<PAGE>
As filed with the Securities and Exchange Commission on April 12, 2000.
File No. 33-19946
811-2627
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. 14 [X]
----
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 152 [X]
----
HARTFORD LIFE INSURANCE COMPANY
DC VARIABLE ACCOUNT-I
and
HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT TWO
(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) 843-6733
(Depositor's Telephone Number, Including Area Code)
MARIANNE O'DOHERTY, ESQ.
HARTFORD LIFE, INC.
P.O. BOX 2999
HARTFORD, CT 06104-2999
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
__X__ on May 1, 2000 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
_____ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
PURSUANT TO RULE 24F-2(a)(1) UNDER THE INVESTMENT COMPANY ACT OF 1940, THE
REGISTRANT HAS REGISTERED AN INDEFINITE AMOUNT OF SECURITIES.
<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(A)
N-4 Item No. Prospectus Heading
- ------------------------------ ------------------------
(PART A)
1. Cover Page Cover Page
2. Definitions Glossary of Special Terms
3. Synopsis or Highlights Summary
4. Condensed Financial Information Accumulation Unit Values
5. General Description of Registrant, The Separate Accounts; Hartford
Depositor, and Portfolio Companies Life Insurance Company and The
Funds
6. Deductions Contract Charges
7. General Description of Variable Death Benefits and Settlement
Contracts Provisions
8. Annuity Period Settlement Provisions
9. Death Benefit Death Benefits
10. Purchases and Contract Value The Contracts
11. Redemptions Settlement Provisions
12. Taxes Federal Tax Considerations
13. Legal Proceedings More Information - Are there
any material legal proceedings
affecting the Separate Accounts?
14. Table of Contents of the Statement Table of Contents of the Statement
of Additional Information of Additional Information
(PART B)
15. Cover Page Cover Page
16. Table of Contents Table of Contents
<PAGE>
17. General Information and History Introduction
18. Services None
19. Purchase of Securities Distribution of Contracts
being Offered
20. Underwriters Distribution of Contracts
21. Calculation of Performance Data Calculation of Yield and Return
22. Annuity Payments Annuity Benefits
23. Financial Statements Financial Statements
(PART C)
24. Financial Statements and Financial Statements and
Exhibits Exhibits
25. Directors and Officers of the Directors and Officers of the
Depositor Depositor
26. Persons Controlled by or Under Persons Controlled by or Under
Common Control with the Depositor Common Control with the Depositor
or Registrant or Registrant
27. Number of Contract Owners Number of Contract Owners
28. Indemnification Indemnification
29. Principal Underwriters Principal Underwriters
30. Location of Accounts and Records Location of Accounts and Records
31. Management Services Management Services
32. Undertakings Undertakings
<PAGE>
HARTFORD
LIFE INSURANCE COMPANY
[LOGO]
GROUP VARIABLE ANNUITY CONTRACTS
ISSUED BY HARTFORD LIFE INSURANCE COMPANY
WITH RESPECT TO DC-I AND DC-II
This Prospectus sets forth information you should know before you purchase
or become a Participant under the group variable annuity contract (the
"Contract" or "Contracts"). Please read it carefully.
Hartford Life Insurance Company issues the Contracts in connection with
Deferred Compensation Plans of tax-exempt and governmental employers. We can
also issue the Contracts in connection with certain Qualified Plans of
employers (generally tax-exempt or non-tax-exempt).
We hold Contributions to Contracts issued in connection with Deferred
Compensation Plans in a Separate Account known as Hartford Life Insurance
Company DC Variable Account - I ("DC-I") during the period before annuity
payments start. When annuity payments start, Contract values are held in our
Separate Account that is known as Hartford Life Insurance Company Separate
Account Two ("DC-II").
For Contracts issued in connection with Qualified Plans, we hold
Contributions in DC-II during the period before annuity payments start and
during the period after annuity payments start.
The Contracts may contain a General Account option or a different General
Account contract may be issued in conjunction with the Contracts. The General
Account option or contract may contain restrictions. The General Account
option or contract and these restrictions are not described in this
Prospectus. The General Account option or contract is not required to be
registered with the Securities and Exchange Commission.
We allocate the Contributions to the "Sub-Accounts" as directed by the
Contract Owner or Participant, as applicable. Sub-Accounts are divisions of a
Separate Account.
The following Sub-Accounts are available in DC-I under the Contracts. Also
listed is the name of the underlying Fund for each Sub-Account.
- Hartford Advisers HLS Sub-Account which purchases shares of Class IA of
Hartford Advisers HLS Fund, Inc.
- Hartford Bond HLS Sub-Account which purchases shares of Class IA of
Hartford Bond HLS Fund, Inc.
- Calvert Social Balanced Sub-Account which purchases shares of the Social
Balanced Portfolio of Calvert Variable Series, Inc. ("Calvert")
- Hartford Capital Appreciation HLS Sub-Account which purchases shares of
Class IA of Hartford Capital Appreciation HLS Fund, Inc.
- Hartford Dividend and Growth HLS Sub-Account which purchases shares of
Class IA of Hartford Dividend and Growth HLS Fund, Inc.
- Hartford Index HLS Sub-Account which purchases shares of Class IA of
Hartford Index HLS Fund, Inc.
- Hartford International Opportunities HLS Sub-Account which purchases
shares of Class IA of Hartford International Opportunities HLS
Fund, Inc.
- Hartford Money Market HLS Sub-Account which purchases shares of
Class IA of Hartford Money Market HLS Fund, Inc.
- Hartford Mortgage Securities HLS Sub-Account which purchases shares of
Class IA of Hartford Mortgage Securities HLS Fund, Inc.
- Hartford Stock HLS Sub-Account which purchases shares of Class IA of
Hartford Stock HLS Fund, Inc.
<PAGE>
The following Sub-Accounts are available in DC-II under the Contracts. Also
listed is the name of the underlying Fund for each Sub-Account.
- Hartford Advisers HLS Sub-Account which purchases shares of Class IA of
Hartford Advisers HLS Fund, Inc.
- Hartford Bond HLS Sub-Account which purchases shares of Class IA of
Hartford Bond HLS Fund, Inc.
- Calvert Social Balanced Sub-Account which purchases shares of the Social
Balanced Portfolio of Calvert Variable Series, Inc. ("Calvert")
- Hartford Capital Appreciation HLS Sub-Account which purchases shares of
Class IA of Hartford Capital Appreciation HLS Fund, Inc.
- Hartford Dividend and Growth HLS Sub-Account which purchases shares of
Class IA of Hartford Dividend and Growth HLS Fund, Inc.
- Hartford Index HLS Sub-Account which purchases shares of Class IA of
Hartford Index HLS Fund, Inc.
- Hartford International Opportunities HLS Sub-Account which purchases
shares of Class IA of Hartford International Opportunities HLS
Fund, Inc.
- Hartford Money Market HLS Sub-Account which purchases shares of
Class IA of Hartford Money Market HLS Fund, Inc.
- Hartford Mortgage Securities HLS Sub-Account which purchases shares of
Class IA of Hartford Mortgage Securities HLS Fund, Inc.
- Hartford Stock HLS Sub-Account which purchases shares of Class IA of
Hartford Stock HLS Fund, Inc.
- American Century VP Capital Appreciation Sub-Account which purchases
shares of American Century Variable Portfolios Inc. American Century VP
Capital Appreciation
- Fidelity VIP II Asset Manager Sub-Account which purchases Initial Class
shares of Fidelity VIP II Asset Manager Portfolio
- Fidelity VIP II Contrafund-Registered Trademark- Sub-Account which
purchases Initial Class shares of Fidelity VIP II
Contrafund-Registered Trademark- Portfolio
- Fidelity VIP Growth Sub-Account which purchases Initial Class shares of
Fidelity VIP Growth Portfolio
- Fidelity VIP Overseas Sub-Account which purchases Initial Class shares
of Fidelity VIP Overseas Portfolio
If you decide to become a Contract Owner or a Participant, you should keep
this Prospectus for your records. You can also call us at 1-800-771-3048 to
get a Statement of Additional Information, free of charge. The Statement of
Additional Information contains more information about the Contract and, like
this Prospectus, is filed with the Securities and Exchange Commission. We have
included a Table of Contents for the Statement of Additional Information at
the end of this Prospectus.
The Commission doesn't approve or disapprove these securities or determine
if the information is truthful or complete. Anyone who represents that the
Securities and Exchange Commission does these things may be guilty of a
criminal offense.
This Prospectus and the Statement of Additional Information can also be
obtained from the Securities and Exchange Commissions' website
(HTTP://WWW.SEC.GOV).
This group variable annuity contract IS NOT:
- A bank deposit or obligation
- Federally insured
- Endorsed by any bank or governmental agency
Prospectus Dated: May 1, 2000
Statement of Additional Information Dated: May 1, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C>
GLOSSARY OF SPECIAL TERMS............................................... 4
FEE TABLE............................................................... 6
SUMMARY................................................................. 9
ACCUMULATION UNIT VALUES................................................ 11
PERFORMANCE RELATED INFORMATION......................................... 16
HARTFORD LIFE INSURANCE COMPANY......................................... 16
THE SEPARATE ACCOUNTS................................................... 17
THE FUNDS............................................................... 17
GENERAL ACCOUNT OPTION.................................................. 21
CONTRACT CHARGES........................................................ 21
Sales Charge.......................................................... 21
Is there ever a time when the Sales Charge does not apply?............ 22
Mortality, Expense Risk and Administrative Charge..................... 22
Annual Maintenance Fee................................................ 23
Transfer Fee.......................................................... 23
Premium Taxes......................................................... 23
Experience Rating under the Contracts................................. 23
Negotiated Charges and Fees........................................... 23
Charges of the Funds.................................................. 24
Plan Related Expenses................................................. 24
THE CONTRACTS........................................................... 24
The Contracts Offered................................................. 24
Purchase of a Contract................................................ 24
Contract Rights and Privileges and Assignments........................ 24
Pricing and Crediting of Contributions................................ 24
May I make changes in the amounts of my Contribution?................. 24
May I transfer assets between the Sub-Accounts?....................... 25
Dollar Cost Averaging................................................. 25
How do I know what my Participant Account is worth?................... 26
How are the underlying Fund shares valued?............................ 26
DEATH BENEFITS.......................................................... 26
Determination of the Beneficiary...................................... 26
Death before the Annuity Commencement Date............................ 26
Death on or after the Annuity Commencement Date....................... 27
SETTLEMENT PROVISIONS................................................... 27
Can payment of the Surrender value ever be postponed beyond the
seven-day period?.................................................... 28
May I Surrender once Annuity Payments have started?................... 28
What are Annuity Rights?.............................................. 28
How do I elect an Annuity Commencement Date and Annuity payment
option?.............................................................. 28
What is the minimum amount that I may select for an Annuity
payment?............................................................. 29
How are Contributions made to establish an Annuity Account?........... 29
Can a Contract be suspended by a Contract Owner?...................... 29
Annuity Payment Options............................................... 29
How are Variable Annuity payments determined?......................... 30
FEDERAL TAX CONSIDERATIONS.............................................. 31
A. General............................................................ 31
B. Hartford and DC-I and DC-II........................................ 31
C. Information Regarding Tax-Qualified Retirement Plans............... 31
D. Diversification of the Separate Account............................ 35
E. Ownership of the Assets of the Separate Account.................... 35
F. Contracts Owned by Non-Natural Persons............................. 36
G. Annuity Purchases by Nonresident Aliens and Foreign Corporations... 36
MORE INFORMATION........................................................ 36
Can a Contract be modified?........................................... 36
Can Hartford waive any rights under a Contract?....................... 37
How are the Contracts sold?........................................... 37
Who is the custodian of the Separate Accounts' assets?................ 37
Are there any material legal proceedings affecting the Separate
Accounts?............................................................ 37
Are you relying on any experts as to any portion of this
Prospectus?.......................................................... 37
How may I get additional information?................................. 38
APPENDIX -- ACCUMULATION PERIOD UNDER PRIOR GROUP CONTRACTS............. 39
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION............... 41
</TABLE>
3
<PAGE>
GLOSSARY OF SPECIAL TERMS
ACCUMULATION PERIOD: The period before the start of Annuity payments.
ACCUMULATION UNIT: A unit of measure used to calculate Separate Account values
before we begin to make Annuity payments to you.
ADMINISTRATIVE OFFICE: Located at 200 Hopmeadow Street, Simsbury, CT 06089. The
mailing address for correspondence concerning this Contract is P.O. Box 1583,
Hartford, CT 06144-1583, except for overnight or express mail packages, which
should be sent to: Attention: IPD/Retirement Plan Solutions, 200 Hopmeadow
Street, Simsbury, CT 06089.
ANNUAL MAINTENANCE FEE: An annual charge for establishing and maintaining a
Participant Account under a Contract.
ANNUITANT: The person on whose life Annuity payments are based.
ANNUITANT'S ACCOUNT: An account established at the beginning of the Annuity
Period for making Annuity payments under the Contracts.
ANNUITY: A series of payments for life or another designated period.
ANNUITY COMMENCEMENT DATE: The date we start to make Annuity payments to you.
ANNUITY PERIOD: The period during which we make Annuity payments to you.
ANNUITY UNIT: A unit of measure in the Separate Account used to calculate the
value of Variable Annuity payments we make to you.
BENEFICIARY: The person or persons designated to receive Contract values in the
event of the Participant's or Annuitant's death.
CODE: The Internal Revenue Code of 1986, as amended.
COMMISSION: Securities and Exchange Commission.
CONTRACT OWNER: The Employer or entity owning the Contract.
CONTRACT YEAR: A period of 12 months beginning with the effective date of the
Contract or with any anniversary of the effective date.
CONTRIBUTION(S): The amount(s) paid or transferred to us by the Contract Owner
on behalf of Participants pursuant to the terms of the Contracts.
DATE OF COVERAGE: The date on which we receive the application on behalf of a
Participant.
DC VARIABLE ACCOUNT I OR DC-I: Our Separate Account, Hartford Life Insurance
Company DC Variable Account-I.
DC-II: Our Separate Account, Hartford Life Insurance Company Separate Account
Two.
DEFERRED COMPENSATION PLAN: A plan established and maintained in accordance with
the provisions of section 457 of the Code and the regulations issued thereunder.
EMPLOYER: A governmental or tax-exempt employer maintaining a Deferred
Compensation Plan for its employees or other eligible persons, or an employer
sponsoring a Qualified Plan for its employees.
FIXED ANNUITY: An Annuity providing for guaranteed payments which remain fixed
in amount throughout the payment period and which do not vary with the
investment experience of a separate account.
GENERAL ACCOUNT: Our General Account that consists of all of our company assets
other than those allocated to our separate accounts.
HARTFORD, WE OR US: Hartford Life Insurance Company.
MINIMUM DEATH BENEFIT: The minimum amount payable upon the death of a
Participant prior to age 65 and before Annuity payments have started.
4
<PAGE>
PARTICIPANT: A term used to describe, for record keeping purposes, any employee
or other eligible person electing to participate in the Deferred Compensation
Plan or Qualified Plan of the Employer/Contract Owner.
PARTICIPANT ACCOUNT: An account to which the General Account values and the
Separate Account Accumulation Units held by the Contract Owner on behalf of
Participant under the Contract are allocated.
PARTICIPANT'S CONTRACT YEAR: A period of twelve (12) months beginning with the
Date of Coverage of a Participant and each successive 12-month period.
PLAN: The Deferred Compensation Plan or Qualified Plan of an Employer.
PREMIUM TAX: A tax charged by a state or municipality on premiums, purchase
payments or Contract values.
QUALIFIED PLAN: A retirement plan of an Employer that qualifies for special tax
treatment under section 401, 403 or 408 of the Code.
SURRENDER: Any partial or complete withdrawal of Contract values.
TERMINATION VALUE: The value of a Participant's Account on any Valuation Day
before the Annuity Commencement Date, less any applicable Premium Taxes not
already deducted and any applicable contingent deferred sales charges.
VALUATION DAY: Every day the New York Stock Exchange is open for trading. The
value of the Separate Account is determined at the close of the New York Stock
Exchange (generally 4:00 p.m. Eastern Time).
VALUATION PERIOD: The period between the close of business on successive
Valuation Days.
VARIABLE ANNUITY: An Annuity providing for payments varying in amount in
accordance with the investment experience of the assets held in the underlying
securities of the Separate Account.
5
<PAGE>
FEE TABLE
Contract Owner Transaction Expenses
<TABLE>
<S> <C>
Sales Load Imposed on Purchases (as a percentage of premium
payments)....................................................... None
Transfer Fee...................................................... $ 5*
Contingent Deferred Sales Charge (as a percentage of amounts
Surrendered) (1)
First through Sixth Year...................................... 7%
Seventh through Twelfth Year.................................. 5%
Thirteenth Year and thereafter................................ 0%
Annual Maintenance Fee (2)........................................ $ 18
Separate Account Annual Expenses (as a percentage of average daily
Sub-Account value)
Mortality, Expense Risk and Administrative Charge (DC-I)
(.50% mortality, .15% expense and .25% administration)....... 0.90%
Mortality, Expense Risk and Administrative Charge(DC II)
(.85% mortality, .15% expense and .25% administration)....... 1.25%
</TABLE>
- ---------
* Currently, we do not charge the $5 Transfer Fee.
We may eliminate or change the Transfer Fee, Contingent Deferred Sales
Charge, Annual Maintenance Fee, and Mortality, Expense Risk and Administrative
Charge. See "Experience Rating under the Contracts" and "Negotiated Charges and
Fees".
(1) Each Participant Account has its own Contingent Deferred Sales Charge
schedule. The amount of the Contingent Deferred Sales Charge depends on the
number of Participant's Contract Years completed with respect to the
Participant's Account before the Surrender. See "Contract Charges".
(2) The Annual Maintenance Fee is a single $18 charge on a Participant Account.
It is deducted proportionally from the investment options in use at the time
of the charge.
The purpose of the Fee Table and Examples is to assist you in understanding
various costs and expenses that you will pay directly or indirectly. The Fee
Table and Examples reflect expenses of the Separate Account and underlying
Funds. We deduct any Premium Taxes that apply.
The Examples should not be considered a representation of past or future
expenses and actual expenses may be greater or less than those shown. The Annual
Maintenance Fee has been reflected in the Examples by a method intended to show
the "average" impact of the Annual Maintenance Fee on an investment in the
Separate Account. We do this by approximating an "average" 0.07% annual charge.
6
<PAGE>
Annual Fund Operating Expenses
As of the Fund's Year End
(As a percentage of net assets)
<TABLE>
<CAPTION>
TOTAL FUND
OPERATING EXPENSES
MANAGEMENT FEES OTHER EXPENSES (INCLUDING ANY
(INCLUDING ANY (INCLUDING ANY WAIVERS AND ANY
WAIVERS) REIMBURSEMENTS) REIMBURSEMENTS)
--------------- --------------- ------------------
<S> <C> <C> <C>
American Century VP Capital Appreciation Fund
(1)........................................... 1.00% 0.00% 1.00%
Calvert Social Balanced Portfolio (2)........... 0.70% 0.19% 0.89%
Fidelity VIP Growth Portfolio (3)............... 0.58% 0.07% 0.65%
Fidelity VIP Overseas Portfolio (3)............. 0.73% 0.14% 0.87%
Fidelity VIP II Asset Manager Portfolio (3)..... 0.53% 0.09% 0.62%
Fidelity VIP II Contrafund-Registered Trademark-
Portfolio (3)................................. 0.58% 0.07% 0.65%
Hartford Advisers HLS Fund...................... 0.63% 0.02% 0.65%
Hartford Bond HLS Fund.......................... 0.49% 0.03% 0.52%
Hartford Capital Appreciation HLS Fund.......... 0.64% 0.02% 0.66%
Hartford Dividend and Growth HLS Fund........... 0.65% 0.03% 0.68%
Hartford Index HLS Fund......................... 0.40% 0.03% 0.43%
Hartford International Opportunities HLS Fund... 0.69% 0.09% 0.78%
Hartford Money Market HLS Fund.................. 0.45% 0.02% 0.47%
Hartford Mortgage Securities HLS Fund........... 0.45% 0.03% 0.48%
Hartford Stock HLS Fund......................... 0.46% 0.02% 0.48%
</TABLE>
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(1) American Century VP Capital Appreciation Fund has a stepped fee schedule.
The Management Fee is 1.00% for the first $500 million in average net
assets, 0.95% for the next $500 million, and 0.90% thereafter.
(2) Other Expenses reflect an indirect fee. Total Fund Operating Expenses after
reductions for fees paid indirectly would be 0.86%.
(3) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, through arrangements with certain funds,
or FMR on behalf of certain funds' custodians, credits realized as a result
of uninvested cash balances were used to reduce a portion of each applicable
fund's expenses. These reductions will continue through at least December
31, 2000 pursuant to an agreement between the adviser and the funds. Without
these reductions, Total Operating Fund Expenses would have been:
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT FEE OTHER EXPENSES OPERATING EXPENSES
-------------- -------------- ------------------
<S> <C> <C> <C>
Fidelity VIP Growth Portfolio................... 0.58% 0.08% 0.66%
Fidelity VIP Overseas Portfolio................. 0.73% 0.18% 0.91%
Fidelity VIP II Asset Manager Portfolio......... 0.53% 0.10% 0.63%
Fidelity VIP II Contrafund-Registered Trademark-
Portfolio..................................... 0.58% 0.09% 0.67%
</TABLE>
7
<PAGE>
EXAMPLE-DC I
<TABLE>
If you surrender your If you annuitize your
Contract at the end of the Contract at the end of the If you do not surrender
applicable time period, you applicable time period, you your Contract, you would
would pay the following would pay the following pay the following expenses
expenses on a $1,000 expenses on a $1,000 on a $1,000 investment,
investment, assuming a 5% investment, assuming a 5% assuming a 5% annual return
annual return on assets: annual return on the on assets:
assets:
SUB-ACCOUNT 1 YR. 3 YRS. 5 YRS. 10 YRS. 1 YR. 3 YRS. 5 YRS. 10 YRS. 1 YR. 3 YRS. 5 YRS. 10 YRS.
--- ---- ---- ---- --- --- ---- ---- --- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Calvert Social
Balanced............... $91 $136 $183 $287 $18 $58 $101 $219 $19 $59 $101 $220
Hartford Advisers HLS.... $89 $129 $171 $263 $16 $51 $ 88 $192 $17 $51 $ 89 $193
Hartford Bond HLS........ $88 $125 $165 $249 $15 $47 $ 81 $178 $15 $47 $ 82 $179
Hartford Capital
Appreciation HLS....... $89 $129 $172 $264 $16 $51 $ 88 $193 $17 $52 $ 89 $194
Hartford Dividend and
Growth HLS............. $89 $130 $173 $266 $16 $52 $ 90 $196 $17 $52 $ 90 $197
Hartford Index HLS....... $87 $122 $160 $240 $14 $44 $ 76 $168 $14 $45 $ 77 $169
Hartford International
Opportunities HLS...... $90 $133 $178 $276 $17 $55 $ 95 $207 $18 $56 $ 96 $208
Hartford Money Market
HLS.................... $87 $124 $162 $244 $14 $45 $ 78 $172 $15 $46 $ 79 $173
Hartford Mortgage
Securities HLS......... $87 $124 $163 $245 $14 $45 $ 79 $173 $15 $46 $ 80 $174
Hartford Stock HLS....... $87 $124 $163 $245 $14 $45 $ 79 $173 $15 $46 $ 80 $174
</TABLE>
EXAMPLE DC-II
<TABLE>
If you surrender your If you annuitize your
Contract at the end of the Contract at the end of the If you do not surrender
applicable time period, you applicable time period, you your Contract, you would
would pay the following would pay the following pay the following expenses
expenses on a $1,000 expenses on a $1,000 on a $1,000 investment,
investment, assuming a 5% investment, assuming a 5% assuming a 5% annual return
annual return on assets: annual return on the on assets:
assets:
SUB-ACCOUNT 1 YR. 3 YRS. 5 YRS. 10 YRS. 1 YR. 3 YRS. 5 YRS. 10 YRS. 1 YR. 3 YRS. 5 YRS. 10 YRS.
--- ---- ---- ---- --- --- ---- ---- --- --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Century VP
Capital Appreciation... $96 $149 $205 $333 $23 $72 $125 $267 $24 $73 $125 $268
Calvert Social
Balanced............... $95 $146 $200 $322 $22 $69 $119 $256 $23 $70 $120 $257
Fidelity VIP Growth...... $92 $139 $188 $298 $19 $62 $106 $230 $20 $62 $107 $231
Fidelity VIP Overseas.... $94 $145 $199 $320 $22 $68 $118 $254 $22 $69 $119 $254
Fidelity VIP II Asset
Manager................ $92 $138 $187 $295 $19 $61 $105 $227 $20 $61 $106 $228
Fidelity VIP II
Contrafund-Registered Trademark-... $92 $139 $188 $298 $19 $62 $106 $230 $20 $62 $107 $231
Hartford Advisers HLS
(1).................... $92 $137 $186 $293 $19 $60 $104 $225 $20 $61 $105 $226
Hartford Bond HLS........ $91 $135 $182 $285 $18 $58 $100 $216 $19 $58 $100 $217
Hartford Capital
Appreciation HLS (1)... $92 $138 $187 $295 $19 $61 $105 $227 $20 $61 $106 $228
Hartford Dividend and
Growth HLS............. $93 $140 $190 $301 $20 $63 $108 $234 $21 $63 $109 $234
Hartford Index HLS (2)... $86 $120 $156 $231 $13 $41 $ 72 $159 $14 $42 $ 73 $160
Hartford International
Opportunities HLS...... $94 $143 $194 $311 $21 $66 $113 $244 $22 $66 $114 $245
Hartford Money Market
HLS.................... $91 $134 $180 $280 $18 $56 $ 97 $211 $18 $57 $ 98 $212
Hartford Mortgage
Securities HLS......... $91 $134 $180 $281 $18 $56 $ 97 $212 $18 $57 $ 98 $213
Hartford Stock HLS (1)... $91 $134 $180 $280 $18 $56 $ 97 $211 $18 $57 $ 98 $212
</TABLE>
- ------------
(1) We voluntarily reduce the charge for administrative undertakings in certain
sub-accounts in DC-II. The reduced total charge for mortality, expense risk
and administrative undertakings in these sub-accounts is as follows:
Hartford Stock HLS, 1.24%; Hartford Advisers HLS,1.20%; and Hartford Capital
Appreciation HLS, 1.21%
(2) We voluntarily limit the applicable charge for mortality, expense risk and
administrative undertakings for the Hartford Index HLS Sub-Account so when
combined with the expenses of the underlying, the total does not exceed
1.25%
8
<PAGE>
SUMMARY
WHAT ARE THE CONTRACTS?
The Contracts are group variable annuity contracts. They are issued in
connection with a Deferred Compensation Plan or Qualified Plan of an Employer.
Contract Owners who purchased a prior series of Contracts can make
Contributions, subject to the terms and provisions of such Contracts. New
Participants may be added to such existing Contracts, but no new Contracts under
that prior series will be issued. Contract Owners of a prior series of Contracts
are referred to the Appendix for a description of the Sales Charges and other
expenses applicable to such earlier series of Contracts.
WHAT IS THE ACCUMULATION PERIOD?
During the Accumulation Period under the Contracts, the Employer makes
Contributions to the Contracts that are used to purchase variable Separate
Account interests. Contributions allocated to purchase variable interests may,
after the deductions described in this Prospectus, be invested in selected
Sub-Accounts of the Separate Accounts, as appropriate.
During the Accumulation Period a Contract Owner or a Participant may
allocate monies held in the Separate Account among the available Sub-Accounts of
the Separate Account. There may be restrictions under certain circumstances (see
"May I transfer assets between Sub-Accounts?").
WHAT ARE THE SALES CHARGES UNDER THE CONTRACT?
We do not deduct sales charges at the time Contributions are made to the
Contract. We deduct a contingent deferred sales charge ("Sales Charge") from
Surrenders of or from the Contract. The amount of the Sales Charge depends on
the number of Participant's Contract Years completed with respect to a
Participant's Account before the Surrender. It is a percentage of the amount
Surrendered.
<TABLE>
<CAPTION>
PARTICIPANT'S CONTRACT YEARS SALES CHARGE
- ---------------------------- ------------
<S> <C>
During the First through the Sixth Year................. 7%
During the Seventh through the Twelfth Year............. 5%
Thirteenth Year and thereafter.......................... 0%
</TABLE>
We may reduce the amount or term of the Sales Charge (see "Experience Rating
under the Contracts" and "Negotiated Charges and Fees"). The Sales Charge will
never exceed 8.5% of aggregate Contributions to a Participant's Account.
No deduction for Sales Charges will be made in certain cases. (See "Is there
ever a time when the Sales Charge does not apply?").
WHAT CHARGES WILL I PAY ON AN ANNUAL BASIS?
Because we assume certain risks under the Contract, and we provide certain
administrative services, we deduct a daily charge against all Contract values
held in the Separate Accounts during the life of the Contract. This is the
charge for Mortality, Expense Risk and Administrative Undertakings. The amount
of the charge differs between DC-I and DC-II:
<TABLE>
<CAPTION>
SEPARATE ACCOUNT
----------------
DC-I DC-II
-------- --------
<S> <C> <C>
Annual Rate............................................. 0.90% 1.25%
</TABLE>
The rate charged for the mortality, expense and administrative undertakings
under the Contracts may be reduced (see "Experience Rating under the Contracts"
and "Negotiated Charges and Fees").
WHAT IS THE ANNUAL MAINTENANCE FEE?
We charge an Annual Maintenance Fee against the value of each Participant
Account at the end of the Participant's Contract Year. The maximum Annual
Maintenance Fee is $18 per year on all Contracts. We reserve the right to reduce
or waive the Annual Maintenance Fee under certain conditions (see "Experience
Rating under the Contracts" and "Negotiated Charges and Fees").
9
<PAGE>
IS THERE A DEDUCTION FOR PREMIUM TAXES?
We deduct during the Accumulation Period and Annuity Period, as appropriate,
for the payment of any Premium Taxes levied against the Contract by a state or
other governmental entity. The range is generally up to 3.50%. (See "Contract
Charges").
IS THERE A DEATH BENEFIT?
We will pay a Minimum Death Benefit if a Participant dies before the earlier
of (1) the Participant's 65th birthday or (2) the Annuity Commencement Date.
(See "Death Benefits").
WHAT IS THE ANNUITY PERIOD?
At the end of the Accumulation Period, we will allocate Contract values held
with respect to Participants' Accounts as directed by the Contract Owner to
establish Annuitants' Accounts to provide Fixed and/or Variable Annuities under
the Contracts. If applicable, we will also allocate any additional Contributions
that a Contract Owner elects to make to the Annuitants' Accounts at the
commencement of the Annuity Period, as directed by the Contract Owner. (See
"Settlement Provisions").
WHAT ANNUITY PAYMENT OPTIONS ARE AVAILABLE?
When you purchase an Annuity, you may choose one of the following Annuity
payment options, or receive a lump sum payment:
LIFE ANNUITY where we make monthly Annuity payments for as long as the
Annuitant lives.
- Payments under this option stop upon the death of the Annuitant, even if
the Annuitant dies after one payment.
LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN where we make
monthly payments for the life of the 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 any remaining guaranteed monthly payments will be
paid to the Beneficiary unless other provisions have been made and approved by
us.
UNIT REFUND LIFE ANNUITY where we make monthly payments during the life of
the Annuitant and when the Annuitant dies, we pay any remaining value to the
Beneficiary. See Annuity payment Option 3 for a discussion of how the remaining
value is determined.
