<PAGE>
File No. 33-73570
811-4372
Securities and Exchange Commission
Washington, D.C.
Form N-4
Registration Statement Under the Securities Act of 1933
-----
Pre-Effective Amendment No. /
----- -----
Post-Effective Amendment No. 2 / X
---- ----
and/or
Registration Statement Under the Investment Company Act of 1940
Amendment No. 2
----
(check appropriate box or boxes)
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)
Depositor's Telephone Number: (203) 843-8847
Rodney J. Vessels, Esquire
P.O. Box 2999
Hartford, CT 06104-2999
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of this Registration Statement.
<PAGE>
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485
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X on (May 1, 1995) pursuant to paragraph (b)(1)(v) of Rule 485
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60 days after filing pursuant to paragraph (a)(1) of Rule 485
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on May 1, 1995 pursuant to paragraph (a)(1) of Rule 485
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75 days after filing pursuant to paragraph (a)(2) of Rule 485
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on ______ pursuant to paragraph (a)(2) of Rule 485
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Calculation of Registration Fee Under Securities Act of 1933
- - -------------------------------------------------------------------------------
Title of Amount Proposed Maximum Proposed Maximum Amount of
Securities Being Offering Aggregate Registration
Being Requested Registered Price Per Unit Offering Price Fee
- - -------------------------------------------------------------------------------
PAID
Hartford Life Insurance Pursuant to Regulation 270. 24f-2
Company under the Investment Company Act of
Separate Account Two 1940, Registrant as
Units of Interest previously elected to register an indefinite
number of units of interest in this
Separate Account
- - --------------------------------------------------------------------------------
The rule 24f-2 Notice for the Registrant's most recent fiscal year will be filed
on or about February 28, 1995.
<PAGE>
-3-
SEPARATE ACCOUNT TWO
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)
N-4 Item No. Prospectus Heading
- - ------------------------- ----------------------------------
1. Cover Page Hartford Life Insurance Company -
Separate Account Two
2. Definitions Glossary of Special Terms
3. Synopsis or Highlights Introduction
4. Condensed Financial Yield Information
Information
5. General Description of Hartford Life, Separate Account
Registrant Two, the Fixed Account, and the Funds
6. Deductions Charges Under the Contract
7. General Description of The Contracts, Separate Account, the
Annuity Contracts Fixed Account, and Surrender Benefits
8. Annuity Period Annuity Benefits
9. Death Benefit Death Benefits
10. Purchases and Contract Value The Contract, Contracts Offered, Premium
Payments and Initial Allocations and
Contract Value
11. Redemptions Surrender Benefits
12. Taxes Federal Tax Considerations
13. Legal Proceedings Legal Matters & Experts
14. Table of Contents of the Table of Contents to
Statement of Additional Statement of Additional
Information Information
<PAGE>
-4-
HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT TWO
-------------------------------
This Prospectus describes the Director, individual and group tax deferred
variable annuity Contracts designed for retirement planning purposes.
The Contracts are issued by Hartford Life Insurance Company ("HL"). Payments
for the Contracts will be held in a series of Hartford Life Insurance Company
Separate Account Two (Separate Account Two or the "Separate Account") or in the
Fixed Account of HL. Allocations to and transfer to and from the Fixed Account
are not permitted in certain states.
The following Sub-Accounts are available under the Contracts. Opposite each
Sub-Account is the name of the underlying investment for that Sub-Account.
Advisers Fund Sub-Account - shares of Hartford Advisers Fund,
Inc. ("Advisers Fund")
Capital Appreciation Fund - shares of Hartford Capital
Sub-Account Appreciation Fund, Inc. ("Capital
Appreciation Fund"), (formerly
"Hartford Aggressive Growth Fund,
Inc.")
Bond Fund Sub-Account - shares of Hartford Bond Fund, Inc.
("Bond Fund")
Dividend and Growth Fund Sub-Account - shares of Hartford Dividend and
Growth Fund, Inc. ("Dividend and
Growth")
HVA Money Market Fund - shares of HVA Money Market Fund, Inc.
Sub-Account ("Money Market Fund").
Index Fund Sub-Account - shares of Hartford Index Fund, Inc.
("Index Fund").
International Opportunities - shares of Hartford International
Opportunities Fund Sub-Account Fund, Inc. ("International
Opportunities Fund").
International Advisers Fund - shares of Hartford International
Sub-Account Advisers Fund, Inc. ("International
Advisers Fund")
Mortgage Securities - shares of Hartford Mortgage
Fund Sub-Account Securities Fund, Inc. ("Mortgage
Securities Fund").
Stock Fund Sub-Account - shares of Hartford Stock Fund, Inc.
("Stock Fund").
<PAGE>
-5-
This Prospectus sets forth the information concerning the Separate Account and
the Fixed Account, where available, that investors should know before investing.
This Prospectus should be kept for future reference. Additional information
about the Separate Account and the Fixed Account has been filed with the
Securities and Exchange Commission and is available without charge upon request.
To obtain the Statement of Additional Information send a written request to
Hartford Life Insurance Company, Attn: Individual Annuity Operations, P.O. Box
5085, Hartford, CT 06102-5085. The Table of Contents for the Statement of
Additional Information may be found on page _____ of this Prospectus. The
Statement of Additional Information is incorporated by reference to this
Prospectus.
- - -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
- - -------------------------------------------------------------------------------
VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED
BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
- - -------------------------------------------------------------------------------
Prospectus Dated: May 1, 1995
--------------------------
Statement of Additional Information Dated: May 1, 1995
---------------------------
<PAGE>
-6-
TABLE OF CONTENTS
SECTION PAGE
- - ------ ----
GLOSSARY OF SPECIAL TERMS. . . . . . . . . . . . . . . . . . . . . . . .
FEE TABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ACCUMULATION UNIT VALUES . . . . . . . . . . . . . . . . . . . . . . . .
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
HARTFORD LIFE, SEPARATE ACCOUNT TWO, THE FIXED ACCOUNT AND THE FUNDS . .
Hartford Life Insurance Company . . . . . . . . . . . . . . . . . .
Separate Account Two. . . . . . . . . . . . . . . . . . . . . . . .
The Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Fixed Account . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Related Information . . . . . . . . . . . . . . . . . .
THE CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contracts Offered . . . . . . . . . . . . . . . . . . . . . . . . .
Premium Payments and Initial Allocations. . . . . . . . . . . . . .
Contract Value. . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfers Between the Sub-Accounts/Fixed Account. . . . . . . . . .
Charges Under the Contract. . . . . . . . . . . . . . . . . . . . .
Death Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . .
Surrender Benefits. . . . . . . . . . . . . . . . . . . . . . . . .
Annuity Benefits. . . . . . . . . . . . . . . . . . . . . . . . . .
Other Information . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
-7-
FEDERAL TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . .
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
How Contracts Are Sold . . . . . . . . . . . . . . . . . . . . . .
Legal Matters and Experts . . . . . . . . . . . . . . . . . . . . .
Additional Information. . . . . . . . . . . . . . . . . . . . . . .
APPENDIX I - Information Regarding Tax Qualified Plans . . . . . . . . .
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION . . . . . . .
<PAGE>
-8-
GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT: An accounting unit of measure used to calculate values
before Annuity payments begin.
ANNUAL WITHDRAWAL AMOUNT: The amount which can be withdrawn in any Contract
Year prior to incurring surrender charges.
ANNUITANT: The person or Participant upon whose life the Contract is issued.
ANNUITY: A series of payments for life, or for life with a minimum number of
payments or a determinable sum guaranteed, or for a joint lifetime and
thereafter during the lifetime of the survivor, or for a designated period.
ANNUITY COMMENCEMENT DATE: The date on which Annuity payments are to commence.
Under group unallocated Contracts, the date for each Participant is determined
by the Contract Owner in accordance with the terms of the Plan.
ANNUITY UNIT: An accounting unit of measure used to calculate the value of
Annuity payments.
BENEFICIARY: The person(s) who receive Contract Values in the event of the
Annuitant's or Contract Owner's death under certain conditions. Under a group
unallocated Contract, the person named by the Participant within the Plan
documents/enrollment forms who is entitled to receive benefits in case of the
death of the Participant.
CODE: The Internal Revenue Code of 1986, as amended.
COMMISSION: Securities and Exchange Commission.
CONTINGENT ANNUITANT: The person so designated by the Contract Owner, who upon
the Annuitant's death, prior to the Annuity Commencement Date, becomes the
Annuitant.
CONTRACT ANNIVERSARY: The anniversary of the Contract Date.
CONTRACT OWNER(S): The owner(s) of the Contract, trustee or other entity,
sometimes herein referred to as "you".
CONTRACT VALUE: The aggregate value of any Sub-Account Accumulation Units held
under the Contract plus the value of the Fixed Account.
CONTRACT YEAR: A period of 12 months commencing with the Contract Date or any
anniversary thereof.
<PAGE>
-9-
DEATH BENEFIT: The amount payable upon the death of a Contract Owner, Annuitant
or Participant, in the case of group Contracts, before annuity payments have
commenced.
FIXED ACCOUNT: Part of the General Account of HL to which a Contract Owner may
allocate all or a portion of his Premium Payment or Contract Value.
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.
FUNDS: The Funds described commencing on page ______ of this Prospectus and any
additional Funds which may be made available from time to time.
GENERAL ACCOUNT: The General Account of HL which consists of all assets of the
Hartford Life Insurance Company other than those allocated to the separate
accounts of the Hartford Life Insurance Company.
HL: Hartford Life Insurance Company.
HOME OFFICE OF THE COMPANY: Currently located at 200 Hopmeadow Street,
Simsbury, CT. All correspondence concerning this Contract should be sent to
P.O. Box 5085, Hartford, CT 06102-5085, Attn: Individual Annuity Operations.
MAXIMUM ANNIVERSARY VALUE: Value used in determining the Death Benefit. It is
based on a series of calculations of Account Values on Contract Anniversaries,
premium payments and partial surrenders, as described on page ______.
PARTICIPANT - (For Group Unallocated Contracts Only) - Any eligible employee of
an Employer/Contract Owner participating in the Plan.
PLAN - A voluntary Plan of an employer which qualifies for special tax treatment
under a Section of the Internal Revenue Code.
PREMIUM PAYMENT: The payment made to HL pursuant to the terms of the Contract.
PREMIUM TAX: A tax on premiums charged by a state or municipality on Premium
Payments or Contract Values.
SEPARATE ACCOUNT: The HL separate account entitled "Hartford Life Insurance
Company Separate Account Two".
SUB-ACCOUNT: Accounts established within the Separate Account with respect to a
Fund.
<PAGE>
-10-
TERMINATION VALUE: The Contract Value upon termination of the Contract prior to
the Annuity Commencement Date, less any applicable Premium Taxes, the Annual
Maintenance Fee and any applicable contingent deferred sales charges.
UNALLOCATED CONTRACTS - Contracts issued to employers, or other entity, as
Contract Owner under which no allocation of Contract Values is made for a
specific Participant. The Plans will be responsible for the individual
allocations.
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 (currently 4:00 p.m. Eastern Time) on such days.
VALUATION PERIOD: The period between the close of business on successive
Valuation Days.
VARIABLE ANNUITY: An Annuity providing for payments varying in amount in
accordance with the investment experience of the assets of the Separate Account.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY
Contract Owner Transaction Expense
(All Sub Accounts)
<S> <C>
Sales Load Imposed on Purchases (as a percentage of premium payments). . . . . . . . None
Exchange Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0
Deferred Sales Load (as a percentage of amounts withdrawn) . . . . . . . . . . . . .
First Year (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
Second Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
Third Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
Fourth Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
Fifth Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4%
Sixth Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3%
Seventh Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2%
Eighth Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0%
Annual Contract Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $30 (2)
Annual Expenses - Separate Account
(as a percentage of average account value)
Mortality and Expense Risk 1.250%
</TABLE>
<TABLE>
<CAPTION>
Annual Fund Operating Expense
(as a percentage of net assets)
Total Fund
Management Other Operating
Fees Expenses Expenses
---------- -------- ----------
<S> <C> <C> <C>
Hartford Bond Fund . . . . . . . . . . . . . . . . . . 0.500% 0.047% 0.547%
Hartford Stock Fund. . . . . . . . . . . . . . . . . . 0.462% 0.039% 0.501%
HVA Money Market Fund. . . . . . . . . . . . . . . . . 0.425% 0.049% 0.474%
Hartford Advisers Fund . . . . . . . . . . . . . . . . 0.615% 0.040% 0.655%
Hartford U.S. Government Money Market Fund . . . . . . 0.425% 0.157% 0.582%
Hartford Aggressive Growth Fund. . . . . . . . . . . . 0.675% 0.045% 0.720%
Hartford Mortgage Securities Fund. . . . . . . . . . . 0.425% 0.052% 0.477%
Hartford Index Fund. . . . . . . . . . . . . . . . . . 0.375% 0.079% 0.454%
Hartford International Opportunities Fund. . . . . . . 0.725% 0.126% 0.851%
Hartford Dividend & Growth Fund. . . . . . . . . . . . 0.668% 0.166% 0.834%
Hartford International Advisers Fund (3) . . . . . . . 0.750% 0.250% 1.000%
<FN>
(1) Length of time from premium payment.
(2) The annual contract fee is a single $30 charge on a Contract. It is deducted
proportionally from the investment options in use at the time of the charge.
In the Example, the annual contract fee is approximated as a 0.08% annual
asset.
(3) Hartford International Advisers Fund is a new fund; operating expenses are
based on annualized estimates of such expenses to be incurred in the current
fiscal year.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
If you surrender your contract at If you annuitize at the end of the
the end of the applicable time period: applicable time period:
You would pay the following expenses You would pay the following expenses
on a $1,000 investment, assuming a 5% on a $1,000 investment, assuming a 5%
annual return on assets: annual return on assets:
_______ _______ _______ _______ _______ _______ _______ ________
Sub-Account 1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
___________ _______ _______ _______ _______ _______ _______ _______ ________
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Hartford Bond Fund . . . . . . . . . . . . . . . . $79 $110 $142 $221 $18 $59 $101 220
Hartford Block Fund. . . . . . . . . . . . . . . . 79 108 140 216 18 57 99 215
HVA Money Market Fund. . . . . . . . . . . . . . . 78 107 138 213 18 56 98 212
Hartford Adviser Fund. . . . . . . . . . . . . . . 80 113 148 233 20 62 107 232
Hartford U.S. Government Money Market Fund . . . . 80 111 144 225 19 60 103 224
Hartford Aggressive Growth Fund. . . . . . . . . . 81 115 151 240 20 64 110 239
Hartford Mortgage Securities Fund. . . . . . . . . 79 107 139 214 18 56 98 213
Hartford Index Fund. . . . . . . . . . . . . . . . 78 107 137 211 17 56 96 210
Hartford International Opportunities Fund. . . . . 82 119 158 254 22 68 117 252
Hartford Dividend & Growth Fund. . . . . . . . . . 82 118 157 252 21 68 116 251
Hartford International Advisers Fund . . . . . . . 84 124 166 269 23 73 125 268
<CAPTION>
If you do not surrender your
contract:
You would pay the following expenses
on a $1,000 investment, assuming a 5%
annual return on assets:
_______ _______ _______ ________
Sub-Account 1 year 3 years 5 years 10 years
___________ _______ _______ _______ ________
<S> <C> <C> <C> <C>
Hartford Bond Fund . . . . . . . . . . . . . . . . $19 $60 $102 221
Hartford Block Fund. . . . . . . . . . . . . . . . 19 58 100 216
HVA Money Market Fund. . . . . . . . . . . . . . . 18 57 98 213
Hartford Adviser Fund. . . . . . . . . . . . . . . 20 63 108 233
Hartford U.S. Government Money Market Fund . . . . 20 61 104 225
Hartford Aggressive Growth Fund. . . . . . . . . . 21 65 111 240
Hartford Mortgage Securities Fund. . . . . . . . . 19 57 99 214
Hartford Index Fund. . . . . . . . . . . . . . . . 18 57 97 211
Hartford International Opportunities Fund. . . . . 22 69 118 254
Hartford Dividend & Growth Fund. . . . . . . . . . 22 68 117 252
Hartford International Advisers Fund . . . . . . . 24 74 126 269
<FN>
The purpose of this table is to assist the contract owner in understanding
various costs and expenses that a contract owner will bear directly or
indirectly. The table reflects expenses of the Separate Account and underlying
Funds. Premium taxes may also be applicable.
