<PAGE>
As filed with the Securities and Exchange Commission on April ____, 1999.
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. 5 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 7 [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) 843-4891
(Depositor's Telephone Number, Including Area Code)
BRIAN LORD, 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 3, 1999, pursuant to paragraph (b) of Rule 485
-----
60 days after filing pursuant to paragraph (a)(1) of Rule 485
-----
on ___________ , 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)
<TABLE>
<CAPTION>
N-4 ITEM NO. LOCATION IN REGISTRATION STATEMENT
------------ ----------------------------------
<S> <C>
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 Certificate;
Annuity Contracts Operation of the Certificate; General
Matters
8. Annuity Period Annuity Benefits
9. Death Benefit Death Benefit
10. Purchases and Contract Value Operation of the Certificate
11. Redemptions Operation of the Certificate
12. Taxes Federal Tax Considerations
13. Legal Proceedings 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>
<CAPTION>
N-4 ITEM NO. LOCATION IN REGISTRATION STATEMENT
------------ ----------------------------------
<S> <C>
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
</TABLE>
<PAGE>
PART A
<PAGE>
OMNIFLEX-REGISTERED TRADEMARK-
ICMG SECULAR TRUST SEPARATE ACCOUNT
HARTFORD LIFE INSURANCE COMPANY
P.O. BOX 2999
HARTFORD, CONNECTICUT 06104-2999
[LOGO] Telephone: 1-800-861-1408
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This Prospectus describes OmniFlex-Registered Trademark-, 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 ICMG
Secular Trust Separate Account (the "Separate Account").
There are currently twenty-four Divisions available under the Certificate. The
current Divisions and underlying Portfolios of the Funds are:
<TABLE>
<CAPTION>
Division Underlying Portfolio
- -------------------------------------------- ----------------------------------------------------------
<S> <C> <C>
Alger American Small Cap Division -- Alger American Small Capitalization Portfolio of The Alger
American Fund ("Alger American Small Cap Portfolio")
Alger American Growth Division -- Alger American Growth Portfolio of The Alger American Fund
BT EAFE-Registered Trademark- Equity Index -- EAFE-Registered Trademark- Equity Index Fund of the BT
Division Insurance Funds Trust ("BT EAFE-Registered Trademark-
Equity Index Fund")
BT Equity 500 Index Division -- Equity 500 Index Fund of the BT Insurance Funds Trust ("BT
Equity 500 Index Fund")
BT Small Cap Index Division -- Small Cap Index Fund of the BT Insurance Funds Trust ("BT
Small Cap Index Fund")
VIP High Income Division -- High Income Portfolio of the Variable Insurance Products
Fund ("VIP High Income Portfolio")
VIP Equity-Income Division -- Equity-Income Portfolio of the Variable Insurance Products
Fund ("VIP Equity-Income Portfolio")
VIP II Asset Manager Division -- Asset Manager Portfolio of the Variable Insurance Products
Fund II ("VIP II Asset Manager Portfolio")
Hartford Capital Appreciation Division -- Capital Appreciation Fund of the Hartford Capital
Appreciation HLS Fund, Inc. ("Hartford Capital
Appreciation Fund")
Hartford Bond Division -- Bond Fund of the Hartford Bond HLS Fund, Inc. ("Hartford
Bond Fund")
Hartford Money Market Division -- Money Market Fund of the Hartford Money Market HLS Fund,
Inc. ("Hartford Money Market Fund")
J.P. Morgan Bond Division -- J.P. Morgan Bond Portfolio of the J.P. Morgan Series Trust
II
J.P. Morgan Equity Division -- J.P. Morgan Equity Portfolio of the J.P. Morgan Series
Trust II
J.P. Morgan Small Company Division -- J.P. Morgan Small Company Portfolio of the J.P. Morgan
Series Trust II
J.P. Morgan International Opportunities -- J.P. Morgan International Opportunities Portfolio of the
Division J.P. Morgan Series Trust II
MSDW Universal Funds Fixed Income Division -- Fixed Income Portfolio of the Morgan Stanley Dean Witter
Universal Funds, Inc. ("MSDW Universal Funds Fixed Income
Portfolio")
MSDW Universal Funds High Yield Division -- High Yield Portfolio of the Morgan Stanley Dean Witter
Universal Funds, Inc. ("MSDW Universal Funds High Yield
Portfolio")
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Division Underlying Portfolio
- -------------------------------------------- ----------------------------------------------------------
<S> <C> <C>
MSDW Universal Funds Equity Growth Division -- Equity Growth Portfolio of the Morgan Stanley Dean Witter
Universal Funds, Inc. ("MSDW Universal Funds Equity Growth
Portfolio")
MSDW Universal Funds Value Division -- Value Portfolio of the Morgan Stanley Dean Witter
Universal Funds, Inc. ("MSDW Universal Funds Value
Portfolio")
MSDW Universal Funds Global Equity Division -- Global Equity Portfolio of the Morgan Stanley Dean Witter
Universal Funds, Inc. ("MSDW Universal Funds Global Equity
Portfolio")
MSDW Universal Funds Emerging Markets Equity -- Emerging Markets Equity Portfolio of the Morgan Stanley
Division Dean Witter Universal Funds, Inc. ("MSDW Universal Funds
Emerging Markets Equity Portfolio")
Neuberger Berman Advisers Management Trust -- Limited Maturity Bond Portfolio of the Neuberger Berman
Limited Maturity Bond Division Advisers Management Trust
Neuberger Berman Advisers Management Trust -- Balanced Portfolio of the Neuberger Berman Advisers
Balanced Division Management Trust
Neuberger Berman Advisers Management Trust -- Partners Portfolio of Neuberger Berman Advisers Management
Partners Division Trust
</TABLE>
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, 1999,
send a written request to International Corporate Marketing Group, Attn:
Registered Products, 100 Campus Drive, Suite 250, Florham Park, NJ 07932. The
Table of Contents of the Statement of Additional Information may be found on the
last page of this OmniFlex-Registered Trademark- Product Prospectus. The
Statement of Additional Information is incorporated by reference into this
Prospectus.
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.
The Hartford and Fidelity-Registered Trademark- prospectuses included in this
OmniFlex-Registered Trademark- Prospectus contain information relating to all of
the funds they offer. Not all the funds in the Hartford and
Fidelity-Registered Trademark- prospectuses are available to you. Please review
this OmniFlex-Registered Trademark- product prospectus for details regarding
available funds (see "The Portfolios").
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 3, 1999
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 3
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Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Glossary of Special Terms............................................. 4
Fee Table............................................................. 5
Summary............................................................... 8
Financial Information................................................. 9
Performance Related Information....................................... 9
The Company........................................................... 9
The Separate Account.................................................. 10
The Funds............................................................. 10
The Portfolios........................................................ 12
The Certificate....................................................... 14
Operation of the Certificate.......................................... 14
Premium Payments.................................................... 14
Right to Examine Period............................................. 15
Allocation of Premium Payments...................................... 15
Value of Accumulation Units......................................... 15
Investment Value.................................................... 15
Transfers Among Divisions........................................... 16
Asset Rebalancing................................................... 16
Dollar Cost Averaging Option Program................................ 16
Surrenders and Partial Withdrawals.................................. 17
Processing of Transactions.......................................... 17
Charges Under the Certificate......................................... 18
Sales Expenses...................................................... 18
Mortality and Expense Risk Charge................................... 18
Administrative Expense Charge....................................... 18
Premium Tax Charge.................................................. 18
Federal Tax Charge.................................................. 19
Death Benefit......................................................... 19
Annuity Benefits...................................................... 19
Annuity Options..................................................... 19
Annuity Unit Valuation.............................................. 20
Determination of Payment Amount..................................... 20
Federal Tax Considerations............................................ 21
A. General.......................................................... 21
B. Taxation of Hartford and the Separate Account.................... 21
C. Taxation of Annuities -- General Provisions Affecting Purchasers
Other Than Qualified Retirement Plans.............................. 21
D. Federal Income Tax Withholding................................... 24
E. Annuity Purchases by Nonresident Aliens and Foreign
Corporations....................................................... 24
General Matters....................................................... 24
Additions, Deletions or Substitutions of Investments................ 24
Assignment.......................................................... 25
Modification........................................................ 25
Misstatement of Age................................................. 25
Delay of Payments................................................... 25
Voting Rights....................................................... 25
Experience Credit................................................... 25
Distribution of the Group Annuity................................... 25
Safekeeping of Separate Account Assets.............................. 26
Legal Proceedings................................................... 26
Year 2000........................................................... 26
Legal Counsel....................................................... 27
Experts............................................................. 27
Additional Information.............................................. 27
Table of Contents of the Statement of Additional Information.......... 28
</TABLE>
<PAGE>
4 HARTFORD LIFE INSURANCE COMPANY
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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 that We begin to make annuity payments.
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) on whose life the Certificate is issued. The
Annuitant may not be changed.
Beneficiary: The person(s) entitled to receive a death benefit under the
Certificate upon death of the Annuitant or Owner.
Certificate Anniversary: An anniversary of the date that We issued the
Certificate.
Certificate Date: The date that We issue the Certificate.
Certificate Year: Any 12 month period between Certificate Anniversaries.
Code: The Internal Revenue Code of 1986, as amended.
Contingent Annuitant: The person that You designate to become the Annuitant if
the Annuitant dies before the Annuity Commencement Date. You must name the
Contingent Annuitant before the Annuitant's death.
Customer Service Center: Currently located at ICMG, Group Annuity Operations,
100 Campus Drive, Suite 250, Florham Park, NJ 07932.
Death Benefit: The amount payable when an Annuitant or Owner dies 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 You must complete before We issue a Certificate.
Funds: The registered management investment companies in which assets of the
Separate Account may be invested.
General Account: The assets of Hartford other than the assets of our Separate
Accounts.
Group Annuity: The variable annuity described in this Prospectus which provides
for annuity payments that vary in amount in accordance with the investment
experience of the Divisions of the Separate Account.
Hartford, Us or We: Hartford Life Insurance Company.
Investment Value: The sum of the values of the assets in the Divisions under the
Certificate.
Maximum Deferral Age: The Annuitant's 90th birthday.
Net Premium: The amount of premium credited to the Divisions.
Owner or You: The entity or person who is the owner of the Certificate, as named
in the Certificate.
Portfolios: A Hartford fund or a separate mutual fund, series or portfolio of
the remaining Funds.
Premium Payment: A payment made to Hartford pursuant to the terms of the
Certificate.
Premium Tax: A tax charged by a state, municipality or other jurisdiction on
Premium Payments.
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 less any due
and unpaid charges.
Valuation Day: Every day that the New York Stock Exchange ("NYSE") is open for
trading. The value of the Separate Account is determined at the close of the
NYSE (generally 4:00 p.m. Eastern Time) on such days.
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
Certificate Owner Transaction Expenses
<TABLE>
<S> <C>
As a Percentage of Premium Payments
Maximum Sales Load Imposed on Purchases........................... 4.6%(1)
Federal Tax Charge................................................ 0.43%
Deferred Sales Load............................................... None
Separate Account Expenses
Administrative Expense Charge..................................... $2.50per month
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.
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.
Annual Portfolio Operating Expenses
(as a percentage of net assets)
<TABLE>
<CAPTION>
Total
Operating
Operating
Expenses
Other (after
Management Expenses any waivers
Fees (after (after and/or
any waivers) reimbursements) reimbursements)(1)
-------------- -------- --------------
<S> <C> <C> <C>
Alger American Small Cap Portfolio.............. 0.850% 0.040% 0.890%
Alger American Growth Portfolio................. 0.750% 0.040% 0.790%
BT EAFE-Registered Trademark- Equity Index Fund
(2)........................................... 0.000% 0.650% 0.650%
BT Equity 500 Index Fund (2).................... 0.000% 0.300% 0.300%
BT Small Cap Index Fund (2)..................... 0.000% 0.450% 0.450%
VIP High Income Portfolio....................... 0.580% 0.120% 0.700%
VIP Equity-Income Portfolio (3)................. 0.490% 0.080% 0.570%
VIP II Asset Manager Portfolio (3).............. 0.540% 0.090% 0.630%
Hartford Capital Appreciation Fund.............. 0.623% 0.019% 0.642%
Hartford Bond Fund.............................. 0.482% 0.021% 0.503%
Hartford Money Market Fund...................... 0.433% 0.015% 0.448%
J.P. Morgan Bond Portfolio (4).................. 0.300% 0.450% 0.750%
J.P. Morgan Equity Portfolio (4)................ 0.400% 0.500% 0.900%
J.P. Morgan Small Company Portfolio (4)......... 0.600% 0.550% 1.150%
J.P. Morgan International Opportunities
Portfolio (4)................................. 0.600% 0.600% 1.200%
MSDW Universal Funds Fixed Income Portfolio
(5)........................................... 0.060% 0.640% 0.700%
MSDW Universal Funds High Yield Portfolio (5)... 0.150% 0.650% 0.800%
MSDW Universal Funds Equity Growth Portfolio
(5)........................................... 0.090% 0.760% 0.850%
MSDW Universal Funds Value Portfolio (5)........ 0.080% 0.770% 0.850%
MSDW Universal Funds Global Equity Portfolio
(5)........................................... 0.320% 0.830% 1.150%
MSDW Universal Funds Emerging Markets Equity
Portfolio (5)................................. 0.000% 1.950% 1.950%
Neuberger Berman Advisers Management Trust
Partners Portfolio (6)........................ 0.780% 0.060% 0.840%
Neuberger Berman Advisers Management Trust
Balanced Portfolio (6)........................ 0.850% 0.180% 1.030%
Neuberger Berman Advisers Management Trust
Limited Maturity Bond Portfolio (6)........... 0.650% 0.110% 0.760%
</TABLE>
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(1) "Management Fee" generally represents the fee paid to the investment adviser
or its affiliate for investment and administrative services provided. "Other
Expenses" are operating expenses (other than management fees) deducted from
the Portfolios, including legal, accounting and custodian fees. For a
complete description of the nature of the services provided in consideration
of the operating expenses deducted, please see the Fund prospectuses.
<PAGE>
6 HARTFORD LIFE INSURANCE COMPANY
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(2) Without expense waivers and reimbursements, it is estimated that Management
Fees, Other Expenses and 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 as follows:
<TABLE>
<CAPTION>
Total Operating
Portfolio Management Fee Other Expenses Expenses
----------------------------------- --------------- -------------- ------------------
<S> <C> <C> <C>
BT EAFE-Registered Trademark-
Equity Index Fund................ 0.450% 1.620% 2.070%
BT Equity 500 Index Fund........... 0.200% 1.480% 1.680%
BT Small Cap Index Fund............ 0.350% 1.580% 1.930%
</TABLE>
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(3) A portion of the brokerage commissions that certain Funds pay was used to
reduce Fund expenses. In addition, certain Funds have entered into
arrangements with their custodian whereby credits realized, as a result of
uninvested cash balances were used to reduce custodian expenses. Including
these reductions Management Fees, Other Expenses and Total Operating
Expenses for VIP Equity-Income Portfolio and VIP II Asset Manager Portfolio
would have been as follows:
<TABLE>
<CAPTION>
Total Operating
Portfolio Management Fee Other Expenses Expenses
----------------------------------- --------------- -------------- ------------------
<S> <C> <C> <C>
VIP Equity-Income.................. 0.490% 0.090% 0.580%
VIP II Asset Manager............... 0.540% 0.100% 0.640%
</TABLE>
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(4) Pursuant to a voluntary agreement, fees and expenses were reimbursed to the
extent 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, Management Fees, Other
Expenses and Total Operating Expenses would have been as follows:
<TABLE>
<CAPTION>
Total Operating
Portfolio Management Fees Other Expenses Expenses
----------------------------------- --------------- -------------- ------------------
<S> <C> <C> <C>
J.P. Morgan Bond................... 0.300% 0.720% 1.020%
J.P. Morgan Equity................. 0.400% 1.080% 1.480%
J.P. Morgan Small Company.......... 0.600% 2.830% 3.430%
J.P. Morgan International
Opportunities.................... 0.600% 2.660% 3.260%
</TABLE>
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(5) With respect to the MSDW Universal Funds Fixed Income, MSDW Universal Funds
High Yield, MSDW Universal Funds Equity Growth, MSDW Universal Funds Value,
MSDW Universal Funds Global Equity and MSDW Universal Funds Emerging Markets
Equity Portfolios, the investment adviser has voluntarily agreed to waive
its investment advisory fees and/or to reimburse the Portfolios for certain
other expenses. 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 Operating
Portfolio Management Fee Other Expenses Expenses
----------------------------------- --------------- -------------- ------------------
<S> <C> <C> <C>
MSDW Universal Funds Fixed
Income........................... 0.400% 0.640% 1.040%
MSDW Universal Funds High Yield.... 0.500% 0.650% 1.150%
MSDW Universal Funds Equity
Growth........................... 0.550% 0.760% 1.310%
MSDW Universal Funds Value......... 0.550% 0.770% 1.320%
MSDW Universal Funds Global
Equity........................... 0.800% 0.830% 1.630%
MSDW Universal Funds Emerging
Markets Equity................... 1.250% 2.200% 3.450%
</TABLE>
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(6) Neuberger Berman Advisers Management Trust is divided into portfolios (each
a "Portfolio"), each of which invests all of its net investable assets in a
corresponding series (each a "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. Similarly, "Other Expenses" includes all other
expenses of the Portfolio and its corresponding Series.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 7
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EXAMPLE
If you surrender your Certificate or annuitize at the end of the applicable
time period:
<TABLE>
<CAPTION>
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>
Alger American Small Cap
Division................... 66 99 134 232
Alger American Growth
Division................... 65 96 129 221
BT EAFE-Registered Trademark-
Equity Index Division...... 64 91 121 206
BT Equity 500 Index
Division................... 60 81 104 168
BT Small Cap Index
Division................... 62 85 111 185
VIP High Income Division..... 64 93 124 212
VIP Equity-Income Division... 63 89 118 199
VIP II Asset Manager
Division................... 63 91 121 205
Hartford Capital Appreciation
Division................... 63 91 121 206
Hartford Bond Division....... 62 87 114 190
Hartford Money Market
Division................... 62 85 111 184
J.P. Morgan Bond Division.... 65 94 127 217
J.P. Morgan Equity
Division................... 66 99 134 233
J.P. Morgan Small Company
Division................... 69 107 149 263
J.P. Morgan International
Opportunities Division..... 69 108 149 264
MSDW Universal Funds Fixed
Income Division............ 64 93 124 212
MSDW Universal Funds High
Yield Division............. 65 96 129 222
MSDW Universal Funds Equity
Growth Division............ 65 97 132 228
MSDW Universal Funds Value
Division................... 65 97 132 228
MSDW Universal Funds Global
Equity Division............ 68 106 147 259
MSDW Universal Funds Emerging
Markets Equity Division.... 76 130 186 337
Neuberger Berman Advisers
Management Trust Limited
Maturity Bond Division..... 65 95 127 218
Neuberger Berman Advisers
Management Trust Balanced
Division................... 67 103 141 246
Neuberger Berman Advisers
Management Trust Partners
Division................... 65 97 131 227
</TABLE>
<PAGE>
8 HARTFORD LIFE INSURANCE COMPANY
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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 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 Alger American
Small Cap Portfolio and Alger American Growth Portfolio of The Alger American
Fund; the BT EAFE-Registered Trademark- Equity Index Fund, the BT Equity 500
Index Fund and the BT Small Cap Index Fund of BT Insurance Funds Trust; the High
Income Portfolio and the Equity-Income Portfolio of VIP; the Asset Manager
Portfolio of VIP II; the Hartford Capital Appreciation Fund, the Hartford Bond
Fund and the Hartford Money Market 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 MSDW Universal Funds Fixed Income Portfolio, the MSDW Universal Funds
High Yield Portfolio, the MSDW Universal Funds Equity Growth Portfolio, the MSDW
Universal Funds Value Portfolio, the MSDW Universal Funds Global Equity
Portfolio and the MSDW Universal Funds Emerging Markets Equity Portfolio of
Morgan Stanley Dean Witter Universal Funds, Inc.; the Limited Maturity Bond
Portfolio, the Balanced Portfolio and the Partners Portfolio of Neuberger Berman
Advisers Management Trust; and such other Portfolios as shall be offered from
time to time. See "The Portfolios".
