARTFORD LIFE INSURANCE COMPANY
ICMG SECULAR TRUST SEPARATE ACCOUNT
(Exact Name of Registrant)
HARTFORD LIFE INSURANCE COMPANY
(Name of Depositor)
P.O. BOX 2999
HARTFORD, CT 06104-2999
(Address of Depositor's Principal Offices)
(860) 843-7563
(Depositor's Telephone Number, Including Area Code)
MARIANNE O'DOHERTY, ESQ.
HARTFORD LIFE INSURANCE COMPANIES
P.O. BOX 2999
HARTFORD, CT 06104-2999
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b) of Rule 485
_X_ on May 1, 1997 pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on May 1, 1997 pursuant to paragraph (a)(1) of Rule 485
___ this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
PURSUANT TO RULE 24F-2(a)(1) UNDER THE INVESTMENT COMPANY ACT OF 1940, THE
REGISTRANT HAS REGISTERED AN INDEFINITE AMOUNT OF SECURITIES. THE RULE 24F-2
NOTICE FOR THE REGISTRANT'S MOST RECENT FISCAL YEAR WAS FILED ON OR ABOUT
FEBRUARY 28, 1997.
<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)
N-4 ITEM NO. PROSPECTUS HEADING
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1. Cover Page Cover Page
2. Definitions Glossary of Special Terms
3. Synopsis or Highlights Summary
4. Condensed Financial Information Statement of Additional Information
5. General Description of Registrant, The Certificate; The Separate
Depositor, and Portfolio Companies Account; The Company; The
Portfolios; General Matters
6. Deductions Charges Under the Certificate
7. General Description of Operation of the Certificate; Death
Annuity Contracts Benefit; The Certificate; The
Separate Account; General Matters
8. Annuity Period Annuity Benefits
9. Death Benefit Death Benefit
10. Purchases and Contract Value Operation of the Certificate
11. Redemptions Operation of the Certificate
12. Taxes Federal Tax Considerations
13. Legal Proceedings General Matters - Legal Proceedings
14. Table of Contents of the Table of Contents to Statement
Statement of Additional of Additional Information
Information
15. Cover Page Part B; Statement of Additional
Information
<PAGE>
N-4 ITEM NO. PROSPECTUS HEADING
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16. Table of Contents Tables of Contents
17. General Information and Introduction
History
18. Services None
19. Purchase of Securities being Distribution of Certificates
Offered
20. Underwriters Distribution of Certificates
21. Calculation of Performance Data Calculation of Yield and Return
22. Annuity Payments Annuity/Payout Period
23. Financial Statements Financial Statements
24. Financial Statements and Exhibits Financial Statements and Exhibits
25. Directors and Officers of the Directors and Officers of the
Depositor Depositor
26. Persons Controlled by or Under Persons Controlled by or Under
Common Control with the Depositor Common Control with the Depositor
or Registrant or Registrant
27. Number of Contract Owners Number of Contract Owners
28. Indemnification Indemnification
29. Principal Underwriters Principal Underwriters
30. Location of Accounts and Records Location of Accounts and Records
31. Management Services Management Services
32. Undertakings Undertakings
<PAGE>
ICMG SECULAR TRUST SEPARATE ACCOUNT
HARTFORD LIFE INSURANCE COMPANY
P.O. BOX 2999
HARTFORD, CONNECTICUT 06104-2999
TELEPHONE: (860) 843-7563
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This Prospectus describes Omniflex-TM-, a group flexible premium deferred
variable annuity contract with individually allocated certificates
("Certificates") issued by Hartford Life Insurance Company ("Hartford"). The
Certificates are offered to employee-participants of nonqualified deferred
compensation and supplemental executive retirement plans. Premium Payments for
each Certificate will be allocated to Divisions of Hartford Life Insurance
Company -- ICMG Secular Trust Separate Account (the "Separate Account").
There are currently eleven (11) Divisions available under the Certificate.
The underlying investment portfolios ("Portfolios") for the Divisions are the
HVA Money Market Fund, Inc., Hartford Bond Fund, Inc. and Hartford Capital
Appreciation Fund, Inc., sponsored by Hartford; Neuberger & Berman Advisers
Management Trust ("AMT") Partners Portfolio, Balanced Portfolio and Limited
Maturity Bond Portfolio; the VIP Equity-Income Portfolio and the VIP High Income
Portfolio of Fidelity Variable Insurance Products Fund; the VIP II Asset Manager
Portfolio of Fidelity Variable Insurance Products Fund II; and the Alger
American Small Capitalization Portfolio and Alger American Growth Portfolio of
The Alger American Fund.
This Prospectus sets forth the information concerning the Separate Account
that prospective investors should know before investing and should be kept for
future reference. Additional information about the Separate Account has been
filed with the Securities and Exchange Commission and is available without
charge upon request. To obtain the Statement of Additional Information send a
written request to International Corporate Marketing Group ("ICMG"), Attn: Group
Annuity Operations, 100 Campus Drive, Suite 250, Florham Park, NJ 07932. The
Table of Contents for the Statement of Additional Information may be found on
page 21 of this Prospectus. The Statement of Additional Information is
incorporated by reference into this Prospectus.
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THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY CURRENT PROSPECTUSES FOR THE
PORTFOLIOS.
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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.
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PROSPECTUS DATED: MAY 1, 1997
STATEMENT OF ADDITIONAL INFORMATION DATED: MAY 1, 1997
<PAGE>
2 HARTFORD LIFE INSURANCE COMPANY
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GLOSSARY OF SPECIAL TERMS............................................. 3
FEE TABLE............................................................. 4
SUMMARY............................................................... 5
PERFORMANCE RELATED INFORMATION....................................... 6
INTRODUCTION.......................................................... 6
THE CERTIFICATE....................................................... 6
THE SEPARATE ACCOUNT.................................................. 7
THE COMPANY........................................................... 7
THE PORTFOLIOS........................................................ 8
Investment Advisers................................................. 8
Other Information about the Portfolios.............................. 9
OPERATION OF THE CERTIFICATE.......................................... 10
Premium Payments.................................................... 10
Refund Rights....................................................... 10
Value of Accumulation Units......................................... 10
Investment Value.................................................... 10
Reallocations Among Divisions....................................... 10
Surrender of a Certificate/Partial Withdrawals...................... 11
DEATH BENEFIT......................................................... 11
CHARGES UNDER THE CERTIFICATE......................................... 12
Sales Expenses...................................................... 12
Mortality and Expense Risk Charge................................... 12
Administrative Expense Charge....................................... 13
Premium Tax Charge.................................................. 13
Federal Tax Charge.................................................. 13
ANNUITY BENEFITS...................................................... 13
Annuity Options..................................................... 13
The Annuity Unit and Valuation...................................... 14
Determination of Payment Amount..................................... 14
FEDERAL TAX CONSIDERATIONS............................................ 15
A. General......................................................... 15
B. Taxation of Hartford and the Separate Account................... 15
C. Taxation of Annuities -- General Provisions Affecting
Purchasers......................................................... 15
D. Federal Income Tax Withholding................................... 18
E. Annuity Purchases by Nonresident Aliens and Foreign
Corporations....................................................... 18
GENERAL MATTERS....................................................... 19
Assignment.......................................................... 19
Modification........................................................ 19
Misstatement of Age................................................. 19
Delay of Payments................................................... 19
Voting Rights....................................................... 19
Experience Credit................................................... 19
Distribution of the Certificates.................................... 19
Custodian of Separate Account Assets................................ 19
Legal Proceedings................................................... 20
Legal Counsel....................................................... 20
Experts............................................................. 20
Additional Information.............................................. 20
TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION.............. 21
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 3
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GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT: An accounting unit of measure used to calculate the
Investment Value during the Accumulation Period.
ALLOCATION DATES: The dates we receive and accept Premium Payments. Premium
Payments are applied to the Separate Account Divisions on these Allocation
Dates.
ANNUITY COMMENCEMENT DATE: The date payment of an annuity is to begin under each
Certificate.
ANNUITY UNIT: An accounting unit of measure used to calculate the amount of
annuity payments under a variable annuity option.
ANNUITANT(S): The person(s) upon whose life the Certificate is issued.
BENEFICIARY: The person(s) entitled to receive benefits under the Certificate on
death of the Annuitant or Certificate Owner.
CERTIFICATE ANNIVERSARY: The anniversary of the Certificate Date.
CERTIFICATE DATE: The date shown in the Certificate specifications.
CERTIFICATE OWNER: The entity or person who is the owner of the Certificate, as
named in the Certificate specifications, sometimes herein referred to as "You."
CERTIFICATE YEAR: A period of 12 months following the Certificate Date and each
anniversary thereof.
CODE: The Internal Revenue Code of 1986, as amended.
COMMISSION: Securities and Exchange Commission.
CONTINGENT ANNUITANT: The person (as designated by the Certificate Owner) who
becomes the Annuitant upon the Annuitant's death prior to the Annuity
Commencement Date.
CUSTOMER SERVICE CENTER: Currently located at ICMG, Group Annuity Operations,
100 Campus Drive, Suite 250, Florham Park, NJ 07932.
DEATH BENEFIT: The amount payable upon the death of an Annuitant or Certificate
Owner before annuity payments have started.
DIVISIONS: The sub-accounts of the Separate Account.
HARTFORD: Hartford Life Insurance Company.
INVESTMENT VALUE: The sum of the values of each Division's Accumulation Units
held under the Certificate.
PORTFOLIOS: The underlying securities allocable under the Certificate.
PREMIUM PAYMENT: A payment made to Hartford pursuant to the terms of the
Certificate.
PREMIUM TAX: A tax charged by a state or municipality on Premium Payments or
Investment Value.
SEPARATE ACCOUNT: The Hartford separate account entitled "Hartford Life
Insurance Company -- ICMG Secular Trust Separate Account."
SURRENDER VALUE: Upon surrender of the Certificate, an amount equal to the
Investment Value less any Premium Taxes not previously deducted and any due and
unpaid charges.
VALUATION DAY: Each day the New York Stock Exchange is open for trading, which
is Monday through Friday, except for normal business holidays. The value of the
Separate Account is determined at the close of the New York Stock Exchange
(currently 4:00 p.m. Eastern Time) on such days.
VALUATION PERIOD: The period between the close of business on successive
Valuation Days.
VARIABLE ANNUITY: An annuity providing for payments varying in amount in
accordance with the investment experience of the Divisions of the Separate
Account.
<PAGE>
4 HARTFORD LIFE INSURANCE COMPANY
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FEE TABLE
ICMG SECULAR TRUST SEPARATE ACCOUNT
Certificate Owner Transaction Expenses
<TABLE>
<S> <C>
As a Percentage of Premium Payments
Maximum Sales Load Imposed on Purchases......................... 4.6%(1)
Federal Tax Charge.............................................. 0.43%
Deferred Sales Load............................................. None
Other Charges
Reallocation Fee................................................ $0
Administrative Expense Charge................................... $2.50/month
</TABLE>
- ------------------------------
(1) The sales load will vary depending on plan characteristics.
<TABLE>
<S> <C>
Annual Expenses-Separate Account (As Percentage of Average
Investment Value)
Mortality and Expense Risk...................................... 0.65%
</TABLE>
Annual Fund Operating Expenses
(as a percentage of net assets)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
FEES EXPENSES EXPENSES
---------- -------- ----------
<S> <C> <C> <C>
HVA Money Market Fund........................... 0.423% 0.021% 0.444%
Hartford Bond Fund.............................. 0.490% 0.030% 0.520%
Hartford Capital Appreciation Fund.............. 0.629% 0.017% 0.646%
Neuberger & Berman AMT Partners Portfolio (1)... 0.840% 0.110% 0.950%
Neuberger & Berman AMT Balanced Portfolio (1)... 0.850% 0.240% 1.090%
Neuberger & Berman AMT Limited Maturity Bond
Portfolio (1)................................ 0.650% 0.130% 0.780%
Fidelity VIP Equity-Income Portfolio (2)........ 0.510% 0.07% 0.580%
Fidelity VIP II Asset Manager (2)............... 0.640% 0.100% 0.740%
Fidelity VIP High Income Portfolio.............. 0.590% 0.120% 0.710%
Alger American Small Capitalization Portfolio... 0.850% 0.030% 0.880%
Alger American Growth Portfolio................. 0.750% 0.040% 0.790%
</TABLE>
- ------------------------------
(1) Neuberger & Berman Advisers Management Trust is divided into Portfolios,
each of which invests all of its net investable assets in a corresponding
series of Advisers Managers Trust. The figures reported under "Management
Fees" include the aggregate of the administration fees paid by the Portfolio
and the management fees paid by its corresponding series of Advisers
Managers Trust. Similarly, "Other Expenses" includes all other expenses of
the Portfolio and its corresponding series of Advisers Managers Trust.
(2) A portion of the brokerage commissions that certain funds pay was used to
reduce funds expenses. In addition, certain funds have entered into
arrangements with their custodian and transfer agent whereby interest earned
on uninvested cash balances was used to reduce custodian and transfer agent
whereby interst earned on uninvested cash balances was used to reduce
custodian and transfer agent expenses. Including these reductions, the total
operating expenses presented in the table would have been .56% for Equity
Income Portfolio, .73% for Asset Manager Portfolio.
EXAMPLE
<TABLE>
<CAPTION>
If you surrender your
Certificate or annuitize at the
end of the applicable time
period: You would pay the
following expenses on a $1,000
Investment, assuming a 5%
annual return on assets:
DIVISION 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
HVA Money Market Fund........ $ 62 $ 86 $ 112 $ 185
Hartford Bond Fund........... 62 89 116 193
Hartford Capital Appreciation
Fund....................... 64 93 123 208
Neuberger & Berman AMT
Partners Portfolio......... 67 102 140 244
Neuberger & Berman AMT
Balanced Portfolio......... 68 107 147 260
Neuberger & Berman AMT
Limited Maturity Bond
Portfolio.................. 65 97 130 224
Fidelity VIP Equity-Income
Portfolio.................. 63 91 120 200
Fidelity VIP II Asset
Manager.................... 65 96 128 219
Fidelity VIP High Income
Portfolio.................. 64 95 127 216
Alger American Small
Capitalization Portfolio... 65 97 131 225
Alger American Growth
Portfolio.................. 66 100 136 235
</TABLE>
The purpose of this table is to assist the Certificate Owner in
understanding various costs and expenses that a Certificate Owner will bear
directly or indirectly. The table reflects expenses of the Separate Account and
underlying Portfolios. Premium taxes may also be applicable.
This EXAMPLE should not be considered a representation of past or future
expenses and actual expenses may be greater or less than those shown. Assumes
maximum charges.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 5
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SUMMARY
WHAT IS THE CERTIFICATE AND HOW MAY I PURCHASE ONE?
The Certificate is offered under an individually allocated, group flexible
premium variable annuity contract (see "Taxation of Annuities -- General
Provisions Affecting Purchasers," page 15). Generally, the Certificate is
purchased by completing an enrollment form to purchase a Certificate and
submitting it, along with the initial Premium Payment, to Hartford for its
approval. The minimum initial Premium Payment is $1,000 per Certificate with a
minimum allocation to any Portfolio of $500 per Certificate. Certain plans may
make smaller initial and subsequent periodic Premium Payments. Subsequent
Premium Payments, if made, must be a minimum of $1,000 or the minimum amount
then in effect.
WHO MAY PURCHASE THE CERTIFICATE?
The Certificates are offered to employee-participants of nonqualified
deferred compensation and supplemental executive retirement plans.
WHAT TYPES OF INVESTMENTS ARE AVAILABLE UNDER THE CERTIFICATE?
The underlying investments for the Certificate are shares of the HVA Money
Market Fund, Inc., Hartford Bond Fund, Inc. and Hartford Capital Appreciation
Fund, Inc. sponsored by Hartford; the Partners Portfolio, Balanced Portfolio and
Limited Maturity Bond Portfolio of Neuberger & Berman Advisers Management Trust;
the Equity-Income Portfolio and High Income Portfolio of Fidelity Variable
Insurance Products Fund; the Asset Manager Portfolio of Fidelity Variable
Insurance Products Fund II, the Alger American Small Capitalization Portfolio
and Alger American Growth Portfolio of The Alger American Fund, and such other
Portfolios as shall be offered from time to time. (See "The Portfolios"
commencing on page 8.)
WHAT ARE THE CHARGES UNDER THE CERTIFICATES?
SALES EXPENSES
A sales load of not more than 4.6% of Premium Payments will be deducted for
sales expenses. The sales load may vary depending on the characteristics of the
group, including such factors as group size, expected number of participants and
the anticipated Premium Payment from participants.
MORTALITY AND EXPENSE RISK CHARGE
For assuming the mortality and expense risks under the Certificate, Hartford
will impose a 0.65% per annum charge against all Investment Value held in the
Divisions (see "Mortality and Expense Risk Charge," page 12).
ADMINISTRATIVE EXPENSE CHARGE
The Certificate provides for an administrative expense charge of $2.50 per
month to be deducted from the Investment Value to cover Hartford's
administrative expenses.
PREMIUM TAX AND FEDERAL TAX CHARGES
A deduction will be made for Premium Taxes for Certificates sold in certain
states. (See "Premium Tax Charge," page 13.) In addition, a deduction will be
made for the federal tax cost resulting from Section 848 of the Code. (See
"Federal Tax Charge," page 13.)
CHARGES BY THE PORTFOLIOS
The Portfolios are subject to certain fees, charges and expenses. (See the
Prospectuses for the Portfolio attached hereto.)
CAN I GET MY MONEY IF I NEED IT?
Subject to any applicable charges, the Certificate may be surrendered or
portions of its Investment Value may be withdrawn at any time prior to the
Annuity Commencement Date. The number of partial withdrawals in any Certificate
Year is limited to 12. If less than Hartford's minimum amount rules then in
effect remains in a Certificate as a result of a withdrawal, Hartford may
terminate the Certificate in its entirety. (See "Surrender of a
Certificate/Partial Withdrawals," page 11; see also "Federal Tax
Considerations," page 15, for a discussion of federal tax consequences,
including a 10% penalty tax that may apply upon surrender or withdrawal.)
DOES THE CERTIFICATE PAY ANY DEATH BENEFITS?
A Death Benefit is provided on the death of the Annuitant or Certificate
Owner before the Annuity Commencement Date and prior to attained age 85. (See
"Death Benefit," page 11.)
WHAT ARE THE AVAILABLE ANNUITY OPTIONS UNDER THE CERTIFICATE?
There are four annuity options available under the Certificate which are
described on page 13. The Annuity Commencement Date may not be deferred beyond
the Annuitant's 90th birthday in most states. (In Pennsylvania, the Annuity
Commencement Date may not be deferred beyond the Annuitant's 85th birthday). If
a Certificate Owner does not elect otherwise, the Investment Value less
applicable premium taxes will be applied on the Annuity Commencement Date under
the third option to provide a joint and last survivor life annuity.
DOES THE CERTIFICATE OWNER HAVE ANY VOTING RIGHTS UNDER THE CERTIFICATE?
Certificate Owners will have the right to vote on matters affecting an
underlying Portfolio to the extent that proxies are solicited by such Portfolio.
If a Certificate Owner does not vote, Hartford shall vote such interests in the
same proportion as shares of the Portfolio for which instructions
<PAGE>
6 HARTFORD LIFE INSURANCE COMPANY
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have been received by Hartford. (See "Voting Rights," page 19.)
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PERFORMANCE RELATED
INFORMATION
The Separate Account may advertise certain performance related information
concerning its Divisions. Performance information about a Division is based on
the Division's past performance only and is no indication of future performance.
Each Division may include total return in advertisements or other sales
material. When a Division advertises its total return, it will usually be
calculated for one year, five years, and ten years or some other relevant
periods if the Division has not been in existence for at least ten years. Total
return is measured by comparing the value of an investment in the Division at
the beginning of the relevant period to the value of the investment at the end
of the period. The Divisions for the Hartford Bond Fund, Inc. and Limited
Maturity Bond Portfolio may advertise yield in addition to total return. The
yield will be computed in the following manner: The net investment income per
unit earned during a recent one month period is divided by the unit value on the
last day of the period. This figure reflects the Certificate charges described
below.
The Division for the HVA Money Market Fund, Inc. may advertise yield and
effective yield. The yield of a Division is based upon the income earned by the
Division over a seven-day period and then annualized, i.e. the income earned in
the period is assumed to be earned every seven days over a 52-week period and
stated as a percentage of the investment. Effective yield is calculated
similarly, but when annualized, the income earned by the investment is assumed
to be reinvested in Division units and thus compounded in the course of a
52-week period. Yield reflects the Certificate charges described below.
Total return for a Division of the Separate Account includes all Certificate
charges: sales charges, mortality and expense risk charges, and the
administrative expense charge, and is therefore lower than total return at the
Portfolio level, with no comparable charges. Yield for a Division of the
Separate Account includes all recurring charges (except sales charges), and is
therefore lower than yield at the Portfolio level, with no comparable charges.
Hartford may provide information on various topics to current and
prospective Certificate Owners in advertising, sales literature or other
materials. These topics may include the relationship between sectors of the
economy and the economy as a whole and its effect on various securities markets,
investment strategies and techniques (such as value investing, dollar cost
averaging and asset allocation), plan and trust arrangements, the advantages and
disadvantages of investing in tax-advantaged and taxable instruments, current
and prospective Certificate Owner profiles and hypothetical purchase scenarios,
financial management and tax and retirement planning, and investment
alternatives, including comparisons between the Certificates and the
characteristics of and market for such alternatives.
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INTRODUCTION
This Prospectus has been designed to provide you with the necessary
information to make a decision on purchasing the Certificate offered by Hartford
and funded by the Divisions of the Separate Account. Please read the Glossary of
Special Terms on page 3 prior to reading this Prospectus to familiarize yourself
with the terms being used.
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THE CERTIFICATE
The Certificate is offered under an individually allocated, group flexible
premium variable annuity contract. Payments for the Certificate will be held in
the Divisions of the Separate Account. Each Division invests in a different
underlying Portfolio with its own distinct investment objectives. You choose the
Division(s) with the investment objectives that meet your needs. You may select
one or more Divisions and determine the percentage of your Premium Payment that
is put into a Division. Subject to certain limits, you may also reallocate
assets among the Divisions so that your investment program meets your specific
needs over time. There are minimum requirements for investing in each Division
which are described later in this Prospectus. In addition, there are certain
other limitations on withdrawals and reallocations of amounts in the Divisions
as described in this Prospectus. See "Charges Under the Certificate" for a
description of the charges for redeeming a Certificate and other charges made
under the Certificate.
