<PAGE>
As filed with the Securities and Exchange Commission on April 15, 1998.
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. 4 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 6 [X]
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) 843-6731
(Depositor's Telephone Number, Including Area Code)
LESLIE T. SOLER, ESQ.
HARTFORD LIFE
P.O. BOX 2999
HARTFORD, CT 06104-2999
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this registration statement.
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b) of Rule 485
_X_ on May 1, 1998, pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on ____________, 1998, pursuant to paragraph (a)(1) of Rule 485
If appropriate check the following box:
___ this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
Title of Securities Being Registered: Group Flexible Premium Deferred Variable
Annuity Contracts
<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)
N-4 ITEM NO. LOCATION IN REGISTRATION STATEMENT
------------ ----------------------------------
1. Cover Page Cover Page
2. Definitions Glossary of Special Terms
3. Synopsis or Highlights Summary
4. Condensed Financial Information Financial Information;
Performance Related Information
5. General Description of Registrant, The Company; The Separate Account;
Depositor, and Portfolio Companies The Funds; The Portfolios; The
Certificate; General Matters
6. Deductions Charges Under the Certificate
7. General Description of Variable The Separate Account; The
Annuity Contracts Certificate; Operation of the
Matters Certificate; General
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 Legal Proceedings
14. Table of Contents of the Statement Table of Contents of the Statement
of Additional Information of Additional Information
15. Cover Page Cover Page
<PAGE>
N-4 ITEM NO. LOCATION IN REGISTRATION STATEMENT
------------ ----------------------------------
16. Table of Contents Table of Contents
17. General Information and History Introduction; Description of
Hartford Life Insurance Company
18. Services Safekeeping of Assets
19. Purchase of Securities Being Offered Distribution of the Group Annuity
20. Underwriters Distribution of the Group Annuity
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 Depositor Directors and Officers of the
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>
PART A
<PAGE>
ICMG SECULAR TRUST SEPARATE ACCOUNT
[LOGO] HARTFORD LIFE INSURANCE COMPANY
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This Prospectus describes OmniFlex-TM-, a group flexible premium deferred
variable annuity contract (the "Group Annuity") with individually allocated
certificates (the "Certificates," and each individually the "Certificate")
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 the subaccounts (the "Divisions") of Hartford Life
Insurance Company -- ICMG Secular Trust Separate Account (the "Separate
Account").
There are currently twenty-four Divisions available under the Certificate. The
underlying investment portfolios (the "Portfolios") for the Divisions are shares
of Class IA of the Hartford Capital Appreciation HLS Fund, Inc. ("Hartford
Capital Appreciation Fund"), shares of Class IA of the Hartford Bond HLS Fund,
Inc. ("Hartford Bond Fund") and shares of Class IA of the Hartford Money Market
HLS Fund, Inc. ("Hartford Money Market Fund"); the Limited Maturity Bond
Portfolio, the Balanced Portfolio and the Partners Portfolio of Neuberger &
Berman Advisers Management Trust; the VIP High Income Portfolio and the VIP
Equity-Income Portfolio of Variable Insurance Products Fund; the VIP II Asset
Manager Portfolio of Variable Insurance Products Fund II; the Alger American
Small Capitalization Portfolio and Alger American Growth Portfolio of The Alger
American Fund; the J.P. Morgan Bond Portfolio, the J.P. Morgan Equity Portfolio,
the J.P. Morgan Small Company Portfolio and the J.P. Morgan International
Opportunities Portfolio of J.P. Morgan Series Trust II; the Fixed Income
Portfolio, the High Yield Portfolio, the Equity Growth Portfolio, the Value
Portfolio, the Global Equity Portfolio and the Emerging Markets Equity Portfolio
of Morgan Stanley Universal Funds, Inc.; and the EAFE-Registered Trademark-
Equity Index Fund, the Equity 500 Index Fund and the Small Cap Index Fund of BT
Insurance Funds Trust.
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 dated May 1, 1998,
send a written request to International Corporate Marketing Group, Attn: Group
Annuity Operations, 100 Campus Drive, Suite 250, Florham Park, NJ 07932. The
Table of Contents of the Statement of Additional Information may be found on
page 25 of this Prospectus. The Statement of Additional Information is
incorporated by reference into this Prospectus.
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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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THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY CURRENT PROSPECTUSES FOR THE
PORTFOLIOS. ALL PROSPECTUSES SHOULD BE RETAINED FOR FUTURE REFERENCE.
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PROSPECTUS DATED: MAY 1, 1998
<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............................................................. 5
SUMMARY............................................................... 7
FINANCIAL INFORMATION................................................. 8
PERFORMANCE RELATED INFORMATION....................................... 8
THE COMPANY........................................................... 8
THE SEPARATE ACCOUNT.................................................. 8
THE FUNDS............................................................. 8
THE PORTFOLIOS........................................................ 11
THE CERTIFICATE....................................................... 13
OPERATION OF THE CERTIFICATE.......................................... 13
Premium Payments.................................................... 13
Right to Examine Period............................................. 14
Allocation of Premium Payments...................................... 14
Value of Accumulation Units......................................... 14
Investment Value.................................................... 14
Transfers Among Divisions........................................... 14
Asset Rebalancing................................................... 15
Surrenders and Partial Withdrawals.................................. 15
Processing of Transactions.......................................... 16
CHARGES UNDER THE CERTIFICATE......................................... 16
Sales Expenses...................................................... 16
Mortality and Expense Risk Charge................................... 16
Administrative Expense Charge....................................... 17
Premium Tax Charge.................................................. 17
Federal Tax Charge.................................................. 17
DEATH BENEFIT......................................................... 17
ANNUITY BENEFITS...................................................... 18
Annuity Options..................................................... 18
Annuity Unit Valuation.............................................. 19
Determination of Payment Amount..................................... 19
FEDERAL TAX CONSIDERATIONS............................................ 19
A. General.......................................................... 19
B. Taxation of Hartford and the Separate Account.................... 19
C. Taxation of Annuities -- General Provisions Affecting Purchasers
Other Than Qualified Retirement Plans.............................. 20
D. Federal Income Tax Withholding................................... 22
E. Annuity Purchases by Nonresident Aliens and Foreign
Corporations....................................................... 23
GENERAL MATTERS....................................................... 23
Additions, Deletions or Substitutions of Investments................ 23
Assignment.......................................................... 23
Modification........................................................ 23
Misstatement of Age................................................. 23
Delay of Payments................................................... 23
Voting Rights....................................................... 23
Experience Credit................................................... 24
Distribution of the Group Annuity................................... 24
Safekeeping of Separate Account Assets.............................. 24
Legal Proceedings................................................... 24
Legal Counsel....................................................... 24
Experts............................................................. 24
Additional Information.............................................. 24
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION.......... 25
</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 of a Division.
ALLOCATION DATES: The dates we receive and accept Premium Payments. Premium
Payments are applied to the 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
upon death of the Annuitant or Owner.
CERTIFICATE ANNIVERSARY: An anniversary of the Certificate Date.
CERTIFICATE DATE: The date so designated in the Certificate.
CERTIFICATE YEAR: A period of 12 months following the Certificate Date and each
anniversary thereof.
CODE: The Internal Revenue Code of 1986, as amended.
CONTINGENT ANNUITANT: The person designated by the Owner to become 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 Owner before
annuity payments have started.
DIVISION: A subaccount of the Separate Account which invests exclusively in the
shares of a specified Portfolio of a Fund.
ENROLLMENT FORM: The form required to be completed prior to issuance of a
Certificate.
FUNDS: The registered open-end management investment companies in which assets
of the Divisions of the Separate Account may be invested. Currently, the Funds
include: (i) Hartford Capital Appreciation Fund; (ii) Hartford Bond Fund; (iii)
Hartford Money Market Fund ((i), (ii), and (iii) are collectively referred to in
this Prospectus as the "Hartford Funds"); (iv) Neuberger & Berman Advisers
Management Trust ("Neuberger & Berman AMT"); (v) Variable Insurance Products
Fund ("VIP"); (vi) Variable Insurance Products Fund II ("VIP II"); (vii) The
Alger American Fund ("Alger American Fund"); (viii) J.P. Morgan Series Trust II
("J.P. Morgan Series Trust"); (ix) Morgan Stanley Universal Funds, Inc.
("MSUF"); and (x) BT Insurance Funds Trust.
GENERAL ACCOUNT: The assets of Hartford other than those allocated to the
Separate Account.
GROUP ANNUITY: The variable annuity described in this Prospectus and providing
for payments varying in amount in accordance with the investment experience of
the Divisions 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.
MAXIMUM DEFERRAL AGE: The Annuitant's 90th birthday.
NET PREMIUM: The amount of premium actually credited to the Divisions.
NYSE: New York Stock Exchange.
OWNER: The entity or person who is the owner of the Certificate, as named in the
Certificate, sometimes herein referred to as "You."
PORTFOLIOS: A Hartford Fund or a separate mutual fund, series or portfolio of
the remaining Funds. There are currently twenty-four Portfolios available: the
Hartford Capital Appreciation Fund, Hartford Bond Fund and Hartford Money Market
Fund; the Limited Maturity Bond Portfolio ("N&B AMT Limited Maturity Bond
Portfolio"), Balanced Portfolio ("N&B AMT Balanced Portfolio") and Partners
Portfolio ("N&B AMT Partners Portfolio") of Neuberger & Berman AMT; the VIP High
Income Portfolio and VIP Equity-Income Portfolio of VIP; the VIP II Asset
Manager Portfolio of VIP II; the Alger American Small Capitalization Portfolio
and Alger American Growth Portfolio of Alger American Fund; the J.P. Morgan Bond
Portfolio, J.P. Morgan Equity Portfolio, J.P. Morgan Small Company Portfolio and
J.P. Morgan International Opportunities Portfolio of J.P. Morgan Series Trust;
the Fixed Income Portfolio ("MS Fixed Income Portfolio"), High Yield Portfolio
("MS High Yield Portfolio"), Equity Growth Portfolio ("MS Equity Growth
Portfolio"), Value Portfolio ("MS Value Portfolio"), Global Equity Portfolio
("MS Global Equity Portfolio"), and Emerging Markets Equity Portfolio ("MS
Emerging Markets Equity Portfolio") of MSUF; the EAFE-Registered Trademark-
Equity Index Fund ("BT EAFE-Registered Trademark- Equity Index Fund"), Equity
500 Index Fund ("BT Equity 500 Index Fund") and Small Cap Index Fund ("BT Small
Cap Index Fund") of BT Insurance Funds Trust.
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.
SEC: U.S. Securities and Exchange Commission.
<PAGE>
4 HARTFORD LIFE INSURANCE COMPANY
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SEPARATE ACCOUNT: The Hartford separate account entitled "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 business day that Hartford and each of the Funds value their
respective investment portfolios, unless the Certificate indicates otherwise. A
business day is any day the NYSE is open for trading or any day the SEC requires
mutual funds, unit investment trusts or other investment portfolios to be
valued. The value of the Separate Account is determined at the close of the NYSE
(generally 4:00 p.m. Eastern Time) on each Valuation Day.
VALUATION PERIOD: The period between the close of business on successive
Valuation Days.
VIP: Variable Insurance Products Fund.
VIP II: Variable Insurance Products Fund II.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 5
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FEE TABLE
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
Separate Account Expenses
Administrative Expense Charge................................. $ 2.50/mo
Mortality and Expense Risk Charge............................. 0.65%(2)
</TABLE>
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(1) The sales load will vary depending on plan characteristics.
(2) Annual expense as a percentage of average Investment Value.
Annual Fund Operating Expenses
(as a percentage of net assets)
<TABLE>
<CAPTION>
TOTAL FUND
OPERATING
EXPENSES
MANAGEMENT OTHER (AFTER
FEES EXPENSES WAIVERS
(AFTER (AFTER AND/OR
WAIVERS) REIMBURSEMENTS) REIMBURSEMENTS)
---------- -------- ----------
<S> <C> <C> <C>
Hartford Capital Appreciation Fund.............. 0.620% 0.020% 0.640%
Hartford Bond Fund.............................. 0.490% 0.020% 0.510%
Hartford Money Market Fund...................... 0.425% 0.015% 0.440%
N&B AMT Partners Portfolio (1).................. 0.800% 0.060% 0.860%
N&B AMT Balanced Portfolio (1).................. 0.850% 0.190% 1.040%
N&B AMT Limited Maturity Bond Portfolio (1)..... 0.650% 0.120% 0.770%
VIP High Income Portfolio (2)................... 0.590% 0.120% 0.710%
VIP Equity-Income Portfolio (2)................. 0.500% 0.080% 0.580%
VIP II Asset Manager Portfolio (2).............. 0.550% 0.100% 0.650%
Alger American Small Capitalization Portfolio... 0.850% 0.040% 0.890%
Alger American Growth Portfolio................. 0.750% 0.040% 0.790%
J.P. Morgan Bond Portfolio (3).................. 0.300% 0.450% 0.750%
J.P. Morgan Equity Portfolio (3)................ 0.400% 0.500% 0.900%
J.P. Morgan Small Company Portfolio (3)......... 0.600% 0.550% 1.150%
J.P. Morgan International Opportunities
Portfolio (3)................................ 0.600% 0.600% 1.200%
MS Fixed Income Portfolio (4)................... 0.000% 0.700% 0.700%
MS High Yield Portfolio (4)..................... 0.000% 0.800% 0.800%
MS Equity Growth Portfolio (4).................. 0.000% 0.850% 0.850%
MS Value Portfolio (4).......................... 0.000% 0.850% 0.850%
MS Global Equity Portfolio (4).................. 0.000% 1.150% 1.150%
MS Emerging Markets Equity Portfolio (4)........ 0.000% 1.750% 1.750%
EAFE-Registered Trademark- Equity Index Fund
(5).......................................... 0.020% 0.630% 0.650%
Equity 500 Index Fund (5)....................... 0.000% 0.300% 0.300%
Small Cap Index Fund (5)........................ 0.000% 0.450% 0.450%
</TABLE>
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(1) Neuberger & Berman AMT 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 Fee" include the aggregate of
the administration fees paid by the Portfolio and the management fee 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 credits
realized, as a result of uninvested cash balances were used to reduce
custodian expenses. Including these reductions, the total operating expenses
presented in the table would have been 0.710% for VIP High Income Portfolio,
0.570% for VIP Equity-Income Portfolio and 0.640% for VIP II Asset Manager
Portfolio.
(3) Pursuant to a voluntary agreement, fees and expenses were reimbursed to the
extent certain expenses exceeded .75%, .90%, 1.15% and 1.20% of the average
daily net assets of J.P. Morgan Bond Portfolio, J.P. Morgan Equity
Portfolio, J.P. Morgan Small Company Portfolio and J.P. Morgan International
Opportunities Portfolio, respectively. Without such reimbursement, total
operating expenses would have been 1.910%, 2.310%, 3.810% and 4.250% for
J.P. Morgan Bond Portfolio, J.P. Morgan Equity Portfolio, J.P. Morgan Small
Company Portfolio and J.P. Morgan International Opportunities Portfolio,
respectively.
(4) With respect to the Fixed Income, High Yield, Equity Growth, Value, Global
Equity and Emerging Markets Equity Portfolios, the investment adviser has
voluntarily agreed to waive its investment advisory fees and to reimburse
the Portfolios if such fees would cause their respective "Total Fund
Operating
<PAGE>
6 HARTFORD LIFE INSURANCE COMPANY
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Expenses" to exceed those set forth in the table above. Absent such
reductions, it is estimated that "Management Fees," "Other Expenses" and
"Total Fund Operating Expenses" for the Portfolios would have been as
follows:
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
FEES EXPENSES EXPENSES
---------- -------- ----------
<S> <C> <C> <C>
Fixed Income.................................... 0.400% 1.310% 1.710%
High Yield...................................... 0.500% 1.180% 1.680%
Equity Growth................................... 0.550% 1.500% 2.050%
Value........................................... 0.550% 1.320% 1.870%
Global Equity................................... 0.800% 1.630% 2.430%
Emeging Markets Equity.......................... 1.250% 2.870% 4.120%
</TABLE>
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(5) Without expense waivers and reimbursements, the total operating expenses for
BT EAFE-Registered Trademark- Equity Index Fund, BT Equity 500 Index Fund
and BT Small Cap Index Fund would have been 2.750%, 2.780% and 3.270%,
respectively.