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 charge of 0.65% per annum against all Investment Value held in the
Divisions. See "Mortality and Expense Risk Charge".
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 and municipalities. See "Premium Tax Charge". In addition, a deduction
will be made for the federal tax cost resulting from Section 848 of the Code.
See "Federal Tax Charge".
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". See also "Federal Tax Considerations", 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".
What are the available annuity options under the Certificate?
There are four annuity options available under the Certificate. See "Annuity
Options". The Annuity Commencement
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HARTFORD LIFE INSURANCE COMPANY 9
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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.
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".
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 standardized 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.
Standardized 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.
The Separate Account may also advertise NON-STANDARD TOTAL RETURNS THAT
PREDATE THE INCEPTION DATE OF THE SEPARATE ACCOUNT. These non-standard total
returns are calculated by assuming the Investment Divisions have been in
existence for the same periods as the underlying Funds and by taking deductions
for charges equal to those currently assessed against the Investment Divisions.
These non-standardized returns must be accompanied by standardized total
returns.
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.
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10 HARTFORD LIFE INSURANCE COMPANY
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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 Investment Company Act of 1940 (the "1940 Act"). This
registration does not, however, involve supervision by the Securities and
Exchange Commission ("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."
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.
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HARTFORD LIFE INSURANCE COMPANY 11
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Applicants should read the Fund prospectuses accompanying this Prospectus in
connection with the purchase of a Certificate.
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 Cap and Alger American Growth Portfolios available as part of
OmniFlex-Registered Trademark-.
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.
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 BT
EAFE-Registered Trademark- Equity Index Fund, the BT Equity 500 Index Fund and
the BT Small Cap Index Fund available as part of OmniFlex-Registered Trademark-.
BT Insurance Funds Trust has retained the services of Bankers Trust Company,
a wholly owned subsidiary of Bankers Trust New York Corporation, as investment
adviser. 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.
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-Registered Trademark-.
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 was
founded in 1946. It provides a number of mutual funds and other clients with
investment research and portfolio management services.
HARTFORD FUNDS -- The Separate Account currently invests in three Funds
sponsored by Hartford that are available as part of
OmniFlex-Registered Trademark- 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, LLC ("HL Advisors") serves as the investment adviser
to each of the Hartford Funds. In addition, HL Advisors has entered into an
investment services agreement with The Hartford Investment Management Company
("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") serves as sub-investment adviser for the
Hartford Capital Appreciation Fund.
J.P. MORGAN SERIES TRUST II -- The Separate Account currently invests in
shares of J.P. Morgan Series Trust II, 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-Registered Trademark-.
Each Portfolio of J.P. Morgan Series Trust II 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 DEAN WITTER UNIVERSAL FUNDS, INC. ("MSDW UNIVERSAL
FUNDS") -- The Separate Account currently invests in shares of MSDW Universal
Funds, an open-end management investment company registered under the 1940 Act
and organized as a corporation under the laws of the State of Maryland. MSDW
Universal Funds consists of 18 portfolios, including the MSDW Universal Funds
Fixed Income, MSDW Universal Funds High Yield, MSDW Universal Funds Equity
Growth, MSDW Universal Funds Value, MSDW Universal Funds Global Equity and MSDW
Universal Funds Emerging Markets Equity Portfolios available as part of
OmniFlex-Registered Trademark-.
The investment adviser for MSDW Universal Funds Equity Growth, MSDW
Universal Funds Global Equity and MSDW Universal Funds Emerging Markets Equity
Portfolios is Morgan Stanley Dean Witter Investment 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 MSDW
Universal Funds Fixed Income, MSDW Universal Funds High Yield and MSDW Universal
Funds Value Portfolios is
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12 HARTFORD LIFE INSURANCE COMPANY
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Miller Anderson & Sherrerd, LLP, which is indirectly wholly-owned by Morgan
Stanley Dean Witter & Co.
NEUBERGER BERMAN ADVISERS MANAGEMENT TRUST PORTFOLIOS ("NEUBERGER BERMAN
AMT") -- 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 Neuberger Berman AMT Limited Maturity Bond
Portfolio, Neuberger Berman AMT Balanced Portfolio and Neuberger Berman AMT
Partners Portfolio available as part of OmniFlex-Registered Trademark-.
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 Neuberger Berman AMT
Limited Maturity Bond Portfolio, Neuberger Berman AMT Balanced Portfolio and
Neuberger Berman AMT 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 Inc. serves as the investment manager of all of
Neuberger Advisers Management Trust Portfolios, in conjunction with Neuberger
Berman, LLC as the sub-adviser.
The investments for each Portfolio is managed by the same portfolio
manager(s) who manage one or more other mutual funds that have similar names,
investment objectives and investment styles as the Portfolio. You should be
aware that the Portfolio is likely to differ from the other mutual funds in
size, cash flow pattern and tax matters. Accordingly, the holdings and
performance of each Portfolio can be expected to vary from those of the other
mutual funds.
Shares of the separate Portfolios are sold only through the currently
effective prospectus and are not available to the general public. Shares of the
Neuberger Berman AMT Portfolios may be purchased only by life insurance
companies for allocation to their variable separate accounts established for the
purpose of funding variable annuity contracts and variable life insurance
policies.
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.
ALGER AMERICAN SMALL CAP PORTFOLIO -- Alger American Small Cap Portfolio
seeks long-term capital appreciation. It focuses on small, fast-growing
companies that offer innovative products, services or technologies to a rapidly
expanding marketplace. Under normal circumstances, the portfolio invests
primarily in the equity securities of small capitalization companies. A small
capitalization company is one that has a market capitalization within the range
of the Russell 2000 Growth Index or the S&P SmallCap 600 Index.
ALGER AMERICAN GROWTH PORTFOLIO -- Alger American Growth Portfolio seeks
long-term capital appreciation. It focuses on growing companies that generally
have broad product lines, markets, financial resources and depth of management.
Under normal circumstances, the portfolio invests primarily in the equity
securities of large companies. The portfolio considers a large company to have a
market capitalization of $1 billion or greater.
BT 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 United States.
BT 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.
BT 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.
VIP HIGH INCOME PORTFOLIO -- VIP High Income Portfolio seeks high current
income primarily through investments in income-producing debt securities,
preferred
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HARTFORD LIFE INSURANCE COMPANY 13
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stocks and convertible securities with an emphasis on lower quality debt
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"), potentially investing
in lower quality debt 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.
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.
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 companies from developed markets other than the
U.S. The Portfolio's assets may also be invested, to a limited extent, in
companies from emerging markets.
MSDW UNIVERSAL FUNDS FIXED INCOME PORTFOLIO -- MSDW Universal Funds 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 and to a limited extent, high yield securities or
junk bonds.
MSDW UNIVERSAL FUNDS HIGH YIELD PORTFOLIO -- MSDW Universal Funds High Yield
Portfolio seeks above average total return over a market cycle of three to five
years by investing primarily in a portfolio of high yield securities.
MSDW UNIVERSAL FUNDS EQUITY GROWTH PORTFOLIO -- MSDW Universal Funds 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 of medium and large capitalization companies.
MSDW UNIVERSAL FUNDS VALUE PORTFOLIO -- MSDW Universal Funds 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 $1.5 billion.
MSDW UNIVERSAL FUNDS GLOBAL EQUITY PORTFOLIO -- MSDW Universal Funds 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.
MSDW UNIVERSAL FUNDS EMERGING MARKET EQUITY PORTFOLIO -- MSDW Universal
Funds Emerging Markets Equity Portfolio seeks long-term capital appreciation by
investing
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14 HARTFORD LIFE INSURANCE COMPANY
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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.
NEUBERGER BERMAN AMT LIMITED MATURITY BOND PORTFOLIO -- Neuberger Berman AMT
Limited Maturity Bond Portfolio seeks the highest available current income
consistent with liquidity and low risk to principal; total return is a secondary
goal. The Portfolio invests mainly in investment-grade bonds and other debt
securities from U.S. government and corporate issuers. To enhance yield and add
diversification, 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.
NEUBERGER BERMAN AMT BALANCED PORTFOLIO -- Neuberger Berman AMT Balanced
Portfolio seeks growth of capital and reasonable current income without undue
risk to principal. The managers may allocate anywhere from 50% to 70% of assets
to stock investments with the balance allocated to bond investments (at least
25%) and operating cash. The Portfolio's fixed income securities consist
primarily of investment-grade bonds and other debt securities.
NEUBERGER BERMAN AMT PARTNERS PORTFOLIO -- Neuberger Berman AMT Partners
Portfolio seeks to achieve capital growth. This Portfolio's investment approach
is to invest mainly in common stocks of mid- to large- capitalization companies.
The managers look for well-managed companies whose stock prices are believed to
be undervalued.
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. The minimum issue age is 20 and the maximum
issue age is 80. 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 they are
received by Hartford at its Customer Service Center or other designated
administrative office.
The number of Accumulation Units in each Division to be credited to a
Certificate will be determined by dividing the portion of the Premium Payment
being credited to each Division by the value of an Accumulation Unit in that
Division on that date.
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HARTFORD LIFE INSURANCE COMPANY 15
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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."
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 be
transferred will be limited by Hartford's rules then in effect and the amounts
that are transferred must be whole percentages of 5% or more, unless otherwise
agreed to by Hartford. Currently, the minimum value of Accumulation
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16 HARTFORD LIFE INSURANCE COMPANY
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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.
All transfers made pursuant to Asset Rebalancing on the same day will count as
one (1) transfer toward the twelve (12) transfers permitted without charge per
coverage year. 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.
Dollar Cost Averaging Option Program
You may elect to allocate Your Net Premiums among the Divisions pursuant to the
dollar cost averaging option program ("DCA Program"). If You choose to
participate in the DCA Program, Your Net Premiums will be deposited into the
Hartford Money Market Division. Each month, amounts will be withdrawn from that
Division and allocated to the other Divisions in accordance with Your allocation
instructions. The transfer date will be the monthly anniversary of Your first
transfer under Your initial DCA election. The first transfer will commence
within five business days after Hartford receives Your initial election, either
in a written form satisfactory to Us or by telephone, subject to the telephone
transfer procedures described above. Your Net Premium will be allocated to the
Divisions that You specify, in the proportions that You specify. If, on any
transfer date, Your Investment Value allocated to the Hartford Money Market
Division is less than the amount You have elected to transfer, Your
participation in the DCA program will terminate. Any transfers made in
connection with the DCA Program must be whole percentages of 5% or more, unless
otherwise agreed to by Hartford. In addition, transfers made under the DCA
Program count toward the twelve (12) transfers permitted without charge per
coverage year.
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HARTFORD LIFE INSURANCE COMPANY 17
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You may cancel Your DCA election by notice in a written form satisfactory to
Us.
The main objective of the DCA Program is to minimize the impact of
short-term price fluctuations. The DCA program allows You to take advantage of
market fluctuations. Since the same dollar amount is transferred to other
Divisions at set intervals, the DCA Program allows You to purchase more
Accumulation Units when prices are low and fewer Accumulation Units when prices
are high. Therefore, a lower average cost per Accumulation Unit may be achieved
over the long-term. However, it is important to understand that a DCA Program
does not assure a profit or protect against loss in a declining market. Owners
who choose to participate in the DCA Program should have the financial ability
to continue making investments through periods of low price levels.
You cannot make transfers under Asset Rebalancing and participate in the DCA
Program at the same time.
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."
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 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".
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 New York Stock Exchange
("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.
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18 HARTFORD LIFE INSURANCE COMPANY
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Charges Under the Certificate
Certain charges and deductions described below may be reduced for
Certificates issued in connection with a specific plan in accordance with
Hartford's rules in effect as of the date an Enrollment Form for a Certificate
is approved. To qualify for such a reduction, a plan must satisfy certain
criteria as to, for example, size of the plan, expected number of participants
and anticipated Premium Payment from the plan. Generally, the sales contacts and
effort, administrative costs and mortality cost per Certificate vary based on
such factors as the size of the plan, the purposes for which Certificates are
purchased and certain characteristics for the plan's members. The amount of
reduction and the criteria for qualification are related to the reduced sales
effort and administrative costs resulting from, and the different mortality
experience expected as a result of, sales to qualifying plans. Hartford may
modify from time to time on a uniform basis both the amounts of reductions and
the criteria for qualification. Reductions in these charges will not be unfairly
discriminatory against any person, including the affected 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
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
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HARTFORD LIFE INSURANCE COMPANY 19
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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 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.
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20 HARTFORD LIFE INSURANCE COMPANY
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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.
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") 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
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HARTFORD LIFE INSURANCE COMPANY 21
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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." As a result, such investment income and realized capital
gains are automatically applied to increase reserves under the Certificate.
No taxes are due on interest, dividends and short-term or long-term capital
gains earned by the Separate Account with respect to the Certificates.
C. Taxation of Annuities -- General
Provisions Affecting Purchasers 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
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22 HARTFORD LIFE INSURANCE COMPANY
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in the contract," and for these purposes such "income on the contract" shall
be computed by reference to any aggregation rule in subparagraph 2.c.
below. As a result, any such amount received or deemed received (1) shall
be includable in gross income to the extent that such amount does not
exceed any such "income on the contract," and (2) shall not be includable
in gross income to the extent that such amount does exceed any such
"income on the contract." If at the time that any amount is received or
deemed received there is no "income on the contract" (e.g., because the
gross value of the Certificate does not exceed the "investment in the
contract" and no aggregation rule applies), then such amount received or
deemed received will not be includable in gross income, and will simply
reduce the "investment in the contract."
iv. The receipt of any amount as a loan under the Certificate or the assignment
or pledge of any portion of the value of the Certificate shall be treated
as an amount received for purposes of this subparagraph a. and the next
subparagraph b.
v. In general, the transfer of the Certificate, without full and adequate
consideration, will be treated as an amount received for purposes of this
subparagraph a. and the next subparagraph b. This transfer rule does not
apply, however, to certain transfers of property between spouses or incident
to divorce.
b. Distributions After Annuity Commencement Date.
Annuity payments made periodically after the Annuity Commencement Date are
includable in gross income to the extent the payments exceed the amount
determined by the application of the ratio of the "investment in the contract"
to the total amount of the payments to be made after the Annuity Commencement
Date (the "exclusion ratio").
i. When the total of amounts excluded from income by application of the
exclusion ratio is equal to the investment in the contract as of the Annuity
Commencement Date, any additional payments (including surrenders) will be
entirely includable in gross income.
ii. If the annuity payments cease by reason of the death of the Annuitant and,
as of the date of death, the amount of annuity payments excluded from gross
income by the exclusion ratio does not exceed the investment in the
contract as of the Annuity Commencement Date, then the remaining portion of
unrecovered investment shall be allowed as a deduction for the last taxable
year of the Annuitant.
iii. Generally, nonperiodic amounts received or deemed received after the
Annuity Commencement Date are not entitled to any exclusion ratio and
shall be fully includable in gross income. However, upon a full surrender
after such date, only the excess of the amount received (after any
surrender charge) over the remaining "investment in the contract" shall be
includable in gross income (except to the extent that the aggregation rule
referred to in the next subparagraph c. may apply).
c. Aggregation of Two or More Annuity Certificates.