The Certificate Owner may select an Annuity Commencement Date and an annuity
option which may be on a fixed or variable basis, or a combination thereof.
Generally, the Certificate contains the four optional forms of annuity described
later in this Prospectus. The Annuity Commencement Date may not be deferred
beyond the Annuitant's 90th birthday in most states. (In Pennsylvania, the
Annuity Commencement Date may not be deferred beyond the Annuitant's 85th
birthday).
The Annuity Commencement Date may be changed from time to time, but any such
change must be made at least 30 days prior to the date on which payments are
scheduled to begin. If you do not elect otherwise, payments will
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 7
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begin at the Annuitant's age 90 under Option 3 (joint and last survivor life
annuity).
When an annuity is effected under a Certificate, unless otherwise specified,
Investment Value held in the Divisions will be applied to provide a variable
annuity based on the pro rata amount in the various Divisions. Variable annuity
payments will vary in accordance with the investment performance of the Division
you have selected. The Certificate allows the Certificate Owner to change the
Divisions on which variable payments are based after payments have commenced
once every quarter. Any fixed annuity allocation may not be changed.
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THE SEPARATE ACCOUNT
The Separate Account was established on October 28, 1994, in accordance with
authorization by the Board of Directors of Hartford. It is the Separate Account
in which Hartford sets aside and invests the assets attributable to the
Certificates. Although the Separate Account is an integral part of Hartford, it
is registered as a unit investment trust under the Investment Company Act of
1940. This registration does not, however, involve supervision by the Commission
of the management or the investment practices or policies of the Separate
Account or Hartford. The Separate Account meets the definition of "separate
account" under federal securities laws.
Under Connecticut law, the assets of the Separate Account attributable to
the Certificates offered under this Prospectus are held for the benefit of the
owners of, and the persons entitled to payments under, those Certificates.
Income, gains, and losses, whether or not realized, from assets allocated to the
Separate Account, are, in accordance with the Certificates, credited to or
charged against the Separate Account. Also, the assets in the Separate Account
are not chargeable with liabilities arising out of any other business Hartford
may conduct. Investment Value allocated to the Divisions will not be affected by
the rate of return of Hartford's general account, nor by the investment
performance of any of Hartford's other separate accounts. However, the
obligations arising under the Certificates are general obligations of Hartford.
Currently, the Certificate Owner has the choice of allocating Investment
Value among up to five of the twelve Divisions. (Hartford reserves the right to
increase the number of allocable investment options to more than five.) Each
Division is invested exclusively in the shares of one underlying Portfolio. Net
Premium Payments and proceeds of reallocations between Portfolios are applied to
purchase shares in the appropriate Portfolio at net asset value determined as of
the end of the Valuation Period during which the payments were received or the
reallocation made. All distributions from the Portfolios are reinvested at net
asset value. The value of your investment will therefore vary in accordance with
the net income and the market value of the underlying Portfolio. During the
variable annuity payout period, both your annuity payments and reserve values
will vary in accordance with these factors.
HARTFORD DOES NOT GUARANTEE THE INVESTMENT RESULTS OF THE PORTFOLIOS OR ANY
OF THE UNDERLYING INVESTMENTS. THERE IS NO ASSURANCE THAT INVESTMENT VALUE
DURING THE YEARS PRIOR TO RETIREMENT OR THE AGGREGATE AMOUNT OF THE VARIABLE
ANNUITY PAYMENTS WILL EQUAL THE TOTAL OF PREMIUM PAYMENTS MADE UNDER THE
CERTIFICATE. SINCE EACH UNDERLYING PORTFOLIO HAS DIFFERENT INVESTMENT OBJECTIVES
AND POLICIES, EACH IS SUBJECT TO DIFFERENT RISKS. THESE RISKS ARE MORE FULLY
DESCRIBED IN THE ACCOMPANYING PORTFOLIO PROSPECTUSES.
Hartford reserves the right, subject to compliance with the law, to
substitute the shares of any other registered investment company for the shares
of any Portfolio held by the Separate Account. Substitution may occur only if
shares of the Portfolio(s) become unavailable or if there are changes in
applicable law or interpretations of law. Current law requires notification to
you of any such substitution and approval of the Commission.
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THE COMPANY
Hartford Life Insurance Company ("Hartford") is a stock life insurance
company engaged in the business of writing health and life insurance, both
individual and group, in all states of the United States and the District of
Columbia. Hartford was originally incorporated under the laws of Massachusetts
on June 5, 1902, and was subsequently redomiciled to Connecticut. Its offices
are located in Simsbury, Connecticut; however, its mailing address is P.O. Box
2999, Hartford, CT 06104-2999. Hartford is a subsidiary of Hartford Fire
Insurance Company, one of the largest multiple lines insurance carriers in the
United States. Hartford is ultimately owned by ITT Hartford Group, Inc., a
Delaware corporation. Subject to shareholder approval on May 2, 1997, the name
of ITT Hartford Group, Inc. will change to The Hartford Financial Services
Group, Inc.
Hartford is rated A+ (superior) by A.M. Best and Company, Inc., on the basis
of its financial soundness and operating performance. Hartford is rated AA by
Standard & Poor's and AA+ by Duff and Phelps, on the basis of its claims paying
ability. These ratings do not apply to the investment performance of the
Sub-Accounts of the Separate Account. The ratings apply to Hartford's ability to
meet its insurance obligations, including those described in this Prospectus.
<PAGE>
8 HARTFORD LIFE INSURANCE COMPANY
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THE PORTFOLIOS
The underlying investment for the Certificates are shares of the Portfolios.
The underlying Portfolio corresponding to each Division and its investment
objective are described below. Hartford reserves the right, subject to
compliance with the law, to offer additional Portfolios with differing
investment objectives. Certificate Owners should review the following brief
descriptions of the investment objectives of the Portfolios. There is no
assurance that any of the Portfolios will achieve their stated objectives.
Certificate Owners are also advised to read the prospectuses for the Portfolios
accompanying this Prospectus for more detailed information.
HVA MONEY MARKET FUND, INC.
Seeks maximum current income consistent with liquidity and preservation of
capital.
HARTFORD BOND FUND, INC.
Seeks maximum current income consistent with preservation of capital by
investing primarily in fixed-income securities. Up to 20% of the total assets of
this Fund may be invested in debt securities rated in the highest category below
investment grade ("Ba" by Moody's Investor Services, Inc. or "BB" by Standard &
Poor's) or, if unrated, are determined to be of comparable quality by the Fund's
investment adviser. Securities rated below investment grade are commonly
referred to as "high yield-high risk securities" or "junk bonds." For more
information concerning the risks associated with investing in such securities,
please refer to the section in the accompanying prospectus for the Hartford
Funds entitled "Hartford Bond Fund, Inc. -- Investment Policies."
HARTFORD CAPITAL APPRECIATION FUND, INC.
Seeks growth of capital by investing in securities selected solely on
potential for capital appreciation; income, if any, is an incidental
consideration.
NEUBERGER & BERMAN AMT PARTNERS PORTFOLIO
Seeks to achieve capital growth by investing primarily in common stocks of
medium to large capitalization established companies, using the value-oriented
investment approach.
NEUBERGER & BERMAN AMT BALANCED PORTFOLIO
Seeks to achieve long-term capital growth and reasonable current income
without undue risk to principal by investing a portion of its assets in common
stocks and a portion of its assets in investment grade debt securities.
NEUBERGER & BERMAN AMT LIMITED MATURITY BOND PORTFOLIO
Seeks primarily to achieve the highest current income consistent with low
risk to principal and liquidity; and secondarily, total return. The Portfolio
pursues its investment objectives by investing in a diversified portfolio
primarily consisting of U.S. government and agency securities and investment
grade debt securities.
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Seeks reasonable income by investing primarily in income-producing equity
securities. In choosing these securities, the Portfolio will also consider the
potential for capital appreciation. The Portfolio's goal is to achieve a yield
which exceeds the composite yield on the securities comprising the Standard &
Poor's 500 Composite Stock Price Index.
FIDELITY VIP HIGH INCOME PORTFOLIO
Seeks to obtain a high level of current income by investing primarily in
high-yielding, lower-rated, fixed income securities (commonly referred to as
junk bonds), while also considering growth of capital. High yielding,
lower-rated debt securities present higher risks of untimely interest and
principal payments, default, and price volatility than higher-rated securities,
and may present problems of liquidity and valuation.
FIDELITY VIP II ASSET MANAGER PORTFOLIO
Seeks high total return with reduced risk over the long-term by allocating
its assets among domestic and foreign stocks, bonds and short-term fixed-income
instruments.
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
Seeks long-term capital appreciation by investing in a diversified, actively
managed portfolio of equity securities, primarily of companies with total market
capitalization within the range of companies included in the Russell 2000 Growth
Index or the Standard & Poor's Small Cap 600 Index, updated quarterly.
ALGER AMERICAN GROWTH PORTFOLIO
Seeks long-term capital appreciation by investing in a diversified, actively
managed portfolio of equity securities, primarily of companies with total market
capitalization of $1 billion or greater.
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INVESTMENT ADVISERS
The investment adviser for the HVA Money Market Fund, Inc., Hartford Bond
Fund, Inc. and Hartford Capital Appreciation Fund, Inc. is HL Investment
Advisors, Inc. ("HL Advisors"). In addition, HL Advisors has entered an
investment services agreement with Hartford Investment Management Company, Inc.
("HIMCO"), pursuant to which HIMCO will provide certain investment services to
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 9
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Hartford Bond Fund, Inc. and HVA Money Market Fund, Inc.
Wellington Management Company, L.L.P. serves as sub-investment adviser for
Hartford Capital Appreciation Fund, Inc.
The investment adviser for Neuberger & Berman Advisers Management Trust is
Neuberger & Berman Management Incorporated, 605 Third Avenue, 2nd Floor, New
York, New York. Neuberger & Berman Management Incorporated, with the assistance
of Neuberger & Berman, L.L.C. as sub-adviser, selects investments for N&B AMT
Partners Portfolio, N&B AMT Balanced Portfolio and N&B AMT Limited Maturity Bond
Portfolio.
The investment manager for the Equity-Income Portfolio of Fidelity Variable
Insurance Products Fund, the High Income Portfolio of Fidelity Variable
Insurance Products Fund, and the Asset Manager Portfolio of Fidelity Variable
Insurance Products Fund II is Fidelity Management & Research Company ("FMR").
FMR, a registered investment adviser under the Investment Advisers Act of 1940,
is one of America's largest investment management organizations and has its
principal business address at 82 Devonshire Street, Boston, Massachusetts. It is
composed of a number of different companies, which provide a variety of
financial services and products. FMR is the original Fidelity company, founded
in 1946. It provides a number of mutual funds and other clients with investment
research and portfolio management services.
Fred Alger Management, Inc. ("Alger Management"), 75 Maiden Lane, New York,
New York 10038, serves as investment manager to the Alger American Small
Capitalization Portfolio and the Alger American Growth Portfolio. Alger
Management is a wholly-owned subsidiary of Fred Alger & Company, Incorporated,
which is a wholly-owned subsidiary of Alger Associates, Inc., a financial
services holding company.
See the accompanying prospectuses for the Portfolios for a more complete
description of the investment advisers and any sub-adviser and their respective
fees.
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OTHER INFORMATION ABOUT THE PORTFOLIOS
All of the Portfolios are registered as diversified open-end management
companies under the Investment Company Act of 1940. Each Portfolio continually
issues an unlimited number of full and fractional shares of beneficial interest
in the Portfolio. Such shares are offered to separate accounts, including the
Separate Account, established by Hartford or one of its affiliated companies
specifically to fund the Certificates and other contracts issued by Hartford or
its affiliates as permitted by the Investment Company Act of 1940.
The Portfolios are available only to serve as the underlying investment for
variable annuity and variable life policies and certificates. A full description
of the Portfolios, their investment objectives, policies and restrictions,
risks, charges and expenses and other aspects of their operation is contained in
the accompanying Portfolio Prospectuses which should be read in conjunction with
this Prospectus before investing, and in the Portfolio Statements of Additional
Information which may be ordered without charge from the Portfolios.
It is conceivable that in the future it may be disadvantageous for variable
annuity separate accounts and variable life insurance separate accounts to
invest in the Portfolios simultaneously. (Although Hartford and the Portfolios
do not currently foresee any such disadvantages either to variable annuity
contract owners or to variable life insurance policyowners, the Portfolio's
Board of Trustees will monitor events in order to identify any material
conflicts between such variable annuity contract and variable life insurance
policyowners and will determine what action, if any, should be taken if a
material conflict arises). If the Board of Trustees of the Portfolio were to
conclude that separate Portfolios should be established for variable life and
variable annuity separate accounts, the variable annuity policy and certificate
owners would not bear any expenses attendant upon establishment of such separate
funds.
All investment income of and other distributions to each Division of the
Separate Account arising from the applicable Portfolio are reinvested in shares
of that Portfolio at net asset value. The income and both realized gains or
losses on the assets of each Division of the Separate Account are therefore
separate and are credited to or charged against the Division without regard to
income, gains or losses from any other Division or from any other business of
Hartford. Hartford will purchase shares in the Portfolios in connection with
premiums allocated to the applicable Division in accordance with Certificate
Owners directions and will redeem shares in the Portfolios to meet Certificate
obligations or make adjustments in reserves, if any. The Portfolios are required
to redeem Portfolio shares at net asset value and to make payment within seven
days.
Hartford reserves the right, subject to compliance with the law as then in
effect, to make additions to, deletions from, or substitutions for the Separate
Account and its Divisions which fund the Certificates. If shares of any of the
Portfolios should no longer be available for investment, or if, in the judgment
of Hartford's management, further investment in shares of any Portfolio should
become inappropriate in view of the purposes of the Certificates, Hartford may
substitute shares of another Portfolio for shares already purchased, or to be
purchased in the future, under the Certificates. No substitution of securities
will take place without notice to and consent of Certificate Owners and without
prior approval of the Securities and Exchange Commission to the extent required
by the Investment
<PAGE>
10 HARTFORD LIFE INSURANCE COMPANY
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Company Act of 1940. Subject to Certificate Owner approval, Hartford also
reserves the right to end the registration under the Investment Company Act of
1940 of the Separate Account or any other separate accounts of which it is the
depositor which may fund the Certificates.
Each Portfolio is subject to investment restrictions which may not be
changed without the approval of a majority of the shareholders of the Portfolio.
See the accompanying prospectuses for the Portfolios.
- ---------------------------------------------------
OPERATION OF THE CERTIFICATE
- --------------------------------PREMIUM PAYMENTS
The balance of each initial Premium Payment remaining after the deduction of
the sales load, any applicable Premium Tax and the federal tax charge, is
credited to your Certificate within two business days of receipt of a properly
completed enrollment form or an order to purchase a Certificate and the initial
Premium Payment by Hartford at its Customer Service Center. It will be credited
to the Division(s) in accordance with your allocation instructions. If the
enrollment form is incomplete when received, the initial Purchase Payment will
be returned within five business days, unless you consent to Hartford's
retention of the Purchase Payment until the enrollment form is made complete.
Subsequent Premium Payments are priced on the Valuation Day received by
Hartford in its Customer Service Center or other designated administrative
office.
The number of Accumulation Units in each Division to be credited to a
Certificate will be determined by dividing the portion of the Premium Payment
being credited to each Division by the value of an Accumulation Unit in that
Division on that date.
The minimum initial Premium Payment is $1,000 per Certificate. Subsequent
Premium Payments, if made, must be a minimum of $1,000 or the minimum amount
then in effect. Certain plans may make smaller initial and subsequent periodic
payments. Each Premium Payment may be split among the various Divisions subject
to minimum amounts then in effect.
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REFUND RIGHTS
If you are not satisfied with your purchase you may surrender the
Certificate by returning it within ten days after you receive it (or within such
period as required in your state). A written request for cancellation must
accompany the Certificate. In such event, Hartford will pay you an amount equal
to the Investment Value on the date of receipt of the request for cancellation,
plus any charges taken. You bear the investment risk during the period prior to
Hartford's receipt of request for cancellation. In certain states, Hartford must
return to the applicant the greater of the Premium Payments made or the sum of
(1) the Investment Value on the date the returned Certificate is received by
Hartford or its agent and (2) any deductions under Certificate or by the
Portfolios for taxes, charges or fees. In these states, the initial Premium
Payments are allocated to the HVA Money Market Fund, Inc. during the refund
right period.
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VALUE OF ACCUMULATION UNITS
The Accumulation Unit value for each Division will vary to reflect the
investment experience of the applicable Portfolio and will be determined on each
Valuation Day by multiplying the Accumulation Unit value of the particular
Division on the preceding Valuation Day by an "Experience Factor" for that
Division for the Valuation Period then ended. The Experience Factor for each of
the Divisions is equal to the net asset value per share of the corresponding
Portfolio at the end of the Valuation Period (plus the per share amount of any
dividends or capital gains distributed by that Portfolio during the current
Valuation Period), divided by the net asset value per share of the corresponding
Portfolio at the beginning of the Valuation Period. You should refer to the
Portfolio Prospectuses which accompanies this Prospectus for a description of
how the assets of each Portfolio are valued since each determination has a
direct bearing on the Accumulation Unit value of the Division and therefore the
Investment Value. The Accumulation Unit value is affected by the performance of
the underlying Portfolio(s), expenses and deduction of the charges described in
this Prospectus.
The shares of the Portfolio are valued at net asset value on each Valuation
Day. A description of the valuation methods used in valuing Portfolio shares may
be found in the accompanying Prospectuses of the Portfolios.
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INVESTMENT VALUE
The Investment Value under your Certificate at any time prior to the
commencement of annuity payments can be determined by multiplying the total
number of Accumulation Units credited to your Certificate in each Division by
the then current Accumulation Unit values for the applicable Division. You will
be advised at least annually of the number of Accumulation Units credited to
each Division, the current Accumulation Unit values, and the Investment Value.
- ---------------------------------------------------
REALLOCATIONS AMONG DIVISIONS
You may reallocate the values of your Division allocations from one or more
Divisions to another free of charge. Prior to the Annuity Commencement Date, the
number of
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HARTFORD LIFE INSURANCE COMPANY 11
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reallocations permitted in a Certificate Year is twelve. Hartford may permit the
Certificate Owner to preauthorize reallocations between the Divisions under
certain circumstances. Reallocations by telephone may be made by the Certificate
Owner or by the agent of record or the attorney-in-fact pursuant to a power of
attorney by calling (800) 861-1408. Telephone reallocations may not be permitted
by some states for their residents who purchase variable annuities. The policy
of Hartford and its agents and affiliates is that they will not be responsible
for losses resulting from acting upon telephone requests reasonably believed to
be genuine. Hartford will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine; otherwise, Hartford may be
liable for any losses due to unauthorized or fraudulent instructions. The
procedures Hartford follows for transactions initiated by telephone include
requirements that callers on behalf of a Certificate Owner provide certain
identifying information. All transfer instructions by telephone are tape
recorded.
The right to reallocate Investment Value between the Divisions is subject to
modification if Hartford determines, in its sole discretion, that the exercise
of that right by one or more Certificate Owners is, or would be, to the
disadvantage of other Certificate Owners. Any modification could be applied to
reallocations to or from some or all of the Divisions and could include, but not
be limited to, the requirement of a minimum time period between each
reallocation, not accepting reallocation requests of an agent acting under a
power of attorney on behalf of more than one Certificate Owner, or limiting the
dollar amount that may be reallocated between the Divisions by a Certificate
Owner at any one time. Such restrictions may be applied in any manner reasonably
designed to prevent any use of the reallocation right which is considered by
Hartford to be to the disadvantage of other Certificate Owners.
The minimum reallocation to any Division is $500. No minimum balance is
presently required in any Division following reallocation.
Reallocations between the Divisions may be made after annuity payments
commence, but are limited to once a quarter and may not be made to or from the
General Account.
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SURRENDER OF A CERTIFICATE/
PARTIAL WITHDRAWALS
At any time prior to the Annuity Commencement Date, you have the right,
subject to the limitations set forth below, to surrender the Certificate or to
make partial withdrawals. Surrenders and partial withdrawals are not permitted
after annuity payments commence EXCEPT that a full surrender is allowed when
payments for a designated period (Option 4) are selected as the annuity option.
FULL SURRENDERS. At any time prior to the Annuity Commencement Date (and
after the Annuity Commencement Date with respect to values applied to Option 4),
the Certificate Owner has the right to terminate the Certificate. In such event,
the Surrender Value of the Certificate may be taken in the form of a lump sum
cash settlement. The Surrender Value of the Certificate is equal to the
Investment Value less any Premium Taxes not previously deducted and any due and
unpaid charges. The Surrender Value may be more or less than the amount of the
Premium Payments made to a Certificate.
PARTIAL WITHDRAWALS. The Certificate Owner may make partial withdrawals of
Investment Value prior to the Annuity Commencement Date. The number of partial
withdrawals in any Certificate Year is limited to 12. The minimum amount
withdrawn must be at least equal to the minimum amount rules then in effect. The
maximum partial withdrawal is equal to the Investment Value less $1,000.
Additionally, if the remaining Investment Value following a surrender is less
than $1,000 or Hartford's minimum amount rules then in effect, Hartford may
terminate the Certificate and pay the Surrender Value.
Certain plans may have different withdrawal privileges. Hartford may permit
the Certificate Owner to preauthorize partial withdrawals subject to certain
limitations then in effect.
ANY SUCH FULL SURRENDER OR PARTIAL WITHDRAWAL DESCRIBED ABOVE MAY RESULT IN
ADVERSE TAX CONSEQUENCES TO THE CERTIFICATE OWNER. THE CERTIFICATE OWNER,
THEREFORE, SHOULD CONSULT WITH HIS TAX ADVISER BEFORE UNDERTAKING ANY SUCH
SURRENDER. (SEE "FEDERAL TAX CONSIDERATIONS" COMMENCING ON PAGE 15.)
Payment on any request for a full or partial withdrawal from the Divisions
will be made as soon as possible and in any event no later than seven days after
the written request is received by Hartford at its Customer Service Center.
In requesting a partial withdrawal you should specify the Division(s) from
which the partial withdrawal is to be taken. Otherwise, such withdrawal will be
effected on a pro rata basis according to the value in each Division under a
Certificate. For federal tax purposes, any partial withdrawal will be deemed to
be first from earnings, to the extent that they exist, and then from Premium
Payments.