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>
Hartford Capital
Appreciation Fund...... $ 64 $ 94 $ 127 $ 224
Hartford Bond Fund....... 63 90 119 208
Hartford Money Market
Fund................... 64 92 123 217
N&B AMT Limited Maturity
Bond Portfolio......... 65 98 134 241
N&B AMT Balanced
Portfolio.............. 68 107 149 276
N&B AMT Partners
Portfolio.............. 66 101 139 253
VIP High Income
Portfolio.............. 65 96 131 233
VIP Equity-Income
Portfolio.............. 64 92 123 217
VIP II Asset Manager..... 64 94 127 226
Alger American Small
Capitalization
Portfolio.............. 67 102 141 257
Alger American Growth
Portfolio.............. 66 99 135 244
J.P. Morgan Bond
Portfolio.............. 65 97 133 239
J.P. Morgan Equity
Portfolio.............. 67 102 141 258
J.P. Morgan Small Company
Portfolio.............. 69 110 156 290
J.P. Morgan International
Opportunities
Portfolio.............. 70 112 158 297
MS Fixed Income
Portfolio.............. 65 96 130 232
MS High Yield
Portfolio.............. 66 99 136 245
MS Equity Growth
Portfolio.............. 66 101 139 251
MS Value Portfolio....... 66 101 139 251
MS Global Equity
Portfolio.............. 69 110 156 290
MS Emerging Markets
Equity Portfolio....... 76 130 190 367
EAFE-Registered Trademark-
Equity Index Fund...... 64 94 127 226
Equity 500 Index Fund.... 61 83 108 181
Small Cap Index Fund..... 62 88 116 200
</TABLE>
The purpose of this table is to assist the Owner in understanding various
costs and expenses that an 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. Maximum
charges are assumed.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 7
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SUMMARY
This Prospectus has been designed to provide you with the information
necessary to make a decision whether to purchase the Certificate offered by
Hartford and funded by the Divisions of the Separate Account. Please read the
Glossary of Special Terms on pages 3 and 4 prior to reading this Prospectus in
order to familiarize yourself with the terms being used.
WHAT IS THE CERTIFICATE AND HOW MAY I PURCHASE ONE?
The Certificate is individually allocated and offered under a group flexible
premium variable annuity contract. Generally, the Certificate is purchased by
completing an Enrollment Form and submitting it, along with the initial Premium
Payment, to the Customer Service Center for Hartford's approval. Unless
otherwise determined by Hartford, the minimum initial Premium Payment is $1,000
per Certificate with a minimum allocation to any Division 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 available to the Certificate are the Hartford
Capital Appreciation Fund, the Hartford Bond Fund and the Hartford Money Market
Fund; the Limited Maturity Bond Portfolio, the Balanced Portfolio and the
Partners Portfolio of Neuberger & Berman AMT; the VIP High Income Portfolio and
the VIP Equity-Income Portfolio of VIP; the VIP II Asset Manager Portfolio of
VIP II; the Alger American Small Capitalization Portfolio and Alger American
Growth Portfolio of Alger American Fund; the J.P. Morgan Bond Portfolio, the
J.P. Morgan Equity Portfolio, the J.P. Morgan Small Company Portfolio and the
J.P. Morgan International Opportunities Portfolio of J.P. Morgan Series Trust;
and the Fixed Income Portfolio, the High Yield Portfolio, the Equity Growth
Portfolio, the Value Portfolio, the Global Equity Portfolio and the Emerging
Markets Equity Portfolio of MSUF; the EAFE-Registered Trademark- Equity Index
Fund, the Equity 500 Index Fund and the Small Cap Index Fund of BT Insurance
Funds Trust; and such other Portfolios as shall be offered from time to time.
See "The Portfolios," page 11.
WHAT ARE THE CHARGES UNDER THE CERTIFICATE?
SALES EXPENSES
A sales load of not more than 4.6% of each Premium Payment 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 16.
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 17. In addition, a deduction will be made
for the federal tax cost resulting from Section 848 of the Code. See "Federal
Tax Charge," page 17.
CHARGES BY THE PORTFOLIOS
The Portfolios are subject to certain fees, charges and expenses. See the
Fund prospectuses accompanying this Prospectus for more information.
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 the remaining Investment Value following a partial
withdrawal is less than $1,000, or Hartford's minimum then in effect, Hartford
may terminate the Certificate in its entirety. See "Surrenders and Partial
Withdrawals," page 15. See also "Federal Tax Considerations," page 19, 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 BENEFIT?
A Death Benefit is provided on the death of the Annuitant or Owner before
the Annuity Commencement Date and prior to attained age 85. See "Death Benefit,"
page 17.
WHAT ARE THE AVAILABLE ANNUITY OPTIONS UNDER THE CERTIFICATE?
There are four annuity options available under the Certificate. See "Annuity
Options," page 18. The Annuity Commencement Date may not be deferred beyond the
Maximum Deferral Age. If an 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.
<PAGE>
8 HARTFORD LIFE INSURANCE COMPANY
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DOES THE OWNER HAVE ANY VOTING RIGHTS UNDER THE 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 an
Owner does not vote, Hartford shall vote such interests in the same proportion
as shares of the Portfolio for which instructions have been received by
Hartford. See "Voting Rights," page 23.
FINANCIAL INFORMATION
The financial statements of Hartford are included in the Statement of
Additional Information. The financial statements of Hartford should be
considered only as they relate to the ability of Hartford to meet its
obligations under the Group Annuity and Certificates. They should not be
considered as relating to the investment performance of the assets held in the
Separate Account. No financial statements of the Separate Account are included
because, as of the effective date of this Prospectus, no Certificates had been
issued.
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 investing in the Hartford Bond Fund and the 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 investing in the Hartford Money Market Fund 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 charge, mortality and expense risk charge, and the administrative
expense charge, and is therefore lower than total return at the Portfolio level,
where there are 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, where there are no comparable charges.
Hartford may provide information on various topics to current and
prospective 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
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.
THE 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 The Hartford Financial Services Group, Inc., a Delaware
corporation.
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
Divisions of the Separate Account. The ratings apply to Hartford's ability to
meet its insurance obligations, including those described in this Prospectus.
THE SEPARATE ACCOUNT
The Separate Account was established on October 28, 1994, pursuant to a
resolution by the Board of Directors of Hartford. It is registered as a unit
investment trust under the
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HARTFORD LIFE INSURANCE COMPANY 9
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Investment Company Act of 1940 (the "1940 Act"). This registration does not,
however, involve supervision by the SEC 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 the federal securities laws.
Under Connecticut law, the assets of the Separate Account attributable to
the Group Annuity and the Certificates offered by this Prospectus are held
exclusively 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 Separate Account has twenty-four Divisions dedicated to the
Group Annuity and the Certificates, each of which invests exclusively in a
corresponding Portfolio of the Funds. Additional Divisions may be established at
Hartford's discretion. The Separate Account may include other divisions which
may not be available under the Group Annuity.
HARTFORD DOES NOT GUARANTEE THE INVESTMENT RESULTS OF THE DIVISIONS 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 PORTFOLIO HAS DIFFERENT INVESTMENT OBJECTIVES AND
POLICIES, EACH IS SUBJECT TO DIFFERENT RISKS. THESE RISKS ARE MORE FULLY
DESCRIBED IN THE ACCOMPANYING FUND PROSPECTUSES.
THE FUNDS
The shares of the Portfolios are sold by the Funds to the Separate Account.
The assets of the Separate Account attributable to the Group Annuity are
invested exclusively in the Divisions. An Owner may allocate Net Premium among
the Divisions. Owners should review the brief descriptions of the investment
objectives of each of the Portfolios in connection with that allocation. See
"The Portfolios," page 11.
Each Fund continually issues an unlimited number of full and fractional
shares of beneficial interest in the relevant Portfolios. In addition to being
offered to the Separate Account, each Fund's shares are or may be offered to
other separate accounts funding variable annuity contracts and variable life
insurance policies issued by Hartford or its affiliates and to separate accounts
of other insurance companies. It is conceivable that in the future it may become
disadvantageous for both variable annuity and variable life insurance separate
accounts or for separate accounts of other life insurance companies to invest in
shares of the Funds simultaneously. Although neither Hartford nor any of the
Funds currently foresee any such disadvantage, each Fund's Board of Directors or
Board of Trustees, as applicable (collectively, the "Boards"), will monitor
events in order to identify any material conflict between different variable
annuity and variable life owners and to determine what action, if any, should be
taken in response thereto, including the possible withdrawal of the Separate
Account's participation in any of the Funds. Material conflicts could result
from such things as (1) changes in state insurance law, (2) changes in federal
income tax law, (3) changes in the investment management of any Portfolio, or
(4) differences between voting instructions given by variable annuity and
variable life owners. If the Boards were to conclude that separate underlying
funds should be established for variable annuity and variable life insurance
separate accounts, Hartford will bear the attendant expenses.
All investment income of, and other distributions to, each Division arising
from the applicable Portfolio are reinvested in shares of that Portfolio at net
asset value. Hartford will purchase Portfolio shares in connection with Net
Premium allocated to the applicable Division in accordance with Owners'
instructions and will redeem Portfolio shares to meet obligations under the
Group Annuity and the Certificates or make adjustments in reserves, if any. The
Funds are required to redeem Portfolio shares at net asset value and generally
to make payment within seven (7) calendar days.
Applicants should read the Fund prospectuses accompanying this Prospectus in
connection with the purchase of a Certificate.
HARTFORD FUNDS
The Separate Account currently invests in three Funds sponsored by Hartford
that are available as part of OmniFlex-TM- -- the Hartford Capital Appreciation
Fund, the Hartford Bond Fund, and the Hartford Money Market Fund. Each Hartford
Fund is a separate diversified open-end management investment company registered
under the 1940 Act and organized as Maryland corporations.
HL Investment Advisors, Inc. ("HL Advisors") serves as the investment
adviser to each of the Hartford Funds. In addition, HL Advisors has entered an
investment services agreement with The Hartford Investment Management Company,
Inc. ("HIMCO"), pursuant to which HIMCO will provide certain investment services
to the Hartford Bond Fund and the Hartford Money Market Fund. Wellington
Management Company, LLP ("Wellington Management")
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10 HARTFORD LIFE INSURANCE COMPANY
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serves as sub-investment adviser for the Hartford Capital Appreciation Fund.
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST
The Separate Account currently invests in Neuberger & Berman AMT, a
diversified open-end management investment company registered under the 1940 Act
and organized as a Delaware business trust. Neuberger & Berman AMT consists of
several portfolios, including the Limited Maturity Bond Portfolio, Balanced
Portfolio and Partners Portfolio available as part of OmniFlex-TM-.
Each portfolio of Neuberger & Berman AMT invests its assets in its
corresponding series of the Advisers Managers Trust, which is also an open-end
management investment company registered under the 1940 Act and is organized as
a New York common law trust. The investment performance of the Limited Maturity
Bond Portfolio, Balanced Portfolio and Partners Portfolio will directly
correspond with the investment performance of the corresponding series of the
Advisers Managers Trust. This "Master/Feeder Fund" structure is different from
that of many other investment companies which directly acquire and manage their
own portfolios of securities.
Neuberger & Berman Management Incorporated serves as the investment manager
of each series of Advisers Managers Trust and as administrator of and
distributor of the shares of each portfolio of Neuberger & Berman AMT. Neuberger
& Berman, LLC serves as the sub-adviser for each series of Advisers Managers
Trust.
VARIABLE INSURANCE PRODUCTS FUND AND VARIABLE
INSURANCE PRODUCTS FUND II (EACH, A "FIDELITY FUND"
AND COLLECTIVELY, THE "FIDELITY FUNDS")
The Separate Account currently invests in both Fidelity Funds. The Fidelity
Funds are diversified, open-end management investment companies organized as
Massachusetts business trusts by Fidelity Management & Research Company ("FMR")
and registered under the 1940 Act. The Fidelity Funds consist of several
investment portfolios, including the VIP High Income Portfolio, VIP Equity-
Income Portfolio and VIP II Asset Manager Portfolio available as part of
OmniFlex-TM-.
The Fidelity Funds are each managed by FMR. FMR is one of America's largest
investment management organizations. 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.
THE ALGER AMERICAN FUND
The Separate Account currently invests in shares of The Alger American Fund,
a diversified open-end management investment company registered under the 1940
Act and organized as a Massachusetts business trust. The Alger American Fund
consists of six series, including the Alger American Small Capitalization and
Alger American Growth Portfolios available as part of OmniFlex-TM-.
The Alger American Fund is managed by Fred Alger Management, Inc. ("Alger
Management"), a subsidiary of Fred Alger & Company, Incorporated, which is in
turn a subsidiary of Alger Associates, Inc., a financial services holding
company. Alger Management has been in the business of providing investment
advisory services since 1964.
J.P. MORGAN SERIES TRUST II
The Separate Account currently invests in shares of J.P. Morgan Series
Trust, a diversified open-end management investment company registered under the
1940 Act and organized as a Delaware business trust. J.P. Morgan Series Trust
consists of five portfolios, including the J.P. Morgan Bond, J.P. Morgan Equity,
J.P. Morgan Small Company and J.P. Morgan International Opportunities Portfolios
available as part of OmniFlex-TM-.
Each Portfolio of J.P. Morgan Series Trust is advised by J.P. Morgan
Investment Management, Inc. ("J.P. Morgan"), a wholly-owned subsidiary of J.P.
Morgan & Co. Incorporated which is a bank holding company with a long history of
service as adviser, underwriter and lender to an extensive roster of major
companies and as financial adviser to national governments.
MORGAN STANLEY UNIVERSAL FUNDS, INC.
The Separate Account currently invests in shares of MSUF, an open-end
management investment company registered under the 1940 Act and organized as a
corporation under the laws of the State of Maryland. MSUF consists of 17
portfolios, including the Fixed Income, High Yield, Equity Growth, Value, Global
Equity and Emerging Markets Equity Portfolios available as part of OmniFlex-TM-.
The investment adviser for Equity Growth, Global Equity and Emerging Markets
Equity Portfolios is Morgan Stanley Asset Management Inc., a wholly-owned
subsidiary of Morgan Stanley Dean Witter & Co., which is a publicly owned global
financial services corporation. The investment adviser for Fixed Income, High
Yield and Value Portfolios is Miller Anderson & Sherrerd, LLP, which is
indirectly wholly-owned by Morgan Stanley Dean Witter & Co.
BT INSURANCE FUNDS TRUST
The Separate Account currently invests in the BT Insurance Funds Trust, a
diversified open-end management investment company registered under the 1940 Act
and organized as a Massachusetts business trust. BT Insurance Funds Trust
consists of six series, including the EAFE-Registered Trademark- Equity Index
Fund, the Equity 500 Index Fund and the Small Cap Index Fund available as part
of OmniFlex-TM-.
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HARTFORD LIFE INSURANCE COMPANY 11
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BT Insurance Funds Trust has retained the services of Bankers Trust Global
Investment Management, a unit of Bankers Trust Company, as investment manager.
Bankers Trust Company conducts a variety of general banking and trust activities
and is a major wholesaler supplier of financial services to the international
and domestic institutional markets.
THE PORTFOLIOS
The underlying investment for the Certificates are shares of the Portfolios.
The 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. Owners
should review the following brief descriptions of the investment objectives of
the Portfolios.
HARTFORD CAPITAL APPRECIATION FUND
Hartford Capital Appreciation Fund seeks to achieve growth of capital by
investing in securities selected solely on the basis of potential for capital
appreciation.
HARTFORD BOND FUND
Hartford Bond Fund seeks to achieve maximum current income consistent with
preservation of capital by investing primarily in fixed-income securities. Up to
20% of the total assets of the Portfolio 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 Portfolio'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 "High Yield-High Risk
Debt Securities."
HARTFORD MONEY MARKET FUND
Hartford Money Market Fund seeks to achieve maximum current income
consistent with liquidity and preservation of capital.