Certificates issued after October 21, 1988 by the same insurer (or
affiliated insurer) to the same 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.).
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 23
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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
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.
<PAGE>
24 HARTFORD LIFE INSURANCE COMPANY
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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 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.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 25
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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
Plans."
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.
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"), 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. HESCO is an affiliate of Hartford. Both HESCO and Hartford are ultimately
controlled by The Hartford Financial Services Group, 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.
<PAGE>
26 HARTFORD LIFE INSURANCE COMPANY
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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.
Year 2000
IN GENERAL -- The Year 2000 issue relates to the ability or inability of
computer hardware, software and other information technology (IT) systems, as
well as non-IT systems, such as equipment and machinery with imbedded chips and
microprocessors, to properly process information and data containing or related
to dates beginning with the year 2000 and beyond. The Year 2000 issue exists
because, historically, many IT and non-IT systems that are in use today were
developed years ago when a year was identified using a two-digit date field
rather than a four-digit date field. As information and data containing or
related to the century date are introduced to date sensitive systems, these
systems may recognize the year 2000 as "1900", or not at all, which may result
in systems processing information incorrectly. This, in turn, may significantly
and adversely affect the integrity and reliability of information databases of
IT systems, may cause the malfunctioning of certain non-IT systems, and may
result in a wide variety of adverse consequences to a company. In addition, Year
2000 problems that occur with third parties with which a company does business,
such as suppliers, computer vendors, distributors and others, may also adversely
affect any given company.
The integrity and reliability of Hartford's IT systems, as well as the
reliability of its non-IT systems, are integral aspects of Hartford's business.
Hartford issues insurance policies, annuities, mutual funds and other financial
products to individual and business customers, nearly all of which contain date
sensitive data, such as policy expiration dates, birth dates and premium payment
dates. In addition, various IT systems support communications and other systems
that integrate Hartford's various business segments and field offices. Hartford
also has business relationships with numerous third parties that affect
virtually all aspects of Hartford's business, including, without limitation,
suppliers, computer hardware and software vendors, insurance agents and brokers,
securities broker-dealers and other distributors of financial products, many of
which provide date sensitive data to Hartford, and whose operations are
important to Hartford's business.
INTERNAL YEAR 2000 EFFORTS AND TIMETABLE -- Beginning in 1990, Hartford
began working on making its IT systems Year 2000 ready, either through
installing new programs or replacing systems. Since January 1998, Hartford's
Year 2000 efforts have focused on the remaining Year 2000 issues related to IT
and non-IT systems in all of Hartford's business segments. These Year 2000
efforts include the following five main initiatives: (1) identifying and
assessing Year 2000 issues; (2) taking actions to remediate IT and non-IT
systems so that they are Year 2000 ready; (3) testing IT and non-IT systems for
Year 2000 readiness; (4) deploying such remediated and tested systems back into
their respective production environments; and (5) conducting internal and
external integrated testing of such systems. As of December 31, 1998, Hartford
substantially completed initiatives (1) through (4) of its internal Year 2000
efforts. Hartford has begun initiative (5) and management currently anticipates
that such activity will continue into the fourth quarter of 1999.
THIRD PARTY YEAR 2000 EFFORTS AND TIMETABLE -- Hartford's Year 2000 efforts
include assessing the potential impact on Hartford of third parties' Year 2000
readiness. Hartford's third party Year 2000 efforts include the following three
main initiatives: (1) identifying third parties which have significant business
relationships with Hartford, including, without limitation, insurance agents,
brokers, third party administrators, banks and other distributors and servicers
of financial products, and inquiring of such third parties regarding their Year
2000 readiness; (2) evaluating such third parties' responses to Hartford's
inquiries; and (3) based on the evaluation of third party responses (or a third
party's failure to respond) and the significance of the business relationship,
conducting additional activities with respect to third parties as determined to
be necessary in each case. These activities may include conducting additional
inquiries, more in-depth evaluations of Year 2000 readiness and plans, and
integrated IT systems testing. Hartford has completed the first third party
initiative and, as of early 1999, had substantially completed evaluating third
party responses received. Hartford has begun conducting the additional
activities described in initiative (3) and management currently anticipates that
it will continue to do
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 27
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so through the end of 1999. However, notwithstanding these third party Year 2000
efforts, Hartford does not have control over these third parties and, as a
result, Hartford cannot currently determine to what extent future operating
results may be adversely affected by the failure of these third parties to
adequately address their Year 2000 issues.
YEAR 2000 COSTS -- The costs of Hartford's Year 2000 program that were
incurred through the year ended December 31, 1997 were not material to
Hartford's financial condition or results of operations. The after-tax costs of
Hartford's Year 2000 efforts for the year ended December 31, 1998 were
approximately $3 million. Management currently estimates that after-tax costs
related to the Year 2000 program to be incurred in 1999 will be less than $10
million. These costs are being expensed as incurred.
RISKS AND CONTINGENCY PLANS -- If significant Year 2000 problems arise,
including problems arising with third parties, failures of IT and non-IT systems
could occur, which in turn could result in substantial interruptions in
Hartford's business. In addition, Hartford's investing activities are an
important aspect of its business and Hartford may be exposed to the risk that
issuers of investments held by it will be adversely impacted by Year 2000
issues. Given the uncertain nature of Year 2000 problems that may arise,
especially those related to the readiness of third parties discussed above,
management cannot determine at this time whether the consequences of Year 2000
related problems that could arise will have a material impact on Hartford's
financial condition or results of operations.
Hartford is in the process of developing certain contingency plans so that
if, despite its Year 2000 efforts, Year 2000 problems ultimately arise, the
impact of such problems may be avoided or minimized. These contingency plans are
being developed based on, among other things, known or reasonably anticipated
circumstances and potential vulnerabilities. The contingency planning also
includes assessing the dependency of Hartford's business on third parties and
their Year 2000 readiness. Hartford currently anticipates that internal and
external contingency plans will be substantially complete by the end of the
second quarter of 1999. However, in many contexts, Year 2000 issues are dynamic,
and ongoing assessments of business functions, vulnerabilities and risks must be
made. As such, new contingency plans may be needed in the future and/or existing
plans may need to be modified as circumstances warrant.
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 registration statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said 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: Registered Products
100 Campus Drive, Suite 250
Florham Park, NJ 07932
Telephone: 800-861-1408
<PAGE>
28 HARTFORD LIFE INSURANCE COMPANY
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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 this form
and mail to:
International Corporate Marketing Group
Attn: Registered Products
100 Campus Drive, Suite 250
Florham Park, NJ 07932
Please send a Statement of Additional Information for
OmniFlex-Registered Trademark- funded by ICMG Secular Trust Separate Account to
me at the following address:
- ----------------------------------------------------
Name
- ------------------------------------------------------------
Address
- ------------------------------------------------------------
City/State Zip
Code
<PAGE>
PART B
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: Registered Products, 100 Campus Drive, Suite 250,
Florham Park, NJ 07932.
Date of Prospectus: May 3, 1999
Date of Statement of Additional Information: May 3, 1999
<PAGE>
-2-
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION 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>
-3-
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY
Hartford Life Insurance Company 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. We were originally
incorporated under the laws of Massachusetts on June 5, 1902, and
subsequently redomiciled to Connecticut. Our offices are located in
Simsbury, Connecticut; however, our mailing address is P.O. Box 2999,
Hartford, CT 06104-2999. We are ultimately controlled by The Hartford
Financial Services Group, Inc., one of the largest financial service
providers in the United States.
HARTFORD'S RATINGS
<TABLE>
<CAPTION>
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Rating Agency Effective Rating Basis of Rating
Date of Rating
<S> <C> <C> <C>
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A.M. Best and Company, Inc. 1/1/99 A+ Financial performance
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Standard & Poor's 6/1/98 AA Insurer financial
strength
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Duff & Phelps 12/21/98 AA+ Claims paying ability
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</TABLE>
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 Investment Divisions.
INDEPENDENT PUBLIC ACCOUNTANTS
The audited financial statements and financial statement schedules included in
this registration statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports. 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 an
affiliate of Hartford. Both HESCO and Hartford are ultimately controlled by
The Hartford Financial Services Group, Inc. 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
<PAGE>
-4-
Securities Exchange Act of 1934 as broker-dealers and are members of the
National Association of Securities Dealers, Inc.
Hartford currently pays HESCO underwriting commissions for its role as
principal underwriter of all variable annuities associated with this Separate
Account. For the past three years, the aggregate dollar amount of
underwriting commissions paid to HESCO in its role as principal underwriter
has been: 1998: $66.24; 1997: $0; and 1996: $0. For the applicable time
periods, HESCO has not retained these commissions.
The offering of the Separate Account Certificates is continuous.
CALCULATION OF YIELD AND RETURN
YIELD OF THE HARTFORD MONEY MARKET DIVISION. As summarized in the Prospectus
under the heading "Performance Related Information," the yield of the Hartford
Money Market 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:
365/7
Effective Yield = [(Base Period Return + 1) ] - 1
THE HARTFORD MONEY MARKET 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, 1998
for the Hartford Money Market Division was as follows ($30 Annual Maintenance
Fee):
<PAGE>
-5-
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
DIVISION YIELD EFFECTIVE YIELD
<S> <C> <C>
- --------------------------------------------------------------------------
Hartford Money Market Fund * 4.14% 4.23%
- --------------------------------------------------------------------------
</TABLE>
* Yield and effective yield for the seven-day period ending December 31, 1998.
YIELDS OF HARTFORD BOND AND LIMITED MATURITY BOND 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:
6
Current Yield Formula for the Division 2[((A-B)/(CD) + 1) - 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.
<PAGE>
-5-
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
DIVISION YIELD
<S> <C>
- ----------------------------------------------------------------------
Hartford Bond Fund ** 5.23%
- ----------------------------------------------------------------------
Neuberger Berman AMT Limited Maturity Bond 4.80%
Portfolio **
- ----------------------------------------------------------------------
</TABLE>
** Yield quotation based on a 30-day period ended December 31, 1998.
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 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, 1998:
<PAGE>
-7-
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FOR YEAR ENDED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
DIVISIONS INCEPTION 1 YEAR 5 YEAR 10 YEAR SINCE
DATE INCEPTION
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
Alger Growth 10/28/94 36.01% N/A N/A 23.24%
- -------------------------------------------------------------------------------
Alger Small 10/28/94 5.65% N/A N/A 11.85%
Cap
- -------------------------------------------------------------------------------
BT EAFE 8/22/97 11.50% N/A N/A 1.58%
- -------------------------------------------------------------------------------
BT Equity 500 10/1/97 18.03% N/A N/A 15.32%
- -------------------------------------------------------------------------------
BT Small Cap 8/25/97 -10.75% N/A N/A -5.62%
Index
- -------------------------------------------------------------------------------
Fidelity VIP 10/28/94 5.32% N/A N/A 9.91%
Asset Mgr
- -------------------------------------------------------------------------------
Fidelity VIP 10/28/94 2.15% N/A N/A 15.12%
Equity Income
- -------------------------------------------------------------------------------
Fidelity VIP 10/28/94 -12.61% N/A N/A 6.17%
High Income
- -------------------------------------------------------------------------------
Hartford Bond 10/28/94 -1.05% N/A N/A 4.91%
- -------------------------------------------------------------------------------
Hartford 10/28/94 5.67% N/A N/A 15.29%
Capital
Appreciation
- -------------------------------------------------------------------------------
Hartford Money 10/28/94 -3.72% N/A N/A 0.29%
Market
- -------------------------------------------------------------------------------
JPM Bond 1/3/95 -1.17% N/A N/A 3.91%
- -------------------------------------------------------------------------------
JPM Equity 1/3/95 12.99% N/A N/A 21.44%
- -------------------------------------------------------------------------------
JPM 1/3/95 -4.23% N/A N/A 3.86%
International
Opps
- -------------------------------------------------------------------------------
JPM Small 1/3/95 -13.79% N/A N/A 12.27%
Company
- -------------------------------------------------------------------------------
MS Emerging 10/1/96 -31.17% N/A N/A -17.81%
Markets Eqty
- -------------------------------------------------------------------------------
MS Equity 1/2/97 9.28% N/A N/A 18.99%
Growth
- -------------------------------------------------------------------------------
MS Fixed 1/2/97 -1.28% N/A N/A 2.34%
Income
- -------------------------------------------------------------------------------
MS Global 1/2/97 3.93% N/A N/A 9.99%
Equity
- -------------------------------------------------------------------------------
MS High Yield 1/2/97 -4.16% N/A N/A 2.56%
- -------------------------------------------------------------------------------
MS Value 1/2/97 -10.59% N/A N/A 2.45%
Portfolio
- -------------------------------------------------------------------------------
Neuberger Berman 10/28/94 2.60% N/A N/A 18.76%
Balanced
- -------------------------------------------------------------------------------
Neuberger Berman 10/28/94 -4.54% N/A N/A 1.22%
Limited Maturity
- -------------------------------------------------------------------------------
Neuberger Berman 10/28/94 -4.75% N/A N/A 17.82%
Partners
- -------------------------------------------------------------------------------
</TABLE>
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 and the time periods used to
calculate return are based on the inception date of the underlying Funds.
Therefore, non-standardized total return for a Division is higher than
standardized total return for a Division.
<PAGE>
-8-
For the fiscal year ended December 31, 1998, the non-standardized annualized
total return for the Divisions listed below were as follows:
NON-STANDARDIZED ANNUALIZED TOTAL RETURN THAT PRE-DATE THE
INCEPTION DATE OF THE SEPARATE ACCOUNT FOR YEAR ENDED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
DIVISIONS INCEPTION 1 YEAR 5 YEAR 10 YEAR SINCE
DATE INCEPTION
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------
Alger Growth 1/8/89 47.11% 23.10% N/A 21.22%
- ------------------------------------------------------------------------------
Alger Small 9/20/88 14.78% 12.36% 19.07% N/A
Cap
- ------------------------------------------------------------------------------
BT EAFE 8/22/97 20.81% N/A N/A 9.08%
- ------------------------------------------------------------------------------
BT Equity 500 10/1/97 27.88% N/A N/A 30.10%
- ------------------------------------------------------------------------------
BT Small Cap 8/25/97 -2.82% N/A N/A 1.38%
Index
- ------------------------------------------------------------------------------
Fidelity VIP 9/6/89 14.31% 11.08% N/A 12.25%
Asset Mgr
- ------------------------------------------------------------------------------
10Fidelity VIP 10/9/86 10.90% 18.00% 14.87% N/A
Equity Income
- ------------------------------------------------------------------------------
Fidelity VIP 9/19/85 -4.95% 8.09% 10.36% N/A
High Income
- ------------------------------------------------------------------------------
Hartford Bond 8/31/77 7.45% 6.55% 8.15% N/A
- ------------------------------------------------------------------------------
Hartford 4/2/84 14.73% 17.12% 17.78% N/A
Capital
Appreciation
- ------------------------------------------------------------------------------
Hartford Money 6/30/80 4.60% 4.41% 4.83% N/A
Market
- ------------------------------------------------------------------------------
JPM Bond 1/3/95 7.32% N/A N/A 8.27%
- ------------------------------------------------------------------------------
JPM Equity 1/3/95 22.52% N/A N/A 25.60%
- ------------------------------------------------------------------------------
JPM 1/3/95 4.05% N/A N/A 8.16%
International
Opps
- ------------------------------------------------------------------------------
JPM Small 1/3/95 -6.11% N/A N/A 16.26%
Company
- ------------------------------------------------------------------------------
MS Emerging 10/1/96 -24.66% N/A N/A -12.89%
Markets Eqty
- ------------------------------------------------------------------------------
MS Equity 1/2/97 18.53% N/A N/A 25.25%
Growth
- ------------------------------------------------------------------------------
MS Fixed 1/2/97 7.21% N/A N/A 8.23%
Income
- ------------------------------------------------------------------------------
MS Global 1/2/97 12.75% N/A N/A 16.00%
Equity
- ------------------------------------------------------------------------------
MS High Yield 1/2/97 4.13% N/A N/A 8.40%
- ------------------------------------------------------------------------------
MS Value 1/2/97 -2.75% N/A N/A 8.14%
Portfolio
- ------------------------------------------------------------------------------
Neuberger Berman 2/28/89 11.45% 10.64% N/A 10.58%
Balanced
- ------------------------------------------------------------------------------
Neuberger Berman 9/10/84 3.71% 4.50% 6.10% N/A
Limited Maturity
- ------------------------------------------------------------------------------
Neuberger Berman 3/22/94 3.53% N/A N/A 18.92%
Partners
- ------------------------------------------------------------------------------
</TABLE>
<PAGE>
-9-
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 invest. 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
<PAGE>
-10-
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.
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 invest. 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 NYSE,
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,
<PAGE>
-11-
60 transportation and 40 financial services concerns. The S&P 500 represents
about 80% of the market value of all issues traded on the NYSE. Its
performance figures reflect changes of market prices and reinvestment of all
regular cash dividends.