JOINT AND LAST SURVIVOR ANNUITY where we make monthly payments during the
joint lifetime of the Annuitant and a designated individual (called the joint
Annuitant) and then throughout the remaining lifetime of the survivor.
- When the Annuity is purchased, the Annuitant elects what percentage (50%,
66 2/3%, or 100%) of the monthly Annuity payment will continue to be paid
to the survivor.
- It is possible for an Annuitant and joint Annuitant to receive only one
payment in the event of the common or simultaneous death of the Annuitant
and joint Annuitant prior to the due date for the second payment.
PAYMENTS FOR A DESIGNATED PERIOD where we agree to make monthly payments for
the number of years selected. Under the Contracts, the minimum number of years
is five. In the event of the Annuitant's death prior to the end of the
designated period, any then remaining balance of proceeds will be paid in one
sum to the Beneficiary unless other provisions have been made and approved by
us.
- This Option does not involve life contingencies and does not provide any
mortality guarantee.
- Surrenders are subject to the limitations set forth in the contract and
any applicable contingent deferred sales charges.
UNDER ANY OF THE ANNUITY PAYMENT OPTIONS ABOVE, EXCEPT PAYMENT FOR A
DESIGNATED PERIOD (ON A VARIABLE BASIS), NO SURRENDERS ARE PERMITTED AFTER
ANNUITY PAYMENTS COMMENCE.
10
<PAGE>
ACCUMULATION UNIT VALUES
(FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT THE PERIOD)
The following information has been derived from the audited financial
statements of the Separate Accounts, which have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto, and should be read in conjunction with those statements which are
included in the Statement of Additional Information, which is incorporated by
reference in this Prospectus
<TABLE>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -------- -------- ------- ------- -------
DC-I
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
HARTFORD BOND HLS SUB-ACCOUNT
(INCEPTION DATE AUGUST 3,
1982)
Accumulation Unit value at
beginning of period......... $ 4.978 $ 4.641 $ 4.201 $ 4.099 $ 3.499 $ 3.689 $ 3.388 $ 3.251 $ 2.827 $ 2.640
Accumulation Unit value at end
of period................... $ 4.837 $ 4.978 $ 4.641 $ 4.201 $ 4.099 $ 3.499 $ 3.689 $ 3.388 $ 3.251 $ 2.827
Number of Accumulation Units
outstanding at end of period
(in thousands).............. 7,197 10,752 8,821 8,711 8,630 9,090 10,092 10,253 10,201 9,871
HARTFORD STOCK HLS SUB-ACCOUNT
(INCEPTION DATE AUGUST 3,
1982)
Accumulation Unit value at
beginning of period......... $ 19.085 $ 14.413 $ 11.059 $ 8.979 $ 6.773 $ 6.990 $ 6.190 $ 5.695 $ 4.628 $ 4.875
Accumulation Unit value at end
of period................... $ 22.672 $ 19.085 $ 14.413 $ 11.059 $ 8.979 $ 6.773 $ 6.990 $ 6.190 $ 5.695 $ 4.628
Number of Accumulation Units
outstanding at end of period
(in thousands).............. 28,666 44,646 44,558 42,224 39,271 39,551 37,542 34,861 32,700 29,962
HARTFORD MONEY MARKET HLS
SUB-ACCOUNT
(INCEPTION DATE JUNE 14, 1982)
Accumulation Unit value at
beginning of period......... $ 2.987 $ 2.861 $ 2.738 $ 2.629 $ 2.515 $ 2.450 $ 2.410 $ 2.354 $ 2.248 $ 2.106
Accumulation Unit value at end
of period................... $ 3.109 $ 2.987 $ 2.861 $ 2.738 $ 2.629 $ 2.515 $ 2.450 $ 2.410 $ 2.354 $ 2.248
Number of Accumulation Units
outstanding at end of period
(in thousands).............. 12,051 13,525 11,208 9,609 7,884 9,548 9,298 9,999 10,936 11,181
HARTFORD ADVISERS HLS
SUB-ACCOUNT
(INCEPTION DATE MAY 2, 1983)
Accumulation Unit value at
beginning of period......... $ 6.432 $ 5.204 $ 4.213 $ 3.649 $ 2.876 $ 2.993 $ 2.700 $ 2.524 $ 2.123 $ 2.123
Accumulation Unit value at end
of period................... $ 7.061 $ 6.432 $ 5.204 $ 4.213 $ 3.649 $ 2.876 $ 2.993 $ 2.700 $ 2.524 $ 2.123
Number of Accumulation Units
outstanding at end of period
(in thousands).............. 101,430 140,627 137,947 136,232 128,415 126,437 119,064 105,648 93,981 84,223
HARTFORD CAPITAL APPRECIATION
HLS SUB-ACCOUNT
(INCEPTION DATE APRIL 2, 1984)
Accumulation Unit value at
beginning of period......... $ 9.106 $ 7.952 $ 6.552 $ 5.482 $ 4.257 $ 4.204 $ 3.524 $ 3.050 $ 2.004 $ 2.278
Accumulation Unit value at end
of period................... $ 12.420 $ 9.106 $ 7.952 $ 6.552 $ 5.482 $ 4.257 $ 4.204 $ 3.524 $ 3.050 $ 2.004
Number of Accumulation Units
outstanding at end of period
(in thousands).............. 39,292 45,417 62,609 59,279 52,278 46,086 36,598 25,900 19,437 15,293
</TABLE>
11
<PAGE>
<TABLE>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
------- ------- ------- ------- ------- ------- ------- ------- ------- ------
HARTFORD MORTGAGE SECURITIES
HLS SUB-ACCOUNT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(INCEPTION DATE JANUARY 15,
1987)
Accumulation Unit value at
beginning of period......... $ 2.781 $ 2.628 $ 2.430 $ 2.335 $ 2.034 $ 2.093 $ 1.993 $ 1.929 $ 1.702 $1.571
Accumulation Unit value at end
of period................... $ 2.802 $ 2.781 $ 2.628 $ 2.430 $ 2.335 $ 2.034 $ 2.093 $ 1.993 $ 1.929 $1.702
Number of Accumulation Units
outstanding at end of period
(in thousands).............. 6,078 8,947 9,204 10,597 11,067 10,782 11,722 12,046 11,855 10,291
HARTFORD INDEX HLS SUB-ACCOUNT
(INCEPTION DATE JUNE 3, 1987)
Accumulation Unit value at
beginning of period......... $ 2.509 1.970 $ 1.520 $ 2.353 $ 1.738 $ 1.735 $ 1.605 $ 1.522 $ 1.190 $1.255
Accumulation Unit value at end
of period................... $ 3.007 $ 2.509 $ 1.970 $ 1.520 $ 2.353 $ 1.738 $ 1.735 $ 1.605 $ 1.522 $1.190
Number of Accumulation Units
outstanding at end of period
(in thousands).............. 62,941 81,407 67,788 49,989 19,816 15,356 13,489 11,720 8,519 6,350
CALVERT SOCIAL BALANCED
SUB-ACCOUNT
(INCEPTION DATE JANUARY 25,
1989)
Accumulation Unit value at
beginning of period......... $ 2.955 $ 2.536 $ 2.152 $ 1.929 $ 1.504 $ 1.573 $ 1.475 $ 1.388 $ 1.207 $1.173
Accumulation Unit value at end
of period................... $ 3.291 $ 2.955 $ 2.563 $ 2.152 $ 1.929 $ 1.504 $ 1.573 $ 1.475 $ 1.388 $1.207
Number of Accumulation Units
outstanding at end of period
(in thousands).............. 7,927 11,080 10,795 10,160 9,009 7,899 7,199 5,215 3,508 2,036
HARTFORD INTERNATIONAL
OPPORTUNITIES HLS
SUB-ACCOUNT
(INCEPTION DATE JULY 2, 1990)
Accumulation Unit value at
beginning of period......... $ 1.662 $ 1.459 $ 1.488 $ 1.330 $ 1.181 $ 1.220 $ 0.924 $ 0.979 $ 0.877 $1.000
Accumulation Unit value at end
of period................... $ 2.305 $ 1.662 $ 1.459 $ 1.488 $ 1.330 $ 1.181 $ 1.220 $ 0.924 $ 0.979 $0.877
Number of Accumulation Units
outstanding at end of period
(in thousands).............. 22,410 32,407 38,369 43,558 35,671 38,270 19,894 8,061 4,633 2,564
HARTFORD DIVIDEND AND GROWTH
HLS SUB-ACCOUNT
(INCEPTION DATE MAY 1, 1995)
Accumulation Unit value at
beginning of period......... $ 2.250 $ 1.949 $ 1.490 $ 1.224 $ 1.000 -- -- -- -- --
Accumulation Unit value at end
of period................... $ 2.349 $ 2.250 $ 1.949 $ 1.490 $ 1.224 -- -- -- -- --
Number of Accumulation Units
outstanding at end of period
(in thousands).............. 22,927 36,162 37,647 20,897 6,317 -- -- -- -- --
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
------- ------- ------- ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
DC-II
HARTFORD BOND HLS SUB-ACCOUNT
(INCEPTION DATE AUGUST 25,
1982)
Accumulation Unit value at
beginning of period......... $ 4.917 $ 4.604 $ 4.187 $4.095 $3.500 $3.689 $3.389 $3.251 $2.827 $2.641
Accumulation Unit value at end
of period................... $ 4.796 $ 4.917 $ 4.604 $4.187 $4.095 $3.500 $3.689 $3.389 $3.251 $2.827
Number of Accumulation Units
outstanding at end of period
(in thousands).............. 3,141 1,804 1,606 1,655 1,368 1,123 992 816 732 724
HARTFORD STOCK HLS SUB-ACCOUNT
(INCEPTION DATE JUNE 29, 1982)
Accumulation Unit value at
beginning of period......... $18.846 $14.295 $11.017 $8.968 $6.771 $6.988 $6.188 $5.694 $4.627 $4.874
Accumulation Unit value at end
of period................... $21.649 $18.846 $14,295 $11.017 $8.968 $6.771 $6.988 $6.188 $5.694 $4.627
Number of Accumulation Units
outstanding at end of period
(in thousands).............. 11,207 4,483 5,082 4,885 4,413 3,885 3,181 2,517 1,885 1,467
HARTFORD MONEY MARKET HLS
SUB-ACCOUNT
(INCEPTION DATE JUNE 29, 1982)
Accumulation Unit value at
beginning of period......... $ 2.947 $ 2.834 $ 2.725 $2.624 $2.512 $2.447 $2.407 $2.351 $2.245 $2.103
Accumulation Unit value at end
of period................... $ 3.061 $ 2.947 $ 2.834 $2.725 $2.624 $2.512 $2.447 $2.407 $2.351 $2.245
Number of Accumulation Units
outstanding at end of period
(in thousands).............. 2,145 1,567 1,473 1,333 989 905 886 884 929 881
HARTFORD ADVISERS HLS
SUB-ACCOUNT
(INCEPTION DATE MAY 2, 1983)
Accumulation Unit value at
beginning of period......... $ 6.366 $ 5.168 $ 4.201 $3.647 $2.876 $2.993 $2.700 $2.524 $2.123 $2.123
Accumulation Unit value at end
of period................... $ 7.021 $ 6.366 $ 5.168 $4.201 $3.647 $2.876 $2.993 $2.700 $2.524 $2.123
Number of Accumulation Units
outstanding at end of period
(in thousands).............. 14,450 8,737 10,299 10,505 9,212 8,279 7,023 7,323 6,220 5,565
HARTFORD CAPITAL APPRECIATION
HLS SUB-ACCOUNT
(INCEPTION DATE APRIL 2, 1984)
Accumulation Unit value at
beginning of period......... $ 9.001 $ 7.896 $ 6.533 $5.478 $4.257 $4.204 $3.524 $3.050 $2.004 $2.278
Accumulation Unit value at end
of period................... $12.389 $ 9.001 $ 7.896 $6.533 $5.478 $4.257 $4.204 $3.524 $3.050 $2.004
Number of Accumulation Units
outstanding at end of period
(in thousands).............. 12,159 7,529 11,032 10,979 9,081 6,923 4,940 3,276 2,113 1,455
</TABLE>
13
<PAGE>
<TABLE>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
HARTFORD MORTGAGE SECURITIES HLS
SUB-ACCOUNT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(INCEPTION DATE JANUARY 15, 1985)
Accumulation Unit value at beginning of
period................................. $2.747 $2.606 $2.421 $2.333 $2.034 $2.093 $1.993 $1.929 $1.702 $1.571
Accumulation Unit value at end of
period................................. $2.799 $2.747 $2.606 $2.421 $2.333 $2.034 $2.093 $1.993 $1.929 $1.702
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... 1,200 891 1,035 1,141 1,149 994 942 802 736 582
HARTFORD INDEX HLS SUB-ACCOUNT
(INCEPTION DATE JUNE 3, 1987)
Accumulation Unit value at beginning of
period................................. $4.755 $3.745 $2.848 $2.353 $1.738 $1.735 $1.605 $1.522 $1.190 $1.255
Accumulation Unit value at end of
period................................. $5.729 $4.755 $3.745 $2.848 $2.353 $1.738 $1.735 $1.605 $1.522 $1.190
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... 10,126 6,393 5,415 4,378 3,153 2,376 1,862 1,437 871 595
CALVERT SOCIAL BALANCED SUB-ACCOUNT
(INCEPTION DATE JANUARY 25, 1989)
Accumulation Unit value at beginning of
period................................. $2.750 $2.396 $2.021 $1.817 $1.417 $1.483 $1.391 $1.308 $1.138 $1.106
Accumulation Unit value at end of
period................................. $3.052 $2.750 $2.396 $2.021 $1.817 $1.417 $1.483 $1.391 $1.308 $1.138
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... 1,628 1,263 1,291 1,193 923 693 498 317 187 94
HARTFORD INTERNATIONAL OPPORTUNITIES HLS
SUB-ACCOUNT
(INCEPTION DATE JULY 2, 1990)
Accumulation unit value at beginning of
period................................. $1.641 $1.469 $1.483 $1.329 $1.181 $1.220 $0.924 $0.979 $0.877 $1.000
Accumulation unit value at end of
period................................. $2.288 $1.641 $1.469 $1.483 $1.329 $1.181 $1.220 $0.924 $0.979 $0.877
Number of accumulation units outstanding
at end of period
(in thousands)......................... 6,548 4,166 5,864 5,996 4,520 3,640 1,495 553 220 52
HARTFORD DIVIDEND AND GROWTH HLS
SUB-ACCOUNT
(INCEPTION DATE MAY 1, 1995)
Accumulation Unit value at beginning of
period................................. $2.222 $1.933 $1.490 $1.223 $1.000 -- -- -- -- --
Accumulation Unit value at end of
period................................. $2.314 $2.222 $1.933 $1.490 $1.223 -- -- -- -- --
Number of Accumulation Units outstanding
at end of period
(in thousands)......................... 9,983 8,150 6,877 3,874 558 -- -- -- -- --
</TABLE>
14
<PAGE>
<TABLE>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
AMERICAN CENTURY VP CAPITAL APPRECIATION
SUB-ACCOUNT
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(INCEPTION DATE JULY 1, 1995)
Accumulation Unit value at beginning of
period................................ $0.943 $0.967 $1.021 $1.081 $1.000 -- -- -- -- --
Accumulation Unit value at end of
period................................ $1.532 $0.943 $0.976 $1.021 $1.081 -- -- -- -- --
Number of Accumulation Units outstanding
at end of period
(in thousands)........................ 1,355 1,239 1,520 1,108 634 -- -- -- -- --
FIDELITY VIP OVERSEAS SUB-ACCOUNT
(INCEPTION DATE JULY 1, 1995)
Accumulation Unit value at beginning of
period................................ $1.413 $1.269 $1.152 $1.030 $1.000 -- -- -- -- --
Accumulation Unit value at end of
period................................ $1.992 $1.413 $1.269 $1.152 $1.030 -- -- -- -- --
Number of Accumulation Units outstanding
at end of period
(in thousands)........................ 2,121 1,755 1,563 921 181 -- -- -- -- --
FIDELITY VIP II ASSET MANAGER
SUB-ACCOUNT
(INCEPTION DATE JULY 1, 1995)
Accumulation Unit value at beginning of
period................................ $1.665 $1.466 $1.230 $1.087 $1.000 -- -- -- -- --
Accumulation Unit value at end of
period................................ $1.828 $1.665 $1.466 $1.230 $1.087 -- -- -- -- --
Number of Accumulation Units outstanding
at end of period
(in thousands)........................ 2,952 2,834 2,172 1,491 312 -- -- -- -- --
FIDELITY VIP II
CONTRAFUND-REGISTERED TRADEMARK-
SUB-ACCOUNT
(INCEPTION DATE JULY 1, 1995)
Accumulation Unit value at beginning of
period................................ $2.072 $1.613 $1.316 $1.099 $1.000 -- -- -- -- --
Accumulation Unit value at end of
period................................ $2.543 $2.072 $1.613 $1.316 $1.099 -- -- -- -- --
Number of Accumulation Units outstanding
at end of period
(in thousands)........................ 9,525 8,632 7,407 5,069 1,808 -- -- -- -- --
FIDELITY VIP GROWTH SUB-ACCOUNT
(INCEPTION DATE JULY 1, 1995)
Accumulation Unit value at beginning of
period................................ $2.040 $1.482 $1.215 $1.073 $1.000 -- -- -- -- --
Accumulation Unit value at end of
period................................ $2.772 $2.040 $1.482 $1.215 $1.073 -- -- -- -- --
Number of Accumulation Units outstanding
at end of period
(in thousands)........................ 11,603 8,893 7,393 5,773 2,055 -- -- -- -- --
</TABLE>
15
<PAGE>
PERFORMANCE RELATED INFORMATION
Each Separate Account may advertise certain performance related information
concerning its Sub-Accounts. Performance information about a Sub-Account is
based on the Sub-Account's past performance only and is no indication of future
performance.
Hartford Advisers HLS, Hartford Bond HLS, Calvert Social Balanced, Hartford
Capital Appreciation HLS, Hartford Dividend and Growth HLS, Hartford Index HLS,
Hartford International Opportunities HLS, Hartford Money Market HLS, Hartford
Mortgage Securities HLS, Hartford Stock HLS, American Century VP Capital
Appreciation, Fidelity VIP II Asset Manager, Fidelity VIP II
Contrafund-Registered Trademark-, Fidelity VIP Growth and Fidelity VIP Overseas
Sub-Accounts may include total return in advertisements or other sales material.
When a Sub-Account 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 Sub-Account has not been in existence for at least ten years.
Total return is measured by comparing the value of an investment in the
Sub-Account at the beginning of the relevant period to the value of the
investment at the end of the period (assuming the deduction of any contingent
deferred sales charge which would be payable if the investment were redeemed at
the end of the period). Total return figures are net of all total fund operating
expenses, the contingent deferred sales charge, the highest charge for
mortality, expense risk and administrative undertakings, and the highest Annual
Maintenance Fee.
The Separate Accounts may also advertise NON-STANDARD TOTAL RETURNS THAT
PRE-DATE THE INCEPTION DATE OF THE SEPARATE ACCOUNTS. These non-standardized
total returns are calculated by assuming that the Sub-Accounts 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 Sub-Accounts. This
figure will usually be calculated for one year, five years, and ten years or
other periods. Non-standardized total return figures are net of total fund
operating expenses, the actual charge for mortality, expense risk and
administrative undertakings, and do not take into account contingent deferred
sales charges and the Annual Maintenance Fee. Therefore, non-standardized total
return for a Sub-Account is higher than standardized total return for a
Sub-Account. These non-standardized returns must be accompanied by standardized
total returns.
Hartford Bond HLS, Hartford Mortgage Securities HLS Sub-Accounts 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 30
day period is divided by the unit value on the last day of the period. This
figure reflects the recurring charges on the Separate Account level including
the charge for mortality, expense risk and administrative undertakings and the
Annual Maintenance Fee.
Hartford Money Market HLS Sub-Account may advertise YIELD AND EFFECTIVE
YIELD. The yield of the Sub-Account is based upon the income earned by the
Sub-Account 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 Sub-Account units and thus compounded in the course of a
52-week period. Yield and effective yield reflect the recurring charges on the
Separate Account level including the charge for mortality, expense risk and
administrative undertakings and the Annual Maintenance Fee.
We may provide information on various topics to Contract Owners and
prospective Contract 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), the advantages and disadvantages of investing in tax-deferred
and taxable instruments, customer profiles and hypothetical purchase scenarios,
financial management and tax and retirement planning, and other investment
alternatives, including comparisons between the Contracts and the
characteristics of and market for such alternatives.
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
16
<PAGE>
Connecticut. Our offices are located in Simsbury, Connecticut; however, our
mailing address is P.O. Box 1583, Hartford, CT 06144-1583. 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>
RATING AGENCY EFFECTIVE DATE OF RATING RATING BASIS OF RATING
- ------------- ------------------------ ------ ------------------------------
<S> <C> <C> <C>
A.M. Best and Company, Inc. 1/1/99 A+ Financial performance
Standard & Poor's 8/1/99 AA Insurer financial strength
Duff & Phelps 7/1/99 AA+ Claims paying ability
Moody's 7/1/99 Aa3 Insurer financial strength
</TABLE>
THE SEPARATE ACCOUNTS
Hartford Life Insurance Company Separate Account DC Variable Account-I
("DC-I") and Hartford Life Insurance Company Separate Account Two ("DC-II") are
where we set aside and invest assets of some of our annuity contracts, including
the Contracts. We hold Contributions to Contracts issued in connection with
Deferred Compensation Plans in DC-I during the Accumulation Period and in DC-II
during the Annuity Period. We hold Contributions to Contracts issued in
connection with Qualified Plans in DC-II during both the Accumulation Period and
the Annuity Period. The assets of DC-I and DC-II were transferred from Hartford
Variable Annuity Life Insurance Company Separate Account DC-I and Separate
Account DC-II, respectively, on December 31, 1987.
Each Separate Account is registered as a unit investment trust under the
Investment Company Act of 1940. This registration does not involve supervision
by the Commission of the management or the investment practices of the Separate
Accounts or Hartford.
Each Separate Account meets the definition of "separate account" under
federal securities law. Each Separate Account holds only assets for variable
annuity contracts. Each Separate Account, respectively:
- Holds assets for the benefit of Participants and Contract Owners, and the
persons entitled to the payments described in the Contract.
- Is not subject to the liabilities arising out of any other business
Hartford may conduct.
- Is not affected by the rate of return of Hartford's General Account or by
the investment performance of any of Hartford's other separate accounts.
- May be subject to liabilities from a Sub-Account of the Separate Account
that holds assets of other contracts offered by the Separate Account which
are not described in this Prospectus.
- Is credited with income and gains, and takes losses, whether or not
realized, from the assets it holds.
WE DO NOT GUARANTEE THE INVESTMENT RESULTS OF THE SEPARATE ACCOUNTS. THERE
IS NO ASSURANCE THAT THE VALUE OF YOUR PARTICIPANT ACCOUNT WILL EQUAL THE TOTAL
OF THE CONTRIBUTIONS MADE TO YOUR PARTICIPANT ACCOUNT.
THE FUNDS
Hartford HLS Funds are sponsored and administered by Hartford Life Insurance
Company. HL Investment Advisors, LLC ("HL Advisors") serves as the investment
adviser to each of the Hartford HLS Funds. Wellington Management Company, LLP
("Wellington Management") and Hartford Investment Management Company ("HIMCO")
serve as sub-investment advisors and provide day to day investment services.
Each Hartford HLS Fund available in this Contract is a separate Maryland
corporation registered with the Securities and Exchange Commission as an
open-end management investment company. The shares of each Fund have been
divided into Class IA and Class IB. Only Class IA shares are available in this
Contract.
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Calvert Asset Management Company, Inc. serves as investment advisor and
manages the fixed-income portion of the Calvert Social Balanced Portfolio. The
sub-advisor to the equity portion of the Portfolio is NCM Capital Management
Inc.
American Century Investment Management, Inc. ("ACIM") serves as the
investment advisor to the American Century VP Funds. ACIM has been providing
investment advisory services to investment companies and institutional investors
since it was founded in 1958.
Fidelity Management & Research Company is the investment adviser for the
Fidelity VIP Funds.
We do not guarantee the investment results of any of the underlying Funds.
Since each underlying Fund has different investment objectives, each is subject
to different risks. These risks and the Fund's expenses are more fully described
in the accompanying Fund's prospectuses and Statements of Additional
Information, which may be ordered from us. The Fund's prospectuses should be
read in conjunction with this Prospectus before investing.
THESE FUNDS MAY NOT BE AVAILABLE IN ALL STATES OR IN ALL CONTRACTS.
The investment goals of each of the Funds are as follows:
HARTFORD HLS FUNDS
HARTFORD ADVISERS HLS FUND
Seeks maximum long-term total rate of return by investing in common stocks
and other equity securities, bonds and other debt securities, and money market
instruments. Sub-advised by Wellington Management.
HARTFORD BOND HLS FUND
Seeks maximum current income consistent with preservation of capital by
investing primarily in investment grade fixed-income securities. Up to 20% of
the total assets of this Fund may be invested in debt securities rated in the
highest category below investment grade ("Ba" by Moody's Investor
Services, Inc. or "BB" by Standard & Poor's) or, if unrated, are determined to
be of comparable quality by the Fund's investment adviser. Securities rated
below investment grade are commonly referred to as "high yield-high risk
securities" or "junk bonds." For more information concerning the risks
associated with investing in such securities, please refer to the section in the
accompanying prospectus for the Funds entitled "Hartford Bond HLS Fund, Inc."
Sub-advised by HIMCO.
HARTFORD CAPITAL APPRECIATION HLS FUND
Seeks growth of capital by investing in equity securities selected solely on
the basis of potential for capital appreciation. Sub-advised by Wellington
Management.
HARTFORD DIVIDEND AND GROWTH HLS FUND
Seeks a high level of current income consistent with growth of capital by
investing primarily in dividend paying equity securities. Sub-advised by
Wellington Management.
HARTFORD INDEX HLS FUND
Seeks to provide investment results that approximate the price and yield
performance of publicly traded common stocks in the aggregate, as represented by
the Standard & Poor's 500 Composite Stock Price Index.* Sub-advised by HIMCO.
* "STANDARD & POOR'S-REGISTERED TRADEMARK-", "S&P-REGISTERED TRADEMARK-", "S&P
500-REGISTERED TRADEMARK-", "STANDARD & POOR'S 500", AND "500" ARE TRADEMARKS
OF THE MCGRAW-HILL COMPANIES, INC. AND HAVE BEEN LICENSED FOR USE BY HARTFORD
LIFE INSURANCE COMPANY AND AFFILIATES. HARTFORD INDEX HLS FUND, INC. ("INDEX
FUND") IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR'S AND
STANDARD & POOR'S MAKES NO REPRESENTATION REGARDING THE ADVISABILITY OF
INVESTING IN THE INDEX FUND.
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HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND
Seeks growth of capital by investing primarily in equity securities issued
by non-U.S. companies. Sub-advised by Wellington Management.
HARTFORD MONEY MARKET HLS FUND
Seeks maximum current income consistent with liquidity and preservation of
capital. Sub-advised by HIMCO.
HARTFORD MORTGAGE SECURITIES HLS FUND
Seeks maximum current income consistent with safety of principal and
maintenance of liquidity by investing primarily in mortgage-related securities.
Sub-advised by HIMCO.
HARTFORD STOCK HLS FUND
Seeks long-term growth by investing primarily in equity securities.
Sub-advised by Wellington Management.
CALVERT FUND
CALVERT SOCIAL BALANCED PORTFOLIO
Seeks to achieve a competitive total return through an actively managed
portfolio of stocks, bonds and money market instruments which offer income and
capital growth opportunity and which satisfy the investment and social criteria.
AMERICAN CENTURY VP FUND
AMERICAN CENTURY VARIABLE PORTFOLIOS, INC. AMERICAN CENTURY VP CAPITAL
APPRECIATION
Seeks capital growth over time by investing primarily in common stocks that
are considered by management to have better than average prospects for
appreciation.
FIDELITY FUNDS
FIDELITY VIP II ASSET MANAGER PORTFOLIO
Seeks high total return with reduced risk over the long-term by allocating
its assets among stocks, bonds and short-term money market instruments.
In addition, the fund may invest in all varieties of fixed income securities
including, lower-quality debt securities maturing in more than one year. For a
further discussion of lower-rated securities, see "Risks of Lower-Rated Debt
Securities" in the Fidelity prospectus for this Portfolio.
FIDELITY VIP II CONTRAFUND-REGISTERED TRADEMARK- PORTFOLIO
Seeks long term capital appreciation through purchase of equity securities
of domestic or foreign companies whose value FMR believes is not fully
recognized by the public.
FIDELITY VIP GROWTH PORTFOLIO
Seeks capital appreciation primarily through purchase of common stocks.
FIDELITY VIP OVERSEAS PORTFOLIO
Seeks long-term growth of capital primarily through investments in foreign
securities and provides a means for aggressive investors to diversify their own
portfolios by participating in companies and economies outside of the United
States.
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International funds have increased economic and political risks as they are
exposed to events and factors in the various world markets. These risks may be
greater for funds that invest in emerging markets.
ALL FUNDS
Hartford Advisers HLS Sub-Account was not available under Contracts issued
prior to May 2, 1983. Hartford Capital Appreciation HLS Sub-Account was not
available under Contracts issued prior to May 1, 1984. Hartford Mortgage
Securities HLS Sub-Account was not available under Contracts issued prior to
January 15, 1985. Hartford Index HLS Sub-Account was not available under
Contracts issued prior to May 1, 1987. Hartford Dividend and Growth HLS
Sub-Account was not available under Contracts issued prior to May 1, 1995. Funds
not available prior to the issue date of a Contract may be requested in writing
by the Contract Owner.
MIXED AND SHARED FUNDING: Shares of the Funds are sold to our other separate
accounts and our insurance company affiliates or other unaffiliated insurance
companies to serve as the underlying investment for both variable annuity
contracts and variable life insurance contracts, a practice known as "mixed and
shared funding." As a result, there is a possibility that a material conflict
may arise between the interests of Contract Owners, and of owners of other
contracts whose contract values are allocated to one or more of these other
separate accounts investing in any one of the Funds. In the event of any such
material conflicts, we will consider what action may be appropriate, including
removing the Fund from the Separate Account or replacing the Fund with another
Fund. There are certain risks associated with mixed and shared funding, as
disclosed in the Funds' prospectus.
VOTING RIGHTS: We are the legal owners of all Fund shares held in the
Separate Accounts and we have the right to vote at the Fund's shareholder
meetings. To the extent required by federal securities laws or regulations, we
will:
- Notify the Contract Owner of any Fund shareholders' meeting if the shares
held for the Contract may be voted;
- Send proxy materials and a form of instructions to the Contract Owner that
may be used to tell us how to vote the Fund shares held for the Contract;
- arrange for the handling and tallying of proxies received from Contract
Owners;
- Vote all Fund shares attributable to a Contract according to instructions
received from the Contract Owner; and
- Vote all Fund shares for which no voting instructions are received in the
same proportion as shares for which instructions have been received.
If any federal securities laws or regulations, or their present
interpretation, change to permit us to vote Fund shares on our own, we may
decide to do so. Contract Owners may attend any shareholder meeting at which
shares held for their Contract may be voted.
During the Annuity Period under a Contract, the number of votes will
decrease as the assets held to fund the Annuity benefits will decrease.