This EXAMPLE should not be considered a representation of passed or future
expenses and actual expenses may be greater or less than those shown.
</TABLE>
<PAGE>
ACCUMULATION UNIT VALUES
(For an accumulation unit outstanding throughout the period)
The following information has been examined by Arthur Andersen & Co.,
Independent public accountants, whose report thereon is included in the
Statement of Additional Information, which is incorporated by reference to this
Prospectus.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
BOND FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 1.694 $ 1.556 $ 1.493
Accumulation unit value at end of period . . . . . . . . . $ 1.607 $ 1.694 $ 1.556
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 85,397 79,080 41,204
STOCK FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 2.250 $ 1.993 $ 1.834
Accumulation unit value at end of period . . . . . . . . . $ 2.180 $ 2.250 $ 1.993
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 248,563 203,873 121,100
MONEY MARKET FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 1.424 $ 1.401 $ 1.369
Accumulation unit value at end of period . . . . . . . . . $ 1.462 $ 1.424 $ 1.401
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 138,396 102,328 78,664
ADVISERS FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 2.072 $ 1.870 $ 1.748
Accumulation unit value at end of period . . . . . . . . . $ 1.991 $ 2.072 $ 1.870
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 858,014 688,865 295,387
U.S. GOVERNMENT MONEY MARKET FUND SUB-ACCOUNT
Accumulation unit value at beginning of period. . . . . . $ 1.376 $ 1.357 $ 1.331
Accumulation unit value at end of period. . . . . . . . . $ 1.409 $ 1.376 $ 1.375
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 48 52 161
AGGRESSUVE GROWTH FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 2.583 $ 2.165 $ 1.874
Accumulation unit value at end of period . . . . . . . . . $ 2.615 $ 2.583 $ 2.165
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 220,936 160,934 75,653
MORTGAGE SECURITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 1.685 $ 1.604 $ 1.552
Accumulation unit value at end of period . . . . . . . . . $ 1.637 $ 1.685 $ 1.604
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 112,417 138,666 98,494
INDEX FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 1.755 $ 1.629 $ 1.544
Accumulation unit value at end of period . . . . . . . . . $ 1.750 $ 1.755 $ 1.629
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 50,799 46,504 29,723
INTERNATIONAL OPPORTUNITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 1.220 0.924 0.979
Accumulation unit value at end of period . . . . . . . . . $ 1.181 1.220 0.924
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 246,259 132,795 32,597
DIVIDEND & GROWTH FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 1.000(d)
Accumulation unit value at end of period . . . . . . . . . $ 1.009
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 29,146
<CAPTION>
Year Ended December 31,
-----------------------------------------------------
1991 1990 1989
---- ---- ----
<S> <C> <C> <C>
BOND FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 1.298 $ 1.212 $ 1.095
Accumulation unit value at end of period . . . . . . . . . $ 1.493 $ 1.298 $ 1.212
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . $ 25,267 14,753 9,267
STOCK FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 1,490 $ 1.569 $ 1.261
Accumulation unit value at end of period . . . . . . . . . $ 1.834 $ 1.490 $ 1.569
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 72,780 $ 31,149 30,096
MONEY MARKET FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 1.307 $ 1.225 $ 1.136
Accumulation unit value at end of period . . . . . . . . . $ 1.369 $ 1.307 $ 1.225
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 60,774 67,059 28,291
ADVISERS FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 1.470 $ 1.470 $ 1.223
Accumulation unit value at end of period . . . . . . . . . $ 1.748 $ 1.470 $ 1.470
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 166,408 101,758 79,738
U.S. GOVERNMENT MONEY MARKET FUND SUB-ACCOUNT
Accumulation unit value at beginning of period. . . . . . $ 1.276 $ 1.202 $ 1.122
Accumulation unit value at end of period. . . . . . . . . $ 1.331 $ 1.276 $ 1.202
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 213 243 297
AGGRESSIVE GROWTH FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 1.231 $ 1.400 $ 1.142
Accumulation unit value at end of period . . . . . . . . . $ 1.874 $ 1.231 $ 1.400
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 39,031 10,501 8,041
MORTGAGE SECURITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 1.370 $ 1.264 $ 1.132
Accumulation unit value at end of period . . . . . . . . . $ 1.552 $ 1.370 $ 1.264
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 46,464 18,632 12,248
INDEX FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 1.207 $ 1.274 $ 0.989
Accumulation unit value at end of period . . . . . . . . . $ 1.544 $ 1.207 $ 1.274
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 15,975 10,015 6,306
INTERNATIONAL OPPORTUNITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 0.877 $ 1.000 $ --
Accumulation unit value at end of period . . . . . . . . . $ 0.979 $ 0.877 $ --
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 13,109 2,892
DIVIDEND & GROWTH FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $
Accumulation unit value at end of period . . . . . . . . . $
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . .
<CAPTION>
Year Ended December 31,
-----------------------------------------------------
1988 1987 1986
---- ---- ----
<S> <C> <C> <C>
BOND FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 1.031 $ 1.044 $ 1.000 (a)
Accumulation unit value at end of period . . . . . . . . . $ 1.095 $ 1.031 $ 1.044
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 5,786 3,576 802
STOCK FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 1.073 $ 1.031 $ 1.000 (a)
Accumulation unit value at end of period . . . . . . . . . $ 1.261 $ 1.073 $ 1.031
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 9,158 9,229 1,250
MONEY MARKET FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 1.071 $ 1.019 $ 1.000 (a)
Accumulation unit value at end of period . . . . . . . . . $ 1.136 $ 1.071 $ 1.019
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . $ 29,043 11,633 243
ADVISERS FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 1.085 $ 1.036 $ 1.000 (a)
Accumulation unit value at end of period . . . . . . . . . $ 1.223 $ 1.085 $ 1.036
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 56,584 56,332 9,405
U.S. GOVERNMENT MONEY MARKET FUND SUB-ACCOUNT
Accumulation unit value at beginning of period. . . . . . $ 1.062 $ 1.018 $ 1.000 (a)
Accumulation unit value at end of period. . . . . . . . . . .$ 1.122 $ 1.062 $ 1.018
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 281 187 10
AGGRESSIVE GROWTH FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 0.916 $ 0.969 $ 1.000 (a)
Accumulation unit value at end of period . . . . . . . . . $ 1.142 $ 0.916 $ 0.969
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 3,606 2,989 431
MORTGAGE SECURITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 1.057 $ 1.043 $ 1.000 (a)
Accumulation unit value at end of period . . . . . . . . . $ 1.132 $ 1.057 $ 1.043
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 11,061 9,397 3,773
INDEX FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . $ 0.862 $ 1.000 $ --
Accumulation unit value at end of period . . . . . . . . . $ 0.989 $ 0.862 $ --
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . 2,868 1,758 --
INTERNATIONAL OPPORTUNITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . . -- -- --
Accumulation unit value at end of period . . . . . . . . . -- -- --
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . -- -- --
DIVIDEND & GROWTH FUND SUB-ACCOUNT
Accumulation unit value at beginning of period . . . . . .
Accumulation unit value at end of period . . . . . . . . .
Number accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . .
<FN>
(a) Inception date August 1, 1986.
(b) Inception date May 1, 1987.
(c) Inception date July 2, 1990.
(d) Inception date March 8, 1994.
</TABLE>
<PAGE>
-13-
INTRODUCTION
This Prospectus has been designed to provide you with the necessary information
to make a decision on purchasing an individual or group tax deferred Variable
Annuity Contract offered by Hartford Life Insurance Company ("HL") in the Fixed
Account and/or a series of Separate Account Two. (See "Hartford Life Insurance
Company" page _____; "The Contracts" page _____; and "The Separate Account" page
____.) Please read the Glossary of Special Terms on pages 2 and 3 prior to
reading this Prospectus to familiarize yourself with the terms being used.
The Contracts are available for purchase by individuals and groups on both a
non-qualified and qualified basis. The maximum issue age for the Contract is 85
years old. (See "The Contracts" page _______.) Generally, minimum initial
Premium Payment is $1,000. Thereafter, the minimum payment is $500. There is
no deduction for sales expenses from Premium Payments when made. A deduction
will be made for state Premium Taxes for Contracts sold in certain states. (See
"Charges Under the Contract," page ____.)
Generally, the Contracts are purchased by completing and submitting an
application or an order to purchase, along with the initial Premium Payment, to
HL for its approval. A Contract Owner may exercise his right to cancel the
Contract within 10 days of delivery of the Contract by returning the Contract to
HL at its Home Office. If the Contract Owner exercises his right to cancel, HL
will return either the Contract Value or the original Premium Payments
(depending on the state law) to the Contract Owner.
The investment options for the Contracts are the Hartford Advisers Fund, Inc.,
Hartford Capital Appreciation Fund, Inc., Hartford Bond Fund, Inc., Hartford
Dividend and Growth Fund, Inc., Hartford Index Fund, Inc., Hartford
International Advisers Fund, Inc., Hartford International Opportunities Fund,
Inc., Hartford Mortgage Securities Fund, Inc., Hartford Stock Fund, Inc., HVA
Money Market Fund, Inc., and such other funds as shall be offered from time to
time (the "Funds"), and the Fixed Account. (See "The Funds" page ____ and "The
Fixed Account" page ____.) With certain limitations, Contract Owners may
allocate their Premium Payments and Contract Values to one or a combination of
these investment options and transfer among the investment options. (See
"Transfers Between Sub-Accounts/Fixed Account" page _______.)
An Annual Maintenance Fee in the amount of $30.00 is deducted from Contract
Values each Contract Year (not applicable to Contracts with Account Values of
$50,000 or more) and there is a 1.25% per annum mortality and expense risk
charge applied against all Contract Values held in the Separate Account. (See
"Charges Under the Contract" page _____.) Finally, the Funds are subject to
certain fees, charges and expenses (see the Prospectus for the Funds attached
hereto).
<PAGE>
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The Contracts may be surrendered, or portions of the value of such Contracts may
be withdrawn, at any time prior to the Annuity Commencement Date. (See
"Surrender Benefits" page ____). However, a contingent deferred sales charge
may be assessed against Contract Values when they are surrendered. Contingent
deferred sales charges will not be assessed in certain instances, including
withdrawals up to the annual withdrawal amount and the payment of Death
Benefits. (See "Charges Under the Contract" page ____.)
The Contract provides for a minimum Death Benefit in the event of the death of
the Annuitant or Contract Owner before Annuity payments have commenced (see
"Death Benefits" page ____). Various annuity options are available under the
Contract for election by the Contract Owner on either a fixed or variable basis.
In the absence of an annuity option election, the Contract Value (less
applicable Premium Taxes) will be applied on the Annuity Commencement Date to
provide a life annuity with 120 monthly payments certain (see "Annuity Benefits"
page ___).
HARTFORD LIFE, SEPARATE ACCOUNT TWO,
THE FIXED ACCOUNT, AND THE FUNDS
HARTFORD LIFE INSURANCE COMPANY
Hartford Life Insurance Company ("HL") is a Connecticut stock life insurance
Company, originally incorporated under the laws of Massachusetts on June 5,
1902. It is engaged in the business of writing health and life insurance, both
ordinary and group, in all states of the United States and the District of
Columbia. The offices of HL are located in Simsbury, Connecticut; however, its
mailing address is P.O. Box 5085, Hartford, CT 06102-5085. HL is ultimately
100% owned by Hartford Fire Insurance Company, one of the largest multiple lines
insurance carriers in the United States. Hartford Fire Insurance Company is a
subsidiary of ITT Corporation. Hartford Life Insurance Company has an A++
(superior) rating from A.M. Best and Company, Inc. HL has an AA+ rating from
Standard & Poor's and Duff and Phelps highest rating (AAA) on the basis of
its claims paying ability.
These ratings do not apply to the performance of the Separate Account. However,
the Contractual obligations under this variable annuity are the general
corporate obligations of HL. These ratings do apply to HL's ability to meet its
insurance obligations under the Contract.
THE SEPARATE ACCOUNT TWO
The Separate Account was established on June 2, 1986. It is the Separate
Account in which HL sets aside and invests the assets attributable to variable
annuity Contracts, including the Contracts sold under this Prospectus. Separate
Account assets are held by HL under a safekeeping arrangement. Although the
Separate Account is an integral part of HL, it is registered as a unit
<PAGE>
-15-
investment trust under the Investment Company Act of 1940. This registration
does not, however, involve Securities and Exchange Commission supervision of the
management or the investment practices or policies of the Separate Account or
HL. The Separate Account meets the definition of "separate account" under
federal securities law.
Your investment in the Separate Account is allocated to one or more Sub-Accounts
as per your specifications. Each Sub-Account is invested exclusively in the
assets of one underlying Fund. HL reserves the right, subject to compliance
with the law, to substitute the shares of any other registered investment
company for the shares of any Fund already purchased or to be purchased in the
future by the Separate Account provided that the substitution has been approved
by the Commission.
Net Premium Payments and proceeds of transfers between Sub-Accounts are applied
to purchase shares in the appropriate Fund at net asset value determined as of
the end of the Valuation Period during which the payments were received or the
transfer made. All distributions from the Fund are reinvested at net asset
value. The value of your investment will therefore vary in accordance with the
net income and fluctuation in the individual investments within the underlying
Fund portfolio or portfolios. During the Variable Annuity payout period, both
your Annuity payments and reserve values will vary in accordance with these
factors.
Under Connecticut law, the assets of the Separate Account attributable to the
Contracts offered under this Prospectus are held for the benefit of the owners
of, and the persons entitled to payments under, those Contracts. Income, gains,
and losses, whether or not realized, from assets allocated to the Separate
Account, are, in accordance with the Contracts, credited to or charged against
the Separate Account. Also, the assets in the Separate Account are not
chargeable with liabilities arising out of any other business HL may conduct.
Contract Values allocated to the Separate Account is not affected by the rate of
return of HL's General Account, nor by the investment performance of any of HL's
other separate accounts. The Separate Account may be subject to liabilities
arising from a Series of the Separate Account whose assets are attributable to
other variable annuity Contracts or variable life insurance policies offered by
the Separate Account which are not described in this Prospectus. However, all
obligations arising under the Contracts are general corporate obligations of HL.
HL does not guarantee the investment results of the Separate Accounts or any of
the underlying investments. There is no assurance that the value of a Contract
during the years prior to retirement or the aggregate amount of the Variable
Annuity payments will equal the total of Premium Payments made under the
Contract. Since each underlying Fund has different investment objectives, each
is subject to different risks. These risks are more fully described in the
accompanying Fund Prospectus.
<PAGE>
-16-
THE FUNDS
All of the Funds are sponsored by HL and were incorporated under the laws of
the State of Maryland.
A full description of the Funds, their investment policies and restrictions,
risks, charges and expenses and all other aspects of their operation is
contained in the accompanying Funds' Prospectus which should be read in
conjunction with this Prospectus before investing and in the Funds' Statement of
Additional Information which may be ordered from HL. The Funds may not be
available in all states.
The investment objectives of each of the Funds are as follows:
HARTFORD ADVISERS FUND, INC. - To achieve maximum long term total rate of
return consistent with prudent investment risk by investing in common stock
and other equity securities, bonds and other debt securities, and money
market instruments. The investment adviser will vary the investments of
the Fund among equity and debt securities and money market instruments
depending upon its analysis of market trends. Total rate of return
consists of current income, including dividends, interest and discount
accruals and capital appreciation.
HARTFORD CAPITAL APPRECIATION FUND, INC. (formerly ""Harford Aggressive
Growth Fund, Inc.") - To achieve growth of capital by investing in
securities selected solely on the basis of potential for capital
appreciation; income, if any, is an incidental consideration.
HARTFORD BOND FUND, INC. - To achieve maximum current income consistent
with preservation of capital by investing primarily in fixed-income
securities.
HARTFORD DIVIDEND AND GROWTH FUND, INC. - To seek a high level of current
income consistent with growth of capital and reasonable investment risk.