The Standard & Poor's 40 Utilities Index is an 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>
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO HARTFORD LIFE INSURANCE COMPANY
ICMG SECULAR TRUST SEPARATE ACCOUNT
AND TO THE OWNERS OF UNITS OF INTEREST THEREIN:
- -------------------------------------------------------------------------------
We have audited the accompanying statements of assets and liabilities of
Hartford Life Insurance Company ICMG Secular Trust Separate Account (Hartford
Bond Fund, Hartford Capital Appreciation Fund, Hartford Money Market Fund,
Neuberger & Berman AMT Partners Portfolio, Neuberger & Berman AMT Balanced
Portfolio, Neuberger & Berman AMT Limited Maturity Bond Portfolio, VIP
Equity-Income Portfolio, VIP High Income Portfolio, VIP II Asset Manager
Portfolio, Alger American Small Capitalization Portfolio, Alger American
Growth Portfolio, J.P. Morgan Bond Portfolio, J.P. Morgan Equity Portfolio,
J.P. Morgan Small Company Portfolio, J.P. Morgan International Opportunities
Portfolio, Morgan Stanley Emerging Markets Equity Portfolio, Morgan Stanley
Equity Growth Portfolio, Morgan Stanley Fixed Income Portfolio, Morgan
Stanley Global Equity Portfolio, Morgan Stanley High Yield Portfolio and
Morgan Stanley Value Portfolio) (collectively, the Account) as of
December 31, 1998, and the related statements of operations and statements of
changes in net assets for the periods presented. These financial statements
are the responsibility of the Account's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit 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 audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Account as of
December 31, 1998 and the results of its operations and the changes in its
net assets for the periods presented in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen LLP
Hartford, Connecticut
February 25, 1999
<PAGE>
<TABLE>
<CAPTION>
HARTFORD LIFE INSURANCE COMPANY
ICMG SECULAR TRUST SEPARATE ACCOUNT Neuberger Neuberger
OMNIFLEX Hartford Hartford & Berman & Berman
STATEMENTS OF ASSETS AND LIABILITIES Hartford Capital Money AMT AMT
DECEMBER 31, 1998 Bond Appreciation Market Partners Balanced
Fund Fund Fund Portfolio Portfolio
Division Division Division Division Division
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. - Class IA
Shares 10,827
Cost $11,329
Market Value............................................ $ 11,700 - - - -
Hartford Capital Appreciation HLS Fund, Inc.- Class IA
Shares 2,972
Cost $13,082
Market Value............................................ - $ 14,145 - - -
Hartford Money Market HLS Fund, Inc. - Class IA
Shares 10,877
Cost $10,877
Market Value............................................ - - $ 10,877 - -
Investments in Neuberger & Berman Advisers Management Trust:
Partners Portfolio
Shares 675
Cost $11,893
Market Value............................................ - - - $ 12,782 -
Balanced Portfolio
Shares 766
Cost $12,628
Market Value............................................ - - - - $ 12,515
Limited Maturity Bond Portfolio
Shares 835
Cost $11,763
Market Value............................................ - - - - -
Investments in the Variable Insurance Products Fund:
VIP Equity-Income Portfolio
Shares 525
Cost $12,042
Market Value............................................ - - - - -
VIP High Income Portfolio
Shares 932
Cost $11,179
Market Value............................................ - - - - -
VIP II Asset Manager Portfolio
Shares 725
Cost $11,328
Market Value............................................ - - - - -
Receivable from Hartford Life Insurance Company........... - 4 - 2 -
----------- ----------- ----------- ----------- -----------
Total Assets ............................................. 11,700 14,149 10,877 12,784 12,515
----------- ----------- ----------- ----------- -----------
LIABILITIES:
Payable to Hartford Life Insurance Company................ 4 - - - 14
----------- ----------- ----------- ----------- -----------
Total Liabilities......................................... 4 - - - 14
----------- ----------- ----------- ----------- -----------
Net Assets (Variable annuity contract liabilities).......... $ 11,696 $ 14,149 $ 10,877 $ 12,784 $ 12,501
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
VARIABLE ANNUITY POLICIES:
Units owned by participants............................... 1,000 1,053 1,000 1,000 1,000
Unit price ............................................... $11.6966571 $13.4424818 $10.8769243 $12.7841852 $12.5010772
<CAPTION>
Neuberger
& Berman
AMT VIP VIP VIP II
Limited Equity- High Asset
Maturity Bond Income Income Manager
Portfolio Portfolio Portfolio Portfolio
Division Division Division Division
-------- -------- -------- --------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. - Class IA
Shares 10,827
Cost $11,329
Market Value............................................ - - - -
Hartford Capital Appreciation HLS Fund, Inc.- Class IA
Shares 2,972
Cost $13,082
Market Value............................................ - - - -
Hartford Money Market HLS Fund, Inc. - Class IA
Shares 10,877
Cost $10,877
Market Value............................................ - - - -
Investments in Neuberger & Berman Advisers Management Trust:
Partners Portfolio
Shares 675
Cost $11,893
Market Value............................................ - - - -
Balanced Portfolio
Shares 766
Cost $12,628
Market Value............................................ - - - -
Limited Maturity Bond Portfolio
Shares 835
Cost $11,763
Market Value............................................ $ 11,542 - - -
Investments in the Variable Insurance Products Fund:
VIP Equity-Income Portfolio
Shares 525
Cost $12,042
Market Value............................................ - $ 13,337 - -
VIP High Income Portfolio
Shares 932
Cost $11,179
Market Value............................................ - - $ 10,742 -
VIP II Asset Manager Portfolio
Shares 725
Cost $11,328
Market Value............................................ - - - $ 13,157
Receivable from Hartford Life Insurance Company........... - - - -
----------- ----------- ----------- -----------
Total Assets ............................................. 11,542 13,337 10,742 13,157
----------- ----------- ----------- -----------
LIABILITIES:
Payable to Hartford Life Insurance Company................ 3 15 - -
----------- ----------- ----------- -----------
Total Liabilities......................................... 3 15 - -
----------- ----------- ----------- -----------
Net Assets (Variable annuity contract liabilities).......... $ 11,539 $ 13,322 $ 10,742 $ 13,157
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
VARIABLE ANNUITY POLICIES:
Units owned by participants............................... 1,060 1,000 1,000 1,000
Unit price ............................................... $10.8851810 $13.3224107 $10.7416721 $13.1568844
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
HARTFORD LIFE INSURANCE COMPANY
ICMG SECULAR TRUST SEPARATE ACCOUNT Alger
OMNIFLEX American Alger J.P. Morgan
STATEMENTS OF ASSETS AND LIABILITIES - (CONTINUED) Small American J.P. Morgan J.P. Morgan J.P. Morgan International
DECEMBER 31, 1998 Capitalization Growth Bond Equity Small Company Opportunities
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Division Division Division Division Division Division
-------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in the Alger American Fund:
American Small Capitalization Portfolio
Shares 297
Cost $11,853
Market Value.................................. $ 13,077 - - - - -
American Growth Portfolio
Shares 327
Cost $12,172
Market Value.................................. - $ 17,427 - - - -
Investments in the J.P. Morgan Series Trust II:
Bond Portfolio
Shares 915
Cost $10,412
Market Value.................................. - - $ 10,683 - - -
Equity Portfolio
Shares 785
Cost $11,190
Market Value.................................. - - - $ 12,436 - -
Small Company Portfolio
Shares 830
Cost $10,370
Market Value.................................. - - - - $ 9,848 -
International Opportunities Portfolio
Shares 990
Cost $10,531
Market Value.................................. - - - - - $ 10,414
Investments in the Morgan Stanley Universal Funds,
Inc.:
Emerging Markets Equity Portfolio
Shares 1,141
Cost $10,083
Market Value.................................. - - - - - -
Equity Growth Portfolio
Shares 783
Cost $10,026
Market Value.................................. - - - - - -
Fixed Income Portfolio
Shares 997
Cost $10,456
Market Value.................................. - - - - - -
Global Equity Portfolio
Shares 856
Cost $10,104
Market Value.................................. - - - - - -
High Yield Portfolio
Shares 995
Cost $10,645
Market Value.................................. - - - - - -
Value Portfolio
Shares 904
Cost $10,316
Market Value.................................. - - - - - -
Receivable from Hartford Life Insurance Company. - - - - - -
----------- ----------- ----------- ----------- ---------- -----------
Total Assets ................................... 13,077 17,427 10,683 12,436 9,848 10,414
----------- ----------- ----------- ----------- ---------- -----------
LIABILITIES:
Payable to Hartford Life Insurance Company...... 14 19 11 13 10 11
----------- ----------- ----------- ----------- ---------- -----------
Total Liabilities............................... 14 19 11 13 10 11
----------- ----------- ----------- ----------- ---------- -----------
Net Assets (Variable annuity contract liabilities) $ 13,063 $ 17,408 $ 10,672 $ 12,423 $ 9,838 $ 10,403
----------- ----------- ----------- ----------- ---------- -----------
----------- ----------- ----------- ----------- ---------- -----------
VARIABLE ANNUITY POLICIES:
Units owned by participants...................... 1,000 1,000 1,000 1,000 1,000 1,000
Unit price ...................................... $13.0627351 $17.4076837 $10.6720127 $12.4228997 $9.8376036 $10.4027321
<CAPTION>
Morgan
Stanley Morgan Morgan Morgan Morgan
Emerging Stanley Stanley Stanley Stanley Morgan
Markets Equity Fixed Global High Stanley
Equity Growth Income Equity Yield Value
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
Division Division Division Division Division Division
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in the Alger American Fund:
American Small Capitalization Portfolio
Shares 297
Cost $11,853
Market Value................................... - - - - - -
American Growth Portfolio
Shares 327
Cost $12,172
Market Value................................... - - - - - -
Investments in the J.P. Morgan Series Trust II:
Bond Portfolio
Shares 915
Cost $10,412
Market Value................................... - - - - - -
Equity Portfolio
Shares 785
Cost $11,190
Market Value................................... - - - - - -
Small Company Portfolio
Shares 830
Cost $10,370
Market Value................................... - - - - - -
International Opportunities Portfolio
Shares 990
Cost $10,531
Market Value................................... - - - - - -
Investments in the Morgan Stanley Universal Funds,
Inc.:
Emerging Markets Equity Portfolio
Shares 1,141
Cost $10,083
Market Value................................... $ 8,116 - - - - -
Equity Growth Portfolio
Shares 783
Cost $10,026
Market Value................................... - $ 11,825 - - - -
Fixed Income Portfolio
Shares 997
Cost $10,456
Market Value................................... - - $ 10,667 - - -
Global Equity Portfolio
Shares 856
Cost $10,104
Market Value................................... - - - $ 11,245 - -
High Yield Portfolio
Shares 995
Cost $10,645
Market Value................................... - - - - $ 10,303 -
Value Portfolio
Shares 904
Cost $10,316
Market Value................................... - - - - - $ 10,046
Receivable from Hartford Life Insurance Company.. - - - - - -
Total Assets .................................... 8,116 11,825 10,667 11,245 10,303 10,046
---------- ----------- ----------- ----------- ----------- -----------
LIABILITIES:
Payable to Hartford Life Insurance Company....... 84 12 12 12 11 10
---------- ----------- ----------- ----------- ----------- -----------
Total Liabilities................................ 84 12 12 12 11 10
---------- ----------- ----------- ----------- ----------- -----------
Net Assets (Variable annuity contract liabilities) $ 8,032 $ 11,813 $ 10,655 $ 11,233 $ 10,292 $ 10,036
---------- ----------- ----------- ----------- ----------- -----------
---------- ----------- ----------- ----------- ----------- -----------
VARIABLE ANNUITY POLICIES:
Units owned by participants...................... 1,000 1,000 1,000 1,000 1,000 1,000
Unit price ...................................... $8.0317132 $11.8125905 $10.6551159 $11.2327995 $10.2922699 $10.0360092
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
HARTFORD LIFE INSURANCE COMPANY
ICMG SECULAR TRUST SEPARATE ACCOUNT Neuberger Neuberger
OMNIFLEX Hartford Hartford & Berman & Berman
STATEMENTS OF OPERATIONS Hartford Capital Money AMT AMT
FOR THE YEAR ENDED DECEMBER 31, 1998 Bond Appreciation Market Partners Balanced
Fund Fund Fund Portfolio Portfolio
Division Division Division Division Division
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................................ $ 563 $ 847 $ 550 $ 1,567 $ 2,135
EXPENSES:
Mortality and expense risk undertakings.............. (74) (81) (69) (82) (76)
------ ---------- -------- --------- --------
Net investment income (loss)....................... 489 766 481 1,485 2,059
------ ---------- -------- --------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investment transactions.. 8 12 - 3 (21)
Net unrealized appreciation (depreciation) of
investments during the period.................... 319 1,007 - (1,057) (758)
------ ---------- -------- --------- --------
Net gain (loss) on investments..................... 327 1,019 - (1,054) (779)
------ ---------- -------- --------- --------
Net increase (decrease) in net assets resulting
from operations................................... $ 816 $ 1,785 $ 481 $ 431 $ 1,280
------ ---------- -------- --------- --------
------ ---------- -------- --------- --------
<CAPTION>
Neuberger
& Berman
AMT VIP VIP VIP II
Limited Equity- High Asset
Maturity Bond Income Income Manager
Portfolio Portfolio Portfolio Portfolio
Division Division Division Division
-------- -------- -------- --------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.......................................................... $ 665 $ 771 $ 1,314 $ 1,465
EXPENSES:
Mortality and expense risk undertakings............................ (72) (83) (74) (80)
------ -------- -------- -------
Net investment income (loss)..................................... 593 688 1,240 1,385
------ -------- -------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investment transactions................ (4) 1,633 (13) 11
Net unrealized appreciation (depreciation) of
investments during the period.................................. (191) (784) (1,801) 254
------ -------- -------- -------
Net gain (loss) on investments................................... (195) 849 (1,814) 265
------ -------- -------- -------
Net increase (decrease) in net assets resulting from operations.. $ 398 $ 1,537 $ (574) $ 1,650
------ -------- -------- -------
------ -------- -------- -------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
HARTFORD LIFE INSURANCE COMPANY
ICMG SECULAR TRUST SEPARATE ACCOUNT Alger
OMNIFLEX American Alger
STATEMENTS OF OPERATIONS - ( CONTINUED ) Small American J.P. Morgan J.P. Morgan
FOR THE YEAR ENDED DECEMBER 31, 1998 Capitalization Growth Bond Equity
Portfolio Portfolio Portfolio Portfolio
Division Division Division* Division*
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 1,584 $ 2,212 $ 459 $ 1,238
EXPENSES:
Mortality and expense risk undertakings (77) (92) (61) (66)
--------- --------- --------- ---------
Net investment income (loss) 1,507 2,120 398 1,172
--------- --------- --------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investment transactions (3) 20 3 5
Net unrealized appreciation (depreciation) of
investments during the period 171 3,455 271 1,246
--------- --------- --------- ---------
Net gain (loss) on investments 168 3,475 274 1,251
--------- --------- --------- ---------
Net increase (decrease) in net assets resulting
from operations $ 1,675 $ 5,595 $ 672 $ 2,423
--------- --------- --------- ---------
--------- --------- --------- ---------
<CAPTION>
HARTFORD LIFE INSURANCE COMPANY
ICMG SECULAR TRUST SEPARATE ACCOUNT Morgan Stanley
OMNIFLEX J.P. Morgan Emerging Morgan Stanley
STATEMENTS OF OPERATIONS - ( CONTINUED ) J.P. Morgan International Markets Equity
FOR THE YEAR ENDED DECEMBER 31, 1998 Small Company Opportunities Equity Growth
Portfolio Portfolio Portfolio Portfolio
Division* Division* Division* Division*
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 418 $ 581 $ 46 $ 74
EXPENSES:
Mortality and expense risk undertakings (60) (61) (53) (64)
--------- --------- --------- ---------
Net investment income (loss) 358 520 (7) 10
--------- --------- --------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investment transactions (6) (3) - 2
Net unrealized appreciation (depreciation) of
investments during the period (522) (117) (1,967) 1,799
--------- --------- --------- ---------
Net gain (loss) on investments (528) (120) (1,967) 1,801
--------- --------- --------- ---------
Net increase (decrease) in net assets resulting
from operations $ (170) $ 400 $ (1,974) $ 1,811
--------- --------- --------- ---------
--------- --------- --------- ---------
<CAPTION>
HARTFORD LIFE INSURANCE COMPANY
ICMG SECULAR TRUST SEPARATE ACCOUNT
OMNIFLEX Morgan Stanley Morgan Stanley Morgan Stanley
STATEMENTS OF OPERATIONS - ( CONTINUED ) Fixed Global High Morgan Stanley
FOR THE YEAR ENDED DECEMBER 31, 1998 Income Equity Yield Value
Portfolio Portfolio Portfolio Portfolio
Division* Division* Division* Division*
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 504 $ 152 $ 693 $ 364
EXPENSES:
Mortality and expense risk undertakings (60) (63) (59) (61)
--------- --------- --------- ---------
Net investment income (loss) 444 89 634 303
--------- --------- --------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investment transactions 2 3 (1) (1)
Net unrealized appreciation (depreciation) of
investments during the period 210 1,141 (341) (270)
--------- --------- --------- ---------
Net gain (loss) on investments 212 1,144 (342) (271)
--------- --------- --------- ---------
Net increase (decrease) in net assets resulting
from operations $ 656 $ 1,233 $ 292 $ 32
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
* From inception, January 27, 1998, to December 31, 1998.