LIMITED MATURITY BOND PORTFOLIO
N&B AMT Limited Maturity Bond Portfolio seeks to achieve the highest current
income consistent with low risk to principal and liquidity; and secondarily,
total return. This Portfolio invests in a diversified portfolio primarily
consisting of short to intermediate term U.S. government and agency securities
and investment grade debt securities issued by financial institutions,
corporations, and others. The Portfolio may invest up to 10% of its net assets,
measured at the time of investment, in fixed-income securities that are below
investment grade.
BALANCED PORTFOLIO
N&B AMT Balanced Portfolio seeks to achieve long-term capital growth and
reasonable current income without undue risk to principal. It is anticipated
that the Portfolio's investment program will normally be managed so that
approximately 60% of its total assets will be invested in common and preferred
stocks and the remaining assets will be invested in debt securities, primarily
investment grade. However, depending on the investment manager's views regarding
current market trends, the common stock portion of its portfolio investments may
be adjusted downward to as low as 50% or upward to as high as 70%. At least 25%
of its assets will be invested in fixed income securities.
PARTNERS PORTFOLIO
N&B AMT Partners Portfolio seeks to achieve capital growth. This Portfolio's
investment approach is to invest principally in common stocks of medium to large
capitalization established companies, using a value-oriented investment approach
designed to increase capital with reasonable risk. Its investment program seeks
securities believed to be undervalued based on strong fundamentals such as low
price-to-earnings ratios, consistent cash flow and the company's track record
through all parts of the market cycle.
VIP HIGH INCOME PORTFOLIO
VIP High Income Portfolio seeks high current income primarily through
investments in all types of income-producing debt securities, preferred stocks
and convertible securities. Although the Portfolio has no limits on the quality
and maturity of its investments, its strategy typically leads to longer-term,
lower-quality, fixed-income securities. These domestic and foreign investments
may present the risk of default or may be in default.
VIP EQUITY-INCOME PORTFOLIO
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. This
Portfolio's goal is to achieve a yield which exceeds the composite yield on the
securities comprising the Standard & Poor's Composite Index of 500 Stocks
(commonly referred to as "S&P 500"). The Portfolio may invest in high yielding,
lower-rated securities (commonly referred to as "junk bonds") which are subject
to greater risk than investments in higher-rated securities.
VIP II ASSET MANAGER PORTFOLIO
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 instruments.
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12 HARTFORD LIFE INSURANCE COMPANY
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ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
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 S&P SmallCap
600 Index, updated quarterly.
ALGER AMERICAN GROWTH PORTFOLIO
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.
J.P. MORGAN BOND PORTFOLIO
J.P. Morgan Bond Portfolio seeks high total return consistent with moderate
risk of capital and maintenance of liquidity. Although the net asset value of
the Portfolio will fluctuate, the Portfolio attempts to preserve the value of
its investments to the extent consistent with its objective. Under normal market
conditions, 65% of the Portfolio's, assets will be invested in bonds, debentures
and other debt instruments. The Portfolio may invest up to 20% of its assets in
securities denominated in foreign currencies and may invest without limitation
in U.S. dollar-denominated securities of foreign issuers.
J.P. MORGAN EQUITY PORTFOLIO
J.P. Morgan Equity Portfolio seeks high total return from a portfolio
comprised of selected equity securities. The Portfolio invests primarily in the
common stock of large and medium capitalization U.S. companies.
J.P. MORGAN SMALL COMPANY PORTFOLIO
J.P. Morgan Small Company Portfolio seeks high total return from a portfolio
of equity securities of small companies. The Portfolio invests at least 65% of
the value of its total assets in the common stock of small U.S. companies
primarily with market capitalizations less than $1 billion.
J.P. MORGAN INTERNATIONAL OPPORTUNITIES PORTFOLIO
J.P. Morgan International Opportunities Portfolio seeks high total return
from a portfolio of equity securities of foreign corporations. Under normal
market conditions, the Portfolio will invest in a minimum of three different
foreign countries.
FIXED INCOME PORTFOLIO
MS Fixed Income Portfolio seeks above average total return over a market
cycle of three to five years by investing primarily in a diversified portfolio
of U.S. government and agency securities, corporate bonds, foreign bonds,
mortgage-backed securities of domestic issuers, and other fixed income
securities and derivatives. Under normal circumstances, the Portfolio will
invest at least 65% of its total assets in fixed income securities, not more
than 20% of which will be below investment grade (commonly referred to as "high
yield securities" or "junk bonds").
HIGH YIELD PORTFOLIO
MS High Yield Portfolio seeks above average total return over a market cycle
of three to five years by investing at least 65% of its total assets in high
yield securities of U.S. and foreign issuers including corporate bonds and other
fixed income securities. The Portfolio expects to achieve its objective through
maximizing current income, although it may seek capital growth opportunities
when consistent with its objective.
EQUITY GROWTH PORTFOLIO
MS Equity Growth Portfolio seeks long-term capital appreciation by investing
primarily in growth-oriented common and preferred stocks, convertible
securities, rights and warrants to purchase common stocks, depositary receipts
and other equity securities. Under normal circumstances, the Portfolio will
invest at least 65% of its total assets in equity securities.
VALUE PORTFOLIO
MS Value Portfolio seeks above average total return over a market cycle of
three to five years by investing primarily in common and preferred stocks,
convertible securities, rights and warrants to purchase common stocks, ADRs and
other equity securities of companies with equity capitalizations usually greater
than $300 million. Under normal circumstances, the Portfolio will invest at
least 65% of its total assets in equity securities. The Portfolio may invest up
to 5% of its total assets in foreign equity securities (other than ADRs).
GLOBAL EQUITY PORTFOLIO
MS Global Equity Portfolio seeks long-term capital appreciation by investing
primarily in common and preferred stocks, convertible securities, and rights and
warrants to purchase common stocks, depositary receipts and other equity
securities of issuers throughout the world, including issuers in the United
States and emerging market countries. Under normal circumstances, at least 65%
of the total assets of the Portfolio will be invested in equity securities.
Also, under normal circumstances, at least 20% of the Portfolio's total assets
will be invested in common stocks of U.S. issuers and the remaining equity
position will be invested in at least three countries other than the United
States.
EMERGING MARKET EQUITY PORTFOLIO
MS Emerging Markets Equity Portfolio seeks long-term capital appreciation by
investing primarily in common and preferred stocks, convertible securities,
rights and warrants to purchase common stocks, sponsored or unsponsored ADRs and
other equity securities of emerging market country issuers. Under normal
circumstances, at least 65%
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HARTFORD LIFE INSURANCE COMPANY 13
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of the Portfolio's total assets will be invested in emerging market country
equity securities.
EAFE-REGISTERED TRADEMARK- EQUITY INDEX FUND
BT EAFE-Registered Trademark- Equity Index Fund seeks to replicate as
closely as possible (before deduction for expenses) the total return of the
Europe, Australia, Far East Index (the "EAFE Index"), a capitalization-weighted
index containing approximately 1,100 equity securities of companies located
outside the United States, by investing in a statistically selected sample of
the equity securities included in the EAFE Index. It will invest primarily in
equity securities of business enterprises organized and domiciled outside of the
United States or for which the principal trading market is outside the Untied
States.
EQUITY 500 INDEX FUND
BT Equity 500 Index Fund seeks to replicate as closely as possible (before
deduction for expenses) the total return of the Standard & Poor's 500 Composite
Stock Price Index (the "S&P 500"), an index emphasizing large-capitalization
stocks. It will include the common stock of those companies included in the S&P
500, other than Bankers Trust New York Corporation, selected on the basis of
computer-generated statistical data, that are deemed representative of the
industry diversification of the entire S&P 500.
SMALL CAP INDEX FUND
BT Small Cap Index Fund seeks to replicate as closely as possible (before
deduction for expenses) the total return of the Russell 2000 Small Stock Index
(the "Russell 2000"), an index consisting of 2,000 small-capitalization common
stocks. It will include the common stock of companies included in the Russell
2000, on the basis of computer-generated statistical data, that are deemed
representative of the industry diversification of the entire Russell 2000.
There is no assurance that any of the Portfolios will achieve their stated
objectives. Owners are also advised to read the Fund prospectuses accompanying
this Prospectus for more detailed information.
THE CERTIFICATE
The Certificate is individually allocated and offered under a 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 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
Maximum Deferral Age.
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 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 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.
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 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 Premium Payment will be returned within five (5) business
days, unless you consent to Hartford's retention of the Premium 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
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14 HARTFORD LIFE INSURANCE COMPANY
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Division by the value of an Accumulation Unit in that Division on that date.
The minimum initial Premium Payment is $1,000 per Certificate, unless agreed
to otherwise by Hartford. 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.
RIGHT TO EXAMINE PERIOD
If you are not satisfied with your purchase, you may surrender the
Certificate by returning it within ten (10) calendar 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 refund
an amount equal to the Investment Value on the date of receipt of the request
for cancellation, plus any charges deducted. The Owner bears the investment risk
during the period prior to Hartford's receipt of the request for cancellation.
In certain states, Hartford must return to the applicant the greater of the
Premium Payment(s) paid or the sum of (1) the Investment Value on the date the
returned Certificate is received by Hartford at the Customer Service Center or
its agent and (2) any deductions under the Certificate or by the Portfolios for
taxes, charges or fees. In these states, the initial Premium Payment is
allocated to the Division investing in the Hartford Money Market Fund during the
right to examine period.
ALLOCATION OF PREMIUM PAYMENTS
Upon written request, You may change the premium allocation. Portions
allocated to the Investment Divisions must be whole percentages of 5% or more.
Subsequent Net Premiums will be allocated among Investment Divisions according
to Your most recent instructions, subject to the following. If We receive a
premium and Your most recent allocation instructions would violate the 5%
requirement, We will allocate the Net Premium among the Investment Divisions
according to Your previous premium allocation. If the asset rebalancing option
is in effect, premiums will be allocated accordingly until that option is
terminated. See "Asset Rebalancing," page 15.
The Owner will receive several different types of notification as to what
his or her current premium allocation is. The initial allocation chosen by the
Owner on the Enrollment Form is shown in the Certificate. In addition, every
transactional confirmation generated after a premium payment is received will
show how that premium has been allocated. A Certificate's annual statement will
also summarize the current premium allocation in effect for that Certificate.
VALUE OF ACCUMULATION UNITS
The value of Accumulation Units 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 Fund
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 Funds.
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.
TRANSFERS AMONG DIVISIONS
AMOUNT AND FREQUENCY OF TRANSFERS
Upon request and as long as the Certificate is in effect, an Owner may
transfer amounts among the Divisions, without charge, up to twelve (12) times
per Certificate Year. Transfers in excess of twelve (12) per Certificate Year
will be subject to a charge of $50 per transfer deducted from the amount of the
transfer. Transfer requests must be in writing on a form approved by Hartford or
by telephone in accordance with established procedures. The amounts which may
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HARTFORD LIFE INSURANCE COMPANY 15
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be transferred will be limited by Hartford's rules then in effect. Currently,
the minimum value of Accumulation Units that may be transferred from one
Division to another is the lesser of (i) $500 or (ii) the total value of the
Accumulation Units in the Division. The value of the remaining Accumulation
Units in a Division after a transfer must equal at least $500. If, after an
ordered transfer, the value of the remaining Accumulation Units in an Division
would be less than $500, the entire value will be transferred.
Currently there are no restrictions on transfers other than those described
herein. Hartford reserves the right in the future to impose additional
restrictions on transfers.
TRANSFERS TO OR FROM DIVISIONS
In the event of a transfer from a Division, the number of Accumulation Units
credited to the Division from which the transfer is made will be reduced. The
reduction will be determined by dividing:
1. the amount transferred by,
2. the Accumulation Unit value for that Division on the Valuation Day Hartford
receives the request for transfer in writing at the Customer Service Center.
In the event of a transfer to a Division, Hartford will increase the number
of Accumulation Units credited thereto. The increase will equal:
1. the amount transferred divided by,
2. the Accumulation Unit Value for that Division determined on the Valuation
Day Hartford receives the request for transfer in writing at the Customer
Service Center.
PROCEDURES FOR TELEPHONE TRANSFERS
Owners may effect telephone transfers in two ways. An Owner may directly
contact a customer service representative. Owners may in the future also request
access to an electronic service known as a Voice Response Unit (VRU). The VRU
will permit the transfer of monies among the Divisions and change of the
allocation of future payments. Owners intending to conduct telephone transfers
through the VRU will be asked to complete a Telephone Authorization Form.
Hartford will undertake reasonable procedures to confirm that instructions
communicated by telephone are genuine. Before a customer service representative
accepts any request, the caller will be asked for his or her social security
number and address. All calls will also be recorded. A Personal Identification
Number (PIN) will be assigned to all Owners who request VRU access. The PIN is
selected by and known only to the Owner. Proper entry of the PIN is required
before any transactions will be allowed through the VRU. Furthermore, all
transactions performed over the VRU, as well as with a customer service
representative, will be confirmed by Hartford through a written letter.
Moreover, all VRU transactions will be assigned a unique confirmation number
which will become part of the Certificate's history. Hartford is not liable for
any loss, cost or expense for action on telephone instructions which are
believed to be genuine in accordance with these procedures.
ASSET REBALANCING
Subject to Hartford's rules then in effect, an Owner may authorize Hartford
to automatically reallocate Investment Value periodically in order to maintain a
particular percentage allocation among the Divisions as selected by the Owner
("Asset Rebalancing"). The Investment Value held in each Division will increase
or decrease in value at different rates during the relevant period. Asset
Rebalancing is intended to reallocate Investment Value from those Divisions that
have increased in value to those that have decreased in value.
To elect Asset Rebalancing, a request in writing must be received by
Hartford at its Customer Service Center. If Asset Rebalancing is elected, all
Investment Value must be included in the automatic reallocation. The percentages
selected under Asset Rebalancing will override any prior percentage allocations
chosen by the Owner and all future Net Premiums will be allocated accordingly.
Once elected, an Owner may instruct Hartford in writing at any time to terminate
the option. In addition, any transfer made outside of Asset Rebalancing will
terminate the option.
SURRENDERS AND 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 under
Option 4 if selected as the annuity payment option. See "Annuity Options," page
18.
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 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 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
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16 HARTFORD LIFE INSURANCE COMPANY
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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 Owner to preauthorize partial withdrawals subject to certain limitations
then in effect.
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.
Payment on any request for a surrender or partial withdrawal from the
Divisions will be made as soon as possible and in any event no later than seven
calendar days after the written request is received by Hartford at its Customer
Service Center.
ANY SURRENDER OR PARTIAL WITHDRAWAL DESCRIBED ABOVE MAY RESULT IN ADVERSE
TAX CONSEQUENCES TO THE OWNER. THE OWNER, THEREFORE, SHOULD CONSULT A TAX
ADVISER BEFORE UNDERTAKING ANY SUCH SURRENDER. SEE "FEDERAL TAX CONSIDERATIONS,"
PAGE 19.
PROCESSING OF TRANSACTIONS
Generally, transactions initiated by an Owner will be processed only on a
Valuation Day. Requests received by Hartford at its Customer Service Center on a
Valuation Day before the close of trading on the NYSE (generally 4:00 p.m.
Eastern Time) will be processed as of that day except as otherwise indicated in
this Prospectus. Those requests received after the close of the NYSE will be
processed as of the next Valuation Day.
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 Owners funded by the
Separate Account.
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.
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 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 Account 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
Owner prior to the commencement of annuity payments Hartford can, in periods of
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HARTFORD LIFE INSURANCE COMPANY 17
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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 for issuing the Certificate, sending confirmations,
creating and distributing annual and other periodic statements, processing
reallocations and surrenders, responding to Owner inquiries, reconciling and
depositing cash receipts, daily calculating and monitoring of Accumulation Unit
values of the Divisions, Separate Account reporting, including semiannual and
annual reports and mailing and tabulation of shareholder proxy solicitations.
You should refer to the Fund 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 Premium 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
SEC rules.