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DEATH BENEFIT
The Certificates provide that in the event the Annuitant dies before the
Annuity Commencement Date, the Contingent Annuitant will become the Annuitant.
If the Annuitant dies before the Annuity Commencement Date and there is
<PAGE>
12 HARTFORD LIFE INSURANCE COMPANY
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no designated Contingent Annuitant, or the Contingent Annuitant predeceases the
Annuitant, or if the Certificate Owner dies before the Annuity Commencement
Date, the Beneficiary will receive the Death Benefit. If the Certificate Owner
is a non-natural person, however, a Death Benefit will be payable in the event
the Annuitant dies prior to the Annuity Commencement Date.
If the death of the Annuitant or Certificate Owner occurs prior to the
Annuitant or Certificate Owner attaining age 85, the Death Benefit will be the
greater of:
(a) The Investment Value as determined on the date of receipt of due proof of
death acceptable to Hartford and received in its Customer Service Center, or
(b) 100% of all Premium Payments made by the Certificate Owner under the
Certificate, reduced by the amount of any partial withdrawals since the
Certificate Date.
If the Annuitant or Certificate Owner had attained age 85 prior to death,
the Death Benefit will be equal to the Investment Value.
PAYMENT OF DEATH BENEFIT -- The Death Benefit may be taken in a lump sum or
under any of the settlement options then being offered by Hartford, provided,
however, that: (a) in the event of the death of any Certificate Owner prior to
the Annuity Commencement Date, the entire interest in the Certificate will be
distributed within 5 years after the death of the Certificate Owner and (b) in
the event of the death of any Certificate Owner or Annuitant occurring on or
after the Annuity Commencement Date, any remaining interest in the Certificate
will be paid at least as rapidly as under the method of distribution in effect
at the time of death, except that, if the benefit is payable over a period not
extending beyond the life expectancy of the Beneficiary or over the life of the
Beneficiary, such distribution must commence within one year of the date of
death. Notwithstanding the foregoing, in the event of the Certificate Owner's
death where the sole Beneficiary is the spouse of the Certificate Owner and the
Annuitant or Contingent Annuitant is living, such spouse may elect, in lieu of
receiving the Death Benefit, to be treated as the Certificate Owner. Only one
such spousal election is permitted with respect to any Certificate.
Notwithstanding any provisions to the contrary, if the Certificate is owned
by a corporation or other non-individual, a Death Benefit will be paid upon the
death of the Annuitant prior to the Annuity Commencement Date. Such benefit will
be payable only as one sum or under the same settlement options and in the same
manner as if an individual Certificate Owner died on the date of the Annuitant's
death.
When payment is taken in one sum, payment will be made within 7 days after
the date Due Proof of Death is received, except that there may be a postponement
in the payment of Death Benefits whenever (a) the New York Stock Exchange is
closed, except for holidays or weekends, or trading on the New York Stock
Exchange is restricted as determined by the Securities and Exchange Commission;
(b) the Securities and Exchange Commission permits postponement and so orders;
or (c) the Securities and Exchange Commission determines that an emergency
exists making valuation of the amounts or disposal of securities not reasonably
practicable.
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CHARGES UNDER THE CERTIFICATE
Certain charges and deductions described below may be reduced for
Certificates issued in connection with a specific plan in accordance with
Hartford's rules in effect as of the date an enrollment form for a Certificate
is approved. To qualify for such a reduction, a plan must satisfy certain
criteria as to, for example, size of the plan, expected number of participants
and anticipated Premium Payment from the plan. Generally, the sales contacts and
effort, administrative costs and mortality cost per Certificate vary based on
such factors as the size of the plan, the purposes for which Certificates are
purchased and certain characteristics for the plan's members. The amount of
reduction and the criteria for qualification are related to the reduced sales
effort and administrative costs resulting from, and the different mortality
experience expected as a result of, sales to qualifying plans. Hartford may
modify from time to time on a uniform basis both the amounts of reductions and
the criteria for qualification. Reductions in these charges will not be unfairly
discriminatory against any person, including the affected Certificate Owners
funded by the Separate Account.
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SALES EXPENSES
A sales load of not more than 4.6% of Premium Payments, depending on the
plan to which the Certificate was issued, will be deducted for expenses related
to the sales and distribution of the Certificate.
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MORTALITY AND EXPENSE RISK CHARGE
Although variable annuity payments made under the Certificates will vary in
accordance with the investment performance of the underlying Portfolio shares
held in the Division(s), the payments will not be affected by (a) Hartford's
actual mortality experience among Annuitants before or after the Annuity
Commencement Date or (b) Hartford's actual expenses, if greater than the
deductions provided for in the Certificates because of the expense and mortality
undertakings by Hartford.
For assuming these risks under the Certificates, Hartford will make a daily
charge at the rate of 0.65% per annum against all Investment Values held in the
Divisions during
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 13
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the life of the Certificate, including the payout period (estimated at up to 45%
for mortality and up to 20% for expense).
The mortality undertaking provided by Hartford under the Certificates,
assuming the selection of one of the forms of life Annuities, is to make monthly
annuity payments (determined in accordance with the 1983a Individual Annuity
Mortality Table and other provisions contained in the Certificate) to Annuitants
regardless of how long an Annuitant may live, and regardless of how long all
Annuitants as a group may live. Hartford also assumes the liability for payment
of the Death Benefit under the Certificate.
The mortality undertakings are based on Hartford's determination of expected
mortality rates among all Annuitants. If actual experience among Annuitants
during the annuity payment period deviates from Hartford's actuarial
determination of expected mortality rates among Annuitants because, as a group,
their longevity is longer than anticipated, Hartford must provide amounts from
its general Portfolios to fulfill its Certificate obligations. In that event, a
loss will fall on Hartford. Also, in the event of the death of an Annuitant or
Certificate Owner prior to the commencement of annuity payments Hartford can, in
periods of declining value, experience a loss resulting from the assumption of
the mortality risk relative to the Death Benefit.
In providing an expense undertaking, Hartford assumes the risk that the
sales loads and the administrative expense charges for maintaining the
Certificates prior to the Annuity Commencement Date may be insufficient to cover
the actual cost of providing such items.
- ---------------------------------------------------
ADMINISTRATIVE EXPENSE CHARGE
Hartford will deduct certain fees from Investment Value to reimburse it for
expenses relating to the administration and maintenance of the Certificate and
for administration of the Separate Account. The Certificate provides for an
administrative expense charge of $2.50 to be deducted from Investment Value on
the Certificate Date and monthly on the same calendar day as the Certificate
Date, or on the last day of any month which has no such calendar day.
The deduction will be made pro rata according to the value in each Division
under a Certificate. There is not necessarily a relationship between the amount
of administrative charge imposed on a given Certificate and the amount of
expenses that may be attributable to that Certificate; expenses may be more or
less than the charge.
The types of expenses incurred by the Separate Account include, but are not
limited to, expenses of issuing the Certificate and expenses for confirmations,
Certificate quarterly statements, processing of reallocations and surrenders,
responding to Certificate Owner inquiries, reconciling and depositing cash
receipts, calculation and monitoring daily Division unit values, Separate
Account reporting, including semiannual and annual reports and mailing and
tabulation of shareholder proxy solicitations.
You should refer to the Portfolio Prospectuses for a description of
deductions and expenses paid out of the assets of the Portfolios.
- ---------------------------------------------------
PREMIUM TAX CHARGE
A deduction is also made for Premium Tax, if applicable, imposed by a state
or other governmental entity. Certain states and municipalities impose a Premium
Tax. The range of premium taxes is currently 0% to 3.5%. Some states assess the
tax at the time purchase payments are made; others assess the tax at the time of
annuitization. Hartford will pay Premium Taxes to the applicable governmental
entity at the time imposed under applicable law and will deduct Premium Taxes at
such time.
- ---------------------------------------------------
FEDERAL TAX CHARGE
We deduct a current charge of 0.43% of each Premium Payment to cover the
estimated cost of the federal income tax treatment of the Certificates deferred
acquisition costs under Section 848 of the Code. This charge may be increased or
decreased to reflect changes in federal tax laws. Hartford includes the federal
tax charge as a factor when computing the maximum sales load chargeable under
Commission rules.
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ANNUITY BENEFITS
You select an Annuity Commencement Date and an annuity option which may be
on a fixed or variable basis, or a combination thereof. The Annuity Commencement
Date will not be deferred beyond the Annuitant's 90th birthday except for
certain states where deferral past age 85 is not permitted. The Annuity
Commencement Date may be changed from time to time, but any change must be at
least 30 days prior to the date on which annuity payments are scheduled to
begin. The Certificate allows the Certificate Owner to change the Divisions on
which variable payments are based after payments have commenced once every
quarter. Any fixed annuity allocation may not be changed, nor may a variable
allocation be reallocated to the General Account.
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ANNUITY OPTIONS
The Certificate contains the four optional annuity forms described below. If
you do not elect otherwise, payments in most states will automatically begin at
the
<PAGE>
14 HARTFORD LIFE INSURANCE COMPANY
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Annuitant's age 90 (with the exception of states that do not allow deferral past
age 85) under Option 3 (Joint Last Survivor Annuity).
Under any of the annuity options excluding Options 4 and 5, no surrenders
are permitted after annuity payments commence. Only full surrenders are allowed
out of Option 4.
OPTION 1 -- Life Annuity
An annuity payable monthly during the lifetime of the Annuitant and
terminating with the last payment preceding the death of the Annuitant. This
option offers the largest payment amount of any of the life annuity options
since there is no guarantee of a minimum number of payments nor a provision for
a Death Benefit payable to a Beneficiary.
It would be possible under this option for an Annuitant to receive only one
annuity payment if he died prior to the due date of the second annuity payment,
two if he died before the date of the third annuity payment, etc.
OPTION 2 -- Life annuity with 120, 180 or 240 Monthly Payments Certain
An annuity payable monthly during the lifetime of an Annuitant with the
provision that payments will be made for a minimum of 120, 180 or 240 months, as
elected. If, at the death of the Annuitant, payments have been made for less
than the minimum elected number of months, then the present value as of the date
of the Annuitant's death, of any remaining guaranteed payments will be paid in
one sum to the Beneficiary or Beneficiaries designated unless other provisions
have been made and approved by Hartford.
OPTION 3 -- Joint and Last Survivor Annuity
An annuity payable monthly during the joint lifetime of the Annuitant and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
Based on the options currently offered by Hartford, the Annuitant may elect that
the payment to the survivor be less than the payment made during the joint
lifetime of the Annuitant and a designated second person.
It would be possible under this option for an Annuitant and designated
second person to receive only one payment in the event of the common or
simultaneous death of the parties prior to the due date for the second payment
and so on.
OPTION 4 -- Payments for a Designated Period
An amount payable monthly for the number of years selected which may be from
5 to 30 years. Under this option, you may, at any time, surrender the
Certificate and receive, within seven days, the Surrender Value of the
Certificate as determined by Hartford.
In the event of the Annuitant's death prior to the end of the designated
period, the present value as of the date of the Annuitant's death, of any
remaining guaranteed payments will be paid in one sum to the Beneficiary or
Beneficiaries designated unless other provisions have been made and approved by
Hartford.
Option 4 is an option that does not involve life contingencies and thus no
mortality guarantee. Charges made for the mortality undertaking under the
Certificates thus provide no real benefit to a Certificate Owner.
Hartford may offer other annuity options from time to time.
- ---------------------------------------------------
THE ANNUITY UNIT AND VALUATION
The value of the Annuity Unit for each Division in the Separate Account for
any day is determined by multiplying the value for the preceding day by the
product of (1) the Experience Factor (See "Value of Accumulation Units,"
commencing on page 10) for the day for which the Annuity Unit value is being
calculated and (2) a factor to neutralize the assumed investment rate of 5.00%
per annum discussed below.
- ---------------------------------------------------
DETERMINATION OF PAYMENT AMOUNT
When annuity payments are to commence, the Investment Value is determined as
the product of the value of the Accumulation Unit of each Division on that same
day, and the number of Accumulation Units credited to each Division as of the
date the annuity is to commence.
The Certificate contains tables indicating the minimum dollar amount of the
first monthly payment under the optional forms of annuity for each $1,000 of
value of a Division under a Certificate. The first monthly payment varies
according to the form and type of annuity selected. The Certificate contains
annuity tables derived from the 1983a Individual Annuity Mortality Table with
ages set back one year and with an assumed investment rate ("A.I.R.") of 3% per
annum for the fixed annuity and 5% per annum for the variable annuity.
The total first monthly variable annuity payment is determined by
multiplying the value (expressed in thousands of dollars) of a Division (less
any applicable Premium Taxes) by the amount of the first monthly payment per
$1,000 of value obtained from the tables in the Certificates.
Fixed annuity payments are determined at annuitization by multiplying the
values allocated (less applicable Premium Taxes) by a rate to be determined by
Hartford
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 15
- --------------------------------------------------------------------------------
which is no less than the rate specified in the annuity tables in the
Certificate. The annuity payment will remain level for the duration of the
annuity.
The amount of the first monthly variable annuity payment, determined as
described above, is divided by the value of an Annuity Unit for the appropriate
Division no earlier than the close of business on the fifth Valuation Day
preceding the day on which the payment is due in order to determine the number
of Annuity Units represented by the first payment. This number of Annuity Units
remains fixed during the annuity payment period, and in each subsequent month
the dollar amount of the variable annuity payment is determined by multiplying
this fixed number of Annuity Units by the then current Annuity Unit value.
THE A.I.R. ASSUMED IN THE MORTALITY TABLES WOULD PRODUCE LEVEL VARIABLE
ANNUITY PAYMENTS IF THE INVESTMENT RATE REMAINED CONSTANT. IN FACT, PAYMENTS
WILL VARY UP OR DOWN AS THE INVESTMENT RATE VARIES UP OR DOWN FROM THE A.I.R.
The Annuity Unit value used in calculating the amount of the variable
annuity payments will be based on an Annuity Unit value determined as of the
close of business on a day no earlier than the fifth Valuation Day preceding the
date of the annuity payment.
- ---------------------------------------------------
FEDERAL TAX CONSIDERATIONS
What are some of the federal tax consequences which affect these
Certificates?
- ---------------------------------------------------
A. GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING
TO THE ACTUAL STATUS OF THE CERTIFICATE OWNER INVOLVED, LEGAL AND TAX ADVICE MAY
BE NEEDED BY A PERSON, TRUSTEE OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A
CERTIFICATE DESCRIBED HEREIN.
It should be understood that any detailed description of the federal income
tax consequences regarding the purchase of these Certificates cannot be made in
this Prospectus and that special tax rules may be applicable with respect to
certain purchase situations not discussed herein. In addition, no attempt is
made here to consider any applicable state or other tax laws. For detailed
information, a qualified tax adviser should always be consulted. This discussion
is based on Hartford Life's understanding of existing federal income tax laws as
they are currently interpreted.
- ---------------------------------------------------
B. TAXATION OF HARTFORD
AND THE SEPARATE ACCOUNT
The Separate Account is taxed as part of Hartford Life which is taxed as a
life insurance company in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Separate Account will not be taxed as a
"regulated investment company" under subchapter M of Chapter 1 of the Code.
Investment income and any realized capital gains on the assets of the Separate
Account are reinvested and are taken into account in determining the value of
the Accumulation and Annuity Units (See "Value of Accumulation Units" commencing
on page 11). As a result, such investment income and realized capital gains are
automatically applied to increase reserves under the Certificate.
No taxes are due on interest, dividends and short-term or long-term capital
gains earned by the Separate Account with respect to the Certificates.
- ---------------------------------------------------
C. TAXATION OF ANNUITIES -- GENERAL
PROVISIONS AFFECTING PURCHASERS
Section 72 of the Code governs the taxation of annuities in general.
1. NON-NATURAL PERSONS, CORPORATIONS, ETC.
Section 72 contains provisions for Certificate Owners which are non-natural
persons. Non-natural persons include corporations, trusts, and partnerships. The
annual net increase in the value of the Certificate is currently includable in
the gross income of a non-natural person unless the non-natural person holds the
Certificate as an agent for a natural person. There is an exception from current
inclusion for certain annuities held by structured settlement companies, certain
annuities held by an employer with respect to a terminated qualified retirement
plan and certain immediate annuities. A non-natural person which is a tax-exempt
entity for federal tax purposes will not be subject to income tax as a result of
this provision.
If the Certificate Owner is not an individual, the primary Annuitant shall
be treated as the Certificate Owner for purposes of making distributions which
are required to be made upon the death of the Certificate Owner. If there is a
change in the primary Annuitant, such change shall be treated as the death of
the Certificate Owner.
2. OTHER CERTIFICATE OWNERS (NATURAL PERSONS).
A Certificate Owner is not taxed on increases in the value of the
Certificate until an amount is received or deemed received, e.g., in the form of
a lump sum payment (full or partial value of a Certificate) or as Annuity
payments under the settlement option elected.
<PAGE>
16 HARTFORD LIFE INSURANCE COMPANY
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The provisions of Section 72 of the Code concerning distributions are
summarized briefly below. Also summarized are special rules affecting
distributions from Certificates obtained in a tax-free exchange for other
annuity contract or life insurance contract which were purchased prior to August
14, 1982.
A. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
i. Total premium payments less amounts received which were not includable in
gross income equal the "investment in the contract" under Section 72 of the
Code.
ii. To the extent that the value of the Certificate (ignoring any surrender
charges except on a full surrender) exceeds the "investment in the
contract," such excess constitutes the "income on the contract."
iii. Any amount received or deemed received prior to the Annuity Commencement
Date (e.g., upon a partial surrender) is deemed to come first from any such
"income on the contract" and then from "investment in the contract," and for
these purposes such "income on the contract" shall be computed by reference
to any aggregation rule in subparagraph 2.c. below. As a result, any such
amount received or deemed received (1) shall be includable in gross income
to the extent that such amount does not exceed any such "income on the
contract," and (2) shall not be includable in gross income to the extent
that such amount does exceed any such "income on the contract." If at the
time that any amount is received or deemed received there is no "income on
the contract" (e.g., because the gross value of the Certificate does not
exceed the "investment in the contract" and no aggregation rule applies),
then such amount received or deemed received will not be includable in gross
income, and will simply reduce the "investment in the contract."
iv. The receipt of any amount as a loan under the Certificate or the assignment
or pledge of any portion of the value of the Certificate shall be treated as
an amount received for purposes of this subparagraph a. and the next
subparagraph b.
v. In general, the transfer of the Certificate, without full and adequate
consideration, will be treated as an amount received for purposes of this
subparagraph a. and the next subparagraph b. This transfer rule does not
apply, however, to certain transfers of property between spouses or incident
to divorce.
B. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE.
Annuity payments made periodically after the Annuity Commencement Date are
includable in gross income to the extent the payments exceed the amount
determined by the application of the ratio of the "investment in the contract"
to the total amount of the payments to be made after the Annuity Commencement
Date (the "exclusion ratio").
i. When the total of amounts excluded from income by application of the
exclusion ratio is equal to the investment in the contract as of the Annuity
Commencement Date, any additional payments (including surrenders) will be
entirely includable in gross income.
ii. If the annuity payments cease by reason of the death of the Annuitant and,
as of the date of death, the amount of annuity payments excluded from gross
income by the exclusion ratio does not exceed the investment in the contract
as of the Annuity Commencement Date, then the remaining portion of
unrecovered investment shall be allowed as a deduction for the last taxable
year of the Annuitant.
iii. Generally, nonperiodic amounts received or deemed received after the
Annuity Commencement Date are not entitled to any exclusion ratio and shall
be fully includable in gross income. However, upon a full surrender after
such date, only the excess of the amount received (after any surrender
charge) over the remaining "investment in the contract" shall be includable
in gross income (except to the extent that the aggregation rule referred to
in the next subparagraph c. may apply).
C. AGGREGATION OF TWO OR MORE ANNUITY CERTIFICATES.
Certificates issued after October 21, 1988 by the same insurer (or
affiliated insurer) to the same Certificate Owner within the same calendar year
(other than certain contract held in connection with a tax-qualified retirement
arrangement) will be treated as one annuity contract for the purpose of
determining the taxation of distributions prior to the Annuity Commencement
Date. An annuity contract received in a tax-free exchange for another annuity
contract or life insurance contract may be treated as a new contract for this
purpose. Hartford Life believes that for any annuity subject to such
aggregation, the values under the contract and the investment in the contract
will be added together to determine the taxation under subparagraph 2.a., above,
of amounts received or deemed received prior to the Annuity Commencement Date.
Withdrawals will first be treated as withdrawals of income until all of the
income from all such contract is withdrawn. As of the date of this Prospectus,
there are no regulations interpreting this provision.
D. 10% PENALTY TAX -- APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY PAYMENTS.
i. If any amount is received or deemed received on the Certificate (before or
after the Annuity Commencement Date), the Code applies a penalty tax equal
to ten percent of the portion of the amount includable in gross income,
unless an exception applies.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 17
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ii. The 10% penalty tax will not apply to the following distributions
(exceptions vary based upon the precise plan involved):
1. Distributions made on or after the date the recipient has attained the
age of 59 1/2.
2. Distributions made on or after the death of the holder or where the
holder is not an individual, the death of the primary annuitant.
3. Distributions attributable to a recipient's becoming disabled.
4. A distribution that is part of a scheduled series of substantially equal
periodic payments for the life (or life expectancy) of the recipient (or
the joint lives or life expectancies of the recipient and the
recipient's Beneficiary).
5. Distributions of amounts which are allocable to the "investment in the
contract" prior to August 14, 1982 (see next subparagraph e.).
E. SPECIAL PROVISIONS AFFECTING CERTIFICATES OBTAINED THROUGH A TAX-FREE
EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CERTIFICATES PURCHASED PRIOR
TO AUGUST 14, 1982.
If the Certificate was obtained by a tax-free exchange of a life insurance
or annuity contract purchased prior to August 14, 1982, then any amount received
or deemed received prior to the Annuity Commencement Date shall be deemed to
come (1) first from the amount of the "investment in the contract" prior to
August 14, 1982 ("pre-8/14/82 investment") carried over from the prior contract,
(2) then from the portion of the "income on the contract" (carried over to, as
well as accumulating in, the successor Certificate) that is attributable to such
pre-8/14/82 investment, (3) then from the remaining "income on the contract" and
(4) last from the remaining "investment in the contract." As a result, to the
extent that such amount received or deemed received does not exceed such
pre-8/14/82 investment, such amount is not includable in gross income., In
addition, to the extent that such amount received or deemed received does not
exceed the sum of (a) such pre-8/14/82 investment and (b) the "income on the
contract" attributable thereto, such amount is not subject to the 10% penalty
tax. In all other respects, amounts received or deemed received from such post-
exchange contracts are generally subject to the rules described in this
subparagraph 3.