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
HARTFORD LIFE INSURANCE COMPANY
ICMG SECULAR TRUST SEPARATE ACCOUNT
OMNIFLEX
STATEMENTS OF CHANGES IN NET ASSETS Hartford Hartford
FOR THE YEAR ENDED DECEMBER 31, 1998 Hartford Capital Money
Bond Appreciation Market
Fund Fund Fund
Division Division Division
--------- --------- ---------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 489 $ 766 $ 481
Net realized gain (loss) on investment transactions 8 12 -
Net unrealized appreciation (depreciation) of
investments during the period 319 1,007 -
--------- --------- ---------
Net increase ( decrease ) in net assets resulting from operations 816 1,785 481
--------- --------- ---------
UNIT TRANSACTIONS:
Premiums - 648 -
Other activity (6) (1) (2)
--------- --------- ---------
Net increase (decrease) in net assets resulting from unit transactions (6) 647 (2)
--------- --------- ---------
Total increase (decrease) in net assets 810 2,432 479
Net assets:
Beginning of period 10,886** 11,717** 10,398**
--------- --------- ---------
End of period $ 11,696 $ 14,149 $ 10,877
--------- --------- ---------
--------- --------- ---------
<CAPTION>
HARTFORD LIFE INSURANCE COMPANY
ICMG SECULAR TRUST SEPARATE ACCOUNT Neuberger
OMNIFLEX Neuberger Neuberger & Berman
STATEMENTS OF CHANGES IN NET ASSETS & Berman & Berman AMT
FOR THE YEAR ENDED DECEMBER 31, 1998 AMT AMT Limited
Partners Balanced Maturity Bond
Portfolio Portfolio Portfolio
Division Division Division
--------- --------- ---------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 1,485 $ 2,059 $ 593
Net realized gain (loss) on investment transactions 3 (21) (4)
Net unrealized appreciation (depreciation) of
investments during the period (1,057) (758) (191)
--------- --------- ---------
Net increase ( decrease ) in net assets resulting from operations 431 1,280 398
--------- --------- ---------
UNIT TRANSACTIONS:
Premiums - - 648
Other activity 5 4 (2)
--------- --------- ---------
Net increase (decrease) in net assets resulting from unit transactions 5 4 646
--------- --------- ---------
Total increase (decrease) in net assets 436 1,284 1,044
Net assets:
Beginning of period 12,348** 11,217** 10,495**
--------- --------- ---------
End of period $ 12,784 $ 12,501 $ 11,539
--------- --------- ---------
--------- --------- ---------
<CAPTION>
HARTFORD LIFE INSURANCE COMPANY
ICMG SECULAR TRUST SEPARATE ACCOUNT
OMNIFLEX
STATEMENTS OF CHANGES IN NET ASSETS VIP VIP VIP II
FOR THE YEAR ENDED DECEMBER 31, 1998 Equity- High Asset
Income Income Manager
Portfolio Portfolio Portfolio
Division Division Division
--------- --------- ---------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 688 $ 1,240 $ 1,385
Net realized gain (loss) on investment transactions 1,633 (13) 11
Net unrealized appreciation (depreciation) of
investments during the period (784) (1,801) 254
--------- --------- ---------
Net increase ( decrease ) in net assets resulting from operations 1,537 (574) 1,650
--------- --------- ---------
UNIT TRANSACTIONS:
Premiums - - -
Other activity (228) 15 (3)
--------- --------- ---------
Net increase (decrease) in net assets resulting from unit transactions (228) 15 (3)
--------- --------- ---------
Total increase (decrease) in net assets 1,309 (559) 1,647
Net assets:
Beginning of period 12,013** 11,301** 11,510
--------- --------- ---------
End of period $ 13,322 $ 10,742 $ 13,157
--------- --------- ---------
--------- --------- ---------
</TABLE>
** The balance at December 31,1997 represents seed money deposited by
Hartford Life Insurance Company.
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
HARTFORD LIFE INSURANCE COMPANY
ICMG SECULAR TRUST SEPARATE ACCOUNT
OMNIFLEX Alger
STATEMENTS OF CHANGES IN NET ASSETS - (CONTINUED) American Alger
FOR THE YEAR ENDED DECEMBER 31, 1998 Small American J.P. Morgan J.P. Morgan
Capitalization Growth Bond Equity
Portfolio Portfolio Portfolio Portfolio
Division Division Division* Division*
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . $ 1,507 $ 2,120 $ 398 $ 1,172
Net realized gain (loss) on investment transactions . . . . . (3) 20 3 5
Net unrealized appreciation (depreciation) of
investments during the period . . . . . . . . . . . . . . 171 3,455 271 1,246
-------- --------- ------- --------
Net increase ( decrease ) in net assets resulting
from operations. . . . . . . . . . . . . . . . . . . . . . 1,675 5,595 672 2,423
-------- --------- ------- --------
UNIT TRANSACTIONS:
Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . - - 10,000 10,000
Other activity.. . . . . . . . . . . . . . . . . . . . . . . 7 (20) - -
-------- --------- ------- --------
Net increase (decrease) in net assets resulting
from unit transactions . . . . . . . . . . . . . . . . . . 7 (20) 10,000 10,000
-------- --------- ------- --------
Total increase (decrease) in net assets . . . . . . . . . . 1,682 5,575 10,672 12,423
Net assets:
Beginning of period. . . . . . . . . . . . . . . . . . . . . 11,381** 11,833** - -
-------- --------- ------- --------
End of period. . . . . . . . . . . . . . . . . . . . . . . . $ 13,063 $ 17,408 $10,672 $ 12,423
-------- --------- ------- --------
-------- --------- ------- --------
<CAPTION>
HARTFORD LIFE INSURANCE COMPANY
ICMG SECULAR TRUST SEPARATE ACCOUNT
OMNIFLEX Morgan Stanley
STATEMENTS OF CHANGES IN NET ASSETS - (CONTINUED) J.P. Morgan Emerging Morgan Stanley
FOR THE YEAR ENDED DECEMBER 31, 1998 J.P. Morgan International Markets Equity
Small Company Opportunities Equity Growth
Portfolio Portfolio Portfolio Portfolio
Division* Division* Division* Division*
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . $ 358 $ 520 $ (7) $ 10
Net realized gain (loss) on investment transactions . . . . . (6) (3) - 2
Net unrealized appreciation (depreciation) of
investments during the period . . . . . . . . . . . . . . (522) (117) (1,967) 1,799
------- --------- --------- --------
Net increase ( decrease ) in net assets resulting
from operations. . . . . . . . . . . . . . . . . . . . . . (170) 400 (1,974) 1,811
------- --------- --------- --------
UNIT TRANSACTIONS:
Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 10,000 10,000 10,000
Other activity.. . . . . . . . . . . . . . . . . . . . . . . 8 3 6 2
------- --------- --------- --------
Net increase (decrease) in net assets resulting from
unit transactions. . . . . . . . . . . . . . . . . . . . . 10,008 10,003 10,006 10,002
------- --------- --------- --------
Total increase (decrease) in net assets . . . . . . . . . . 9,838 10,403 8,032 11,813
Net assets:
Beginning of period. . . . . . . . . . . . . . . . . . . . . - - - -
------- --------- --------- --------
End of period. . . . . . . . . . . . . . . . . . . . . . . . $ 9,838 $ 10,403 $ 8,032 $ 11,813
------- --------- --------- --------
------- --------- --------- --------
<CAPTION>
HARTFORD LIFE INSURANCE COMPANY
ICMG SECULAR TRUST SEPARATE ACCOUNT
OMNIFLEX Morgan Stanley Morgan Stanley Morgan Stanley
STATEMENTS OF CHANGES IN NET ASSETS - (CONTINUED) Fixed Global High Morgan Stanley
FOR THE YEAR ENDED DECEMBER 31, 1998 Income Equity Yield Value
Portfolio Portfolio Portfolio Portfolio
Division* Division* Division* Division*
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) . . . . . . . . . . . . . . . . . $ 444 $ 89 $ 634 $ 303
Net realized gain (loss) on investment transactions . . . . . 2 3 (1) (1)
Net unrealized appreciation (depreciation) of
investments during the period . . . . . . . . . . . . . . 210 1,141 (341) (270)
------- ------- -------- ------
Net increase ( decrease ) in net assets resulting
from operations. . . . . . . . . . . . . . . . . . . . . . 656 1,233 292 32
------- ------- ------- -------
UNIT TRANSACTIONS:
Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 10,000 10,000 10,000
Other activity.. . . . . . . . . . . . . . . . . . . . . . . (1) - - 4
------- ------- ------- -------
Net increase (decrease) in net assets resulting
from unit transactions . . . . . . . . . . . . . . . . . . 9,999 10,000 10,000 10,004
------- ------- ------- -------
Total increase (decrease) in net assets . . . . . . . . . . 10,655 11,233 10,292 10,036
Net assets:
Beginning of period. . . . . . . . . . . . . . . . . . . . . - - - -
------- ------- ------- -------
End of period. . . . . . . . . . . . . . . . . . . . . . . . $10,655 $11,233 $10,292 $10,036
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
* From inception, January 27, 1998, to December 31, 1998
** The balance at December 31,1997 represents seed money deposited by Hartford
Life Insurance Company.
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
ICMG SECULAR TRUST SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. ORGANIZATION:
ICMG Secular Trust Separate Account (the Account) is a separate investment
account within Hartford Life Insurance Company (the Company) and is
registered with the Securities and Exchange Commission (SEC) as a unit
investment trust under the Investment Company Act of 1940, as amended. The
Account consists of twenty one Divisions. Both the Company and the Account
are subject to supervision and regulation by the Department of Insurance of
the State of Connecticut and the SEC. The Account, which contained only
seed money deposited by the Company, invests deposits by variable annuity
contractholders of the Company in various mutual funds (the Funds) as
directed by the contractholders. The Account began accepting premium
deposits by contractholders during 1998.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS - Security transactions are recorded on the
trade date (date the order to buy or sell is executed). Cost of
investments sold is determined on the basis of identified cost.
Dividend income is accrued as of the ex-dividend date.
b) SECURITY VALUATION - The investments in shares of the funds are valued
at the closing net asset value per share as determined by the
appropriate Fund as of December 31, 1998.
c) FEDERAL INCOME TAXES - The operations of the Account form a part of,
and are taxed with, the total operations of the Company, which is
taxed as an insurance company under the Internal Revenue Code. Under
current law, no federal income taxes are payable with respect to the
operations of the Account.
d) USE OF ESTIMATES - 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 as of the date of the financial
statements and the reported amounts of income and expenses during the
period. Operating results in the future could vary from the amounts
derived from management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
a) MORTALITY AND EXPENSE RISK UNDERTAKINGS - The Company, as issuer of
variable life insurance contracts, provides the mortality and expense
undertakings and, with respect to the Account, receives an annual fee
of 0.65% of the Account's average daily net assets.
b) DEDUCTION OF OTHER FEES - In accordance with the terms of the
contracts, the Company makes deductions for administrative fees and
state premium taxes. These charges are deducted through termination
of units of interest from applicable contractholder's accounts.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-1
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hartford Life Insurance Company:
We have audited the accompanying Consolidated Balance Sheets of Hartford Life
Insurance Company and subsidiaries as of December 31, 1998 and 1997, and the
related Consolidated Statements of Income, Changes in Stockholder's Equity and
Cash Flows for each of the three years in the period ended December 31, 1998.
These Consolidated Financial Statements and the schedules referred to below are
the responsibility of Hartford Life Insurance Company's management. Our
responsibility is to express an opinion on these 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, 1998 and 1997, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1998 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 the 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 26, 1999
<PAGE>
F-2 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
------------------------
1998 1997 1996
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Premiums and other considerations............... $2,218 $1,637 $1,705
Net investment income........................... 1,759 1,368 1,397
Net realized capital (losses) gains............. (2) 4 (213)
------ ------ ------
Total revenues................................ 3,975 3,009 2,889
------ ------ ------
Benefits, claims and expenses
Benefits, claims and claim adjustment
expenses....................................... 1,911 1,379 1,535
Amortization of deferred policy acquisition
costs.......................................... 431 335 234
Dividends to policyholders...................... 329 240 635
Other expenses.................................. 766 586 427
------ ------ ------
Total benefits, claims and expenses........... 3,437 2,540 2,831
------ ------ ------
Income before income tax expense................ 538 469 58
Income tax expense.............................. 188 167 20
------ ------ ------
Net income........................................ $ 350 $ 302 $ 38
------ ------ ------
------ ------ ------
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-3
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER
31,
-----------------
1998 1997
------- -------
<S> <C> <C>
(IN MILLIONS,
EXCEPT FOR SHARE
DATA)
Assets
Investments
Fixed maturities, available for sale, at fair
value (amortized cost of $14,505 and
$13,885)....................................... $14,818 $14,176
Equity securities, at fair value................ 31 180
Policy loans, at outstanding balance............ 6,684 3,756
Other investments, at cost...................... 264 47
------- -------
Total investments............................. 21,797 18,159
Cash............................................ 17 54
Premiums receivable and agents' balances........ 17 18
Reinsurance recoverables........................ 1,257 6,114
Deferred policy acquisition costs............... 3,754 3,315
Deferred income tax............................. 464 348
Other assets.................................... 695 682
Separate account assets......................... 90,262 69,055
------- -------
Total assets.................................. $118,263 $97,745
------- -------
------- -------
Liabilities
Future policy benefits.......................... $ 3,595 $ 3,059
Other policyholder funds........................ 19,615 21,034
Other liabilities............................... 2,094 2,254
Separate account liabilities.................... 90,262 69,055
------- -------
Total liabilities............................. 115,566 95,402
------- -------
Stockholder's Equity
Common stock -- 1,000 shares authorized, issued
and outstanding, par value $5,690.............. 6 6
Capital surplus................................. 1,045 1,045
Accumulated other comprehensive income
Net unrealized capital gains on securities,
net of tax................................... 184 179
------- -------
Total accumulated other comprehensive
income....................................... 184 179
------- -------
Retained earnings............................... 1,462 1,113
------- -------
Total stockholder's equity.................... 2,697 2,343
------- -------
Total liabilities and stockholder's equity...... $118,263 $97,745
------- -------
------- -------
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
F-4 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME
---------------
NET UNREALIZED
CAPITAL GAINS
(LOSSES) ON TOTAL
COMMON CAPITAL SECURITIES, RETAINED STOCKHOLDER'S
STOCK SURPLUS NET OF TAX EARNINGS EQUITY
------ -------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
(IN MILLIONS)
1998
Balance, December 31, 1997.............. $6 $ 1,045 $179 $1,113 $2,343
Comprehensive income
Net income............................ -- -- -- 350 350
------
Other comprehensive income, net of tax
(1):
Changes in net unrealized capital
gains on securities (2).............. -- -- 5 -- 5
------
Total other comprehensive income........ 5
------
Total comprehensive income 355
------
Dividends............................... -- -- -- (1) (1)
--
------ ----- ----------- ------
Balance, December 31, 1998.......... $6 $ 1,045 $184 $1,462 $2,697
--
------ ----- ----------- ------
1997
Balance, December 31, 1996.............. $6 $ 1,045 $ 30 $ 811 $1,892
Comprehensive income
Net income............................ -- -- -- 302 302
------
Other comprehensive income, net of tax
(1):
Changes in net unrealized capital
gains on securities (2).............. -- -- 149 -- 149
------
Total other comprehensive income........ 149
------
Total comprehensive income 451
--
------ ----- ----------- ------
Balance, December 31, 1997.......... $6 $ 1,045 $179 $1,113 $2,343
--
------ ----- ----------- ------
1996
Balance, December 31, 1995.............. $6 $ 1,007 $(57) $ 773 $1,729
Comprehensive income
Net income............................ -- -- -- 38 38
------
Other comprehensive income, net of tax
(1):
Changes in net unrealized capital
gains on securities (2).............. -- -- 87 -- 87
------
Total other comprehensive income........ 87
------
Total comprehensive income............ 125
------
Capital contribution.................... -- 38 -- -- 38
--
------ ----- ----------- ------
Balance, December 31, 1996.......... $6 $ 1,045 $ 30 $ 811 $1,892
--
--
------ ----- ----------- ------
------ ----- ----------- ------
</TABLE>
- ---------
(1) Net unrealized capital gain on securities is reflected net of tax of $3,
$80 and $47, as of December 31, 1998, 1997 and 1996, respectively.
(2) There was no reclassification adjustment for after-tax gains (losses)
realized in net income for the years ended December 31, 1998 and 1997. December
31, 1996 is net of a $142 reclassification adjustment for after-tax losses
realized in net income.
See Notes to Consolidated Financial Statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-5
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
------------------------------
1998 1997 1996
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Operating Activities
Net income............................ $ 350 $ 302 $ 38
Adjustments to reconcile net income to
net cash provided by operating
activities
Depreciation and amortization......... (23) 8 14
Net realized capital losses (gains)... 2 (4) 213
Decrease in premiums receivable and
agents' balances..................... 1 119 10
(Decrease) increase in other
liabilities.......................... (79) 223 577
Change in receivables, payables, and
accruals............................. 83 107 (22)
Increase (decrease) in accrued
taxes................................ 60 126 (91)
(Increase) decrease in deferred income
taxes................................ (118) 40 (102)
Increase in deferred policy
acquisition costs.................... (439) (555) (572)
Increase in future policy benefits.... 536 585 101
(Increase) decrease in reinsurance
recoverables and other related
assets............................... (2) 21 (146)
-------- -------- --------
Net cash provided by operating
activities......................... 371 972 20
-------- -------- --------
Investing Activities
Purchases of investments.............. (6,061) (6,869) (5,854)
Sales of investments.................. 4,901 4,256 3,543
Maturity of investments............... 1,761 2,329 2,693
-------- -------- --------
Net cash provided by (used for)
investing activities............... 601 (284) 382
-------- -------- --------
Financing Activities
Capital contribution.................. -- -- 38
Net disbursements for investment and
universal life-type contracts charged
against policyholder accounts........ (1,009) (677) (443)
-------- -------- --------
Net cash used for financing
activities......................... (1,009) (677) (405)
-------- -------- --------
Net (decrease) increase in cash....... (37) 11 (3)
Cash -- beginning of year............. 54 43 46
-------- -------- --------
Cash -- end of year................... $ 17 $ 54 $ 43
-------- -------- --------
-------- -------- --------
Supplemental Disclosure of Cash Flow
Information:
Net Cash Paid During the Year for:
Income taxes.......................... $ 263 $ 9 $ 189
Noncash Investing Activities:
Due to the recapture of an in force block of business previously ceded
to MBL Life Assurance Co. of New Jersey, reinsurance recoverables of
$4,546 were exchanged for the fair value of assets comprised of
$4,354 in policy loans and $192 in other assets.