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 no
designated Contingent Annuitant, if the Contingent Annuitant predeceases the
Annuitant, or if the Owner dies before the Annuity Commencement Date, the
Beneficiary will receive the Death Benefit. If the 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 Owner occurs prior to the Annuitant or
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 Owner under the Certificate,
reduced by the amount of any partial withdrawals since the Certificate Date.
If the Annuitant or 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 offered by Hartford; provided, however, that (a) in the event of
the death of any Owner prior to the Annuity Commencement Date, the entire
interest in the Certificate will be distributed within 5 years after the death
of the Owner and (b) in the event of the death of any 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 Owner's death where the sole
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18 HARTFORD LIFE INSURANCE COMPANY
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Beneficiary is the spouse of the 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 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 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 the Death Benefit whenever (a) the NYSE is closed, except for
holidays or weekends, or trading on the NYSE is restricted as determined by the
SEC, (b) the SEC permits postponement and so orders, or (c) the SEC determines
that an emergency exists making valuation of the amounts or disposal of
securities not reasonably practicable.
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 Maximum Deferral Age. 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 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.
ANNUITY OPTIONS
The Certificate contains the four annuity options described below. If you do
not elect otherwise, payments in most states will automatically begin at the
Maximum Deferral Age under Option 3 (Joint and Last Survivor Annuity).
Under any of the annuity options excluding Option 4, no surrenders are
permitted after annuity payments commence. Only full surrenders are permitted
under 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 an Owner.
Hartford may offer other annuity options from time to time.
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ANNUITY UNIT 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," page
14) for the day for which the value of the Annuity Unit
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 Accumulation Units 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 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 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 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'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 which is taxed as a life
insurance company in accordance with 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," page 14. 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.
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C. TAXATION OF ANNUITIES -- GENERAL
PROVISIONS AFFECTING PURCHASERS OTHER THAN QUALIFIED RETIREMENT PLANS
Section 72 of the Code governs the taxation of annuities in general.
1. NON-NATURAL PERSONS, CORPORATIONS, ETC.
Section 72 contains provisions for 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 Owner is not an individual, the primary Annuitant shall be treated as
the Owner for purposes of making distributions which are required to be made
upon the death of the Owner. If there is a change in the primary Annuitant, such
change shall be treated as the death of the Owner.
2. OTHER OWNERS (NATURAL PERSONS).
An 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.
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
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HARTFORD LIFE INSURANCE COMPANY 21
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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 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
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.
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 Owner or Primary Annuitant
Subject to the alternative election or spouse beneficiary provisions in ii
or iii below:
1. If any 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 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 Owner is not an individual, then for purposes of 1. or 2. above,
the primary annuitant under the Certificate shall be treated as the
Owner, and any change in the primary annuitant shall be treated as the
death of the 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
<PAGE>
22 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
If any portion of the interest of an 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 an 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 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 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 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 Owner must agree to pay the tax due for the period during which the
diversification requirements were not met.
Hartford monitors the diversification of investments in the separate
accounts and tests for diversification as required by the Code. Hartford 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
Owner, such as the ability to select and control investments in a separate
account, will cause the 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 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 an Owner could be considered the owner of the
assets for tax purposes. Hartford reserves the right to modify the Certificates,
as necessary, to prevent 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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 23
- --------------------------------------------------------------------------------
forms are not submitted to Hartford, Hartford will automatically withhold 10% of
the taxable distribution.
2. PERIODIC DISTRIBUTIONS.
A period distribution is a distribution 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.
GENERAL MATTERS
ADDITIONS, DELETIONS OR
SUBSTITUTIONS OF INVESTMENTS
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 Group Annuity. 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 Group Annuity, Hartford may
substitute shares of another Portfolio for shares already purchased, or to be
purchased in the future, under the Group Annuity. No substitution of securities
will take place without notice to and consent of Owners and without prior
approval of the SEC to the extent required by the Investment Company Act of
1940. Subject to Owner approval, if required, 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 Group Annuity.
ASSIGNMENT
Benefits under a Certificate described herein are assignable by the 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 Other Than Qualified
Retirement Plans," page 19.
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 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 NYSE is closed, except for holidays or weekends, or trading on the NYSE
is restricted as determined by the SEC; (b) the SEC permits postponement and so
orders; or (c) the SEC 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.
<PAGE>
24 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
In connection with the voting of Portfolio shares held by it, Hartford will
arrange for the handling and tallying of voting instructions received from
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 Owners
for whose accounts the Portfolio shares are held. If an Owner desires to attend
any meeting at which shares held for the Owner's benefit may be voted, the 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 Owner's
account. In the event that the 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 GROUP ANNUITY
The Group Annuity will be sold by insurance and variable annuity agents of
Hartford who are either registered representatives of Hartford Equity Sales
Company, Inc. ("HESCO"), a wholly-owned broker-dealer subsidiary of Hartford, or
of independent broker-dealers. These broker-dealers are registered with the SEC
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, service fees, asset-based trail
commissions, or other compensation.
Broker-dealers or financial institutions are compensated according to a
schedule set forth by HESCO and any applicable rule or regulations for variable
insurance compensation. Compensation is generally based on premium payments made
by policyholders or contract owners. This compensation is usually paid from the
sales charges described in this Prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HESCO, its affiliates or Hartford may also make compensation
arrangements with certain broker-dealers or financial institutions based on
total sales by the broker-dealer or financial institution of insurance products.
These payments, which may be different for different broker-dealers or financial
institutions, will be made by HESCO, its affiliates or Hartford out of their own
assets and will not effect the amounts paid by the policyholders or contract
owners to purchase, hold or surrender variable insurance products.
SAFEKEEPING OF SEPARATE ACCOUNT ASSETS
The assets of the Separate Account are held by Hartford and are kept
physically segregated and held separate and apart from the other accounts of
Hartford. Additional protection for the assets of the Separate Account is
afforded by Hartford's blanket fidelity bond issued by Aetna Casualty and Surety
Company, in the aggregate amount of $50 million, covering all of the officers
and employees of Hartford.
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,
Senior Vice President, General Counsel and Secretary, Hartford Life, P.O. Box
2999, Hartford, Connecticut 06104-2999.
EXPERTS
The audited 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
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said report. 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:
International Corporate Marketing Group
Attn: Group Annuity Operations
100 Campus Drive, Suite 250
Florham Park, NJ 07932
Telephone: 800-861-1408
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 25
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
OF THE
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY........................
SAFEKEEPING OF ASSETS.................................................
INDEPENDENT PUBLIC ACCOUNTANTS........................................
DISTRIBUTION OF CERTIFICATES..........................................
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:
International Corporate Marketing Group
Attn: Group Annuity Operations
100 Campus Drive, Suite 250
Florham Park, NJ 07932
Please send a Statement of Additional Information for OmniFlex-TM- funded by
ICMG Secular Trust Separate Account to me at the following address:
- ----------------------------------------------------
Name
- ------------------------------------------------------------
Address
- ------------------------------------------------------------
City/State Zip
Code
<PAGE>
PART B
<PAGE>
-2-
STATEMENT OF ADDITIONAL INFORMATION
HARTFORD LIFE INSURANCE COMPANY -
ICMG SECULAR TRUST SEPARATE ACCOUNT
OMNIFLEX VARIABLE ANNUITY
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, 1998
Date of Statement of Additional Information: May 1, 1998
<PAGE>
-3-
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY ...........
SAFEKEEPING OF ASSETS .....................................
INDEPENDENT PUBLIC ACCOUNTANTS ............................
DISTRIBUTION OF CERTIFICATES ..............................
CALCULATION OF YIELD AND RETURN ...........................
PERFORMANCE COMPARISONS ...................................
FINANCIAL STATEMENTS ......................................
<PAGE>
-4-
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY
Hartford Life Insurance Company ("Hartford") is a stock life insurance company
engaged in the business of writing 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 ultimately controlled by The Hartford Financial
Services Group, Inc., one of the largest financial service providers in the
United States.
HARTFORD RATINGS
EFFECTIVE
RATING AGENCY DATE OF RATING RATING BASIS OF RATING
- ------------- -------------- ------ ---------------
A.M. Best and Company, Inc. 9/9/97 A+ Financial soundness and
operating performance.
Standard & Poor's 1/23/98 AA Claims paying ability
Duff & Phelps 1/23/98 AA+ Claims paying ability
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 Divisions.
INDEPENDENT PUBLIC ACCOUNTANTS
The audited 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
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said report. The principal business
address of Arthur Andersen LLP is One Financial Plaza, Hartford, Connecticut
06103.
DISTRIBUTION OF CERTIFICATES
Hartford Equity Sales Company, Inc. ("HESCO") serves as principal underwriter
for the securities issued with respect to the Separate Account. HESCO is a
wholly-owned subsidiary of Hartford. 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.
<PAGE>
-5-
CALCULATION OF YIELD AND RETURN
YIELD OF THE HARTFORD MONEY MARKET FUND DIVISION. As summarized in the
Prospectus under the heading "Performance Related Information," the yield of
the Hartford Money Market Fund Division for a seven day period (the "base
period") will be computed by determining the "net change in value"
(calculated as set forth below) of a hypothetical account having a balance of
one accumulation unit of the Division at the beginning of the period,
subtracting a hypothetical charge reflecting deductions from Owner accounts,
and dividing the difference by the value of the account at the beginning of
the base period to obtain the base period return, and then 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 daily
dividends as declared by the underlying funds, less daily expense 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 HARTFORD MONEY MARKET FUND DIVISION'S YIELD AND EFFECTIVE YIELD WILL VARY IN
RESPONSE TO FLUCTUATIONS IN INTEREST RATES AND IN THE EXPENSES OF THE DIVISION.
THE CURRENT YIELD AND EFFECTIVE YIELD REFLECT RECURRING CHARGES ON THE SEPARATE
ACCOUNT LEVEL, INCLUDING THE MAXIMUM ANNUAL MAINTENANCE FEE.
The yield and effective yield for the seven day period ending December 31, 1997
for the Hartford Money Market Fund Division was as follows ($30 Annual
Maintenance Fee):
DIVISIONS YIELD EFFECTIVE YIELD
Hartford Money Market Fund* 4.70% 4.82%
* Yield and effective yield for the seven day period ending December 31, 1997.
<PAGE>
-6-
YIELDS OF HARTFORD BOND FUND AND LIMITED MATURITY BOND PORTFOLIO DIVISIONS.
As summarized in the Prospectus under the heading "Performance Related
Information," yields of the above Divisions will be computed by annualizing a
recent month's net investment income, divided by a Fund share's net asset
value on the last trading day of that month. Net changes in the value of a
hypothetical account will assume the change in the underlying mutual fund's
"net asset value per share" for the same period in addition to the daily
expense charge assessed, at the Division level for the respective period.
The Divisions' yields will vary from time to time depending upon market
conditions and, the composition of the underlying funds' portfolios. Yield
should also be considered relative to changes in the value of the Divisions'
shares and to the relative risks associated with the investment objectives
and policies of the underlying Fund.
THE YIELD REFLECTS RECURRING CHARGES ON THE SEPARATE ACCOUNT LEVEL, INCLUDING
THE ANNUAL MAINTENANCE FEE.
Yield calculations of the Divisions used for illustration purposes reflect
the interest earned by the Divisions, less applicable asset charges assessed
against an Owner's account over the base period. Yield quotations based on a
30 day period were computed by dividing the dividends and interests earned
during the period by the maximum offering price per unit on the last day of
the period, according to the following formula:
Example:
Current Yield Formula for the Division 2[((A-B)/(CD) + 1)(6) - 1]
Where A = Dividends and interest earned during the period.
B = Expenses accrued for the period (net of reimbursements).
C = The average daily number of units outstanding during the period
that were entitled to receive dividends.
D = The maximum offering price per unit on the last day of the period.
DIVISIONS YIELD
- --------- -----
Hartford Bond Fund** 5.65%
Neuberger and Berman AMT Limited Maturity Bond Portfolio** 5.15%
** Yield quotation based on a 30 day period ended December 31, 1997.
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.
The method of calculating yields described above for these Divisions differs
from the method used by the Divisions prior to May 1, 1988. The denominator of
the fraction used to calculate yield was
<PAGE>
-7-
previously the average unit value for the period calculated. That
denominator will hereafter be the unit value of the Divisions on the last
trading day of the period calculated.
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.
The following are the standardized average annual total return quotations for
the Divisions for the 1, 5, and 10 year periods ended December 31, 1997:
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FOR YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
10 YEAR OR SINCE
DIVISIONS INCEPTION DATE 1 YEAR 5 YEAR INCEPTION*
- --------- -------------- ------ ------ ----------------
<S> <C> <C> <C> <C>
Hartford 8/31/77 1.89% 2.79% 4.95%
Bond Fund
Hartford 4/2/84 12.20% 14.28% 16.35%
Capital
Appreciation
Fund
Hartford 6/30/80 -3.70% -.30% 1.66%
Money Market
Fund
Neuberger & 3/22/94 20.48% na 18.63%
Berman AMT
Partners
Portfolio
Neuberger & 2/28/89 9.50% 5.27% 7.33%
Berman AMT
Balanced
Portfolio
Neuberger & 9/10/84 -2.37% .75% 3.13%
Berman AMT
Limited Maturity
Bond Portfolio
Fidelity VIP 10/9/86 17.53% 15.49% 13.17%
Equity-Income
Portfolio
Fidelity VIP 9/19/85 7.79% 9.22% 8.98%
High Income
Portfolio
Fidelity VIP II 9/6/89 9.23% 7.91% 8.56%
Asset Manager
</TABLE>
<PAGE>
-8-
<TABLE>
<S> <C> <C> <C> <C>
Alger American 9/21/88 1.85% 7.86% 16.07%
Small
Capitalization
Portfolio
Alger American 1/9/89 15.39% 14.61% 15.89%
Growth Portfolio
JPM Bond 1/3/95 .06% na 3.70%
Portfolio
JPM Equity 1/3/95 -9.00% na 2.67%
Portfolio
JPM Small 1/3/95 12.20% na 19.91%
Company
Portfolio
JPM 1/3/95 17.03% na 21.70%
International
Opportunities
Portfolio
Morgan Stanley 1/2/97 na na .58%
Fixed Income
Portfolio
Morgan Stanley 1/2/97 na na 3.93%
High Yield
Portfolio
Morgan Stanley 1/2/97 na na 22.12%
Equity Growth
Portfolio
Morgan Stanley 1/2/97 na na 10.96%
Value Portfolio
Morgan Stanley 1/2/97 na na 10.04%
Global Equity
Portfolio
Morgan Stanley 10/1/96 -8.03% na -11.02%
Emerging Markets
Equity Portfolio
</TABLE>
*Figures represent performance since inception for Divisions in existence for
less than 10 years, or performance for 10 years for Divisions in existence for
more than 10 years.
In addition to the standardized total return, the Division may advertise a
non-standardized total return. This figure will usually be calculated for one
year, five years, and ten years or other periods. Non-standardized total return
is measured in the same manner as the standardized total return described above,
except that the contingent deferred sales charge and the Annual Maintenance Fee
are not deducted. Therefore, non-standardized total return for a Division is
higher than standardized total return for a Division.