F. REQUIRED DISTRIBUTIONS
i. Death of Certificate Owner or Primary Annuitant
Subject to the alternative election or spouse beneficiary provisions in ii
or iii below:
1. If any Certificate Owner dies on or after the Annuity Commencement Date
and before the entire interest in the Certificate has been distributed,
the remaining portion of such interest shall be distributed at least as
rapidly as under the method of distribution being used as of the date of
such death;
2. If any Certificate Owner dies before the Annuity Commencement Date, the
entire interest in the Certificate will be distributed within 5 years
after such death; and
3. If the Certificate Owner is not an individual, then for purposes of 1.
or 2. above, the primary annuitant under the Certificate shall be
treated as the Certificate Owner, and any change in the primary
annuitant shall be treated as the death of the Certificate Owner. The
primary annuitant is the individual, the events in the life of whom are
of primary importance in affecting the timing or amount of the payout
under the Certificate.
ii. Alternative Election to Satisfy Distribution Requirements
If any portion of the interest of a Certificate Owner described in i. above
is payable to or for the benefit of a designated beneficiary, such
beneficiary may elect to have the portion distributed over a period that
does not extend beyond the life or life expectancy of the beneficiary. The
election and payments must begin within a year of the death.
iii. Spouse Beneficiary
If any portion of the interest of a Certificate Owner is payable to or for
the benefit of his or her spouse, and the Annuitant or Contingent Annuitant
is living, such spouse shall be treated as the Certificate Owner of such
portion for purposes of section i. above.
3. DIVERSIFICATION REQUIREMENTS.
Section 817 of the Code provides that a variable annuity contract will not
be treated as an annuity contract for any period during which the investments
made by the separate account or underlying fund are not adequately diversified
in accordance with regulations prescribed by the Treasury Department. If a
Certificate is not treated as an annuity contract, the Certificate Owner will be
subject to income tax on the annual increases in cash value.
The Treasury Department has issued diversification regulations which
generally require, among other things, that no more than 55% of the value of the
total assets of the segregated asset account underlying a variable contract is
represented by any one investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three investments, and no
more than
<PAGE>
18 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
90% is represented by any four investments. In determining whether the
diversification standards are met, all securities of the same issuer, all
interests in the same real property project, and all interests in the same
commodity are each treated as a single investment. In addition, in the case of
government securities, each government agency or instrumentality shall be
treated as a separate issuer.
A separate account must be in compliance with the diversification standards
on the last day of each calendar quarter or within 30 days after the quarter
ends. If an insurance company inadvertently fails to meet the diversification
requirements, the company may comply within a reasonable period and avoid the
taxation of contract income on an ongoing basis. However, either the company or
the Certificate Owner must agree to pay the tax due for the period during which
the diversification requirements were not met.
Hartford Life monitors the diversification of investments in the separate
accounts and tests for diversification as required by the Code. Hartford Life
intends to administer all contracts subject to the diversification requirements
in a manner that will maintain adequate diversification.
4. OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT.
In order for a variable annuity contract to qualify for tax deferral, assets
in the segregated asset accounts supporting the variable contract must be
considered to be owned by the insurance company and not by the variable contract
owner. The Internal Revenue Service ("IRS") has issued several rulings which
discuss investor control. The IRS has ruled that incidents of ownership by the
Certificate Owner, such as the ability to select and control investments in a
separate account, will cause the Certificate Owner to be treated as the owner of
the assets for tax purposes.
Further, in the explanation to the temporary Section 817 diversification
regulations, the Treasury Department noted that the temporary regulations "do
not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset account may cause the investor, rather
than the insurance company, to be treated as the owner of the assets in the
account." The explanation further indicates that "the temporary regulations
provide that in appropriate cases a segregated asset account may include
multiple sub-accounts, but do not specify the extent to which policyholders may
direct their investments to particular sub-accounts without being treated as the
owners of the underlying assets. Guidance on this and other issues will be
provided in regulations or revenue rulings under Section 817(d), relating to the
definition of variable contract." The final regulations issued under Section 817
did not provide guidance regarding investor control, and as of the date of this
prospectus, no other such guidance has been issued. Further, Hartford Life does
not know if or in what form such guidance will be issued. In addition, although
regulations are generally issued with prospective effect, it is possible that
regulations may be issued with retroactive effect. Due to the lack of specific
guidance regarding the issue of investor control, there is necessarily some
uncertainty regarding whether a Certificate Owner could be considered the owner
of the assets for tax purposes. Hartford Life reserves the right to modify the
Certificates, as necessary, to prevent Certificate Owners from being considered
the owners of the assets in the separate accounts.
- ---------------------------------------------------
D. FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient will
be subject to federal income tax withholding, pursuant to Section 3405 of the
Code. The application of this provision is summarized below:
1. NON-PERIODIC DISTRIBUTIONS.
The portion of a non-periodic distribution which constitutes taxable income
will be subject to federal income tax withholding unless the recipient elects
not to have taxes withheld. If an election not to have taxes withheld is not
provided, 10% of the taxable distribution will be withheld as federal income
tax. Election forms will be provided at the time distributions are requested. If
the necessary election forms are not submitted to Hartford Life, Hartford Life
will automatically withhold 10% of the taxable distribution.
2. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN ONE
YEAR).
The portion of a periodic distribution which constitutes taxable income will
be subject to federal income tax withholding as if the recipient were married
claiming three exemptions. A recipient may elect not to have income taxes
withheld or have income taxes withheld at a different rate by providing a
completed election form. Election forms will be provided at the time
distributions are requested.
- ---------------------------------------------------
E. ANNUITY PURCHASES BY NONRESIDENT
ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal
income tax consequences to annuity purchasers that are U.S. citizens or
residents. Purchasers not U.S. citizens or residents will generally be subject
to U.S. federal income tax and withholding on annuity distributions at a 30%
rate, unless a lower treaty rate applies. In addition, purchasers may be subject
to state premium tax, other state and/or municipal taxes, and taxes that may be
imposed by the purchaser's country of citizenship or residence. Prospective
purchasers are advised to consult with a qualified tax adviser regarding U.S.,
state, and foreign taxation with respect to an annuity purchase.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 19
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- ---------------------------------------------------
GENERAL MATTERS
- -------------------------------- ASSIGNMENT
Benefits under a Certificate described herein are assignable by the
Certificate Owner only if Hartford agrees. An assignment of a Certificate may
subject the assignment proceeds to income taxes and certain penalty taxes. (See
"Taxation of Annuities -- General Provisions Affecting Purchasers," page 15.)
- ---------------------------------------------------
MODIFICATION
Hartford reserves the right to modify the Certificate, but only if such
modification (i) is necessary to make the Certificate or the Separate Account
comply with any law or regulation issued by a governmental agency to which
Hartford is subject; or (ii) is necessary to assure continued tax advantages for
the Certificate under the Code or other federal or state laws; or (iii) is
necessary to reflect a change in the operation of the Separate Account or the
Division(s) or (iv) provides additional Separate Account options or (v)
withdraws Separate Account options. In the event of any such modification,
Hartford will provide notice to the Certificate Owner or to the payee(s) during
the annuity period. Hartford may also make appropriate endorsement in the
Certificate to reflect such modification.
- ---------------------------------------------------
MISSTATEMENT OF AGE
If the age of the Annuitant has been misstated, the amount of the annuity
payable by Hartford will be that provided by that portion of the amounts
allocated to effect such annuity on the basis of the corrected information
without changing the date of the first payment of such annuity. Any
underpayments by Hartford shall be made up immediately and any overpayments
shall be charged against future amounts becoming payable.
- ---------------------------------------------------
DELAY OF PAYMENTS
There may be postponement of a surrender payment or Death Benefit whenever
(a) the New York Stock Exchange is closed, except for holidays or weekends, or
trading on the New York Stock Exchange is restricted as determined by the
Commission; (b) the Commission permits postponement and so orders; or (c) the
Commission determines that an emergency exists making valuation or disposal of
securities not reasonably practicable.
- ---------------------------------------------------
VOTING RIGHTS
Hartford will notify you of any Portfolio shareholders' meeting if the
shares held for your account may be voted at such meetings. Hartford will also
send proxy materials and a form of instruction by means of which you can
instruct Hartford with respect to the voting of the Portfolio shares held for
your account.
In connection with the voting of Portfolio shares held by it, Hartford will
arrange for the handling and tallying of voting instructions received from
Certificate Owners. Hartford as such, shall have no right, except as hereinafter
provided, to vote any Portfolio shares held by it hereunder which may be
registered in its name or the names of its nominees. Hartford will, however,
vote the Portfolio shares held by it in accordance with the instructions
received from the Certificate Owners for whose accounts the Portfolio shares are
held. If a Certificate Owner desires to attend any meeting at which shares held
for the Certificate Owner's benefit may be voted, the Certificate Owner may
request Hartford to furnish a proxy or otherwise arrange for the exercise of
voting rights with respect to the Portfolio shares held for such Certificate
Owner's account. In the event that the Certificate Owner gives no instructions
or leaves the manner of voting discretionary, Hartford will vote such shares of
the appropriate Portfolio in the same proportion as shares of that Portfolio for
which instructions have been received. During the annuity period under a
Certificate the number of votes will decrease as the assets held to fund annuity
benefits decrease.
- ---------------------------------------------------
EXPERIENCE CREDIT
The Certificates issued under a corporate-sponsored plan may be eligible for
experience credits due to administrative savings. The amount of any experience
credit may be paid in cash or applied to and used to increase Investment Value.
- ---------------------------------------------------
DISTRIBUTION OF THE CERTIFICATES
The securities will be sold by insurance and variable annuity agents of
Hartford who are either registered representatives of Hartford Equity Sales
Company, Inc., a wholly-owned broker-dealer subsidiary of Hartford, or of
independent broker-dealers. These broker-dealers are registered with the
Commission under the Securities Exchange Act of 1934 as a broker-dealer and are
members of the National Association of Securities Dealers, Inc.
Commissions will be paid by Hartford and will not be more than 4.6% of
Premium Payments.
From time to time, Hartford may pay or permit other promotional incentives,
in cash or credit or other compensation.
- ---------------------------------------------------
CUSTODIAN OF SEPARATE ACCOUNT ASSETS
The assets of the Separate Account are held by Hartford under a safekeeping
arrangement.
<PAGE>
20 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- ---------------------------------------------------
LEGAL PROCEEDINGS
There are no material legal proceedings pending to which the Separate
Account is a party.
- ---------------------------------------------------
LEGAL COUNSEL
Counsel with respect to Federal laws and regulations applicable to the issue
and sale of the Contracts and with respect to Connecticut law is Lynda Godkin,
General Counsel and Secretary, Hartford Life Insurance Companies, P.O. Box 2999,
Hartford, Connecticut 06104-2999.
- ---------------------------------------------------
EXPERTS
The audited consolidated financial statements and financial statement
schedules included in this Prospectus and elsewhere in the registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports. Reference is made to said report on the consolidated financial
statements of Hartford Life Insurance Company (the Depositor), which includes an
explanatory paragraph with respect to the change in method of accounting for
debt and equity securities as of January 1, 1994, as discussed in Note 2 of
Notes to Consolidated Financial Statements. The principal business address of
Arthur Andersen LLP is One Financial Plaza, Hartford, Connecticut 06103.
- ---------------------------------------------------
ADDITIONAL INFORMATION
Inquiries will be answered by calling your representative or by writing:
ICMG
Attn: Group Annuity Operations
100 Campus Drive, Suite 250
Florham Park, NJ 07932.
Telephone: 800-861-1408
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 21
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- --------------------------------------------------------------------------------
TABLE OF CONTENTS
TO
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
SECTION PAGE
------------------------------------------------------------------------ ----
<S> <C>
INTRODUCTION............................................................
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY..........................
SAFEKEEPING OF ASSETS...................................................
INDEPENDENT PUBLIC ACCOUNTANTS..........................................
DISTRIBUTION OF CERTIFICATES............................................
ANNUITY/PAYOUT PERIOD...................................................
Annuity Payments......................................................
The Annuity Unit and Valuation........................................
Determination of Payment Amount.......................................
CALCULATION OF YIELD AND RETURN.........................................
PERFORMANCE COMPARISONS.................................................
FINANCIAL STATEMENTS....................................................
</TABLE>
<PAGE>
To Obtain a Statement of
Additional Information, please
complete the form below and mail to:
ICMG
Attn: Group Annuity Operations
100 Campus Drive, Suite 250
Florham Park, NJ 07932
Please send a Statement of
Additional Information for ICMG
Secular Trust Separate Account to me
at the following address:
- ----------------------------------------------------
Name
- ----------------------------------------
Street
- ----------------------------------------
City/State Zip
Code
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
HARTFORD LIFE INSURANCE COMPANY -
ICMG SECULAR TRUST SEPARATE ACCOUNT
This Statement of Additional Information is not a Prospectus. The information
contained herein should be read in conjunction with the Prospectus.
To obtain a Prospectus, send a written request to International Corporate
Marketing Group, Attn: Group Annuity Operations, 100 Campus Drive, Suite
250, Florham Park, NJ 07932.
Date of Prospectus: May 1, 1997
Date of Statement of Additional Information: May 1, 1997
<PAGE>
-2-
TABLE OF CONTENTS
SECTION PAGE NO.
- ------- --------
INTRODUCTION.................................................
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY...............
SAFEKEEPING OF ASSETS........................................
INDEPENDENT PUBLIC ACCOUNTANTS ..............................
DISTRIBUTION OF CERTIFICATES.................................
ANNUITY/PAYOUT PERIOD........................................
Annuity Payments..........................................
The Annuity Unit and Valuation............................
Determination of Payment Amount...........................
CALCULATION OF YIELD AND RETURN .............................
PERFORMANCE COMPARISONS......................................
FINANCIAL STATEMENTS.........................................
<PAGE>
-3-
INTRODUCTION
The Group Flexible Premium Deferred Variable Annuity Individually Allocated
Certificates ("Certificates") described in the prospectus are offered to
employee-participants of nonqualified deferred compensation and supplemental
executive retirement plans.
The Premium Payments under a Certificate, less any applicable Premium Taxes
and federal taxes imposed under Section 848 of the Code, will be applied to
the Separate Account. Accordingly, the net Premium Payment under the
Certificate will be applied to purchase interests in one or more of the
following twelve Divisions: HVA Money Market Fund, Inc., Hartford Bond Fund,
Inc. and Hartford Capital Appreciation Fund, Inc., sponsored by Hartford Life
Insurance Company ("Hartford"); the Partners Portfolio, Balanced Portfolio
and Limited Maturity Bond Portfolio of Neuberger & Berman Advisers Management
Trust; the VIP Equity-Income Portfolio and VIP High Income Portfolio of
Fidelity Variable Insurance Products Fund; the VIP II Asset Manager Portfolio
of Fidelity Variable Insurance Products Fund II; and the Alger American Small
Capitalization Portfolio and Alger American Growth Portfolio of the Alger
American Fund.
Shares of the Portfolios are purchased by the Separate Account without the
imposition of any additional sales charge. The value of a Certificate
depends on the value of the shares of the Portfolio held by the Separate
Account pursuant to that Certificate. As a result, the Certificate Owner
bears the investment risk since market value of the shares may increase or
decrease.
The Certificates provide that in the event the Annuitant dies before the
selected Annuity Commencement Date, the Contingent Annuitant will become the
Annuitant. If the Annuitant dies before the Annuity Commencement Date and
there is no designated Contingent Annuitant, or the Contingent Annuitant
predeceases the Annuitant, or if the Certificate Owner dies before the
Annuity Commencement Date, the Beneficiary will receive the Certificate Value
determined on the date of receipt of due proof of death by Hartford in its
Home Office. However, if, upon death prior to the Annuity Commencement Date,
the Annuitant or Certificate Owner, as applicable, had not attained his 85th
birthday, the Beneficiary will receive the greater of (a) the Investment
Value as determined on the date of receipt of due proof of death acceptable
to Hartford and received in its Customer Service Center, or (b) 100% of the
all Premium Payments made by the Certificate Owner under the Certificate,
reduced by the amount of any partial withdrawals since the Certificate Date.
If the Annuitant or Certificate Owner had attained age 85 prior to death, the
Death Benefit will be equal to the Investment Value.
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY
Hartford Life Insurance Company ("Hartford") is a stock life insurance
company engaged in the business of writing health and life insurance, both
individual and group, in all states of the United States and the District of
Columbia. Hartford was originally incorporated under the laws of
Massachusetts on June 5, 1902, and was subsequently redomiciled to
Connecticut. Its offices are located in Simsbury, Connecticut; however, its
mailing address is P.O. Box 2999, Hartford, CT 06104-2999. Hartford is a
subsidiary of Hartford Fire Insurance Company, one
<PAGE>
-4-
of the largest multiple lines insurance carriers in the United States.
Hartford is ultimately owned by ITT Hartford Group, Inc., a Delaware
corporation. Subject to shareholder approval on May 2, 1997, the name of
ITT Hartford Group, Inc. will change to The Hartford Financial Services
Group, Inc.
Hartford is rated A+ (superior) by A.M. Best and Company, Inc., on the basis
of its financial soundness and operating performance. Hartford is rated AA
by Standard & Poor's and AA+ by Duff and Phelps on the basis of its claims
paying ability. These ratings do not apply to the investment performance of
the Sub-Accounts of the Separate Account. The ratings apply to Hartford's
ability to meet its insurance obligations, including those described in this
Prospectus.
SAFEKEEPING OF ASSETS
Title to the assets of the Separate Account is held by Hartford. The assets
are kept physically segregated and are held separate and apart from
Hartford's general corporate assets. Records are maintained of all purchases
and redemptions of Fund shares held in each of the Sub-Accounts.
INDEPENDENT PUBLIC ACCOUNTANTS
The audited consolidated financial statements and financial statement
schedules included in this Statement of Additional Information and elsewhere
in the registration statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm
as experts in giving said reports. Reference is made to said report on the
consolidated financial statements of Hartford Life Insurance Company (the
Depositor), which includes an explanatory paragraph with respect to the
change in method of accounting for debt and equity securities as of January
1, 1994, as discussed in Note 2 of Notes to Consolidated Financial
Statements. The principal business address of Arthur Andersen LLP is One
Financial Plaza, Hartford, Connecticut 06103.
DISTRIBUTION OF CERTIFICATES
Hartford Equity Sales, Inc. ("HESCO") serves as Principal Underwriter for
the securities issued with respect to the Separate Account. HESCO is a
wholly-owned subsidiary of Hartford.
<PAGE>
-5-
The securities will be sold by insurance and Variable Annuity agents of
Hartford who are registered representatives of HESCO or independent
Broker-Dealers. These Broker-Dealers are registered with the Commission
under the Securities Exchange Act of 1934 as Broker-Dealers and are members
of the National Association of Securities Dealers, Inc.
The offering of the Separate Account Certificates is continuous.
ANNUITY/PAYOUT PERIOD
ANNUITY PAYMENTS
Variable Annuity payments are determined on the basis of (1) a mortality
table set forth in the Certificate and the type of Annuity payment option
selected, and (2) the investment performance of the investment medium
selected. Fixed Annuity payments are based on the Annuity tables contained
in the Certificate, and will remain level for the duration of the Annuity.
The amount of the Annuity payments will not be affected by adverse mortality
experience or by an increase in expenses in excess of the expense deduction
for which provision has been made (see "Mortality and Expense Risk Charge,"
page __ of the prospectus).
For a Variable Annuity, the Annuitant will be paid the value of a fixed
number of Annuity Units each month. The value of such units and the amounts
of the monthly Variable Annuity payments will, however, reflect investment
income occurring after retirement, and thus the Variable Annuity payments
will vary with the investment experience of the Portfolio shares selected.
THE ANNUITY UNIT AND VALUATION
The value of the Annuity Unit for each Division in the Separate Account for
any day is determined by multiplying the value for the preceding day by the
product of (1) the Experience Factor (see "Valuation of Accumulation Units,"
commencing on page __) for the day for which the Annuity Unit value is
being calculated, and (2) a factor to neutralize the assumed investment rate
discussed below.
ILLUSTRATION OF CALCULATION OF ANNUITY UNIT VALUE
1. Net Investment Factor for period . . . . . . . . . . . . . . . . 1.011225
2. Adjustment for 4% Assumed Investment Rate . . . . . . . . . . . .999892
3. 2x1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.011116
4. Annuity Unit value, beginning of period . . . . . . . . . . . . . .995995
5. Annuity Unit value, end of period (3x4) . . . . . . . . . . . . . 1.007066
<PAGE>
-6-
CALCULATION OF YIELD AND RETURN
YIELD OF THE HVA MONEY MARKET FUND, INC. As summarized in the Prospectus
under the heading "Performance Related Information," the yield of the HVA
Money Market Fund, Inc. for a seven-day period (the "base period") will be
computed by determining the "net change in value" of a hypothetical account
having a balance of one unit at the beginning of the period, dividing the net
change in account value by the value of the account at the beginning of the
base period to obtain the base period return, and multiplying the base period
return by 365/7 with the resulting yield figure carried to the nearest
hundredth of one percent. Net changes in value of a hypothetical account
will include net investment income of the account (accrued dividends as
declared by the underlying funds, less expense and Certificate charges of the
account) for the period, but will not include realized gains or losses or
unrealized appreciation or depreciation on the underlying fund shares.
The effective yield is calculated by compounding the base period return by
adding 1, raising the sum to a power equal to 365/7 and subtracting 1 from
the result, according to the following formula:
Effective Yield = [(Base Period Return + 1) (365/7)] - 1
The HVA Money Market Fund, Inc.'s yield and effective yield will vary in
response to fluctuations in interest rates and in the expenses of the
Division.
The Hartford Bond Fund, Inc. and Limited Maturity Bond Portfolio may
advertise yield in addition to total return. The yield will be computed in
the following manner: The net investment income per unit earned during a
recent one month period is divided by the unit value on the first day of the
period. This figure reflects the recurring charges at the Separate Account
level.