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
F-6 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
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 ("Hartford Life Insurance Company" or
the "Company"), Hartford Life and Annuity Insurance Company (ILA) and 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). Pursuant to an initial
public offering (the "IPO") on May 22, 1997, Hartford Life sold 26 million
shares of Class A Common Stock 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 outstanding promissory notes and line of credit with
the remaining $160 contributed by Hartford Life to HLA to support growth in its
core businesses. Hartford Life became a publicly traded company upon the sale of
26 million shares representing approximately 18.6% of the equity ownership in
Hartford Life. 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, HLA, the Company is a leading financial services and
insurance 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 disability insurance
that is directly written by the Company and is substantially ceded to its
parent, HLA, and (d) corporate owned life insurance.
2. SUMMARY OF 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 November 1998, the Emerging Issues Task Force (EITF) reached consensus on
Issue No. 98-15, "Structured Notes Acquired for a Specific Investment Strategy".
This EITF issue requires companies to account for structured notes acquired for
a specific investment strategy, as a unit. Affected companies that entered into
these notes prior to September 25, 1998 are required to either restate prior
period financial statements to conform with the prescribed unit accounting model
or disclose the related impact on earnings for all periods presented and
cumulatively over the life of the instruments had the registrant accounted for
the structure as a unit. Based upon recently prescribed current generally
accepted accounting principles for such types of transactions entered into after
September 24, 1998, there was no additional earnings impact to the Company
related to combined structured note transactions. As of December 31, 1998, the
Company does not hold any combined structured notes.
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities". The new standard establishes
accounting and reporting guidance for derivative instruments, including certain
derivative instruments embedded in other contracts. The standard requires, among
other things, that all derivatives be carried on the balance sheet at fair
value. The standard also specifies hedge accounting criteria under which a
derivative can qualify for special accounting. In order to receive special
accounting, the derivative instrument must qualify as either
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-7
- --------------------------------------------------------------------------------
a hedge of the fair value or the variability of the cash flow of a qualified
asset or liability. Special accounting for qualifying hedges provides for
matching the timing of gain or loss recognition on the hedging instrument with
the recognition of the corresponding changes in value of the hedged item. SFAS
No. 133 will be effective for fiscal years beginning after June 15, 1999.
Initial application for Hartford Life Insurance Company will begin for the first
quarter of the year 2000. While Hartford Life Insurance Company is currently in
the process of quantifying the impact of SFAS No. 133, the Company is reviewing
its derivative holdings in order to take actions needed to minimize potential
volatility, while at the same time maintaining the economic protection needed to
support the goals of its business.
In March 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position (SOP) No. 98-1, "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use". The SOP provides
guidance on accounting for the costs of internal use software and in determining
whether the software is for internal use. The SOP defines internal use software
as software that is acquired, internally developed, or modified solely to meet
internal needs and identifies stages of software development and accounting for
the related costs incurred during the stages. This statement is effective for
fiscal years beginning after December 15, 1998 and is not expected to have a
material impact on the Company's financial condition or results of operations.
Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income", which establishes standards for reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. The objective of this statement is to report a measure of
all changes in equity of an enterprise that result from transactions and other
economic events of the period other than transactions with owners. Comprehensive
income is the total of net income and all other nonowner changes in equity.
Accordingly, the Company has reported comprehensive income in the Consolidated
Statements of Changes in Stockholder's Equity.
In December 1997, the AICPA issued 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.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information". The new standard requires public
business enterprises to disclose certain financial and descriptive information
about reportable operating segments in annual financial statements and in
condensed financial statements of interim periods. Operating segments are
components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and assessing performance. SFAS No. 131 also
establishes standards for related disclosures about products and services,
geographic areas and major customers. The Company adopted SFAS No. 131 in 1998.
For additional information, see Note 13.
On November 14, 1996, the 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 FASB issued SFAS No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities" which is
effective for transfers and servicing of financial 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. Adoption of SFAS No. 125 did not have a material
effect on the Company's financial condition or results of operations.
Effective January 1, 1996, Hartford Life Insurance 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. 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 investment products and universal life-type policies consist of
policy charges for policy administration, cost of insurance and surrender
charges assessed to policy account balances and are recognized in the period in
which services are provided. Premiums for traditional life insurance policies
are recognized as revenues when they are due from policyholders.
<PAGE>
F-8 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
(D) FUTURE POLICY BENEFITS AND OTHER POLICYHOLDER FUNDS
Liabilities for future policy benefits are computed by the net level premium
method using interest rate assumptions varying from 3% to 11% and withdrawal and
mortality assumptions appropriate at the time the policies were issued.
Liabilities for universal life-type and investment contracts are stated at
policyholder account values before surrender charges.
(E) INVESTMENTS
Hartford Life Insurance 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 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. 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. Net realized capital gains
and losses, excluding those related to immediate participation guaranteed
contracts, 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 additional impairment, if necessary.
(F) DERIVATIVE INSTRUMENTS
Hartford Life Insurance 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. Hartford Life Insurance 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 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. For a discussion
of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities"
issued in June 1998, see (b) Changes in Accounting Principles.
Derivative instruments must be designated at inception as a hedge and
measured for effectiveness both at inception and on an ongoing basis. Hartford
Life Insurance Company's correlation threshold for hedge designation is 80% to
120%. If correlation, which is assessed monthly and measured based on a rolling
three month average, falls outside the 80% to 120% range, 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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-9
- --------------------------------------------------------------------------------
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.
(G) SEPARATE ACCOUNTS
Hartford Life Insurance Company maintains separate account assets and
liabilities which are reported at fair value. Separate account assets are
segregated from other investments. Separate accounts reflect two categories of
risk assumption: non-guaranteed separate accounts, wherein the policyholder
assumes the investment risk and rewards, and guaranteed separate account assets,
wherein the Company contractually guarantees either a minimum return or account
value to the policyholder.
(H) 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, usually 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
charges, mortality and expense margins. Actual gross profits can vary from
management's estimates resulting in increases or decreases in the rate of
amortization. Management periodically updates these estimates, when appropriate,
and evaluates the recoverability of the deferred acquisition cost asset. When
appropriate, management revises its assumptions on the estimated gross profits
of these contracts and the cumulative amortization for the books of business are
re-estimated and adjusted by a cumulative charge or credit to income.
Acquisition costs and their related deferral are included in the Company's
other expenses as follows:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Commissions.......................... $ 1,069 $ 976 $ 848
Deferred acquisition costs........... (891) (862) (823)
Other................................ 588 472 402
--------- --------- ---------
Total other expenses............. $ 766 $ 586 $ 427
--------- --------- ---------
--------- --------- ---------
</TABLE>
(I) DIVIDENDS TO POLICYHOLDERS
Certain life insurance policies contain dividend payment provisions that
enable the policyholder to participate in the earnings on that participating
block of business. The participating insurance in force accounted for 71%, 55%
and 44% in 1998, 1997 and 1996, respectively, of total insurance in force.
3. INVESTMENTS AND DERIVATIVE INSTRUMENTS
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Interest income from fixed
maturities......................... $ 952 $ 932 $ 918
Interest income from policy loans... 789 425 477
Income from other investments....... 32 26 15
--------- --------- ---------
Gross investment income............. 1,773 1,383 1,410
Less: Investment expenses........... 14 15 13
--------- --------- ---------
Net investment income............... $ 1,759 $ 1,368 $ 1,397
--------- --------- ---------
--------- --------- ---------
</TABLE>
(B) COMPONENTS OF NET REALIZED CAPITAL (LOSSES) GAINS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1998 1997 1996
--------- ----- ---------
<S> <C> <C> <C>
Fixed maturities......................... $ (28) $ (7) $ (201)
Equity securities........................ 21 12 2
Real estate and other.................... 5 (1) (4)
Less: Decrease in liability to
policyholders for realized capital
gains................................... -- -- (10)
--------- --- ---------
Net realized capital (losses) gains...... $ (2) $ 4 $ (213)
--------- --- ---------
--------- --- ---------
</TABLE>
<PAGE>
F-10 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
(C) NET UNREALIZED CAPITAL (LOSSES) GAINS ON EQUITY SECURITIES
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Gross unrealized capital gains.............. $ 2 $ 14 $ 13
Gross unrealized capital losses............. (1) -- (1)
--- --- ---
Net unrealized capital gains................ 1 14 12
Deferred income tax expense................. -- 5 4
--- --- ---
Net unrealized capital gains, net of tax.... 1 9 8
Balance -- beginning of year................ 9 8 1
--- --- ---
Net change in unrealized capital gains on
equity securities.......................... $ (8) $ 1 $ 7
--- --- ---
--- --- ---
</TABLE>
(D) NET UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED MATURITIES
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Gross unrealized capital gains.......... $ 421 $ 371 $ 386
Gross unrealized capital losses......... (108) (80) (341)
Unrealized capital gains credited to
policyholders.......................... (32) (30) (11)
--------- --------- ---------
Net unrealized capital gains............ 281 261 34
Deferred income tax expense............. 98 91 12
--------- --------- ---------
Net unrealized capital gains, net of
tax.................................... 183 170 22
Balance -- beginning of year............ 170 22 (58)
--------- --------- ---------
Net change in unrealized capital gains
(losses) on fixed maturities........... $ 13 $ 148 $ 80
--------- --------- ---------
--------- --------- ---------
</TABLE>
(E) FIXED MATURITY INVESTMENTS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
---------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
U. S. Government and Government agencies and authorities
(guaranteed and sponsored)...................................... $ 121 $ 2 $ -- $ 123
U. S. Government and Government agencies and authorities
(guaranteed and sponsored) -- asset backed...................... 1,001 23 (8) 1,016
States, municipalities and political subdivisions................ 165 8 -- 173
International governments........................................ 393 26 (7) 412
Public utilities................................................. 844 33 (3) 874
All other corporate including international...................... 5,469 260 (42) 5,687
All other corporate -- asset backed.............................. 4,155 58 (42) 4,171
Short-term investments........................................... 1,847 -- -- 1,847
Certificates of deposit.......................................... 510 11 (6) 515
---------- ----- ----------- ----------
Total fixed maturities....................................... $14,505 $421 $(108) $14,818
---------- ----- ----------- ----------
---------- ----- ----------- ----------
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
---------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
U. S. Government and Government agencies and authorities
(guaranteed and sponsored)...................................... $ 217 $ 3 $ (1) $ 219
U. S. Government and Government 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>
The amortized cost and estimated fair value of fixed maturity investments as
of December 31, 1998 by estimated maturity year are shown below. Expected
maturities differ from contractual maturities due to call or prepayment
provisions. Asset backed securities, including mortgage backed securities and
collateralized mortgage obligations, are distributed to maturity year based on
the Company's estimates of the rate of future prepayments of principal over the
remaining lives of the securities. These estimates are developed using
prepayment speeds provided in broker
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-11
- --------------------------------------------------------------------------------
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......................... $ 3,047 $ 3,116
Over one year through five years......... 4,796 4,843
Over five years through ten years........ 3,242 3,318
Over ten years........................... 3,420 3,541
----------- -----------
Total................................ $ 14,505 $ 14,818
----------- -----------
----------- -----------
</TABLE>
Sales of fixed maturities, excluding short-term fixed maturities, for the
years ended December 31, 1998, 1997 and 1996 resulted in proceeds of $3.2
billion, $4.2 billion and $3.5 billion, gross realized capital gains of $103,
$169 and $87, gross realized capital losses (including writedowns) of $131, $176
and $298, respectively. In 1996, gross realized capital losses includes an other
than temporary impairment of $137 related to the Company's block of guaranteed
investment contract business written prior to 1995 which could not recover to
amortized cost prior to sale. Sales of equity security investments for the years
ended December 31, 1998, 1997 and 1996 resulted in proceeds of $35, $132 and $74
and gross realized capital gains of $21, $12 and $2, respectively, and no gross
realized capital losses for all periods.
(F) CONCENTRATION OF CREDIT RISK
The Company is not exposed to any significant concentration of credit risk
in fixed maturities of a single issuer greater than 10% of stockholder's equity.
(G) DERIVATIVE INSTRUMENTS
Hartford Life Insurance 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.
Hartford Life Insurance 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.
Hartford Life Insurance Company's derivative program is monitored by an
internal compliance unit and is reviewed by senior management and Hartford
Life's Finance Committee of the Board of Directors. 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 $6.2 billion and $6.5 billion ($3.9 billion and $4.6 billion related to
the Company's investments, $2.3 billion and $1.9 billion on the Company's
liabilities) as of December 31, 1998 and 1997, respectively.
The tables below provide a summary of derivative instruments held by
Hartford Life Insurance Company as of December 31, 1998 and 1997, segregated by
major investment and liability category:
<PAGE>
F-12 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 -- AMOUNT HEDGED (NOTIONAL AMOUNTS)
----------------------------------------------------------------------------------
FOREIGN
TOTAL ISSUED PURCHASED INTEREST CURRENCY TOTAL
CARRYING CAPS & CAPS & FUTURES RATE SWAPS NOTIONAL
ASSETS HEDGED VALUE FLOORS FLOORS (2) SWAPS (3) AMOUNT
- ----------------------------------- -------- -------- ---------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Asset backed securities (excluding
inverse floaters and
anticipatory)..................... $ 5,163 $ -- $ 188 $ 3 $ 885 $-- $ 1,076
Inverse floaters (1)............... 24 44 55 -- -- -- 99
Anticipatory (4)................... -- -- -- -- 235 -- 235
Other bonds and notes.............. 7,683 461 597 18 1,300 90 2,466
Short-term investments............. 1,948 -- -- -- -- -- --
-------- -------- ---------- --- ---------- --- ----------
Total fixed maturities......... 14,818 505 840 21 2,420 90 3,876
Equity securities, policy loans and
other investments................. 6,979 -- -- -- -- -- --
-------- -------- ---------- --- ---------- --- ----------
Total investments.............. $ 21,797 505 840 21 2,420 90 3,876
Other policyholder funds....... $ 19,615 1,100 50 -- 1,195 -- 2,345
-------- -------- ---------- --- ---------- --- ----------
Total derivative instruments --
notional value................ $ 1,605 $ 890 $ 21 $ 3,615 $90 $ 6,221
-------- -------- ---------- --- ---------- --- ----------
Total derivative instruments --
fair value.................... $ (6) $ 19 $ -- $ 27 $(7) $ 33
-------- -------- ---------- --- ---------- --- ----------
-------- -------- ---------- --- ---------- --- ----------
</TABLE>
<TABLE>
<CAPTION>
1997 -- AMOUNT HEDGED (NOTIONAL AMOUNTS)
--------------------------------------------------------------------------
FOREIGN
TOTAL ISSUED PURCHASED INTEREST CURRENCY TOTAL
CARRYING CAPS & CAPS & RATE SWAPS NOTIONAL
ASSETS HEDGED VALUE FLOORS FLOORS FUTURES (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
Other policyholder funds....... $ 21,034 10 150 -- 1,747 -- 1,907
-------- ------- ------------ --- --------- --- -------
Total derivative instruments --
notional value................ $ 1,019 $ 2,094 $ 50 $ 3,251 $ 91 $6,505
-------- ------- ------------ --- --------- --- -------
Total derivative instruments --
fair value.................... $ (8) $ 23 $ -- $ 19 $ (6 ) $ 28
-------- ------- ------------ --- --------- --- -------
-------- ------- ------------ --- --------- --- -------
</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, 1998 and 1997, approximately 5% and 44% ,
respectively, of the notional futures contracts expire within one year.
(3) As of December 31, 1998 and 1997, approximately 11% and 16%,
respectively, of foreign currency swaps expire within one year.
(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. As of December 31, 1998 and 1997, the Company had no
deferred gains for interest rate swaps. During 1998, $1.5 in deferred gains were
basis adjusted.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-13
- --------------------------------------------------------------------------------
The following is a reconciliation of notional amounts by derivative type and
strategy as of December 31, 1998 and 1997:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 MATURITIES/ DECEMBER 31, 1998
NOTIONAL AMOUNT ADDITIONS TERMINATIONS (1) NOTIONAL AMOUNT
----------------- -------- ----------------- -----------------
<S> <C> <C> <C> <C>
BY DERIVATIVE TYPE
Caps......................................... $1,239 $1,000 $ 327 $1,912
Floors....................................... 1,864 -- 1,281 583
Swaps/Forwards............................... 3,342 1,838 1,475 3,705
Futures...................................... 50 8 37 21
Options...................................... 10 -- 10 --
------- -------- ------- -------
Total.................................... $6,505 $2,846 $3,130 $6,221
------- -------- ------- -------
BY STRATEGY
Liability.................................... $1,907 $1,099 $ 661 $2,345
Anticipatory................................. -- 242 7 235
Asset........................................ 1,805 1,260 667 2,398
Portfolio.................................... 2,793 245 1,795 1,243
------- -------- ------- -------
Total.................................... $6,505 $2,846 $3,130 $6,221
------- -------- ------- -------
------- -------- ------- -------
</TABLE>
- ---------
(1) During 1998, the Company had no significant gains or losses on
terminations of hedge positions using derivative financial instruments.
4. FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS 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. Hartford
Life Insurance Company uses the following methods and assumptions in estimating
the fair value of each class of financial instrument.
Fair value for fixed maturities and marketable equity securities
approximates those quotations published by applicable stock exchanges or
received from other reliable sources.
For policy loans, carrying amounts approximate fair value.