For the fiscal year ended December 31, 1997, the non-standardized annualized
total return for the Divisions listed below were as follows:
<PAGE>
-9-
NON-STANDARDIZED ANNUALIZED TOTAL RETURN FOR YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
10 YEAR OR SINCE
DIVISIONS INCEPTION DATE 1 YEAR 5 YEAR INCEPTION*
- --------- -------------- ------ ------ ----------------
<S> <C> <C> <C> <C>
Hartford 8/31/77 10.63% 6.96% 8.10%
Bond Fund
Hartford 4/2/84 21.55% 18.18% 18.83%
Capital
Appreciation Fund
Hartford Money 6/30/80 4.63% 3.94% 5.04%
Market Fund
Neuberger & Berman AMT 3/22/94 30.40% na 23.36%
Partners Portfolio
Neuberger & Berman AMT 2/28/89 18.68% 9.49% 10.48%
Balanced Portfolio
Neuberger & Berman AMT 9/10/84 6.05% 4.94% 6.38%
Limited Maturity Bond
Portfolio
Fidelity VIP Equity- 10/9/86 27.27% 19.38% 15.97%
Income Portfolio
Fidelity VIP High 9/19/85 16.90% 13.18% 12.08
Income Portfolio
Fidelity VIP II Asset 9/6/89 19.87% 12.25% 12.00%
Manager
Alger American 9/21/88 10.67% 11.92% 18.44%
Small Capitalization
Portfolio
Alger American 1/9/89 24.93% 18.51% 18.64%
Growth Portfolio
JPM Bond Portfolio 1/3/95 8.67% na 8.59%
JPM Equity Portfolio 1/3/95 26.68% na 26.64%
JPM Small Company 1/3/95 21.71% na 24.86%
Portfolio
JPM International 1/3/95 -1.18% na 7.46%
Opportunities
Portfolio
Morgan Stanley Fixed 1/2/97 na na 9.22%
Income Portfolio
Morgan Stanley High 1/2/97 na na 12.79%
Yield Portfolio
Morgan Stanley Equity 1/2/97 na na 32.19%
Growth Portfolio
Morgan Stanley Value 1/2/97 na na 20.20%
Portfolio
Morgan Stanley Global 1/2/97 na na 19.26%
Equity Portfolio
Morgan Stanley 10/1/96 na na -2.69%
Emerging Markets
Equity Portfolio
</TABLE>
*Figures represent performance since inception for Divisions in existence for
less than 10 years, or performance for 10 years for Divisions in existence for
more than 10 years.
<PAGE>
-10-
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>
-11-
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>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hartford Life Insurance Company:
We have audited the accompanying Consolidated Balance Sheets of Hartford Life
Insurance Company (the "Company") and subsidiaries as of December 31, 1997 and
1996, 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,
1997. These consolidated financial statements and the schedules referred to
below are the responsibility of the Company's management. Our responsibility is
to express an opinion on these 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 financial position of Hartford Life
Insurance Company and subsidiaries as of December 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1997, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in Index to
Consolidated Financial Statements and Schedules are presented for the purpose of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic 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 financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 27, 1998
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
------------------------
1997 1996 1995
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Premiums and other considerations............... $1,637 $1,705 $1,487
Net investment income........................... 1,368 1,397 1,328
Net realized capital gains (losses)............. 4 (213) (11)
------ ------ ------
Total revenues................................ 3,009 2,889 2,804
------ ------ ------
Benefits, claims and expenses
Benefits, claims and claim adjustment
expenses....................................... 1,379 1,535 1,422
Amortization of deferred policy acquisition
costs.......................................... 335 234 199
Dividends to policyholders...................... 240 635 675
Other expenses.................................. 586 427 317
------ ------ ------
Total benefits, claims and expenses........... 2,540 2,831 2,613
------ ------ ------
Income before income tax expense................ 469 58 191
Income tax expense.............................. 167 20 62
------ ------ ------
Net income........................................ $ 302 $ 38 $ 129
------ ------ ------
------ ------ ------
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER
31,
-----------------
1997 1996
------- -------
<S> <C> <C>
(IN MILLIONS,
EXCEPT FOR SHARE
DATA)
Assets
Investments
Fixed maturities, available for sale, at fair
value (amortized cost of $13,885 and
$13,579)....................................... $14,176 $13,624
Equity securities, at fair value................ 180 119
Policy loans, at outstanding balance............ 3,756 3,836
Other investments, at cost...................... 47 56
------- -------
Total investments............................. 18,159 17,635
Cash............................................ 54 43
Premiums receivable and agents' balances........ 18 137
Accrued investment income....................... 330 407
Reinsurance recoverables........................ 6,325 6,259
Deferred policy acquisition costs............... 3,315 2,760
Deferred income tax............................. 348 474
Other assets.................................... 352 357
Separate account assets......................... 69,055 49,690
------- -------
Total assets.................................. $97,956 $77,762
------- -------
------- -------
Liabilities
Future policy benefits.......................... $ 3,270 $ 2,474
Other policyholder funds........................ 21,034 22,134
Other liabilities............................... 2,254 1,572
Separate account liabilities.................... 69,055 49,690
------- -------
Total liabilities............................. 95,613 75,870
------- -------
Stockholder's Equity
Common stock -- 1,000 shares authorized, issued
and outstanding, par value $5,690.............. 6 6
Additional paid in capital...................... 1,045 1,045
Net unrealized capital gains on securities, net
of tax......................................... 179 30
Retained earnings............................... 1,113 811
------- -------
Total stockholder's equity.................... 2,343 1,892
------- -------
Total liabilities and stockholder's equity...... $97,956 $77,762
------- -------
------- -------
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
NET UNREALIZED
CAPITAL GAINS
ADDITIONAL (LOSSES) ON TOTAL
COMMON PAID IN SECURITIES, RETAINED STOCKHOLDER'S
STOCK CAPITAL NET OF TAX EARNINGS EQUITY
------ -------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
(IN MILLIONS)
Balance, December 31, 1994.............. $6 $ 826 $(654) $ 644 $ 822
Net income............................ -- -- -- 129 129
Capital contribution.................. -- 181 -- -- 181
Change in net unrealized capital gains
(losses) on securities, 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 gains
(losses) on securities, net of tax... -- -- 87 -- 87
--
------ ------ ----------- ------
Balance, December 31, 1996.............. 6 1,045 30 811 1,892
Net income............................ -- -- -- 302 302
Change in net unrealized capital gains
(losses) on securities, net of tax... -- -- 149 -- 149
--
------ ------ ----------- ------
Balance, December 31, 1997.............. $6 $1,045 $179 $1,113 $2,343
--
--
------ ------ ----------- ------
------ ------ ----------- ------
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
------------------------------
1997 1996 1995
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Operating Activities
Net income............................ $ 302 $ 38 $ 129
Adjustments to reconcile net income to
cash provided by operating activities
Depreciation and amortization......... 8 14 21
Net realized capital (gains) losses... (4) 213 11
Decrease (increase) in deferred income
taxes................................ 40 (102) (172)
Increase in deferred policy
acquisition costs.................... (555) (572) (379)
Decrease (increase) in premiums
receivable and agents' balances...... 119 10 (81)
Decrease (increase) in accrued
investment income.................... 77 (13) (16)
Decrease (increase) in other assets... 52 (132) (177)
(Increase) decrease in reinsurance
recoverables......................... (416) 179 (35)
Increase (decrease) in liabilities for
future policy benefits............... 796 (92) 483
Increase in other liabilities......... 379 477 281
-------- -------- --------
Cash provided by operating
activities......................... 798 20 65
-------- -------- --------
Investing Activities
Purchases of fixed maturity
investments.......................... (6,231) (5,747) (6,228)
Sales of fixed maturity investments... 4,232 3,459 4,845
Maturities and principal paydowns of
fixed maturity investments........... 2,329 2,693 1,741
Net sales (purchases) of other
investments.......................... 24 (107) (871)
Net (purchases) sales of short-term
investments.......................... (638) 84 (24)
-------- -------- --------
Cash (used for) provided by
investing activities............... (284) 382 (537)
-------- -------- --------
Financing Activities
Capital contribution.................. -- 38 --
Net (disbursements for) receipts from
investment and universal life-type
contracts (charged against) credited
to policyholder accounts............. (503) (443) 498
-------- -------- --------
Cash (used for) provided by
financing activities............... (503) (405) 498
-------- -------- --------
Increase (decrease) in cash........... 11 (3) 26
Cash -- beginning of year............. 43 46 20
-------- -------- --------
Cash -- end of year................... $ 54 $ 43 $ 46
-------- -------- --------
-------- -------- --------
Supplemental Disclosure of Cash Flow
Information:
Net Cash Paid During the Year for:
Income taxes.......................... $ 9 $ 189 $ 162
Noncash Financing Activities:
Capital contribution.................. $ -- $ -- $ 181
-------- -------- --------
-------- -------- --------
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA UNLESS OTHERWISE STATED)
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"). Hartford Life is a direct subsidiary of Hartford
Accident and Indemnity Company ("HA&I"), an indirect subsidiary of The Hartford
Financial Services Group, Inc. ("The Hartford"). On February 10, 1997, Hartford
Life filed a registration statement, as amended, with the Securities and
Exchange Commission relating to an Initial Public Offering ("IPO") of the
Hartford Life's Class A Common Stock. Pursuant to the IPO on May 22, 1997,
Hartford Life sold to the public 26 million shares at $28.25 per share and
received net proceeds of $687. Of the proceeds, $527 was used to retire debt
related to Hartford Life's outstanding promissory notes and line of credit with
the remaining $160 contributed by Hartford Life to HLA to support growth in its
core businesses.
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. As a result, The Hartford became an
independent, publicly traded company.
Along with its parent, 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 and retirement 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 group life and group disability
insurance and corporate owned life insurance.
2. SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION
These consolidated financial statements present the financial position,
results of operations and cash flows of the Company. All material intercompany
transactions and balances between the Company, its subsidiaries and affiliates
have been eliminated. The consolidated financial statements are prepared on the
basis of generally accepted accounting principles which differ materially from
the statutory accounting practices 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. The most
significant estimates include those used in determining deferred policy
acquisition costs and the liability for future policy benefits and other
policyholder funds. Although some variability is inherent in these estimates,
management believes the amounts provided are adequate.
Certain reclassifications have been made to prior year financial information
to conform to the current year presentation.
(B) CHANGES IN ACCOUNTING PRINCIPLES
In December 1997, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") No. 97-3 "Accounting by Insurance
and Other Enterprises for Insurance Related Assessments". This SOP provides
guidance on accounting by insurance and other enterprises for assessments
related to insurance activities. Specifically, the SOP provides guidance on when
a guaranty fund or other assessment should be recognized, how to measure the
liability, and what information should be disclosed. This SOP will be effective
for fiscal years beginning after December 15, 1998. Adoption of SOP 97-3 is not
expected to have a material impact on the Company's financial condition or
results of operations.
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 EITF 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"
which is effective for transfers and servicing of financial
<PAGE>
- --------------------------------------------------------------------------------
assets and extinguishments of liabilities occurring after December 31, 1996.
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.
Effective January 1, 1996, the Company adopted SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of". This statement establishes accounting standards for the impairment of
long-lived assets, certain identifiable intangibles, and goodwill related to
those assets to be held and used and for long-lived assets and certain
identifiable intangibles to be disposed of. Adoption of SFAS No. 121 did not
have a material effect on the Company's financial condition or results of
operations.
The Company's cash flows were not impacted by these changes in accounting
principles.
(C) REVENUE RECOGNITION
Revenues for universal life-type 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 and
disability 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. Health
reserves, which are the result of sales of group long-term and short-term
disability, stop loss, Medicare Supplement and individual disability products,
are stated at amounts determined by estimates on individual cases and estimates
of unreported claims based on past experience. Liabilities for universal
life-type and investment contracts are stated at policyholder account values
before surrender charges.
(E) 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 over the expected maturity of the securities, since under
the terms of the contracts the realized gains and losses will be credited to
policyholders in future years as they are entitled to receive them.
(F) INVESTMENTS
The Company's investments in fixed maturities include bonds and commercial
paper which are considered "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 "Net unrealized capital gains (losses) on
securities, net of tax". Equity securities, which include common and
non-redeemable preferred stocks, are carried at fair values with the after-tax
difference from cost reflected in Stockholder's Equity. Policy loans are carried
at outstanding balance which approximates fair value. Net realized capital gains
and losses, after deducting pension policyholders' share, are reported as a
component of revenue and are determined on a specific identification basis.
The Company's accounting policy for impairment 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, for securities expected to be sold, an
other than temporary impairment charge is recognized if the Company does not
expect the fair value of a security to recover to cost or amortized cost prior
to the expected date of sale. Once an impairment charge has been recorded, the
Company then continues to review the other than temporarily impaired securities
for appropriate valuation on an on-going basis.
During 1996, it was determined that certain individual securities within the
investment portfolio supporting the Company's block of guaranteed rate contract
business written prior to 1995 ("Closed Book GRC") could not recover to
amortized cost prior to sale. Therefore, an other than temporary impairment loss
of $88, after-tax, was recorded.
(G) DERIVATIVE INSTRUMENTS
The Company uses a variety of derivative 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
planned investment purchases or existing assets and liabilities. The Company
does not hold or issue derivative instruments for trading purposes. The
Company's accounting for derivative 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", AICPA SOP 86-2,
"Accounting for Options" and various EITF pronouncements. Written options are
used, in all cases in conjunction with other assets and derivatives, as part of
the Company's asset and liability management strategy. Derivative instruments
are carried at values consistent with the asset or liability being hedged.
Derivative instruments used to hedge fixed maturities or equity securities are
carried at fair value
<PAGE>
- --------------------------------------------------------------------------------
with the after-tax difference from cost reflected in Stockholder's Equity.
Derivative instruments used to hedge other invested assets or liabilities are
carried at cost.
Derivative instruments must be designated at inception as a hedge and
measured for effectiveness both at inception and on an on-going 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. Derivative
instruments 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. Consistent with industry
practice, synthetic instruments are accounted for like the financial instrument
it is intended to replicate. Derivative instruments which fail to meet risk
management criteria, subsequent to acquisition, 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 investment of future receipt of product cash flows are deferred and, at
the time of the ultimate investment 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 contract futures are closed, except for futures used in
duration hedging which are deferred and basis adjusted on a quarterly basis. The
basis adjustments are amortized into net investment income over the remaining
asset life.
Open forward commitment contracts are marked to market through Stockholder's
Equity. Such contracts are accounted for at settlement by recording the purchase
of the specified securities at the previously committed price. Gains or losses
resulting from the termination of forward commitment contracts before the
delivery of the securities are recognized immediately in the Consolidated
Statements of Income as a component of net investment income.
The cost of options entered into as part of a risk management strategy are
basis adjusted to the underlying asset or liability and amortized over the
remaining life of the option. Gains or losses on expiration or termination are
adjusted into the basis of the underlying asset or liability and amortized over
the remaining asset life.
Interest rate swaps involve the periodic exchange of payments without the
exchange of underlying principal or notional amounts. Net receipts or payments
are accrued and recognized over the life of the swap agreement as an adjustment
to investment 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 net investment income. Interest rate swaps purchased in
anticipation of an asset purchase ("anticipatory transaction") are recognized
consistent with the underlying asset components such that the settlement
component is recognized in the Consolidated Statements of Income while the
change in market value is recognized as an unrealized capital gain or loss.
Premiums paid on purchased floor or cap agreements and the premium received
on issued cap or floor agreements (used for risk management) 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. Changes in the spot rate of instruments designated
as hedges of the net investment in a foreign subsidiary are reflected in the
cumulative translation adjustments component of Stockholder's Equity. Cash flows
from futures, options, and swaps, accounted for as hedges, are included with the
cash flows of the item being hedged.
(H) SEPARATE ACCOUNTS
The Company maintains separate account assets and liabilities 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
policyholders. Separate accounts reflect two categories of risk assumption:
non-guaranteed separate accounts, wherein the policyholder assumes the
investment risk, and guaranteed separate account assets, wherein the Company
contractually guarantees either a minimum return or account value to the
policyholder.
(I) DEFERRED POLICY ACQUISITION COSTS
Policy acquisition costs, which include 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
<PAGE>
- --------------------------------------------------------------------------------
for the books of business are reestimated and adjusted by a cumulative charge or
credit to income.
The Company's other expenses include the following:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Commissions........................... $ 976 $ 848 $ 619
Deferred acquisition costs............ (862) (823) (618)
Other................................. 472 402 316
--------- --------- ---------
Total other expenses.............. $ 586 $ 427 $ 317
--------- --------- ---------
--------- --------- ---------
</TABLE>
(J) 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
55%, 44%, and 41% in 1997, 1996, and 1995, respectively, of total insurance in
force.