CALCULATION OF TOTAL RETURN. As summarized in the Prospectus under the
heading "Performance Related Information", total return is a measure of the
change in value of an investment in a Division over the period covered. The
formula for total return used herein includes three steps: (1) calculating
the value of the hypothetical initial investment of $1,000 as of the end of
the period by multiplying the total number of units owned at the end of the
period by the unit value per unit on the last trading day of the period; (2)
assuming redemption at the end of the period and deducting any applicable
contingent deferred sales charge and (3) dividing this account value for the
hypothetical investor by the initial $1,000 investment and annualizing the
result for periods of less than one year. Total return will be calculated
for one year, five years, and ten years or some other relevant periods if a
Division has not been in existence for at least ten years.
<PAGE>
-7-
At any time in the future, yields and total return may be higher or lower
than past yields and there can be no assurance that any historical results
will continue.
PERFORMANCE COMPARISONS
YIELD AND TOTAL RETURN. The total return and yield may also be used to
compare the performance of the Divisions against certain widely acknowledged
outside standards or indices for stock and bond market performance. Index
performance is not representative of the performance of the Division to which
it is compared and is not adjusted for commissions and other costs.
Portfolio holdings of the Division will differ from those of the index to
which it is compared. Performance comparison indices include the following:
The Consumer Price Index, prepared by the U.S. Bureau of Labor Statistics, is
a commonly used measure of the rate of inflation. The index shows the average
change in the cost of selected consumer goods and services and does not
represent a return on an investment vehicle.
The Dow Jones Industrial Average is an unmanaged list of 30 common stocks
frequently used as a general measure of stock market performance. Its
performance figures reflect changes of market prices and reinvestment of all
distributions.
Lehman Brothers Corporate Bond Index is an unmanaged list of publicly issued,
fixed-rate, non-convertible investment-grade domestic corporate debt
securities frequently used as a general measure of the performance of
fixed-income securities. The average quality of bonds included in the index
may be higher than the average quality of those bonds in which High Yield
Fund customarily invests. The index does not include bonds in certain of the
lower rating classifications in which the Fund may invest. The performance
figures of the index reflect changes in market prices and reinvestment of all
interest payments.
The Lehman Brothers Government Bond Index (the "SL Government Index") is a
measure of the market value of all public obligations of the U.S. Treasury;
all publicly issued debt of all agencies of the U.S. Government and all
quasi-federal corporations; and all corporate debt guaranteed by the U.S.
Government. Mortgage-backed securities, flower bonds and foreign targeted
issues are not included in the SL Government Index.
The Lehman Brothers Government/Corporate Bond Index (the "SL
Government/Corporate Index") is a measure of the market value of
approximately 5,300 bonds with a face value currently in excess of $1.3
trillion. To be included in the SL Government/Corporate Index, an issue must
have amounts outstanding in excess of $1 million, have at least one year to
maturity and be rated "Baa" or higher ("investment grade") by a nationally
recognized rating agency. The index does not include bonds in certain of the
lower-rating classifications in which High Yield Fund invests. Its
performance figures reflect changes in market prices and reinvestment of all
interest payments.
<PAGE>
-8-
Morgan Stanley Capital International World Index is an unmanaged list of
approximately 1,450 equity securities listed on the stock exchanges of the
United States, Europe, Canada, Australia, New Zealand and the Far East, with
all values expressed in U.S. dollars. Performance figures reflect changes in
market prices and reinvestment of distributions net of withholding taxes.
The securities in the index change over time to maintain representativeness.
The NASDAQ-OTC Industrial Average (The "NASDAQ Index") is a market
value-weighted and unmanaged index showing the changes in the aggregate
market value of approximately 3,500 stocks relative to the base measure of
100.00 on February 5, 1971. The NASDAQ Index is composed entirely of common
stocks of companies traded over-the-counter and often through the National
Association of Securities Dealers Automated Quotations ("NASDAQ") system.
Only those over-the-counter stocks having only one market maker or traded on
exchanges are excluded. Its performance figures reflect changes of market
prices but do not reflect reinvestment of cash dividends.
Salomon Brothers Long-Term High-Grade Corporate Bond Index is an unmanaged
list of publicly traded corporate bonds having a rating of at least AA by
Standard & Poor's or Aa by Moody's and is frequently used as general measure
of the performance of fixed-income securities. The average quality of bonds
included in the index may be higher than the average quality of those bonds
in which a Fund may customarily invests. The index does not include bonds in
certain of the lower rating classifications in which the Fund may invest.
Performance figures for the index reflect changes of market prices and
reinvestment of all distributions.
The Salomon Brothers 7-10 Year Government Bond Index is an unmanaged list of
U.S. Government and government agency securities with maturities of 7 to 10
years. Performance figures for the index reflect changes of market prices
and reinvestment of all interest payments.
The Standard & Poor's Composite Index of 500 stocks (the "S&P 500") a market
value-weighted and unmanaged index showing changes in the aggregate market
value of 500 stocks relative to the base period 1941-43. The S&P 500 is
composed almost entirely of common stocks of companies listed on the New York
Stock Exchange, although the common stocks of a few companies listed on the
American Stock Exchange or traded over-the-counter are included. The 500
companies represented include 400 industrial, 60 transportation and 40
financial services concerns. The S&P 500 represents about 80% of the market
value of all issues traded on the New York Stock Exchange. Its performance
figures reflect changes of market prices and reinvestment of all regular cash
dividends.
The Standard & Poor's 40 Utilities Index is unmanaged list of 40 utility
stocks. The Index assumes reinvestment of all distributions and reflects
changes in market prices but does not take into account brokerage commissions
or other fees.
The manner in which total return and yield will be calculated for public use
is described above.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
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, 1996 and 1995, 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, 1996. These consolidated financial statements and the
schedules referred to below are the responsibility of Hartford Life Insurance
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the 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, 1996 and
1995, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles.
As discussed in Note 2 of Notes to Consolidated Financial Statements, Hartford
Life Insurance Company adopted a new accounting standard promulgated by the
Financial Accounting Standards Board, changing its method of accounting, as of
January 1, 1994, for debt and equity securities.
Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedules listed in the
Index to Consolidated Financial Statements and Schedules are presented for
purposes of complying with the Securities and Exchange Commission's rules and
are not a required part of the basic consolidated financial statements. These
schedules have been subjected to the auditing procedures applied in the audits
of the basic consolidated financial statements and, in our opinion, fairly state
in all material respects the financial data required to be set forth therein in
relation to the basic consolidated financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 10, 1997
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
------------------------
1996 1995 1994
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Premiums and other considerations............... $1,705 $1,487 $1,100
Net investment income........................... 1,397 1,328 1,292
Net realized capital (losses) gains............. (213) (11) 7
------ ------ ------
Total Revenues................................ 2,889 2,804 2,399
------ ------ ------
Benefits, Claims and Expenses
Benefits, claims and claim adjustment
expenses....................................... 1,535 1,422 1,405
Amortization of deferred policy acquisition
costs.......................................... 234 199 145
Dividends to policyholders...................... 635 675 419
Other insurance expenses........................ 427 317 227
------ ------ ------
Total Benefits, Claims and Expenses........... 2,831 2,613 2,196
------ ------ ------
Income before income tax expense................ 58 191 203
Income tax expense.............................. 20 62 65
------ ------ ------
Net income........................................ $ 38 $ 129 $ 138
------ ------ ------
------ ------ ------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of the above statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER
31,
-----------------
1996 1995
------- -------
<S> <C> <C>
(IN MILLIONS
EXCEPT SHARE
DATA)
Assets
Investments
Fixed maturities, available for sale, at fair
value (amortized cost $13,579 and $14,440)..... $13,624 $14,400
Equity securities, available for sale, at fair
value.......................................... 119 63
Policy loans, at outstanding balance............ 3,836 3,381
Mortgage loans, at outstanding balance.......... 2 265
Other investments, at cost...................... 54 156
------- -------
Total investments............................. 17,635 18,265
Cash............................................ 43 46
Premiums and amounts receivable................. 137 165
Accrued investment income....................... 407 394
Reinsurance recoverable......................... 6,066 6,221
Deferred policy acquisition costs............... 2,760 2,188
Deferred income tax............................. 474 420
Other assets.................................... 357 234
Separate account assets......................... 49,690 36,264
------- -------
Total assets.................................. $77,569 $64,197
------- -------
------- -------
Liabilities
Future policy benefits.......................... $ 2,281 $ 2,373
Other policyholder funds........................ 22,134 22,598
Other liabilities............................... 1,572 1,233
Separate account liabilities.................... 49,690 36,264
------- -------
Total liabilities............................. 75,677 62,468
------- -------
Stockholder's Equity
Common stock, $5,690 par value, 1,000 shares
authorized, issued and outstanding............. 6 6
Capital surplus................................. 1,045 1,007
Net unrealized capital gain (loss) on
investments, net of tax........................ 30 (57)
Retained earnings............................... 811 773
------- -------
Total stockholder's equity.................... 1,892 1,729
------- -------
Total liabilities and stockholder's equity...... $77,569 $64,197
------- -------
------- -------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of the above statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
NET UNREALIZED
CAPITAL GAIN
(LOSS) ON TOTAL
COMMON CAPITAL INVESTMENTS, RETAINED STOCKHOLDER'S
STOCK SURPLUS NET OF TAX EARNINGS EQUITY
------ -------------- -------------- -------- -------------
<S> <C> <C> <C> <C> <C>
(IN MILLIONS)
Balance, December 31, 1993.............. $6 $ 676 $ (5) $516 $1,193
Net income............................ -- -- -- 138 138
Dividends declared on common stock.... -- -- -- (10) (10)
Capital contribution.................. -- 150 -- -- 150
Change in net unrealized capital loss
on investments, net of tax(1)........ -- -- (649) -- (649)
--
------ ------ -------- ------
Balance, December 31, 1994.............. 6 826 (654) 644 822
Net income............................ -- -- -- 129 129
Capital contribution.................. -- 181 -- -- 181
Change in net unrealized capital gain
on investments, net of tax........... -- -- 597 -- 597
--
------ ------ -------- ------
Balance, December 31, 1995.............. 6 1,007 (57) 773 1,729
Net income............................ -- -- -- 38 38
Capital contribution.................. -- 38 -- -- 38
Change in net unrealized capital gain
on investments, net of tax........... -- -- 87 -- 87
--
------ ------ -------- ------
Balance, December 31, 1996.............. $6 $1,045 $ 30 $811 $1,892
--
--
------ ------ -------- ------
------ ------ -------- ------
</TABLE>
- ------------------------
(1) The 1994 change in net unrealized capital loss on investments, net of tax,
includes a gain of $91 due to the adoption of SFAS No. 115 as discussed in
Note 2(b) of Notes to Consolidated Financial Statements.
The accompanying notes to consolidated financial statements are an integral part
of the above statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
(IN MILLIONS)
Operating Activities
Net income............................ $ 38 $ 129 $ 138
Adjustments to net income:
Net realized capital losses (gains) on
sale of investments.................. 213 11 (7)
Net amortization of premium on fixed
maturities........................... 14 21 41
Increase in deferred income taxes..... (102) (172) (128)
Increase in deferred policy
acquisition costs.................... (572) (379) (441)
Decrease (increase) in premiums and
amounts receivable................... 10 (81) 10
Increase in accrued investment
income............................... (13) (16) (106)
(Increase) decrease in other assets... (132) (177) 101
Decrease (increase) in reinsurance
recoverable.......................... 179 (35) 75
(Decrease) increase in liability for
future policy benefits............... (92) 483 224
Increase in other liabilities......... 477 281 191
-------- -------- --------
Cash provided by operating
activities......................... 20 65 98
-------- -------- --------
Investing Activities
Purchases of fixed maturity
investments.......................... (5,747) (6,228) (9,127)
Sales of fixed maturity investments... 3,459 4,845 5,713
Maturities and principal paydowns of
fixed maturity investments........... 2,693 1,741 1,931
Net purchase of other investments..... (107) (871) (1,338)
Net sales (purchases) of short-term
investments.......................... 84 (24) 135
-------- -------- --------
Cash provided by (used for)
investing activities............... 382 (537) (2,686)
-------- -------- --------
Financing Activities
Capital contribution.................. 38 -- 150
Dividends paid........................ -- -- (10)
Net (disbursements for) receipts from
investment and universal life-type
contracts (charged from) credited to
policyholder accounts................ (443) 498 2,467
-------- -------- --------
Cash (used for) provided by
financing activities............... (405) 498 2,607
-------- -------- --------
Net (decrease) increase in cash....... (3) 26 19
Cash--beginning of year............... 46 20 1
-------- -------- --------
Cash--end of year....................... $ 43 $ 46 $ 20
-------- -------- --------
-------- -------- --------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of the above statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(IN MILLIONS)
- ---------------------------------------------------
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
These consolidated financial statements include Hartford Life Insurance
Company and its wholly-owned subsidiaries (the "Company"), ITT Hartford Life and
Annuity Insurance Company ("ILA") and ITT Hartford International Life
Reassurance Corporation ("HLRe"), formerly American Skandia Life Reinsurance
Corporation. The Company is a wholly-owned subsidiary of Hartford Life and
Accident Insurance Company ("HLA"), a wholly-owned subsidiary of Hartford Life,
Inc. ("Hartford Life"), a direct subsidiary of Hartford Accident and Indemnity
Company, an indirect subsidiary of ITT Hartford Group, Inc. ("The Hartford").
Hartford Life was formed on December 13, 1996 and capitalized on December 16,
1996 with the contribution of all the outstanding common stock of HLA. On
February 10, 1997, The Hartford, the ultimate parent of Hartford Life, announced
its intention to sell up to 20% of Hartford Life during the second quarter of
1997. Management believes that this transaction will not have a material impact
on the operations of the Company (See Note 11).
On December 19, 1995, ITT Industries, Inc. (formerly ITT Corporation)("ITT")
distributed all the outstanding shares of capital stock of The Hartford to ITT
stockholders of record on such date (the transactions relating to such
distribution are referred to herein as the "ITT Spin-off"). As a result of the
ITT Spin-off, The Hartford became an independent, publicly traded company.
The Company is a leading insurance and financial services company which
provides: (a) investment products such as individual variable annuities and
fixed market value adjusted annuities, deferred compensation plan services and
mutual funds for savings and retirement needs; (b) life insurance for income
protection and estate planning; and (c) employee benefits products such as
corporate owned life insurance.
- ---------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION
These financial statements present the financial position, results of
operations and cash flows of the Company, and all material intercompany
transactions and balances between Hartford Life Insurance Company and its
subsidiaries have been eliminated. The consolidated financial statements are
prepared on a basis of generally accepted accounting principles which differ
materially from the statutory accounting prescribed by various insurance
regulatory authorities.
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.
(B) CHANGES IN ACCOUNTING PRINCIPLES
On November 14, 1996, the Emerging Issues Task Force ("EITF") reached a
consensus on Issue No. 96-12, "Recognition of Interest Income and Balance Sheet
Classification of Structured Notes". This Issue requires companies to record
income on certain structured securities on a retrospective interest method. The
Company adopted EITF No. 96-12 for structured securities acquired after November
14, 1996. Adoption of EITF No. 96-12 did not have a material effect on the
Company's financial condition or results of operations.
In June 1996, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities".
This statement established criteria for determining whether transferred assets
should be accounted for as sales or secured borrowings. Subsequently, in
December 1996, the FASB issued SFAS No. 127, "Deferral of Effective Date of
Certain Provisions of FASB Statement No. 125", which defers the effective date
of certain provisions of SFAS No. 125 for one year. Adoption of SFAS No. 125 is
not expected to have a material effect on the Company's financial condition or
results of operations.
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation", which is effective in 1996. As permitted by SFAS No. 123, the
Company continues to measure compensation costs of employee stock option plans
(relating to options on common stock of The Hartford) using the intrinsic value
method prescribed by Accounting Principles Board Opinion No. 25. As of February
10, 1997, the Company had not adopted an employee stock compensation plan.
Certain officers of the Company participate in The Hartford's stock option plan.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Compensation costs allocated by The Hartford to the Company, as well as pro
forma compensation costs as determined under SFAS No. 123, were immaterial to
the results of operations for 1996 and 1995.
Effective January 1, 1994, the Company adopted SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities". The new standard requires,
among other things, that securities be classified as "held-to-maturity",
"available-for-sale" or "trading" based on the Company's intentions with respect
to the ultimate disposition of the security and its ability to effect those
intentions. The classification determines the appropriate accounting carrying
value (cost basis or fair value) and, in the case of fair value, whether the
fair value difference from cost, net of tax, 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 after-tax impact included in stockholder's equity.
Under SFAS No. 115, the Company's fixed maturity investments 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 "Net unrealized capital gain (loss) on investments, net of
tax." As with the underlying investment security, unrealized capital 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 million. The Company'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 and are recognized in the period in
which services are provided. Premiums for traditional life insurance policies
are recognized as revenues when they are due from policyholders.
(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 and
mortality assumptions appropriate at the time the policies were issued.
Liabilities for universal life-type and investment contracts are stated at
policyholder account values before surrender charges.
(E) DEFERRED POLICY ACQUISITION COSTS
Policy acquisition costs, including commissions and certain underwriting
expenses associated with acquiring business, are deferred and amortized over the
estimated lives of the contracts, generally 20 years. Generally, acquisition
costs are deferred and amortized using the retrospective deposit method. Under
the retrospective deposit method, acquisition costs are amortized in proportion
to the present value of expected gross profits from surrender charges,
investment, mortality and expense margins. Actual gross profits can vary from
management's estimates resulting in increases or decreases in the rate of
amortization. Management periodically updates these estimates, when appropriate,
and evaluates the recoverability of the deferred acquisition cost asset. When
appropriate, management revises its assumptions on the estimated gross profits
of these contracts and the cumulative amortization for the books of business are
reestimated and readjusted by a cumulative charge or credit to income.
(F) POLICYHOLDER REALIZED CAPITAL GAINS AND LOSSES
Realized capital gains and losses on security transactions associated with
the Company's immediate participation guaranteed contracts are excluded from
revenues and deferred, 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.
(G) FOREIGN CURRENCY TRANSLATION
Foreign currency translation gains and losses are reflected in stockholder's
equity. Balance sheet accounts are translated at the exchange rates in effect at
each year end and income statement accounts are translated at the average rates
of exchange prevailing during the year. The national currencies of international
operations are generally their functional currencies.
(H) INVESTMENTS
The Company'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 fair value with the
after-tax difference from cost reflected as a component of stockholder's equity
designated as "Net unrealized capital gain (loss) on investments, net of tax".
Equity securities, which include common and non-redeemable preferred stocks, are
carried at fair value with the after-tax difference from cost reflected in
stockholder's equity. Policy and mortgage loans are each carried at their
outstanding balance which approximates fair value. Investments in partnerships
and trusts are carried at cost. Net realized capital gains (losses), after
deducting the policyholders' share, are reported as a component of revenue and
are determined on a specific identification basis.
The Company's accounting policy for impairment recognition requires
recognition of an other than temporary impairment charge on a security if it is
determined that the Company is unable to recover all amounts due under the
contractual obligations of the security. In addition, the Company has
established specific criteria to be used in the
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
impairment evaluation of an individual portfolio of assets. Specifically, if the
asset portfolio is supporting a runoff operation, is forced to be liquidated
prior to maturity to meet liability commitments, and has fair value below
amortized cost, which will not materially fluctuate as a result of future
interest rate changes, then an other than temporary impairment condition has
been determined to have occurred. Each individual security within that portfolio
is evaluated to determine whether or not it is impaired. Once an impairment
charge has been recorded, the Company then continues to review the individual
impaired securities for appropriate valuation on an ongoing basis.
During 1996, it was determined that certain individual securities within the
investment portfolio supporting the Company's closed block of guaranteed rate
contracts ("Closed Book GRC") were impaired. With the initiation of certain
hedge transactions, which eliminated the possibility that the fair value of the
Closed Book GRC investments would recover to their current amortized cost, an
other than temporary impairment loss of $88 after tax was determined to have
occurred and was recorded.
(I) DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses a variety of derivative financial instruments including
swaps, caps, floors, forwards and exchange traded financial futures and options
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 anticipated investment purchases or existing assets and liabilities. The
Company does not hold or issue derivative financial instruments for trading
purposes. The Company'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 EITF pronouncements. Written options are,
in all cases, used in conjunction with other assets and derivatives as part of
the Company's asset/liability management strategies. 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 must be designated at inception as a hedge and measured for
effectiveness both at inception and on an ongoing basis. The Company's minimum
correlation threshold for hedge designation is 80%. If correlation, which is
assessed monthly and measured based on a rolling three month average, falls
below 80%, hedge accounting will be terminated. 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. Interest rate swaps are the primary type of derivatives used
to convert London interbank offered quotations for U.S. dollar deposits
("LIBOR") based variable rate instruments to fixed rate instruments. 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 an adjustment to the cost basis of the purchased
asset. Gains or losses on futures used in invested asset risk management are
deferred and adjusted into the cost basis of the hedged asset when the futures
contracts are closed, except for futures used in duration hedging which are
deferred and are adjusted into the cost basis on a quarterly basis. The
adjustments to the cost basis are amortized into investment income over the
remaining asset life.
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 purchased options and/or premiums received on covered written
options, entered into as part of an asset/liability management strategy, is/are
adjusted into the cost basis of the underlying asset or liability and amortized
over the remaining life of the hedge. Gains or losses on expiration or
termination of the hedge are adjusted into the basis of the underlying asset or
liability and amortized over the remaining asset life. The Company had no
written options as of December 31, 1996 and 1995.
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 (an
"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.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
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.
(J) RELATED PARTY TRANSACTIONS
Transactions of the Company with HLA and its affiliates relate principally
to tax settlements, reinsurance, insurance coverage, rental and service fees and
payment of dividends and capital contributions. In addition, certain affiliated
insurance companies purchased group annuity contracts from the Company to fund
pension costs and claim annuities to settle casualty claims. Substantially all
general insurance expenses related to the Company, including rent and employee
benefit plan expenses, are initially paid by Hartford Fire Insurance Company, an
indirect subsidiary of The Hartford ("Hartford Fire"). Direct expenses are
allocated to the Company using specific identification, and indirect expenses
are allocated using other applicable methods. Indirect expenses include those
for corporate areas which, depending on the type, are allocated based on either
a percentage of direct expenses or on utilization. Indirect expenses allocated
to the Company by Hartford Fire were $40, $45 and $41 in 1996, 1995 and 1994,
respectively. Management of the Company believes that the methods used are
reasonable. In addition, the Company was charged its share of costs allocated to
The Hartford by ITT prior to the ITT Spin-off, which were immaterial in 1995 and
1994. The Company had a receivable from The Hartford of $1 and a payable to The
Hartford of $2 at December 31, 1996 and 1995, respectively.