SUBSTITUTION, ADDITION OR DELETION OF FUNDS, SEPARATE ACCOUNTS AND/OR
SUB-ACCOUNTS: We reserve the right, subject to any applicable law, to substitute
the shares of any other registered investment company for the shares of any Fund
held by the Separate Account. Substitution may occur if shares of the Fund(s)
become unavailable or due to changes in applicable law or interpretations of law
or as we deem appropriate. Current law requires notification to you of any such
substitution and approval of the Securities and Exchange Commission. We also
reserve the right, subject to any applicable law, to offer additional
Sub-Accounts with differing investment objectives, and to make existing
Sub-Account options unavailable under the Contracts in the future.
We may offer additional separate account options from time to time under
these Contracts. Such new options will be subject to the then in effect charges,
fees, and or transfer restrictions for the Contracts for such additional
separate accounts.
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ADMINISTRATIVE SERVICES -- Hartford has entered into agreements with the
investment advisers or distributors of many of the Funds. Under the terms of
these agreements, Hartford provides administrative services and the Funds pay a
fee to Hartford that is usually based on an annual percentage of the average
daily net assets of the Funds. These agreements may be different for each Fund
or each Fund family.
GENERAL ACCOUNT OPTION
IMPORTANT INFORMATION YOU SHOULD KNOW: THE PORTION OF THE CONTRACT RELATING
TO THE GENERAL ACCOUNT OPTION IS NOT REGISTERED UNDER THE SECURITIES ACT OF 1933
("1933 ACT") AND THE GENERAL ACCOUNT OPTION IS NOT REGISTERED AS AN INVESTMENT
COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940 ("1940 ACT"). NEITHER THE
GENERAL ACCOUNT OPTION NOR ANY INTEREST IN THE GENERAL ACCOUNT OPTION IS SUBJECT
TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT, AND THE STAFF
OF THE SECURITIES AND EXCHANGE COMMISSION HAS NOT REVIEWED THE DISCLOSURE
REGARDING THE GENERAL ACCOUNT OPTION.
The General Account option is part of our General Account that includes our
company assets.
DECLARED RATE OF INTEREST -- We credit interest on Contributions made to the
General Account at a rate we declare for any period of time that we determine.
We may change the declared interest rate from time to time at our discretion.
GUARANTEED RATE OF INTEREST -- We guarantee a minimum rate of interest. The
declared interest rate will not be less than the minimum guaranteed rate of
interest.
DISTRIBUTIONS AND TRANSFERS -- We generally process distributions and
transfers from the General Account within a reasonable period of time after we
receive a Participant request at our Administrative Office. However, under
certain conditions, transfers from the General Account may be limited or
deferred. Distributions may be subject to a contingent deferred sales charge and
may be deferred or subject to a market value adjustment.
CONTRACT CHARGES
SALES CHARGE: The purpose of the Sales Charge is to cover expenses relating
to the sale and distribution of the Contracts, including:
- the cost of preparing sales literature,
- commissions and other compensation paid to distributing organizations and
their sales personnel, and
- other distribution related activities.
If the Sales Charge is not sufficient to cover sales and distribution
expenses, we pay those expenses from our general assets, including surplus.
Surplus might include profits resulting from unused mortality and expense risk
charges.
There is no deduction for Sales Charge at the time Contributions are made to
the Contract. The Sales Charge is deducted from Surrenders of or from the
Contract. The amount of the Sales Charge depends on the number of Participant's
Contract Years completed with respect to a Participant's Account before the
Surrender. It is a percentage of the amount Surrendered.
<TABLE>
<CAPTION>
PARTICIPANT'S CONTRACT YEARS SALES CHARGE
- ---------------------------- ------------
<S> <C>
During the First through the Sixth Year..................... 7%
During the Seventh through the Twelfth Year................. 5%
Thirteenth Year and thereafter.............................. 0%
</TABLE>
We may reduce the amount or term of the Sales Charge (see "Experience Rating
under the Contracts" and "Negotiated Charges and Fees"). The Sales Charge will
never exceed 8.5% of aggregate Contributions to a Participant's Account.
When you request a full Surrender, the Sales Charge is deducted from the
amount Surrendered and the balance is paid to you.
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- Example: You request a full Surrender when the value of your Participant
Account is $1,000 and the applicable Sales Charge is 5%: Your Sub-Account(s)
will be surrendered by $1,000 and you will receive $950 (i.e., the $1,000
Surrender less the 5% Sales Charge).
If you request a partial Surrender and ask for a specific dollar amount, the
Sales Charge will be calculated on the total amount that must be withdrawn from
your Sub-Account(s) to provide you with the amount requested.
- Example: You ask for $1,000 when the applicable Sales Charge is 5%: Your
Sub-Account(s) will be reduced by $1,052.63 (i.e., a total withdrawal of
$1,052.63 made up of $52.63 in Sales Charge plus the $1,000 you requested).
The net amount of $1,000 is paid to you.
IS THERE EVER A TIME WHEN THE SALES CHARGE DOES NOT APPLY?
We do not deduct the Sales Charge from a Surrender from Participant's
Account under a Contract in the event of the Participant's:
- death,
- Annuity payout for his or her Participant Account under one of the
available Annuity payout options (except that a surrender out of Annuity
Option 5, Payments for a Designated Period, is subject to a Sales Charge,
if applicable),
- financial hardship (as defined in the Employer's Plan), the waiver of the
Sales Charge for financial hardship is available for Participants under
Contracts issued in connection with Deferred Compensation Plans only.
Participants with a Date of Coverage prior to October 15, 1986 may withdraw
up to 10% of the value of their Participant Account on a non-cumulative basis
each Participant's Contract Year, after the first, without application of Sales
Charges. Participants with a Date of Coverage on or after October 15, 1986 do
not have this 10% withdrawal privilege.
MORTALITY, EXPENSE RISK AND ADMINISTRATIVE CHARGE: Because we assume certain
risks under the Contract, and we provide certain administrative services, we
deduct a daily charge against all Contract values held in the Separate Accounts
during the life of the Contract. The amount of the charge differs between DC-I
and DC-II:
<TABLE>
<CAPTION>
SEPARATE
ACCOUNT
-------------------
DC-I DC-II
-------- --------
<S> <C> <C>
Annual rate................................................. 0.90% 1.25%
</TABLE>
Although Variable Annuity payments made under the Contracts will vary in
accordance with the investment performance of the underlying Fund shares held in
the Sub-Account(s), the payments will not be affected by (a) our actual
mortality experience among Annuitants before or after the Annuity Commencement
Date or (b) our actual expenses, including certain administrative expenses, if
greater than the deductions provided for in the Contracts because of our expense
and mortality undertakings.
There are two types of mortality risks:
- mortality risks during the Accumulation Period
- mortality risks during the Annuity Period
We take a mortality risk in the Accumulation Period because we assume the
mortality risk for the death benefit in event of the death of an Annuitant
before commencement of Annuity payments, in periods of declining value.
We take a mortality risk during the Annuity Period because we agree to make
monthly Annuity payments (determined in accordance with the 1983a Individual
Annuitant Mortality Table and other provisions contained in the Contract) to
Annuitants regardless of how long an Annuitant may live, and regardless of how
long all Annuitants as a group may live. We also assume the liability for
payment of a minimum death benefit under the Contract. These mortality
undertakings are based on our determination of expected mortality rates among
all Annuitants. If actual experience among Annuitants during the Annuity payment
period deviates from our
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<PAGE>
actuarial determination of expected mortality rates among Annuitants because, as
a group, their longevity is longer than anticipated, we must provide amounts
from our general funds to fulfill our contractual obligations. We will bear the
loss in such a situation.
The administrative undertaking provided by Hartford assures the Contract
Owner that administration will be provided throughout the entire life of the
Contract.
We may reduce the rate charged for the mortality, expense risk and
administrative undertakings under the Contracts (see "Experience Rating under
the Contracts" and "Negotiated Charges and Fees"). The rate charged for the
mortality, expense risk, and administrative undertakings may be periodically
increased but will not exceed 2.00% per year, provided, however, that no such
increase will occur unless the Commission first approves such increase.
ANNUAL MAINTENANCE FEE: We deduct an Annual Maintenance Fee from the value
of each Participant Account under a Contract. The maximum Annual Maintenance Fee
is $18 per year, but such fee may be reduced or waived (see "Experience Rating
under the Contracts" and "Negotiated Charges and Fees").
We deduct the Annual Maintenance Fee on the last business day of each
Participant's Contract Year. However, if you Surrender the value of your
Participant Account in full before the last business day of your Participant's
Contract Year, we deduct the Annual Maintenance Fee from the proceeds of such
Surrender. We do not deduct the Annual Maintenance Fee during the Annuity Period
under a Contract. We deduct the Annual Maintenance Fee on a pro rata basis from
the value of the applicable Sub-Accounts with respect to a Participant Account.
If the Contract has a General Account option or the Contract is issued in
conjunction with a separate Hartford General Account contract, we deduct the
Annual Maintenance Fee as described above against the Sub-Accounts in DC-I or
DC-II, as applicable, and the General Account option or contract on a pro-rata
basis.
TRANSFER FEE: We can deduct a Transfer Fee of $5 for each transfer between
or among the Sub-Accounts under a Contract. We do not currently charge the $5
Transfer Fee.
PREMIUM TAXES: We deduct a charge for Premium Tax, if applicable, imposed by
a state or other governmental entity. Certain states and municipalities impose a
Premium Tax, generally ranging up to 3.50%. In some cases, Premium Taxes are
deducted at the time purchase payments are made; in other cases Premium Tax is
assessed at the time of annuitization. We will pay Premium Taxes at the time
imposed under applicable law. At our sole discretion, we may deduct Premium
Taxes at the time we pay such taxes to the applicable taxing authorities, at the
time the Contract is surrendered, at the time a death benefit is paid, or at the
time a Participant annuitizes.
EXPERIENCE RATING UNDER THE CONTRACTS: We may apply experience credits under
a Contract based on investment, administrative, mortality or other factors,
including, but not limited to (1) the total number of Participants, (2) the sum
of all Participants' Account values, (3) the allocation of Contract values
between the General Account and the Separate Accounts under the Contract, (4)
present or anticipated levels of Contributions, distributions, transfers,
administrative expenses or commissions, and (5) whether we are the exclusive
annuity contract provider. Experience credits can take the form of a reduction
in the deduction for mortality, expense risk and administrative undertakings, a
reduction in the term or amount of any applicable Sales Charges, an increase in
the rate of interest credited under the Contract, a reduction in the amount of
the Annual Maintenance Fee, a reduction in the amount of the Transfer Fee, a
payment to be allocated as directed by the Contract Owner, or any combination of
the foregoing. We may apply experience credits either prospectively or
retrospectively. We may apply and allocate experience credits in such manner as
we deem appropriate. Any such credit will not be unfairly discriminatory against
any person, including the affected Contract Owners or Participants. Experience
credits have been given in certain cases. Participants in Contracts receiving
experience credits will receive notification regarding such credits. Experience
credits may be discontinued at our sole discretion in the event of a change in
applicable factors.
NEGOTIATED CHARGES AND FEES: The charges and fees described in this section
vary from Contract to Contract, depending on plan characteristics. The Contract
Owner can negotiate charges and fees. This flexibility allows us and the
Contract Owner to custom design a charge and fee structure that meets the
financial goals of both the Contract Owner and Hartford.
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CHARGES OF THE FUNDS: The investment performance of each Fund reflects the
management fee that the Fund pays to its investment manager as well as other
operating expenses that the Fund incurs. Investment management fees are
generally daily fees computed as a percentage of a Fund's average daily net
assets as an annual rate. Please read the prospectus for each Fund for complete
details.
PLAN RELATED EXPENSES: We can agree with the Contract Owner to be directed
to deduct amounts from the assets under a Contract to pay certain administrative
expenses or other Plan related expenses including, but not limited to, fees to
consultants, auditors and other Plan service providers. We will deduct and pay
such amounts to the Contract Owner or as directed by the Contract Owner. We may
agree to include such amounts as an adjustment to the charge for administrative
undertakings for a Separate Account.
THE CONTRACTS
THE CONTRACTS OFFERED: The Contracts are group variable annuity contracts.
We can offer the Contracts for use in connection with Deferred Compensation
Plans and Qualified Plans, including annuity purchase plans adopted by public
school systems and certain tax-exempt organizations according to section
403(b) of the Code.
Contract Owners who purchased a prior series of Contracts can make
Contributions, subject to the terms and provisions of such Contracts. New
Participants may be added to such existing Contracts, but no new Contracts under
that prior series will be issued. Contract Owners of a prior series of Contracts
are referred to the Appendix for a description of the Sales Charges and other
expenses applicable to such earlier series of Contracts.
PURCHASE OF A CONTRACT: A single group Contract is issued to the Contract
Owner, covering all present and future participating employees and other
eligible persons providing services to the Employer. The Contracts provide for
variable (Separate Account) Contributions and may also provide for allocations
to the General Account during the Accumulation Period. The Contract Owner can
direct that a Participant Account be established for each Participant for
purposes of determining benefits payable under the Plan.
CONTRACT RIGHTS AND PRIVILEGES AND ASSIGNMENTS: The Contract belongs to the
Contract Owner. However, under certain Deferred Compensation Plans and Qualified
Plans, the Contract Owner must hold the Contract for the exclusive benefit of
the Plan's Participants and Beneficiaries. The Contract Owner's rights and
privileges may only be exercised in a manner that is consistent with the written
Plan adopted by the Contract Owner. Under certain circumstances, the Contract
Owner's interest in the Contract may be assigned. However, amounts held under a
Contract on behalf of a Participant are nontransferable and cannot be assigned.
PRICING AND CREDITING OF CONTRIBUTIONS: We credit initial Contributions to
your Participant Account within two business days after we receive your properly
completed application and the initial Contribution at our Administrative Office.
If your application or other necessary information is incomplete when
received, your initial Contribution will be credited to your Participant Account
not later than two business days after the application is made complete.
However, if an incomplete application is not made complete within five business
days of its initial receipt, the Contribution will be immediately returned
unless we inform the Contract Owner of the delay and the Contract Owner tells us
not to return it.
Subsequent Contributions properly designated for your Participant Account
are priced on the Valuation Day that we receive the Contribution at our
Administrative Office.
MAY I MAKE CHANGES IN THE AMOUNTS OF MY CONTRIBUTION?
Yes, however the minimum Contribution that may be made at any one time on
behalf of a Participant is $30 unless the Employer's Plan provides otherwise. If
the Plan adopted by the Contract Owner so provides, the Contract permits the
allocation of Contributions, in multiples of 10% among the several Sub-Accounts
of the Separate Accounts. The minimum amount that may be allocated to any
Sub-Account in a Separate Account shall not be less than $10. Such changes must
be requested in the form and manner prescribed by us.
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<PAGE>
MAY I TRANSFER ASSETS BETWEEN SUB-ACCOUNTS?
Yes, you can transfer the values of your Sub-Account allocations from one or
more Sub-Accounts or the General Account option to one or more Sub-Accounts, the
General Account option, or any combination thereof during the Accumulation
Period. You can make these transfers and changes in allocations by
- written request,
- by calling 1-800-771-3048, or
- where available, electronically by Internet through our website at
http://retire.hartfordlife.com.
Any transfers or changes will be effected as of the date we receive your
request in good order at our Administrative Office.
The following transfer restrictions apply to Contracts issued or amended on
or after May 1, 1992:
Transfers of assets presently held in the General Account, or which were
held in the General Account at any time during the preceding three months, to
the Hartford Money Market Sub-Account, or to any money market sub-account
established in the future, are prohibited.
Similarly, transfers of assets presently held in the Hartford Money Market
Sub-Account, or any money market sub-account established in the future, or which
where held in any of these Sub-Accounts during the preceding three months, to
the General Account are prohibited.
We, or our agents and affiliates will not be responsible for losses
resulting from acting upon telephone or electronic requests reasonably believed
to be genuine. We will employ reasonable procedures to confirm that instructions
communicated by telephone or electronically are genuine. The procedures we
follow for transactions initiated by telephone include requirements that callers
provide certain information for identification purposes. All transfer
instructions by telephone are tape-recorded. Transfer requests initiated
electronically require a personal identification number.
IT IS YOUR RESPONSIBILITY TO VERIFY THE ACCURACY OF ALL CONFIRMATIONS OF
TRANSFERS AND TO PROMPTLY ADVISE US AT OUR ADMINISTRATIVE OFFICE OF ANY
INACCURACIES WITHIN 30 DAYS OF THE DATE YOU RECEIVE YOUR CONFIRMATION.
The right to reallocate Contract values is subject to modification by us if
we determine, in our sole opinion, that the exercise of that right by one or
more Participants or Contract Owners is, or would be, to the disadvantage of
other Participants or Contract Owners. Any modification could be applied to
transfers to or from some or all of the Sub-Accounts and could include, but not
be limited to, the requirement of a minimum time period between each transfer,
not accepting transfer requests of an agent acting under a power of attorney on
behalf of more than one Participant or Contract Owner, or limiting the dollar
amount that may be transferred between the Sub-Accounts by you at any one time.
SUCH RESTRICTIONS MAY BE APPLIED IN ANY MANNER REASONABLY DESIGNED TO PREVENT
ANY USE OF THE TRANSFER RIGHT WHICH WE CONSIDER TO BE TO THE DISADVANTAGE OF
OTHER CONTRACT OWNERS OR PARTICIPANTS.
DOLLAR COST AVERAGING: If, during the Accumulation Period, the portion of
your Contract values held under the General Account option is at least $5,000,
or the value of your Accumulation Units held under the Hartford Money Market
Sub-Account is at least $5,000, you may choose to have a specified dollar amount
transferred from either the General Account option or the Hartford Money Market
Sub-Account, whichever meets the applicable minimum value, to other Sub-Accounts
of the Separate Account at monthly, quarterly, semi-annual or annual intervals
("transfer intervals"). This is known as Dollar Cost Averaging. The main
objective of a Dollar Cost Averaging program is to minimize the impact of short
term price fluctuations. Since the same dollar amount is transferred to other
Sub-Accounts at set intervals, more units are purchased in a Sub-Account if the
value per unit is low and less units are purchased if the value per unit is
high. Therefore, a lower average cost per unit may be achieved over the long
term. A Dollar Cost Averaging program allows investors to take advantage of
market fluctuations. However, it is important to understand that Dollar Cost
Averaging does not assure a profit or protect against a loss in declining
markets.
The minimum amount that may be transferred to any one Sub-Account at a
transfer interval is $100. The transfer date will be the monthly, quarterly,
semi-annual or annual anniversary, as applicable, of your first transfer under
your initial Dollar Cost Averaging election. The first transfer will commence
within five (5) business days after we receive your initial election either on
an appropriate election form in good order or by telephone subject to the
telephone transfer procedures detailed above. The dollar amount will be
allocated to the Sub-Accounts that you specify, in the proportions that you
specify on the appropriate election form that we
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provide or over our recorded telephone line. You may specify a maximum of five
(5) Sub-Accounts. If, on any transfer date, your General Account value or the
value of your Accumulation Units under the Hartford Money Market Sub-Account, as
applicable, is less than the amount you have elected to have transferred, your
Dollar Cost Averaging program will end. You may cancel your Dollar Cost
Averaging election by sending us a written notice at our Administrative Office
or by calling one of our representatives at 1-800-771-3048 and giving us notice
on our recorded telephone line.
HOW DO I KNOW WHAT MY PARTICIPANT ACCOUNT IS WORTH?
Your Participant Account value reflects the sum of the amounts under your
Participant Account allocated to the General Account option and the
Sub-Accounts.
There are two things that affect your Sub-Account value: (1) the number of
Accumulation Units and (2) the Accumulation Unit value. The Sub-Account value is
determined by multiplying the number of Accumulation Units by the Accumulation
Unit value. Therefore, on any Valuation Day the portion of your Participant
Account allocated to the Sub-Accounts will reflect the investment performance of
the Sub-Accounts and will fluctuate with the performance of the underlying
Funds.
Contributions made or Contract values allocated to a Sub-Account are
converted into Accumulation Units by dividing the amount of the Contribution or
allocation, minus any Premium Taxes, by the Accumulation Unit value for that
Valuation Day. The more Contributions or Contract values allocated to the
Sub-Accounts under your Participant Account, the more Accumulation Units will be
reflected under your Participant Account. You decrease the number of
Accumulation Units in a Sub-Account under your Participant Account by requesting
Surrenders, transferring money out of a Sub-Account, submitting a Death Benefit
claim or by electing an annuity payout from your Participant Account.
To determine the current Accumulation Unit value, we take the prior
Valuation Day's Accumulation Unit value and multiply it by the Net Investment
Factor for the current Valuation Day.
The Net Investment Factor is used to measure the investment performance of a
Sub-Account from one Valuation Day to the next. The Net Investment Factor for
each Sub-Account is calculated by dividing (a) by (b) and subtracting
(c) where:
(a) is the net asset value per share of each Fund held in the Sub-Account at the
end of the current Valuation Day.
(b) is the net asset value per share of each Fund held in the Sub-Account at the
end of the prior Valuation Day.
(c) is the daily factor representing the mortality and expense risk charge and
any applicable administration charge deducted from the Sub-Account, adjusted
for the number of days in the Valuation Period, and any other applicable
charge.
We will send you a statement in each calendar quarter, that tells you how
many Accumulation Units you have, their value and your total Participant Account
value. You can also call 1-800-771-3048 to obtain your Participant Account
value.
HOW ARE THE UNDERLYING FUND SHARES VALUED?
The shares of the Fund are valued at net asset value on a daily basis. A
complete description of the valuation method used in valuing Fund shares may be
found in the accompanying prospectus of each Fund.
DEATH BENEFITS
DETERMINATION OF THE BENEFICIARY: The Beneficiary is the person or persons
designated to receive payment of the death benefit upon the death of the
Participant. If no designated Beneficiary remains living at the death of the
Participant, the Participant's estate is the Beneficiary.
DEATH BEFORE THE ANNUITY COMMENCEMENT DATE:
- DEATH PRIOR TO AGE 65: If the Participant dies before the Annuity
Commencement Date or the Participant's attainment of age 65 (whichever
comes first) the Minimum Death Benefit is payable to the Beneficiary. The
Minimum Death Benefit is the greater of (a) the Termination Value of your
Participant
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Account determined as of the day we receive Due Proof of Death or
(b) 100% of the total Contributions made to your Participant Account,
reduced by any prior partial Surrenders. "Termination Value" means the
value of a Participant's Account on any Valuation Day before the Annuity
Commencement Date less any applicable Premium Taxes not already deducted
and any applicable contingent deferred sales charges.
- DEATH ON OR AFTER AGE 65: If the Participant dies before the Annuity
Commencement Date but on or after the Participant's 65th birthday, the
Beneficiary will receive the Termination Value of your Participant Account
as of the Date we receive Due Proof of Death at our Administrative
Offices.
CALCULATION OF THE DEATH BENEFIT: If the Participant dies before the Annuity
Commencement Date, the death benefit will be calculated as of the date we
receive Due Proof of Death. THE DEATH BENEFIT REMAINS INVESTED IN THE SEPARATE
ACCOUNT AND/OR GENERAL ACCOUNT OPTION ACCORDING TO YOUR LAST INSTRUCTIONS UNTIL
THE PROCEEDS ARE PAID OR WE RECEIVED NEW SETTLEMENT INSTRUCTIONS FROM THE
BENEFICIARY. DURING THE TIME PERIOD BETWEEN OUR RECEIPT OF DUE PROOF OF DEATH
AND OUR RECEIPT OF THE COMPLETED SETTLEMENT INSTRUCTIONS, THE CALCULATED DEATH
BENEFIT WILL BE SUBJECT TO MARKET FLUCTUATIONS. UPON RECEIPT OF COMPLETE
SETTLEMENT INSTRUCTIONS, WE WILL CALCULATE THE PAYABLE AMOUNT.
If the payable amount is taken in a single sum, payment will normally be
made within seven days of our receipt of completed settlement instructions.
You may apply the death benefit payment to any one of the Annuity payment
options under DC-II (see "Annuity payment options") instead of receiving the
death benefit payment in a single sum. An election to receive payment of death
benefits under an Annuity payment option must be made before a lump sum
settlement and within one year after the death by written notice to us at our
Administrative Offices. Proceeds due on death may be applied to provide variable
payments, fixed payments, or a combination of variable and fixed payments. No
election to provide Annuity payments will become operative unless the initial
Annuity payment is at least $20 on either a variable or fixed basis, or $20 on
each basis when a combination benefit is elected. The manner in which the
Annuity payments are determined and in which they may vary from month to month
are the same as applicable to a Participant's Account after retirement (see "How
are Contributions made to establish my Annuity Account?").
DEATH ON OR AFTER THE ANNUITY COMMENCEMENT DATE: If the Annuitant dies on or
after the Annuity Commencement Date, we will make the payments described below
to the Beneficiary under the following Annuity payment options, subject to the
specific terms of those Annuity payment options:
x Life Annuity (Option 1)
x Life Annuity with 120, 180 or 240 Monthly Payments Certain (Option 2)
x Unit Refund Life Annuity (Option 3)
x Joint and Last Survivor Life Annuity (Option 4)
x Payment for a Designated Period (Option 5)
SETTLEMENT PROVISIONS
IMPORTANT TAX INFORMATION: THERE ARE CERTAIN RESTRICTIONS ON SECTION
403(b) TAX-SHELTERED ANNUITIES. AS OF DECEMBER 31, 1988, ALL SECTION
403(b) ANNUITIES HAVE LIMITS ON FULL AND PARTIAL SURRENDERS. CONTRIBUTIONS TO
THE CONTRACT MADE AFTER DECEMBER 31, 1988 AND ANY INCREASES IN CASH VALUE AFTER
DECEMBER 31, 1988 MAY NOT BE DISTRIBUTED UNLESS THE CONTRACT OWNER/EMPLOYEE HAS
A) ATTAINED AGE 59 1/2, B) SEPARATED FROM SERVICE, C) DIED, D) BECOME DISABLED
OR E) EXPERIENCED FINANCIAL HARDSHIP (CASH VALUE INCREASES MAY NOT BE
DISTRIBUTED FOR HARDSHIPS PRIOR TO AGE 59 1/2). DISTRIBUTIONS PRIOR TO AGE
59 1/2 DUE TO FINANCIAL HARDSHIP OR SEPARATION FROM SERVICE MAY STILL BE SUBJECT
TO A PENALTY TAX OF 10%. WE WILL NOT ASSUME ANY RESPONSIBILITY FOR DETERMINING
WHETHER A WITHDRAWAL IS PERMISSIBLE, WITH OR WITHOUT TAX PENALTY, IN ANY
PARTICULAR SITUATION; OR IN MONITORING WITHDRAWAL REQUESTS REGARDING PRE OR POST
JANUARY 1, 1989 CONTRACT VALUES. ANY FULL OR PARTIAL SURRENDER DESCRIBED ABOVE
MAY AFFECT THE CONTINUING TAX-QUALIFIED STATUS OF SOME CONTRACTS OR PLANS AND
MAY RESULT IN ADVERSE TAX CONSEQUENCES TO THE CONTRACT OWNER OR PARTICIPANT. THE
CONTRACT OWNER AND PARTICIPANT, THEREFORE, SHOULD CONSULT WITH A TAX ADVISER
BEFORE UNDERTAKING ANY SUCH SURRENDER. (SEE "FEDERAL TAX CONSIDERATIONS")
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After termination of Contributions on behalf of a Participant prior to the
selected Annuity Commencement Date for that Participant, the Contract Owner will
have the following options:
1. CONTINUE THE PARTICIPANT'S ACCOUNT UNDER THE CONTRACT. Under this option,
when the selected Annuity Commencement Date arrives, payments will begin
under the selected Annuity payment option. (See "Annuity payment options").
At any time in the interim, a Contract Owner may surrender the Participant's
Account for a lump sum cash settlement in accordance with 3. below.
2. TO PROVIDE ANNUITY PAYMENTS IMMEDIATELY. The values in a Participant's
Account may be applied, subject to contractual provisions, to provide for
Fixed or Variable Annuity payments, or a combination thereof, commencing
immediately, under the selected Annuity payment option under the Contract.
(See "Annuity payment options").
3. TO SURRENDER THE PARTICIPANT'S ACCOUNT IN A SINGLE SUM. The amount received
will be the net Termination Value next computed after we receive a written
surrender request for complete surrender at our Administrative Offices.
Payment will normally be made within seven days after we receive the written
request.
4. TO REQUEST A PARTIAL SURRENDER OF THE PARTICIPANT'S ACCOUNT. Partial
surrenders are taken from the Sub-Account(s) that you specify. If you do not
specify the Sub-Account(s), we will take the amount out of all applicable
Sub-Account(s) on a pro rata basis. We will deduct any contingent deferred
sales charges from the partial Surrender (see "Contract Charges").
CAN PAYMENT OF THE SURRENDER VALUE EVER BE POSTPONED BEYOND THE SEVEN-DAY
PERIOD?
Yes. It may be postponed whenever (a) the New York Stock Exchange is closed,
except for holidays or weekends, or trading on the New York Stock Exchange is
restricted as determined by the Securities and Exchange Commission; (b) the
Securities and Exchange Commission permits postponement and so orders; or
(c) the Securities and Exchange Commission determines that an emergency exists
making valuation of the amounts or disposal of securities not reasonably
practicable.
MAY I SURRENDER ONCE ANNUITY PAYMENTS HAVE STARTED?
Except with respect to Annuity Payment Option 5 (on a variable basis), once
Annuity payments have commenced for an Annuitant, no Surrender of the Annuity
benefit can be made for the purpose of receiving a partial withdrawal or a lump
sum settlement. Any Surrender of Option 5 will be subject to Sales Charges, if
applicable.
WHAT ARE ANNUITY RIGHTS?
Annuity Rights entitle the Owner of the Contract issued in connection with a
Deferred Compensation Plan to have Annuity payments made at the rates set forth
in the Contract at the time of issue. Such rates are applicable to all amounts
held in a Participant Account during the Accumulation Period which do not exceed
a limit of five times the gross Contributions made to that Participant Account
during the Accumulation Period. Any amounts in excess of this limit may be
applied at Annuity rates then being offered by us.
HOW DO I ELECT AN ANNUITY COMMENCEMENT DATE AND ANNUITY PAYMENT OPTION?
The Contract Owner selects an Annuity Commencement Date, usually between a
Participant's 50th and 75th birthdays, and an Annuity payment option. The
Annuity Commencement Date may be the first day of any month before or including
the month of a Participant's 75th birthday, or an earlier date if prescribed by
applicable law. In the absence of a written election to the contrary, the
Annuity Commencement Date will be the first day of the month coinciding with or
next following the Participant's 75th birthday.
The Annuity Commencement Date and/or the Annuity payment option may be
changed from time to time, but any such change must be made at least 30 days
prior to the date on which Annuity payments are scheduled to begin. Annuity
payments will normally be made on the first business day of each month or
another mutually agreed upon business day.
The contract contains five Annuity payment options that may be selected on
either a Fixed or Variable Annuity basis, or a combination thereof. If a
Contract Owner does not elect otherwise, we reserve the right to begin Annuity
payments at age 75 under Option 2 with 120 monthly payments certain. However, we
will not assume responsibility in determining or monitoring minimum
distributions beginning at age 70 1/2 (See "Federal Tax Consequences").
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WHAT IS THE MINIMUM AMOUNT THAT I MAY SELECT FOR AN ANNUITY PAYMENT?