Fair value for other invested assets primarily consist of partnerships and
trusts that are based on external market valuations from partnership and trust
management as well as mortgage loans where carrying amounts approximate fair
value.
Other policyholder funds fair value information is determined by estimating
future cash flows, discounted at the current market rate.
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 periodic comparison to dealer quoted prices.
The carrying amount and fair values of Hartford Life Insurance Company's
financial instruments as of December 31, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
------------------ ------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- ------- --------- -------
<S> <C> <C> <C> <C>
ASSETS
Fixed maturities..................................... $ 14,818 $14,818 $ 14,176 $14,176
Equity securities.................................... 31 31 180 180
Policy loans......................................... 6,684 6,684 3,756 3,756
Other investments.................................... 264 309 47 91
LIABILITIES
Other policyholder funds (1)......................... $ 11,709 $11,726 $ 11,769 $11,755
</TABLE>
- ---------
(1) Excludes corporate owned life insurance and universal life insurance
contracts.
<PAGE>
F-14 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
5. SEPARATE ACCOUNTS
Hartford Life Insurance Company maintained separate account assets and
liabilities totaling $90.3 billion and $69.1 billion as of December 31, 1998 and
1997, respectively, which are reported at fair value. Separate account assets,
which are segregated from other investments, reflect two categories of risk
assumption: non-guaranteed separate accounts totaling $80.6 billion and $58.6
billion as of December 31, 1998 and 1997, respectively, wherein the policyholder
assumes the investment risk, and guaranteed separate accounts totaling $9.7 and
$10.5 billion as of December 31, 1998 and 1997, respectively, wherein Hartford
Life Insurance Company contractually guarantees either a minimum return or
account value to the policyholder. Included in non-guaranteed separate account
assets were policy loans totaling $1.8 billion and $1.9 billion as of December
31, 1998 and 1997, 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 and other revenues were $908, $699 and $538
in 1998, 1997 and 1996, respectively. The guaranteed separate accounts include
fixed market value adjusted (MVA) individual annuity and modified guaranteed
life insurance. The average credited interest rate on these contracts was 6.6%
and 6.5% as of December 31, 1998 and 1997, respectively. The assets that support
these liabilities were comprised of $9.5 billion and $10.2 billion in fixed
maturities as of December 31, 1998 and 1997, respectively. 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 $40 and $119 in carrying value and $3.5 billion and
$3.0 billion in notional amounts as of December 31, 1998 and 1997, respectively.
6. STATUTORY RESULTS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Statutory net income................ $ 211 $ 214 $ 144
--------- --------- ---------
Statutory surplus................... $ 1,676 $ 1,441 $ 1,207
--------- --------- ---------
--------- --------- ---------
</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 1999 is estimated to be $168.
Hartford Life Insurance Company and its domestic insurance subsidiaries
prepare their statutory financial statements in accordance with accounting
practices prescribed by the State of Connecticut. Prescribed statutory
accounting practices include publications of the National Association of
Insurance Commissioners, as well as state laws, regulations, and general
administrative rules.
7. STOCK COMPENSATION PLANS
Hartford Life Insurance Company's employees are included in the 1997
Hartford Life, Inc. Incentive Stock Plan (the "Plan"), which was adopted during
the second quarter of 1997. 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 million
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 Hartford
Life, Inc. 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 121,943 and
54,316 shares under the ESPP in 1998 and 1997, respectively. The weighted
average fair value of the discount under the ESPP was $13.80 per share in 1998
and $9.63 per share in 1997.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-15
- --------------------------------------------------------------------------------
8. POSTRETIREMENT BENEFIT AND SAVINGS PLANS
(A) PENSION PLANS
Hartford Life Insurance 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 $6 in 1998 and $5
in both 1997 and 1996.
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 1998, 1997 and 1996.
The assumed rate in the per capita cost of health care (the health care
trend rate) was 7.8% for 1998, decreasing ratably to 5.0% in the year 2003.
Increasing the health care trend rates by one percent per year would have an
immaterial impact on the accumulated postretirement benefit obligation and the
annual expense. To the extent that the actual experience differs from the
inherent assumptions, the effect will be amortized over the average future
service of 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 Hartford Life Insurance Company for the above-mentioned
plan was approximately $4 and $2 in 1998 and 1997, respectively.
9. REINSURANCE
Hartford Life Insurance 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,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Gross premiums...................... $ 2,722 $ 2,164 $ 2,138
Assumed............................. 150 159 190
Ceded............................... (654) (686) (623)
--------- --------- ---------
Net premiums and other
considerations................... $ 2,218 $ 1,637 $ 1,705
--------- --------- ---------
--------- --------- ---------
</TABLE>
The Company ceded approximately $128, $76 and $100 of group life premium to
HLA in 1998, 1997 and 1996, respectively, representing $38.4 billion, $33.6
billion and $33.3 billion of insurance in force, respectively. The Company ceded
$383, $339 and $318 of accident and health premium to HLA in 1998, 1997 and
1996, respectively. The Company assumed $82, $89 and $101 of premium in 1998,
1997 and 1996, respectively, representing $7.4 billion, $8.2 billion and $8.5
billion of individual life insurance in force, respectively, from HLA.
Life reinsurance recoveries, which reduce death and other benefits,
approximated $97, $158 and $140 for the years ended December 31, 1998, 1997 and
1996, respectively.
Hartford Life Insurance Company has no significant reinsurance-related
concentrations of credit risk.
10. 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 own 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. It is the intention of The
Hartford and its non-life subsidiaries to file a single consolidated Federal
income tax return. The life insurance companies will file a separate
consolidated federal income tax return. The Company's effective tax rate was
35%, 36% and 35% in 1998, 1997 and 1996, respectively.
<PAGE>
F-16 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Income tax expense is as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Current.................................. $ 307 $ 162 $ 118
Deferred................................. (119) 5 (98)
--------- --------- ---------
Income tax expense..................... $ 188 $ 167 $ 20
--------- --------- ---------
--------- --------- ---------
</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,
---------------------------------
1998 1997 1996
--------- --------- -----
<S> <C> <C> <C>
Tax provision at the U.S. Federal
statutory rate........................... $ 188 $ 164 $ 20
Other..................................... -- 3 --
--------- --------- ---
Total................................... $ 188 $ 167 $ 20
--------- --------- ---
--------- --------- ---
</TABLE>
Deferred tax assets (liabilities) include the following as of December 31:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Tax basis deferred policy acquisition costs.... $ 751 $ 639
Financial statement deferred policy acquisition
costs and reserves............................ 103 69
Employee benefits.............................. 4 8
Net unrealized capital gains on securities..... (98) (96)
Investments and other.......................... (296) (272)
--------- ---------
Total........................................ $ 464 $ 348
--------- ---------
--------- ---------
</TABLE>
Hartford Life Insurance Company had a current tax payable of $65 and $64 as
of December 31, 1998 and 1997, respectively.
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, based on current tax law,
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, 1998 was $104.
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, 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 $47, $34 and $40 in 1998, 1997 and 1996,
respectively. Management believes that the methods used are reasonable.
12. COMMITMENTS AND CONTINGENT LIABILITIES
(A) LITIGATION
Hartford Life Insurance 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, at the
present time the Company does not anticipate that the ultimate liability arising
from such pending or threatened litigation, after consideration of provisions
made for potential losses and costs of defense, will have a material adverse
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. Part of the assessments
paid by the Company and its subsidiaries pursuant to these laws may be used as
credits for a portion of the associated premium taxes. The Company paid guaranty
fund assessments of approximately $9, $15 and $11 in 1998, 1997 and 1996,
respectively, of which $4, $4 and $5, respectively, were estimated to be
creditable against premium taxes.
(C) LEASES
The rent paid to Hartford Fire for space occupied by the Company was $7 in
both 1998 and 1997 and $3 in 1996. Future minimum rental commitments are as
follows:
<TABLE>
<S> <C>
1999............. $ 7
2000............. 12
2001............. 12
2002............. 13
2003............. 13
Thereafter....... 74
---------
Total.......... $ 131
---------
---------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-17
- --------------------------------------------------------------------------------
Rental expense is recognized on a level basis over the term of the primary
sublease, which expires on December 31, 2009, and amounted to approximately $9
in both 1998 and 1997 and $8 in 1996.
(D) TAX MATTERS
Hartford Life's federal income tax returns are routinely audited by the
Internal Revenue Service. Hartford Life is currently under audit for the years
1993 through 1995, with the audit for the years 1996 through 1997 expected to
begin during early 1999. Management believes that adequate provision has been
made in the financial statements for items that may result from tax examinations
and other tax related matters.
(E) INVESTMENTS
As of December 31, 1998, Hartford Life Insurance Company held $71 of asset
backed securities securitized and serviced by Commercial Financial Services,
Inc. (CFS) of which $50 were included in the Company's general account and $21
in the Company's guaranteed separate account. In October 1998, the Company
became aware of allegations of improper activities at CFS. On December 11, 1998,
CFS filed for protection under Chapter 11 of the Bankruptcy Code. As of December
31, 1998, CFS continues to service the asset backed securities, which remain
current on payments of principal and interest, however, the Company does not
expect to recover all of its principal investment. Based upon information
available in the fourth quarter 1998, the Company recognized a $25, after-tax,
writedown related to its holdings in CFS of which $18 was related to the
Company's general account assets. The ultimate realizable amount depends on the
outcome of the bankruptcy of CFS and these estimates are therefore subject to
material change as new information becomes available. The Company is presently
unable to determine the amount of further potential loss, if any, related to the
securities.
13. SEGMENT INFORMATION
Hartford Life Insurance Company adopted SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information", during the fourth quarter of
1998. This statement replaces SFAS No. 14, "Financial Reporting for Segments of
a Business Enterprise", and establishes new standards for reporting information
about operating segments in annual financial statements and in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas and major customers.
This statement requires that the reportable operating segments be based on the
Company's internal operations. On this basis, Hartford Life Insurance Company's
segments represent strategic operations which offer different products and
services as well as serve different markets.
Hartford Life Insurance Company is organized into three reportable operating
segments which include Investment Products, Individual Life and Corporate Owned
Life Insurance (COLI). Investment Products offers individual variable annuities,
fixed market value adjusted (MVA) annuities and fixed and variable immediate
annuities, mutual funds, deferred compensation and retirement plan services,
structured settlement contracts and other special purpose annuity contracts.
Individual Life sells a variety of life insurance products, including variable
life, universal life, interest-sensitive whole life and term life insurance.
COLI primarily offers variable products used by employers to fund non-qualified
benefits or other post-employment benefit obligations as well as leveraged COLI.
The Company includes in "Other" corporate items not directly allocable to any of
its reportable operating segments as well as certain employee benefit products
including group life and disability insurance that is directly written by the
Company and is substantially ceded to its parent, HLA.
The accounting policies of the reportable operating segments are the same as
those described in the summary of significant accounting policies in Note 2.
Hartford Life Insurance Company evaluates performance of its segments based on
revenues, net income and the segment's return on allocated capital. The Company
charges direct operating expenses to the appropriate segment and allocates the
majority of indirect expenses to the segments based on an intercompany expense
arrangement. Intersegment revenues are not significant and primarily occur
between corporate and the operating segments. These amounts include interest
income on allocated surplus and the amortization of net realized capital gains
and losses through net investment income utilizing the duration of the segment's
investment portfolios. The Company's revenues are primarily derived from
customers within the United States. The Company's long-lived assets primarily
consist of deferred policy acquisition costs and deferred tax assets from within
the United States. The following table outlines summarized financial information
concerning the Company's segments. The information for 1997 and 1996 has been
restated to conform to the 1998 presentation.
<TABLE>
<CAPTION>
INVESTMENT INDIVIDUAL
1998 PRODUCTS LIFE COLI OTHER TOTAL
- ------------------------------------------------------- --------- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Total revenues......................................... $ 1,779 $ 543 $ 1,567 $ 86 $ 3,975
Net investment income.................................. 736 181 793 49 1,759
Amortization of deferred policy acquisition costs...... 326 105 -- -- 431
Income tax expense (benefit)........................... 145 35 12 (4) 188
Net income (loss)...................................... 270 64 24 (8) 350
Assets................................................. 87,207 5,228 22,631 3,197 118,263
</TABLE>
<PAGE>
F-18 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INDIVIDUAL
1997 PRODUCTS LIFE COLI OTHER TOTAL
- ------------------------------------------------------- --------- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Total revenues......................................... $ 1,510 $ 487 $ 980 $ 32 $ 3,009
Net investment income.................................. 739 164 429 36 1,368
Amortization of deferred policy acquisition costs...... 250 83 -- 2 335
Income tax expense..................................... 111 30 15 11 167
Net income............................................. 206 55 27 14 302
Assets................................................. 72,288 4,914 17,800 2,743 97,745
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT INDIVIDUAL
1996 PRODUCTS LIFE COLI OTHER TOTAL
- ------------------------------------------------------- --------- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Total revenues......................................... $ 1,002 $ 440 $ 1,360 $ 87 $ 2,889
Net investment income.................................. 684 153 480 80 1,397
Amortization of deferred policy acquisition costs...... 174 60 -- -- 234
Income tax expense (benefit)........................... (42 ) 24 11 27 20
Net income (loss)...................................... (77 ) 44 26 45 38
Assets................................................. 57,410 3,753 14,222 2,377 77,762
</TABLE>
14. QUARTERLY RESULTS FOR 1998 AND 1997 (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------- -------------------- --------------------
1998 1997 1998 1997 1998 1997 1998 1997
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues........................... $ 915 $ 651 $ 721 $ 645 $ 826 $ 679 $ 1,513 $ 1,034
Benefits, claims and expenses...... 787 550 591 536 688 550 1,371 904
Net income......................... 83 63 85 74 89 81 93 84
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-19
- --------------------------------------------------------------------------------
SCHEDULE I -- SUMMARY OF INVESTMENTS -- OTHER THAN INVESTMENTS IN AFFILIATES
AS OF DECEMBER 31, 1998
(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. Government and Government agencies
and authorities (guaranteed and
sponsored)................................ $ 121 $ 123 $ 123
U. S. Government and Government agencies
and authorities (guaranteed and sponsored)
-- asset backed........................... 1,001 1,016 1,016
States, municipalities and political
subdivisions.............................. 165 173 173
Foreign governments........................ 393 412 412
Public utilities........................... 844 874 874
All other corporate including
international............................. 5,469 5,687 5,687
All other corporate -- asset backed........ 4,155 4,171 4,171
Short-term investments..................... 1,847 1,847 1,847
Certificates of deposit...................... 510 515 515
------- ------- -------
Total fixed maturities....................... 14,505 14,818 14,818
------- ------- -------
Equity Securities
Common Stocks
Industrial and miscellaneous............... 30 31 31
------- ------- -------
Total equity securities...................... 30 31 31
------- ------- -------
Total fixed maturities and equity
securities.................................. 14,535 14,849 14,849
------- ------- -------
Policy Loans................................. 6,684 6,684 6,684
------- ------- -------
Other Investments
Mortgage loans on real estate.............. 206 207 206
Other invested assets...................... 58 102 58
------- ------- -------
Total other investments...................... 264 309 264
------- ------- -------
Total investments............................ $21,483 $21,842 $21,797
------- ------- -------
------- ------- -------
</TABLE>
<PAGE>
F-20 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN MILLIONS)
<TABLE>
<CAPTION>
DEFERRED
POLICY FUTURE OTHER PREMIUMS NET
ACQUISITION POLICY POLICYHOLDER AND OTHER INVESTMENT
SEGMENT COSTS BENEFITS FUNDS CONSIDERATIONS INCOME
- --------------------------------------------- ----------- --------- ---------- --------------- ---------
<S> <C> <C> <C> <C> <C>
1998
Investment Products.......................... $2,823 $2,407 $ 9,194 $1,043 $ 736
Individual Life.............................. 931 466 2,307 363 181
Corporate Owned Life Insurance............... -- 225 8,097 774 793
Other........................................ -- 497 17 38 49
----------- --------- ---------- ------ ---------
Consolidated operations...................... $3,754 $3,595 $19,615 $2,218 $1,759
----------- --------- ---------- ------ ---------
----------- --------- ---------- ------ ---------
1997
Investment Products.......................... $2,478 $2,070 $ 9,620 $ 771 $ 739
Individual Life.............................. 837 392 2,182 323 164
Corporate Owned Life Insurance............... -- 56 9,259 551 429
Other........................................ -- 541 (27) (8) 36
----------- --------- ---------- ------ ---------
Consolidated operations...................... $3,315 $3,059 $21,034 $1,637 $1,368
----------- --------- ---------- ------ ---------
----------- --------- ---------- ------ ---------
1996
Investment Products.......................... $2,030 $1,526 $10,140 $ 537 $ 684
Individual Life.............................. 730 346 2,160 287 153
Corporate Owned Life Insurance............... -- -- 9,823 880 480
Other........................................ -- 602 11 1 80
----------- --------- ---------- ------ ---------
Consolidated operations...................... $2,760 $2,474 $22,134 $1,705 $1,397
----------- --------- ---------- ------ ---------
----------- --------- ---------- ------ ---------
<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>
1998
Investment Products.......................... $ -- $ 670 $326 $ -- $ 368
Individual Life.............................. (1) 262 105 -- 77
Corporate Owned Life Insurance............... -- 924 -- 329 278
Other........................................ (1) 55 -- -- 43
----------- ----------- ----- ----- -----
Consolidated operations...................... $ (2) $1,911 $431 $329 $ 766
----------- ----------- ----- ----- -----
----------- ----------- ----- ----- -----
1997
Investment Products.......................... $ -- $ 677 $250 $ -- $ 266
Individual Life.............................. -- 242 83 -- 77
Corporate Owned Life Insurance............... -- 439 -- 240 259
Other........................................ 4 21 2 -- (16)
----------- ----------- ----- ----- -----
Consolidated operations...................... $ 4 $1,379 $335 $240 $ 586
----------- ----------- ----- ----- -----
----------- ----------- ----- ----- -----
1996
Investment Products.......................... $(219) $ 744 $175 $ -- $ 203
Individual Life.............................. -- 245 59 -- 68
Corporate Owned Life Insurance............... -- 545 -- 634 144
Other........................................ 6 1 -- 1 12
----------- ----------- ----- ----- -----
Consolidated operations...................... $(213) $1,535 $234 $635 $ 427
----------- ----------- ----- ----- -----
----------- ----------- ----- ----- -----
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-21
- --------------------------------------------------------------------------------
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, 1998
Life insurance in force........................... $326,400 $ 200,782 $ 18,289 $143,907 12.7%
Premiums and other considerations
Life insurance and annuities.................... $ 2,329 $ 271 $ 142 $ 2,200 6.5%
Accident and health insurance................... 393 383 8 18 44.4%
-------- -------------- ------- --------
Total premiums and other considerations........... $ 2,722 $ 654 $ 150 $ 2,218 6.8%
-------- -------------- ------- --------
-------- -------------- ------- --------
For the year ended December 31, 1997
Life insurance in force......................... $245,487 $ 178,771 $ 33,156 $ 99,872 33.2%
Premiums and other considerations
Life insurance and annuities.................... $ 1,818 $ 340 $ 157 $ 1,635 9.6%
Accident and health insurance................... 346 346 2 2 100.0%
-------- -------------- ------- --------
Total premiums and other considerations........... $ 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%
Premiums and other considerations
Life insurance and annuities.................... $ 1,801 $ 298 $ 169 $ 1,672 10.1%
Accident and health insurance................... 337 325 21 33 63.6%
-------- -------------- ------- --------
Total premiums and other considerations........... $ 2,138 $ 623 $ 190 $ 1,705 11.1%
-------- -------------- ------- --------
-------- -------------- ------- --------
</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.