In 1996, the Company ceded approximately $33.3 billion of group life
insurance in force and $318 million of disability premium to HLA and assumed
$8.5 billion of individual life insurance in force from HLA.
On June 30, 1995, the ownership of ITT Lyndon Insurance Company was
transferred to the Company via a capital contribution of $181 million,
representing the net assets of the company. Also, in 1996, the Company received
a capital contribution of $37.5 million from its parent HLA.
(K) DIVIDENDS TO POLICYHOLDERS
Certain life insurance policies contain dividend payment provisions that
enable the policyholder to participate in the earnings of the life insurance
subsidiaries of the Company. The participating insurance in force accounted for
44%, 41%, and 43% in 1996, 1995, and 1994, respectively, of total life insurance
in force.
- ---------------------------------------------------
3. INVESTMENTS
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Interest income................ $ 1,452 $ 1,338 $ 1,247
(Losses) income from other
investments................... (42) 1 54
--------- --------- ---------
Gross investment income........ 1,410 1,339 1,301
Less: Investment expenses...... 13 11 9
--------- --------- ---------
Net investment income.......... $ 1,397 $ 1,328 $ 1,292
--------- --------- ---------
--------- --------- ---------
</TABLE>
(B) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Fixed maturities............... $ (201) $ 23 $ (34)
Equity securities.............. 2 (6) (11)
Real estate and other.......... (4) (25) 47
Less: (Increase) decrease in
liability to policyholders for
realized capital gains
(losses)...................... (10) (3) 5
--------- --------- ---------
Net realized capital (losses)
gains......................... $ (213) $ (11) $ 7
--------- --------- ---------
--------- --------- ---------
</TABLE>
(C) NET UNREALIZED CAPITAL GAINS (LOSSES) ON EQUITY SECURITIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1996 1995 1994
----- ----- ---------
<S> <C> <C> <C>
Gross unrealized gains........... $ 13 $ 4 $ 2
Gross unrealized losses.......... (1) (2) (11)
--- --- ---------
Net unrealized capital gains
(losses)........................ 12 2 (9)
Deferred income tax liability
(asset)......................... 4 1 (3)
--- --- ---------
Net unrealized capital gains
(losses), after tax............. 8 1 (6)
Balance beginning of year........ 1 (6) (5)
--- --- ---------
Change in net unrealized capital
gains (losses) on investments... $ 7 $ 7 $ (1)
--- --- ---------
--- --- ---------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
(D) NET UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED MATURITIES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
--------------------
1996 1995
--------- ---------
<S> <C> <C>
Gross unrealized gains..................................................................................... $ 386 $ 529
Gross unrealized losses.................................................................................... (341) (569)
Unrealized (gains) losses credited to policyholders........................................................ (11) (52)
--------- ---------
Net unrealized capital gains (losses)...................................................................... 34 (92)
Deferred income tax liability (asset)...................................................................... 12 (34)
--------- ---------
Net unrealized capital gains (losses), after tax........................................................... 22 (58)
Balance beginning of year.................................................................................. (58) (648)
--------- ---------
Change in net unrealized capital gains (losses) on investments............................................. $ 80 $ 590
--------- ---------
--------- ---------
<CAPTION>
1994
---------
<S> <C>
Gross unrealized gains..................................................................................... $ 150
Gross unrealized losses.................................................................................... (1,185)
Unrealized (gains) losses credited to policyholders........................................................ 37
---------
Net unrealized capital gains (losses)...................................................................... (998)
Deferred income tax liability (asset)...................................................................... (350)
---------
Net unrealized capital gains (losses), after tax........................................................... (648)
Balance beginning of year.................................................................................. 161
---------
Change in net unrealized capital gains (losses) on investments............................................. $ (809)
---------
---------
</TABLE>
(E) COMPONENTS OF FIXED MATURITIES INVESTMENTS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
---------------------------------
GROSS UNREALIZED
AMORTIZED --------------------
COST GAINS LOSSES
----------- --------- ---------
<S> <C> <C> <C>
U.S. government and government agencies and authorities (guaranteed and sponsored)............ $ 166 $ 12 $ (3)
U.S. government and government agencies and authorities (guaranteed and
sponsored)--asset-backed..................................................................... 1,970 161 (128)
States, municipalities and political subdivisions............................................. 373 6 (11)
International governments..................................................................... 281 12 (4)
Public utilities.............................................................................. 877 12 (8)
All other corporate including international................................................... 4,656 120 (107)
All other corporate--asset-backed............................................................. 3,601 49 (59)
Short-term investments........................................................................ 1,655 14 (21)
----------- --------- ---------
Total fixed maturities.................................................................... $ 13,579 $ 386 $ (341)
----------- --------- ---------
----------- --------- ---------
<CAPTION>
AS OF DECEMBER 31, 1995
---------------------------------
GROSS UNREALIZED
AMORTIZED --------------------
COST GAINS LOSSES
----------- --------- ---------
<S> <C> <C> <C>
U.S. government and government agencies and authorities (guaranteed and sponsored)............ $ 502 $ 4 $ (9)
U.S. government and government agencies and authorities (guaranteed and
sponsored)--asset-backed..................................................................... 3,568 210 (387)
States, municipalities and political subdivisions............................................. 201 4 (3)
International governments..................................................................... 291 19 (4)
Public utilities.............................................................................. 949 29 (2)
All other corporate including international................................................... 3,065 76 (55)
All other corporate--asset-backed............................................................. 5,056 187 (109)
Short-term investments........................................................................ 808 -- --
----------- --------- ---------
Total fixed maturities.................................................................... $ 14,440 $ 529 $ (569)
----------- --------- ---------
----------- --------- ---------
<CAPTION>
FAIR
VALUE
---------
<S> <C>
U.S. government and government agencies and authorities (guaranteed and sponsored)............ $ 175
U.S. government and government agencies and authorities (guaranteed and
sponsored)--asset-backed..................................................................... 2,003
States, municipalities and political subdivisions............................................. 368
International governments..................................................................... 289
Public utilities.............................................................................. 881
All other corporate including international................................................... 4,669
All other corporate--asset-backed............................................................. 3,591
Short-term investments........................................................................ 1,648
---------
Total fixed maturities.................................................................... $ 13,624
---------
---------
FAIR
VALUE
---------
<S> <C>
U.S. government and government agencies and authorities (guaranteed and sponsored)............ $ 497
U.S. government and government agencies and authorities (guaranteed and
sponsored)--asset-backed..................................................................... 3,391
States, municipalities and political subdivisions............................................. 202
International governments..................................................................... 306
Public utilities.............................................................................. 976
All other corporate including international................................................... 3,086
All other corporate--asset-backed............................................................. 5,134
Short-term investments........................................................................ 808
---------
Total fixed maturities.................................................................... $ 14,400
---------
---------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
The amortized cost and fair value of fixed maturities at December 31, 1996,
by maturity, are shown below. Asset-backed securities, including mortgage-backed
securities and collateralized mortgage obligations, are distributed to maturity
year based on the Company's estimates of the rate of future prepayments of
principal over the remaining lives of such securities. These estimates are
developed using prepayment speeds reported in broker consensus data and can be
expected to vary from actual experience. Expected maturities differ from
contractual maturities due to call or prepayment provisions.
<TABLE>
<CAPTION>
MATURITY AMORTIZED COST FAIR VALUE
- -------------------------- -------------- -----------
<S> <C> <C>
One year or less.......... $ 2,632 $ 2,642
Over one year through five
years.................... 5,871 5,928
Over five years through
ten years................ 3,320 3,311
Over ten years............ 1,756 1,743
------- -----------
Total................. $ 13,579 $ 13,624
------- -----------
------- -----------
</TABLE>
Sales of fixed maturities excluding short-term fixed maturities for the
years ended December 31, 1996, 1995 and 1994 resulted in proceeds of $3,459,
$4,848 and $5,708, respectively, resulting in gross realized capital gains of
$87, $91 and $71, respectively, and gross realized capital losses (including
investment writedowns) of $298, $72 and $100, respectively, not including
policyholder gains and losses. Sales of equity securities for the years ended
December 31, 1996, 1995 and 1994 resulted in proceeds of $74, $64 and $159,
respectively, resulting in gross realized capital gains of $2, $28 and $3,
respectively, and gross realized capital losses of $0, $59 and $14,
respectively, not including policyholder gains and losses.
(F) CONCENTRATION OF CREDIT RISK
As of December 31, 1996, the Company had a reinsurance recoverable of $3.8
billion from Mutual Benefit Life Assurance Corporation ("Mutual Benefit"),
supported by assets in a security trust of $3.8 billion (including policy loans
of $3.3 billion). The risk of Mutual Benefit becoming insolvent is mitigated by
the reinsurance agreement's requirement that the assets be kept in a security
trust with the Company as sole beneficiary. Excluding investments in U.S.
government and agencies, the Company has no other significant concentrations of
credit risk in fixed maturities.
(G) DERIVATIVE INVESTMENTS
Derivatives play an important role in facilitating the management of
interest rate risk, creating opportunities to fund product obligations hedging
against indexation risks that affect the value of certain liabilities and
adjusting broad investment risk characteristics when dictated by significant
changes in market risks. As an end user of derivatives, the Company uses a
variety of derivative financial instruments, including swaps, caps, floors,
forwards and exchange traded financial futures and options in order to hedge
exposure to price, foreign currency and/or interest rate risk on anticipated
investment purchases or existing assets and liabilities. The notional amounts of
derivative contracts represent the basis upon which pay and receive amounts are
calculated and are not reflective of credit risk for derivative contracts.
Credit risk for derivative contracts is limited to the amounts calculated to be
due to the Company on such contracts. The Company believes it maintains prudent
policies regarding the financial stability and credit standing of its major
counterparties and typically requires credit enhancement provisions to further
limit its credit risk. Many of these derivative contracts are bilateral
agreements that are not assignable without the consent of the relevant
counterparty. Notional amounts pertaining to derivative financial instruments
totaled $9.9 billion and $8.8 billion at December 31, 1996 and 1995,
respectively ($7.4 billion and $7.1 billion related to life insurance
investments and $2.5 billion and $1.7 billion related to life insurance
liabilities at December 31, 1996 and 1995, respectively).
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
The following table summarizes the Company's derivatives, segregated by
major categories, as of December 31, 1996 and 1995:
<TABLE>
<CAPTION>
AMOUNTS HEDGED (NOTIONAL AMOUNTS) (EXCLUDING
LIABILITY HEDGES)
--------------------------------------------------
PURCHASED
TOTAL ISSUED CAPS OPTIONS,
CARRYING & CAPS &
1996 VALUE FLOORS(C) FLOORS(D) FUTURES(E)
- ------------------------------------------------------------------------ --------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Asset-backed securities (excluding inverse floaters and anticipatory)... $ 5,242 $ 500 $ 2,454 $ --
Inverse floaters(a)..................................................... 352 98 856 --
Anticipatory(g)......................................................... -- -- -- 132
Other bonds and notes................................................... 7,369 425 440 5
Short-term investments.................................................. 661 -- -- --
--------- ----------- ----------- -----
Total fixed maturities.............................................. 13,624 1,023 3,750 137
Equity securities, policy loans and other investments................... 4,011 -- -- --
--------- ----------- ----------- -----
Total investments................................................... $ 17,635 $ 1,023 $ 3,750 $ 137
--------- ----------- ----------- -----
--------- ----------- ----------- -----
Total derivatives-fair value(b)..................................... $ (10) $ 35 $ --
----------- ----------- -----
----------- ----------- -----
<CAPTION>
AMOUNTS HEDGED (NOTIONAL AMOUNTS) (EXCLUDING
LIABILITY HEDGES)
--------------------------------------------------
PURCHASED
TOTAL ISSUED CAPS OPTIONS,
CARRYING & CAPS &
1995 VALUE FLOORS(C) FLOORS(D) FUTURES(E)
- ------------------------------------------------------------------------ --------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Asset-backed securities (excluding inverse floaters and anticipatory)... $ 5,764 $ 118 $ 3,133 $ 322
Inverse floaters(a)..................................................... 711 560 354 6
Anticipatory(g)......................................................... -- -- -- 213
Other bonds and notes................................................... 7,118 33 66 322
Short-term investments.................................................. 807 -- -- --
--------- ----------- ----------- -----
Total fixed maturities.............................................. 14,400 711 3,553 863
Equity securities, policy loans and other investments................... 3,865 -- -- --
--------- ----------- ----------- -----
Total investments................................................... $ 18,265 $ 711 $ 3,553 $ 863
--------- ----------- ----------- -----
--------- ----------- ----------- -----
Total derivatives-fair value(b)..................................... $ (32) $ 46 $ --
----------- ----------- -----
----------- ----------- -----
<CAPTION>
INTEREST FOREIGN TOTAL
RATE CURRENCY NOTIONAL
1996 SWAPS(H) SWAPS(F) AMOUNT
- ------------------------------------------------------------------------ ----------- ----------- -----------
<S> <C> <C> <C>
Asset-backed securities (excluding inverse floaters and anticipatory)... $ 941 $ -- $ 3,895
Inverse floaters(a)..................................................... 346 -- 1,300
Anticipatory(g)......................................................... -- -- 132
Other bonds and notes................................................... 1,079 125 2,074
Short-term investments.................................................. -- -- --
----------- ----- -----------
Total fixed maturities.............................................. 2,366 125 7,401
Equity securities, policy loans and other investments................... 19 -- 19
----------- ----- -----------
Total investments................................................... $ 2,385 $ 125 $ 7,420
----------- ----- -----------
----------- ----- -----------
Total derivatives-fair value(b)..................................... $ (25) $ (9) $ (9)
----------- ----- -----------
----------- ----- -----------
INTEREST FOREIGN TOTAL
RATE CURRENCY NOTIONAL
1995 SWAPS(H) SWAPS(F) AMOUNT
- ------------------------------------------------------------------------ ----------- ----------- -----------
<S> <C> <C> <C>
Asset-backed securities (excluding inverse floaters and anticipatory)... $ 290 $ -- $ 3,863
Inverse floaters(a)..................................................... 681 -- 1,601
Anticipatory(g)......................................................... 25 -- 238
Other bonds and notes................................................... 757 187 1,365
Short-term investments.................................................. -- -- --
----------- ----- -----------
Total fixed maturities.............................................. 1,753 187 7,067
Equity securities, policy loans and other investments................... 18 -- 18
----------- ----- -----------
Total investments................................................... $ 1,771 $ 187 $ 7,085
----------- ----- -----------
----------- ----- -----------
Total derivatives-fair value(b)..................................... $ (108) $ (24) $ (118)
----------- ----- -----------
----------- ----- -----------
</TABLE>
- ------------------------
(a) Inverse floaters are variations of collateralized mortgage obligations
("CMOs") for which the coupon rates move inversely with an index rate such
as LIBOR. The risk to principal is considered negligible as the underlying
collateral for the securities is guaranteed or sponsored by government
agencies. To address the volatility risk created by the coupon variability,
the Company uses a variety of derivative instruments, primarily interest
rate swaps and purchased caps and floors.
(b) The fair value of derivative instruments including swaps, caps, floors,
futures, options and forward commitments, was determined using a pricing
model which is validated through quarterly comparison to dealer quoted
market prices, for 1996 and dealer quoted prices for 1995.
(c) The 1996 data includes issued caps of $433 with a weighted average strike
rate of 8.21% (ranging from 7.0% to 9.5%) and over 93% maturing in 2000
through 2005. In addition, issued floors totaled $590, had a weighted
average strike rate of 5.17% (ranging from 5.00% to 7.85%) with all of them
maturing by the end of 2005. The 1995 data includes issued caps of $475 with
a weighted average strike rate of 8.5% (ranging from 7.0% to 10.4%) and over
85% maturing in 2000 through 2004. In addition, issued floors totaled $236,
had a weighted average strike rate of 8.1% (ranging from 5.3% to 10.9%) and
mature through 2007, with 76% maturing by 2004.
(d) The 1996 data includes purchased floors of $2.4 billion and purchased caps
of $1.3 billion. The floors had a weighted average strike rate of 5.84%
(ranging from 3.70% to 7.85%) and over 87% mature in 1997 through 1999. The
options mature in 1997. The caps had a weighted average strike rate of 7.59%
(ranging from 4.40% to 10.125%) and over 76% mature in 1997 through 2001.
The 1995 data includes purchased floors of $1.8 billion and purchased caps
of $1.7 billion. The floors had 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 had a weighted average strike price of 7.5% (ranging from 4.5% and
10.1%) and over 82% mature in 1997 through 1999.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
(e) As of December 31, 1996 and 1995, over 39% and 95%, respectively, of the
notional futures contracts, expire within one year.
(f) As of December 31, 1996 and 1995, over 42% and 25%, respectively, of the
Company's foreign currency swaps, expire within one year; the balance mature
over the succeeding 4 to 5 years.
(g) 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, 1996, the Company had $1 million in
net deferred gains for futures, interest rate swaps and purchased options.
The Company expects to basis adjust $1 million of the deferred gains in
1997. At December 31, 1995, the Company had $5.3 million in net deferred
gains for futures, interest rate swaps and purchased options.
(h) The following table summarizes the maturities by notional value of interest
rate swaps outstanding at December 31, 1996 and 1995, and the related
weighted average interest pay rate or receive rate. The variable rates
represent spot rates (primarily 90 day LIBOR), as of December 31, 1996 and
1995. Such variable rates have been calculated assuming that the spot rates
remain unchanged throughout the life of the interest rate swaps.
<TABLE>
<CAPTION>
1996 1997 1998 1999 2000 2001
- ------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PAY FIXED/RECEIVE VARIABLE
Notional Value $-- $50 $125 $35 $125
Weighted Average Pay Rate -- 5.7 % 5.9 % 5.5 % 5.5%
Weighted Average Receive Rate -- 3.2 % -- 6.5 % 6.4%
PAY VARIABLE/RECEIVE FIXED
Notional Value $86 $25 $486 $74 $582
Weighted Average Pay Rate 7.5 % -- 6.4 % 6.7 % 7.0%
Weighted Average Receive Rate 5.6 % -- 5.6 % 5.7 % 6.2%
PAY VARIABLE/RECEIVE DIFFERENT VARIABLE
Notional Value $19 $15 $-- $200 $--
Weighted Average Pay Rate 5.9 % 5.7 % -- 6.4 % --
Weighted Average Receive Rate 3.7 % 5.5 % -- 5.0 % --
Total Interest Rate Swaps $105 $90 $611 $309 $707
Total Weighted Average Pay Rate 7.2 % 5.7 % 6.3 % 6.4 % 6.7%
Total Weighted Average Receive Rate 5.2 % 3.8 % 4.3 % 5.4 % 6.3%
<CAPTION>
1995 1996 1997 1998 1999 2000
- ------------------------------------------------------------ ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PAY FIXED/RECEIVE VARIABLE
Notional Value $15 $50 $-- $453 $31
Weighted Average Pay Rate 5.0 % 7.2 % -- 8.1 % 7.1%
Weighted Average Receive Rate 5.8 % 5.9 % -- 5.8 % 5.7%
PAY VARIABLE/RECEIVE FIXED
Notional Value $100 $68 $25 $25 $35
Weighted Average Pay Rate 5.9 % 8.6 % 5.9 % -- 5.9%
Weighted Average Receive Rate 2.4 % 7.9 % 4.0 % -- 6.5%
PAY VARIABLE/RECEIVE DIFFERENT VARIABLE
Notional Value $50 $18 $36 $12 $200
Weighted Average Pay Rate 5.8 % -- 3.7 % 3.5 % 4.5%
Weighted Average Receive Rate 5.4 % -- 5.6 % 5.2 % 6.8%
Total Interest Rate Swaps $165 $136 $61 $490 $266
Total Weighted Average Pay Rate 5.8 % 7.8 % 4.6 % 7.6 % 5.0%
Total Weighted Average Receive Rate 3.6 % 7.2 % 4.9 % 5.4 % 6.6%
<CAPTION>
LATEST
1996 THEREAFTER TOTAL MATURITY
- ------------------------------------------------------------ ------------- ----------- -----------
<S> <C> <C> <C>
PAY FIXED/RECEIVE VARIABLE
Notional Value $170 $505 2003
Weighted Average Pay Rate 5.7 % 5.7 %
Weighted Average Receive Rate 6.9 % 4.7 %
PAY VARIABLE/RECEIVE FIXED
Notional Value $349 $1,602 2007
Weighted Average Pay Rate 6.9 % 6.8 %
Weighted Average Receive Rate 5.9 % 5.9 %
PAY VARIABLE/RECEIVE DIFFERENT VARIABLE
Notional Value $44 $278 2003
Weighted Average Pay Rate 12.9 % 7.4 %
Weighted Average Receive Rate 6.4 % 5.2 %
Total Interest Rate Swaps $563 $2,385 2007
Total Weighted Average Pay Rate 7.0 % 6.6 %
Total Weighted Average Receive Rate 6.3 % 5.5 %
LATEST
1995 THEREAFTER TOTAL MATURITY
- ------------------------------------------------------------ ------------- ----------- -----------
<S> <C> <C> <C>
PAY FIXED/RECEIVE VARIABLE
Notional Value $229 $778 2004
Weighted Average Pay Rate 7.8 % 7.8 %
Weighted Average Receive Rate 5.9 % 5.9 %
PAY VARIABLE/RECEIVE FIXED
Notional Value $190 $443 2007
Weighted Average Pay Rate 5.4 % 5.4 %
Weighted Average Receive Rate 6.9 % 6.9 %
PAY VARIABLE/RECEIVE DIFFERENT VARIABLE
Notional Value $234 $550 2004
Weighted Average Pay Rate 16.3 % 5.7 %
Weighted Average Receive Rate 5.9 % 6.4 %
Total Interest Rate Swaps $653 $1,771 2007
Total Weighted Average Pay Rate 7.3 % 6.9 %
Total Weighted Average Receive Rate 6.3 % 5.8 %
</TABLE>
In addition, interest rate sensitivity related to certain Company insurance
liabilities was altered primarily through interest rate swap agreements. The
notional amount of the liability agreements in which the Company generally pays
one variable rate in exchange for another was $2.4 billion and $1.7 billion at
December 31, 1996 and 1995, respectively. As of December 31, 1996, the weighted
average pay rate was 5.6% and the weighted average receive rate was 6.5%. These
agreements mature at various times through 2001.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
A reconciliation between notional amounts at December 31, 1995 and 1996 by
derivative type and strategy is as follows:
<TABLE>
<CAPTION>
BY DERIVATIVE TYPE
---------------------------------------------
12/31/95 MATURITIES/
NOTIONAL AMOUNT ADDITIONS TERMINATIONS
----------------- ----------- -------------
<S> <C> <C> <C>
Caps..................................................................... $ 2,184 $ 1,286 $ 1,715
Floors................................................................... 2,180 2,053 1,065
Options.................................................................. -- 10 --
Swaps/Forwards........................................................... 3,566 3,989 2,694
Futures.................................................................. 863 2,092 2,818
------ ----------- ------
Total................................................................ $ 8,793 $ 9,430 $ 8,292
------ ----------- ------
------ ----------- ------
<CAPTION>
BY STRATEGY
---------------------------------------------
12/31/95 MATURITIES/
NOTIONAL AMOUNT ADDITIONS TERMINATIONS
----------------- ----------- -------------
<S> <C> <C> <C>
Liability................................................................ $ 1,708 $ 1,940 $ 1,137
Anticipatory............................................................. 238 516 622
Asset.................................................................... 2,984 1,265 2,137
Portfolio................................................................ 3,863 5,709 4,396
------ ----------- ------
Total................................................................ $ 8,793 $ 9,430 $ 8,292
------ ----------- ------
------ ----------- ------
<CAPTION>
12/31/96
NOTIONAL AMOUNT
-----------------
<S> <C>
Caps..................................................................... $ 1,755
Floors................................................................... 3,168
Options.................................................................. 10
Swaps/Forwards........................................................... 4,861
Futures.................................................................. 137
------
Total................................................................ $ 9,931
------
------
12/31/96
NOTIONAL AMOUNT
-----------------
<S> <C>
Liability................................................................ $ 2,511
Anticipatory............................................................. 132
Asset.................................................................... 2,112
Portfolio................................................................ 5,176
------
Total................................................................ $ 9,931
------
------
</TABLE>
(H) FAIR VALUE OF FINANCIAL INSTRUMENTS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF DECEMBER 31,
1996 1995
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
ASSETS
Fixed maturities............................................................. $ 13,624 $ 13,624 $ 14,400 $ 14,400
Equity securities............................................................ 119 119 63 63
Policy loans................................................................. 3,836 3,836 3,381 3,381
Mortgage loans............................................................... 2 2 265 265
Investments in partnerships and trust........................................ 48 48 94 97
Other........................................................................ 6 56 62 62
LIABILITIES
Other policy benefits........................................................ $ 11,707 $ 11,469 $ 12,727 $ 12,767
</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 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 managements;
fair value of derivative instruments, including swaps, caps, floors, futures,
and forward commitments, is determined by using a pricing model which is
validated through quarterly comparison to dealer quoted market prices; and other
policy benefits payable for investment type contracts are determined by
estimating future cash flows discounted at the year end market rate.