The minimum Annuity payment is $20. No election may be made which results in
a first payment of less than $20. If at any time Annuity payments are or become
less than $20, we have the right to change the frequency of payment to intervals
that will result in payments of at least $20.
HOW ARE CONTRIBUTIONS MADE TO ESTABLISH AN ANNUITY ACCOUNT?
During the Annuity Period, Contract values and any allowable additional
Contributions made by the Contract Owner for the purpose of effecting Annuity
payments under the Contract are, based upon the information received from the
Contract Owner, applied to establish Annuitant's Accounts under the Contracts to
provide Fixed or Variable Annuity payments.
For Contracts issued in connection with Deferred Compensation Plans, at the
end of the Accumulation Period there is an automatic transfer of all DC-I values
from the Participant's Account to DC-II to establish an Annuitant's Account with
respect to DC-II. Such a transfer is effected by a transfer of ownership of DC-I
interests in the underlying securities to DC-II. The value of a Participant's
Account that is transferred to DC-II will be without application of any sales
charges or other expenses, with the exception of charges for any applicable
Premium Taxes.
CAN A CONTRACT BE SUSPENDED BY A CONTRACT OWNER?
A Contract may be suspended by the Contract Owner by giving us written
notice at least 90 days before the effective date of the suspension at our
Administrative Office. A Contract will be suspended automatically on its
anniversary if the Contract Owner fails to assent to any modification of a
Contract. (See "Can a Contract be modified?"). In this context, such
modifications would have become effective on or before that anniversary.
Upon suspension, we will continue to accept Contributions, subject to the
terms of the Contract, as such terms are applicable to Participant's Accounts
under the Contracts prior to such suspension. However, no Contributions will be
accepted on behalf of any new Participant Accounts. Annuitants at the time of
any suspension will continue to receive their Annuity payments. The suspension
of a Contract will not preclude a Contract Owner from applying existing
Participant's Accounts to the purchase of Fixed or Variable Annuity benefits.
ANNUITY PAYMENT OPTIONS:
OPTION 1: LIFE ANNUITY where we make monthly Annuity payments for as long as
the Annuitant lives.
- Payments under this option stop with the last monthly payment preceding the
death of the Annuitant, even if the Annuitant dies after one payment. This
option offers the maximum level of monthly payments of any of the other life
annuity options (Options 2-4) since there is no guarantee of a minimum
number of payments nor a provision for a death benefit payable to a
Beneficiary.
OPTION 2: LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN where
we make monthly payments for the life of the 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 any remaining guaranteed monthly payments will be
paid to the Beneficiary unless other provisions have been made and approved by
us.
OPTION 3: UNIT REFUND LIFE ANNUITY where we make monthly payments during the
life of the Annuitant terminating with the last payment due prior to the death
of the Annuitant, except that an additional payment will be made to the
Beneficiary if (a) below exceeds (b) below:
total amount applied under the option
(a) = at the Annuity Commencement Date
--------------------------------------------------------------------
Annuity Unit value at the Annuity Commencement Date
number of Annuity Units represented by number of monthly
(b) = each monthly Annuity payment made X Annuity payments made
The amount of the additional payments is determined by multiplying the
excess, if any, by the Annuity Unit value as of the date we receive Due Proof of
Death.
OPTION 4: JOINT AND LAST SURVIVOR ANNUITY where we make monthly payments
during the joint lifetime of the Annuitant and a designated individual (called
the joint Annuitant) and then throughout the remaining lifetime of the survivor,
ending with the last payment prior to the death of the survivor.
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- When the Annuity is purchased, the Annuitant elects what percentage (50%,
66 2/3%, or 100%) of the monthly Annuity payment will continue to be paid to
the survivor.
- Under this Option 4, it would be possible for an Annuitant and joint
Annuitant to receive only one payment in the event of the common or
simultaneous death of the Annuitant and joint Annuitant prior to the due
date for the second payment.
OPTION 5: PAYMENTS FOR A DESIGNATED PERIOD where we agree to make monthly
payments for the number of years selected. Under the Contracts, the minimum
number of years is five. In the event of the Annuitant's death prior to the end
of the designated period, any then remaining balance of proceeds will be paid in
one sum to the Beneficiary unless other provisions have been made and approved
by us.
- Option 5 does not involve life contingencies and does not provide any
mortality guarantee.
Surrenders are subject to the limitations set forth in the Contract and any
applicable contingent deferred sales charges. (See "Contract Charges").
UNDER ANY OF THE ANNUITY PAYMENT OPTIONS ABOVE, EXCEPT OPTION 5 (ON A
VARIABLE BASIS), NO SURRENDERS ARE PERMITTED AFTER ANNUITY PAYMENTS COMMENCE.
OPTIONS 2 AND 5 ARE AVAILABLE ONLY IF THE GUARANTEED ANNUITY PAYMENT PERIOD
IS LESS THAN THE LIFE EXPECTANCY OF THE ANNUITANT AT THE TIME THE OPTION BECOMES
EFFECTIVE. SUCH LIFE EXPECTANCY SHALL BE COMPUTED ON THE BASIS OF THE MORTALITY
TABLE PRESCRIBED BY THE IRS OR, IF NONE IS PRESCRIBED, THE MORTALITY TABLE THEN
IN USE BY US.
WE MAY OFFER OTHER ANNUITY PAYMENT OPTIONS FROM TIME TO TIME.
HOW ARE VARIABLE ANNUITY PAYMENTS DETERMINED?
The value of the Annuity Unit for each Sub-Account in the Separate Account
for any day is determined by multiplying the value for the preceding day by the
product of (1) the Net Investment Factor (see "How is the Accumulation Unit
value determined?") for the day for which the Annuity Unit value is being
calculated, and (2) a factor to neutralize the assumed net investment rate
discussed below.
The value of the Contract is determined as the product of the value of the
Accumulation Unit credited to each Sub-Account no earlier than the close of
business on the fifth business day preceding the date the first Annuity payment
is due and the number of Accumulation Units credited to each Sub-Account as of
the date the Annuity is to commence.
The first monthly payment varies according to the Annuity payment option
selected. The Contract cites Annuity tables derived from the 1983a Individual
Annuitant Mortality Table with an assumed interest rate ("A.I.R.") of 4.00% per
annum. The total first monthly Annuity payment is determined by multiplying the
value (expressed in thousands of dollars) of a Sub-Account (less any applicable
Premium Taxes) by the amount of the first monthly payment per $1,000 of value
obtained from the tables in the contracts. With respect to Fixed Annuities only,
the current rate will be applied if it is higher than the rate under the tables
in the Contract.
Level Annuity payments would be provided if the net investment rate remained
constant and equal to the A.I.R. In fact, payments will vary up or down in the
proportion that the net investment rate varies up or down from the A.I.R. A
higher A.I.R. may produce a higher initial payment but more slowly rising and
more rapidly falling subsequent payments than would a lower interest rate
assumption.
The amount of the first monthly Annuity payment, determined as described
above, is divided by the value of an Annuity Unit for the appropriate
Sub-Account not later than the fifth business 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
Period, and in each subsequent month the dollar amount of the Annuity payment is
determined by multiplying this fixed number of Annuity Units by the then current
Annuity Unit value.
The Annuity payments will be made on the date selected. The Annuity Unit
value used in calculating the amount of the Annuity payments will be based on an
Annuity Unit value determined as of the close of business on a day not more than
the fifth business day preceding the date of the Annuity payment.
Here is an example of how a Variable Annuity is determined:
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ILLUSTRATION OF ANNUITY PAYMENTS:
(UNISEX) AGE 65, LIFE ANNUITY WITH 120 PAYMENTS CERTAIN
<TABLE>
<C> <S> <C>
A. Net amount applied........................................ $139,782.50
B. Initial monthly income per $1,000 of payment applied...... 6.13
C. Initial monthly payment (A X B DIVIDED BY 1,000)......... $ 856.87
D. Annuity Unit Value........................................ 3.125
E. Number of monthly annuity units (C DIVIDED BY D)......... 274.198
F. Assume annuity unit value for second month equal to....... 2.897
G. Second monthly payment (F X E)............................ $ 794.35
H. Assume annuity unit value for third month equal to........ 3.415
I. Third month payment (H X E)............................... $ 936.39
</TABLE>
The above figures are simply to illustrate the calculation of a Variable
Annuity and have no bearing on the actual historical record of any Separate
Account.
FEDERAL TAX CONSIDERATIONS
WHAT ARE SOME OF THE FEDERAL TAX CONSEQUENCES WHICH AFFECT THESE CONTRACTS?
A. GENERAL
Since the federal tax law is complex, the tax consequences of purchasing
this contract will vary depending on your situation. You may need tax or legal
advice to help you determine whether purchasing this contract is right for you.
Our general discussion of the tax treatment of this contract is based on our
understanding of federal income tax laws as they are currently interpreted. A
detailed description of all federal income tax consequences regarding the
purchase of this contract cannot be made in the prospectus. We also do not
discuss state, municipal or other tax laws that may apply to this contract. For
detailed information, you should consult with a qualified tax adviser familiar
with your situation.
B. HARTFORD AND DC-I AND DC-II
DC-I is not taxed as a part of Hartford. The taxation of DC-I is governed by
Subchapter M of Chapter 1 of the Internal Revenue Code of 1986, as amended (the
"Code"). By distributing substantially all of the net income and realized
capital gains of DC-I to Contract Owners no federal income tax liability will be
incurred by DC-I on the income and gain so distributed. While we have no reason
to believe that DC-I will be taxed other than as described above, in the event
that it is, the taxation of DC-I and DC-II would be identical.
DC-II is taxed as part of Hartford which is taxed as a life insurance
company in accordance with the Code. Accordingly, DC-II will not be taxed as a
"regulated investment company" under Subchapter M of the Code. Investment income
and any realized capital gains on the assets of DC-II are reinvested and are
taken into account in determining the value of the Accumulation and Annuity
Units. (See "How is the Accumulation Unit value determined?"). As a result, such
investment income and realized capital gains are automatically applied to
increase reserves under the contract.
No taxes are due on interest, dividends and short-term or long-term capital
gains earned by DC-II with respect to qualified or non-qualified contracts.
C. INFORMATION REGARDING TAX-QUALIFIED RETIREMENT PLANS
This summary does not attempt to provide more than general information about
the federal income tax rules associated with use of a Contract by a
tax-qualified retirement plan. Because of the complexity of the federal tax
rules, owners, participants and beneficiaries are encouraged to consult their
own tax advisors as to specific tax consequences.
The federal tax rules applicable to owners of Contracts under tax-qualified
retirement plans vary according to the type of plan as well as the terms and
conditions of the plan itself. Contract owners, plan participants and
beneficiaries are cautioned that the rights and benefits of any person may be
controlled by the terms and
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conditions of the tax-qualified retirement plan itself, regardless of the terms
and conditions of a Contract. We are not bound by the terms and conditions of
such plans to the extent such terms conflict with a Contract, unless we
specifically consent to be bound.
Some tax-qualified retirement plans are subject to distribution and other
requirements that are not incorporated into our administrative procedures.
Contract owners, participants and beneficiaries are responsible for determining
that contributions, distributions and other transactions comply with applicable
law. Tax penalties may apply to transactions with respect to tax-qualified
retirement plans if applicable federal income tax rules and restrictions are not
carefully observed.
We do not currently offer the Contracts in connection with all of the types
of tax-qualified retirement plans discussed below and may not offer the
Contracts for all types of tax-qualified retirement plans in the future.
1. TAX-QUALIFIED PENSION OR PROFIT-SHARING PLANS
Eligible employers can establish certain tax-qualified pension and
profit-sharing plans under section 401 of the Code. Rules under section 401(k)
of the Code govern certain "cash or deferred arrangements" under such plans.
Rules under section 408(k) govern "simplified employee pensions".
Tax-qualified pension and profit-sharing plans are subject to limitations on
the amount that may be contributed, the persons who may be eligible to
participate and the time when distributions must commence. Employers intending
to use the Contracts in connection with tax-qualified pension or
profit-sharing plans should seek competent tax and other legal advice.
2. TAX SHELTERED ANNUITIES UNDER SECTION 403(b)
Public schools and certain types of charitable, educational and scientific
organizations, as specified in section 501(c)(3) of the Code, can purchase
tax-sheltered annuity contracts for their employees. Tax-deferred
contributions can be made to tax-sheltered annuity contracts under section
403(b) of the Code, subject to certain limitations. Generally, such
contributions may not exceed the lesser of $10,500 (indexed) or 20% of the
employee's "includable compensation" for such employee's most recent full year
of employment, subject to other adjustments. Special provisions under the Code
may allow some employees to elect a different overall limitation.
Tax-sheltered annuity programs under section 403(b) are subject to a
PROHIBITION AGAINST DISTRIBUTIONS FROM THE CONTRACT ATTRIBUTABLE TO
CONTRIBUTIONS MADE PURSUANT TO A SALARY REDUCTION AGREEMENT, unless such
distribution is made:
- after the participating employee attains age 59 1/2;
- upon separation from service;
- upon death or disability; or
- in the case of hardship (and in the case of hardship, any income
attributable to such contributions may not be distributed).
Generally, the above restrictions do not apply to distributions attributable
to cash values or other amounts held under a section 403(b) contract as of
December 31, 1988.
3. DEFERRED COMPENSATION PLANS UNDER SECTION 457
A governmental employer or a tax-exempt employer other than a governmental
unit can establish a Deferred Compensation Plan under section 457 of the Code.
For these purposes, a "governmental employer" is a State, a political
subdivision of a State, or an agency or an instrumentality of a State or
political subdivision of a State. Employees and independent contractors
performing services for a governmental or tax-exempt employer can elect to
have contributions made to a Deferred Compensation Plan of their employer in
accordance with the employer's plan and section 457 of the Code.
Deferred Compensation Plans that meet the requirements of section 457(b) of
the Code are called "eligible" Deferred Compensation Plans. Section
457(b) limits the amount of contributions that can be made to an eligible
Deferred Compensation Plan on behalf of a participant. Generally, the
limitation on contributions is 33 1/3% of a participant's includable
compensation (typically 25% of gross compensation) or, for 2000, $8,000
(indexed), whichever is less. The plan may provide for additional "catch-up"
contributions during the three taxable years ending before the year in which
the participant attains normal retirement age.
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All of the assets and income of an eligible Deferred Compensation Plan of a
governmental employer must be held in trust for the exclusive benefit of
participants and their beneficiaries. For this purpose, custodial accounts and
certain annuity contracts are treated as trusts. The requirement of a trust
does not apply to amounts under a Deferred Compensation Plan of a tax-exempt
(non-governmental) employer. In addition, the requirement of a trust does not
apply to amounts under a Deferred Compensation Plan of a governmental employer
if the Deferred Compensation Plan is not an eligible plan within the meaning
of section 457(b) of the Code. In the absence of such a trust, amounts under
the plan will be subject to the claims of the employer's general creditors.
In general, distributions from an eligible Deferred Compensation Plan are
prohibited under section 457 of the Code unless made after the participating
employee:
- attains age 70 1/2,
- separates from service,
- dies, or
- suffers an unforeseeable financial emergency as defined in the Code.
Under present federal tax law, amounts accumulated in a Deferred
Compensation Plan under section 457 of the Code cannot be transferred or
rolled over on a tax-deferred basis except for certain transfers to other
Deferred Compensation Plans under section 457 in limited cases.
4. INDIVIDUAL RETIREMENT ANNUITIES ("IRAS") UNDER SECTION 408
TRADITIONAL IRAS. Eligible individuals can establish individual retirement
programs under section 408 of the Code through the purchase of an IRA. Section
408 imposes limits with respect to IRAs, including limits on the amount that
may be contributed to an IRA, the amount of such contributions that may be
deducted from taxable income, the persons who may be eligible to contribute to
an IRA, and the time when distributions commence from an IRA. Distributions
from certain tax-qualified retirement plans may be "rolled-over" to an IRA on
a tax-deferred basis.
SIMPLE IRAS. Eligible employees may establish SIMPLE IRAs in connection
with a SIMPLE IRA plan of an employer under section 408(p) of the Code.
Special rollover rules apply to SIMPLE IRAs. Amounts can be rolled over from
one SIMPLE IRA to another SIMPLE IRA. However, amounts can be rolled over from
a SIMPLE IRA to a Traditional IRA only after two years have expired since the
employee first commenced participation in the employer's SIMPLE IRA plan.
Amounts cannot be rolled over to a SIMPLE IRA from a qualified plan or a
Traditional IRA. Hartford is a non-designated financial institution for
purposes of the SIMPLE IRA rules.
ROTH IRAS. Eligible individuals may establish Roth IRAs under section 408A
of the Code. Contributions to a Roth IRA are not deductible. Subject to
special limitations, a Traditional IRA may be converted into a Roth IRA or a
distribution from a Traditional IRA may be rolled over to a Roth IRA. However,
a conversion or a rollover from a Traditional IRA to a Roth IRA is not
excludable from gross income. If certain conditions are met, qualified
distributions from a Roth IRA are tax-free.
5. FEDERAL TAX PENALTIES AND WITHHOLDING
Distributions from tax-qualified retirement plans are generally taxed as
ordinary income under section 72 of the Code. Under these rules, a portion of
each distribution may be excludable from income. The excludable amount is the
portion of the distribution that bears the same ratio as the after-tax
contributions bear to the expected return.
(a) PENALTY TAX ON EARLY DISTRIBUTIONS
Section 72(t) of the Code imposes an additional penalty tax equal to 10%
of the taxable portion of a distribution from certain tax-qualified
retirement plans. However, the 10% penalty tax does not apply to a
distributions that is:
- Made on or after the date on which the employee reaches age 59 1/2;
- Made to a beneficiary (or to the estate of the employee) on or after the
death of the employee;
- Attributable to the employee's becoming disabled (as defined in the Code);
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- Part of a series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy) of the
employee or the joint lives (or joint life expectancies) of the employee
and his or her designated beneficiary;
- Except in the case of an IRA, made to an employee after separation from
service after reaching age 55; or
- Not greater than the amount allowable as a deduction to the employee for
eligible medical expenses during the taxable year.
In addition, the 10% penalty tax does not apply to a distribution from an
IRA that is:
- Made after separation from employment to an unemployed IRA owner for
health insurance premiums, if certain conditions are met;
- Not in excess of the amount of certain qualifying higher education
expenses, as defined by section 72(t)(7) of the Code; or
- A qualified first-time homebuyer distribution meeting the requirements
specified at section 72(t)(8) of the Code.
If you are a participant in a SIMPLE IRA plan, you should be aware that
the 10% penalty tax is increased to 25% with respect to non-exempt early
distributions made from your SIMPLE IRA during the first two years following
the date you first commenced participation in any SIMPLE IRA plan of your
employer.
(b) MINIMUM DISTRIBUTION PENALTY TAX
If the amount distributed is less than the minimum required distribution
for the year, the Participant is subject to a 50% penalty tax on the amount
that was not properly distributed.
An individual's interest in a tax-qualified retirement plan generally must
be distributed, or begin to be distributed, not later than the Required
Beginning Date. Generally, the Required Beginning Date is April 1 of the
calendar year following the later of:
- the calendar year in which the individual attains age 70 1/2; or
- the calendar year in which the individual retires from service with the
employer sponsoring the plan.
The Required Beginning Date for an individual who is a five (5) percent
owner (as defined in the Code), or who is the owner of an IRA, is April 1 of
the calendar year following the calendar year in which the individual
attains age 70 1/2.
The entire interest of the Participant must be distributed beginning no
later than the Required Beginning Date over:
- the life of the Participant or the lives of the Participant and the
Participant's designated beneficiary, or
- over a period not extending beyond the life expectancy of the Participant
or the joint life expectancy of the Participant and the Participant's
designated beneficiary.
Each annual distribution must equal or exceed a "minimum distribution
amount" which is determined by dividing the account balance by the
applicable life expectancy. This account balance is generally based upon the
account value as of the close of business on the last day of the previous
calendar year. In addition, minimum distribution incidental benefit
rules may require a larger annual distribution.
If an individual dies before reaching his or her Required Beginning Date,
the individual's entire interest must generally be distributed within five
years of the individual's death. However, this rule will be deemed
satisfied, if distributions begin before the close of the calendar year
following the individual's death to a designated beneficiary and
distribution is over the life of such designated beneficiary (or over a
period not extending beyond the life expectancy of the beneficiary). If the
beneficiary is the individual's surviving spouse, distributions may be
delayed until the individual would have attained age 70 1/2.
If an individual dies after reaching his or her Required Beginning Date or
after distributions have commenced, the individual's interest must generally
be distributed at least as rapidly as under the method of distribution in
effect at the time of the individual's death.
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(c) WITHHOLDING
In general, regular wage withholding rules apply to distributions from
IRAs and plans described in section 457 of the Code. Periodic distributions
from other tax-qualified retirement plans that are made for a specified
period of 10 or more years or for the life or life expectancy of the
participant (or the joint lives or life expectancies of the participant and
beneficiary) are generally subject to federal income tax withholding as if
the recipient were married claiming three exemptions. The recipient of
periodic distributions may generally elect not to have withholding apply or
to have income taxes withheld at a different rate by providing a completed
election form.
Mandatory federal income tax withholding at a flat rate of 20% will
generally apply to other distributions from such other tax-qualified
retirement plans unless such distributions are:
- the non-taxable portion of the distribution;
- required minimum distributions; or
- direct transfer distributions.
Direct transfer distributions are direct payments to an IRA or to another
eligible retirement plan under Code section 401(a)(31).
Certain states require withholding of state taxes when federal income tax
is withheld.
D. DIVERSIFICATION OF THE SEPARATE ACCOUNT
The Code requires that investments supporting your contract be adequately
diversified. Code Section 817 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.
If a contract is not treated as an annuity contract, the contract owner will be
subject to income tax on annual increases in cash value.
The Treasury Department's diversification regulations 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 the
case of government securities, each government agency or instrumentality is
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 still comply within a reasonable period and avoid
the taxation of contract income on an ongoing basis. However, either the company
or the contract owner must agree to pay the tax due for the period during which
the diversification requirements were not met.
We monitor the diversification of investments in the separate accounts and
test for diversification as required by the Code. We intend to administer all
contracts subject to the diversification requirements in a manner that will
maintain adequate diversification.
E. OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT
In order for a variable annuity contract to qualify for tax deferral, assets
in the separate accounts supporting the contract must be considered to be owned
by the insurance company and not by the contract owner. It is unclear under what
circumstances an investor is considered to have enough control over the assets
in the separate account to be considered the owner of the assets for tax
purposes.
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The IRS has issued several rulings discussing investor control. These
rulings say that certain incidents of ownership by the contract owner, such as
the ability to select and control investments in a separate account, will cause
the contract owner to be treated as the owner of the assets for tax purposes.
In its explanation of the diversification regulations, the Treasury
Department recognized 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, guidance has
yet to be issued. We do not know if additional guidance will be issued. If
guidance is issued, we do not know if it will have a retroactive effect.
Due to the lack of specific guidance on investor control, there is some
uncertainty about when a contract owner is considered the owner of the assets
for tax purposes. We reserve the right to modify the contract, as necessary, to
prevent you from being considered the owner of assets in the separate account.
F. CONTRACTS OWNED BY NON-NATURAL PERSONS
Code Section 72 contains provisions for contract owners which are not
natural persons. Non-natural persons include corporations, trusts, limited
liability companies, partnerships and other types of legal entities. The tax
rules for contracts owned by non-natural persons are different from the
rules for contracts owned by individuals. For example, the annual net increase
in the value of the contract is currently includible in the gross income of a
non-natural person, unless the non-natural person holds the contract as an agent
for a natural person. There are additional exceptions 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 contract owner is a non-natural person, the primary annuitant is
treated as the contract owner in applying mandatory distribution rules. These
rules require that certain distributions be made upon the death of the contract
owner. A change in the primary annuitant is also treated as the death of the
contract owner.
G. 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 that are 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.
MORE INFORMATION
CAN A CONTRACT BE MODIFIED?
Subject to any federal and state regulatory restrictions, we may modify the
Contracts at any time by written agreement between the Contract Owner and us. No
modification will affect the amount or term of any Annuities begun prior to the
effective date of the modification, unless it is required to conform the
Contract to, or give the Contract Owner the benefit of, any federal or state
statutes or any rule or regulation of the U.S. Treasury Department or the
Internal Revenue Service.
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On or after the fifth anniversary of any Contract we may change, from time
to time, any or all of the terms of the Contracts by giving 90 days advance
written notice to the Contract Owner, except that the Annuity tables, guaranteed
interest rates and the contingent deferred sales charges which are applicable at
the time a Participant's Account is established under a Contract, will continue
to be applicable.
We reserve the right to modify the Contract at any time if such
modification: (i) is necessary to make the Contract or the Separate Account
comply with any law or regulation issued by a governmental agency to which we
are subject; or (ii) is necessary to assure continued qualification of the
contract under the Code or other federal or state laws relating to retirement
annuities or annuity contracts; or (iii) is necessary to reflect a change in the
operation of the Separate Account or the Sub-Account(s); or (iv) provides
additional Separate Account options; or (v) withdraws Separate Account options.
In the event of any such modification we will provide notice to the Contract
Owner or to the payee(s) during the Annuity period. Hartford may also make
appropriate endorsement in the Contract to reflect such modification.
CAN HARTFORD WAIVE ANY RIGHTS UNDER A CONTRACT?
We may, at our sole discretion, elect not to exercise a right or reservation
specified in this Contract. If we elect not to exercise a right or reservation,
we are not waiving it. We may decide to exercise a right or a reservation that
we previously did not exercise.
HOW ARE THE CONTRACTS SOLD?
Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account. HSD
is an affiliate of Hartford. Both HSD and Hartford are ultimately controlled by
The Hartford Financial Services Group, Inc. The principal business address of
HSD is the same as that of Hartford.
The securities will be sold by salespersons of HSD who represent Hartford as
insurance and variable annuity agents and who are registered representatives or
Broker-Dealers who have entered into distribution agreements with HSD.
HSD is registered with the Commission under the Securities Exchange Act of
1934 as a Broker-Dealer and is a member of the National Association of
Securities Dealers, Inc.
Commissions will be paid by Hartford and will not be more than 5.0% of
Contributions and 0.25% annually on Participants' Account values. Sales
compensation may be reduced. Hartford may pay or permit other promotional
incentives, in cash or credit or other compensation.
Broker-dealers or financial institutions are compensated according to a
schedule set forth by HSD and any applicable rules or regulations for variable
insurance compensation. Compensation is generally based on premium payments made
by policyholders or contract owners. This compensation is usually paid from the
sales charges described in this Prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HSD, 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 HSD, 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.
WHO IS THE CUSTODIAN OF THE SEPARATE ACCOUNTS' ASSETS?
Hartford is the custodian of the Separate Accounts' assets.
ARE THERE ANY MATERIAL LEGAL PROCEEDINGS AFFECTING THE SEPARATE ACCOUNTS?
There are no material legal proceedings pending to which the Separate
Account is a party. Counsel with respect to Federal laws and regulations
applicable to the issue and sale of the contracts and with respect to
Connecticut law is Lynda Godkin, General Counsel, Hartford Life Insurance
Company, P.O. Box 2999, Hartford, CT 06104-2999.
ARE YOU RELYING ON ANY EXPERTS AS TO ANY PORTION OF THIS PROSPECTUS?
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
37
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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.
HOW MAY I GET ADDITIONAL INFORMATION?
Inquiries will be answered by calling 1-800-771-3048 or your sales
representative or by writing to:
Hartford Life Insurance Company
P.O. Box 1583
Hartford, CT 06144-1583
You can also send inquiries to us electronically by Internet through our
website at http:// retire.hartfordlife.com.
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APPENDIX
ACCUMULATION PERIOD UNDER PRIOR
GROUP CONTRACTS
Such contracts are no longer being issued. Contract Owners may continue to
make Contributions to the contracts subject to the following charges.
A. DEDUCTIONS UNDER THE PRIOR GROUP CONTRACTS FOR SALES EXPENSES, THE MINIMUM
DEATH BENEFIT GUARANTEE AND ANY APPLICABLE PREMIUM TAXES.
Contributions made to a Participant's Individual Account pursuant to the
terms of contracts issued after December 7, 1981 and prior to May 2, 1983 are
subject to the following:
No deduction for sales expenses is made at the time of allocation of
Contributions to the Contracts. Hartford charges a contingent deferred sales
charge that begins to phase out after the 12th Participation Contract Year.
During the first 10 Participation Contract Years, a maximum deduction of 6% will
be made against the full amount of any such surrender. Thereafter, if a
surrender occurs between the 10th and 12th Participant Contract Years, a 5%
contingent deferred sales charge will be made against the full amount of such
surrender. After the 12th Participant Contract Year, the 5% charge will be
reduced by 1% each subsequent year until the charge is eliminated.
In some states, the contingent deferred sales charge structure noted above
may not yet be available. In these states, Hartford will deduct 6% from the
amount surrendered from any Participant's Individual Account under a Master
Contract during the first ten Participant's Contract Years and 5% thereafter
prior to the Annuity Commencement Date.
The full value of a surrender is subject to such changes with the provision
that such charges will in no event ever exceed 8.50% when applied as a
percentage against the sum of all Contributions to a Participant's Individual
Account.
No deduction for contingent deferred sales charges will be made: (1) in the
event of death of a Participant; or (2) if the value of a Participant's
Individual Account is paid out under one of the available annuity options under
the contracts; or, (3) if, on Public Employee Deferred Compensation Plans only,
a Participant in a Plan makes a financial hardship withdrawal as defined in the
Regulations issued by the IRS with respect to the IRC Section 457 governmental
deferred compensation plans. The Plan of the Employer must also provide for such
hardship withdrawals.
Hartford reserves the right to limit any increase in the Contributions made
to a Participant's Individual Account to not more than three times the total
Contributions made on behalf of such Participant during the initial 12
consecutive months of the Account's existence under the contract of the present
guaranteed deduction rates. Increases in excess of those described will be
accepted only with the consent of Hartford and subject to the then current
deductions being made for sales charges, the Minimum Death Benefit guarantee and
mortality and expense undertaking.
Each contract provides for experience rating of the deduction for sales
expenses and/or the Annual Contract Fee. In order to experience rate a contract,
actual sales costs applicable to a particular contract are determined. If the
costs exceed the amounts deducted for such expenses, no additional deduction
will be made. If however, the amounts deducted for such expenses exceed actual
costs, Hartford, in its discretion, may allocate all, a portion, or none of such
excess as an experience rating credit. If such an allocation is made, the
experience credit will be made as considered appropriate: (1) by a reduction in
the amount deducted from subsequent contributions for sales expenses; (2) by the
crediting of a number of additional Accumulation Units or by Annuity Units, as
applicable, without deduction of any sales or other expenses therefrom; (3) or
by waiver of the Annual Maintenance Fees or by a combination of the above. To
date experience rating credits have been provided on certain cases.
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B. DEDUCTIONS FOR MORTALITY AND EXPENSE ADMINISTRATIVE UNDERTAKINGS, ANNUAL
MAINTENANCE FEE AND PREMIUM TAXES.
1. MORTALITY AND EXPENSE UNDERTAKINGS
Although variable annuity payments made under the contracts will vary in
accordance with the investment performance of the Fund shares, the payments
will not be affected by (a) Hartford's actual expenses, if greater than the
deductions provided for in the contracts, or (b) Hartford's actual mortality
experience among Annuitants after retirement because of the expense and
mortality undertakings by Hartford.
In providing an expense undertaking, Hartford assumes the risk that the
deductions for sales expenses, the Annual Maintenance Fee and the Minimum
Death Benefit during the Accumulation Period may be insufficient to cover the
actual costs of providing such items.