HARTFORD INDEX FUND, INC. - To provide investment results which 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. The Fund is neither sponsored by, nor affiliated with,
Standard & Poor's Corporation.
HARTFORD INTERNATIONAL ADVISERS FUND, INC. - To provide maximum long-term
total return consistent with prudent investment risk by investing in a
portfolio of equity, debt and money securities. Securities in which the
Fund invests primarily will be denominated in non-U.S. currencies and will
be traded in non-U.S. markets.
HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC. - To achieve long-term
total return consistent with prudent investment risk through investment
primarily in equity securities issued by foreign companies.
<PAGE>
-17-
HARTFORD MORTGAGE SECURITIES FUND, INC. - To achieve maximum current income
consistent with safety of principal and maintenance of liquidity by
investing primarily in mortgage-related securities, including securities
issued by the Government National Mortgage Association ("GNMA").
HARTFORD STOCK FUND, INC. - To achieve long-term capital growth primarily
through capital appreciation, with income as a secondary consideration, by
investing in equity-type securities.
HVA MONEY MARKET FUND, INC. - To achieve maximum current income consistent
with liquidity and preservation of capital by investing in money market
securities.
VOTING RIGHTS - HL is the legal owner of all Fund shares held in the Separate
Account. As the owner, HL has the right to vote at the Funds' shareholder
meetings. However, to the extent required by federal securities laws or
regulations, HL will:
1. Vote all Fund shares attributable to a Contract according to instructions
received from Contract Owner, and
2. Vote share attributable to a Contract for which no voting instructions are
received in the same proportion as shares for which instructions are
received.
If any federal securities laws or regulations, or their present interpretation
change to permit HL to vote Fund shares in its own right, HL may elect to do so.
HL will notify you of any Fund shareholders' meeting if the shares held for your
account may be voted at such meetings. HL will send proxy materials and a form
of instruction by means of which you can instruct HL with respect to the voting
of the Fund shares held for your account.
In connection with the voting of Fund shares held by it, HL will arrange for the
handling and tallying of proxies received from Contract Owners. HL as such,
shall have no right, except as hereinafter provided, to vote any Fund shares
held by it hereunder which may be registered in its name or the names of its
nominees. HL will, however, vote the Fund shares held by it in accordance with
the instructions received from the Contract Owners for whose accounts the Fund
shares are held. If a Contract Owner desires to attend any meeting at which
shares held for the Contract Owner's benefit may be voted, the Contract Owner
may request HL to furnish a proxy or otherwise arrange for the exercise of
voting rights with respect to the Fund shares held for such Contract Owner's
account. HL will vote shares for which no instructions have been given and
shares which are not attributable to Contract Owners (i.e. shares owned by HL)
in the same proportion as it votes shares of that Fund for which it has received
instructions. During the Annuity period under a Contract the number of votes
will decrease as the assets held to fund Annuity benefits decrease.
The Funds are available only to serve as the underlying investment for variable
annuity and variable life insurance Contracts issued by HL. It is conceivable
that in the future it may be disadvantageous for variable annuity separate
accounts and variable life insurance separate accounts to invest in the Funds
<PAGE>
-18-
simultaneously. Although HL and the Funds do not currently foresee any such
disadvantages either to variable annuity Contract Owners or to variable life
insurance Policyowners, the Funds' Board of Directors intends to monitor events
in order to identify any material conflicts between such Contract Owners and
Policyowners and to determine what action, if any, should be taken in response
thereto. If the Board of Directors of the Funds were to conclude that separate
funds should be established for variable life and variable annuity separate
accounts, the variable annuity Contract Owners would not bear any expenses
attendant to the establishment of such separate funds.
THE FIXED ACCOUNT
THAT PORTION OF THE CONTRACT RELATING TO THE FIXED ACCOUNT IS NOT REGISTERED
UNDER THE SECURITIES ACT OF 1933 ("1933 ACT") AND THE FIXED ACCOUNT IS NOT
REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940
("1940 ACT"). ACCORDINGLY, NEITHER THE FIXED ACCOUNT NOR ANY INTERESTS THEREIN
ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT,
AND THE DISCLOSURE REGARDING THE FIXED ACCOUNT HAS NOT BEEN REVIEWED BY THE
STAFF OF THE SECURITIES AND EXCHANGE COMMISSION. THE FOLLOWING DISCLOSURE ABOUT
THE FIXED ACCOUNT MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF
THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND COMPLETENESS OF
DISCLOSURE.
Premium Payments and Contract Values allocated to the Fixed Account become a
part of the general assets of HL. HL invests the assets of the General Account
in accordance with applicable law governing the investments of Insurance Company
General Accounts.
Currently, HL guarantees that it will credit interest at a rate of not less than
3% per year, compounded annually, to amounts allocated to the Fixed Account
under the Contracts. However, HL reserves the right to change the rate
according to state insurance law. HL may credit interest at a rate in excess of
3% per year. There is no specific formula for the determination of excess
interest credits. Some of the factors that the Company may consider in
determining whether to credit excess interest to amounts allocated to the Fixed
Account and the amount thereof, are general economic trends, rates of return
currently available and anticipated on the Company's investments, regulatory and
tax requirements and competitive factors. ANY INTEREST CREDITED TO AMOUNTS
ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF 3% PER YEAR WILL BE DETERMINED IN
THE SOLE DISCRETION OF THE COMPANY. THE OWNER ASSUMES THE RISK THAT INTEREST
CREDITED TO FIXED ACCOUNT ALLOCATIONS MAY NOT EXCEED THE MINIMUM GUARANTEE OF 3%
FOR ANY GIVEN YEAR.
<PAGE>
-19-
PERFORMANCE RELATED INFORMATION
The 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.
The Hartford Advisers Fund, Hartford Capital Appreciation Fund, Hartford Bond
Fund, Hartford Dividend and Growth Fund, Hartford Index Fund, Hartford
International Advisers Fund, Hartford International Opportunities Fund,
Hartford Mortgage Securities Fund, Hartford Stock Fund, and HVA Money Market
Fund 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).
In addition to the standardized total return, the Sub-Account may advertise a
non-standardized total return. This figure will usually be calculated for one
year, five years, and ten years or other periods. Non-standardized total return
is measured in the same manner as the standardized total return described above,
except that the contingent deferred sales charge and the Annual Maintenance Fee
are not deducted. Therefore, non-standardized total return for a Sub-Account is
higher than standardized total return for a Sub-Account.
The Hartford Bond Fund and Hartford Mortgage Securities Fund 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 one
month period is divided by the unit value on the last day of the period. This
figure reflects the recurring charges at the Separate Account level including
the Annual Maintenance Fee.
The HVA Money Market Fund Sub-Account may advertise yield and effective yield.
The yield of a 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 at the Separate Account
level including the Annual Maintenance Fee.
The Separate Account may also disclose yield, standard total return, and
non-standard total return for periods prior to the date the Separate Account
commenced operations. For periods prior to the date the Separate Account
commenced operations, performance information for the Sub-Accounts will be
<PAGE>
-20-
calculated based on the performance of the underlying Funds and the assumption
that the Sub-Accounts were in existence for the same periods as those of the
underlying Funds, with a level of charges equal to those currently assessed
against the Sub-Accounts.
THE CONTRACTS
CONTRACTS OFFERED
The Contracts are individual or group tax-deferred Variable Annuity Contracts
designed for retirement planning purposes and may be purchased by any
individual, group or trust, including any trustee or custodian for a retirement
plan qualified under Sections 401(a) or 403(a) of the Internal Revenue Code;
annuity purchase plans adopted by public school systems and certain tax-exempt
organizations according to Section 403(b) of the Internal Revenue Code;
Individual Retirement Annuities adopted according to Section 408 of the Internal
Revenue Code; employee pension plans established for employees by a state, a
political subdivision of a state, or an agency or instrumentality of either a
state or a political subdivision of a state, and certain eligible deferred
compensation plans as defined in Section 457 of the Internal Revenue Code
("Qualified Contracts").
PREMIUM PAYMENTS AND INITIAL ALLOCATIONS
The minimum initial Premium Payment is $1,000. Thereafter, the minimum Premium
Payment is $500. Certain plans may make smaller periodic payments. Each
Premium Payment may be split among the various Sub-Accounts and/or the Fixed
Account subject to minimum amounts then in effect.
REFUND RIGHTS - If you are not satisfied with your purchase you may
surrender the Contract by returning it within ten days (longer in some
states) after you receive it. A written request for cancellation must
accompany the Contract. In such event, HL will, without deduction for any
charges normally assessed thereunder, pay you an amount equal to the value
of the Contract on the date of receipt of the request for cancellation.
You bear the investment risk during the period prior to the Company's
receipt of request for cancellation. HL will refund the premium paid only
for individual retirement annuities (if returned within seven days of
receipt) and in those states where required by law.
CREDITING AND VALUATION - The balance of each initial Premium Payment
remaining after the deduction of any applicable Premium Tax is credited to
your Contract within two business days of receipt of a properly completed
application or an order to purchase a Contract and the initial Premium
Payment by HL at its Home Office, P.O. Box 5085, Hartford, CT 06102-5085.
It will be credited to the Sub-Account(s) and/or the Fixed Account in
accordance with your election. If the application or other information is
incomplete when received, the balance of each initial Premium Payment,
after deduction of any applicable Premium Tax, will be credited to the
Sub-Account(s) or the Fixed Account within five business days of receipt.
<PAGE>
-21-
If the initial Premium Payment is not credited within five business days,
the Premium Payment will be immediately returned unless you have been
informed of the delay and request that the Premium Payment not be returned.
The number of Accumulation Units in each Sub-Account to be credited to a
Contract will be determined by dividing the portion of the Premium Payment
being credited to each Sub-Account by the value of an Accumulation Unit in
that Sub-Account on that date.
Subsequent Premium Payments are priced on the Valuation Day received by HL
in its Home Office, or other designated administrative offices.
CONTRACT VALUE
The value of the Sub-Account investments under your Contract at any time
prior to the commencement of Annuity payments can be determined by
multiplying the total number of Accumulation Units credited to your
Contract in each Sub-Account by the then current Accumulation Unit values
for the applicable Sub-Account. The value of the Fixed Account under your
Contract will be the amount allocated to the Fixed Account plus interest
credited.
You will be advised at least semiannually of the number of Accumulation
Units credited to each Sub-Account, the current Accumulation Unit values,
the Fixed Account value, and the total value of your Contract.
ACCUMULATION UNIT VALUES - The Accumulation Unit value for each Sub-Account
will vary to reflect the investment experience of the applicable Fund and
will be determined on each Valuation Day by multiplying the Accumulation
Unit value of the particular Sub-Account on the preceding Valuation Day by
a "Net Investment Factor" for that Sub-Account for the Valuation Period
then ended. The "Net Investment Factor" for each of the Sub-Accounts is
equal to the net asset value per share of the corresponding Fund at the end
of the Valuation Period (plus the per share amount of any dividends or
capital gains distributed by that Fund if the ex-dividend date occurs in
the Valuation Period then ended) divided by the net asset value per share
of the corresponding Fund at the beginning of the Valuation Period. You
should refer to the Prospectus for each of the Funds which accompanies this
Prospectus for a description of how the assets of each Fund are valued
since each determination has a direct bearing on the Accumulation Unit
value of the Sub-Account and therefore the value of a Contract. The
Accumulation Unit Value is affected by the performance of the underlying
Fund(s), expenses and deduction of the charges described in this
Prospectus.
VALUATION OF FUND SHARES - The shares of the Fund are valued at net asset
value on each Valuation Day. A complete description of the valuation
method used in valuing Fund shares may be found in the accompanying
Prospectus of the Funds.
VALUATION OF THE FIXED ACCOUNT - HL will determine the value of the Fixed
Account by crediting interest to amounts allocated to the Fixed Account.
<PAGE>
-22-
TRANSFERS BETWEEN SUB-ACCOUNTS/FIXED ACCOUNT
You may transfer the values of your Sub-Account allocations from one or more
Sub-Accounts to another free of charge. However, HL reserves the right to limit
the number of transfers to twelve (12) per Contract Year, with no two (2)
transfers occurring on consecutive Valuation Days. Transfers by telephone may
be made by calling (800) 862-6668. Telephone transfers may not be permitted by
some states for their residents who purchase variable annuities.
HL may permit the Contract Owner to preauthorize transfers among Sub-Accounts
and between Sub-Accounts and the Fixed Account under certain circumstances. The
policy of HL and its agents and affiliates is that they will not be responsible
for losses resulting from acting upon telephone requests reasonably believed to
be genuine. HL will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine; otherwise, HL may be liable for any
losses due to unauthorized or fraudulent instructions. The procedures HL
follows for transactions initiated by telephone include requirements that
callers on behalf of a Contract Owner identify themselves and the Contract Owner
by name and social security number. All transfer instructions by telephone are
tape recorded.
Transfers between the Sub-Accounts may be made both before and after Annuity
payments commence (limited to once a quarter) provided that the minimum
allocation to any Sub-Account may not be less than $500. No minimum balance is
required in any Sub-Account.
Transfers from the Fixed Account into a Sub-Account may be made at any time
during the Contract Year. The maximum amount which may be transferred from the
Fixed Account during any Contract Year is the greater of 30% of the Fixed
Account balance as of the last Contract Anniversary or the greatest amount of
any prior transfer from the Fixed Account. If HL permits preauthorized
transfers from the Fixed Account to the Sub-Accounts, this restriction is
inapplicable. Also, if any interest rate is renewed at a rate of at least one
percentage point less than the previous rate, the Contract Owner may elect to
transfer up to 100% of the funds receiving the reduced rate within 60 days of
notification of the interest rate decrease. Generally, transfers may not be
made from any Sub-Account into the Fixed Account for the six-month period
following any transfer from the Fixed Account into one or more of the
Sub-Accounts. HL reserves the right to defer transfers from the Fixed Account
for up to six months from the date of request.
Subject to the exceptions set forth in the following paragraph, the right to
reallocate Contract Values is subject to modification if HL determines, in its
sole opinion, that the exercise of that right by one or more Contract Owners is,
or would be, to the disadvantage of other Contract Owners. Any modification
could be applied to transfers to or from some or all of the Sub-Accounts and the
Fixed Account 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 Contract
Owner, or limiting the dollar amount that may be transferred between the
Sub-Accounts and the Fixed Account by a Contract Owner at any one time. Such
restrictions may be applied in any manner reasonably designed to prevent any
<PAGE>
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use of the transfer right which is considered by HL to be to the disadvantage of
other Contract Owners.
For Contracts issued in the State of New York, the reservation of rights set
forth in the preceding paragraph is limited to (i) requiring up to a maximum of
10 Valuation Days between each transfer: (ii) limiting the amount to be
transferred on any one Valuation Day to no more than $2 million; and (iii) upon
30 days prior written notice, to only accepting transfer instructions from the
Contract Owner and not from the Contract Owner's representative, agent or person
acting under a power of attorney for the Contract Owner.
Currently, and with respect to Contracts issued in all states, the only
restriction in effect is that HL will not accept instructions from agents acting
under a power of attorney of multiple Contract Owners whose accounts aggregate
more than $2 million, unless the agent has entered into a third party transfer
services agreement with HL.
CHARGES UNDER THE CONTRACTS
CONTINGENT DEFERRED SALES CHARGES
There is no deduction for sales expenses from Premium Payments when made.
However, a contingent deferred sales charge may be assessed against
Contract Values when they are surrendered. The length of time from receipt
of a Premium Payment to the time of surrender determines the contingent
deferred sales charge. Premium payments will be deemed to be surrendered
in the order in which they were received.
PAYMENTS SUBJECT TO SALES CHARGES DURING THE FIRST SEVEN CONTRACT YEARS
During the first seven Contract years, a contingent deferred sales charge
will be assessed against the surrender of the Premium Payments. All
surrenders will be first from Premium Payments and then from other Contract
Values.
AFTER THE SEVENTH CONTRACT YEAR
After the seventh Contract year, all surrenders will first be from earnings
and then from premium payments. A contingent deferred sales charge will
not be assessed against the surrender of earnings. If an amount equal to
all earnings has been surrendered, a contingent deferred sales charge will
not be assessed against premium payments received more than seven years
prior to surrender, but will be assessed against premium payments received
less than seven years prior to surrender.