- ---------------------------------------------------
4. INCOME TAX
Hartford Life and The Hartford have entered into a tax sharing agreement
under which each member, including the Company, in the consolidated U.S. federal
income tax return will make payments between them such that, with respect to any
period, the amount of taxes to be paid by Hartford Life for the Company, subject
to certain adjustments, generally will be determined as though the Company were
to file separate federal, state and local income tax returns.
As long as The Hartford continues to beneficially own, directly or
indirectly, at least 80% of the combined voting power and 80% of the value of
the outstanding capital stock of Hartford Life, the Company will be included for
federal income tax purposes in the consolidated group of which The Hartford is
the common parent. It is the current intention of The Hartford and its
subsidiaries to continue to file a consolidated federal income tax return. The
Company will continue to remit to (receive from) The Hartford a current income
tax provision (benefit) computed in accordance with such tax sharing agreement.
The Company's effective tax rate was 35%, 32% and 32% in 1996, 1995 and 1994,
respectively.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Income tax expense was as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Current............................. $ 122 $ 211 $ 185
Deferred........................... (102) (149) (120)
--------- --------- ---------
Total............................ $ 20 $ 62 $ 65
--------- --------- ---------
--------- --------- ---------
</TABLE>
A reconciliation of the tax provision at the U.S. federal statutory rate to
the provision for income taxes was as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Tax provision at U.S. statutory
rate............................... $ 20 $ 67 $ 71
Tax-exempt income.................. -- (3) (3)
Foreign tax credit................. -- (4) (1)
Other.............................. -- 2 (2)
--------- --------- ---------
Total............................ $ 20 $ 62 $ 65
--------- --------- ---------
--------- --------- ---------
</TABLE>
Income taxes paid were $189, $162 and $244 in 1996, 1995 and 1994,
respectively. The current tax refund due from The Hartford to the Company was
$72 and $8 as of December 31, 1996 and 1995, respectively.
Deferred tax assets (liabilities) included the following:
<TABLE>
<CAPTION>
AS OF
DECEMBER 31,
--------------------
1996 1995
--------- ---------
<S> <C> <C>
Tax return deferred acquisition costs......... $ 514 $ 410
Financial statement deferred acquisition costs
and reserves................................. (242) 138
Employee benefits............................. 8 8
Unrealized (gain) loss on investments......... (16) 32
Investments and other......................... 210 (168)
--------- ---------
Total..................................... $ 474 $ 420
--------- ---------
--------- ---------
</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 such circumstances, 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,
1996 was $37.
- ---------------------------------------------------
5. REINSURANCE
The Company cedes insurance to non-affiliated insurers in order to limit its
maximum loss. Such transfer does not relieve the Company of its primary
liability. The Company also assumes insurance from other insurers.
Life insurance net retained premiums were comprised of the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Gross premiums..................... $ 1,834 $ 1,545 $ 1,316
Insurance assumed.................. 173 591 299
Insurance ceded.................... (302) (649) (515)
--------- --------- ---------
Total.......................... $ 1,705 $ 1,487 $ 1,100
--------- --------- ---------
--------- --------- ---------
</TABLE>
Life reinsurance recoveries, which reduced death and other benefits, for the
years ended December 31, 1996, 1995 and 1994 approximated $140, $220 and $164,
respectively.
In December 1994, the Company ceded to a third party $1.0 billion in
individual fixed and variable annuities on a modified coinsurance basis. In
December 1995, the Company 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, the Company assumed the life insurance policies and the
individual annuities of Pacific Standard with reserves and account values of
approximately $434 million. The Company received cash and investment grade
assets to support the life insurance and individual annuity contract obligations
assumed.
- ---------------------------------------------------
6.PENSION PLANS AND OTHER POSTRETIREMENT
BENEFITS
The Company's employees are included in Hartford Fire's noncontributory
defined benefit pension plans. These plans provide pension benefits that are
based on years of service and the employee's compensation during the last ten
years of employment. The Company's funding policy is to contribute annually an
amount between the minimum funding requirements set forth in the Employee
Retirement Income Security Act of 1974, as amended, and the maximum amount that
can be deducted for Federal income tax purposes. Generally, pension costs are
funded through the purchase of the Company's group pension contracts. The cost
to the Company was approximately $5, $2 and $2 in 1996, 1995 and 1994,
respectively.
The Company also provides, through Hartford Fire, certain health care and
life insurance benefits for eligible retired employees. A substantial portion of
the Company's employees may become eligible for these benefits upon retirement.
The Company's contribution for health care benefits will depend on the retiree's
date of retirement and years of service. In addition, the plan has a defined
dollar cap which limits average Company contributions. The Company has prefunded
a portion of the health care and life insurance obligations through trust funds
where such prefunding can be accomplished on a tax effective basis.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Postretirement health care and life insurance benefits expense, allocated by The
Hartford, was immaterial for 1996, 1995 and 1994, respectively.
The assumed rate of future increases in the per capita cost of health care
(the health care trend rate) was 9.3% for 1996, 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.
- ---------------------------------------------------
7. BUSINESS SEGMENT INFORMATION
The Company sells financial products such as fixed and variable annuities,
retirement plan services, and life insurance on both an individual and a group
basis. The Company divides its core businesses into three segments: Investment
Products, Individual Life Insurance and Employee Benefits. In addition, the
Company also maintains a corporate operation and also classifies certain of its
business as Runoff operations. The Investment Products segment offers individual
variable annuities and fixed market value adjusted annuities, deferred
compensation and retirement plan services, mutual funds, investment management
services and other financial products. The Individual Life Insurance segment
sells a variety of individual life insurance products, including variable life,
universal life, and interest-sensitive whole life policies. The Employee
Benefits segment sells corporate owned life insurance. Through its corporate
operation, the Company reports net investment income on assets representing
surplus not assigned to any of its business segments and certain other revenues
and expenses not specifically allocable to any of its business segments. The
Company's Runoff operations are comprised of Closed Book GRC. With the exception
of Closed Book GRC, net realized capital gains and losses are recognized in the
period of realization but are allocated to the segments utilizing durations of
the segment portfolios.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
REVENUES
Investment Products............... $ 1,013 $ 759 $ 594
Individual Life Insurance......... 440 383 375
Employee Benefits................. 1,366 1,273 919
Corporate Operations.............. 81 52 30
Runoff Operations................. (11) 337 481
--------- --------- ---------
Total Revenues.................. $ 2,889 $ 2,804 $ 2,399
--------- --------- ---------
--------- --------- ---------
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
INCOME BEFORE INCOME TAX EXPENSE
Investment Products............... $ 230 $ 172 $ 127
Individual Life Insurance......... 68 56 39
Employee Benefits................. 43 37 27
Corporate Operations.............. 65 16 8
Runoff Operations................. (348) (90) 2
--------- --------- ---------
Income Before Income Tax
Expense........................ $ 58 $ 191 $ 203
--------- --------- ---------
--------- --------- ---------
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
ASSETS
Investment Products............... $ 53,743 $ 40,624 $ 29,115
Individual Life Insurance......... 3,753 3,173 2,808
Employee Benefits................. 14,515 13,494 7,847
Corporate Operations.............. 1,891 1,729 822
Runoff Operations................. 3,667 5,177 7,257
--------- --------- ---------
Total Assets.................... $ 77,569 $ 64,197 $ 47,849
--------- --------- ---------
--------- --------- ---------
</TABLE>
- ---------------------------------------------------
8. STATUTORY NET INCOME AND SURPLUS
A significant percentage of the consolidated statutory surplus is
permanently reinvested or is subject to various state regulatory restrictions
which limit the payment of dividends without prior approval. The total amount of
statutory dividends which may be paid by the insurance subsidiaries of the
Company in 1997, without prior approval, is estimated to be $121 million.
Statutory net income and surplus as of and for the years ended December 31 were:
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Statutory net income...... $ 144 $ 112 $ 58
Statutory surplus......... $ 1,207 $ 1,125 $ 941
</TABLE>
The insurance subsidiaries of the Company prepare their statutory financial
statements in accordance with accounting practices prescribed by the State of
Connecticut Insurance Department. Prescribed statutory accounting practices
include publications of the National Association of Insurance Commissioners
("NAIC"), as well as state laws, regulations, and general administrative rules.
- ---------------------------------------------------
9. SEPARATE ACCOUNTS
The Company maintained separate account assets and liabilities totaling
$49.7 billion and $36.3 billion at December 31, 1996 and 1995, 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 $39.4 billion and $25.9 billion at
December 31, 1996 and 1995, respectively, wherein the policyholder assumes the
investment risk, and
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
guaranteed separate account assets totaling $10.3 billion at December 31, 1996
and 1995, wherein the Company contractually guarantees either a minimum return
or account value to the policyholder. Included in the non-guaranteed category
are policy loans totaling $2.0 billion and $1.7 billion at December 31, 1996 and
1995, 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 $538, $387 and $256 in 1996, 1995 and
1994, respectively.
The guaranteed separate accounts include modified guaranteed individual
annuity and modified guaranteed life insurance. The average credited interest
rate on these contracts was 6.53% at December 31, 1996. The assets that support
these liabilities were comprised of $10.2 billion in fixed maturities at
December 31, 1996. The portfolios are segregated from other investments and are
managed so as to minimize liquidity and interest rate risk. 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 $0.1 billion in carrying value and $2.4
billion in notional amounts at December 31, 1996.
- ---------------------------------------------------
10. COMMITMENTS AND CONTINGENCIES
Under insurance guaranty fund laws existing in each state, the District of
Columbia and Puerto Rico, insurers licensed to do business can be assessed by
state insurance guaranty associations for certain obligations of insolvent
insurance companies to policyholders and claimants. Recent regulatory actions
against certain large life insurers encountering financial difficulty have
prompted various state insurance guaranty associations to begin assessing life
insurance companies for the deemed losses. Most of these laws do provide,
however, that an assessment may be excused or deferred if it would threaten an
insurer's solvency and further provide annual limits on such assessments. A
large part of the assessments paid by the Company's insurance subsidiaries
pursuant to these laws may be used as credits for a portion of the Company's
insurance subsidiaries' premium taxes. The Company paid guaranty fund
assessments of approximately $11, $10 and $8 in 1996, 1995 and 1994,
respectively, of which $5, $6 and $4 were estimated to be creditable against
premium taxes.
The Company is a defendant in various lawsuits arising in the ordinary
course of business. In the opinion of management, the resolution of these
matters is not expected to have a material adverse effect on the Company's
business, financial position, or results of operations.
The rent paid to Hartford Fire for the space occupied by the Company was $3
in 1996, 1995, and 1994. The Company expects to pay annual rent of $7 in 1997,
1998, and 1999, respectively, $12 in 2000 and 2001, and $96 thereafter, over the
remaining term of the sublease, which expires on December 31, 2009. Rental
expense is recognized on a level basis over the term of the sublease and
amounted to approximately $8 in 1996, 1995 and 1994.
- ---------------------------------------------------
11. SUBSEQUENT EVENTS
On February 10, 1997, Hartford Life filed a registration statement with the
Securities and Exchange Commission relating to the U.S. and international
offerings of shares of Class A common stock (the "Equity Offerings")
representing up to 20% ownership of Hartford Life. After completion of the
Equity Offerings, The Hartford would own all of the shares of Class B Common
Stock (after reclassification of Hartford Life's common stock into Class B
Common Stock prior to March 31, 1997). Hartford Life intends to use the
estimated net proceeds of the Equity Offerings to make a capital contribution to
its insurance subsidiaries, to reduce its third-party indebtedness and for other
general corporate purposes.
The Hartford has advised the Company that its current intent is to continue
to beneficially own at least 80% of Hartford Life, but it is under no
contractual obligation to do so, except for a limited period. Provided that The
Hartford continues to beneficially own at least 80% of the combined voting power
or the value of the outstanding capital stock of Hartford Life, Hartford Life
will be included for federal income tax purposes in the controlled group of
which The Hartford is the common parent. Each member of a controlled group is
jointly and severally liable for pension funding and pension termination
liabilities of each other member of the controlled group, as well as certain
benefit plan taxes. Accordingly, the Company could be liable for pension
funding, pension termination liabilities and certain other pension related
excise taxes as well as other taxes of another member of The Hartford controlled
group in the event any such liability is incurred, and not discharged, by such
other member.
In connection with the proposed Equity Offerings, Hartford Life plans to
enter into formal agreements, including a master intercompany agreement,
investment management agreements and a new tax sharing agreement, with The
Hartford covering such matters as corporate services, approval of certain
corporate activities, registration rights, owned and leased space, allocation of
expenses, taxes and liabilities, investment advisory services, use of trademarks
and certain other corporate matters. As part of the master intercompany
agreement, Hartford Life would agree to remit to The Hartford 30% of any shared
liabilities for which The Hartford is responsible in respect of the ITT
Spin-off, 30% of any taxes which may be assessed to The
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Hartford relating to the ITT Spin-off and will indemnify The Hartford for
certain other tax liabilities. As of December 31, 1996 there was no known
liability associated with the ITT Spin-off. Such agreements are meant to
maintain the relationship between Hartford Life and The Hartford in a manner
consistent in all material respects with past practice. As a result, management
believes these agreements should not have a material impact on the results of
operations of the Company.
In addition, under insurance company holding laws, agreements between
Hartford Life's insurance subsidiaries and The Hartford must be fair and
reasonable and may be subject to the approval of applicable insurance
commissioners. The agreements will be intended to maintain the relationship
between Hartford Life and The Hartford in a manner generally consistent with
past practices. However, none of these arrangements will result from
arm's-length negotiations and, therefore, the prices charged to Hartford Life
and its subsidiaries for services provided under these arrangements may be
higher or lower than prices that may be charged by third parties.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE I -- SUMMARY OF INVESTMENTS (OTHER THAN INVESTMENTS IN AFFILIATES)
AS OF DECEMBER 31, 1996
(IN MILLIONS)
<TABLE>
<CAPTION>
ESTIMATED
FAIR
TYPE OF INVESTMENT COST VALUE
- ------------------------------------------------------------------------------------------------- --------- -----------
<S> <C> <C>
Fixed Maturities
Bonds and Notes
U.S. Government and government agencies and authorities
(guaranteed sponsored)........................................................................ $ 166 $ 175
U.S. Government and government agencies and authorities
(guaranteed sponsored)--asset-backed.......................................................... 1,970 2,003
States, municipalities and political subdivisions................................................ 373 368
International governments........................................................................ 281 289
Public utilities................................................................................. 877 881
All other corporate including international...................................................... 4,656 4,669
All other corporate--asset-backed................................................................ 3,601 3,591
Short-term investments........................................................................... 1,655 1,648
--------- -----------
Total Fixed Maturities........................................................................... $ 13,579 $ 13,624
Equity Securities
Common Stocks--industrial, miscellaneous, and all other.......................................... 110 119
Total Fixed Maturities and Equity Securities..................................................... $ 13,689 $ 13,743
Other Investments
Policy Loans..................................................................................... 3,836 3,836
Mortgage Loans................................................................................... 2 2
Investments in partnerships and trusts........................................................... 48 48
Futures, options, and miscellaneous.............................................................. 6 56
Total Other Investments.......................................................................... 3,892 3,942
--------- -----------
Total Investments................................................................................ $ 17,581 $ 17,685
--------- -----------
--------- -----------
<CAPTION>
AMOUNT AT
WHICH SHOWN
ON
TYPE OF INVESTMENT BALANCE SHEET
- ------------------------------------------------------------------------------------------------- -------------
<S> <C>
Fixed Maturities
Bonds and Notes
U.S. Government and government agencies and authorities
(guaranteed sponsored)........................................................................ $ 175
U.S. Government and government agencies and authorities
(guaranteed sponsored)--asset-backed.......................................................... 2,003
States, municipalities and political subdivisions................................................ 368
International governments........................................................................ 289
Public utilities................................................................................. 881
All other corporate including international...................................................... 4,669
All other corporate--asset-backed................................................................ 3,591
Short-term investments........................................................................... 1,648
-------------
Total Fixed Maturities........................................................................... $ 13,624
Equity Securities
Common Stocks--industrial, miscellaneous, and all other.......................................... 119
Total Fixed Maturities and Equity Securities..................................................... $ 13,743
Other Investments
Policy Loans..................................................................................... 3,836
Mortgage Loans................................................................................... 2
Investments in partnerships and trusts........................................................... 48
Futures, options, and miscellaneous.............................................................. 6
Total Other Investments.......................................................................... 3,892
-------------
Total Investments................................................................................ $ 17,635
-------------
-------------
</TABLE>
Note: The fair values for short-term investments approximate cost.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN MILLIONS)
<TABLE>
<CAPTION>
FUTURE POLICY
BENEFITS, UNPAID OTHER POLICY
CLAIMS AND CLAIMS AND
DEFERRED POLICY CLAIM ADJUSTMENT BENEFITS
SEGMENT ACQUISITION COSTS EXPENSES PAYABLE
- ---------------------------------------------------------------- ----------------- ------------------- ---------------
<S> <C> <C> <C>
1996
Investment Products............................................. $ 2,030 $ 1,554 $ 6,599
Individual Life Insurance....................................... 730 346 2,160
Employee Benefits............................................... -- 381 9,834
Corporate Operations............................................ -- -- --
Runoff Operations............................................... -- -- 3,541
------ ------ -------
Consolidated Operations......................................... $ 2,760 $ 2,281 $ 22,134
------ ------ -------
------ ------ -------
1995
Investment Products............................................. $ 1,561 $ 1,314 $ 6,204
Individual Life Insurance....................................... 615 706 1,932
Employee Benefits............................................... 12 325 9,285
Corporate Operations............................................ -- -- --
Runoff Operations............................................... -- 28 5,177
------ ------ -------
Consolidated Operations......................................... $ 2,188 $ 2,373 $ 22,598
------ ------ -------
------ ------ -------
1994
Investment Products............................................. $ 1,244 $ 895 $ 4,617
Individual Life Insurance....................................... 565 582 2,543
Employee Benefits............................................... -- 369 6,911
Corporate Operations............................................ -- -- --
Runoff Operations............................................... -- 44 7,257
------ ------ -------
Consolidated Operations......................................... $ 1,809 $ 1,890 $ 21,328
------ ------ -------
------ ------ -------
<CAPTION>
BENEFITS CLAIMS, AMORTIZATION OF
NET REALIZED AND CLAIM DEFERRED POLICY
CAPITAL (LOSSES) ADJUSTMENT ACQUISITION
SEGMENT GAINS EXPENSES COSTS
- ---------------------------------------------------------------- ----------------- ------------------- ---------------
<S> <C> <C> <C>
1996
Investment Products............................................. $ -- $ 451 $ 175
Individual Life Insurance....................................... -- 245 59
Employee Benefits............................................... -- 546 --
Corporate Operations............................................ 6 -- --
Runoff Operations............................................... (219) 293 --
------ ------ -------
Consolidated Operations......................................... $ (213) $ 1,535 $ 234
------ ------ -------
------ ------ -------
1995
Investment Products............................................. $ -- $ 349 $ 117
Individual Life Insurance....................................... -- 127 70
Employee Benefits............................................... -- 496 --
Corporate Operations............................................ (11) 33 --
Runoff Operations............................................... -- 417 12
------ ------ -------
Consolidated Operations......................................... $ (11) $ 1,422 $ 199
------ ------ -------
------ ------ -------
1994
Investment Products............................................. $ -- $ 383 $ 90
Individual Life Insurance....................................... -- 179 51
Employee Benefits............................................... -- 376 --
Corporate Operations............................................ 7 -- --
Runoff Operations............................................... -- 467 4
------ ------ -------
Consolidated Operations......................................... $ 7 $ 1,405 $ 145
------ ------ -------
------ ------ -------
<CAPTION>
PREMIUMS AND NET
OTHER INVESTMENT
SEGMENT CONSIDERATIONS INCOME
- ---------------------------------------------------------------- --------------- -----------
<S> <C> <C>
1996
Investment Products............................................. $ 536 $ 477
Individual Life Insurance....................................... 287 153
Employee Benefits............................................... 881 485
Corporate Operations............................................ -- 75
Runoff Operations............................................... 1 207
------ -----------
Consolidated Operations......................................... $ 1,705 $ 1,397
------ -----------
------ -----------
1995
Investment Products............................................. $ 319 $ 436
Individual Life Insurance....................................... 246 137
Employee Benefits............................................... 922 351
Corporate Operations............................................ -- 67
Runoff Operations............................................... -- 337
------ -----------
Consolidated Operations......................................... $ 1,487 $ 1,328
------ -----------
------ -----------
1994
Investment Products............................................. $ 263 $ 330
Individual Life Insurance....................................... 268 108
Employee Benefits............................................... 569 350
Corporate Operations............................................ -- 23
Runoff Operations............................................... -- 481
------ -----------
Consolidated Operations......................................... $ 1,100 $ 1,292
------ -----------
------ -----------
DIVIDENDS TO OTHER
SEGMENT POLICYHOLDERS EXPENSES
- ---------------------------------------------------------------- --------------- -----------
<S> <C> <C>
1996
Investment Products............................................. $ -- $ 156
Individual Life Insurance....................................... -- 68
Employee Benefits............................................... 635 143
Corporate Operations............................................ -- 16
Runoff Operations............................................... -- 44
------ -----------
Consolidated Operations......................................... $ 635 $ 427
------ -----------
------ -----------
1995
Investment Products............................................. $ -- $ 115
Individual Life Insurance....................................... -- 55
Employee Benefits............................................... 675 138
Corporate Operations............................................ -- 11
Runoff Operations............................................... -- (2)
------ -----------
Consolidated Operations......................................... $ 675 $ 317
------ -----------
------ -----------
1994
Investment Products............................................. $ -- $ (31)
Individual Life Insurance....................................... -- 107
Employee Benefits............................................... 419 100
Corporate Operations............................................ -- 43
Runoff Operations............................................... -- 8
------ -----------
Consolidated Operations......................................... $ 419 $ 227
------ -----------
------ -----------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE IV -- REINSURANCE
(IN MILLIONS)
<TABLE>
<CAPTION>
GROSS CEDED TO ASSUMED FROM NET
AMOUNT OTHER COMPANIES OTHER COMPANIES AMOUNT
---------- ---------------- ---------------- ----------
<S> <C> <C> <C> <C>
Year Ended December 31, 1996
Life Insurance in Force............................... $ 177,094 $ 106,146 $ 31,957 $ 102,905
---------- -------- ------- ----------
Insurance Revenues
Life Insurance and Annuities........................ $ 1,801 $ 298 $ 169 $ 1,672
Accident and Health Insurance....................... 33 4 4 33
---------- -------- ------- ----------
Total................................................. $ 1,834 $ 302 $ 173 $ 1,705
---------- -------- ------- ----------
---------- -------- ------- ----------
For the Year Ended December 31, 1995
Life Insurance in Force............................... $ 182,716 $ 112,774 $ 26,996 $ 96,938
---------- -------- ------- ----------
Insurance Revenues
Life Insurance and Annuities........................ $ 1,232 $ 325 $ 574 $ 1,481
Accident and Health Insurance....................... 313 324 17 6
---------- -------- ------- ----------
Total................................................. $ 1,545 $ 649 $ 591 $ 1,487
---------- -------- ------- ----------
---------- -------- ------- ----------
For the Year Ended December 31, 1994
Life Insurance in Force............................... $ 136,929 $ 87,553 $ 35,016 $ 84,392
---------- -------- ------- ----------
Insurance Revenues
Life Insurance and Annuities........................ $ 1,008 $ 211 $ 294 $ 1,091
Accident and Health Insurance....................... 308 304 5 9
---------- -------- ------- ----------
Total................................................. $ 1,316 $ 515 $ 299 $ 1,100
---------- -------- ------- ----------
---------- -------- ------- ----------
<CAPTION>
PERCENTAGE OF
AMOUNT ASSUMED
TO NET
-----------------
<S> <C>
Year Ended December 31, 1996
Life Insurance in Force............................... 31.1%
Insurance Revenues
Life Insurance and Annuities........................ 10.1%
Accident and Health Insurance....................... 12.1%
Total................................................. 10.1%
For the Year Ended December 31, 1995
Life Insurance in Force............................... 27.8%
Insurance Revenues
Life Insurance and Annuities........................ 38.8%
Accident and Health Insurance....................... 283.3%
Total................................................. 39.7%
For the Year Ended December 31, 1994
Life Insurance in Force............................... 41.5%
Insurance Revenues
Life Insurance and Annuities........................ 26.9%
Accident and Health Insurance....................... 55.6%
Total................................................. 27.2%
</TABLE>
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) All financial statements are included in Part A and
Part B of the Registration Statement.