3. INITIAL PUBLIC OFFERING
On February 10, 1997, Hartford Life filed a registration statement, as
amended, with the Securities and Exchange Commission, relating to the IPO of
Hartford Life's Class A Common Stock. Pursuant to the IPO on May 22, 1997,
Hartford Life sold to the public 26 million shares at $28.25 per share and
received proceeds, net of offering expenses, of $687. Of the proceeds, $527 was
used to retire debt related to Hartford Life's promissory notes outstanding and
line of credit. The remaining $160 was contributed by Hartford Life to HLA to
support growth in its core businesses. The 26 million shares sold in the
Offering represent approximately 18.6% of the equity ownership in Hartford Life
and approximately 4.4% of the combined voting power of Hartford Life's Class A
and Class B Common Stock. The Hartford owns all of the 114 million outstanding
shares of Class B Common Stock of Hartford Life, representing approximately
81.4% of the equity ownership in Hartford Life and approximately 95.6% of the
combined voting power of Hartford Life's Class A and Class B Common Stock.
Holders of Class A Common Stock generally have identical rights to the holders
of Class B Common Stock except that the holders of Class A Common Stock are
entitled to one vote per share while holders of Class B Common Stock are
entitled to five votes per share on all matters submitted to a vote of Hartford
Life's stockholders.
4. INVESTMENTS AND DERIVATIVE INSTRUMENTS
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Interest income from fixed
maturities......................... $ 932 $ 918 $ 996
Interest income from policy loans... 425 477 342
Income from other investments....... 26 15 1
--------- --------- ---------
Gross investment income............. 1,383 1,410 1,339
Less: Investment expenses........... 15 13 11
--------- --------- ---------
Net investment income............... $ 1,368 $ 1,397 $ 1,328
--------- --------- ---------
--------- --------- ---------
</TABLE>
(B) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
---------------------------------
1997 1996 1995
----- --------- ---------
<S> <C> <C> <C>
Fixed maturities......................... $ (7) $ (201) $ 23
Equity securities........................ 12 2 (6)
Real estate and other.................... (1) (4) (25)
Less: Increase in liability to
policyholders for realized capital
gains................................... -- (10) (3)
--- --------- ---------
Net realized capital gains (losses) $ 4 $ (213) $ (11)
--- --------- ---------
--- --------- ---------
</TABLE>
(C) NET UNREALIZED CAPITAL GAINS (LOSSES) ON EQUITY SECURITIES
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------------------
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Gross unrealized capital gains.............. $ 14 $ 13 $ 4
Gross unrealized capital losses............. -- (1) (2)
--- --- ---
Net unrealized capital gains................ 14 12 2
Deferred income tax expense................. 5 4 1
--- --- ---
Net unrealized capital gains, net of tax.... 9 8 1
Balance -- beginning of year................ 8 1 (6)
--- --- ---
Net change in unrealized capital gains
(losses) on equity securities.............. $ 1 $ 7 $ 7
--- --- ---
--- --- ---
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
(D) NET UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED MATURITIES
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
---------------------
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Gross unrealized capital gains................................... $ 371 $ 386 $ 529
Gross unrealized capital losses.................................. (80) (341) (569)
Unrealized capital (gains) losses credited to policyholders...... (30) (11) (52)
----- ----- -----
Net unrealized capital gains (losses)............................ 261 34 (92)
Deferred income tax expense (benefit)............................ 91 12 (34)
----- ----- -----
Net unrealized capital gains (losses), net of tax................ 170 22 (58)
Balance -- beginning of year..................................... 22 (58) (648)
----- ----- -----
Net change in unrealized capital gains (losses) on fixed
maturities...................................................... $ 148 $ 80 $ 590
----- ----- -----
----- ----- -----
</TABLE>
(E) FIXED MATURITY INVESTMENTS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
---------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
U.S. gov't and gov't agencies and authorities
(guaranteed and sponsored)...................................... $ 217 $ 3 $ (1) $ 219
U.S. gov't and gov't agencies and authorities
(guaranteed and sponsored) -- asset backed...................... 1,175 64 (35) 1,204
States, municipalities and political subdivisions................ 211 7 (1) 217
International governments........................................ 376 20 (3) 393
Public utilities................................................. 871 26 (3) 894
All other corporate including international...................... 5,033 200 (25) 5,208
All other corporate -- asset backed.............................. 4,091 41 (8) 4,124
Short-term investments........................................... 1,318 -- -- 1,318
Certificates of deposit.......................................... 593 10 (4) 599
---------- ----- ----- ----------
Total fixed maturities....................................... $13,885 $371 $(80) $14,176
---------- ----- ----- ----------
---------- ----- ----- ----------
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
---------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
U.S. gov't and gov't agencies and authorities
(guaranteed and sponsored)...................................... $ 166 $ 12 $ (3) $ 175
U.S. gov't and gov't agencies and authorities
(guaranteed and sponsored) -- asset backed...................... 1,970 161 (128) 2,003
States, municipalities and political subdivisions................ 373 6 (11) 368
International governments........................................ 281 12 (4) 289
Public utilities................................................. 877 12 (8) 881
All other corporate including international...................... 4,656 120 (107) 4,669
All other corporate -- asset backed.............................. 3,601 49 (59) 3,591
Short-term investments........................................... 1,655 14 (21) 1,648
---------- ----- ----------- ----------
Total fixed maturities....................................... $13,579 $386 $(341) $13,624
---------- ----- ----------- ----------
---------- ----- ----------- ----------
</TABLE>
The amortized cost and estimated fair value of fixed maturity investments at
December 31, 1997 by estimated maturity year are shown below. Expected
maturities differ from contractual maturities due to call or prepayment
provisions. Asset backed securities, including MBS and CMO's, are distributed to
maturity year based on the Company's estimates of the rate of future prepayments
of principal over the remaining lives of the securities. These estimates are
developed using prepayment speeds provided in broker consensus data. Such
estimates are derived from prepayment speeds experienced at the interest rate
levels projected for the applicable underlying collateral and can be expected to
vary from actual experience.
MATURITY
<TABLE>
<CAPTION>
AMORTIZED
COST FAIR VALUE
----------- -----------
<S> <C> <C>
One year or less......................... $ 2,838 $ 2,867
Over one year through five years......... 5,528 5,595
Over five years through ten years........ 3,094 3,156
Over ten years........................... 2,425 2,558
----------- -----------
Total................................ $ 13,885 $ 14,176
----------- -----------
----------- -----------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Sales of fixed maturities, excluding short-term fixed maturities, for the
years ended December 31, 1997, 1996 and 1995 resulted in proceeds of $4.2
billion, $3.5 billion and $4.8 billion, gross realized capital gains of $169,
$87 and $91, gross realized capital losses (including writedowns) of $176, $298
and $72, respectively. Sales of equity security investments for the years ended
December 31, 1997, 1996 and 1995 resulted in proceeds of $132, $74 and $64,
gross realized capital gains of $12, $2 and $28 and gross realized capital
losses of $0, $0 and $59, respectively.
(F) CONCENTRATION OF CREDIT RISK
Excluding investments in U.S. government and agencies, the Company has not
invested in the securities of a single issuer in amounts greater than 10% of
stockholder's equity at December 31, 1997.
(G) DERIVATIVE INSTRUMENTS
The Company utilizes a variety of derivative instruments, including swaps,
caps, floors, forwards and exchange traded futures and options, in accordance
with Company policy and in order to achieve one of three Company approved
objectives: to hedge risk arising from interest rate, price or currency exchange
rate volatility; to manage liquidity; or, to control transactions costs. The
Company utilizes derivative instruments to manage market risk through four
principal risk management strategies: hedging anticipated transactions, hedging
liability instruments, hedging invested assets and hedging portfolios of assets
and/or liabilities. The Company does not trade in these instruments for the
express purpose of earning trading profits.
The Company maintains a derivatives counterparty exposure policy which
establishes market-based credit limits, favors long-term financial stability and
creditworthiness, and typically requires credit enhancement/credit risk reducing
agreements. Credit risk is measured as the amount owed to the Company based on
current market conditions and potential payment obligations between the Company
and its counterparties. Credit exposures are quantified weekly and netted, and
collateral is pledged to or held by the Company to the extent the current value
of derivatives exceed exposure policy thresholds.
The Company's derivative program is monitored by an internal compliance unit
and is reviewed by senior management and Hartford Life's Finance Committee.
Notional amounts, which represent the basis upon which pay or receive amounts
are calculated and are not reflective of credit risk, pertaining to derivative
financial instruments (excluding the Company's guaranteed separate account
derivative investments), totaled $6.5 billion and $9.9 billion ($4.6 billion and
$7.4 billion related to the Company's investments, $1.9 billion and $2.5 billion
on the Company's liabilities) at December 31, 1997 and 1996, respectively.
The table below provides a summary of derivative instruments held by the
Company at December 31, 1997 and 1996, segregated by major investment and
liability category:
<TABLE>
<CAPTION>
1997 -- AMOUNT HEDGED (NOTIONAL AMOUNTS)
----------------------------------------------------------------------------------
PURCHASED
CAPS, FOREIGN
TOTAL ISSUED FLOORS INTEREST CURRENCY TOTAL
CARRYING CAPS & AND FUTURES RATE SWAPS NOTIONAL
ASSETS HEDGED VALUE FLOORS OPTIONS (2) SWAPS (3) AMOUNT
- ----------------------------------- -------- -------- ---------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Asset backed securities (excluding
inverse floaters and
anticipatory)..................... $ 5,253 $ 500 $ 1,404 $ 28 $ 221 $-- $ 2,153
Inverse floaters (1)............... 75 47 80 -- 25 -- 152
Anticipatory (4)................... -- -- -- -- -- -- --
Other bonds and notes.............. 7,531 462 460 22 1,258 91 2,293
Short-term investments............. 1,317 -- -- -- -- -- --
-------- -------- ---------- --- ---------- --- ----------
Total fixed maturities......... 14,176 1,009 1,944 50 1,504 91 4,598
Equity securities, policy loans and
other investments................. 3,983 -- -- -- -- -- --
-------- -------- ---------- --- ---------- --- ----------
Total investments.............. $ 18,159 $ 1,009 $ 1,944 $ 50 $ 1,504 $91 $ 4,598
Long term debt................. -- -- -- -- -- -- --
Other policy claims............ -- 10 150 -- 1,747 -- 1,907
-------- -------- ---------- --- ---------- --- ----------
Total derivatives -- notional
value........................... $ 1,019 $ 2,094 $ 50 $ 3,251 $91 $ 6,505
-------- -------- ---------- --- ---------- --- ----------
Total derivatives -- fair value.... $ (8) $ 23 $ -- $ 19 $(6) $ 28
-------- -------- ---------- --- ---------- --- ----------
-------- -------- ---------- --- ---------- --- ----------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 --AMOUNT HEDGED (NOTIONAL AMOUNTS)
--------------------------------------------------------------------------
FOREIGN
TOTAL ISSUED PURCHASED INTEREST CURRENCY TOTAL
CARRYING CAPS & CAPS, FLOORS RATE SWAPS NOTIONAL
ASSETS HEDGED VALUE FLOORS AND OPTIONS FUTURES (2) SWAPS (3) AMOUNT
- ----------------------------------- -------- ------- ------------ ----------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Asset backed securities (excluding
inverse floaters and
anticipatory)..................... $ 5,242 $ 500 $ 2,454 $ -- $ 941 $ -- $3,895
Inverse floaters (1)............... 352 98 856 -- 346 -- 1,300
Anticipatory (4)................... -- -- -- 132 -- -- 132
Other bonds and notes.............. 7,369 425 440 5 1,079 125 2,074
Short-term investments............. 661 -- -- -- -- -- --
-------- ------- ------------ ----- --------- -------- -------
Total fixed maturities......... 13,624 1,023 3,750 137 2,366 125 7,401
Equity securities, policy loans and
other investments................. 4,011 -- -- -- 19 -- 19
-------- ------- ------------ ----- --------- -------- -------
Total investments.............. $ 17,635 $ 1,023 $ 3,750 $ 137 $ 2,385 $ 125 $7,420
Long term debt................. -- -- -- -- -- -- --
Other policy claims............ -- 10 150 -- 2,351 -- 2,511
-------- ------- ------------ ----- --------- -------- -------
Total derivatives -- notional
value......................... $ 1,033 $ 3,900 $ 137 $ 4,736 $ 125 $9,931
-------- ------- ------------ ----- --------- -------- -------
Total derivatives -- fair
value......................... $ (10) $ 38 $ -- $ 2 $ (9 ) $ 21
-------- ------- ------------ ----- --------- -------- -------
-------- ------- ------------ ----- --------- -------- -------
</TABLE>
- ---------
(1) Inverse floaters are variations of collateralized mortgage obligations
("CMO's") for which the coupon rates move inversely with an index rate such as
the London interbank offered rate ("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, caps and floors.
(2) As of December 31, 1997 and 1996, over 44% and 39% , respectively, of
the notional futures contracts expire within one year.
(3) As of December 31, 1997 and 1996, over 16% and 42%, respectively, of
foreign currency swaps expire within one year; the balance matures over the
succeeding 9 years.
(4) Deferred gains and losses on anticipatory transactions are included in
the carrying value of fixed maturities 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, 1997, the Company had $0 deferred gains and
losses. At December 31, 1996, the Company had $0.9 in net deferred gains for
futures, interest rate swaps and purchased options of which $2.0 was basis
adjusted in 1997.
The following is a reconciliation of notional amounts by derivative type and
strategy as of December 31, 1997 and 1996:
<TABLE>
<CAPTION>
DECEMBER 31, 1996 MATURITIES/ DECEMBER 31, 1997
NOTIONAL AMOUNT ADDITIONS TERMINATIONS (1) NOTIONAL AMOUNT
----------------- -------- ----------------- -----------------
<S> <C> <C> <C> <C>
BY DERIVATIVE TYPE
Caps......................................... $1,755 $ 14 $ 530 $1,239
Floors....................................... 3,168 28 1,332 1,864
Swaps/Forwards............................... 4,861 941 2,460 3,342
Futures...................................... 137 131 218 50
Options...................................... 10 -- -- 10
------- -------- ------- -------
Total.................................... $9,931 $1,114 $4,540 $6,505
------- -------- ------- -------
BY STRATEGY
Liability.................................... $2,511 $ 191 $ 795 $1,907
Anticipatory................................. 132 4 136 --
Asset........................................ 2,112 739 1,046 1,805
Portfolio.................................... 5,176 180 2,563 2,793
------- -------- ------- -------
Total.................................... $9,931 $1,114 $4,540 $6,505
------- -------- ------- -------
------- -------- ------- -------
</TABLE>
- ---------
(1) During 1997, the Company had no significant gains or losses on terminations
of hedge positions using derivative financial instruments.
<PAGE>
- --------------------------------------------------------------------------------
5. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107 "Disclosure about Fair
Value of Financial Instruments" requires disclosure of fair value information of
financial instruments. For certain financial instruments where quoted market
prices are not available, other independent valuation techniques and assumptions
are used. Because considerable judgment is used, these estimates are not
necessarily indicative of amounts that could be realized in a current market
exchange. SFAS No. 107 excludes certain financial instruments from disclosure,
including insurance contracts.
For cash, short-term investments, accounts receivable, policy loans,
mortgage loans and other liabilities, carrying amounts on the Consolidated
Balance Sheets approximate fair value.
Fair value for fixed maturities and marketable equity securities are based
upon quoted market prices. Fair value for securities that are not publicly
traded are analytically determined. These amounts are disclosed in Note 4 of
Notes to Consolidated Financial Statements.
The fair value of derivative financial instruments, including swaps, caps,
floors, futures, options and forward commitments, is determined using a pricing
model which is validated through quarterly comparison to dealer quoted prices.
Amounts are disclosed in Note 4 of Notes to Consolidated Financial Statements.
Fair value for partnerships and trusts are based on external market
valuations from partnership and trust management.
Other policy claims and benefits payable fair value information is
determined by estimating future cash flows, discounted at the current market
rate.