<PAGE>
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The charge is a percentage of the amount withdrawn (not to exceed the
aggregate amount of the Premium Payments made) and equals:
Length of Time from Premium Payment
Charge (Number of Years)
------ -----------------
6% 1
6% 2
5% 3
5% 4
4% 5
3% 6
2% 7
0% 8 or more
PAYMENTS NOT SUBJECT TO SALES CHARGES - During the first seven Contract
Years, on a non-cumulative basis, a Contract Owner may make a partial
surrender of Contract Values of up to 10% of the aggregate Premium Payments
made to the Contract (as determined on the date of the requested
withdrawal) without the application of the contingent deferred sales
charge. After the seventh Contract year, the Contract Owner may make a
partial surrender of 10% of premium payments made during the seven years
prior to the surrender and 100% of the Contract Value less the premium
payments made during the seven years prior to the surrender. The amounts
not subject to sales charges are known as the Annual Withdrawal Amount.
The Annual Withdrawal Amount is the amount which can be withdrawn in any
Contract Year prior to incurring sales charges. An Extended Withdrawal
Privilege rider allows an Annuitant who attains age 70 1/2 under a
Qualified Plan to withdraw an amount in excess of the Annual Withdrawal
Amount to comply with IRS minimum distribution rules.
Certain plans or programs may have different withdrawal privileges. Any
such withdrawal will be deemed to be from Contract Values other than
Premium Payments. From time to time, HL may permit the Contract Owner to
preauthorize partial surrenders subject to certain limitations then in
effect. Additional surrenders or any surrender of the Contract Values in
excess of such amount in any Contract Year during the period when
contingent deferred sales charges are applicable will be subject to the
appropriate charge.
No contingent deferred sales charges otherwise applicable will be assessed
in the event of death of the Annuitant, death of the Contract Owner or if
payments are made under an Annuity option (other than a surrender out of
Option 4) provided for under the Contract.
PURPOSE OF SALES CHARGES - The contingent deferred sales charges are used
to cover expenses relating to the sale and distribution of the Contracts,
including commissions paid to any distribution organization and its sales
personnel, the cost of preparing sales literature and other promotional
activities. To the extent that these charges do not cover such
distribution expenses they will be borne by HL from its general assets,
<PAGE>
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including surplus. The surplus might include profits resulting from unused
mortality and expense risk charges.
MORTALITY AND EXPENSE RISK CHARGE - 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) HL's actual mortality experience among Annuitants
before or after the Annuity Commencement Date or (b) HL's actual expenses,
if greater than the deductions provided for in the Contracts because of the
expense and mortality undertakings by HL.
For assuming these risks under the Contracts, HL will make a daily charge
at the rate of 1.25% per annum against all Contract Values held in the
Sub-Accounts during the life of the Contract (estimated at .90% for
mortality and .35% for expense).
The mortality undertakings provided by HL 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 1983a Individual Annuity
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. HL also assumes the liability
for payment of a minimum Death Benefit under the Contract.
The mortality undertakings are based on HL's determination of expected
mortality rates among all Annuitants. If actual experience among
Annuitants during the Annuity payment period deviates from HL's actuarial
determination of expected mortality rates among Annuitants because, as a
group, their longevity is longer than anticipated, HL must provide amounts
from its general funds to fulfill its Contract obligations. In that event,
a loss will fall on HL. Also, in the event of the death of an Annuitant or
Contract Owner before the commencement of Annuity payments, whichever is
earlier, HL can, in periods of declining value or in periods where the
contingent deferred sales loads would have been applicable, experience a
loss resulting from the assumption of the mortality risk relative to the
guaranteed Death Benefit.
In providing an expense undertaking, HL assumes the risk that the
contingent deferred sales charges and the Annual Maintenance Fee for
maintaining the Contracts prior to the Annuity Commencement Date may be
insufficient to cover the actual cost of providing such items.
ANNUAL MAINTENANCE FEE - Each year, on each Contract Anniversary on or
before the Annuity Commencement Date, HL will deduct an Annual Maintenance
Fee, if applicable, from Contract Values to reimburse it for expenses
relating to the maintenance of the Contract, the Fixed Account, and the
Sub-Account(s) thereunder. If during a Contract Year the Contract is
surrendered for its full value, HL will deduct the Annual Maintenance Fee
at the time of such surrender. The fee is a flat fee which will be due in
the full amount regardless of the time of the Contract Year that Contract
Values are surrendered. The Annual Maintenance Fee is $30.00 per Contract
<PAGE>
-26-
Year for Contracts with less than $50,000 Contract Value on the Contract
Anniversary. The deduction will be made pro rata according to the value
in each Sub-Account and the Fixed Account under a Contract.
PREMIUM TAXES - A deduction is also made for Premium Tax, if applicable,
imposed by a state or other governmental entity. Certain states impose a
Premium Tax, currently ranging up to 3.5%. Some states assess the tax at
the time purchase payments are made; others assess the tax at the time of
annuitization. HL will pay Premium Taxes at the time imposed under
applicable law. At its sole discretion, HL may deduct Premium Taxes at the
time HL pays such taxes to the applicable taxing authorities, at the time
the Contract is surrendered, or at the time the Contract annuitizes.
EXCEPTIONS - HL may offer, in its discretion, reduced fees and charges
including, but not limited to, the contingent deferred sales charges, the
mortality and expense risk charge and the maintenance fee for certain sales
(including employer sponsored savings plans) under circumstances which may
result in savings of certain costs and expenses. Reductions in these fees
and charges will not be unfairly discriminatory against any Contract Owner.
DEATH BENEFITS
The Contracts provide that in the event the Annuitant dies before the selected
Annuity Commencement Date, the Contingent Annuitant will become the Annuitant.
If the Annuitant dies before the Annuity Commencement Date and either (a) there
is no designated Contingent Annuitant, (b) the Contingent Annuitant predeceases
the Annuitant, or (c) if any Contract Owner dies before the Annuity Commencement
Date, the Beneficiary as determined under the Contract Control Provisions, will
receive the Death Benefit as determined on the date of receipt of due proof of
death by HL in its Home Office. With regard to Joint Contract Owners, at the
first death of a joint Contract Owner prior to the Annuity Commencement Date,
the Beneficiary will be the surviving Contract Owner notwithstanding that the
beneficiary designation may be different.
GUARANTEED DEATH BENEFIT - Upon death prior to the Annuity Commencement
Date of the Annuitant or Contract Owner, as applicable, the Beneficiary
will receive the greatest of (a) the Contract Value determined as of the
day written proof of death of such person is received by HL, or (b) 100% of
the total Premium Payments made to such Contract, reduced by any prior
surrenders, or (c) the Maximum Anniversary Value immediately preceding the
date of death, increased by the dollar amount of any Premium Payments made
and reduced by the dollar amount of any partial surrenders.
The Maximum Anniversary Value is equal to the greatest Anniversary Value
attained from the following:
As of the date of receipt of due proof of death, the Company will
calculate an Anniversary Value for each Contract Anniversary prior to the
deceased's attained age 81.
<PAGE>
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The Anniversary Value is equal to the Contract Value on a Contract
Anniversary, increased by the dollar amount of any premium payments made
since that anniversary and reduced by the dollar amount of any partial
surrenders since that anniversary.
PAYMENT OF DEATH BENEFIT - Death Benefit proceeds will remain invested in
the Separate Account in accordance with the allocation instructions given
by the Certificate Owner until the proceeds are paid or HL receives new
instructions from the Beneficiary. The Death Benefit may be taken in one
sum, payable within 7 days after the date Due Proof of Death is received,
or under any of the settlement options then being offered by the Company
provided, however, that: (a) in the event of the death of any Contract
Owner prior to the Annuity Commencement Date, the entire interest in the
Contract will be distributed within 5 years after the death of the Contract
Owner and (b) in the event of the death of any Contract Owner or Annuitant
which occurs on or after the Annuity Commencement Date, any remaining
interest in the Contract will be paid at least as rapidly as under the
method of distribution in effect at the time of death, or, if the benefit
is payable over a period not extending beyond the life expectancy of the
Beneficiary or over the life of the Beneficiary, such distribution must
commence within one year of the date of death. Notwithstanding the
foregoing, in the event of the Contract Owner's death where the sole
Beneficiary is the spouse of the Contract Owner and the Annuitant or
Contingent Annuitant is living, such spouse may elect, in lieu of receiving
the death benefit, to be treated as the Contract Owner. The proceeds due
on the death may be applied to provide variable payments, fixed payments,
or a combination of variable and fixed payments.
If the Contract is owned by a corporation or other non-individual, the
Death Benefit payable upon the death of the Annuitant prior to the Annuity
Commencement Date will be payable only as one sum or under the same
settlement options and in the same manner as if an individual Contract
Owner died on the date of the Annuitant's death.
There may be postponement in the payment of Death Benefits whenever (a) the
New York Stock Exchange is closed, except for holidays or weekends, or
trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission; (b) the Securities and Exchange
Commission permits postponement and so orders; or (c) the Securities and
Exchange Commission determines that an emergency exists making valuation of
the amounts or disposal of securities not reasonably practicable.
GROUP UNALLOCATED CONTRACTS - HL requires that detailed accounting of
cumulative purchase payments, cumulative gross surrenders, and current
Contract Value attached to each Plan Participant be submitted on an annual
basis by the Contract Owner. Failure to submit accurate data satisfactory
to HL will give HL the right to terminate this extension of benefits.
<PAGE>
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SURRENDER BENEFITS
FULL SURRENDERS - At any time prior to the Annuity Commencement Date (and
after the Annuity Commencement Date with respect to values applied to
Option 4), the Contract Owner has the right to terminate the Contract. In
such event, the Termination Value of the Contract may be taken in the form
of a lump sum cash settlement.
Under any of the Annuity options excluding Options 4 and 5, no surrenders
are permitted after Annuity payments commence. Only full surrenders are
allowed out of Option 4 and any such surrender will be subject to
contingent deferred sales charges, if applicable. Full or partial
withdrawals may be made from Option 5 at any time and contingent deferred
sales charges will not be applied.
The Termination Value of the Contract is equal to the Contract Value less
any applicable Premium Taxes, the Annual Maintenance Fee if applicable and
any applicable contingent deferred sales charges. The Termination Value
may be more or less than the amount of the Premium Payments made to a
Contract.
PARTIAL SURRENDERS - The Contract Owner may make a partial surrender of
Contract Values at any time prior to the Annuity Commencement Date so long
as the amount surrendered is at least equal to the minimum amount rules
then in effect. Additionally, if the remaining Contract Value following a
surrender is less than $500, HL may terminate the Contract and pay the
Termination Value. For Contracts issued in Texas, there is an additional
requirement that the Contract will not be terminated when the remaining
Contract Value after a surrender is less than $500 unless there were no
Premium Payments made during the previous two Contract Years.
In requesting a partial withdrawal you should specify the Sub-Account(s)
and/or the Fixed Account from which the partial withdrawal is to be taken.
Otherwise, such withdrawal and any applicable contingent deferred sales
charges will be effected on a pro rata basis according to the value in the
Fixed Account and each Sub-Account under a Contract.
HL may permit the Contract Owner to preauthorize partial surrenders subject
to certain limitations then in effect.
PAYMENT OF SURRENDER BENEFITS - Payment on any request for a full or
partial surrender from the Sub-Accounts will be made as soon as possible
and in any event no later than seven days after the written request is
received by HL at its Home Office, Attn: Individual Annuity Operations,
P.O. Box 5085, Hartford, CT 06102-5085. HL may defer payment of any
amounts from the Fixed Account for up to six months from the date of the
request for surrender. If HL defers payment for more than 30 days, HL will
pay interest of at least 3% per annum on the amount deferred.
<PAGE>
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There may be postponement in the payment of Surrender Benefits whenever (a)
the New York Stock Exchange is closed, except for holidays or weekends, or
trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission; (b) the Securities and Exchange
Commission permits postponement and so orders; or (c) the Securities and
Exchange Commission determines that an emergency exists making valuation of
the amounts or disposal of securities not reasonably practicable.
CERTAIN QUALIFIED CONTRACT SURRENDERS - 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)
TERMINATED EMPLOYMENT, C) DIED, D) BECOME DISABLED OR E) EXPERIENCED
FINANCIAL HARDSHIP.
DISTRIBUTIONS DUE TO FINANCIAL HARDSHIP OR SEPARATION FROM SERVICE MAY
STILL BE SUBJECT TO A PENALTY TAX OF 10%.
HL WILL NOT ASSUME ANY RESPONSIBILITY IN 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
ACCOUNT VALUES.
ANY SUCH 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. THE CONTRACT OWNER,
THEREFORE, SHOULD CONSULT WITH HIS TAX ADVISER BEFORE UNDERTAKING ANY SUCH
SURRENDER. (SEE "FEDERAL TAX CONSIDERATIONS" COMMENCING ON PAGE ___.)
ANNUITY BENEFITS
You select an Annuity Commencement Date and an Annuity option which may be on a
fixed or variable basis, or a combination thereof. The Annuity Commencement
Date will not be deferred beyond the Annuitant's 90th birthday except for
certain states where deferral past age 85 is not permitted. The Annuity
Commencement Date and/or the Annuity option may be changed from time to time,
but any change must be at least 30 days prior to the date on which Annuity
payments are scheduled to begin. The Contract allows the Contract Owner to
change the Sub-Accounts on which variable payments are based after payments have
commenced once every three (3) months. Any Fixed Annuity allocation may not be
changed.
<PAGE>
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ANNUITY OPTIONS
The Contract contains the five optional Annuity forms described below.
Options 2, 4 and 5 are available to Qualified Contracts only if the
guaranteed 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 the HL. With
respect to Non-Qualified Contracts, if you do not elect otherwise, payments
in most states will automatically begin at the Annuitant's age 90 (with the
exception of states that do not allow deferral past age 85) under Option 2
with 120 monthly payments certain. For Qualified Contracts and Contracts
issued in Texas, if you do not elect otherwise, payments will begin
automatically at the Annuitant's age 90 under Option 1 to provide a life
Annuity.
Under any of the Annuity options excluding Options 4 and 5, no surrenders
are permitted after Annuity payments commence. Only full surrenders are
allowed out of Option 4 and any such surrender will be subject to
contingent deferred sales charges, if applicable. Full or partial
withdrawals may be made from Option 5 at any time and contingent deferred
sales charges will not be applied.
Option 1: Life Annuity
A life Annuity is an Annuity payable during the lifetime of the Annuitant
and terminating with the last payment preceding the death of the Annuitant.
This options offers the largest payment amount of any of the life Annuity
options since there is no guarantee of a minimum number of payments nor a
provision for a Death Benefit payable to a Beneficiary.
It would be possible under this option for an Annuitant to receive only one
Annuity payment if he died prior to the due date of the second Annuity
payment, two if he died before the date of the third Annuity payment, etc.
Option 2: Life Annuity with 120, 180 or 240 Monthly Payments Certain
This Annuity option is an Annuity payable monthly during the lifetime of an
Annuitant with the provision that payments will be made for a minimum of
120, 180 or 240 months, as elected. If, at the death of the Annuitant,
payments have been made for less than the minimum elected number of months,
then the present value as of the date of the Annuitant's death, of any
remaining guaranteed payments will be paid in one sum to the Beneficiary or
Beneficiaries designated unless other provisions have been made and
approved by the HL.
<PAGE>
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Option 3: Joint and Last Survivor Annuity
An Annuity payable monthly during the joint lifetime of the Annuitant and a
designated second person, and thereafter during the remaining lifetime of
the survivor, ceasing with the last payment prior to the death of the
survivor. Based on the options currently offered by Hartford Life, the
Annuitant may elect that the payment to the survivor be less than the
payment made during the joint lifetime of the Annuitant and a designated
second person.
It would be possible under this option for an Annuitant and designated
second person to receive only one payment in the event of the common or
simultaneous death of the parties prior to the due date for the second
payment and so on.
Option 4: Payments for a Designated Period
An amount payable monthly for the number of years selected which may be
from 5 to 30 years. Under this option, you may, at any time, surrender the
Contract and receive, within seven days, the Termination Value of the
Contract as determined by HL.