(b) (1) The resolution of the Board of Directors of
Hartford Life Insurance Company ("Hartford")
authorizing the Separate Account(1)
(2) Not applicable.
(3) (a) Principal Underwriting Agreement(2)
(3) (b) Form of Dealer Agreement(2)
(4) Group Flexible Premium Deferred Variable Annuity
Contract and Certificate(1)
(5) Form of Application(1)
(6) (a) Articles of Incorporation of Hartford.
(b) Bylaws of Hartford.(1)
(7) Not applicable.
(8) Form of Participation Agreement between the
Registrant and the underlying Funds(1)
(9) Opinion and Consent of Lynda Godkin, General
Counsel.
(10) Consent of Arthur Andersen LLP, Independent Public Accountants.
- ----------------------
(1) Incorporated by reference to Pre-Effective Amendment No. 1, to the
Registration Statement File No. 33-59069, dated October 30, 1995.
(2) Incorporated by reference to Pre-Effective Amendment No. 1, to the
Registration Statement File No. 33-59069, dated May 1, 1996.
<PAGE>
-2-
(11) No financial statements are omitted.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) Copy of Power of Attorney.
(16) Organizational Chart.
Item 25. Directors and Officers of the Depositor
NAME POSITION WITH HARTFORD
---- ----------------------
Wendell J. Bossen Vice President
Gregory A. Boyko Vice President and Controller
Peter W. Cummins Vice President
Ann M. deRaismes Vice President
Timothy M. Fitch Vice President and Actuary
Bruce D. Gardner Vice President, Director*
Joseph H. Gareau Executive Vice President and Chief
Investment Officer, Director*
J. Richard Garrett Vice President and Treasurer
John P. Ginnetti Executive Vice President and Director,
Asset Management Services, Director*
Lynda Godkin General Counsel, and Corporate Secretary
Lois W. Grady Vice President
David A. Hall Senior Vice President and Actuary
Robert A. Kerzner Vice President
Andrew W. Kohnke Vice President
<PAGE>
-3-
NAME POSITION WITH HARTFORD
---- ----------------------
Steven M. Maher Vice President and Actuary
William B. Malchodi, Jr. Vice President and Director of Taxes
Thomas M. Marra Executive Vice President and Director,
Individual Life and Annuity Division,
Director*
Robert F. Nolan Vice President
Joseph J. Noto Vice President
Leonard E. Odell, Jr. Senior Vice President, Director*
Craig D. Raymond Vice President and Chief Actuary
Lowndes A. Smith President and Chief Operating Officer,
Director*
Edward J. Sweeney Vice President
Raymond P. Welnicki Senior Vice President and Director,
Employee Benefit Division, Director*
Walter C. Welsh Vice President
James J. Westervelt Senior Vice President and Group Controller
Lizabeth H. Zlatkus Vice President, Director*
Unless otherwise indicated, the principal business address of
each the above individuals is P.O. Box 2999, Hartford, CT 06104-2999.
*Denotes Board of Directors.
Item 26. Persons Controlled By or Under Common Control with the Depositor
or Registrant
Filed herewith as Exhibit 16.
<PAGE>
-4-
Item 27. Number of Contract Owners
As of December 31, 1996, there were no contract owners.
Item 28. Indemnification.
Under Section 33-320a of the Connecticut General
Statutes, the Registrant must indemnify a director or
officer against judgments, fines, penalties, amounts paid
in settlement and reasonable expenses, including
attorneys' fees, for actions brought or threatened to be
brought against him in his capacity as a director or
officer when it is determined by certain disinterested
parties that he acted in good faith and in a manner he
reasonably believed to be in the best interests of the
Registrant. In any criminal action or proceeding, it
also must be determined that the director or officer had
no reason to believe his conduct was unlawful. The
director or officer must also be indemnified when he is
successful on the merits in the defense of a proceeding
or in circumstances where a court determines that he is
fairly and reasonably entitled to be indemnified, and the
court approves the amount. In shareholder derivative
suits, the director or officer must be finally adjudged
not to have breached his duty to the Registrant or a
court must determine that he is fairly and reasonably
entitled to be indemnified and must approve the amount.
In a claim upon the director's or officer's purchase or
sale of the Registrant's securities, the director or
officer may obtain indemnification only if a court
determines that, in view of all the circumstances, he is
fairly and reasonably entitled to be indemnified, and
then for such amount as the court shall determine.
The foregoing statements are specifically made subject to
the detailed provisions of Section 33-320a.
The directors and officers of Hartford and Hartford
Equity Sales Company, Inc. ("HESCO") are covered under a
directors and officers liability insurance policy issued
to ITT Hartford Group, Inc. and its subsidiaries. Such
policy will reimburse the Registrant for any payments
that it shall make to directors and officers pursuant to
law and will, subject to certain exclusions contained in
the policy, further pay any other costs, charges and
expenses and settlements and judgments arising from any
proceeding involving any director or officer of the
Registrant in his past or present capacity as such, and
for which he may be liable, except as to any liabilities
arising from acts that are deemed to be uninsurable.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 (the "Act") 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,
<PAGE>
-5-
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant
of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the
securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled
by controlling 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.
Item 29. Principal Underwriters
(a) HESCO acts as principal underwriter for the following
investment companies:
Hartford Life Insurance Company - ICMG Secular Trust Separate Account
Hartford Life Insurance Company - Separate Account VL II
Hartford Life Insurance Company - Separate Account VL I
ITT Hartford Life and Annuity Insurance Company - Separate
Account VL II
ITT Hartford Life and Annuity Insurance Company - Separate
Account VL I
ITT Hartford Life and Annuity Insurance Company - ICMG
Registered Variable Life Separate Account One
(b) Directors and Officers of HESCO
Name and Principal Positions and Offices
Business Address * With Underwriter
------------------- ---------------------
Lowndes A. Smith President, Director
John P. Ginnetti Executive Vice President,
Director
Joseph H. Gareau Executive Vice President
Thomas M. Marra Senior Vice President
Donald E. Waggaman, Jr. Treasurer
Lynda Godkin General Counsel and Secretary
George R. Jay Controller
Peter W. Cummins Vice President
J. Richard Garrett Vice President
Lois W. Grady Vice President
Michael S. W ilder Director
Unless otherwise indicated, the principal business address
of each the above individuals is P.O. Box 2999,
Hartford, CT 06104-2999.
<PAGE>
-6-
Item 30. Location of Accounts and Records
All of the accounts, books, records or other documents
required to be kept by Section 31(a) of the Investment
Company Act of 1940 and rules thereunder, are maintained
by Hartford at 200 Hopmeadow Street, Simsbury,
Connecticut 06089.
Item 31. Management Services
All management contracts are discussed in Part A and Part B
of this Registration Statement.
Item 32. Undertakings
(a) The Registrant hereby undertakes to file a
post-effective amendment to this Registration
Statement as frequently as is necessary to ensure
that the audited financial statements in the
Registration Statement are never more than 16
months old so long as payments under the Variable
Annuity Contracts may be accepted.
(b) The Registrant hereby undertakes to include
either (1) as part of any application to purchase
a Contract offered by the Prospectus, a space
that an applicant can check to request a
Statement of Additional Information, or (2) a
post card or similar written communication
affixed to or included in the Prospectus that the
applicant can remove to send for a Statement of
Additional Information.
(c) The Registrant hereby undertakes to deliver any
Statement of Additional Information and any
financial statements required to be made
available under this Form promptly upon written
or oral request.
(d) Hartford hereby represents that the aggregate
fees and charges under the Contracts are
reasonable in relation to the services rendered,
the expenses expected to be incurred, and the
risks assumed by Hartford.
The Registrant is relying on the no-action letter issued
by the Division of Investment Management to American
Council of Life Insurance, Ref. No. IP-6-88, November 28,
1988. The Registrant has complied with conditions one
through four of the no-action letter.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets all the requirements for
effectiveness of this Registration Statement pursuant to Rule 485(b) under
the Securities Act of 1933 and duly caused this Registration Statement to be
signed on its behalf, in the City of Hartford, and State of Connecticut on
this __ day of ____________________, 1997.
HARTFORD LIFE INSURANCE COMPANY -
ICMG SECULAR TRUST SEPARATE ACCOUNT
(Registrant)
*By: /s/ Thomas M. Marra
----------------------------
Thomas M. Marra, Executive
Vice President
HARTFORD LIFE INSURANCE COMPANY *By: /s/ Lynda Godkin
(Depositor) ------------------------
Lynda Godkin
Attorney-in-Fact
*By: /s/ Thomas M. Marra
----------------------------
Thomas M. Marra, Executive
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons and in the capacities and
on the dates indicated.
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, Director * Dated:
Raymond P. Welnicki, Senior Vice ----------------------
President, Director *
Lizabeth H. Zlatkus, Vice President
Director *
<PAGE>
EXHIBIT INDEX
6.(a) Articles of Incorporation of Hartford
9. Opinion and Consent of Lynda Godkin, General Counsel
10. Consent of Arthur Andersen LLP
15. Copy of Power of Attorney
16. Organizational Chart
<PAGE>
FILING #0001681565 PG 04 OF 05 VOL B-00105
FILED 12/31/1996 10:21 AM PAGE 00680
SECRETARY OF THE STATE
CONNECTICUT SECRETARY OF THE STATE
HARTFORD LIFE INSURANCE COMPANY
CERTIFICATE AMENDING
RESTATED CERTIFICATE OF INCORPORATION
BY ACTIONS OF THE BOARD OF DIRECTORS AND THE SOLE SHAREHOLDER
1. The name of the Corporation is HARTFORD LIFE INSURANCE COMPANY.
2. The Restated Certificate of Incorporation of the Corporation is amended by
the following resolution of each of the Board of Directors and the Sole
Shareholder:
RESOLVED, that the Restated Certificate of Incorporation of the
Company, as supplemented and amended to date, is hereby further
amended by and adding the following Sections 4 and 5. All other
sections of the Restated Certificate of Incorporation shall
remain unchanged and continue in full force and effect.
"Section 4. The Board of Directors may, at any time, appoint
from among its own members such committees as it
may deem necessary for the proper conduct of the
business of the Company. The Board of Directors
shall be unrestricted as to the powers it may
confer upon such committees."
"Section 5. So much of the charter of said corporation, as
amended, as is inconsistent herewith is repealed,
provided that such repeal shall not invalidate or
otherwise affect any action taken pursuant to the
charter of the corporation, in accordance with its
terms, prior to the effective date of such
repeal."
3. The above resolutions were consented to by the Board of Directors and the
Sole Shareholder of the Corporation. The number of shares of the
Corporation's common capital stock entitled to vote thereon was 1,000 and
the vote required for adoption was 660 shares. The vote favoring adoption
was 1,000 shares, which was the greatest vote required to pass the
resolution.
<PAGE>
2
Dated at Simsbury, Connecticut this 30th day of December, 1996.
We hereby declare, under penalty of false statement, that the statements made in
the foregoing Certificate are true.
HARTFORD LIFE INSURANCE COMPANY
/s/ John P. Ginnetti
---------------------------------
John P. Ginnetti, Executive Vice
President
/s/ Lynda Godkin
---------------------------------
Lynda Godkin, Associate General Counsel
& Secretary
<PAGE>
3
RESTATED CERTIFICATE OF INCORPORATION
HARTFORD LIFE INSURANCE COMPANY
This Restated Certificate of Incorporation gives effect to
the amendment of the Certificate of Incorporation of the corporation
and otherwise purports merely to restate all those provisions
already in effect. This Restated Certificate of Incorporation has
been adopted by the Board of Directors and by the sole shareholder.
Section 1. The name of the corporation is Hartford Life
Insurance Company and it shall have all the powers granted
by the general statutes, as now enacted or hereinafter
amended to corporations formed under the Stock Corporation
Act.
Section 2. The corporation shall have the purposes and
powers to write any and all forms of insurance which any
other corporation now or hereafter chartered by Connecticut
and empowered to do an insurance business may now or
hereafter may lawfully do; to accept and to issue cede
reinsurance; to issue policies and contracts for any kind
or combination of kinds of insurance; to policies or
contracts either with or without participation in profits;
to acquire and hold any or all of the shares or other
securities of any insurance corporation; and to engage in
any lawful act or activity for which corporations may be
formed under the Stock Corporation Act. The corporation is
authorized to exercise the powers herein granted in any
state, territory or jurisdiction of the United States or in
any foreign country.
Section 3. The capital with which the corporation shall
commence business shall be an amount not less than one
thousand dollars. The authorized capital shall be two
million five hundred thousand dollars divided into one
thousand shares of common capital stock with a par value of
twenty-five hundred dollars each.
<PAGE>
4
We hereby declare, under the penalties of false statement
that the statements made in the foregoing Certificate are true.
Dated: February 10, 1982 HARTFORD LIFE INSURANCE COMPANY
By /s/ ROBERT B. GOODE, JR.
----------------------------
Attest:
/s/ WM. A. MCMAHON
- ----------------------
7342D
<PAGE>
EXHIBIT 9
THE [LOGO]
HARTFORD
April 10, 1997 Lynda Godkin
General Counsel & Secretary
Law Department
Board of Directors
Hartford Life Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
RE: HARTFORD LIFE INSURANCE COMPANY
ICMG SECULAR TRUST SEPARATE ACCOUNT
FILE NO. 33-59069
Dear Sir/Madam:
I have acted as General Counsel to Hartford Life Insurance Company (the
"Company"), a Connecticut insurance company, and Hartford Life Insurance
Company ICMG Secular Trust Separate Account (the "Account") in connection
with the registration of an indefinite amount of securities in the form of
group flexible premium deferred variable annuity contracts (the "Contracts")
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended. I have examined such documents (including the Form N-4
Registration Statement) and reviewed such questions of law as I considered
necessary and appropriate, and on the basis of such examination and review,
it is my opinion that:
1. The Company is a corporation duly organized and validly
existing as a stock life insurance company under the laws of
the State of Connecticut and is duly authorized by the
Insurance Department of the State of Connecticut to issue the
Contracts.
2. The Account is a duly authorized and validly existing separate
account established pursuant to the provisions of Section 38a-433
of the Connecticut Statutes.
3. To the extent so provided under the Contracts, that portion of
the assets of the Account equal to the reserves and other
contract liabilities with respect to the Account will not be
chargeable with liabilities arising out of any other business
that the Company may conduct.
Hartford Life Insurance Companies
200 Hopmeadow Street
Simsbury, CT 06089
860 843 3153
860 843 8665 Fax
Mailing Address:
P.O. Box 2999
Hartford, CT 06104-2999
<PAGE>
Board of Directors
Hartford Life Insurance Company
April 10, 1997
Page 2
4. The Contracts, when issued as contemplated by the Form N-4
Registration Statement, will constitute legal, validly issued
and binding obligations of the Company.
I hereby consent to the filing of this opinion as an exhibit to the
Form N-4 Registration Statement for the Contracts and the Account.
Sincerely,
/s/ Lynda Godkin
Lynda Godkin
<PAGE>
EXHIBIT 10
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
Registration Statement File No. 33-59069 for Hartford Life Insurance Company
ICMG Secular Trust Separate Account on Form N-4.
/s/Arthur Andersen LLP
Hartford, Connecticut
April 14, 1997
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
AND
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY
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, Marianne O'Doherty,
and Margaret E. Hankard 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 and Hartford Life and
Accident Insurance Company 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 /s/Leonard E. Odell, Jr.
- --------------------------------------- ----------------------------------
Donald R. Frahm Leonard E. Odell, Jr.
/s/Bruce D. Gardner /s/Lowndes A. Smith
- --------------------------------------- ----------------------------------
Bruce D. Gardner Lowndes A. Smith
/s/Joseph H. Gareau /s/Raymond P. Welnicki
- --------------------------------------- ----------------------------------
Joseph H. Gareau Raymond P. Welnicki
/s/John P. Ginetti /s/Lizabeth H. Zlatkus
- --------------------------------------- ----------------------------------
John P. Ginnetti Lizabeth H. Zlatkus
/s/Thomas M. Marra
- ---------------------------------------
Thomas M. Marra
Dated: December 3, 1996
-------------------
<PAGE>
EXHIBIT 16
<TABLE>
<CAPTION>
<S><C>
ITT Hartford Group, Inc..
(Delaware)
|
Hartford Fire Insurance Company
(Connecticut)
|
Hartford Accident and Indemnity Company
(Connecticut)
|
Hartford Life, Inc.
(Delaware)
|
Hartford Life and Accident Insurance Company
(Connecticut)
|
|
|
- -------------------------------------------------------------------------------------------------------------------
Alpine Life Hartford Financial Hartford Life American Maturity ITT Hartford Canada
Insurance Company Services Life Insurance Company Life Insurance Holdings, Inc.
(New Jersey) Insurance Co. (Connecticut) Company (Canada)
(Connecticut) | (Connecticut) |
| |
| |
| ITT Hartford Life
| Insurance Company
| of Canada
| (Canada)
|
|
- ------------------------------------------------------------------------------------------------------------------
ITT Hartford Life and Annuity ITT Hartford International Hartford Financial Services
Insurance Company Life Reassurance Corporation Corporation
(Connecticut) (Connecticut) (Delaware)
| |
| |
| |
ITT Hartford Life, Ltd. |
(Bermuda) |
|
|
- -----------------------------------------------------------------------------------------------------------------
MS Fund HL Funding The Hartford Hartford Hartford Securities ITT Comp. Emp.
America, Inc. Company, Inc. Investment Equity Sales Distribution Benefits Service
(Delaware) (Connecticut) Management Co. Company, Inc. Company, Inc. Company
(Connecticut) (Connecticut) (Connecticut) (Connecticut)
</TABLE>