The carrying amount and fair values of the Company's financial instruments
at December 31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
------------------ ------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- ------- --------- -------
<S> <C> <C> <C> <C>
ASSETS
Fixed maturities..................................... $ 14,176 $14,176 $ 13,624 $13,624
Equity securities.................................... 180 180 119 119
Policy loans......................................... 3,756 3,756 3,836 3,836
Mortgage loans....................................... -- -- 2 2
Investments in partnerships, trusts and other........ 47 91 54 104
LIABILITIES
Other policy benefits................................ $ 11,769 $11,755 $ 11,707 $11,469
</TABLE>
6. SEPARATE ACCOUNTS
The Company maintained separate account assets and liabilities totaling
$69.1 billion and $49.7 billion at December 31, 1997 and 1996, respectively,
which are reported at fair value. Separate account assets are segregated from
other investments and net investment income and net realized capital gains and
losses accrue directly to the policyholder. Separate accounts reflect two
categories of risk assumption: non-guaranteed separate accounts totaling $58.6
billion and $39.4 billion at December 31, 1997 and 1996, respectively, wherein
the policyholder assumes the investment risk, and guaranteed separate accounts
totaling $10.5 and $10.3 billion at December 31, 1997 and 1996, respectively,
wherein the Company contractually guarantees either a minimum return or account
value to the policyholder. Included in the non-guaranteed category were policy
loans totaling $1.9 billion and $2.0 billion at December 31, 1997 and 1996,
respectively. Net investment income (including net realized capital 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 were $699, $538 and $387 in 1997, 1996 and
1995, respectively. The guaranteed separate accounts include fixed market value
adjusted individual annuity and modified guaranteed life insurance. The average
credited interest rate on these contracts was 6.52% at December 31, 1997. The
assets that support these liabilities were comprised of $10.2 billion in fixed
maturities as of December 31, 1997. The portfolios are segregated from other
investments and are managed to minimize liquidity and interest rate risk. In
order to minimize the risk of disintermediation associated with early
withdrawals, fixed MVA 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 $119 in
carrying value and $3.0 billion in notional amounts as of December 31, 1997.
<PAGE>
- --------------------------------------------------------------------------------
7. INCOME TAX
Hartford Life and The Hartford have entered into a tax sharing agreement
under which each member 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 the Company, subject to certain adjustments, generally will
be determined as though the Company were filing 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 affiliated group of which The Hartford is the
common parent. To the extent allowed by law, it is the intention of The Hartford
and its subsidiaries to continue to file a single consolidated Federal income
tax return. The Company will continue to remit (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 36%, 35% and 32% in
1997, 1996 and 1995, respectively.
Income tax expense is as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------
1997 1996 1995
---- ------ ------
<S> <C> <C> <C>
Current...................................... $119 $ 122 $ 211
Deferred..................................... 48 (102) (149)
---- ------ ------
Income tax expense......................... $167 $ 20 $ 62
---- ------ ------
---- ------ ------
</TABLE>
A reconciliation of the tax provision at the U.S. Federal statutory rate to
the provision for income taxes is as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------
1997 1996 1995
--------- ----- -----
<S> <C> <C> <C>
Tax provision at the U.S. Federal statutory
rate...................................... $ 164 $ 20 $ 67
Tax-exempt income.......................... -- -- (3)
Foreign tax credit......................... -- -- (4)
Other...................................... 3 -- 2
--------- --- ---
Total.................................... $ 167 $ 20 $ 62
--------- --- ---
--------- --- ---
</TABLE>
Deferred tax assets include the following at December 31:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Tax return deferred acquisition costs............ $ 639 $ 514
Financial statement deferred acquisition costs
and reserves.................................... (366) (242)
Employee benefits................................ 5 8
Net unrealized capital gains on securities....... (96) (16)
Investments and other............................ 166 210
--------- ---------
Total.......................................... $ 348 $ 474
--------- ---------
--------- ---------
</TABLE>
Income taxes paid were $9, $189 and $162 in 1997, 1996 and 1995,
respectively. The Company had a current tax payment of $27 due to The Hartford
at December 31, 1997 and a tax refund due from The Hartford of $72 at December
31, 1996.
Prior to the Tax Reform Act of 1984, the Life Insurance Company Income Tax
Act of 1959 permitted the deferral from taxation of a portion of statutory
income under certain circumstances. In these situations, the deferred income was
accumulated in a "Policyholders' Surplus Account" and will be taxable in the
future only under conditions which management considers to be remote; therefore,
no Federal income taxes have been provided on this deferred income. The balance
for tax return purposes of the Policyholders' Surplus Account as of December 31,
1997 was $37.
8. POSTRETIREMENT BENEFIT AND SAVINGS PLANS
(A) PENSION PLANS
The Company's employees are included in The Hartford'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 U.S. 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, $5 and $2 in 1997, 1996 and 1995,
respectively.
The Company also provides, through The Hartford, 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.
Postretirement health care and life insurance benefits expense, allocated by The
Hartford, was immaterial to the results of operations for 1997, 1996 and 1995,
respectively.
The assumed rate in the per capita cost of health care (the health care
trend rate) was 8.5% for 1997, 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,
<PAGE>
- --------------------------------------------------------------------------------
the effect will be amortized over the average future service of covered
employees.
(B) INVESTMENT AND SAVINGS PLAN
Substantially all employees of the Company are eligible to participate in The
Hartford's Investment and Savings Plan. Under this plan, designated
contributions, which may be invested in Class A Common Stock of Hartford Life or
certain other investments, are matched, up to 3% of compensation, by the
Company. The cost to the Company for the above-mentioned plans was approximately
$2 in 1997.
9. STOCK COMPENSATION PLANS
During the second quarter of 1997, Hartford Life adopted the 1997 HLI
Incentive Stock Plan (the "Plan"). Under the Plan, options granted may be either
non-qualified options or incentive stock options qualifying under Section 422A
of the Internal Revenue Code. The aggregate number of shares of Class A Common
Stock which may be awarded in any one year shall be subject to an annual limit.
The maximum number of shares of Class A Common Stock which may be granted under
the Plan in each year shall be 1.5% of the total issued and outstanding shares
of Hartford Life Class A Common Stock and treasury stock as reported in the
Annual Report on Hartford Life's Form 10-K for the preceding year plus unused
portions of such limit from prior years. In addition, no more than 5,000,000
shares of Class A Common Stock shall be cumulatively available for awards of
incentive stock options under the Plan, and no more than 20% of the total number
of shares on a cumulative basis shall be available for restricted stock and
performance shares.
All options granted have an exercise price equal to the market price of
Hartford Life's stock on the date of grant and an option's maximum term is ten
years. Certain nonperformance based options become exercisable upon the
attainment of specified market price appreciation of Hartford Life's common
shares or at seven years after the date of grant, while the remaining
nonperformance based options become exercisable over a three year period
commencing with the date of grant.
Also included in the Plan are long term performance awards which become
payable upon the attainment of specific performance goals achieved over a three
year period.
During the second quarter of 1997, Hartford Life established the HLI
Employee Stock Purchase Plan ("ESPP"). Under this plan, eligible employees of
Hartford Life and the Company may purchase Class A Common Stock of Hartford Life
at a 15% discount from the lower of the market price at the beginning or end of
the quarterly offering period. Hartford Life may sell up to 2,700,000 shares of
stock to eligible employees. Hartford Life sold 54,316 shares under the ESPP in
1997.
10. REINSURANCE
The Company cedes insurance to other insurers, including its parent HLA, 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.
Failure of reinsurers to honor their obligations could result in losses to the
Company. The Company evaluates the financial condition of its reinsurers and
monitors concentration of credit risk.
Net premiums and other considerations were comprised of the following:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Gross premiums............................... $ 2,164 $ 2,138 $ 1,545
Assumed...................................... 159 190 591
Ceded........................................ (686) (623) (649)
--------- --------- ---------
Net premiums and other considerations...... $ 1,637 $ 1,705 $ 1,487
--------- --------- ---------
--------- --------- ---------
</TABLE>
The Company ceded approximately $76, $100 and $101 of group life premium in
1997, 1996 and 1995, respectively, representing $33.6 billion, $33.3 billion and
$32.3 billion of insurance in force, respectively. The Company ceded $339, $318
and $320 of accident and health premium to HLA in 1997, 1996 and 1995,
respectively. The Company assumed $89, $101 and $103 of premium in 1997, 1996
and 1995, respectively, representing $8.2 billion, $8.5 billion and $8.5 billion
of individual life insurance in force, respectively, from HLA.
Life reinsurance recoveries, which reduce death and other benefits,
approximated $158, $140 and $220 for the years ended December 31, 1997, 1996 and
1995, respectively.
As of December 31, 1997, the Company had reinsurance recoverables of $5.0
billion from Mutual Benefit Life Assurance Corporation ("Mutual Benefit"),
supported by assets in a security trust of $5.0 billion (including policy loans
and accrued interest of $4.5 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. The
Company has no other significant reinsurance-related concentrations of credit
risk.
11. RELATED PARTY TRANSACTIONS
Transactions of the Company with HA&I and its affiliates relate principally
to tax settlements, reinsurance, insurance coverage, rental and service fees,
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 The Hartford. 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,
<PAGE>
- --------------------------------------------------------------------------------
depending on type, are allocated based on either a percentage of direct expenses
or on utilization. Indirect expenses allocated to the Company by The Hartford
were $34, $40, and $45 in 1997, 1996 and 1995, respectively. Management believes
that the methods used are reasonable.
The rent paid to Hartford Fire for space occupied by the Company was $7 in
1997, and $3 in 1996 and 1995. The Company expects to pay annual rent of $7 in
1998 and 1999, respectively, $12 in 2000 and 2001, respectively, $13 in 2002 and
$87 thereafter, over the remaining term of the sublease, which expires on
December 31, 2009. Rental expense is recognized over a level basis over the term
of the sublease and amounted to approximately $9 in 1997 and $8 in 1996 and
1995.
12. STATUTORY RESULTS
The domestic insurance subsidiaries of Hartford Life 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.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Statutory net income......................... $ 214 $ 144 $ 112
------ ------ ------
Statutory surplus............................ $1,441 $1,207 $1,125
------ ------ ------
------ ------ ------
</TABLE>
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 1998 is estimated to be $144.
13. COMMITMENTS AND CONTINGENT LIABILITIES
(A) LITIGATION
The Company is involved in pending and threatened litigation in the normal
course of its business in which claims for monetary and punitive damages have
been asserted. Although there can be no assurances, management, at the present
time, does not anticipate that the ultimate liability arising from such pending
or threatened litigation will have a material effect on the financial condition
or operating results of the Company.
(B) GUARANTY FUNDS
Under insurance guaranty fund laws 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 $15,
$11 and $10 in 1997, 1996 and 1995, respectively, of which $4, $5, and $6 were
estimated to be creditable against premium taxes.
14. BUSINESS SEGMENT INFORMATION
The Company, along with its parent, sells financial products such as fixed
and variable annuities, retirement plan services, and life and disability
insurance on both an individual and a group basis. The Company divides its core
businesses into three segments: Annuity, Individual Life Insurance, and Employee
Benefits. The Company also maintains a Guaranteed Investment Contracts segment,
which is primarily comprised of guaranteed rate contract business written prior
to 1995 and a Corporate Operation. The Annuity 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, interest-sensitive whole life, and term life policies. The
Employee Benefits segment sells group insurance products, including group life,
group short and long-term disability and corporate owned life insurance, and
engages in certain international operations. The Guaranteed Investment Contracts
segment sells a limited amount of guaranteed investment contracts and contains
Closed Book GRC. Through its Corporate Operation, the Company reports items that
are not directly allocable to any of its business segments. Included in the
Corporate Operation are unallocated income and expense and certain other items
not directly allocable to any segment. 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.
<PAGE>
- --------------------------------------------------------------------------------
The following table outlines revenues, operating income and assets by
business segment:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
REVENUES
Annuity.............................................. $ 1,269 $ 968 $ 759
Individual Life Insurance............................ 487 440 383
Employee Benefits.................................... 972 1,366 1,273
Guaranteed Investment Contracts...................... 241 34 337
Corporate Operation.................................. 40 81 52
-------- -------- --------
Total revenues..................................... $ 3,009 $ 2,889 $ 2,804
-------- -------- --------
-------- -------- --------
INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT)
Annuity.............................................. $ 317 $ 226 $ 171
Individual Life Insurance............................ 85 68 56
Employee Benefits.................................... 53 44 37
Guaranteed Investment Contracts...................... -- (346) (103)
Corporate Operation.................................. 14 66 30
-------- -------- --------
Total income before income tax expense............. $ 469 $ 58 $ 191
-------- -------- --------
-------- -------- --------
ASSETS
Annuity $ 69,152 $ 52,877 $ 39,732
Individual Life Insurance............................ 4,918 3,753 3,173
Employee Benefits.................................... 18,196 14,708 13,494
Guaranteed Investment Contracts...................... 3,347 4,533 6,069
Corporate Operation.................................. 2,343 1,891 1,729
-------- -------- --------
Total assets....................................... $ 97,956 $ 77,762 $ 64,197
-------- -------- --------
-------- -------- --------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
SCHEDULE I -- SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN AFFILIATES
AS OF DECEMBER 31, 1997
(IN MILLIONS)
<TABLE>
<CAPTION>
AMOUNT AT
WHICH
FAIR SHOWN ON
TYPE OF INVESTMENT COST VALUE BALANCE SHEET
- --------------------------------------------- ------- ------- --------------
<S> <C> <C> <C>
Fixed Maturities
Bonds and Notes
U. S. gov't and gov't agencies and
authorities (guaranteed and sponsored) $ 217 $ 219 $ 219
U. S. gov't and gov't agencies and
authorities (guaranteed and sponsored) --
asset-backed.............................. 1,175 1,204 1,204
States, municipalities and political
subdivisions.............................. 211 217 217
International governments.................. 376 393 393
Public utilities........................... 871 894 894
All other corporate including
international............................. 5,033 5,208 5,208
All other corporate -- asset-backed........ 4,091 4,124 4,124
Short-term investments..................... 1,318 1,318 1,318
Certificates of deposit...................... 593 599 599
------- ------- -------
Total fixed maturities....................... 13,885 14,176 14,176
------- ------- -------
Equity Securities
Common Stocks
Public utilities........................... -- -- --
Banks, trusts and insurance companies...... -- -- --
Industrial and miscellaneous............... 166 180 180
Nonredeemable preferred stocks............. -- -- --
------- ------- -------
Total equity securities...................... 166 180 180
------- ------- -------
Total fixed maturities and equity
securities.................................. 14,051 14,356 14,356
------- ------- -------
Real Estate.................................. -- -- --
Other Investments
Mortgage loans on real estate.............. -- -- --
Policy loans............................... 3,756 3,756 3,756
Investments in partnerships, trusts and
other..................................... 47 91 47
------- ------- -------
Total other investments...................... 3,803 3,847 3,803
------- ------- -------
Total investments............................ $17,854 $18,203 $18,159
------- ------- -------
------- ------- -------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN MILLIONS)
<TABLE>
<CAPTION>
FUTURE
POLICY
BENEFITS,
UNPAID OTHER
DEFERRED CLAIMS POLICY
POLICY AND CLAIM CLAIMS AND PREMIUMS NET
ACQUISITION ADJUSTMENT BENEFITS AND OTHER INVESTMENT
SEGMENT COSTS EXPENSES PAYABLE CONSIDERATIONS INCOME
- --------------------------------------------- ----------- --------- ---------- --------------- ---------
<S> <C> <C> <C> <C> <C>
1997
Annuity...................................... $2,478 $2,070 $ 6,838 $ 769 $ 500
Individual Life Insurance.................... 837 392 2,182 323 164
Employee Benefits............................ -- 780 9,232 541 431
Guaranteed Investment Contracts.............. -- -- 2,782 2 239
Corporate Operation.......................... -- 28 -- 2 34
----------- --------- ---------- ------ ---------
Consolidated operations...................... $3,315 $3,270 $21,034 $1,637 $1,368
----------- --------- ---------- ------ ---------
----------- --------- ---------- ------ ---------
1996
Annuity...................................... $2,030 $1,526 $ 6,016 $ 535 $ 433
Individual Life Insurance.................... 730 346 2,160 287 153
Employee Benefits............................ -- 574 9,834 881 485
Guaranteed Investment Contracts.............. -- -- 4,124 2 251
Corporate Operation.......................... -- 28 -- -- 75
----------- --------- ---------- ------ ---------
Consolidated operations...................... $2,760 $2,474 $22,134 $1,705 $1,397
----------- --------- ---------- ------ ---------
----------- --------- ---------- ------ ---------
1995
Annuity...................................... $1,561 $1,314 $ 5,661 $ 319 $ 400
Individual Life Insurance.................... 615 706 1,932 246 137
Employee Benefits............................ 12 325 9,285 922 351
Guaranteed Investment Contracts.............. -- 28 5,720 -- 377
Corporate Operation.......................... -- -- -- -- 63
----------- --------- ---------- ------ ---------
Consolidated operations...................... $2,188 $2,373 $22,598 $1,487 $1,328
----------- --------- ---------- ------ ---------
----------- --------- ---------- ------ ---------
<CAPTION>
NET BENEFITS, AMORTIZATION
REALIZED CLAIMS AND OF DEFERRED
CAPITAL CLAIM POLICY
GAINS ADJUSTMENT ACQUISITION DIVIDENDS TO OTHER
SEGMENT (LOSSES) EXPENSES COSTS POLICYHOLDERS EXPENSES
- --------------------------------------------- ----------- ----------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
1997
Annuity...................................... $ -- $ 445 $250 $ -- $ 257
Individual Life Insurance.................... -- 242 83 -- 77
Employee Benefits............................ -- 425 2 240 252
Guaranteed Investment Contracts.............. -- 232 -- -- 9
Corporate Operation.......................... 4 35 -- -- (9)
----------- ----------- ----- ----- -----
Consolidated operations...................... $ 4 $1,379 $335 $240 $ 586
----------- ----------- ----- ----- -----
----------- ----------- ----- ----- -----
1996
Annuity...................................... $ -- $ 412 $174 $ -- $ 156
Individual Life Insurance.................... -- 245 59 -- 68
Employee Benefits............................ -- 546 -- 635 141
Guaranteed Investment Contracts.............. (219) 332 1 -- 47
Corporate Operation.......................... 6 -- -- -- 15
----------- ----------- ----- ----- -----
Consolidated operations...................... $(213) $1,535 $234 $635 $ 427
----------- ----------- ----- ----- -----
----------- ----------- ----- ----- -----
1995
Annuity...................................... $ -- $ 317 $117 $ -- $ 114
Individual Life Insurance.................... -- 203 70 -- 54
Employee Benefits............................ -- 424 -- 675 137
Guaranteed Investment Contracts.............. -- 453 12 -- 15
Corporate Operation.......................... (11) 25 -- -- (3)
----------- ----------- ----- ----- -----
Consolidated operations...................... $ (11) $1,422 $199 $675 $ 317
----------- ----------- ----- ----- -----
----------- ----------- ----- ----- -----
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
SCHEDULE IV -- REINSURANCE
(IN MILLIONS)
<TABLE>
<CAPTION>
CEDED TO ASSUMED FROM PERCENTAGE
GROSS OTHER OTHER NET OF AMOUNT
AMOUNT COMPANIES COMPANIES AMOUNT ASSUMED TO NET
-------- -------------- -------------- -------- ---------------
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1997
Life insurance in force........................... $245,487 $ 178,771 $ 33,156 $ 99,872 33.2%
Insurance revenues
Life insurance and annuities.................... 1,818 340 157 1,635 9.6%
Accident and health insurance................... 346 346 2 2 100.0%
-------- -------------- ------- --------
Total insurance revenues.......................... $ 2,164 $ 686 $ 159 $ 1,637 9.7%
-------- -------------- ------- --------
-------- -------------- ------- --------
For the year ended December 31, 1996
Life insurance in force......................... $177,094 $ 106,146 $ 31,957 $102,905 31.1%
Insurance revenues
Life insurance and annuities.................... 1,801 298 169 1,672 10.1%
Accident and health insurance................... 337 325 21 33 63.6%
-------- -------------- ------- --------
Total insurance revenues.......................... $ 2,138 $ 623 $ 190 $ 1,705 11.1%
-------- -------------- ------- --------
-------- -------------- ------- --------
For the year ended December 31, 1995
Life insurance in force......................... $182,716 $ 112,774 $ 26,996 $ 96,938 27.8%
Insurance revenues
Life insurance and annuities.................... 1,232 325 574 1,481 38.8%
Accident and health insurance................... 313 324 17 6 283.3%
-------- -------------- ------- --------
Total insurance revenues.......................... $ 1,545 $ 649 $ 591 $ 1,487 39.7%
-------- -------------- ------- --------
-------- -------------- ------- --------
</TABLE>
<PAGE>
PART C
<PAGE>
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. (3)
(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, Senior Vice President,
General Counsel, Corporate Secretary.