In the event of the Annuitant's death prior to the end of the designated
period, the present value as of the date of the Annuitant's death, of any
remaining guaranteed payments will be paid in one sum to the Beneficiary or
Beneficiaries designated unless other provisions have been made and
approved by HL.
Option 4 is an option that does not involve life contingencies and thus no
mortality guarantee. Charges made for the mortality undertaking under the
Contracts thus provide no real benefit to a Contract Owner.
Option 5: Death Benefit Remaining with HL
Proceeds from the Death Benefit may be left with HL for a period not to
exceed five years from the date of the Contract Owner's death prior to the
Annuity Commencement Date. These proceeds will remain in the
Sub-Account(s) to which they were allocated at the time of death unless the
Beneficiary elects to reallocate them. Full or partial withdrawals may be
made at any time. In the event of withdrawals, the remaining value will
equal the Contract Value of the proceeds left with HL, minus any
withdrawals.
HL may offer other annuity options from time to time.
VARIABLE AND FIXED ANNUITY PAYMENTS - When an Annuity is effected under a
Contract, unless otherwise specified, Contract Values (less applicable
Premium Taxes) held in the Sub-Accounts will be applied to provide a
Variable Annuity based on the pro rata amount in the various Sub-Accounts.
Fixed Account Contract Values will be applied to provide a Fixed Annuity.
<PAGE>
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YOU SHOULD CONSIDER THE QUESTION OF ALLOCATION OF CONTRACT VALUES (LESS
APPLICABLE PREMIUM TAXES) AMONG SUB-ACCOUNTS OF THE SEPARATE ACCOUNT AND THE
GENERAL ACCOUNT OF HL TO MAKE CERTAIN THAT ANNUITY PAYMENTS ARE BASED ON THE
INVESTMENT ALTERNATIVE BEST SUITED TO YOUR NEEDS FOR RETIREMENT.
The minimum monthly Annuity payment is $50.00. No election may be made
which results in a first payment of less than $50.00. If at any time
Annuity payments are or become less than $50.00, HL has the right to change
the frequency of payment to intervals that will result in payments of at
least $50.00. For New York Contracts, the minimum monthly Annuity payment
is $20.00.
When Annuity payments are to commence, the value of the Contract is
determined as the sum of the value of the Fixed Account no earlier than the
close of business on the fifth Valuation Day preceding the date the first
Annuity payment is due plus the product of the value of the Accumulation
Unit of each Sub-Account on that same day, and the number of Accumulation
Units credited to each Sub-Account as of the date the Annuity is to
commence.
VARIABLE ANNUITY - The Contract contains tables indicating the minimum
dollar amount of the first monthly payment under the optional variable
forms of Annuity for each $1,000 of value of a Sub-Account under a
Contract. The first monthly payment varies according to the form and type
of Variable Payment Annuity selected. The Contract contains Variable
Payment Annuity tables derived from the 1983a Individual Annuity Mortality
Table with ages set back one year and with an assumed investment rate
("A.I.R.") of 5% per annum. The total first monthly Variable 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.
The amount of the first monthly Variable Annuity payment is divided by the
value of an Annuity Unit for the appropriate Sub-Account no earlier than
the close of business on the fifth Valuation Day preceding the day on which
the payment is due in order to determine the number of Annuity Units
represented by the first payment. This number of Annuity Units remains
fixed during the Annuity payment period, and in each subsequent month the
dollar amount of the Variable Annuity payment is determined by multiplying
this fixed number of Annuity Units by the then current Annuity Unit value.
The 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 for the day for which the
Annuity Unit value is being calculated, and (2) a factor to neutralize the
assumed investment rate of 5.00% per annum. The Annuity Unit value used in
calculating the amount of the Variable Annuity payments will be based on an
Annuity Unit value determined as of the close of business on a day no
earlier than the fifth Valuation Day preceding the date of the Annuity
payment.
<PAGE>
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LEVEL VARIABLE ANNUITY PAYMENTS WOULD BE PRODUCED IF THE INVESTMENT RATE
REMAINED CONSTANT AND EQUAL TO THE A.I.R. IN FACT, PAYMENTS WILL VARY UP
OR DOWN AS THE INVESTMENT RATE VARIES UP OR DOWN FROM THE A.I.R.
FIXED ANNUITY - Fixed Annuity payments are determined at annuitization by
multiplying the Contract Value (less applicable Premium Taxes) by a rate to
be determined by HL which is no less than the rate specified in the Fixed
Payment Annuity tables in the Contract. The Annuity payment will remain
level for the duration of the Annuity.
OTHER INFORMATION
ASSIGNMENT - Ownership of a Contract described herein is generally
assignable. However, if the Contracts are issued pursuant to some form of
Qualified Plan, it is possible that the ownership of the Contracts may not
be transferred or assigned depending on the type of qualified retirement
plan involved. An assignment of a Non-Qualified Contract may subject the
assignment proceeds to income taxes and certain penalty taxes.
CONTRACT MODIFICATION - HL reserves the right to modify the Contract, but
only 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 HL is 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 HL will provide notice to the Contract Owner or to the
payee(s) during the Annuity period. HL may also make appropriate
endorsement in the Contract to reflect such modification.
At December 31, 1994, certain Hartford Life Insurance Company group pension
Contracts held direct interest in shares as follows:
<PAGE>
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Percent of
Shares Total Shares
------ ------------
Hartford Advisers Fund, Inc. 10,709,364 0.56%
Hartford Capital Appreciation Fund, Inc. 5,313,800 1.31%
Hartford Index Fund, Inc. 9,462,900 9.14%
Hartford International Opportunities Fund, Inc. 5,547,408 1.16%
Hartford Mortgage Securities Fund, Inc. 16,249,689 5.26%
Hartford Stock Fund, Inc. 65,899 0.02%
FEDERAL TAX CONSIDERATIONS
A. GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING TO
THE ACTUAL STATUS OF THE CONTRACT OWNER INVOLVED AND THE TYPE OF PLAN UNDER
WHICH THE CONTRACT IS PURCHASED, LEGAL AND TAX ADVICE MAY BE NEEDED BY A PERSON,
TRUSTEE OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A CONTRACT DESCRIBED
HEREIN. IT SHOULD BE UNDERSTOOD THAT ANY DETAILED DESCRIPTION OF THE FEDERAL
INCOME TAX CONSEQUENCES REGARDING THE PURCHASE OF THESE CONTRACTS CANNOT BE MADE
IN THIS PROSPECTUS AND THAT SPECIAL TAX RULES MAY BE APPLICABLE WITH RESPECT TO
CERTAIN PURCHASE SITUATIONS NOT DISCUSSED HEREIN. IN ADDITION, NO ATTEMPT IS
MADE HERE TO CONSIDER ANY APPLICABLE STATE OR OTHER TAX LAWS. FOR DETAILED
INFORMATION, A QUALIFIED TAX ADVISER SHOULD ALWAYS BE CONSULTED. THIS
DISCUSSION IS BASED ON HL'S UNDERSTANDING OF CURRENT FEDERAL INCOME TAX LAWS AS
THEY ARE CURRENTLY INTERPRETED.
B. TAXATION OF HL AND THE SEPARATE ACCOUNT
The Separate Account is taxed as part of HL which is taxed as a life insurance
company in accordance with the Internal Revenue Code (the "Code"). Accordingly,
the Separate Account will not be taxed as a "regulated investment company" under
subchapter M of Chapter 1 of the Code. Investment income and any realized
capital gains on the assets of the Separate Account are reinvested and are taken
into account in determining the value of the Accumulation and Annuity Units.
(See "Value of Accumulation Units" commencing on page ___.) 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 the Separate Account with respect to Qualified or Non-Qualified
Contracts.
<PAGE>
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C. TAXATION OF ANNUITIES -- GENERAL PROVISIONS AFFECTING PURCHASERS OTHER THAN
QUALIFIED PLANS
Section 72 of the Internal Revenue Code governs the taxation of annuities
in general.
1. NON-NATURAL PERSONS, CORPORATIONS, ETC. Section 72 contains
provisions for Contract Owners which are non-natural persons. Non-
natural persons include corporations, trusts, and partnerships. The
annual net increase in the value of the Contract is currently
includable 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 is an exception from current inclusion for certain annuities
held by structured settlement companies, certain annuities held by an
employer with respect to a terminated Qualified 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 not an individual, the primary Annuitant
shall be treated as the Contract Owner for purposes of making
distributions which are required to be made upon the death of the
Contract Owner. If there is a change in the primary Annuitant, such
change shall be treated as the death of the Contract Owner.
2. OTHER CONTRACT OWNERS (NATURAL PERSONS). A Contract Owner is not
taxed on increases in the value of the Contract until an amount is
received or deemed received, e.g., in the form of a lump sum payment
(full or partial value of a Contract) or as Annuity payments under the
settlement option elected.
The provisions of Section 72 of the Code concerning distributions are
summarized briefly below. Also summarized are special rules affecting
distributions from Contracts obtained in a tax-free exchange for other
annuity contracts or life insurance contracts which were purchased
prior to August 14, 1982.
a. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
i. Total premium payments less prior withdrawals which were not
includable in gross income equal the "investment in the
contract" under Section 72 of the Code.
ii. When the value of the Contract (ignoring any surrender
charges) exceeds the "investment in the contract," any
amount surrendered which is less than or equal to the
difference between such value of the Contract and the
"investment in the contract" will be included in gross
income.
<PAGE>
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iii. When such value of the Contract is less than or equal to the
"investment in the contract," any amount surrendered which
is less than or equal to the "investment in the contract"
shall be treated as a return of "investment in the contract"
and will not be included in gross income.
iv. The receipt of any amount as a loan under the Contract or
the assignment or pledge of any portion of the value of the
Contract shall be treated as an amount surrendered which
will be covered by the provisions in subparagraph ii. or
iii. above.
v. In general, the transfer of the Contract, without full and
adequate consideration, will be treated as an amount
surrendered which will be covered by the provisions in
subparagraph ii. or iii. above. This transfer rule does not
apply, however, to certain transfers of property between
spouses or incident to divorce.
b. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE. Annuity payments
made after the Annuity Commencement Date are includable in gross
income to the extent the payments exceed the amount determined by
the application of the ratio of the "investment in the contract"
to the total amount of the payments to be made after the Annuity
Commencement Date (the "exclusion ratio").
i. When the total of amounts excluded from income by
application of the exclusion ratio is equal to the
investment in the contract as of the Annuity Commencement
Date, any additional payments (including surrenders) will be
entirely includable in gross income.
ii. If the annuity payments cease by reason of the death of the
Annuitant and, as of the date of death, the amount of
annuity payments excluded from gross income by the exclusion
ratio does not exceed the investment in the contract as of
the Annuity Commencement Date, then the remaining portion of
unrecovered investment shall be allowed as a deduction for
the last taxable year of the Annuitant.
iii. Certain distributions, such as surrenders made after the
Annuity Commencement Date, are not treated as annuity
payments, and shall be included in gross income.
c. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS.
Contracts issued after October 21, 1988 by the same insurer (or
affiliated insurer) to the same Contract Owner within the same
calendar year (other than certain contracts held in connection
with a tax-qualified retirement arrangement) will be treated as
one annuity Contract for the purpose of determining the taxation
of distributions prior to the Annuity Commencement Date. An
annuity contract received in a tax-free exchange for another
<PAGE>
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annuity contract or life insurance contract may be treated as a
new Contract for this purpose. HL believes that for any annuity
subject to such aggregation, the values under the Contracts and
the investment in the contracts will be added together to
determine the taxation of amounts received or deemed received
prior to the Annuity Commencement Date. Withdrawals will first
be treated as withdrawals of income until all of the income from
all such Contracts is withdrawn. As of the date of this
Prospectus, there are no regulations interpreting this provision.
d. PENALTY -- APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY
PAYMENTS.
i. If any amount is received or deemed received on the Contract
(before or after the Annuity Commencement Date), the Code
applies a penalty tax equal to ten percent of the portion of
the amount includable in gross income, unless an exception
applies.
ii. The penalty will not apply to the following distributions
(exceptions vary based upon the precise plan involved):
1. Distributions made on or after the date the recipient
has attained the age of 59 1/2.
2. Distributions made on or after the death of the
Contract Holder or where the Contract Holder is not an
individual, the death of the primary Annuitant.
3. Distributions attributable to a recipient's becoming
disabled.
4. A distribution that is part of a scheduled series of
substantially equal periodic payments for the life (or
life expectancy) of the recipient (or the joint lives
or life expectancies of the recipient and the
recipient's Beneficiary).
5. Distributions of amounts which are allocable to
"investments in the contract" made prior to August 14,
1982.
e. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-
FREE EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS
PURCHASED PRIOR TO AUGUST 14, 1982.
If the Contract was obtained by a tax-free exchange of a life
insurance or annuity Contract purchased prior to August 14, 1982,
then any amount surrendered prior to the Annuity Commencement
Date which does not exceed the portion of the "investment in the
contract" (generally premiums paid into the prior Contract, less
amounts deemed received) prior to August 14, 1982, shall not be
included in gross income. In all other respects, the general
provisions apply to distributions from such Contracts.
<PAGE>
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f. REQUIRED DISTRIBUTIONS IN THE EVENT OF CONTRACT OWNER'S DEATH.
i. If any Contract Owner dies before the Annuity Commencement
Date, the entire interest must be distributed within five
years of the date of death; however, a portion or all of
such interest may be payable to a designated Beneficiary
over the life of such Beneficiary or for a period not
extending beyond the life expectancy of such Beneficiary
with payments starting within one year of the date of death.
ii. If any Contract Owner or Annuitant dies on or after the
Annuity Commencement Date and before the entire interest in
the Contract has been distributed, any remaining portion of
such interest must be distributed at least as rapidly as
under the method of distribution in effect at the time of
death.
iii. If a spouse is designated as a Beneficiary at the time of
the Contract Owner's death and there is a surviving
Annuitant or Contingent Annuitant, then such spouse will be
treated as the Contract Owner under subparagraph i. and ii.
above.
iv. If the Contract Owner is not an individual, the primary
Annuitant shall be treated as the Contract Owner under
subparagraphs i. and ii. above. If there is a change in the
primary Annuitant, such change shall be treated as the death
of the Contract Owner.
3. DIVERSIFICATION REQUIREMENTS.
Section 817 of the Code provides that a variable annuity contract
(other than certain contracts held in connection with a tax-qualified
retirement arrangement) will not be treated as an annuity contract for
any period during which the investments made by the separate account
or underlying fund are not adequately diversified in accordance with
regulations prescribed by the Treasury. If a Contract is not treated
as an annuity contract, the Contract Owner will be subject to income
tax on the annual increases in cash value. The Treasury has issued
diversification regulations which, among other things, require that no
more than 55% of the assets of a mutual fund (such as the HL mutual
funds) underlying a variable annuity contract, be invested in any one
investment. In determining whether the diversification standards are
met, each United States Government Agency or instrumentality shall be
treated as a separate issuer.
D. FEDERAL INCOME TAX WITHHOLDING -
The portion of a distribution which is taxable income to the recipient will
be subject to federal income tax withholding.
<PAGE>
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1. NON-PERIODIC DISTRIBUTIONS - The portion of a non-periodic
distribution which constitutes taxable income will be subject to
withholding unless the recipient elects not to have taxes withheld.
If an election not to have taxes withheld is not provided, 10% of the
taxable distribution will be withheld as Federal income tax. Election
forms will be provided at the time distributions are requested. If
the necessary election forms are not submitted to HL, HL will
automatically withhold 10% of the taxable distribution.
2. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER
THAN ONE YEAR) - The portion of a periodic distribution which
constitutes taxable income will be subject to withholding as if the
recipient were married claiming three exemptions. A recipient may
elect not to have income taxes withheld or have income taxes withheld
at a different rate by providing a completed election form. Election
forms will be provided at the time distributions are requested.
E. GENERAL PROVISIONS AFFECTING TAX QUALIFIED PLANS -
The Contract may be used for a number of qualified plans. If the Contract
is being purchased with respect to some form of qualified retirement plan,
please refer to Appendix I commencing on page ___ for information relative
to the types of plans for which it may be used and the general explanation
of the tax features of such plans.