The mortality undertaking provided by Hartford under the contracts, assuming
the selection of one of the forms of life annuities, is to make monthly
annuity payments (determined in accordance with the annuity tables and other
provisions contained in the contract) to Contract Owners or Annuitant's
Accounts regardless of how long an Annuitant may live and regardless of how
long all Annuitants as a group may live. This undertaking assures a Contract
Owner that neither the longevity of an Annuitant nor an improvement in life
expectancy will have any adverse effect on the monthly annuity payments the
Employees will receive under the contract. It thus relieves the Contract Owner
from the risk that Participants in the Plan will outlive the funds
accumulated.
The mortality undertaking is based on Hartford's actuarial determination of
expected mortality rates among all Annuitants. If actual experience among
Annuitants 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 funds
to fulfill its contract obligations. In that event, a loss will fall on
Hartford. Conversely, if longevity among Annuitants is lower than anticipated,
a gain will result to Hartford.
For assuming these risks Hartford makes a minimum daily charge against the
value of the average daily assets held under DC-I and DC-II, as appropriate,
of 1.25% with respect to the Hartford Bond and Hartford Money Market
Sub-Accounts where available, on an annual basis. This rate may be
periodically increased by Hartford subject to a maximum annual rate of 2.00%.
However, no increase will occur unless the Securities and Exchange Commission
first approves the increase.
2. ANNUAL MAINTENANCE FEE
There will be an Annual Maintenance Fee deduction in the amount of $10 from
the value of each such Participant's Individual Account under the contracts,
except as set forth below.
This fee will be deducted from the value of each such account on the last
business day of each calendar year; provided, however, that if the value of a
Participant's Individual Account is redeemed in full at any time before the
last business day of the year, then the Annual Maintenance Fee charge will be
deducted from the proceeds of such redemption. No contract fee deduction will
be made during the Annuity Payment period under the contracts.
In the event that the Contributions made on behalf of a Participant are
allocated partially to the fixed annuity portion of the Participant's
Individual Account and partially to the variable annuity portion of the
Participant's Individual Account, then the Annual Maintenance Fee will be
deducted first from the value of the fixed annuity portion of the
Participant's Individual Account. If the value of the fixed annuity portion of
the Participant's Individual Account is insufficient to pay the fee, then any
deficit will be deducted from the value of the variable annuity portion of the
Participant's Individual Account in the following manner: if there are no
accumulation units in the General Account or if their value is less than $10,
the General Account portion of an account will be made against values held in
the Hartford Stock Sub-Account of DC-I. If the Hartford Stock Sub-Account
values are insufficient to cover the fee, the fee shall be deducted from the
account values held in the Hartford Bond Sub-Account of DC-I. In the event
that the Contributions made on behalf of a Participant are allocated partially
to the General Account and partially to the Separate Account, the Annual
Maintenance Fee will be charged against the Separate Account and General
Account on a pro rata basis.
3. PREMIUM TAXES
A deduction is also made for Premium Taxes, if applicable. On any contract
subject to Premium Taxes, the tax will be deducted from the Contributions when
received, from the proceeds at surrender, or from the amount applied to effect
an annuity at the time annuity payments commence.
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TABLE OF CONTENTS
FOR
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY..............
SAFEKEEPING OF ASSETS.......................................
INDEPENDENT PUBLIC ACCOUNTANTS..............................
DISTRIBUTION OF CONTRACTS...................................
CALCULATION OF YIELD AND RETURN.............................
PERFORMANCE COMPARISONS.....................................
FINANCIAL STATEMENTS........................................
</TABLE>
41
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This form must be completed for all tax-sheltered annuities.
SECTION 403(b)(11) ACKNOWLEDGMENT FORM
The Hartford Variable Annuity Contract which you have recently purchased is
subject to certain restrictions imposed by the Tax Reform Act of 1986.
Contributions to the Contract after December 31, 1988 and any increases in cash
value after December 31, 1988 may not be distributed to you unless you have:
a. attained age 59 1/2
b. separated from service
c. died, or
d. become disabled.
Distributions of post December 31, 1988 Contributions (excluding any income
thereon) may also be made if you have experienced a financial hardship. Also
there may be a 10% penalty tax for distributions made prior to age 59 1/2
because of financial hardship or separation from service. Also, please be aware
that your 403(b) plan may also offer other financial alternatives other than the
Hartford variable annuity. Please refer to your Plan.
Please complete the following and return to:
Hartford Life Insurance Company
P.O. Box 1583
Hartford, CT 06144-1583
Name of Contractholder/Participant _____________________________________________
Address ________________________________________________________________________
City or Plan/School District ___________________________________________________
Date ___________________________________________________________________________
<PAGE>
To obtain a Statement of Additional
Information, complete the form below and mail to:
Hartford Life Insurance Company
P.O. Box 1583
Hartford, CT 06144-1583
Please send a Statement of Additional
Information for Separate Account DC-I and Separate
Account Two (DC Variable Account II) (Form
HV-1524-21) to me at the following address:
_________________________________________
Name
_________________________________________
Address
_________________________________________
City/State Zip Code
<PAGE>
PRINCIPAL UNDERWRITER
Hartford Securities Distribution Company, Inc. (HSD)
Hartford Plaza, Hartford, CT 06115
HARTFORD
INSURER
Hartford Life Insurance Company
Executive Offices: P.O. Box 1583
LIFE INSURANCE
Hartford, CT 06144-1583
COMPANY
DC VARIABLE ACCOUNT-I AND
SEPARATE ACCOUNT TWO PROSPECTUS
INCLUDING THE PROSPECTUS OF
THE FUNDS
EFFECTIVE MAY 1, 2000
The Contracts described in this prospectus are
Group Variable Annuity Contracts
sold only by Gardner & White. General Agents of Hartford
Life Insurance Company.
GARDNER & WHITE
Employee Benefit Plans
[LOGO]
HV-1524-21
HARTFORD LIFE INSURANCE COMPANY
P.O. BOX 1583, HARTFORD, CT 06144-1583
BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 1
HARTFORD, CONN.
<PAGE>
-2-
PART B
STATEMENT OF ADDITIONAL INFORMATION
HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT DC-I AND SEPARATE ACCOUNT TWO (DC-II)
Group Variable Annuity Contracts Issued by
Hartford Life Insurance Company
With Respect to DC-I and DC-II
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 Hartford Life Insurance
Company, P.O. Box 1583, Hartford, CT 061144-1583.
Date of Prospectus: May 1, 2000
Date of Statement of Additional Information: May 1, 2000
33-19946
HV-1524
<PAGE>
-3-
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY............................................................
SAFEKEEPING OF ASSETS
INDEPENDENT PUBLIC ACCOUNTANTS............................................................................
DISTRIBUTION OF CONTRACTS.................................................................................
CALCULATION OF YIELD AND RETURN...........................................................................
PERFORMANCE COMPARISONS...................................................................................
FINANCIAL STATEMENTS......................................................................................
</TABLE>
<PAGE>
-4-
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.
<TABLE>
<CAPTION>
HARTFORD'S RATINGS
- ------------------------------------------- ---------------------- -------------- ------------------------------------
Rating Agency Effective Rating Basis of Rating
Date of Rating
- ------------------------------------------- ---------------------- -------------- ------------------------------------
<S> <C> <C> <C>
A.M. Best and Company, Inc. 1/1/99 A+ Financial performance
- ------------------------------------------- ---------------------- -------------- ------------------------------------
Standard & Poor's 8/1/99 AA Insurer financial strength
- ------------------------------------------- ---------------------- -------------- ------------------------------------
Duff & Phelps 7/1/99 AA+ Claims paying ability
- ------------------------------------------- ---------------------- -------------- ------------------------------------
Moody's 7/1/99 Aa3 Insurer financial strength
- ------------------------------------------- ---------------------- -------------- ------------------------------------
</TABLE>
SAFEKEEPING OF ASSETS
Title to the assets of the Separate Account is held by Hartford. These assets
are kept physically segregated and are held separate and apart from Hartford's
general corporate assets. Records are maintained of all purchases and
redemptions of Fund shares held in each of the Sub-Accounts.
INDEPENDENT PUBLIC ACCOUNTANTS
The audited 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 CONTRACTS
Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account. HSD
is an affiliate of Hartford. Both HSD and Hartford are ultimately controlled by
The Hartford Financial Services Group, Inc. The principal business address of
HSD is the same as Hartford.
The securities will be sold by salespersons of HSD who represent Hartford as
insurance
<PAGE>
-5-
and Variable Annuity agents and who are registered representatives of
Broker-Dealers who have entered into distribution agreements with HSD.
HSD is registered with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 as a Broker-Dealer and is a member of the
National Association of Securities Dealers, Inc. ("NASD"). Compensation will be
paid by Hartford to registered representatives for the sale of Contracts up to a
maximum of 7% on Contributions and .50% annually on Individual Participant's
Account Values. Sales compensation may be reduced.
Hartford currently pays HSD 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 and retained by HSD in its role as Principal Underwriter has been: 1999:
$2,894,254; 1998: $4,072,980 and 1997: $3,657,643. For the applicable time
periods, HSD retained none of these commissions.
The offering of the Separate Account contracts is continuous.
CALCULATION OF YIELD AND RETURN
YIELD OF A MONEY MARKET SUB-ACCOUNTS. As summarized in the Prospectus under the
heading "Performance Related Information," the yield of a money market
Sub-Account for a seven day period (the "base period") will be computed by
determining the "net change in value" of a hypothetical account having a balance
of one unit at the beginning of the period, dividing the net change in account
value by the value of the account at the beginning of the base period to obtain
the base period return, and multiplying the base period return by 365/7 with the
resulting yield figure carried to the nearest hundredth of one percent. Net
changes in value of a hypothetical account will include net investment income of
the account (accrued dividends as declared by the underlying funds, less expense
and Contract 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
HARTFORD MONEY MARKET HLS SUB-ACCOUNT'S YIELD AND EFFECTIVE YIELD WILL VARY
IN RESPONSE TO FLUCTUATIONS IN INTEREST RATES AND IN THE EXPENSES OF THE
SUB-ACCOUNT. THE CURRENT YIELD AND EFFECTIVE YIELD REFLECT RECURRING CHARGES
ON THE SEPARATE ACCOUNT LEVEL, INCLUDING
<PAGE>
-6-
THE MAXIMUM ANNUAL MAINTENANCE FEE.
YIELD AND EFFECTIVE YIELD FOR THE SEVEN-DAY PERIOD ENDING DECEMBER 31, 1999
<TABLE>
<CAPTION>
DCI (.90% mortality, expense risk and administrative charge)
- ---------------------------------------- ------------------------------------ --------------------------------------
SUB-ACCOUNT YIELD EFFECTIVE YIELD
- ---------------------------------------- ------------------------------------ --------------------------------------
<S> <C> <C>
Hartford Money Market HLS 4.45% 4.54%
- ---------------------------------------- ------------------------------------ --------------------------------------
<CAPTION>
DCII (1.25% mortality, expense risk and administrative charge)
- ---------------------------------------- ------------------------------------ --------------------------------------
SUB-ACCOUNT YIELD EFFECTIVE YIELD
- ---------------------------------------- ------------------------------------ --------------------------------------
<S> <C> <C>
Hartford Money Market HLS 4.09% 4.18%
- ---------------------------------------- ------------------------------------ --------------------------------------
</TABLE>
YIELD OF SUB-ACCOUNTS. As summarized in the Prospectus under the heading
"Performance Related Information," yields of Sub-Accounts 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 sub-account level for the respective period. The
Sub-Accounts' 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 Sub-Accounts'
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 Sub-Accounts used for illustration purposes reflect
the interest earned by the Sub-Accounts, less applicable asset charges assessed
against a Contract 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 Sub-Account 2[((A-B)/(CD) + 1) - 1]
Where A = Dividends and interest earned during the period.
<PAGE>
-7-
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.
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.
YIELD QUOTATION BASED ON A 30-DAY PERIOD ENDING DECEMBER 31, 1999
<TABLE>
<CAPTION>
DCI (.90% mortality, expense risk and administrative charge)
- ------------------------------------------------------------ ---------------------------------------------------------
SUB ACCOUNTS YIELD
- ------------------------------------------------------------ ---------------------------------------------------------
<S> <C>
Hartford Bond HLS 6.06%
- ------------------------------------------------------------ ---------------------------------------------------------
Hartford Mortgage Securities HLS 5.88%
- ------------------------------------------------------------ ---------------------------------------------------------
<CAPTION>
DCII (1.25% mortality, expense risk and administrative charge)
- ------------------------------------------------------------ ---------------------------------------------------------
SUB-ACCOUNTS YIELD
- ------------------------------------------------------------ ---------------------------------------------------------
<S> <C>
Hartford Bond HLS 5.69%
- ------------------------------------------------------------ ---------------------------------------------------------
Hartford Mortgage Securities HLS 5.51%
- ------------------------------------------------------------ ---------------------------------------------------------
</TABLE>
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 Sub-Account 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. Standardized total return will be calculated since the inception of
the Separate Account for one year, five years and ten years or some other
relevant periods if a Sub-Account has not been in existence for at least ten
years.
The following are the standardized average annual total return quotations for
the Sub-Accounts:
<PAGE>
-8-
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FOR YEAR ENDED
DECEMBER 31, 1999
<TABLE>
<CAPTION>
DCI (.90% mortality, expense risk and administrative charge)
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
SEPARATE
ACCOUNT SINCE INCEPTION
INCEPTION OF SEPARATE
SUB-ACCOUNT DATE 1 YEAR 5 YEAR 10-YEAR ACCOUNT
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Hartford Advisers HLS 3/31/88 0.12% 17.44% 11.07% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Bond HLS 3/31/88 -11.49% 3.66% 4.26% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Capital Appreciation 3/31/88 25.93% 21.77% 17.1% N/A
HLS
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Dividend and Growth HLS 3/8/94 -4.74% 18.88% N/A 15.83%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Index HLS 3/31/88 9.25% 24.85% 14.74% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford International 7/2/90 28.3% 11.59% N/A 6.96%
Opportunities HLS
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Mortgage Securities HLS 3/31/88 -8.23% 3.54% 3.94% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Stock HLS 3/31/88 8.60% 25.40% 15.03% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Money Market HLS 3/31/88 -5.12% 1.04% 1.78% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Calvert Social Balanced 12/31/88 1.68% 14.59% 9.06% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
</TABLE>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FOR YEAR ENDED
DECEMBER 31, 1999
<TABLE>
<CAPTION>
DCII (1.25% mortality, expense risk and administrative charge)
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
SEPARATE
ACCOUNT SINCE INCEPTION
INCEPTION OF SEPARATE
SUB-ACCOUNT DATE 1 YEAR 5 YEAR 10-YEAR ACCOUNT
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Hartford Advisers HLS 3/31/88 -0.18% 17.16% 10.94% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Bond HLS 3/31/88 -11.81% 3.35% 4.12% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Capital Appreciation 3/31/88 25.51% 21.47% 16.97% N/A
HLS
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Dividend and Growth HLS 3/8/94 -5.08% 18.54% N/A 15.55%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Index HLS 3/31/88 9.34% 24.89% 14.76% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford International 7/2/90 27.82% 11.27% N/A 6.80%
Opportunities HLS
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Mortgage Securities HLS 3/31/88 -8.56% 3.23% 3.79% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Stock HLS 3/31/88 8.23% 25.06% 14.88% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Money Market HLS 3/31/88 -5.46% 0.76% 1.64% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Calvert Social Balanced 12/31/88 1.32% 14.27% 8.91% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
American Century VP 3/31/88 52.18% 10.15% 8.21% N/A
Capital Appreciation
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Fidelity VIP II Asset Manager 9/6/89 0.23% 11.71% 10.16% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Fidelity VIP II 1/3/95 12.41% 24.24% N/A 24.24%
Contrafund-Registered Trademark-
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Fidelity VIP Growth 3/31/88 25.43% 26.23% 16.99% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Fidelity VIP Overseas 3/31/88 30.56% 13.34% 8.01% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
</TABLE>
<PAGE>
-9-
In addition to standardized total return, the Sub-Accounts may advertise
non-standardized total return that pre-dates the inception date of the
Separate Account. This non-standardized total return is calculated by
assuming that the Sub-Accounts have been in existence for the same periods as
the underlying funds and by taking deductions for charges equal to those
currently assessed by the Sub-Accounts. Non-standardized total return figures
are net of total fund operating expenses, the actual charge for mortality,
expense risk and administrative undertakings and do not take into account
contingent deferred sales charges and the Annual Maintenance Fee. Therefore,
non-standardized total return for a Sub-Account is higher than standardized
total return for a Sub-Account.
The non-standardized annualized total return for the Sub-Accounts 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, 1999
<TABLE>
<CAPTION>
DCI (.90% mortality, expense risk and administrative charge) (1)
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
FUND
INCEPTION SINCE INCEPTION
SUB-ACCOUNT DATE 1 YEAR 5 YEAR 10-YEAR OF FUND
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Hartford Advisers HLS Fund 3/31/83 9.60% 19.58% 12.72% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Bond HLS Fund 8/31/77 -2.89% 6.62% 6.21% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Capital Appreciation 4/2/84 36.23% 23.79% 18.44% N/A
HLS Fund
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Dividend and Growth 3/8/94 4.37% 20.87% N/A 17.83%
HLS Fund
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Index HLS Fund 5/1/87 19.41% 26.69% 16.28% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford International 7/2/90 38.60% 14.23% N/A 9.15%
Opportunities HLS Fund
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Mortgage Securities 1/1/85 0.61% 6.54% 5.92% N/A
HLS Fund
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Stock HLS Fund 8/31/77 18.71% 27.24% 16.57% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Money Market HLS Fund 6/30/80 3.96% 4.25% 3.93% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Calvert Social Balanced 12/31/88 11.26% 16.87% 10.82% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
</TABLE>
(1) Where the charge for mortality, expense risk and administrative
undertakings is reduced for a Contract, the above charge will be replaced
by the actual charge for that Contract.
<PAGE>
-10-
NON-STANDARDIZED ANNUALIZED TOTAL RETURN THAT PRE-DATE THE
INCEPTION DATE OF THE SEPARATE ACCOUNT FOR YEAR ENDED
DECEMBER 31, 1999
<TABLE>
<CAPTION>
DCII (l.25% mortality, expense risk and administrative charge) (1)
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
FUND
INCEPTION SINCE INCEPTION
SUB-ACCOUNT DATE 1 YEAR 5 YEAR 10-YEAR OF FUND
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Hartford Advisers HLS Fund 3/31/83 9.27% 19.32% 12.60% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Bond HLS Fund 8/31/77 -3.23% 6.34% 6.07% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Capital Appreciation 4/2/84 35.81% 23.51% 18.30% N/A
HLS Fund
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Dividend and Growth 3/8/94 4.01% 20.55% N/A 17.56%
HLS Fund
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Index HLS Fund 5/1/87 19.50% 26.74% 16.30% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford International 7/2/90 38.12% 13.93% N/A 9.00%
Opportunities HLS Fund
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Mortgage Securities 1/1/85 0.26% 6.25% 5.77% N/A
HLS Fund
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Stock HLS Fund 8/31/77 18.31% 26.92% 16.42% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Hartford Money Market HLS Fund 6/30/80 3.59% 3.98% 3.80% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Calvert Social Balanced 12/31/88 10.88% 16.56% 10.67% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
American Century VP Capital 11/20/87 62.48% 12.91% 10.01% N/A
Appreciation
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Fidelity VIP II Asset Manager 9/6/89 9.71% 14.19% 11.74% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Fidelity VIP II 1/3/95 22.71% 26.11% N/A 26.11%
Contrafund-Registered Trademark-
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Fidelity VIP Growth 10/9/86 35.73% 28.13% 18.45% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Fidelity VIP Overseas 1/28/87 40.86% 15.91% 10.04% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
</TABLE>
(1) Where the charge for mortality, expense risk and administrative
undertakings is reduced for a Contract, the above charge will be replaced
by the actual charge for that Contract.
PERFORMANCE COMPARISONS
YIELD AND TOTAL RETURN. Each Sub-Account may from time to time include its total
return in advertisements or in information furnished to present or prospective
shareholders. Each
<PAGE>
-11-
Sub-Account may from time to time include its yield and total return in
advertisements or information furnished to present or prospective shareholders.
Each Sub-Account may from time to time include in advertisements its total
return (and yield in the case of certain Sub-Accounts) the ranking of those
performance figures relative to such figures for groups of other annuities
analyzed by Lipper Analytical Services as having the same investment objectives.
The total return and yield may also be used to compare the performance of the
Sub-Accounts against certain widely acknowledged outside standards or indices
for stock and bond market performance. The Standard & Poor's Composite Index of
500 Stocks (the "S&P 500") is a market value-weighted and unmanaged index
showing the changes in the aggregate market value of 500 stocks relative to the
base period 1941-43. The S&P 500 is composed almost entirely of common stocks of
companies listed on the New York Stock Exchange, although the common stocks of a
few companies listed on the American Stock Exchange or traded over-the-counter
are included. The 500 companies represented include 400 industrial, 60
transportation and 40 financial services concerns. The S&P 500 represents about
80% of the market value of all issues traded on the New York Stock Exchange.
The NASDAQ-OTC Price Index (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.
The Shearson Lehman 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 Shearson Lehman Government/Corporate Bond Index (the "SL
Government/Corporate Index") is a measure of the market value of approximately
5,300 bonds with a face value currently in excess of $1.3 trillion. To be
included in the SL Government/Corporate Index, an issue must have amounts
outstanding in excess of $1 million, have at least one year to maturity and be
rated "Baa" or higher ("investment grade") by a nationally recognized rating
agency.
The Composite Index for Hartford Advisers HLS Fund is comprised of the S&P 500
(55%), the Lehman Government/Corporate Bond Index (35%), both mentioned above,
and 90 Day U.S. Treasury Bills (10%).
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO HARTFORD LIFE INSURANCE COMPANY
DC VARIABLE ACCOUNT-I AND TO THE OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statements of assets and liabilities of
Hartford Life Insurance Company DC Variable Account-I (Bond Fund, Stock Fund,
Money Market Fund, Advisers Fund, Capital Appreciation Fund, Mortgage Securities
Fund, Index Fund, International Opportunities Fund, Dividend and Growth Fund and
Calvert Social Balanced Portfolio) (collectively, the Account) as of
December 31, 1999, and the related statements of operations and the 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 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 financial statements referred to above present fairly, in
all material respects, the financial position of the Account as of December 31,
1999, and the results of their operations and the changes in their net assets
for the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 17, 2000 ARTHUR ANDERSEN LLP
- ------------------------------------ SA-1 -------------------------------------
<PAGE>
DC VARIABLE ACCOUNT-I
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
MONEY MARKET
BOND FUND STOCK FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. -
Class IA
Shares 35,027,942
Cost $35,075,750
Market Value......................... $34,812,940 -- --
Hartford Stock HLS Fund, Inc. -
Class IA
Shares 90,929,970
Cost $372,743,476
Market Value......................... -- $649,911,779 --
Hartford Money Market HLS Fund, Inc. -
Class IA
Shares 37,464,148
Cost $37,464,148
Market Value......................... -- -- $37,464,148
Hartford Advisers HLS Fund, Inc. -
Class IA
Shares 241,575,706
Cost $491,569,828
Market Value......................... -- -- --
Hartford Capital Appreciation HLS
Fund, Inc. - Class IA
Shares 80,058,557
Cost $268,461,947
Market Value......................... -- -- --
Hartford Mortgage Securities HLS
Fund, Inc. - Class IA
Shares 16,383,834
Cost $17,409,616
Market Value......................... -- -- --
Hartford Index HLS Fund, Inc. -
Class IA
Shares 45,178,039
Cost $113,674,627
Market Value......................... -- -- --
Hartford International Opportunities
HLS Fund, Inc. - Class IA
Shares 27,540,897
Cost $33,916,402
Market Value......................... -- -- --
Hartford Dividend and Growth HLS
Fund, Inc. - Class IA
Shares 25,067,270
Cost $40,459,306
Market Value......................... -- -- --
Calvert Social Balanced Portfolio
Shares 12,019,049
Cost $21,192,688
Market Value......................... -- -- --
Due from Hartford Life Insurance
Company................................. 22,065 -- --
Receivable from fund shares sold......... -- 534,856 188,721
----------- ------------ -----------
Total Assets............................. 34,835,005 650,446,635 37,652,869
----------- ------------ -----------
LIABILITIES:
Due to Hartford Life Insurance Company... -- 534,821 187,172
Payable for fund shares purchased........ 22,040 -- --
----------- ------------ -----------
Total Liabilities........................ 22,040 534,821 187,172
----------- ------------ -----------
Net Assets (variable annuity contract
liabilities)............................ $34,812,965 $649,911,814 $37,465,697
=========== ============ ===========
Deferred annuity contracts in the
accumulation period:
Group Sub-Accounts:
Units owned by participants.............. 7,196,751 28,665,974 12,051,487
Unit values*............................. $ 4.837317 $ 22.671890 $ 3.108803
</TABLE>
*Unit value amounts represent an average of individual unit values, which differ
within each sub-account.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
- ------------------------------------ SA-2 -------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL
ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------------- --------------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. -
Class IA
Shares 35,027,942
Cost $35,075,750
Market Value......................... -- -- -- -- --
Hartford Stock HLS Fund, Inc. -
Class IA
Shares 90,929,970
Cost $372,743,476
Market Value......................... -- -- -- -- --
Hartford Money Market HLS Fund, Inc. -
Class IA
Shares 37,464,148
Cost $37,464,148
Market Value......................... -- -- -- -- --
Hartford Advisers HLS Fund, Inc. -
Class IA
Shares 241,575,706
Cost $491,569,828
Market Value......................... $716,217,371 -- -- -- --
Hartford Capital Appreciation HLS
Fund, Inc. - Class IA
Shares 80,058,557
Cost $268,461,947
Market Value......................... -- $487,987,969 -- -- --
Hartford Mortgage Securities HLS
Fund, Inc. - Class IA
Shares 16,383,834
Cost $17,409,616
Market Value......................... -- -- $17,030,864 -- --
Hartford Index HLS Fund, Inc. -
Class IA
Shares 45,178,039
Cost $113,674,627
Market Value......................... -- -- -- $189,240,864 --
Hartford International Opportunities
HLS Fund, Inc. - Class IA
Shares 27,540,897
Cost $33,916,402
Market Value......................... -- -- -- -- $51,664,932
Hartford Dividend and Growth HLS
Fund, Inc. - Class IA
Shares 25,067,270
Cost $40,459,306
Market Value......................... -- -- -- -- --
Calvert Social Balanced Portfolio
Shares 12,019,049
Cost $21,192,688
Market Value......................... -- -- -- -- --
Due from Hartford Life Insurance
Company................................. -- 42,914 -- -- --
Receivable from fund shares sold......... 182,514 -- 43,601 317,424 226,380
------------ ------------ ----------- ------------ -----------
Total Assets............................. 716,399,885 488,030,883 17,074,465 189,558,288 51,891,312
------------ ------------ ----------- ------------ -----------
LIABILITIES:
Due to Hartford Life Insurance Company... 182,403 -- 43,965 317,414 226,468
Payable for fund shares purchased........ -- 42,785 -- -- --
------------ ------------ ----------- ------------ -----------
Total Liabilities........................ 182,403 42,785 43,965 317,414 226,468
------------ ------------ ----------- ------------ -----------
Net Assets (variable annuity contract
liabilities)............................ $716,217,482 $487,988,098 $17,030,500 $189,240,874 $51,664,844
============ ============ =========== ============ ===========
Deferred annuity contracts in the
accumulation period:
Group Sub-Accounts:
Units owned by participants.............. 101,429,660 39,291,550 6,077,622 62,940,685 22,410,406
Unit values*............................. $ 7.061223 $ 12.419670 $ 2.802165 $ 3.006654 $ 2.305395
<CAPTION>
CALVERT
DIVIDEND AND SOCIAL BALANCED
GROWTH FUND PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------ ---------------
<S> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. -
Class IA
Shares 35,027,942
Cost $35,075,750
Market Value......................... -- --
Hartford Stock HLS Fund, Inc. -
Class IA
Shares 90,929,970
Cost $372,743,476
Market Value......................... -- --
Hartford Money Market HLS Fund, Inc. -
Class IA
Shares 37,464,148
Cost $37,464,148
Market Value......................... -- --
Hartford Advisers HLS Fund, Inc. -
Class IA
Shares 241,575,706
Cost $491,569,828
Market Value......................... -- --
Hartford Capital Appreciation HLS
Fund, Inc. - Class IA
Shares 80,058,557
Cost $268,461,947
Market Value......................... -- --
Hartford Mortgage Securities HLS
Fund, Inc. - Class IA
Shares 16,383,834
Cost $17,409,616
Market Value......................... -- --
Hartford Index HLS Fund, Inc. -
Class IA
Shares 45,178,039
Cost $113,674,627
Market Value......................... -- --
Hartford International Opportunities
HLS Fund, Inc. - Class IA
Shares 27,540,897
Cost $33,916,402
Market Value......................... -- --
Hartford Dividend and Growth HLS
Fund, Inc. - Class IA
Shares 25,067,270
Cost $40,459,306
Market Value......................... $53,865,252 --
Calvert Social Balanced Portfolio
Shares 12,019,049
Cost $21,192,688
Market Value......................... -- $26,069,318
Due from Hartford Life Insurance
Company................................. -- 5,206
Receivable from fund shares sold......... 20,267 --
----------- -----------
Total Assets............................. 53,885,519 26,074,524
----------- -----------
LIABILITIES:
Due to Hartford Life Insurance Company... 20,249 --
Payable for fund shares purchased........ -- 725
----------- -----------
Total Liabilities........................ 20,249 725
----------- -----------
Net Assets (variable annuity contract
liabilities)............................ $53,865,270 $26,073,799
=========== ===========
Deferred annuity contracts in the
accumulation period:
Group Sub-Accounts:
Units owned by participants.............. 22,926,762 7,926,762
Unit values*............................. $ 2.349450 $ 3.290904
</TABLE>
- ------------------------------------ SA-3 -------------------------------------
<PAGE>
DC VARIABLE ACCOUNT-I
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
MONEY MARKET
BOND FUND STOCK FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 1,926,845 $ 4,509,588 $1,753,408
EXPENSES:
Mortality and expense undertakings.... (323,664) (5,581,356) (290,855)
----------- ------------- ----------
Net investment income (loss)........ 1,603,181 (1,071,768) 1,462,553
----------- ------------- ----------
CAPITAL GAINS INCOME.................... 308,039 63,567,855 974
----------- ------------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on security
transactions......................... 446,938 194,109,792 --
Net unrealized (depreciation)
appreciation of investments during
the period........................... (3,554,082) (126,167,137) --
----------- ------------- ----------
Net (loss) gain on investments...... (3,107,144) 67,942,655 --
----------- ------------- ----------
Net (decrease) increase in net
assets resulting from operations... $(1,195,924) $ 130,438,742 $1,463,527
=========== ============= ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
- ------------------------------------ SA-4 -------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL
ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------------- --------------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 15,085,324 $ 1,474,954 $ 952,816 $ 1,831,409 $ 499,816
EXPENSES:
Mortality and expense undertakings.... (5,969,355) (3,539,967) (153,921) (1,436,655) (354,285)
------------- ------------ ----------- ----------- -----------
Net investment income (loss)........ 9,115,969 (2,065,013) 798,895 394,754 145,531
------------- ------------ ----------- ----------- -----------
CAPITAL GAINS INCOME.................... 66,035,988 28,364,366 -- 2,884,801 --
------------- ------------ ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on security