- --------------------
(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 Post-Effective Amendment No. 1, to the
Registration Statement File No. 33-59069, dated May 1, 1996.
(3) Incorporated by reference to Post-Effective Amendment No. 2, to the
Registration Statement File No. 33-59069, filed on April 15, 1997.
<PAGE>
(10) Consent of Arthur Andersen LLP, Independent Public Accountants.
(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
- ------------------------------------------------------------------------------
Dong H. Ahn Vice President
- ------------------------------------------------------------------------------
Wendell J. Bossen Vice President
- ------------------------------------------------------------------------------
Gregory A. Boyko Senior Vice President, Chief Financial Officer,
and Treasurer, Director*
- ------------------------------------------------------------------------------
Peter W. Cummins Senior Vice President
- ------------------------------------------------------------------------------
Ann M. de Raismes Senior Vice President
- ------------------------------------------------------------------------------
Timothy M. Fitch Vice President and Actuary
- ------------------------------------------------------------------------------
David T. Foy Vice President
- ------------------------------------------------------------------------------
Bruce D. Gardner Vice President
- ------------------------------------------------------------------------------
J. Richard Garrett Vice President and Assistant Treasurer
- ------------------------------------------------------------------------------
John P. Ginnetti Executive Vice President & Director of Asset
Management Services, Director*
- ------------------------------------------------------------------------------
William A. Godfrey, III Senior Vice President
- ------------------------------------------------------------------------------
Lynda Godkin Senior Vice President, General Counsel and
Corporate Secretary, Director*
- ------------------------------------------------------------------------------
Lois W. Grady Vice President
- ------------------------------------------------------------------------------
Christopher Graham Vice President
- ------------------------------------------------------------------------------
Mark E. Hunt Vice President
- ------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------
NAME POSITION WITH HARTFORD
- ------------------------------------------------------------------------------
Stephen T. Joyce Vice President
- ------------------------------------------------------------------------------
Michael D. Keeler Vice President
- ------------------------------------------------------------------------------
Robert A. Kerzner Senior Vice President
- ------------------------------------------------------------------------------
David N. Levenson Vice President
- ------------------------------------------------------------------------------
Steven M. Maher Vice President and Actuary
- ------------------------------------------------------------------------------
William B. Malchodi, Jr. Vice President
- ------------------------------------------------------------------------------
Raymond J. Marra Vice President
- ------------------------------------------------------------------------------
Thomas M. Marra Executive Vice President and Director, Individual
Life and Annuity Division, Director*
- ------------------------------------------------------------------------------
Robert F. Nolan, Jr. Senior Vice President
- ------------------------------------------------------------------------------
Joseph J. Noto Vice President
- ------------------------------------------------------------------------------
C. Michael O'Halloran Vice President
- ------------------------------------------------------------------------------
Lawrence M. O'Rourke Vice President
- ------------------------------------------------------------------------------
Daniel E. O'Sullivan Vice President
- ------------------------------------------------------------------------------
Craig R. Raymond Senior Vice President and Chief Actuary
- ------------------------------------------------------------------------------
Marry P. Robinson Vice President
- ------------------------------------------------------------------------------
Donald A. Salama Vice President
- ------------------------------------------------------------------------------
Timothy P. Schiltz Vice President
- ------------------------------------------------------------------------------
Lowndes A. Smith President and Chief Executive Officer, Director*
- ------------------------------------------------------------------------------
Keith A. Stevenson Vice President
- ------------------------------------------------------------------------------
Edward A. Sweeney Vice President
- ------------------------------------------------------------------------------
Judith V. Tilbor Vice President
- ------------------------------------------------------------------------------
Raymond P. Welnicki Senior Vice President and Director, Employee
Benefit Division, Director*
- ------------------------------------------------------------------------------
Walter C. Welsh Senior Vice President
- ------------------------------------------------------------------------------
Lizabeth H. Zlatkus Senior Vice President, Director*
- ------------------------------------------------------------------------------
David M. Znamierowski Senior Vice President, Director*
- ------------------------------------------------------------------------------
<PAGE>
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.
Item 27. Number of Contract Owners
As of March 31, 1998, there have been no contracts issued by the
Registrant.
Item 28. Indemnification.
Under Section 33-772 of the Connecticut General Statutes, unless
limited by its certificate of incorporation, the Registrant must
indemnify a director who was wholly successful, on the merits or
otherwise, in the defense of any proceeding to which he was a party
because he is or was a director of the corporation against
reasonable expenses incurred by him in connection with the
proceeding.
The Registrant may indemnify an individual made a party to a
proceeding because he is or was a director against liability
incurred in the proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Registrant, and, with respect to any criminal
proceeding, had no reason to believe his conduct was unlawful.
Conn. Gen. Stat. Section 33-771(a). Additionally, pursuant to Conn.
Gen. Stat. Section 33-776, the Registrant may indemnify officers
and employees or agents for liability incurred and for any expenses
to which they becomes subject by reason of being or having been an
employees or officers of the Registrant. Connecticut law does not
prescribe standards for the indemnification of officers, employees
and agents and expressly states that their indemnification may be
broader than the right of indemnification granted to directors.
The foregoing statements are specifically made subject to the
detailed provisions of Section 33-770 et seq.
Notwithstanding the fact that Connecticut law obligates the
Registrant to indemnify a only a director that was successful on
the merits in a suit, under Article VIII, Section 1 of the
Registrant's bylaws, the Registrant must indemnify both directors
and officers of the Registrant for (1) any claims and liabilities
to which they become subject by reason of being or having been a
directors or officers of the company and legal and (2) other
expenses incurred in defending against such claims, in each case,
to the extent such is consistent with statutory provisions.
<PAGE>
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
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
Hartford Life and Annuity Insurance Company - Separate Account
VL II
Hartford Life and Annuity Insurance Company - Separate Account
VL I
Hartford Life and Annuity Insurance Company - ICMG Registered
Variable Life Separate Account One
(b) Directors and Officers of HESCO
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address* With Underwriter
------------------ ---------------------
<S> <C>
Lowndes A. Smith President and Chief Executive
Officer, Director
John P. Ginnetti Executive Vice President, Director
Thomas M. Marra Executive Vice President, Director
Peter W. Cummins Senior Vice President, Director
Donald E. Waggaman, Jr. Treasurer
Lynda Godkin Senior Vice President, General
Counsel and Corporate Secretary
George R. Jay Controller
J. Richard Garrett Vice President
Donald A. Salama Vice President
</TABLE>
<PAGE>
Unless otherwise indicated, the principal business address of
each the above individuals is P.O. Box 2999, Hartford, CT
06104-2999.
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 10th
day of April, 1998.
HARTFORD LIFE INSURANCE COMPANY -
ICMG SECULAR TRUST SEPARATE ACCOUNT
(Registrant)
*By: /s/ Peter W. Cummins
---------------------------------------
Peter W. Cummins, Senior Vice President
HARTFORD LIFE INSURANCE COMPANY *By: /s/ Lynda Godkin
(Depositor) --------------------------
Lynda Godkin
Attorney-in-Fact
*By: /s/ Peter W. Cummins
---------------------------------------
Peter W. Cummins, Senior 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.
Gregory A. Boyko, Senior Vice President,
Chief Financial Officer, and Treasurer,
Director*
John P. Ginnetti, Executive Vice
President, Director*
Lynda Godkin, Senior Vice President,
General Counsel, and Corporate
Secretary, Director*
Thomas M. Marra, Executive Vice *By: /s/ Lynda Godkin
President, Director* ------------------------
Lowndes A. Smith, President, Lynda Godkin
Chief Executive Officer, Director* Attorney-In-Fact
Raymond P. Welnicki, Senior Vice
President, Director* Dated: April 10, 1998
Lizabeth H. Zlatkus, Senior Vice President,
Director*
David M. Znamierowski, Senior Vice President,
Director
<PAGE>
EXHIBIT INDEX
(9) Opinion and Consent of Lynda Godkin, Senior Vice President, General
Counsel and Corporate Secretary
(10) Consent of Arthur Andersen LLP, Independent Public Accountants
(15) Copy of Power of Attorney
(16) Organizational Chart
<PAGE>
EXHIBIT 9
[LOGO]
HARTFORD LIFE
April 10, 1998 Lynda Godkin
Senior Vice President,
General Counsel &
Corporate 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.
<PAGE>
Board of Directors
Hartford Life Insurance Company
April 10, 1998
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
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(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 15, 1998
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
POWER OF ATTORNEY
-----------------
Gregory A. Boyko
John P. Ginnetti
Lynda Godkin
Thomas M. Marra
Lowndes A. Smith
Raymond P. Welnicki
Lizabeth H. Zlatkus
David M. Znamierowski
do hereby jointly and severally authorize Lynda Godkin, Marianne O'Doherty,
and Leslie T. Soler 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/ Gregory A. Boyko Dated as of March 16, 1998
- --------------------------------------- --------------------------
Gregory A. Boyko
/s/ John P. Ginnetti Dated as of March 16, 1998
- --------------------------------------- --------------------------
John P. Ginnetti
/s/ Lynda Godkin Dated as of March 16, 1998
- --------------------------------------- --------------------------
Lynda Godkin
/s/ Thomas M. Marra Dated as of March 16, 1998
- --------------------------------------- --------------------------
Thomas M. Marra
/s/ Lowndes A. Smith Dated as of March 16, 1998
- --------------------------------------- --------------------------
Lowndes A. Smith
/s/ Raymond P. Welnicki Dated as of March 16, 1998
- --------------------------------------- --------------------------
Raymond P. Welnicki
/s/ Lizabeth H. Zlatkus Dated as of March 16, 1998
- --------------------------------------- --------------------------
Lizabeth H. Zlatkus
/s/ David M. Znamierowski Dated as of March 16, 1998
- --------------------------------------- --------------------------
David M. Znamierowski
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
THE HARTFORD
The Hartford Financial Services Group, Inc.
(Delaware)
|
- -------------------------------------------------------------------------------------------------------------
Nutmeg Insurance Company The Hartford Investment
(Connecticut) Management Company
| (Delaware)
Hartford Fire Insurance Company |
(Connecticut) Hartford Investment
| Services, Inc.
Hartford Accident and Indemnity Company (Connecticut)
(Connecticut)
|
Hartford Life, Inc.
(Delaware)
|
Hartford Life and Accident Insurance Company
(Connecticut)
|
|
|
- -------------------------------------------------------------------------------------------------------------
Alpine Life Hartford Financial Hartford Life American Maturity ITT Hartford Canada
Insurance Services Life Insurance Company Life Insurance Holdings, Inc.
Company Insurance Co. (Connecticut) Company (Canada)
(New Jersey) (Connecticut) | (Connecticut) |
| | |
| AML Financial, Inc. |
| (Connecticut) Hartford Life
| Insurance Company
| of Canada
| (Canada)
|
|
- -------------------------------------------------------------------------------------------------------------
Hartford Life and Annuity ITT Hartford International Hartford Financial Services Royal Life
Insurance Company Life Reassurance Corporation Corporation Insurance
(Connecticut) (Connecticut) (Delaware) Company of
| | America
| | (Connecticut)
| |
ITT Hartford Life, Ltd. |
(Bermuda) |
|
|
- -------------------------------------------------------------------------------------------------------------
MS Fund HL Funding HL Investment Hartford Hartford Securities Hartford-Comp. Emp.
America Company, Inc. Advisors, Inc. Equity Sales Distribution Benefit Service
1993-K, Inc. (Connecticut) (Connecticut) Company, Inc. Company, Inc. Company
(Delaware) | (Connecticut) (Connecticut) (Connecticut)
|
Hartford Investment
Financial Services
Company
(Delaware)
</TABLE>