MISCELLANEOUS
HOW CONTRACTS ARE SOLD
Hartford Equity Sales Company, Inc. ("HESCO") currently serves as Principal
Underwriter for the securities issued with respect to the Separate Account.
Hartford Securities Distribution Company, Inc. ("HSD") will replace HESCO as
principal underwriter upon approval by the Commission, the National Association
of Securities Dealers, Inc. ("NASD") and applicable state regulatory
authorities.
Both HESCO and HSD are wholly-owned subsidiaries of Hartford Life Insurance
Company. The principal business address of HESCO and HSD is the same as
Hartford Life Insurance Company.
The securities will be sold by salespersons of HESCO, and subsequently, HSD, who
represent HL as insurance and Variable Annuity agents and who are registered
representatives or Broker-Dealers who have entered into distribution agreements
with HESCO, and subsequently HSD.
HESCO is registered with the Commission under the Securities and Exchange Act of
1934 as a Broker-Dealer and is a member of the NASD. HSD will be registered
<PAGE>
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with the Commission under the Securities Exchange Act of 1934 as a Broker-Dealer
and will become a member of the NASD.
Commissions will be paid by HL and will not be more than 6% of Premium Payments.
From time to time, HL may pay or permit other promotional incentives, in cash or
credit or other compensation.
LEGAL MATTERS AND EXPERTS
There are no material legal proceedings affecting the Separate Account.
The audited financial statements and schedules of HL and the Separate Account
included in the Statement of Additional Information have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance on the
authority of said firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
Inquiries will be answered by calling your representative or by writing:
Hartford Life Insurance Company
Attn: Individual Annuity Operations
P.O. Box 5085
Hartford, Connecticut 06102-5085.
Telephone: (800) 862-6668
<PAGE>
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APPENDIX I
INFORMATION REGARDING TAX QUALIFIED PLANS
THE TAX REFORM ACT OF 1986 AND THE TECHNICAL AND MISCELLANEOUS REVENUE ACT OF
1988 HAVE MADE SUBSTANTIAL CHANGES TO QUALIFIED PLANS. YOU SHOULD CONSULT YOUR
TAX ADVISER TO FULLY ADDRESS ALL CHANGES OCCURRING AS A RESULT OF THE TAX REFORM
ACT AND THE TECHNICAL AND MISCELLANEOUS REVENUE ACT OF 1988 AND THEIR EFFECT ON
QUALIFIED PLANS.
A. Contributions
1. Pension, Profit-Sharing and Simplified Employee Pension Plans.
Contributions to pension or profit-sharing plans (described in Section
401(a) and 401(k), if applicable, and exempt from taxation under Section
501(a) of the Code), and Simplified Employee Pension Plans (described in
Section 408(k)), which do not exceed certain limitations prescribed in the
Code are fully tax deductible to the employer. Such contributions are not
currently taxable to the covered employees, and increases in the value of
Contracts purchased with such contributions are not subject to taxation
until received by the covered employees or their beneficiaries in the form
of Annuity payments or other distributions.
2. Tax-Deferred Annuity Plans for Public School Teachers and Employers
and Employees of Certain Tax-Exempt Organizations
Contributions to tax-deferred annuity plans (described in Section 403(a)
and 403(b) of the Code) by employers are not includable within the
employee's income to the extent those contributions do not exceed the
lesser of $9,500 or the exclusion allowance. Generally, the exclusion
allowance is equal to 20% of the employee's includable compensation for his
most recent full year of employment multiplied by the number of years of
his service, less the aggregate amount contributed by the employer for
Annuity Contracts which were not included within the gross income of the
employee for any prior taxable year. There are special provisions which
may allow an employee of an educational institution, a hospital or a home
health service agency to elect an overall limitation different from the
limitation described above.
3. Deferred Compensation Plans for Tax-Exempt Organizations and State and
Local Governments
Employees may contribute on a before tax basis to the Deferred Compensation
Plan of their employer in accordance with the employer's Plan and Section
457 of the Code. Section 457 places limitations on contributions to
Deferred Compensation Plans maintained by a State ("State" means a State,
<PAGE>
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a political sub-division of a State, and an agency or instrumentality of a
State or political sub-division of a State) or other tax-exempt
organization. Generally, the limitation is 33 1/3% of includable
compensation (25% of gross compensation) or $7,500, whichever is less. The
plan may also provide for additional contributions during the three taxable
years ending before normal retirement age of a Participant for a total of
up to $15,000 per year for such three years.
An employee electing to participate in a plan should understand that his
rights and benefits are governed strictly by the terms of the plan, that he
is in fact a general creditor of the employer under the terms of the plan,
that the employer is legal owner of any Contract issued with respect to the
plan and that the employer as owner of the Contract(s) retains all voting
and redemption rights which may accrue to the Contract(s) issued with
respect to the plan. The participating employee should look to the terms
of his plan for any charges in regard to participating therein other than
those disclosed in this Prospectus.
Certain distributions are required to be made upon the death of a
Participant. These requirements are generally described in Section C.2.f
of "Federal Tax Considerations" on page ________ .
4. Individual Retirement Annuities ("IRA's")
Individuals may contribute and deduct the lesser of $2,000 or 100 percent
of their compensation to an IRA. In the case of a spousal IRA, the maximum
deduction is the lesser of $2,250 or 100 percent of compensation. The
deduction for contributions is phased out between $40,000 and $50,000 of
adjusted gross income (AGI) for a married individual (and between $25,000
and $35,000 for single individuals) if either the individual or his or her
spouse is an active Participant in any Section 401(a), 403(a), 403(b) or
408(k) plan regardless of whether the individual's interest is vested.
To the extent deductible contributions are not allowed, individuals may
make designated non-deductible contributions to an IRA, subject to the
above limits.
B. Distributions
1. Pension and Profit-Sharing Plans, Tax-Sheltered annuities, Individual
Retirement Annuities
Annuity payments made under the Contracts are taxable under Section 72 of
the Code as ordinary income, in the year of receipt, to the extent that
they exceed the "excludable amount." The investment in the Contract is the
aggregate amount of the contributions made by or on behalf of an employee
which were included as a part of his taxable income and not deducted.
Thus, annual premiums deducted for an IRA are not included in the
investment in the Contract. The employee's investment in the Contract is
divided by the expected number of payments to be made under the Contract.
<PAGE>
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The amount so computed constitutes the "excludable amount," which is the
amount of each annuity payment considered a return of investment in each
year and, therefore, not taxable. Once the employee's investment in the
Contract is recouped, the full amount of each payment will be fully
taxable. If the employee dies prior to recouping his or her investment in
the Contract, a deduction is allowed for the last taxable year. The rules
for determining the excludable amount are contained in Section 72 of the
Code.
Generally, distributions or withdrawals prior to age 59 1/2 may be subject
to an additional income tax of 10% of the amount includable in income.
This additional tax does not apply to distributions made after the
employee's death, on account of disability and distributions in the form of
a life annuity and, except in the case of an IRA, certain distributions
after separation from service at or after age 55, and certain distributions
for eligible medical expenses. A life annuity is defined as a scheduled
series of substantially equal periodic payments for the life or life
expectancy of the Participant (or the joint lives or life expectancies of
the Participant and Beneficiary). The taxation of withdrawals and other
distributions varies depending on the type of distribution and the type of
plan from which the distribution is made. With respect to tax-deferred
annuity Contracts under Section 403(b), contributions to the Contract made
after December 31, 1988 and any increases in cash value after that date may
not be distributed prior to attaining age 59 1/2, separation from service,
death or disability. Contributions (but not earnings) made after December
31, 1988 may also be distributed by reason of financial hardship.
Generally, in order to avoid a penalty tax, annuity payments, periodic
payments or annual distributions MUST commence by April 1 of the calendar
year following the year in which the Participant attains age 70 1/2. The
entire interest of the Participant must be distributed beginning no later
than this required beginning date over a period which may not extend beyond
a maximum of the lives or life expectancies of the Participant and a
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. With respect to a Section
403(b) plan, this account balance is based upon earnings and contributions
after December 31, 1986. In addition, minimum distribution incidental
benefit rules may require a larger annual distribution based upon dividing
the entire account balance as of the close of business on the last day of
the previous calendar year by a factor promulgated by the Internal Revenue
Service which ranges from 26.2 (at age 70) to 1.8 (at age 115). Special
rules apply to require that distributions be made to Beneficiaries after
the death of the Participant. A penalty tax of up to 50% of the amount
which should be distributed may be imposed by the Internal Revenue Service
for failure to make such a distribution.
<PAGE>
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2. Deferred Compensation Plans for Tax-Exempt Organizations and State and
Local Governments
Generally, in order to avoid a penalty tax, annuity payments, periodic
payments or annual distributions must commence by April 1 of the calendar
year following the year in which the Participant attains age 70 1/2.
Minimum distributions under a Section 457 Deferred Compensation Plan may be
further deferred if the Participant remains employed. The entire interest
of the Participant must be distributed beginning no later than this
required beginning date over a period which may not extend beyond a maximum
of the life expectancy of the Participant and a 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 based upon dividing
the account balance by a factor promulgated by the Internal Revenue Service
which ranges from 26.2 (at age 70) to 1.8 (at age 115). Special rules
apply to require that distributions be made to Beneficiaries after the
death of the Participant. A penalty tax of up to 50% of the amount which
should be distributed may be imposed by the Internal Revenue Service for
failure to make a distribution.
Upon receipt of any monies pursuant to the terms of a Deferred Compensation
Plan for a tax-exempt organization, state or local government under Section
457 of the Code, such monies are taxable to such employee as ordinary
income in the year in which received.
C. Federal Income Tax Withholding
The portion of a distribution which is taxable income to the recipient will be
subject to Federal income tax withholding, pursuant to Section 3405 of the
Internal Revenue Code. The application of this provision is summarized below:
1. Eligible Rollover Distributions
a. The Unemployment Compensation Amendments Act of 1992 requires that
federal income taxes be withheld from certain distributions from
tax-qualified retirement plans and from tax-sheltered annuities under
Section 403(b). These provisions DO NOT APPLY to distributions from
individual retirement annuities under section 408(b) or from deferred
compensation programs under section 457.
b. If any portion of a distribution is an "eligible rollover
distribution", the law requires that 20% of that amount be withheld. This
amount is sent to the IRS as withheld income taxes. The following types of
payments DO NOT constitute an eligible rollover distribution (and,
therefore, the mandatory withholding rules will not apply):
<PAGE>
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- the non-taxable portion of the distribution;
- distributions which are part of a series of equal (or substantially
equal) payments made at least annually for your lifetime (or your life
expectancy), or your lifetime and your Beneficiary's lifetime (or life
expectancies), or for a period of ten years or more;
- required minimum distributions made pursuant to section 401(a)(9) of
the IRC.
c. However, these mandatory withholding requirements do not apply in the
event of all or a portion of any eligible rollover distribution is paid in
a "direct rollover". A direct rollover is the direct payment of an
eligible rollover distribution or portion thereof to an individual
retirement arrangement or annuity (IRA) or to another qualified employer
plan. IF A DIRECT ROLLOVER IS ELECTED, NO INCOME TAX WILL BE WITHHELD.
d. If any portion of a distribution is not an eligible rollover
distribution but is taxable, the mandatory withholding rules described
above do not apply. In this case, the voluntary withholding rules
described below apply.
2. Non-Eligible Rollover Distributions
a. Non-Periodic Distributions
The portion of a non-periodic distribution which constitutes taxable
income will be subject to federal income tax withholding unless the
recipient elects not to have taxes withheld. If an election not to
have taxes withheld is not provided, 10% of the taxable distribution
will be withheld as Federal income tax. Election forms will be
provided at the time distributions are requested.
b. Periodic Distributions (distributions payable over a period
greater than one year)
The portion of a periodic distribution which constitutes taxable
income will be subject to federal income tax withholding as if the
recipient were married claiming three exemptions. A recipient may
elect not to have income taxes withheld or have income taxes withheld
at a different rate by providing a completed election form. Election
forms will be provided at the time distributions are requested.
D. Any distribution from plans described in A.3 on page _____ is subject to
the regular wage withholding rules.
<PAGE>
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TABLE OF CONTENTS TO
STATEMENT OF ADDITIONAL INFORMATION
SECTION PAGE
- - ------- ----
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY . . . . . . . . . . . . .
SAFEKEEPING OF ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . .
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . .
DISTRIBUTION OF CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . .
ANNUITY PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A. Annuity Payments. . . . . . . . . . . . . . . . . . . . . . . .
B. Electing the Annuity Commencement Date and Form of Annuity . .
C. Optional Annuity Forms. . . . . . . . . . . . . . . . . . . . .
D. The Annuity Unit and Valuation . . . . . . . . . . . . . . . .
E. Determination of Amount of First Monthly Annuity Payment -
Fixed and Variable. . . . . . . . . . . . . . . . . . . . . . .
F. Amount of Second and Subsequent Monthly Annuity Payments. . . .
G. Date and Time of Annuity Payments . . . . . . . . . . . . . . .
CALCULATION OF YIELD AND RETURN. . . . . . . . . . . . . . . . . . . . .
PERFORMANCE COMPARISONS. . . . . . . . . . . . . . . . . . . . . . . . .
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
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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. terminated employment
c. died, or
d. become disabled.
Distributions of post December 31, 1988 contributions may also be made if you
have experienced a financial hardship.
Also, there may be a 10% penalty tax for distributions made 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
Individual Annuity Operations
P.O. Box 5085
Hartford, CT 06102-5085
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Name of Contract Owner/Participant
Address
City or Plan/School District
Date:
Contract No:
Signature:
<PAGE>
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- - - - - - - - - - - - - - - - - -
To Obtain a Statement of Additional Information, please complete the form below
and mail to:
Hartford Life Insurance Company
Attn: Individual Annuity Operations
P.O. Box 5085
Hartford, CT 06102-5085
Please send a Statement of Additional Information for the Director to me at the
following address:
__________________________________
Name
__________________________________
Address
__________________________________
City/State Zip Code
- - - - - - - - - - - - - - - - - -
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT TWO
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 Attn: Individual Annuity Operations, P.O. Box 5085, Hartford, CT
06102-5085.
Date of Prospectus: May 1, 1995
Date of Statement of Additional Information: May 1, 1995
<PAGE>
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TABLE OF CONTENTS
SECTION PAGE
- - ------- ----
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY . . . . . . . . . . . . . .
SAFEKEEPING OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . .
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . .
DISTRIBUTION OF CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . .
ANNUITY PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A. Annuity Payments . . . . . . . . . . . . . . . . . . . . . . . . .
B. Electing the Annuity Commencement Date and Form of Annuity . . . .
C. Optional Annuity Forms . . . . . . . . . . . . . . . . . . . . . .
D. The Annuity Unit and Valuation . . . . . . . . . . . . . . . . . .
E. Determination of Amount of First Monthly Annuity. . . . . . . . . .
F. Amount of Second and Subsequent Monthly Annuity Payments. . . . . .
G. Date and Time of Annuity Payments . . . . . . . . . . . . . . . . .
CALCULATION OF YIELD AND RETURN. . . . . . . . . . . . . . . . . . . . . .
PERFORMANCE COMPARISONS. . . . . . . . . . . . . . . . . . . . . . . . . .
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
-3-
INTRODUCTION
The individual and group tax-deferred variable annuity Contracts described in
the Prospectus are designed to provide Annuity benefits to individuals who have
established or wish to establish retirement programs which may or may not
qualify for special federal income tax treatment. The Annuitant under these
Contracts may receive Annuity benefits in accordance with the Annuity option
selected and the retirement program, if any, under which the Contracts have been
purchased. Annuity payments under a Contract will begin on a particular future
date which may be selected at any time under the Contract or automatically when
the Annuitant reaches age 90 except in certain states where the Annuitant must
reach age 85. There are several alternative annuity payment options available
under the Contract (see "Optional Annuity Forms," commencing on page ).
The Premium Payments under a Contract, less any applicable Premium Taxes,
will be applied to the Separate Account and/or the Fixed Account.