transactions......................... 109,707,712 75,300,296 353,908 29,025,940 3,154,826
Net unrealized (depreciation)
appreciation of investments during
the period........................... (110,915,510) 43,096,428 (1,009,631) 1,691,276 12,059,980
------------- ------------ ----------- ----------- -----------
Net (loss) gain on investments...... (1,207,798) 118,396,724 (655,723) 30,717,216 15,214,806
------------- ------------ ----------- ----------- -----------
Net (decrease) increase in net
assets resulting from operations... $ 73,944,159 $144,696,077 $ 143,172 $33,996,771 $15,360,337
============= ============ =========== =========== ===========
<CAPTION>
CALVERT
DIVIDEND AND SOCIAL BALANCED
GROWTH FUND PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------ ---------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 882,872 $ 562,563
EXPENSES:
Mortality and expense undertakings.... (494,414) (203,569)
------------ -----------
Net investment income (loss)........ 388,458 358,994
------------ -----------
CAPITAL GAINS INCOME.................... 2,571,967 1,927,344
------------ -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on security
transactions......................... 9,975,175 2,311,717
Net unrealized (depreciation)
appreciation of investments during
the period........................... (10,078,741) (1,644,189)
------------ -----------
Net (loss) gain on investments...... (103,566) 667,528
------------ -----------
Net (decrease) increase in net
assets resulting from operations... $ 2,856,859 $ 2,953,866
============ ===========
</TABLE>
- ------------------------------------ SA-5 -------------------------------------
<PAGE>
DC VARIABLE ACCOUNT-I
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
MONEY MARKET
BOND FUND STOCK FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------- ------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............... $ 1,603,181 $ (1,071,768) $ 1,462,553
Capital gains income....................... 308,039 63,567,855 974
Net realized gain on security
transactions.............................. 446,938 194,109,792 --
Net unrealized (depreciation) appreciation
of investments during the period.......... (3,554,082) (126,167,137) --
------------ ------------- ------------
Net (decrease) increase in net assets
resulting from operations................. (1,195,924) 130,438,742 1,463,527
------------ ------------- ------------
UNIT TRANSACTIONS:
Purchases.................................. 3,207,870 57,188,543 2,777,236
Net transfers.............................. (7,476,531) (82,392,780) 3,061,293
Surrenders for benefit payments and fees... (13,250,066) (307,416,804) (10,239,180)
------------ ------------- ------------
Net (decrease) in net assets resulting from
unit transactions......................... (17,518,727) (332,621,041) (4,400,651)
------------ ------------- ------------
Net (decrease) in net assets............... (18,714,651) (202,182,299) (2,937,124)
NET ASSETS:
Beginning of period........................ 53,527,616 852,094,113 40,402,821
------------ ------------- ------------
End of period.............................. $ 34,812,965 $ 649,911,814 $ 37,465,697
============ ============= ============
</TABLE>
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
MONEY MARKET
BOND FUND STOCK FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............... $ 2,183,191 $ 499,834 $ 1,519,662
Capital gains income....................... -- 23,069,120 --
Net realized gain (loss) on security
transactions.............................. 2,433 714,355 --
Net unrealized appreciation (depreciation)
of investments during the period.......... 972,564 183,443,598 --
----------- ------------ -----------
Net increase in net assets resulting from
operations................................ 3,158,188 207,726,907 1,519,662
----------- ------------ -----------
UNIT TRANSACTIONS:
Purchases.................................. 3,667,032 52,577,965 3,344,933
Net transfers.............................. 7,703,221 (30,615,196) 5,386,082
Surrenders for benefit payments and fees... (1,938,648) (19,829,778) (1,911,188)
----------- ------------ -----------
Net increase (decrease) in net assets
resulting from unit transactions.......... 9,431,605 2,132,991 6,819,827
----------- ------------ -----------
Net increase (decrease) in net assets...... 12,589,793 209,859,898 8,339,489
NET ASSETS:
Beginning of period........................ 40,937,823 642,234,215 32,063,332
----------- ------------ -----------
End of period.............................. $53,527,616 $852,094,113 $40,402,821
=========== ============ ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
- ------------------------------------ SA-6 -------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE
ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------------- --------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............... $ 9,115,969 $ (2,065,013) $ 798,895 $ 394,754
Capital gains income....................... 66,035,988 28,364,366 -- 2,884,801
Net realized gain on security
transactions.............................. 109,707,712 75,300,296 353,908 29,025,940
Net unrealized (depreciation) appreciation
of investments during the period.......... (110,915,510) 43,096,428 (1,009,631) 1,691,276
------------- ------------- ----------- ------------
Net (decrease) increase in net assets
resulting from operations................. 73,944,159 144,696,077 143,172 33,996,771
------------- ------------- ----------- ------------
UNIT TRANSACTIONS:
Purchases.................................. 60,209,515 38,405,063 1,337,928 25,883,222
Net transfers.............................. (79,780,932) (72,296,647) (2,595,863) (11,869,735)
Surrenders for benefit payments and fees... (243,193,118) (136,718,724) (6,751,436) (53,518,791)
------------- ------------- ----------- ------------
Net (decrease) in net assets resulting from
unit transactions......................... (262,764,535) (170,610,308) (8,009,371) (39,505,304)
------------- ------------- ----------- ------------
Net (decrease) in net assets............... (188,820,376) (25,914,231) (7,866,199) (5,508,533)
NET ASSETS:
Beginning of period........................ 905,037,858 513,902,329 24,896,699 194,749,407
------------- ------------- ----------- ------------
End of period.............................. $ 716,217,482 $ 487,988,098 $17,030,500 $189,240,874
============= ============= =========== ============
<CAPTION>
INTERNATIONAL DIVIDEND AND CALVERT SOCIAL
OPPORTUNITIES FUND GROWTH FUND BALANCED PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------ ------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............... $ 145,531 $ 388,458 $ 358,994
Capital gains income....................... -- 2,571,967 1,927,344
Net realized gain on security
transactions.............................. 3,154,826 9,975,175 2,311,717
Net unrealized (depreciation) appreciation
of investments during the period.......... 12,059,980 (10,078,741) (1,644,189)
------------ ------------ -----------
Net (decrease) increase in net assets
resulting from operations................. 15,360,337 2,856,859 2,953,866
------------ ------------ -----------
UNIT TRANSACTIONS:
Purchases.................................. 6,465,977 13,489,504 2,662,375
Net transfers.............................. (8,846,795) (25,227,178) (3,375,593)
Surrenders for benefit payments and fees... (15,181,367) (18,620,723) (8,906,608)
------------ ------------ -----------
Net (decrease) in net assets resulting from
unit transactions......................... (17,562,185) (30,358,397) (9,619,826)
------------ ------------ -----------
Net (decrease) in net assets............... (2,201,848) (27,501,538) (6,665,960)
NET ASSETS:
Beginning of period........................ 53,866,692 81,366,808 32,739,759
------------ ------------ -----------
End of period.............................. $ 51,664,844 $ 53,865,270 $26,073,799
============ ============ ===========
</TABLE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE
ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------------- --------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............... $ 11,397,583 $ (1,312,459) $ 1,363,211 $ 264,966
Capital gains income....................... 25,313,632 32,040,202 -- 3,422,388
Net realized gain (loss) on security
transactions.............................. 6,494,130 1,681,913 39,785 (58,579)
Net unrealized appreciation (depreciation)
of investments during the period.......... 128,375,353 35,834,365 (24,289) 35,353,337
------------ ------------ ----------- ------------
Net increase in net assets resulting from
operations................................ 171,580,698 68,244,021 1,378,707 38,982,112
------------ ------------ ----------- ------------
UNIT TRANSACTIONS:
Purchases.................................. 63,792,632 57,410,119 1,815,173 21,746,631
Net transfers.............................. (25,294,322) (97,300,197) (1,687,207) 9,830,133
Surrenders for benefit payments and fees... (22,848,470) (12,289,854) (801,083) (5,052,574)
------------ ------------ ----------- ------------
Net increase (decrease) in net assets
resulting from unit transactions.......... 15,649,840 (52,179,932) (673,117) 26,524,190
------------ ------------ ----------- ------------
Net increase (decrease) in net assets...... 187,230,538 16,064,089 705,590 65,506,302
NET ASSETS:
Beginning of period........................ 717,807,320 497,838,240 24,191,109 129,243,105
------------ ------------ ----------- ------------
End of period.............................. $905,037,858 $513,902,329 $24,896,699 $194,749,407
============ ============ =========== ============
<CAPTION>
INTERNATIONAL DIVIDEND AND CALVERT SOCIAL
OPPORTUNITIES FUND GROWTH FUND BALANCED PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------ ------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............... $ 262,775 $ 660,494 $ 490,049
Capital gains income....................... 3,515,336 2,779,678 1,638,236
Net realized gain (loss) on security
transactions.............................. 707,165 426,383 48,836
Net unrealized appreciation (depreciation)
of investments during the period.......... 2,062,833 7,655,244 2,144,124
------------ ------------ -----------
Net increase in net assets resulting from
operations................................ 6,548,109 11,521,799 4,321,245
------------ ------------ -----------
UNIT TRANSACTIONS:
Purchases.................................. 8,614,699 14,599,476 3,592,019
Net transfers.............................. (16,662,048) (15,975,390) (2,100,831)
Surrenders for benefit payments and fees... (1,450,359) (2,142,352) (738,890)
------------ ------------ -----------
Net increase (decrease) in net assets
resulting from unit transactions.......... (9,497,708) (3,518,266) 752,298
------------ ------------ -----------
Net increase (decrease) in net assets...... (2,949,599) 8,003,533 5,073,543
NET ASSETS:
Beginning of period........................ 56,816,291 73,363,275 27,666,216
------------ ------------ -----------
End of period.............................. $ 53,866,692 $ 81,366,808 $32,739,759
============ ============ ===========
</TABLE>
- ------------------------------------ SA-7 -------------------------------------
<PAGE>
DC VARIABLE ACCOUNT-I
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION:
DC Variable Account-I (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. 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 invests
deposits by variable annuity contractholders of the Company in various
mutual funds (the Funds) as directed by the contractholders.
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). Realized gains and
losses on the sales of securities are computed on the basis of identified
cost of the fund shares sold. Dividend and capital gains income is
accrued as of the ex-dividend date. Capital gains income represents those
dividends from the Funds which are characterized as capital gains under
tax regulations.
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, 1999.
c) UNIT TRANSACTIONS--Unit transactions are executed based on the unit
values calculated at the close of the business day.
d) 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.
e) 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. DEDUCTIONS AND CHARGES:
Certain amounts are deducted from the contracts, as described below:
a) MORTALITY AND EXPENSE RISK CHARGES--The Company will make deductions at a
maximum annual rate of 1.25% of the contract's value for the mortality
and expense risks which the Company undertakes.
b) TAX EXPENSE CHARGE--If applicable, the Company will make deductions at a
maximum rate of 3.5% of the contract's value to meet premium tax
requirements. An additional tax charge based on a percentage of the
contract's value may be assessed to partial withdrawals or surrenders.
These expenses are included in surrenders for benefit payments and fees
on the accompanying statements of changes in net assets.
c) ANNUAL MAINTENANCE FEE--An annual maintenance fee up to $18 may be
deducted from the contract's value each contract year. These expenses are
included in surrenders for benefit payments and fees on the accompanying
statements of changes in net assets.
- ------------------------------------ SA-8 -------------------------------------
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT TWO AND TO THE OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statements of assets and liabilities of
Hartford Life Insurance Company Separate Account Two (Bond Fund, Stock Fund,
Money Market Fund, Advisers Fund, Capital Appreciation Fund, Mortgage Securities
Fund, Index Fund, International Opportunities Fund, Dividend and Growth Fund,
Calvert Social Balanced Portfolio, American Century VP Advantage Fund, American
Century VP Capital Appreciation Fund, Fidelity VIP Overseas Fund, Fidelity VIP
II Asset Manager Fund, Fidelity VIP II Contrafund Fund and Fidelity VIP Growth
Fund) (collectively, the Account) as of December 31, 1999, and the related
statements of operations and the 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 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 financial statements referred to above present fairly, in
all material respects, the financial position of the Account as of December 31,
1999, and the results of their operations and the changes in their net assets
for the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 17, 2000 ARTHUR ANDERSEN LLP
___________________________________ SA-1 ______________________________________
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
BOND STOCK MONEY MARKET
FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. -
Class IA
Shares 15,155,028
Cost $15,395,587
Market Value...................... $15,062,007 -- --
Hartford Stock HLS Fund, Inc. -
Class IA
Shares 33,945,549
Cost $93,349,265
Market Value...................... -- $242,622,010 --
Hartford Money Market HLS
Fund, Inc. - Class IA
Shares 6,566,019
Cost $6,566,019
Market Value...................... -- -- $6,566,019
Hartford Advisers HLS Fund, Inc. -
Class IA
Shares 34,221,708
Cost $65,147,307
Market Value...................... -- -- --
Hartford Capital Appreciation HLS
Fund, Inc. - Class IA
Shares 24,732,727
Cost $80,938,460
Market Value...................... -- -- --
Hartford Mortgage Securities HLS
Fund, Inc. - Class IA
Shares 3,231,289
Cost $3,417,582
Market Value...................... -- -- --
Hartford Index HLS Fund, Inc. -
Class IA
Shares 13,851,001
Cost $34,212,808
Market Value...................... -- -- --
Hartford International Opportunities
HLS Fund, Inc. - Class IA
Shares 7,985,421
Cost $9,989,610
Market Value...................... -- -- --
Hartford Dividend and Growth HLS
Fund, Inc. - Class IA
Shares 10,749,812
Cost $18,435,960
Market Value...................... -- -- --
Calvert Social Balanced Portfolio
Shares 2,290,301
Cost $4,101,434
Market Value...................... -- -- --
Due from Hartford Life Insurance
Company.............................. 734 61,407 7,262
Receivable from fund shares sold...... -- -- --
----------- ------------ ----------
Total Assets.......................... 15,062,741 242,683,417 6,573,281
----------- ------------ ----------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. -- -- --
Payable for fund shares purchased..... 735 61,426 6,966
----------- ------------ ----------
Total Liabilities..................... 735 61,426 6,966
----------- ------------ ----------
Net Assets (variable annuity contract
liabilities)......................... $15,062,006 $242,621,991 $6,566,315
=========== ============ ==========
Deferred annuity contracts in the
accumulation period:
Group Sub-Accounts:
Units owned by participants........... 3,140,832 11,207,213 2,145,214
Unit values*.......................... $ 4.795562 $ 21.648735 $ 3.060914
</TABLE>
*Unit value amounts represent an average of individual unit values, which differ
within each sub-account.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
___________________________________ SA-2 ______________________________________
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND
ADVISERS APPRECIATION SECURITIES INDEX OPPORTUNITIES AND GROWTH
FUND FUND FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------ ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. -
Class IA
Shares 15,155,028
Cost $15,395,587
Market Value...................... -- -- -- -- -- --
Hartford Stock HLS Fund, Inc. -
Class IA
Shares 33,945,549
Cost $93,349,265
Market Value...................... -- -- -- -- -- --
Hartford Money Market HLS
Fund, Inc. - Class IA
Shares 6,566,019
Cost $6,566,019
Market Value...................... -- -- -- -- -- --
Hartford Advisers HLS Fund, Inc. -
Class IA
Shares 34,221,708
Cost $65,147,307
Market Value...................... $101,459,629 -- -- -- -- --
Hartford Capital Appreciation HLS
Fund, Inc. - Class IA
Shares 24,732,727
Cost $80,938,460
Market Value...................... -- $150,755,566 -- -- -- --
Hartford Mortgage Securities HLS
Fund, Inc. - Class IA
Shares 3,231,289
Cost $3,417,582
Market Value...................... -- -- $3,358,899 -- -- --
Hartford Index HLS Fund, Inc. -
Class IA
Shares 13,851,001
Cost $34,212,808
Market Value...................... -- -- -- $58,018,795 -- --
Hartford International Opportunities
HLS Fund, Inc. - Class IA
Shares 7,985,421
Cost $9,989,610
Market Value...................... -- -- -- -- $14,980,130 --
Hartford Dividend and Growth HLS
Fund, Inc. - Class IA
Shares 10,749,812
Cost $18,435,960
Market Value...................... -- -- -- -- -- $23,099,497
Calvert Social Balanced Portfolio
Shares 2,290,301
Cost $4,101,434
Market Value...................... -- -- -- -- -- --
Due from Hartford Life Insurance
Company.............................. 98,692 11,901 2,379 36,427 194,453 6,604
Receivable from fund shares sold...... -- -- -- -- -- --
------------ ------------ ---------- ----------- ----------- -----------
Total Assets.......................... 101,558,321 150,767,467 3,361,278 58,055,222 15,174,583 23,106,101
------------ ------------ ---------- ----------- ----------- -----------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. -- -- -- -- -- --
Payable for fund shares purchased..... 98,690 11,938 2,410 38,456 194,438 6,576
------------ ------------ ---------- ----------- ----------- -----------
Total Liabilities..................... 98,690 11,938 2,410 38,456 194,438 6,576
------------ ------------ ---------- ----------- ----------- -----------
Net Assets (variable annuity contract
liabilities)......................... $101,459,631 $150,755,529 $3,358,868 $58,016,766 $14,980,145 $23,099,525
============ ============ ========== =========== =========== ===========
Deferred annuity contracts in the
accumulation period:
Group Sub-Accounts:
Units owned by participants........... 14,450,344 12,158,882 1,199,939 10,126,403 6,548,367 9,982,636
Unit values*.......................... $ 7.021261 $ 12.388609 $ 2.799198 $ 5.729257 $ 2.287616 $ 2.313970
<CAPTION>
CALVERT
SOCIAL BALANCED
PORTFOLIO
SUB-ACCOUNT
---------------
<S> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. -
Class IA
Shares 15,155,028
Cost $15,395,587
Market Value...................... --
Hartford Stock HLS Fund, Inc. -
Class IA
Shares 33,945,549
Cost $93,349,265
Market Value...................... --
Hartford Money Market HLS
Fund, Inc. - Class IA
Shares 6,566,019
Cost $6,566,019
Market Value...................... --
Hartford Advisers HLS Fund, Inc. -
Class IA
Shares 34,221,708
Cost $65,147,307
Market Value...................... --
Hartford Capital Appreciation HLS
Fund, Inc. - Class IA
Shares 24,732,727
Cost $80,938,460
Market Value...................... --
Hartford Mortgage Securities HLS
Fund, Inc. - Class IA
Shares 3,231,289
Cost $3,417,582
Market Value...................... --
Hartford Index HLS Fund, Inc. -
Class IA
Shares 13,851,001
Cost $34,212,808
Market Value...................... --
Hartford International Opportunities
HLS Fund, Inc. - Class IA
Shares 7,985,421
Cost $9,989,610
Market Value...................... --
Hartford Dividend and Growth HLS
Fund, Inc. - Class IA
Shares 10,749,812
Cost $18,435,960
Market Value...................... --
Calvert Social Balanced Portfolio
Shares 2,290,301
Cost $4,101,434
Market Value...................... $4,967,663
Due from Hartford Life Insurance
Company.............................. 1,204
Receivable from fund shares sold...... --
----------
Total Assets.......................... 4,968,867
----------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. --
Payable for fund shares purchased..... 564
----------
Total Liabilities..................... 564
----------
Net Assets (variable annuity contract
liabilities)......................... $4,968,303
==========
Deferred annuity contracts in the
accumulation period:
Group Sub-Accounts:
Units owned by participants........... 1,627,793
Unit values*.......................... $ 3.052171
</TABLE>
___________________________________ SA-3 ______________________________________
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
AMERICAN
CENTURY VP
CAPITAL APPRECIATION
FUND
SUB-ACCOUNT
--------------------
<S> <C>
ASSETS:
Investments:
American Century VP Capital
Appreciation Fund, Inc.
Shares 139,934
Cost $1,575,748
Market Value...................... $2,076,616
Fidelity VIP Overseas Fund, Inc.
Shares 153,914
Cost $2,912,903
Market Value...................... --
Fidelity VIP II Asset Manager
Fund, Inc.
Shares 288,915
Cost $4,713,414
Market Value...................... --
Fidelity VIP II Contrafund
Fund, Inc.
Shares 830,829
Cost $14,496,214
Market Value...................... --
Fidelity VIP Growth Fund, Inc.
Shares 585,635
Cost $21,025,317
Market Value...................... --
Due from Hartford Life Insurance
Company.............................. 1,081
Receivable from fund shares sold...... --
----------
Total Assets.......................... 2,077,697
----------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. --
Payable for fund shares purchased..... 1,074
----------
Total Liabilities..................... 1,074
----------
Net Assets (variable annuity contract
liabilities)......................... $2,076,623
==========
Deferred annuity contracts in the
accumulation period:
Group Sub-Accounts:
Units owned by participants........... 1,355,363
Unit values*.......................... $ 1.532151
</TABLE>
*Unit value amounts represent an average of individual unit values, which differ
within each sub-account.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
___________________________________ SA-4 ______________________________________
<PAGE>
<TABLE>
<CAPTION>
FIDELITY FIDELITY FIDELITY FIDELITY
VIP VIP II VIP II VIP
OVERSEAS ASSET MANAGER CONTRAFUND GROWTH
FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
American Century VP Capital
Appreciation Fund, Inc.
Shares 139,934
Cost $1,575,748
Market Value...................... -- -- -- --
Fidelity VIP Overseas Fund, Inc.
Shares 153,914
Cost $2,912,903
Market Value...................... $4,223,395 -- -- --
Fidelity VIP II Asset Manager
Fund, Inc.
Shares 288,915
Cost $4,713,414
Market Value...................... -- $5,394,049 -- --
Fidelity VIP II Contrafund
Fund, Inc.
Shares 830,829
Cost $14,496,214
Market Value...................... -- -- $24,218,673 --
Fidelity VIP Growth Fund, Inc.
Shares 585,635
Cost $21,025,317
Market Value...................... -- -- -- $32,168,933
Due from Hartford Life Insurance
Company.............................. 2,418 1,694 8,310 17,140
Receivable from fund shares sold...... -- -- -- --
---------- ---------- ----------- -----------
Total Assets.......................... 4,225,813 5,395,743 24,226,983 32,186,073
---------- ---------- ----------- -----------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. -- -- -- --
Payable for fund shares purchased..... 2,466 1,250 8,330 17,144
---------- ---------- ----------- -----------
Total Liabilities..................... 2,466 1,250 8,330 17,144
---------- ---------- ----------- -----------
Net Assets (variable annuity contract
liabilities)......................... $4,223,347 $5,394,493 $24,218,653 $32,168,929
========== ========== =========== ===========
Deferred annuity contracts in the
accumulation period:
Group Sub-Accounts:
Units owned by participants........... 2,120,519 2,951,785 9,524,933 11,602,886
Unit values*.......................... $ 1.991553 $ 1.827536 $ 2.542659 $ 2.772494
</TABLE>
___________________________________ SA-5 ______________________________________
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
BOND STOCK MONEY MARKET
FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 829,146 $ 1,666,475 $303,879
EXPENSES:
Mortality and expense
undertakings.......... (169,945) (2,300,122) (68,630)
----------- ----------- --------
Net investment income
(loss).............. 659,201 (633,647) 235,249
----------- ----------- --------
CAPITAL GAINS INCOME..... 114,981 18,026,889 161
----------- ----------- --------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized (loss)
gain on security
transactions.......... (19,976) 2,484,575 --
Net unrealized
(depreciation)
appreciation of
investments during the
period................ (1,257,359) 18,838,148 --
----------- ----------- --------
Net (loss) gain on
investments......... (1,277,335) 21,322,723 --
----------- ----------- --------
Net (decrease)
increase in net
assets resulting
from operations..... $ (503,153) $38,715,965 $235,410
=========== =========== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
___________________________________ SA-6 ______________________________________
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND
ADVISERS APPRECIATION SECURITIES INDEX OPPORTUNITIES AND GROWTH CALVERT SOCIAL
FUND FUND FUND FUND FUND FUND BALANCED PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ----------- ----------- ------------- ----------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 2,124,562 $ 453,558 $ 187,585 $ 543,832 $ 138,993 $ 371,026 $107,208
EXPENSES:
Mortality and expense
undertakings.......... (1,019,523) (1,238,342) (37,929) (379,540) (121,371) (265,879) (56,336)
----------- ----------- --------- ---------- ---------- --------- --------
Net investment income
(loss).............. 1,105,039 (784,784) 149,656 164,292 17,622 105,147 50,872
----------- ----------- --------- ---------- ---------- --------- --------
CAPITAL GAINS INCOME..... 7,575,377 7,303,697 -- 756,329 -- 871,549 367,294
----------- ----------- --------- ---------- ---------- --------- --------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized (loss)
gain on security
transactions.......... 32,508 384,490 209 55,113 71,485 56,924 14,784
Net unrealized
(depreciation)
appreciation of
investments during the
period................ 8,461 33,047,538 (137,396) 8,186,922 3,936,105 (108,988) 60,504
----------- ----------- --------- ---------- ---------- --------- --------
Net (loss) gain on
investments......... 40,969 33,432,028 (137,187) 8,242,035 4,007,590 (52,064) 75,288
----------- ----------- --------- ---------- ---------- --------- --------
Net (decrease)
increase in net
assets resulting
from operations..... $ 8,721,385 $39,950,941 $ 12,469 $9,162,656 $4,025,212 $ 924,632 $493,454
=========== =========== ========= ========== ========== ========= ========
</TABLE>
___________________________________ SA-7 ______________________________________
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
AMERICAN
AMERICAN CENTURY VP
CENTURY VP CAPITAL
ADVANTAGE APPRECIATION
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 10,047 $ --
EXPENSES:
Mortality and expense
undertakings.......... (3,958) (16,810)
-------- --------
Net investment income
(loss).............. 6,089 (16,810)
-------- --------
CAPITAL GAINS INCOME..... 23,850 --
-------- --------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on
security
transactions.......... 38,985 3,131
Net unrealized
(depreciation)
appreciation of
investments during the
period................ (33,239) 784,514
-------- --------
Net gain on
investments......... 5,746 787,645
-------- --------
Net increase in net
assets resulting
from operations..... $ 35,685 $770,835
======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
___________________________________ SA-8 ______________________________________
<PAGE>
<TABLE>
<CAPTION>
FIDELITY FIDELITY FIDELITY FIDELITY
VIP VIP II VIP II VIP
OVERSEAS ASSET MANAGER CONTRAFUND GROWTH
FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 38,923 $156,695 $ 89,227 $ 34,374
EXPENSES:
Mortality and expense
undertakings.......... (35,894) (61,474) (248,651) (295,423)
---------- -------- ---------- ----------
Net investment income
(loss).............. 3,029 95,221 (159,424) (261,049)
---------- -------- ---------- ----------
CAPITAL GAINS INCOME..... 62,779 198,480 654,328 2,161,295
---------- -------- ---------- ----------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on
security
transactions.......... 10,866 4,859 31,812 10,578
Net unrealized
(depreciation)
appreciation of
investments during the
period................ 1,091,582 177,917 3,847,668 5,999,319
---------- -------- ---------- ----------
Net gain on
investments......... 1,102,448 182,776 3,879,480 6,009,897
---------- -------- ---------- ----------
Net increase in net
assets resulting
from operations..... $1,168,256 $476,477 $4,374,384 $7,910,143
========== ======== ========== ==========
</TABLE>
___________________________________ SA-9 ______________________________________
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
BOND STOCK MONEY MARKET
FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 659,201 $ (633,647) $ 235,249
Capital gains income.................. 114,981 18,026,889 161
Net realized (loss) gain on security
transactions......................... (19,976) 2,484,575 --
Net unrealized (depreciation)
appreciation of investments during
the period........................... (1,257,359) 18,838,148 --
----------- ------------ ----------
Net (decrease) increase in net assets
resulting from operations............ (503,153) 38,715,965 235,410
----------- ------------ ----------
UNIT TRANSACTIONS:
Purchases............................. 877,749 7,131,167 523,946
Net transfers......................... (881,035) 1,039,770 (237,078)
Surrenders for benefit payments and
fees................................. (1,214,915) (14,377,881) (535,282)
Net annuity transactions.............. (154,673) (1,808,549) 58,994
----------- ------------ ----------
Net (decrease) increase in net assets
resulting from unit transactions..... (1,372,874) (8,015,493) (189,420)
----------- ------------ ----------
Net (decrease) increase in net
assets............................... (1,876,027) 30,700,472 45,990
NET ASSETS:
Beginning of period................... 16,938,033 211,921,519 6,520,325
----------- ------------ ----------
End of period......................... $15,062,006 $242,621,991 $6,566,315
=========== ============ ==========
</TABLE>
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
BOND STOCK MONEY MARKET
FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 643,021 $ (320,715) $ 222,574
Capital gains income.................. -- 5,882,426 --
Net realized gain (loss) on security
transactions......................... 62,787 8,889,332 --
Net unrealized appreciation
(depreciation) of investments during
the period........................... 361,946 37,635,810 --
----------- ------------ -----------
Net increase in net assets resulting
from operations...................... 1,067,754 52,086,853 222,574
----------- ------------ -----------
UNIT TRANSACTIONS:
Purchases............................. 912,679 6,592,898 495,356
Net transfers......................... 1,735,405 242,331 1,098,990
Surrenders for benefit payments and
fees................................. (1,328,850) (11,790,542) (1,154,260)
Net annuity transactions.............. 118,114 (1,031,092) (75,788)
----------- ------------ -----------
Net increase (decrease) in net assets
resulting from unit transactions..... 1,437,348 (5,986,405) 364,298
----------- ------------ -----------
Net increase in net assets............ 2,505,102 46,100,448 586,872
NET ASSETS:
Beginning of period................... 14,432,931 165,821,071 5,933,453
----------- ------------ -----------
End of period......................... $16,938,033 $211,921,519 $ 6,520,325
=========== ============ ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
__________________________________ SA-10 ______________________________________
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND
ADVISERS APPRECIATION SECURITIES INDEX OPPORTUNITIES AND GROWTH
FUND FUND FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------ ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 1,105,039 $ (784,784) $ 149,656 $ 164,292 $ 17,622 $ 105,147
Capital gains income.................. 7,575,377 7,303,697 -- 756,329 -- 871,549
Net realized (loss) gain on security
transactions......................... 32,508 384,490 209 55,113 71,485 56,924
Net unrealized (depreciation)
appreciation of investments during
the period........................... 8,461 33,047,538 (137,396) 8,186,922 3,936,105 (108,988)
------------ ------------ ---------- ----------- ----------- -----------
Net (decrease) increase in net assets
resulting from operations............ 8,721,385 39,950,941 12,469 9,162,656 4,025,212 924,632
------------ ------------ ---------- ----------- ----------- -----------
UNIT TRANSACTIONS:
Purchases............................. 5,766,833 8,678,190 256,864 4,686,636 1,026,238 2,788,276
Net transfers......................... 1,085,736 (2,258,982) (207,674) 3,228,930 220,580 (960,677)
Surrenders for benefit payments and
fees................................. (6,055,967) (7,267,595) (177,925) (2,277,171) (519,616) (1,772,801)
Net annuity transactions.............. 658,379 (211,724) (276) 257,961 (38,926) 20,963
------------ ------------ ---------- ----------- ----------- -----------
Net (decrease) increase in net assets
resulting from unit transactions..... 1,454,981 (1,060,111) (129,011) 5,896,356 688,276 75,761
------------ ------------ ---------- ----------- ----------- -----------
Net (decrease) increase in net
assets............................... 10,176,366 38,890,830 (116,542) 15,059,012 4,713,488 1,000,393
NET ASSETS:
Beginning of period................... 91,283,265 111,864,699 3,475,410 42,957,754 10,266,657 22,099,132
------------ ------------ ---------- ----------- ----------- -----------
End of period......................... $101,459,631 $150,755,529 $3,358,868 $58,016,766 $14,980,145 $23,099,525
============ ============ ========== =========== =========== ===========
<CAPTION>
CALVERT SOCIAL
BALANCED PORTFOLIO
SUB-ACCOUNT
------------------
<S> <C>
OPERATIONS:
Net investment income (loss).......... $ 50,872
Capital gains income.................. 367,294
Net realized (loss) gain on security
transactions......................... 14,784
Net unrealized (depreciation)
appreciation of investments during
the period........................... 60,504
----------
Net (decrease) increase in net assets
resulting from operations............ 493,454
----------
UNIT TRANSACTIONS:
Purchases............................. 434,582
Net transfers......................... (224,945)
Surrenders for benefit payments and
fees................................. (153,765)
Net annuity transactions.............. 175,629
----------
Net (decrease) increase in net assets
resulting from unit transactions..... 231,501
----------
Net (decrease) increase in net
assets............................... 724,955
NET ASSETS:
Beginning of period................... 4,243,348
----------
End of period......................... $4,968,303
==========
</TABLE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND
ADVISERS APPRECIATION SECURITIES INDEX OPPORTUNITIES AND GROWTH
FUND FUND FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 929,613 $ (507,599) $ 179,661 $ 73,444 $ 22,163 $ 118,445