(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.
- --------------------
(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>
-2-
Item 25. Directors and Officers of the Depositor
- ------------------------------------------------------------------------------
NAME POSITION WITH HARTFORD
- ------------------------------------------------------------------------------
Wendell J. Bossen Vice President
- ------------------------------------------------------------------------------
Gregory A. Boyko Senior Vice President, Director*
- ------------------------------------------------------------------------------
Peter W. Cummins Senior Vice President
- ------------------------------------------------------------------------------
Timothy M. Fitch Vice President
- ------------------------------------------------------------------------------
Mary Jane B. Fortin Vice President & Chief Accounting Officer
- ------------------------------------------------------------------------------
David T. Foy Senior Vice President & Treasurer
- ------------------------------------------------------------------------------
Lynda Godkin Senior Vice President, General Counsel and
Corporate Secretary, Director*
- ------------------------------------------------------------------------------
Lois W. Grady Senior Vice President
- ------------------------------------------------------------------------------
Stephen T. Joyce Vice President
- ------------------------------------------------------------------------------
Michael D. Keeler Vice President
- ------------------------------------------------------------------------------
Robert A. Kerzner Senior Vice President
- ------------------------------------------------------------------------------
Thomas M. Marra Executive Vice President, Director*
- ------------------------------------------------------------------------------
Joseph J. Noto Vice President
- ------------------------------------------------------------------------------
Craig R. Raymond Senior Vice President and Chief Actuary
- ------------------------------------------------------------------------------
Donald A. Salama Vice President
- ------------------------------------------------------------------------------
Lowndes A. Smith President and Chief Executive Officer, Director*
- ------------------------------------------------------------------------------
David M. Znamierowski Senior Vice President, Director*
- ------------------------------------------------------------------------------
Unless otherwise indicated, the principal business address of each the
above individuals is P.O. Box 2999, Hartford, CT 06104-2999.
*Denotes Board of Directors.
Item 26. Persons Controlled By or Under Common Control with the Depositor or
Registrant
Filed herewith as Exhibit 16.
Item 27. Number of Contract Owners
As of March 31, 1999, there was 1 Contract Owner.
<PAGE>
-3-
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 become subject
by reason of being or having been 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 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 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>
-4-
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
<PAGE>
-5-
(b) Directors and Officers of HESCO
Name and Principal Positions and Offices
Business Address * With Underwriter
------------------- ---------------------
Lowndes A. Smith President and Chief Executive Officer,
Director
Thomas M. Marra Executive Vice President, Director
Peter W. Cummins Senior Vice President, Director
Lynda Godkin Senior Vice President, General Counsel
and Corporate Secretary
Richard J. Garnett Vice President
Donald A. Salama Vice President
Donald E. Waggaman, Jr. Treasurer
George R. Jay Controller
Unless otherwise indicated, the principal business address of each
of 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.
<PAGE>
-6-
(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 the requirements of Securities
Act Rule 485(b) for effectiveness of this Registration Statement and has duly
caused this Registration Statement to be signed on its behalf, in the Town of
Simsbury, and State of Connecticut on this 12th day of April, 1999.
HARTFORD LIFE INSURANCE COMPANY -
ICMG SECULAR TRUST SEPARATE ACCOUNT
(Registrant)
*By: Thomas M. Marra
---------------------------------------------
Thomas M. Marra, Executive Vice President
*By: /s/ Brian Lord
------------------------
Brian Lord
Attorney-in-Fact
HARTFORD LIFE INSURANCE COMPANY
(Depositor)
*By: Thomas M. Marra
---------------------------------------------
Thomas M. Marra, Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons and in the capacities and on
the dates indicated.
Gregory A. Boyko, Senior Vice President,
Director *
Lynda Godkin, Senior Vice President,
General Counsel, and Corporate
Secretary, Director*
Thomas M. Marra, Executive Vice *By: /s/ Brian Lord
President, Director * -------------------------
Lowndes A. Smith, President, Brian Lord
Chief Executive Officer, Director * Attorney-In-Fact
David M. Znamierowski, Senior Vice President,
Director Dated: April 12, 1999
<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 12, 1999 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 12, 1999
Page 2
4. The Contracts, when issued as contemplated by the Form N-4 Registration
Statement, will constitute legal, validly issued and binding obligations
of the Company.
I hereby consent to the filing of this opinion as an exhibit to the Form N-4
Registration Statement for the Contracts and the Account.
Sincerely,
/s/ Lynda Godkin
Lynda Godkin
<PAGE>
EXHIBIT 10
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this
Registration Statement File No. 33-59069 for Hartford Life Insurance Company
ICMG Secular Trust Separate Account on Form N-4.
/s/ Arthur Andersen LLP
Hartford, Connecticut
April 12, 1999
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
POWER OF ATTORNEY
-----------------
Gregory A. Boyko
David T. Foy
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, Christine Repasy,
Marianne O'Doherty, Thomas S. Clark and Brian Lord 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 under the Securities Act of 1933 and/or the Investment Company Act of
1940, and do hereby ratify any such signatures heretofore made by such
persons.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for
the purpose herein set forth.
/s/ Gregory A. Boyko Dated as of January 15, 1999
- ------------------------------
Gregory A. Boyko
/s/ David T. Foy Dated as of January 15, 1999
- ------------------------------
David T. Foy
/s/ Lynda Godkin Dated as of January 15, 1999
- ------------------------------
Lynda Godkin
/s/ Thomas M. Marra Dated as of January 15, 1999
- ------------------------------
Thomas M. Marra
/s/ Lowndes A. Smith Dated as of January 15, 1999
- ------------------------------
Lowndes A. Smith
/s/ Raymond P. Welnicki Dated as of January 15, 1999
- ------------------------------
Raymond P. Welnicki
/s/ Lizabeth H. Zlatkus Dated as of January 15, 1999
- ------------------------------
Lizabeth H. Zlatkus
/s/ David M. Znamierowski Dated as of January 15, 1999
- ------------------------------
David M. Znamierowski
<PAGE>
ORGANIZATIONAL CHART
<TABLE>
<CAPTION>
<S> <C>
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(DELAWARE)
|
---------------------------------------------
NUTMEG INSURANCE COMPANY |
(CONNECTICUT) THE HARTFORD INVESTMENT
| MANAGEMENT COMPANY
HARTFORD FIRE INSURANCE COMPANY (DELAWARE)
(CONNECTICUT) |
| |
HARTFORD ACCIDENT AND INDEMNITY COMPANY HARTFORD INVESTMENT
(CONNECTICUT) SERVICES, INC.
| (CONNECTICUT)
HARTFORD LIFE, INC.
(DELAWARE)
|
HARTFORD LIFE & ACCIDENT INSURANCE COMPANY
(CONNECTICUT)
|
|
|
-------------------------------------------------------------------------------------------------------------------------
| | | | | | | | |
ITT HARTFORD LIFE | | | | | | HLIC PLANCO
INTERNATIONAL LTD. | | | | | | CANADA FINANCIAL
(CONNECTICUT) | | | | | | HOLDINGS, INC. SERVICES,
| | | | | | | (CANADA) INCORPORATED
| | | | | | | | (PENNSYLVANIA)
| | | | | | | | |
| | ALPINE LIFE HARTFORD FINANCIAL HARTFORD LIFE HARTFORD AMERICAN | |
| | INSURANCE SERVICES LIFE INSURANCE COMPANY FINANCIAL MATURITY LIFE | |
| | COMPANY INSURANCE CO. (CONNECTICUT) SERVICES, LLC INSURANCE COMPANY | |
| | (CONNECTICUT) (CONNECTICUT) | (DELAWARE) (CONNECTICUT) | PLANCO, INC.
| | | | | | (PENNSYLVANIA)
| | ------------------------------------- | AML FINANCIAL, INC. |
HARTFORD CALMA | | | | | (CONNECTICUT) |
COMPANY | ROYAL LIFE HARTFORD HARTFORD | HARTFORD
(FLORIDA) | INSURANCE INTERNATIONAL LIFE AND | LIFE INSURANCE
| COMPANY LIFE REASSURANCE ANNUITY INSURANCE | COMPANY
| OF AMERICA CORP. COMPANY | OF CANADA
|(CONNECTICUT) (CONNECTICUT) (CONNECTICUT) | (CANADA)
| | |
| | |
| ITT HARTFORD |
| LIFE, LTD. |
| (BERMUDA) |
| |
| |
----------| ---------------------------------------------------------------------------------------------
| | | | | |
INTERNATIONAL MS FUND HL INVESTMENT HARTFORD HARTFORD SECURITIES HARTFORD COMP. EMP.
CORPORATE AMERICA 1993-K ADVISORS, LLC EQUITY SALES DISTRIBUTION BENEFITS SERVICE
MARKETING GROUP, INC. SPE, INC. (CONNECTICUT) COMPANY, INC. COMPANY, INC. COMPANY
(CONNECTICUT) (DELAWARE) | (CONNECTICUT) (CONNECTICUT) (CONNECTICUT)
| |
| |
THE EVERGREEN HARTFORD INVESTMENT
GROUP, INC. FINANCIAL SERVICES
(NEW YORK) COMPANY
(DELAWARE)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(DELAWARE)
|
NUTMEG INSURANCE COMPANY
(CONNECTICUT)
|
HARTFORD FIRE INSURANCE COMPANY
(CONNECTICUT)
|
----------------------------------------------------------------------------------------------------------------------------
| | |
| | ITT HARTFORD LIFE
| | -------INTERNATIONAL LTD.
| | | (CONNECTICUT)
| | | |
| | | ITT HARTFORD
| | | ----SUDAMERICANA
| | | | HOLDING S.A.
| | | | (ARGENTINA)
| | | |------------------------------------------------------
| | | | | |
| | | | HARTFORD GALICIA INSTITUTO DE
| | | | SEGUROS VIDA COMPANIA SALTA COMPANIA DE
| | | |--------DE VIDA DE SEGUROS S.A. SEGUROS DE VIDA S.A.
| | | | (URUGUAY) (ARGENTINA) (ARGENTINA)
| | | |
| | ICATU | | ITT HARTFORD
| | HARTFORD | |-----SEGUROS DE VIDA
| | SEGUROS S.A.----------| | (ARGENTINA)
| | (BRAZIL) | |
| | | | |
| | | | | ITT HARTFORD
| | -- ----------| | |------SEGUROS DE
| | | | | | RETIRO S.A.
| | | | | | (ARGENTINA)
|-----------|----------------|---------------|---|--------------------------------------------------------------------------
| | | | | |
| | | ICATU HARTFORD | | CONSULTORA DE CAPITALES
| | | FUNDO DE PENSAO | | S.A. SOCIEDAD GERENTE
| | | (BRAZIL) | |----DE FONDOS COMUNES
| | | | | | DE ENVERSION
| | | | | | (ARGENTINA)
| | | ICATU HARTFORD | |
| | | CAPITALIZACAO S.A. | | CLARIDAD
| | | (BRAZIL) | | ADMINISTRADORA DE
| | | | | |---FONDOS DE JUBILACIONES
| | | BRAZILCAP | | Y PENSIONES S.A.
| | | CAPITALIZACAO S.A. | | (ARGENTINA)
| | | (BRAZIL) | |
| | | | |
| | -------------------------- | |
| |--------------- | | |
| | | | |
HARTFORD FIRE HARTFORD FIRE | | |------- SEGPOOL S.A.
INTERNATIONAL------------INTERNATIONAL, LTD. | | | (ARGENTINA)
(GERMANY) GMBH (CONNECTICUT) | | |
(WEST GERMANY) | | |
| | |
ICATU HARTFORD | | | THESIS S.A.
ADMINISTRACAO | | |-------- (ARGENTINA)
DE BENEFICIOS LTDA-- | | |
(BRAZIL) | |
| |
----------------- |
| |
CAB |--------- U.O.R., S.A.
CORPORATION (ARGENTINA)
(BRITISH VIRGIN ISLANDS)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(DELAWARE)
|
NUTMEG INSURANCE COMPANY
(CONNECTICUT)
|
HARTFORD FIRE INSURANCE COMPANY
(CONNECTICUT)
|
- --------------------------------------------------------------------------------------------------------------------------------|
| |
THE HARTFORD INTERNATIONAL |
|-----------------------------------------------------------------------FINANCIAL SERVICES GROUP, INC. |
| | | (DELAWARE) |
| | | ----------------------|----------------- |
| | | | | | | |
ZWOLSCHE | | ITT HARTFORD LONDON AND | HARTFORD |
ALGEMEENE N.V. | | INTERNATIONAL, LTD. EDINBURGH | EUROPE, INC. |
(NETHERLANDS) | | (U.K.) INSURANCE GROUP, LTD.| (DELAWARE) |
| | | (U.K.) | |
| | | | | |
| | | ------------- | |
| | | | | |
| ITT ASSURANCES HARTFORD INTERNATIONAL | LONDON AND --ITT ERCOS |
| S.A. INSURANCE CO., N.V. |--- EDINBURGH DE SEGUROS Y |
| ZWOLSCHE ALGEMEENE (FRANCE) (BELGIUM) | INSURANCE CO., LTD. REASEGUROS S.A.|
|----SCHADEVERZEKERING | | (U.K.) (SPAIN) |
--------| N.V.----------------------------------- | | | |
| | (NETHERLANDS) | | | | |
Z.A. | | | | EXCESS INSURANCE |
- --VERZEKERINGEN | | | | COMPANY LTD. |
| N.V. | ZWOLSCHE ALGEMEENE | | | (U.K.) |
| (BELGIUM) |------HERVERZEKERING B.V. | | | |
| | -----| (NETHERLANDS) | | | LONDON AND |
| | | | | | |--- EDINBURGH LIFE |
| Z.A. LUX S.A. | | | | ASSURANCE CO., LTD. |
| (LUXEMBURG) | ZWOLSCHE ALGEMEENE | | | (U.K.) |
| |--LEVENS-VERZEKERING N.V.------------ | | | |
| | (NETHERLANDS) | | | | |
- ----------------|------------------------------------|------------|------|--------------|---------------------------------------|
| | | | | | |
| -------- | | | | |
| | | | | | | |
| ZWOLSCHE | ZWOLSCHE ALGEMEENE ZWOLSCHE ALGEMEENE | | | |
| ALGEMEENE |-----HYPOTHEKEN N.V. BELEGGINGEN III B.V. | | | |
| EUROPA B.V. | (NETHERLANDS) (NETHERLANDS) | | | |
| (NETHERLANDS) | ---------- | | |
- --------| | | | | |
| EXPLOITATIEMAAT- BELEGGINGSMAAT- | | |
|----- SCHAPPIJ SCHAPPIJ | | |
| BUIZERDLAAN B.V. BUIZERDLAAN B.V. | | |
| (NETHERLANDS) (NETHERLANDS) | | |
| | | |
| | | -----
| HOLLAND | |-------------------------- |
|---- BELEGGINGSGROEP B.V. | | | |
(NETHERLANDS) | |----------------- | |
| -------| | | |
| | | | | |
| | | | | |
F.A. KNIGHT | MACALISTER & LONDON AND | HARTFORD FIRE
& SON N.V. | DUNDAS, LTD. EDINBURGH | INTERNATIONAL
(BELGIUM) | (SCOTLAND) TRUSTEES, LTD. | SERVICIOS
| (U.K.) | (SPAIN)
------------------------- -----------
| | |
FENCOURT QUOTEL LONDON AND
PRINTERS, LTD. INSURANCE EDINBURGH
(U.K.) SYSTEMS, LTD. SERVICES, LTD.
(U.K.) (U.K.)
|
EUROSURE
INSURANCE
MARKETING, LTD.
(U.K.)
</TABLE>