Accordingly, the net Premium Payment under the Contract will be applied to
purchase interests in one or more of the Hartford Bond Fund, Hartford Stock
Fund, HVA Money Market Fund (for qualified Contracts issued prior to May 1,
1987), Hartford Advisers Fund, Hartford Capital Appreciation Fund, Hartford
Dividend and Growth, Hartford Index Fund, Hartford International Advisers
Fund, Hartford International Opportunities Fund, Hartford Mortgage Securities
Fund, and Hartford U.S. Government Money Market Fund Sub-Accounts.
Shares of the Funds are purchased by the Separate Account without the imposition
of a sales charge. The value of a Contract depends on the value of the shares
of the Fund held by the Separate Account pursuant to that Contract. As a
result, the Contract Owner bears the investment risk since market value of the
shares may increase or decrease.
There is no assurance that the value of the Contract Owner's Contract at any
time will equal or exceed the Premium Payments made. However, if the Annuitant
or Contract Owner dies before the Annuity Commencement Date, the Contracts
provide that a death benefit equal to the value of the Contract as of the date
due proof of death is received by Hartford Life Insurance Companies shall be
payable. This amount is the greater of (a) the Contract Value on the date of
receipt of due proof of death by Hartford Life Insurance Companies, or (b) 100%
of the total Premium Payments made to such Contract, reduced by any prior
surrenders, or (c) the Contract Value on the Specified Contract Anniversary
immediately preceding the date of death, increased by the dollar amount of any
Premium Payments made and reduced by the dollar amount of any partial
terminations since the immediately preceding Specified Contract Anniversary.
(See "Payments of Benefits" commencing on page ___ of the Prospectus).
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY
Hartford Life Insurance Company ("HL") was originally incorporated under the
laws of Massachusetts on June 5, 1902. It was subsequently redomiciled to
Connecticut. It is a stock life insurance company engaged in the business of
writing health and life insurance, both ordinary and group, in all states of the
United States and the District of Columbia. The offices of HL are located in
<PAGE>
-4-
Simsbury, Connecticut; however its mailing address is P.O. Box 5085,
Hartford, Connecticut 06102-5085. Hartford Life is ultimately 100% owned by
Hartford Fire Insurance Company, one of the largest multiple lines insurance
carriers in the United States. Hartford Fire Insurance Company is a
subsidiary of ITT Corporation. Hartford Life Insurance Company has an A++
(superior) rating from A.M. Best and Company, Inc. HL has an AA+ rating from
Standard & Poor's and Duff and Phelps highest rating (AAA) on the basis of its
claims paying ability.
These ratings do not apply to the performance of the Separate Account. However,
the Contractual obligations under this variable annuity are the general
corporate obligations of Hartford Life. These ratings do apply to Hartford
Life's ability to meet its insurance obligations under the Contract.
At December 31, 1994, certain Hartford Life Insurance Company group pension
Contracts held direct interest in shares as follows:
Percent of
Shares Total Shares
------ ------------
Hartford Advisers Fund, Inc. 10,709,364 0.56%
Hartford Capital Appreciation Fund, Inc. 5,313,800 1.31%
Hartford Index Fund, Inc. 9,462,900 9.14%
Hartford International Opportunities Fund, Inc. 5,547,408 1.16%
Hartford Mortgage Securities Fund, Inc. 16,249,689 5.26%
Hartford Stock Fund, Inc. 65,899 0.02%
SAFEKEEPING OF ASSETS
The assets of the Separate Account are held by Hartford Life Insurance Companies
under a safekeeping arrangement.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, One Financial Plaza Hartford, Connecticut, independent
public accountants, will perform an annual audit of the Separate Account. The
financial statements included in this Statement of Additional Information have
been audited by Arthur Andersen LLP to the extent and for the periods
indicated in their report and are included herein in reliance upon the report of
said firm as experts in accounting and auditing.
<PAGE>
-5-
DISTRIBUTION OF CONTRACTS
Hartford Equity Sales Company, Inc. ("HESCO") currently serves as Principal
Underwriter for the securities issued with respect to the Separate Account.
Hartford Securities Distribution Company, Inc. ("HSD") will replace HESCO as
principal underwriter upon approval by the Commission, the National Association
of Securities Dealers, Inc. ("NASD") and applicable state regulatory
authorities.
Both HESCO and HSD are wholly-owned subsidiaries of HL. The principal business
address of HESCO and HSD is the same as HL.
The securities will be sold by salespersons of HESCO, and subsequently, HSD, who
represent HL as insurance and Variable Annuity agents and who are registered
representatives or Broker-Dealers who have entered into distribution agreements
with HESCO, and subsequently HSD.
HESCO is registered with the Commission under the Securities and Exchange Act of
1934 as a Broker-Dealer and is a member of the NASD. HSD will be registered
with the Commission under the Securities Exchange Act of 1934 as a Broker-Dealer
and will become a member of the NASD.
The offering of the Separate Account Contracts is continuous.
ANNUITY PERIOD
A. Annuity Payments
Variable Annuity payments are determined on the basis of (1) a mortality table
set forth in the Contracts and the type of Annuity payment option selected, and
(2) the investment performance of the investment medium selected. Fixed Annuity
payments are based on the Annuity tables contained in the Contracts, and will
remain level for the duration of the Annuity.
The amount of the Annuity payments will not be affected by adverse mortality
experience or by an increase in expenses in excess of the expense deduction for
which provision has been made (see "Charges Under the Contracts," commencing on
page ___ of the Prospectus).
For a Variable Annuity the Annuitant will be paid the value of a fixed number of
Annuity Units each month. The value of such units and the amounts of the
monthly Variable Annuity payments will, however, reflect investment income
occurring after retirement, and thus the Variable Annuity payments will vary
with the investment experience of the Fund shares selected.
<PAGE>
-6-
B. Electing the Annuity Commencement Date and Form of Annuity
The Contract Owner selects an Annuity Commencement Date and an Annuity option
which may be on a fixed or variable basis, or a combination thereof. The
Annuity Commencement Date will not be deferred beyond the Annuitant's 90th
birthday, except in certain states where deferral past age 85 is not permitted.
The Annuity Commencement Date and/or the Annuity 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.
The Contract contains the five optional Annuity forms described below. Options
2, 4 and 5 are available with respect to Qualified Contracts only if the
guaranteed 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 HL.
With respect to Non-Qualified Contracts, if you do not elect otherwise, payments
will automatically begin at the Annuitant's age 90 (with the exception of states
that do not allow deferral past age 85) under Option 2 with 120 monthly payments
certain.
For Qualified Contracts and Contracts issued in Texas, if you do not elect
otherwise, payments will begin automatically at the Annuitant's age 90 (with the
exception of states that do not allow deferral past age 85) under Option 1 to
provide a life Annuity.
When an Annuity is effected under a Contract, unless otherwise specified,
variable values will be applied to provide a Variable Annuity based on Contract
Values as they are held in the various Sub-Accounts under the Contracts. Fixed
Account Contract Values will be applied to provide a Fixed Annuity. The
Contract Owner should consider the question of allocation of Contract Values
among Sub-Accounts of the Separate Account and the General Account of Hartford
Life Insurance Companies to make certain that Annuity payments are based on the
investment alternative best suited to the Contract Owner's needs for retirement.
If at any time Annuity payments with respect to a Variable or a Fixed Annuity or
a combination of the two are or become less than $50.00 per payment, Hartford
Life Insurance Companies has the right to change the frequency of payment to
such intervals as will result in Annuity payments of at least $50.00. For New
York Contracts the minimum payment is $20.00
There may be other annuity options available offered by HL from time to time.
<PAGE>
-7-
C. Optional Annuity Forms
OPTION 1: Life Annuity
A life Annuity is an Annuity payable during the lifetime of the Annuitant and
terminating with the last monthly payment preceding the death of the Annuitant.
This option offers the maximum level of monthly payments of any of the life
Annuity options since there is no guarantee of a minimum number of payments nor
a provision for a death benefit payable to a Beneficiary.
It would be possible under this option for an Annuitant to receive only one
Annuity payment if he died prior to the due date of the second Annuity payment,
two if he died before the due date of the third Annuity payment, etc.
OPTION 2: Life Annuity with 120, 180 or 240 Monthly Payments Certain
This Annuity option is an Annuity payable monthly during the lifetime of an
Annuitant with the provision that if, at the death of the Annuitant, payments
have been made for less than 120, 180 or 240 months, as elected, then the
present value as of the date of the Annuitant's death of the current dollar
amount at the date of death, of any remaining guaranteed monthly payments will
be paid in one sum to the Beneficiary or Beneficiaries designated.
Illustration of Annuity Payments
Individual Age 65, Life Annuity
With 120 Payments Certain
-------------------------
<TABLE>
<CAPTION>
<S> <C>
1. Net amount applied 13,978.25
2. Initial monthly income per $1,000 of payment applied 6.24
3. Initial monthly payment (1x2 divided by 1,000) 87.22
4. Annuity Unit value .953217
5. Number of monthly Annuity Units (3 divided by 4) 91.501
6. Assume Annuity Unit value for second month equal to .963723
7. Second monthly payment (6x5) 88.18
8. Assume Annuity Unit value for third month equal to .964917
9. Third monthly payment (8x5) 88.29
</TABLE>
For the purpose of this illustration, purchase is assumed to have been made on
the fifth business day preceding the first payment date. In determining the
second and subsequent payments, the Annuity Unit value of the fifth business day
preceding the Annuity due date is used.
<PAGE>
-8-
OPTION 3: Joint and Last Survivor Annuity
An Annuity payable monthly during the joint lifetime of the Annuitant and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
It would be possible under this option for an Annuitant and designated second
person in the event of the common or simultaneous death of the parties to
receive only one payment in the event of death prior to the due date for the
second payment and so on.
OPTION 4: Payments for a Designated Period
An amount payable monthly for the number of years selected which may be from 5
to 30 years. Under this option, you may, at any time, surrender the Contract
and receive, within seven days, the Termination Value of the Contract.
In the event of the Annuitant's death prior to the end of the designated period,
the present value as of the date of the Annuitant's death, of the current dollar
amount of any remaining guaranteed monthly payments will be paid in one sum to
the Beneficiary or Beneficiaries designated.
Option 4 is an option that does not involve life contingencies and thus no
mortality guarantee. Charges made for the mortality undertaking under the
Contracts thus provide no real benefit to a Contract Owner.
OPTION 5: Death Benefit Remaining with the Company
Proceeds from the Death Benefit may be left with the Company for a period not to
exceed five years from the date of the Contract Owner's death prior to the
Annuity Commencement Date. The proceeds will remain in the Sub-Account(s) to
which they were allocated at the time of death unless the Beneficiary elects to
reallocate them. Full or partial withdrawals may be made at any time. In the
event of withdrawals, the remaining value will equal the Contract Value of the
proceeds left with the Company, minus any withdrawals. Contingent Deferred
Sales Charges, if applicable, will also be applied to all withdrawals. For
purposes of determining this charge, the original Contract Date of this Contract
will be used.
- - -------------------------------------------------------------------------------
Under any of the Annuity options above, excluding Option 4, no surrenders are
permitted after Annuity payments commence. Only full surrenders are allowed out
of Option 4 and any such surrender will be subject to contingent deferred
charges, if applicable.
- - -------------------------------------------------------------------------------
D. The Annuity Unit and Valuation
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 page 11 of the Prospectus) for the
<PAGE>
-9-
day for which the Annuity Unit value is being calculated, and (2) a factor to
neutralize the assumed investment rate of 5.00% per annum discussed in Section
E. below.
Illustration of Calculation of Annuity Unit Value
-------------------------------------------------
1. Net Investment Factor for period 1.011225
2. Adjustment for 5% Assumed Rate of Investment Return .999892
3. 2x1 1.011116
4. Annuity Unit value, beginning of period .995995
5. Annuity Unit value, end of period (3x4) 1.007066
E. Determination of Amount of First Monthly Annuity Payment-Fixed and Variable
When Annuity payments are to commence, the value of the Contract is determined
as the sum of the value of the Fixed Account no earlier than the close of
business on the fifth Valuation Day preceding the date the first Annuity payment
is due plus the product of the value of the Accumulation Unit of each
Sub-Account on that same day, and the number of Accumulation Units credited to
each Sub-Account as of the date the Annuity is to commence.
The Contract contains tables indicating the minimum dollar amount of the first
monthly payment under the optional forms of Annuity for each $1,000 of value of
a Sub-Account under a Contract. The first monthly payment varies according to
the form and type of Annuity selected. The Contracts contains Annuity tables
derived from the 1983a Individual Annuity Mortality table with ages set back one
year with an assumed investment rate ("A.I.R.") of 5% per annum. The total
first monthly Variable 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.
Fixed Annuity payments are determined at annuitization by multiplying the values
allocated to the Fixed Account by a rate to be determined by HL which is no less
than the rate specified in the Annuity tables in the Contract. The Annuity
payment will remain level for the duration of the Annuity.
F. Amount of Second and Subsequent Monthly Variable Annuity Payments
The amount of the first monthly Variable Annuity payment, determined as
described above, is divided by the value of an Annuity Unit for the appropriate
Sub-Account no earlier than the close of business on the fifth Valuation Day
preceding the day on which the payment is due in order to determine the number
of Annuity Units represented by the first payment. This number of Annuity Units
remains fixed during the Annuity Period, and in each subsequent month the dollar
amount of the Variable Annuity payment is determined by multiplying this fixed
number of Annuity Units by the then current Annuity Unit value.
<PAGE>
-10-
Level Variable Annuity Payments would be produced if the investment rate
remained constant and equal to the A.I.R. In fact, payments will vary up or
down as the investment rate varies up or down from the A.I.R.
G. Date and Time of Annuity Payments
The Annuity payments will be made on the fifteenth day of each month following
selection. The Annuity Unit value used in calculating the amount of the
Variable Annuity payments will be based on an Annuity Unit value determined as
of the close of business on a day no earlier than the fifth Valuation Day
preceding the date of the Annuity payment.
<PAGE>
-11-
CALCULATION OF YIELD AND RETURN
YIELD OF THE HVA MONEY MARKET FUND AND HARTFORD U.S. GOVERNMENT MONEY MARKET
FUND SUB-ACCOUNTS. As summarized in the Prospectus under the heading
"Performance Related Information," the yield of the HVA Money Market Fund and
Hartford U.S. Government Money Market Fund Sub-Accounts for a seven day period
(the "base period") will be computed by determining the "net change in value"
(calculated as set forth below) of a hypothetical account having a balance of
one share 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 daily dividends as declared by the underlying funds, less
daily expense charges of the account) for the period, but will not include
realized gains or losses or unrealized appreciation or depreciation on the
underlying fund shares.
The HVA Money Market Fund and Hartford U.S. Government Money Market Fund
Sub-Accounts' yield and effective yield will vary in response to fluctuations in
interest rates and in the expenses of the two Sub-Accounts.
THE CURRENT YIELD AND EFFECTIVE YIELD REFLECT RECURRING CHARGES ON THE SEPARATE
ACCOUNT LEVEL, INCLUDING THE MAXIMUM ANNUAL POLICY FEE.
HVA Money Market Fund Sub-Account
The yield and effective yield for the seven day period ending December 31, 1994
is as follows:
($30 annual policy fee)
Yield 4.05%
Effective Yield 4.13%
Hartford U.S. Government Money Market Fund Sub-Account
The yield and effective yield for the sub-account for the seven day period
ending December 31, 1994 is as follows:
The following is an example of this yield calculation for the Sub-Account based
on a seven day period ending December 31, 1994:
($30 annual policy fee)
Yield 3.73%
Effective Yield 3.80%
<PAGE>
-12-
YIELDS OF HARTFORD BOND FUND AND HARTFORD MORTGAGE SECURITIES FUND SUB-ACCOUNTS.
As summarized in the Prospectus under the heading "Performance Related
Information," yields of these two 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
Hartford Bond Fund and Hartford Mortgage Securities Fund 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
Hartford Bond Fund and Hartford Mortgage Securities Fund.
The yield reflects recurring charges on the Separate Account level, including
the annual policy fee.
HARTFORD BOND FUND SUB-ACCOUNT
Yield calculations of the Sub-Account used for illustration purposes reflect the
interest earned by the Sub-Account, less applicable asset charges assessed
against a Contract Owner's account over the base period. The following is the
method used to determine the yield for the 30 day period ended December 31,
1994.