Capital gains income.................. 2,448,343 6,467,014 -- 703,652 644,678 554,310
Net realized gain (loss) on security
transactions......................... 1,582,801 3,648,830 14,296 35,759 55,547 (33,442)
Net unrealized appreciation
(depreciation) of investments during
the period........................... 11,671,877 4,206,625 (10,512) 7,410,073 384,781 1,893,095
----------- ------------ ---------- ----------- ----------- -----------
Net increase in net assets resulting
from operations...................... 16,632,634 13,814,870 183,445 8,222,928 1,107,169 2,532,408
----------- ------------ ---------- ----------- ----------- -----------
UNIT TRANSACTIONS:
Purchases............................. 5,710,527 10,043,845 290,758 3,542,564 1,295,646 2,740,504
Net transfers......................... 4,672,171 (4,177,559) (134,090) 7,709,937 (908,131) 3,854,598
Surrenders for benefit payments and
fees................................. (4,297,456) (6,489,893) (324,882) (2,057,610) (917,114) (1,314,938)
Net annuity transactions.............. 1,069,101 (70,995) 18,035 560,037 (60,468) 110,854
----------- ------------ ---------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from unit transactions..... 7,154,343 (694,602) (150,179) 9,754,928 (590,067) 5,391,018
----------- ------------ ---------- ----------- ----------- -----------
Net increase in net assets............ 23,786,977 13,120,268 33,266 17,977,856 517,102 7,923,426
NET ASSETS:
Beginning of period................... 67,496,288 98,744,431 3,442,144 24,979,898 9,749,555 14,175,706
----------- ------------ ---------- ----------- ----------- -----------
End of period......................... $91,283,265 $111,864,699 $3,475,410 $42,957,754 $10,266,657 $22,099,132
=========== ============ ========== =========== =========== ===========
<CAPTION>
CALVERT SOCIAL
BALANCED PORTFOLIO
SUB-ACCOUNT
------------------
<S> <C>
OPERATIONS:
Net investment income (loss).......... $ 49,286
Capital gains income.................. 211,876
Net realized gain (loss) on security
transactions......................... 23,262
Net unrealized appreciation
(depreciation) of investments during
the period........................... 239,801
----------
Net increase in net assets resulting
from operations...................... 524,225
----------
UNIT TRANSACTIONS:
Purchases............................. 495,534
Net transfers......................... 26,347
Surrenders for benefit payments and
fees................................. (187,099)
Net annuity transactions.............. 20,431
----------
Net increase (decrease) in net assets
resulting from unit transactions..... 355,213
----------
Net increase in net assets............ 879,438
NET ASSETS:
Beginning of period................... 3,363,910
----------
End of period......................... $4,243,348
==========
</TABLE>
__________________________________ SA-11 ______________________________________
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
AMERICAN
AMERICAN CENTURY VP
CENTURY VP CAPITAL
ADVANTAGE APPRECIATION
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).................... $ 6,089 $ (16,810)
Capital gains income............................ 23,850 --
Net realized gain on security transactions...... 38,985 3,131
Net unrealized (depreciation) appreciation of
investments during the period.................. (33,239) 784,514
--------- ----------
Net increase in net assets resulting from
operations..................................... 35,685 770,835
--------- ----------
UNIT TRANSACTIONS:
Purchases....................................... 58,593 254,542
Net transfers................................... (378,748) (19,911)
Surrenders for benefit payments and fees........ (41,476) (102,225)
Net annuity transactions........................ (11,186) (550)
--------- ----------
Net (decrease) increase in net assets resulting
from unit transactions......................... (372,817) 131,856
--------- ----------
Net (decrease) increase in net assets........... (337,132) 902,691
NET ASSETS:
Beginning of period............................. 337,132 1,173,932
--------- ----------
End of period................................... $ -- $2,076,623
========= ==========
</TABLE>
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
AMERICAN
AMERICAN CENTURY VP
CENTURY VP CAPITAL
ADVANTAGE APPRECIATION
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).................... $ 2,371 $ (14,526)
Capital gains income............................ 22,200 63,395
Net realized gain (loss) on security
transactions................................... 1,198 (16,383)
Net unrealized appreciation (depreciation) of
investments during the period.................. 17,601 (61,793)
-------- ----------
Net increase (decrease) in net assets resulting
from operations................................ 43,370 (29,307)
-------- ----------
UNIT TRANSACTIONS:
Purchases....................................... 60,545 294,260
Net transfers................................... 13,214 (521,383)
Surrenders for benefit payments and fees........ (27,765) (58,707)
Net annuity transactions........................ (768) (486)
-------- ----------
Net increase (decrease) in net assets resulting
from unit transactions......................... 45,226 (286,316)
-------- ----------
Net increase (decrease) in net assets........... 88,596 (315,623)
NET ASSETS:
Beginning of period............................. 248,536 1,489,555
-------- ----------
End of period................................... $337,132 $1,173,932
======== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
__________________________________ SA-12 ______________________________________
<PAGE>
<TABLE>
<CAPTION>
FIDELITY FIDELITY FIDELITY FIDELITY
VIP VIP II VIP II VIP
OVERSEAS ASSET MANAGER CONTRAFUND GROWTH
FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).................... $ 3,029 $ 95,221 $ (159,424) $ (261,049)
Capital gains income............................ 62,779 198,480 654,328 2,161,295
Net realized gain on security transactions...... 10,866 4,859 31,812 10,578
Net unrealized (depreciation) appreciation of
investments during the period.................. 1,091,582 177,917 3,847,668 5,999,319
---------- ---------- ----------- -----------
Net increase in net assets resulting from
operations..................................... 1,168,256 476,477 4,374,384 7,910,143
---------- ---------- ----------- -----------
UNIT TRANSACTIONS:
Purchases....................................... 387,081 598,974 2,302,231 2,449,392
Net transfers................................... 443,568 42,815 825,702 4,848,698
Surrenders for benefit payments and fees........ (256,167) (443,450) (1,166,185) (1,212,305)
Net annuity transactions........................ -- -- (43) 11,853
---------- ---------- ----------- -----------
Net (decrease) increase in net assets resulting
from unit transactions......................... 574,482 198,339 1,961,705 6,097,638
---------- ---------- ----------- -----------
Net (decrease) increase in net assets........... 1,742,738 674,816 6,336,089 14,007,781
NET ASSETS:
Beginning of period............................. 2,480,609 4,719,677 17,882,564 18,161,148
---------- ---------- ----------- -----------
End of period................................... $4,223,347 $5,394,493 $24,218,653 $32,168,929
========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
FIDELITY FIDELITY FIDELITY FIDELITY
VIP VIP II VIP II VIP
OVERSEAS ASSET MANAGER CONTRAFUND GROWTH
FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).................... $ 10,125 $ 54,671 $ (92,518) $ (113,377)
Capital gains income............................ 112,345 313,180 618,218 1,488,257
Net realized gain (loss) on security
transactions................................... 956 (275) 12,359 13,141
Net unrealized appreciation (depreciation) of
investments during the period.................. 96,646 146,330 3,177,338 3,253,190
---------- ---------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations................................ 220,072 513,906 3,715,397 4,641,211
---------- ---------- ----------- -----------
UNIT TRANSACTIONS:
Purchases....................................... 377,694 629,178 2,095,903 1,855,983
Net transfers................................... 96,385 731,434 816,733 1,278,624
Surrenders for benefit payments and fees........ (196,825) (338,204) (696,448) (573,796)
Net annuity transactions........................ -- -- (34) (166)
---------- ---------- ----------- -----------
Net increase (decrease) in net assets resulting
from unit transactions......................... 277,254 1,022,408 2,216,154 2,560,645
---------- ---------- ----------- -----------
Net increase (decrease) in net assets........... 497,326 1,536,314 5,931,551 7,201,856
NET ASSETS:
Beginning of period............................. 1,983,283 3,183,363 11,951,013 10,959,292
---------- ---------- ----------- -----------
End of period................................... $2,480,609 $4,719,677 $17,882,564 $18,161,148
========== ========== =========== ===========
</TABLE>
__________________________________ SA-13 ______________________________________
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION:
Separate Account Two (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. 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 invests
deposits by variable annuity contractholders of the Company in various
mutual funds (the Funds) as directed by the contractholders.
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). Realized gains and
losses on the sales of securities are computed on the basis of identified
cost of the fund shares sold. Dividend and capital gains income is
accrued as of the ex-dividend date. Capital gains income represents
dividends from the Funds which are characterized as capital gains under
tax regulations.
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, 1999.
c) UNIT TRANSACTIONS--Unit transactions are executed based on the unit
values calculated at the close of the business day.
d) 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.
e) 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. DEDUCTIONS AND CHARGES:
Certain amounts are deducted from the contracts, as described below:
a) MORTALITY AND EXPENSE RISK CHARGES--The Company will make deductions at a
maximum annual rate of 1.25% of the contract's value for the mortality
and expense risks which the Company undertakes.
b) TAX EXPENSE CHARGE--If applicable, the Company will make deductions at a
maximum rate of 3.50% of the contract's value to meet premium tax
requirements. An additional tax charge based on a percentage of the
contract's value may be assessed to partial withrawals or surrenders.
These expenses are included in surrenders for benefit payments and fees
in the accompanying statements of changes in net assets.
c) ANNUAL MAINTENANCE FEE--An annual maintenance fee in the amount of $30
may be deducted from the contract's value each contract year. These
expenses are included in surrenders for benefit payments and fees in the
accompaying statements of changes in net assets.
__________________________________ SA-14 ______________________________________
<PAGE>
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, 1999 and 1998, 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, 1999.
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 auditing standards generally accepted
in the United States. 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, 1999 and 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States.
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.
Hartford, Connecticut
January 31, 2000 ARTHUR ANDERSEN LLP
F-1
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(in millions)
REVENUES
Premiums and other considerations $2,045 $2,218 $1,637
Net investment income 1,359 1,759 1,368
Net realized capital gains (losses) (4) (2) 4
- ----------------------------------------------------------------------------------------------
TOTAL REVENUES 3,400 3,975 3,009
- ----------------------------------------------------------------------------------------------
BENEFITS, CLAIMS AND EXPENSES
Benefits, claims and claim adjustment expenses 1,574 1,911 1,379
Amortization of deferred policy acquisition costs 539 431 335
Dividends to policyholders 104 329 240
Other expenses 631 766 586
- ----------------------------------------------------------------------------------------------
TOTAL BENEFITS, CLAIMS AND EXPENSES 2,848 3,437 2,540
- ----------------------------------------------------------------------------------------------
Income before income tax expense 552 538 469
Income tax expense 191 188 167
- ----------------------------------------------------------------------------------------------
NET INCOME $ 361 $ 350 $ 302
- ----------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
<S> <C> <C>
- ------------------------------------------------------------------------------------------
1999 1998
- ------------------------------------------------------------------------------------------
(in millions, except
for share data)
ASSETS
Investments
Fixed maturities, available for sale, at fair value
(amortized cost of $13,923 and $14,505) $ 13,499 $ 14,818
Equity securities, at fair value 56 31
Policy loans, at outstanding balance 4,187 6,684
Other investments 342 264
- ------------------------------------------------------------------------------------------
TOTAL INVESTMENTS 18,084 21,797
- ------------------------------------------------------------------------------------------
Cash 55 17
Premiums receivable and agents' balances 29 17
Reinsurance recoverables 1,274 1,257
Deferred policy acquisition costs 4,013 3,754
Deferred income tax 459 464
Other assets 654 695
Separate account assets 110,397 90,262
- ------------------------------------------------------------------------------------------
TOTAL ASSETS $134,965 $118,263
- ------------------------------------------------------------------------------------------
LIABILITIES
Future policy benefits $ 4,332 $ 3,595
Other policyholder funds 16,004 19,615
Other liabilities 1,613 2,094
Separate account liabilities 110,397 90,262
- ------------------------------------------------------------------------------------------
TOTAL LIABILITIES 132,346 115,566
- ------------------------------------------------------------------------------------------
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 (loss)
Net unrealized capital gains (losses) on securities, net
of tax (255) 184
- ------------------------------------------------------------------------------------------
TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (255) 184
- ------------------------------------------------------------------------------------------
Retained earnings 1,823 1,462
- ------------------------------------------------------------------------------------------
TOTAL STOCKHOLDER'S EQUITY 2,619 2,697
- ------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $134,965 $118,263
- ------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-3
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Accumulated Other
Comprehensive
Income (Loss)
-----------------
<S> <C> <C> <C> <C> <C>
Net Unrealized
Capital Gains
(Losses) on Total
Common Capital Securities, Retained Stockholder's
Stock Surplus Net of Tax Earnings Equity
- -------------------------------------------------------------------------------------------------------------
(in millions)
1999
Balance, December 31, 1998 $6 $1,045 $ 184 $1,462 $2,697
Comprehensive income
Net income -- -- -- 361 361
Other comprehensive income (loss), net of
tax (1):
Changes in net unrealized capital gains
(losses) on securities (2) -- -- (439) -- (439)
Total other comprehensive income (loss) (439)
Total comprehensive income (loss) (78)
- -------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999 $6 $1,045 $(255) $1,823 $2,619
- -------------------------------------------------------------------------------------------------------------
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
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Net unrealized capital gain (loss) on securities is reflected net of tax of
$(236), $3 and $80, for the years ended December 31, 1999, 1998 and 1997,
respectively.
(2) Net of reclassification adjustment for after-tax gains (losses) realized in
net income of $(2), $(1) and $2 for the years ended December 31, 1999, 1998
and 1997, respectively.
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-4
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(in millions)
OPERATING ACTIVITIES
Net income $ 361 $ 350 $ 302
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation and amortization (18) (23) 8
Net realized capital losses (gains) 4 2 (4)
Loss due to commutation of reinsurance 16 -- --
(Increase) decrease in premiums receivable and agents'
balances (18) 1 119
(Decrease) increase in other liabilities (263) (79) 223
Change in receivables, payables, and accruals 125 83 107
(Decrease) increase in accrued taxes (163) 60 126
Decrease (increase) in deferred income tax 241 (118) 40
Increase in deferred policy acquisition costs (358) (439) (555)
Increase in future policy benefits 797 536 585
Increase in reinsurance recoverables (318) (101) (31)
Other, net (81) 99 52
- --------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 325 371 972
- --------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchases of investments (5,753) (6,061) (6,869)
Sales of investments 6,383 4,901 4,256
Maturity of investments 1,818 1,761 2,329
Purchases of affiliates and other (25) -- --
- --------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 2,423 601 (284)
- --------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net disbursements for investment and universal life-type
contracts charged against policyholder accounts (2,710) (1,009) (677)
- --------------------------------------------------------------------------------------------
Net cash used for financing activities (2,710) (1,009) (677)
- --------------------------------------------------------------------------------------------
Net increase (decrease) in cash 38 (37) 11
Cash -- beginning of year 17 54 43
- --------------------------------------------------------------------------------------------
Cash -- end of year $ 55 $ 17 $ 54
- --------------------------------------------------------------------------------------------
Supplemental Disclosure of Cash Flow Information:
Net Cash Paid During the Year for:
Income taxes $ 111 $ 263 $ 9
Noncash Investing Activities:
In 1999, the Company's parent, Hartford Life and Accident Insurance Company, recaptured an
in force block of individual life insurance previously ceded to the Company. This
commutation resulted in a reduction in the Company's assets of $666, consisting of $556
of invested assets, $99 of deferred policy acquisition costs and $11 of other assets.
Liabilities decreased $650, consisting of $543 of other policyholder funds, $60 of future
policy benefits and $47 of other liabilities. As a result, the Company recognized an
after-tax loss relating to this transaction of $16.
In 1998, due to the recapture of an in force block of business previously ceded to MBL
Life Assurance Co. of New Jersey, reinsurance recoverables of $4,753 were exchanged for
the fair value of assets comprised of $4,310 in policy loans and $443 in other net
assets.
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-5
<PAGE>
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 (HLAI) 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). In November 1998,
Hartford Life Insurance Company transferred in the form of a dividend, Hartford
Financial Services, LLC and its subsidiaries to HLA.
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 its
insurance subsidiaries 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.
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, mutual funds and
retirement plan services for savings and retirement needs; (b) life insurance
for income protection and estate planning; (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 are prepared on the basis of accounting
principles generally accepted in the United States, which differ materially from
the statutory accounting practices prescribed by various insurance regulatory
authorities. All material intercompany transactions and balances between
Hartford Life Insurance Company and its subsidiaries have been eliminated.
The preparation of financial statements, in conformity with accounting
principles generally accepted in the United States, 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) ADOPTION OF NEW ACCOUNTING STANDARDS
Effective January 1, 1999, Hartford Life Insurance Company adopted Statement of
Position (SOP) No. 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use". This 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. Adoption of this SOP did not have a
material impact on the Company's financial condition or results of operations.
Effective January 1, 1999, Hartford Life Insurance Company adopted SOP
No. 97-3, "Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments". This SOP addresses accounting by insurance and other enterprises
for assessments related to insurance activities, including recognition,
measurement and disclosure of guaranty fund or other assessments. Adoption of
this SOP did not have a material impact 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) FUTURE ADOPTION OF NEW ACCOUNTING STANDARDS
In June 1999, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133". This statement amends SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", to defer its effective date for
one year, to fiscal years beginning after June 15, 2000. Initial
F-6
<PAGE>
application for Hartford Life Insurance Company will begin January 1, 2001. SFAS
No. 133 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 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.
The Company has reviewed its derivative holdings and is in the process of
quantifying the impact of SFAS No. 133. The Company is also assessing what
actions, if any, need to be taken to minimize potential volatility, while at the
same time maintaining the economic protection needed to support the goals of its
business.
In October 1998, the American Institute of Certified Public Accountants (AICPA)
issued SOP No. 98-7, "Accounting for Insurance and Reinsurance Contracts That Do
Not Transfer Insurance Risk". This SOP provides guidance on the method of
accounting for insurance and reinsurance contracts that do not transfer
insurance risk, defined in the SOP as the deposit method. This SOP is effective
for financial statements for fiscal years beginning after June 15, 1999 and is
not expected to have a material impact on the Company's financial condition or
results of operations.
(D) 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 and
disability policies are recognized as revenues ratably over the policy period.
(E) 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 of the life insurance subsidiaries of the Company. The participating
insurance in force accounted for 34%, 35% and 33% in 1999, 1998 and 1997,
respectively, of total insurance in force.
(F) INVESTMENTS
Hartford Life Insurance Company's investments in both fixed maturities, which
include bonds, redeemable preferred stock and commercial paper, and equity
securities, which include common and non-redeemable preferred stocks, are
classified as "available for sale" in accordance with SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities". Accordingly, these
securities are carried at fair value with the after-tax difference from cost
reflected in stockholder's equity as a component of accumulated other
comprehensive income. Policy loans are carried at outstanding balance which
approximates fair value. Other invested assets consist primarily of partnership
investments, which are accounted for by the equity method, and mortgage loans,
whereby the carrying value 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.
(G) DERIVATIVE INSTRUMENTS
HEDGE ACCOUNTING -- 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. Hartford Life Insurance 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 No. 86-2, "Accounting for
Options" and various Emerging Issues Task Force 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 (c) Future Adoption of New Accounting Standards.
Derivative instruments must be designated at inception as a hedge and measured
for effectiveness both at inception
F-7
<PAGE>
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
or quarterly 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
they are 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.
FUTURES -- 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.
FORWARD COMMITMENTS -- 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 are recognized immediately in the Consolidated Statements of Income as
a component of net investment income.
OPTIONS -- The cost of options entered into as part of a risk management
strategy are basis adjusted to the underlying asset or liability and amortized
over the remaining life of the option. Gains or losses on expiration or
termination are adjusted into the basis of the underlying asset or liability and
amortized over the remaining asset life.
INTEREST RATE SWAPS -- 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 earnings. 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.
INTEREST RATE CAPS AND FLOORS -- Premiums paid on purchased cap or floor
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 AND CURRENCY SWAPS CONTRACTS -- 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 adjustment
component of stockholder's equity.
Cash flows from futures, options and swaps, accounted for as hedges, are
included with the cash flows of the item being hedged.
(H) SEPARATE ACCOUNTS
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 substantially all the investment risk and rewards, and guaranteed
separate accounts, wherein the Company contractually guarantees either a minimum
return or account value to the policyholder.
(I) DEFERRED POLICY ACQUISITION COSTS
Policy acquisition costs, which include commissions and certain other 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.
F-8
<PAGE>
Acquisition costs and their related deferral are included in the Company's other
expenses as follows:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
------------------------------
Commissions $ 887 $1,069 $ 976
Deferred acquisition costs (898) (891) (862)
Other 642 588 472
------------------------------
TOTAL OTHER EXPENSES $ 631 $ 766 $ 586
------------------------------
</TABLE>
(J) FUTURE POLICY BENEFITS
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.
(K) OTHER POLICYHOLDER FUNDS
Other policyholder funds include reserves for investment contracts without life
contingencies, corporate owned life insurance and universal life insurance
contracts. These reserves are based on account values, which represent the
balance that accrues to the benefit of policyholders.
3. INVESTMENTS AND DERIVATIVE INSTRUMENTS
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
For the years ended
December 31,
--------------------------------
1999 1998 1997
<S> <C> <C> <C>
--------------------------------
Interest income from fixed maturities $ 934 $ 952 $ 932
Interest income from policy loans 391 789 425
Income from other investments 48 32 26
--------------------------------
Gross investment income 1,373 1,773 1,383
Less: Investment expenses 14 14 15
--------------------------------
NET INVESTMENT INCOME $1,359 $1,759 $1,368
--------------------------------
</TABLE>
(B) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
For the years ended
December 31,
--------------------------
1999 1998 1997
<S> <C> <C> <C>
--------------------------
Fixed maturities $(7) $(28) $(7)
Equity securities 2 21 12
Real estate and other 1 5 (1)
--------------------------
NET REALIZED CAPITAL GAINS (LOSSES) $(4) $(2) $ 4
--------------------------
</TABLE>
(C) NET UNREALIZED CAPITAL GAINS (LOSSES) ON EQUITY SECURITIES
<TABLE>
<CAPTION>
For the years ended
December 31,
--------------------------
1999 1998 1997
<S> <C> <C> <C>
--------------------------
Gross unrealized capital gains $ 9 $ 2 $14
Gross unrealized capital losses (2) (1) --
--------------------------
Net unrealized capital gains 7 1 14
Deferred income tax expense 2 -- 5
--------------------------
Net unrealized capital gains, net of tax 5 1 9
Balance -- beginning of year 1 9 8
--------------------------
NET CHANGE IN UNREALIZED CAPITAL GAINS (LOSSES) ON EQUITY
SECURITIES $ 4 $(8) $ 1
--------------------------
</TABLE>
F-9
<PAGE>
(D) NET UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED MATURITIES
<TABLE>
<CAPTION>
For the years ended
December 31,
----------------------------
1999 1998 1997
<S> <C> <C> <C>
----------------------------
Gross unrealized capital gains $ 48 $ 421 $371
Gross unrealized capital losses (472) (108) (80)
Unrealized capital (gains) losses credited to policyholders 24 (32) (30)
----------------------------
Net unrealized capital gains (losses) (400) 281 261
Deferred income tax expense (benefit) (140) 98 91
----------------------------
Net unrealized capital gains (losses), net of tax (260) 183 170
Balance -- beginning of year 183 170 22
----------------------------
NET CHANGE IN UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED
MATURITIES $(443) $ 13 $148
----------------------------
</TABLE>
(E) FIXED MATURITY INVESTMENTS
<TABLE>
<CAPTION>
As of December 31, 1999
---------------------------------------------
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) $ 180 $ 5 $ (3) $ 182
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) -- asset backed 1,094 5 (35) 1,064
States, municipalities and political subdivisions 155 2 (1) 156
Foreign governments 289 6 (14) 281
Public utilities 865 7 (39) 833
All other corporate, including international 5,646 18 (244) 5,420
All other corporate -- asset backed 4,103 5 (123) 3,985
Short-term investments 1,156 -- -- 1,156
Certificates of deposit 434 -- (12) 422
Redeemable preferred stock 1 -- (1) --
---------------------------------------------
TOTAL FIXED MATURITIES $13,923 $48 $(472) $13,499
---------------------------------------------
</TABLE>
<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
Foreign 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>
The amortized cost and estimated fair value of fixed maturity investments as of
December 31, 1999 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 consensus
F-10
<PAGE>
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.
<TABLE>
<CAPTION>
Amortized
Cost Fair Value
<S> <C> <C>
----------------------------
MATURITY
One year or less $ 2,454 $ 2,440
Over one year through five years 4,874 4,787
Over five years through ten years 3,072 2,940
Over ten years 3,523 3,332
----------------------------
TOTAL $13,923 $13,499
----------------------------
</TABLE>
(F) SALES OF FIXED MATURITY AND EQUITY SECURITY INVESTMENTS
Sales of fixed maturities, excluding short-term fixed maturities, for the years
ended December 31, 1999, 1998 and 1997 resulted in proceeds of $3.4 billion,
$3.2 billion and $4.2 billion, gross realized capital gains of $153, $103 and
$169, gross realized capital losses (including writedowns) of $160, $131 and
$176, respectively. Sales of equity security investments for the years ended
December 31, 1999, 1998 and 1997 resulted in proceeds of $7, $35 and $132 and
gross realized capital gains of $2, $21 and $12, respectively, and no gross
realized capital losses for all periods.
(G) 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.
(H) 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.
The Company maintains a derivatives counterparty exposure policy which
establishes market based credit limits, favors long-term financial stability and
creditworthiness, and typically requires credit enhancement/credit risk reducing
agreements. Credit risk is measured as the amount owed to the Company based on
current market conditions and potential payment obligations between the Company
and its counterparties. Credit exposures are quantified weekly and netted, and
collateral is pledged to or held by the Company to the extent the current value
of derivatives exceed exposure policy thresholds.
The Company's derivative program is monitored by an internal compliance unit and
is reviewed by senior management. 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 $5.5
billion and $6.2 billion ($3.9 billion and $3.9 billion related to the Company's
investments, $1.6 billion and $2.3 billion on the Company's liabilities) as of
December 31, 1999 and 1998, respectively.
The tables below provide a summary of derivative instruments held by Hartford
Life Insurance Company as of December 31, 1999 and 1998, segregated by major
investment and liability category:
F-11
<PAGE>
<TABLE>
<CAPTION>
1999 -- Amount Hedged (Notional Amounts)
----------------------------------------------------------------------------------
Total Issued Purchased Interest Rate Foreign Total
Carrying Caps & Caps, Floors Swaps & Currency Notional
ASSETS HEDGED Value Floors & Options Futures (1) Forwards Swaps (2) Amount
<S> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------
Asset backed securities (excluding
anticipatory) $ 5,049 $ -- $ -- $ -- $ 911 $-- $ 911
Anticipatory (3) -- -- -- 5 112 -- 117
Other bonds and notes 7,294 494 611 -- 1,676 80 2,861
Short-term investments 1,156 -- -- -- -- -- --
----------------------------------------------------------------------------------
TOTAL FIXED MATURITIES 13,499 494 611 5 2,699 80 3,889
Equity securities, policy loans and
other investments 4,585 -- -- -- -- -- --
----------------------------------------------------------------------------------
TOTAL INVESTMENTS $18,084 494 611 5 2,699 80 3,889
----------------------------------------------------------------------------------
OTHER POLICYHOLDER FUNDS $16,004 -- 1,150 -- 430 -- 1,580
----------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
NOTIONAL VALUE $ 494 $1,761 $ 5 $3,129 $80 $5,469
----------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
FAIR VALUE $ (22) $ 8 $ -- $ (30) $ 2 $ (42)
----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1998 -- Amount Hedged (Notional Amounts)
-------------------------------------------------------------------------------
Total Issued Purchased Interest Rate Foreign Total
Carrying Caps & Caps & Swaps & Currency Notional
ASSETS HEDGED Value Floors Floors Futures (1) Forwards Swaps (2) Amount
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------
Asset backed securities (excluding
anticipatory) $ 5,187 $ 44 $ 243 $ 3 $ 885 $-- $1,175
Anticipatory (3) -- -- -- -- 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 -- 1,150 -- 1,195 -- 2,345
-------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
NOTIONAL VALUE $ 505 $1,990 $21 $3,615 $90 $6,221
-------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
FAIR VALUE $ (6) $ 19 $-- $ 27 $(7) $ 33
-------------------------------------------------------------------------------
</TABLE>
(1) As of December 31, 1999 and 1998, approximately 100% and 5%,
respectively, of the notional futures contracts expire within one year.
(2) As of December 31, 1999 and 1998, approximately 28% and 11%,
respectively, of foreign currency swaps expire within one year.
(3) 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, 1999, the Company had $1.4 of net
deferred losses on interest rate swaps and futures. The Company expects to basis
adjust the entire loss in 2000. During 1999, $0.2 of new future activity was
basis adjusted. As of December 31, 1998, the Company had no deferred gains for
interest rate swaps.
F-12
<PAGE>
The following is a reconciliation of notional amounts by derivative type and
strategy as of December 31, 1999 and 1998:
<TABLE>
<CAPTION>
BY DERIVATIVE TYPE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1998 Maturities/ December 31, 1999
Notional Amount Additions Terminations (1) Notional Amount
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Caps $1,912 $ -- $ 148 $1,764
Floors 583 -- 178 405
Swaps/Forwards 3,705 991 1,487 3,209
Futures 21 292 308 5
Options -- 86 -- 86
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL $6,221 $1,369 $2,121 $5,469
- -------------------------------------------------------------------------------------------------------------------------------
BY STRATEGY
- -------------------------------------------------------------------------------------------------------------------------------
Liability $2,345 $ 17 $ 782 $1,580
Anticipatory 235 204 322 117
Asset 2,398 831 427 2,802
Portfolio 1,243 317 590 970
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL $6,221 $1,369 $2,121 $5,469
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) During 1999, 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.
Other invested assets consist primarily of partnership investments, which are
accounted for by the equity method, and mortgage loans, whereby the carrying
value approximates 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 similar to external valuation models.
The carrying amount and fair values of Hartford Life Insurance Company's
financial instruments as of December 31, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
<S> <C> <C> <C> <C>
------------------------------------
ASSETS
Fixed maturities $13,499 $13,499 $14,818 $14,818
Equity securities 56 56 31 31
Policy loans 4,187 4,187 6,684 6,684
Other investments 342 348 264 309
LIABILITIES
Other policyholder funds (1) 11,734 11,168 11,709 11,726
------------------------------------
</TABLE>
(1) Excludes corporate owned life insurance and universal life insurance
contracts.
F-13
<PAGE>
5. SEPARATE ACCOUNTS
Hartford Life Insurance Company maintained separate account assets and
liabilities totaling $110.4 billion and $90.3 billion as of December 31, 1999
and 1998, 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 $101.7 billion and
$80.6 billion as of December 31, 1999 and 1998, respectively, wherein the
policyholder assumes substantially all the investment risk, and guaranteed
separate accounts totaling $8.7 and $9.7 billion as of December 31, 1999 and
1998, 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
$860 and $1.8 billion as of December 31, 1999 and 1998, 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 $1.1 billion, $908 and
$699 in 1999, 1998 and 1997, respectively. The guaranteed separate accounts
include fixed market value adjusted (MVA) individual annuities and modified
guaranteed life insurance. The average credited interest rate on these contracts
was 6.5% and 6.6% as of December 31, 1999 and 1998, respectively. The assets
that support these liabilities were comprised of $8.7 billion and $9.5 billion
in fixed maturities as of December 31, 1999 and 1998, respectively, and $0.2
billion of other invested assets as of December 31, 1998. 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 $(96) and $40 in carrying value and $2.0 billion and
$3.5 billion in notional amounts as of December 31, 1999 and 1998, respectively.
6. STATUTORY RESULTS
<TABLE>
<CAPTION>
For the years ended December 31,
------------------------------------
1999 1998 1997
<S> <C> <C> <C>
------------------------------------
Statutory net income $ 151 $ 211 $ 214
------------------------------------
Statutory capital and surplus $1,905 $1,676 $1,441
------------------------------------
</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
2000, without prior regulatory approval, is estimated to be $190.
Hartford Life Insurance Company and its domestic insurance subsidiaries prepare
their statutory financial statements in accordance with accounting practices
prescribed by the applicable state of domicile. Prescribed statutory accounting
practices include publications of the National Association of Insurance
Commissioners (NAIC), as well as state laws, regulations and general
administrative rules.
The NAIC adopted the Codification of Statutory Accounting Principles (SAP) in
March 1998. The proposed effective date for the statutory accounting guidance is
January 1, 2001. It is expected that Hartford Life Insurance Company's
domiciliary state will adopt the SAP and the Company will make the necessary
changes required for implementation. The Company has not yet determined the
impact that the SAP will have on the statutory financial statements of Hartford
Life Insurance Company and its insurance subsidiaries.
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, stock appreciation rights, performance shares or
restricted stock, or any combination of the foregoing. 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 and Class B Common Stock
and treasury stock as reported in the Annual Report on Hartford Life's Form 10-K
of the Company 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 awards. Performance shares
awards of common stock granted under the Plan become payable upon the attainment
of specific performance goals achieved over a three year period.
F-14
<PAGE>
All options granted have an exercise price equal to the market price of the
Company's stock on the date of grant and an option's maximum term is ten years.
Certain non-performance 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 non-performance based options
become exercisable over a three year period commencing with the date of grant.
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 120,694, 121,943 and 54,316
shares under the ESPP in 1999, 1998 and 1997, respectively. The weighted average
fair value of the discount under the ESPP was $7.48 per share in 1999, $13.74
per share in 1998 and $9.63 per share in 1997.
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 both 1999 and
1998, and $5 in 1997.
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 1999, 1998 and 1997.
The assumed rate in the per capita cost of health care (the health care trend
rate) was 7.1% for 1999, decreasing ratably to 5.0% in the year 2003. Increasing
or decreasing 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 in both 1999 and 1998, and $2 in 1997.
9. REINSURANCE
Hartford Life Insurance Company cedes insurance to other insurers in order to
limit its maximum losses. Such transfer does not relieve Hartford Life Insurance
Company of its primary liability. Failure of reinsurers to honor their
obligations could result in losses to Hartford Life Insurance Company. Hartford
Life Insurance Company reduces this risk by evaluating the financial condition
of reinsurers, and monitoring for possible concentrations of credit risk.
Hartford Life Insurance Company has no significant reinsurance related
concentrations of credit risk.
The Company records a receivable for the portion of reinsured benefits paid and
insurance liabilities. Reinsurance recoveries on ceded reinsurance contracts
were $397, $300 and $418 for the years ended December 31, 1999, 1998 and 1997,
respectively. Hartford Life Insurance Company also assumes insurance from other
insurers.
The effect of reinsurance on premiums and other considerations is summarized as
follows:
<TABLE>
<CAPTION>
For the years ended December 31,
------------------------------------
1999 1998 1997
<S> <C> <C> <C>
------------------------------------
Direct premiums and other considerations $2,660 $2,722 $2,164
Reinsurance assumed 95 150 159
Reinsurance ceded (710) (654) (686)
------------------------------------
PREMIUMS AND OTHER CONSIDERATIONS $2,045 $2,218 $1,637
------------------------------------
</TABLE>
F-15
<PAGE>
Hartford Life Insurance Company maintains certain reinsurance agreements with
HLA, whereby the Company cedes both group life and group accident and health
risk. Under these treaties, the Company ceded group life premium of $119, $132
and $80 in 1999, 1998 and 1997, respectively, and accident and health premium of
$430, $379, and $335, respectively, to HLA.
Pursuant to a reinsurance agreement dating back to 1992, the Company assumed
100% of certain blocks of individual life insurance from HLA. Under this
reinsurance agreement Hartford Life Insurance Company assumed $9, $13 and $18 of
premium from HLA in 1999, 1998 and 1997, respectively. On December 1, 1999, HLA
recaptured this in force block of individual life insurance previously ceded to
the Company. This commutation resulted in a reduction in the Company's assets of
$666, consisting of $556 of invested assets, $99 of deferred policy acquisition
costs and $11 of other assets. Liabilities decreased $650, consisting of $543 of
other policyholder funds, $60 of future policy benefits and $47 of other
liabilities. As a result, the Company recognized an after-tax loss relating to
this transaction of $16.
In 1998, the Hartford Life recaptured an in force block of Corporate Owned Life
Insurance (COLI) business previously ceded to MBL Assurance Co. of New Jersey
(MBL Life). The transaction was consummated through an assignment of a
reinsurance arrangement between Hartford Life and MBL Life to a Hartford Life
subsidiary. Hartford Life originally assumed the life insurance block in 1992
from Mutual Benefit Life, which was placed in court-supervised rehabilitation in
1991, and reinsured a portion of those policies back to MBL Life. This recapture
was effective January 1, 1998 and resulted in a decrease in ceded premiums and
other considerations of $163 in 1998. Additionally, this transaction resulted in
a decrease in reinsurance recoverables of $4.8 billion, which was exchanged for
the fair value of assets comprised of $4.3 billion in policy loans and $443 in
other net assets.
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 for 1997 and 1998 and intend to file a
separate consolidated federal income tax return for 1999. The Company's
effective tax rate was 35%, 35% and 36% in 1999, 1998 and 1997, respectively.
Income tax expense (benefit) is as follows:
<TABLE>
<CAPTION>
For the years ended
December 31,
------------------------------
1999 1998 1997
<S> <C> <C> <C>
------------------------------
Current $(50) $307 $162
Deferred 241 (119) 5
------------------------------
INCOME TAX EXPENSE $191 $188 $167
------------------------------
</TABLE>
A reconciliation of the tax provision at the U.S. federal statutory rate to the
provision (benefit) for income taxes is as follows:
<TABLE>
<CAPTION>
For the years ended
December 31,
------------------------------
1999 1998 1997
<S> <C> <C> <C>
------------------------------
Tax provision at the U.S. federal statutory rate $193 $188 $164
Other (2) -- 3
------------------------------
TOTAL $191 $188 $167
------------------------------
</TABLE>
Deferred tax assets (liabilities) include the following as of December 31:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C> <C>
---------------------
Tax basis deferred policy acquisition costs $ 720 $ 751
Financial statement deferred policy acquisition costs and
reserves 11 103
Employee benefits (3) 4
Net unrealized capital losses (gains) on securities 138 (98)
Investments and other (407) (296)
---------------------
TOTAL $ 459 $ 464
---------------------
</TABLE>
F-16
<PAGE>
Hartford Life Insurance Company had a current tax receivable of $56 as of
December 31, 1999 and a current tax payable of $65 as of December 31, 1998.
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 the
balance in this account, which for tax return purposes was $104 as of December
31, 1999.
11. RELATED PARTY TRANSACTIONS
Transactions of the Company with 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 in both 1999 and 1998 and $39 in 1997.
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 alleged economic and
punitive damages have been asserted. Some of these cases have been filed as
purported class actions and some cases have been filed in certain jurisdictions
that permit punitive damage awards disproportionate to the actual damages
incurred. 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 estimated
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 $2, $9 and $15 in 1999, 1998 and 1997,
respectively, of which $1 in 1999 and $4 in both 1998 and 1997 were estimated to
be creditable against premium taxes.
(C) LEASES
The rent paid to Hartford Fire for space occupied by the Company was $9 in 1999
and $7 in both 1998 and 1997. Future minimum rental commitments are as follows:
<TABLE>
<S> <C>
2000 $ 14
2001 14
2002 13
2003 12
2004 12
Thereafter 62
--------
TOTAL $ 127
--------
</TABLE>
The principal executive offices of Hartford Life Insurance Company, together
with its parent, are located in Simsbury, Connecticut. Rental expense is
recognized on a level basis over the term of the primary sublease for the
facility located in Simsbury, Connecticut, which expires on December 31, 2009,
and amounted to approximately $9 in each of the years ended December 31, 1999,
1998 and 1997.
(D) TAX MATTERS
Hartford Life's federal income tax returns are routinely audited by the Internal
Revenue Service. Hartford Life's 1996-1997 federal income tax returns are
currently under audit by the Internal Revenue Service. Management believes that
sufficient provision has been made in the financial statements for issues that
may result from tax examinations and other tax related matters for all open tax
years.
F-17
<PAGE>
13. SEGMENT INFORMATION
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 fixed and variable
annuities, mutual funds, retirement plan services other investment products.
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 tables outlines summarized financial
information concerning the Company's segments.
<TABLE>
<CAPTION>
Investment Individual
1999 Products Life COLI Other Total
<S> <C> <C> <C> <C> <C>
--------------------------------------------------
Total revenues $ 1,884 $ 574 $ 830 $ 112 $ 3,400
Net investment income 699 169 431 60 1,359
Amortization of deferred policy acquisition costs 411 128 -- -- 539
Income tax expense (benefit) 159 37 15 (20) 191
Net income (loss) 300 68 28 (35) 361
Assets 106,352 5,962 20,198 2,453 134,965
</TABLE>
<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>
<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>
14. QUARTERLY RESULTS FOR 1999 AND 1998 (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 31, June 30, September 30, December 31,
------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------
Revenues $838 $915 $853 $721 $846 $826 $863 $1,513
Benefits, claims and expenses 703 787 722 591 695 688 728 1,371
Net income 88 83 85 85 100 89 88 93
</TABLE>
F-18
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE I -- SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN AFFILIATES
AS OF DECEMBER 31, 1999
(IN MILLIONS)
<TABLE>
<CAPTION>
Amount at
Fair which shown
Type of Investment Cost Value on Balance Sheet
<S> <C> <C> <C>
------------------------------------
FIXED MATURITIES
Bonds and Notes
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) $ 180 $ 182 $ 182
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) -- asset backed 1,094 1,064 1,064
States, municipalities and political subdivisions 155 156 156
Foreign governments 289 281 281
Public utilities 865 833 833
All other corporate, including international 5,646 5,420 5,420
All other corporate -- asset backed 4,103 3,985 3,985
Short-term investments 1,156 1,156 1,156
Certificates of deposit 434 422 422
Redeemable preferred stock 1 -- --
------------------------------------
TOTAL FIXED MATURITIES 13,923 13,499 13,499
------------------------------------
EQUITY SECURITIES
Common Stocks
Industrial and miscellaneous 49 56 56
------------------------------------
TOTAL EQUITY SECURITIES 49 56 56
------------------------------------
TOTAL FIXED MATURITIES AND EQUITY SECURITIES 13,972 13,555 13,555
------------------------------------
Policy Loans 4,187 4,187 4,187
------------------------------------
OTHER INVESTMENTS
Mortgage loans on real estate 198 198 198
Other invested assets 127 150 144
------------------------------------
TOTAL OTHER INVESTMENTS 325 348 342
------------------------------------
TOTAL INVESTMENTS $18,484 $18,090 $18,084
------------------------------------
</TABLE>
S-1
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN MILLIONS)
<TABLE>
<CAPTION>
Net Benefits,
Deferred Realized Claims and
Policy Future Other Premiums Net Capital Claim
Acquisition Policy Policyholder and Other Investment Gains Adjustment
Segment Costs Benefits Funds Considerations Income (Losses) Expenses
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------
1999
Investment Products $3,099 $2,744 $ 8,859 $1,185 $ 699 $-- $ 660
Individual Life 914 270 1,880 405 169 -- 254
Corporate Owned Life Insurance -- 321 5,244 399 431 -- 621
Other -- 997 21 56 60 (4) 39
-------------------------------------------------------------------------------------------
CONSOLIDATED OPERATIONS $4,013 $4,332 $16,004 $2,045 $1,359 $(4) $1,574
-------------------------------------------------------------------------------------------
1998
-------------------------------------------------------------------------------------------
Investment Products $2,823 $2,407 $ 9,194 $1,043 $ 736 $-- $ 670
Individual Life 931 466 2,307 363 181 (1) 262
Corporate Owned Life Insurance -- 225 8,097 774 793 -- 924
Other -- 497 17 38 49 (1) 55
-------------------------------------------------------------------------------------------
CONSOLIDATED OPERATIONS $3,754 $3,595 $19,615 $2,218 $1,759 $(2) $1,911
-------------------------------------------------------------------------------------------
1997
-------------------------------------------------------------------------------------------
Investment Products $2,478 $2,070 $ 9,620 $ 771 $ 739 $-- $ 677
Individual Life 837 392 2,182 323 164 -- 242
Corporate Owned Life Insurance -- 56 9,259 551 429 -- 439
Other -- 541 (27) (8) 36 4 21
-------------------------------------------------------------------------------------------
CONSOLIDATED OPERATIONS $3,315 $3,059 $21,034 $1,637 $1,368 $ 4 $1,379
-------------------------------------------------------------------------------------------
<CAPTION>
Amortization
of Deferred
Policy
Acquisition Dividends to Other
Segment Costs Policyholders Expenses
<S> <C> <C> <C>
---------------------------------------
1999
Investment Products $411 $ -- $354
Individual Life 128 -- 87
Corporate Owned Life Insurance -- 104 62
Other -- -- 128
---------------------------------------
CONSOLIDATED OPERATIONS $539 $104 $631
---------------------------------------
1998
---------------------------------------
Investment Products $326 $ -- $368
Individual Life 105 -- 77
Corporate Owned Life Insurance -- 329 278
Other -- -- 43
---------------------------------------
CONSOLIDATED OPERATIONS $431 $329 $766
---------------------------------------
1997
---------------------------------------
Investment Products $250 $ -- $266
Individual Life 83 -- 77
Corporate Owned Life Insurance -- 240 259
Other 2 -- (16)
---------------------------------------
CONSOLIDATED OPERATIONS $335 $240 $586
---------------------------------------
</TABLE>
S-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE IV -- REINSURANCE
(IN MILLIONS)
<TABLE>
<CAPTION>
Percentage
Gross Ceded to Assumed From Net of Amount
Amount Other Companies Other Companies Amount Assumed to Net
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------
FOR THE YEAR ENDED
DECEMBER 31, 1999
Life insurance in force $307,970 $131,162 $11,785 $188,593 6.2%
PREMIUMS AND OTHER CONSIDERATIONS
Life insurance and annuities $ 2,212 $ 275 $ 84 $ 2,021 4.2%
Accident and health insurance 448 435 11 24 45.8%
------------------------------------------------------------------------
TOTAL PREMIUMS AND OTHER CONSIDERATIONS $ 2,660 $ 710 $ 95 $ 2,045 4.6%
------------------------------------------------------------------------
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%
------------------------------------------------------------------------
</TABLE>
S-3
<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) Resolution of the Board of Directors of Hartford Life
Insurance Company ("Hartford") authorizing the establishment
of the Separate Account. (1)
(2) Not applicable. Hartford maintains custody of all assets
pursuant to an exemptive order granted on December 1, 1981.
(3) (a) Principal Underwriting Agreement. (2)
(b) Form of Dealer Agreement. (2)
(4) Form of Variable Annuity Contract. (2)
(5) Form of Application. (2)
(6) (a) Articles of Incorporation of Hartford. (3)
(b) Bylaws of Hartford. (2)
(7) Not applicable.
(8) Participation Agreement. (1)
(9) Opinion and Consent of Lynda Godkin, Senior Vice President,
General Counsel and Corporate Secretary.
(10) Consent of Arthur Andersen LLP, Independent Public
Accountants.
- -------------------
(1) Incorporated herein by reference to the Post Effective
Amendment No. 9, to the Registration Statement File
No. 33-19946, dated May 1, 1995.
(2) Incorporated herein by reference to the Post Effective
Amendment No. 10, to the Registration Statement File
No. 33-19946, dated May 1, 1996.
(3) Incorporated herein by reference to the Post Effective
Amendment No. 11, to the Registration Statement File
No. 33-19946, filed on April 17, 1997.
<PAGE>
(11) No financial statements are omitted.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) Copy of Power of Attorney.
(16) Organizational Chart.
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
- -------------------------------------------- -------------------------------------------------------------------------
NAME POSITION WITH HARTFORD
- -------------------------------------------- -------------------------------------------------------------------------
<S> <C>
David A. Carlson Vice President
- -------------------------------------------- -------------------------------------------------------------------------
Peter W. Cummins Senior Vice President
- -------------------------------------------- -------------------------------------------------------------------------
Bruce W. Ferris Vice President
- -------------------------------------------- -------------------------------------------------------------------------
Timothy M. Fitch Vice President and Actuary
- -------------------------------------------- -------------------------------------------------------------------------
Mary Jane B. Fortin Vice President & Chief Accounting Officer
- -------------------------------------------- -------------------------------------------------------------------------
David T. Foy Senior Vice President, Chief Financial Officer and Treasurer, Director*
- -------------------------------------------- -------------------------------------------------------------------------
Lynda Godkin Senior Vice President, General Counsel and Corporate Secretary,
Director*
- -------------------------------------------- -------------------------------------------------------------------------
Lois W. Grady Senior Vice President
- -------------------------------------------- -------------------------------------------------------------------------
Stephen T. Joyce Senior Vice President
- -------------------------------------------- -------------------------------------------------------------------------
Michael D. Keeler Vice President
- -------------------------------------------- -------------------------------------------------------------------------
Robert A. Kerzner Senior Vice President
- -------------------------------------------- -------------------------------------------------------------------------
Thomas M. Marra President, Director*
- -------------------------------------------- -------------------------------------------------------------------------
Deanne Osgood Vice President
- -------------------------------------------- -------------------------------------------------------------------------
Craig R. Raymond Senior Vice President and Chief Actuary
- -------------------------------------------- -------------------------------------------------------------------------
Donald A. Salama Vice President
- -------------------------------------------- -------------------------------------------------------------------------
Lowndes A. Smith Chief Executive Officer, Director*
- -------------------------------------------- -------------------------------------------------------------------------
David M. Znamierowski Senior Vice President and Chief Investment Officer, Director*
- -------------------------------------------- -------------------------------------------------------------------------
</TABLE>
Unless otherwise indicated, the principal business address of each of the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
*Denotes Board of Directors.
<PAGE>
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 January 31, 2000, there were 245,333 Contract Owners.
Item 28. Indemnification
<PAGE>
Sections 33-770 to 33-778, inclusive, of the Connecticut General
Statutes ("CGS") provide that a corporation may provide indemnification
of or advance expenses to a director, officer, employee or agent.
Reference is hereby made to Section 33-771(e) of CGS regarding
indemnification of directors and Section 33-776(d) of CGS regarding
indemnification of officers, employees and agents of Connecticut
corporations. These statutes provide, in general, that Connecticut
corporations incorporated prior to January 1, 1997 shall, except to the
extent that their certificate of incorporation expressly provides
otherwise, indemnify their directors, officers, employees and agents
against "liability" (defined as the obligation to pay a judgment,
settlement, penalty, fine, including an excise tax assessed with
respect to an employee benefit plan, or reasonable expenses incurred
with respect to a proceeding) when (1) a determination is made pursuant
to Section 33-775 that the party seeking indemnification has met the
standard of conduct set forth in Section 33-771 or (2) a court has
determined that indemnification is appropriate pursuant to Section
33-774. Under Section 33-775, the determination of and the
authorization for indemnification are made (a) by the disinterested
directors, as defined in Section 33-770(3); (b) by special counsel; (c)
by the shareholders; or (d) in the case of indemnification of an
officer, agent or employee of the corporation, by the general counsel
of the corporation or such other officer(s) as the board of directors
may specify. Also, Section 33-772 provides that a corporation shall
indemnify an individual who was wholly successful on the merits or
otherwise against reasonable expenses incurred by him in connection
with a proceeding to which he was a party because he was a director of
the corporation. In the case of a proceeding by or in the right of the
corporation or with respect to conduct for which the director, officer,
agent or employee was adjudged liable on the basis that he received a
financial benefit to which he was not entitled, indemnification is
limited to reasonable expenses incurred in connection with the
proceeding against the corporation to which the individual was named a
party.
Under the Depositor's bylaws, the Depositor must indemnify both
directors and officers of the Depositor for (1) any claims and
liabilities to which they become subject by reason of being or having
been directors or officers of the Depositor and (2) legal and other
expenses incurred in defending against such claims, in each case, to
the extent such is consistent with statutory provisions.
Section 33-777 of CGS specifically authorizes a corporation to procure
indemnification insurance on behalf of an individual who was a
director, officer, employer or agent of the corporation. Consistent
with the statute, the directors and officers of the Depositor and
Hartford Securities Distribution Company, Inc. ("HSD") are covered
under a directors and
<PAGE>
officers liability insurance policy issued to The Hartford Financial
Services Group, Inc. and its subsidiaries.
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.
<PAGE>
Item 29. Principal Underwriters
(a) HSD acts as principal underwriter for the following investment companies:
Hartford Life Insurance Company - Separate Account One
Hartford Life Insurance Company - Separate Account Two
Hartford Life Insurance Company - Separate Account Two (DC Variable
Account I)
Hartford Life Insurance Company - Separate Account Two (DC Variable
Account II)
Hartford Life Insurance Company - Separate Account Two (QP Variable
Account)
Hartford Life Insurance Company - Separate Account Two (Variable Account
"A")
Hartford Life Insurance Company - Separate Account Two (NQ Variable
Account)
Hartford Life Insurance Company - Putnam Capital Manager Trust Separate
Account
Hartford Life Insurance Company - Separate Account Three
Hartford Life Insurance Company - Separate Account Five
Hartford Life Insurance Company - Separate Account Seven
Hartford Life and Annuity Insurance Company - Separate Account One
Hartford Life and Annuity Insurance Company - Putnam Capital Manager
Trust Separate Account Two
Hartford Life and Annuity Insurance Company - Separate Account Three
Hartford Life and Annuity Insurance Company - Separate Account Five
Hartford Life and Annuity Insurance Company - Separate Account Six
Hartford Life and Annuity Insurance Company - Separate Account Seven
American Maturity Life Insurance Company - Separate Account AMLVA
Servus Life Insurance Company - Separate Account One
<PAGE>
Servus Life Insurance Company - Separate Account Two
Hart Life Insurance Company - Separate Account One
Hart Life Insurance Company - Separate Account Two
(b) Directors and Officers of HSD
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER
David A. Carlson Vice President
Peter W. Cummins Senior Vice President
David T. Foy Treasurer
Lynda Godkin Senior Vice President, General Counsel and
Corporate Secretary
George R. Jay Controller
Robert A. Kerzner Executive Vice President
Thomas M. Marra Executive Vice President, Director
Paul E. Olson Supervising Registered Principal
Lowndes A. Smith President and Chief Executive Officer, Director
Unless otherwise indicated, the principal business address of each
of the above individuals is P.O. Box 2999, Hartford, Connecticut
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>
(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 Contract 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.
33-19946
<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 caused this
Registration Statement to be signed on its behalf, in the Town of Simsbury, and
State of Connecticut on this 6th day of April, 2000.
HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT TWO -
(DC VARIABLE ACCOUNT I)
(Registrant)
*By: Thomas M. Marra *By: /s/ Marianne O'Doherty
- ---------------------------------------------- -------------------------
Thomas M. Marra, President Marianne O'Doherty
Attorney-In-Fact
HARTFORD LIFE INSURANCE COMPANY
(Depositor)
*By: Thomas M. Marra
- -----------------------------------------------
Thomas M. Marra, President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons and in the
capacity and on the date indicated.
David T. Foy, Senior Vice President, Chief
Financial Officer and Treasurer, Director*
Lynda Godkin, Senior Vice President, General
Counsel and Corporate Secretary, Director*
Thomas M. Marra, President, By: /s/ Marianne O'Doherty
Director* -------------------------
Lowndes A. Smith, Chief Marianne O'Doherty
Executive Officer, Director * Attorney-in-Fact
Raymond P. Welnicki, Senior Vice President,
Director* Date: April 6, 2000
Lizabeth H. Zlatkus, Executive Vice President,
David M. Znamierowski, Senior Vice President and
Chief Investment Officer, Director*
(33-19946)
<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>
April 6, 2000
LYNDA GODKIN
SENIOR VICE PRESIDENT,
GENERAL COUNSEL &
CORPORATE SECRETARY
Board of Directors
Hartford Life Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
RE: SEPARATE ACCOUNT TWO (DC VARIABLE ACCOUNT-I)
HARTFORD LIFE INSURANCE COMPANY
FILE NO. 33-19946
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
Separate Account Two (the "Account") in connection with the registration of an
indefinite amount of securities in the form of 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 6, 2000
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>
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. 33-19946 for Hartford Life Insurance Company DC
Variable Account-I and a series of Separate Account Two on Form N-4.
/s/ Arthur Andersen LLP
Hartford, Connecticut
April 11, 2000
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
POWER OF ATTORNEY
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 Marta Czekajewski 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 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/ David T. Foy
- -------------------------------- Dated as of January 15, 2000
David T. Foy
/s/ Lynda Godkin
- -------------------------------- Dated as of January 15, 2000
Lynda Godkin
/s/ Thomas M. Marra
- -------------------------------- Dated as of January 15, 2000
Thomas M. Marra
/s/ Lowndes A. Smith
- -------------------------------- Dated as of January 15, 2000
Lowndes A. Smith
/s/ Raymond P. Welnicki
- -------------------------------- Dated as of January 15, 2000
Raymond P. Welnicki
/s/ Lizabeth H. Zlatkus
- -------------------------------- Dated as of January 15, 2000
Lizabeth H. Zlatkus
/s/ David M. Znamierowski
- -------------------------------- Dated as of January 15, 2000
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 AND ACCIDENT INSURANCE COMPANY
(CONNECTICUT)
|
|
|
-------------------------------------------------------------------------------------------------------------------------
| | | | | | | | |
HARTFORD LIFE | | | | | | PLANCO PLANCO
INTERNATIONAL, LTD.| | | | | | FINANCIAL INCORPORATED
(CONNECTICUT) | | | | | | SERVICES, (PENNSYLVANIA)
| | | | | | INCORPORATED
| | | | | | (PENNSYLVANIA)
| | | | | |
| HART LIFE HARTFORD FINANCIAL HARTFORD LIFE HARTFORD AMERICAN
| INSURANCE SERVICES LIFE INSURANCE COMPANY FINANCIAL MATURITY LIFE
| COMPANY INSURANCE COMPANY (CONNECTICUT) SERVICES, LLC INSURANCE COMPANY
| (CONNECTICUT) (CONNECTICUT) | (DELAWARE) (CONNECTICUT)
| | | |
| ------------------------------------- | AML FINANCIAL, INC.
| | | | | (CONNECTICUT)
|SERVUS LIFE HARTFORD HARTFORD |
| INSURANCE INTERNATIONAL LIFE AND |
| COMPANY LIFE REASSURANCE ANNUITY INSURANCE |
|(CONNECTICUT) CORPORATION COMPANY |
| (CONNECTICUT) (CONNECTICUT) |
| | |
| | |
| HARTFORD |
| LIFE, LTD. |
| (BERMUDA) |
| |
| |
----------| -----------------------------------------------------------------------
| | | | |
INTERNATIONAL HL INVESTMENT HARTFORD HARTFORD SECURITIES HARTFORD-COMPREHENSIVE
CORPORATE ADVISORS, LLC EQUITY SALES DISTRIBUTION EMPLOYEE
MARKETING GROUP, INC. (CONNECTICUT) COMPANY, INC. COMPANY, INC. BENEFIT SERVICE
(CONNECTICUT) | (CONNECTICUT) (CONNECTICUT) COMPANY
| | (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)
|
----------------------------------------------------------------------------------------------------------------------------
| | |
| | Hartford Accidental and Indemnity Company
| | (Connecticut)
| | |
| | Hartford Life, Inc
| | (Delaware)
| | |
| | Hartford Life and Accident Insurance Company
| | (Connecticut)
| | |
| | HARTFORD LIFE
| | -------INTERNATIONAL LTD.
| | | (CONNECTICUT)
| | | |
| | | ITT HARTFORD
| | | ----SUDAMERICANA
| | | | HOLDING S.A.
| | | | (ARGENTINA)
| | | |------------------------------------------------------
| | | | | |
| | | | ITT HARTFORD GALICIA INSTITUTO DE
| | | | SEGUROS VIDA COMPANIA SALTA COMPANIA DE
| | | |------DE VIDA S.A. DE SEGUROS S.A. SEGUROS DE VIDA S.A.
| | | | (URUGUAY) (ARGENTINA) (ARGENTINA)
| | | |
| | ICATU | | HARTFORD
| | HARTFORD | |---SEGUROS DE VIDA S.A.
| | SEGUROS S.A.----------| | (ARGENTINA)
| | (BRAZIL) |
| | | |
| | | | 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) |
|
|
|
|--------- U.O.R., S.A.
(ARGENTINA)
</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 -THE HARTFORD |
| S.A. INSURANCE CO., N.V. |--- EDINBURGH INTERNATIONAL |
| ZWOLSCHE ALGEMEENE (FRANCE) (BELGIUM) | INSURANCE CO., LTD. FINANCIAL |
|----SCHADEVERZEKERING | | (U.K.) SERVICES |
--------| N.V.----------------------------------- | | | GROUP CIA |
| | (NETHERLANDS) | | | | DE SEGUROS Y |
Z.A. | | | | EXCESS INSURANCE REASEGUROS S.A.|
- --VERZEKERINGEN | | | | COMPANY LTD. (SPAIN) |
| 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>