Example:
Current Yield Formula for the Sub-Account
2*[((A-B)/(C*D) + 1)TO THE 6TH POWER - 1]
Where A = Dividends and interest earned during the period.
B = Expenses accrued for the period (net of reimbursements).
C = The average daily number of units outstanding during the period that
were entitled to receive dividends.
D = The maximum offering price per unit on the last day of the period.
Yield = 5.87%
HARTFORD MORTGAGE SECURITIES FUND SUB-ACCOUNT
Yield calculations of the Sub-Account used for illustration purposes reflect the
interest earned by the Sub-Account, less applicable asset charges assessed
against a Contract Owner's account over the base period. The following is the
method used to determine the yield for the 30 days period ended December 31,
1994.
<PAGE>
-13-
Example:
Current Yield Formula for the Sub-Account
2*[((A-B)/(C*D) + 1)TO THE 6TH POWER - 1]
Where A = Dividends and interest earned during the period.
B = Expenses accrued for the period (net of reimbursements).
C = The average daily number of units outstanding during the period that
were entitled to receive dividends.
D = The maximum offering price per unit on the last day of the period.
Yield = 6.51%
At any time in the future, yields and total return may be higher or lower than
past yields and there can be no assurance that any historical results will
continue.
The method of calculating yields described above for these Sub-Accounts differs
from the method used by the Sub-Accounts prior to May 1, 1988. The denominator
of the fraction used to calculate yield was previously the average unit value
for the period calculated. That denominator will hereafter be the unit value of
the Sub-Accounts on the last trading day of the period calculated.
CALCULATION OF TOTAL RETURN. As summarized in the Prospectus under the heading
"Performance Related Information", total return is a measure of the change in
value of an investment in a 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 by the unit value per unit
on the last trading day of the period; (2) assuming redemption at the end of the
period and deducting any applicable contingent deferred sales charge and (3)
dividing this account value for the hypothetical investor by the initial $1,000
investment and annualizing the result for periods of less than one year. Total
return will be calculated for one year, five years and ten years or some other
relevant periods if a Sub-Account has not been in existence for at least ten
years.
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 to
prospective shareholders. Each Sub-Account may from time to time include its
yield and total return in advertisements or information furnished to present to
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 and Morningstar, Inc. as
having the same investment objectives.
<PAGE>
-14-
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 Composite 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 Morgan Stanley Capital International EAFE Index (the "EAFE Index") is an
unmanaged index, which includes over 1,000 companies representing the stock
markets of Europe, Australia, New Zealand, and the Far East. The EAFE Index is
weighted by market capitalization, and therefore, it has a heavy representation
in countries with large stock markets, such as Japan.
The Lehman Government Bond Index (the "Lehman 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 issued are not
included in the Lehman Government Index.
The Lehman Government/Corporate Bond Index (the "Lehman 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 Lehman
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 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%).
The manner in which total return and yield will be calculated for public use is
described above. The following table summarizes the calculation of total return
and yield for each Sub-Account, where applicable, through December 31, 1994.
<PAGE>
MONEY MARKET FUND - DIRECTOR
The following is an example of this yield calculation for the Sub-Account based
on a seven day period ending December 31, 1994.
<TABLE>
<CAPTION>
<S> <C>
Assumption:
Value of a hypothetical pre-existing account
with exactly one unit at the beginning of the
period: . . . . . . . . . . . . . . . . . . . . . . . $1.461337
Value of the same account (excluding capital
changes) at the end of the seven day period . . . . . $1.462471
Calculation:
Ending account value. . . . . . . . . . . . . . . . . $1.462471
Less beginning account value. . . . . . . . . . . . . 1.461337108
Net change in account value . . . . . . . . . . . . . $0.001134
Base period return:
(adjusted change / beginning account value)
$0.001134 / $1.461337 $0.000776
Current yield = $0.000776 * (365/7)= . . . 4.05%
Effective yield = (1+ 0.000776)RAISED TO THE POWER OF 365/7 - 1 = . . . 4.13%
</TABLE>
<PAGE>
U.S. GOVERNMENT MONEY MARKET FUND - DIRECTOR
The following is an example of this yield calculation for the Sub-Account based
on a seven day period ending December 31, 1994.
<TABLE>
<CAPTION>
<S> <C>
Assumption:
Value of a hypothetical pre-existing account
with exactly one unit at the beginning of the
period: . . . . . . . . . . . . . . . . . . . . . . . $1.407964
Value of the same account (excluding capital
changes) at the end of a seven day period . . . . . . $1.408971
Calculation:
Ending account value. . . . . . . . . . . . . . . . . $1.408971
Less beginning account value. . . . . . . . . . . . . 1.407964302
Net change in account value . . . . . . . . . . . . . $0.001007
Base period return:
(adjusted change / beginning account value)
$0.001007 / $1.407964 $0.000715
Current yield = $0.000715 * (365/7) = . . . . . . . . . . . . . . 3.73%
Effective yield = (1+ 0.000715)RAISED TO THE POWER OF 365/7 - 1 =. . . 3.80%
</TABLE>
<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 statement of assets and liabilities of
Hartford Life Insurance Company Separate Account Two as of December 31, 1994,
and the related statement of operations for the year then ended and statement of
changes in net assets for each of the two years in the period then ended. These
financial statements are the responsibility of the Company'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 Hartford Life Insurance
Company Separate Account Two as of December 31, 1994, the results of its
operations for the year then ended and the changes in its net assets for each of
the two years in the period then ended in conformity with generally accepted
accounting principles.
Hartford, Connecticut
February 10, 1995 Arthur Andersen LLP
37
<PAGE>
- - -------------------------------------------------------------------------------
SEPARATE ACCOUNT TWO
- - -------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1994
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY U.S. GOVERNMENT
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND MONEY MARKET FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------ ------------ -------------- --------------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund, Inc.
Shares 172,229,725
Cost $ 176,180,319
Market Value........................................ $159,488,170 -- -- -- --
Hartford Stock Fund, Inc.
Shares 230,631,116
Cost $ 615,215,162
Market Value........................................ -- $646,103,848 -- -- --
HVA Money Market Fund, Inc.
Shares 241,684,272
Cost $ 241,684,272
Market Value........................................ -- -- $241,684,272 -- --
Hartford Advisers Fund, Inc.
Shares 1,125,337,358
Cost $1,820,221,520
Market Value........................................ -- -- -- $1,801,079,934 --
Hartford U.S. Government Money Market Fund, Inc.
Shares 1,211,232
Cost $ 1,211,232
Market Value........................................ -- -- -- -- $1,211,232
Hartford Aggressive Growth Fund, Inc.
Shares 221,151,687
Cost $ 581,410,587
Market Value........................................ -- -- -- -- --
Hartford Mortgage Securities Fund, Inc.
Shares 216,900,409
Cost $ 233,653,118
Market Value........................................ -- -- -- -- --
Hartford Index Fund, Inc.
Shares 62,005,461
Cost $ 85,135,111
Market Value........................................ -- -- -- -- --
Hartford International Opportunities Fund, Inc.
Shares 255,913,841
Cost $ 287,607,489
Market Value........................................ -- -- -- -- --
Hartford Dividend and Growth Fund, Inc.
Shares 30,033,209
Cost $ 30,342,155
Market Value........................................ -- -- -- -- --
Calvert Socially Responsive Series, Inc.
Shares 688,923
Cost $ 985,530
Market Value........................................ -- -- -- -- --
Smith Barney Shearson Daily Dividend Fund, Inc.
Shares 645,916
Cost $ 645,916
Market Value........................................ -- -- -- -- --
Smith Barney Shearson Appreciation Fund, Inc.
Shares 11,551
Cost $ 74,714
Market Value........................................ -- -- -- -- --
Smith Barney Shearson Government and Agencies Fund
Shares 48,101
Cost $ 48,101
Market Value........................................ -- -- -- -- --
Dividends Receivable.................................. -- -- -- -- --
Due from Hartford Life Insurance Company.............. 67,001 493,463 -- 694,443 9,658
Receivable from fund shares sold...................... -- -- 416,033 -- --
------------ ------------ ------------ -------------- -----------
Total Assets.......................................... 159,555,171 646,597,311 242,100,305 1,801,774,377 1,220,890
------------ ------------ ------------ -------------- -----------
LIABILITIES:
Due to Hartford Life Insurance Company................ -- -- 411,062 -- --
Payable for fund shares purchased..................... 67,024 494,846 -- 693,465 9,289
------------ ------------ ------------ -------------- -----------
Total Liabilities..................................... 67,024 494,846 411,062 693,465 9,289
------------ ------------ ------------ -------------- -----------
Net Assets (variable annuity contract liabilities).... $159,488,147 $646,102,465 $241,689,243 $1,801,080,912 $1,211,601
------------ ------------ ------------ -------------- -----------
------------ ------------ ------------ -------------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
28
<PAGE>
<TABLE>
<CAPTION>
SMITH
BARNEY
SHEARSON
SMITH BARNEY SMITH BARNEY GOVERNMENT
DIVIDEND SHEARSON SHEARSON AND
AGGRESSIVE MORTGAGE INTERNATIONAL AND GROWTH SOCIALLY DAILY DIVIDEND APPRECIATION AGENCIES
GROWTH FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND FUND RESPONSIVE FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ --------------- ----------- ------------------ ----------- --------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
-- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- --
$632,467,289 -- -- -- -- -- -- -- --
-- $213,512,425 -- -- -- -- -- -- --
-- -- $94,384,095 -- -- -- -- -- --
-- -- -- $300,880,462 -- -- -- -- --
-- -- -- -- $29,855,712 -- -- -- --
-- -- -- -- -- $ 992,739 -- -- --
-- -- -- -- -- -- $ 645,916 -- --
-- -- -- -- -- -- -- $117,210 --
-- -- -- -- -- -- -- -- $48,101
-- -- -- -- -- 31,623 -- -- 8
670,264 -- -- 34,067 169,314 7,760 -- -- --
-- 72,115 122,769 -- -- -- 1,130 30 195
------------ --------------- ----------- ------------------ ----------- --------------- -------------- -------------- -----------
633,137,553 213,584,540 94,506,864 300,914,529 30,025,026 1,032,122 647,046 117,240 48,304
------------ --------------- ----------- ------------------ ----------- --------------- -------------- -------------- -----------
-- 67,937 122,812 -- -- -- 1,130 19 211
668,624 -- -- 34,906 169,722 7,784 -- -- --
------------ --------------- ----------- ------------------ ----------- --------------- -------------- -------------- -----------
668,624 67,937 122,812 34,906 169,722 7,784 1,130 19 211
------------ --------------- ----------- ------------------ ----------- --------------- -------------- -------------- -----------
$632,468,929 $213,516,603 $94,384,052 $300,879,623 $29,855,304 $1,024,338 $ 645,916 $117,221 $48,093
------------ --------------- ----------- ------------------ ----------- --------------- -------------- -------------- -----------
------------ --------------- ----------- ------------------ ----------- --------------- -------------- -------------- -----------
</TABLE>
29
<PAGE>
- - -------------------------------------------------------------------------------
SEPARATE ACCOUNT TWO
- - -------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF ASSETS & LIABILITIES -- (CONTINUED)
DECEMBER 31, 1994
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------ ---------- ---------------
<S> <C> <C> <C>
DEFERRED ANNUITY CONTRACTS IN THE ACCUMULATION PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Bond Fund Qualified 1.00%............................................................. 386,894 $ 3.081636 $ 1,192,266
Bond Fund Non-Qualified 1.00%......................................................... 2,747,334 3.034781 8,337,557
Bond Fund 1.25%....................................................................... 85,397,157 1.606681 137,205,990
Bond Fund .25%........................................................................ 130,046 1.048603 136,367
Stock Fund Qualified 1.00%............................................................ 1,015,114 4.177385 4,240,521
Stock Fund Non-Qualified 1.00%........................................................ 3,743,893 3.994491 14,954,948
Stock Fund 1.25%...................................................................... 248,563,344 2.180436 541,976,464
Stock Fund .25%....................................................................... 1,226,382 1.123066 1,377,308
Money Market Fund Qualified 1.00%..................................................... 1,193,859 2.261057 2,699,383
Money Market Fund Non-Qualified 1.00%................................................. 14,166,909 2.262124 32,047,305
Money Market Fund 1.25%............................................................... 138,396,161 1.462471 202,400,371
Money Market Fund .25%................................................................ 186,512 1.064380 198,520
Advisers Fund Qualified 1.00%......................................................... 4,660,625 2.959828 13,794,648
Advisers Fund Non-Qualified 1.00%..................................................... 15,416,951 2.959828 45,631,522
Advisers Fund 1.25%................................................................... 858,013,683 1.990804 1,708,137,073
Advisers Fund .25%.................................................................... 1,344,430 1.088404 1,463,283
U.S. Government Money Market Fund Qualified 1.00%..................................... 20,769 1.810814 37,609
U.S. Government Money Market Fund 1.25%............................................... 48,432 1.408971 68,240
Aggressive Growth Fund Qualified 1.00%................................................ 938,226 4.368563 4,098,699
Aggressive Growth Fund Non-Qualified 1.00%............................................ 2,983,029 4.366578 13,025,628
Aggressive Growth Fund 1.25%.......................................................... 220,935,895 2.615288 577,810,995
Aggressive Growth Fund .25%........................................................... 2,691,355 1.233577 3,319,994
Mortgage Securities Fund Qualified 1.00%.............................................. 1,431,871 2.084988 2,985,434
Mortgage Securities Fund Non-Qualified 1.00%.......................................... 11,296,904 2.084988 23,553,908
Mortgage Securities Fund 1.25%........................................................ 112,417,272 1.636791 184,003,579
Mortgage Securities Fund .25%......................................................... 105,417 1.037405 109,360
Index Fund 1.25%...................................................................... 50,799,238 1.749714 88,884,138
Index Fund .25%....................................................................... 205,039 1.099141 225,367
International Opportunities Fund Qualified 1.00%...................................... 556,691 1.194697 665,077
International Opportunities Fund Non-Qualified 1.00%.................................. 2,439,349 1.194654 2,914,179
International Opportunities Fund 1.25%................................................ 246,259,349 1.181321 290,911,341
International Opportunities Fund .25%................................................. 1,080,735 1.295734 1,400,346
Dividend and Growth Fund Qualified 1.00%.............................................. 36,668 1.011382 37,085
Dividend and Growth Fund Non-Qualified 1.00%.......................................... 335,338 1.011382 339,155
Dividend and Growth Fund 1.25%........................................................ 29,145,963 1.009335 29,418,040
Dividend and Growth Fund .25%......................................................... 59,971 1.017552 61,024
Smith Barney Shearson Daily Dividend, Inc. Qualified 1.00%............................ 96,101 2.458044 236,221
Smith Barney Shearson Daily Dividend, Inc. Non-Qualified 1.00%........................ 161,059 2.543759 409,695
Smith Barney Shearson Appreciation Fund, Inc. Qualified 1.00%......................... 23,909 4.902844 117,221
Smith Barney Shearson Government and Agencies, Inc. Qualified 1.00%................... 21,677 2.218682 48,093
---------------
Sub-total Individual Sub-Accounts..................................................... 3,940,473,954
---------------
GROUP SUB-ACCOUNTS:
Bond Fund Qualified 1.00% QP.......................................................... 1,668,221 3.609357 6,021,205
Bond Fund 1.25% DCII.................................................................. 1,122,768 3.499674 3,929,323
Bond Fund .15% DCII................................................................... 305,816 3.261226 997,336
Stock Fund Qualified 1.00% QP......................................................... 4,283,748 6.985679 29,924,886
Stock Fund Qualified .825% QP......................................................... 1,435,480 5.600682 8,039,665
Stock Fund Non-Qualified 1.00% NQ..................................................... 88,837 5.481096 486,923
Stock Fund Non-Qualified .825% NQ..................................................... 890,205 5.610519 4,994,510
Stock Fund 1.25% DCII................................................................. 3,884,750 6.771260 26,304,653
Stock Fund .15% DCII.................................................................. 858,147 5.201059 4,463,271
Money Market Fund Qualified .375% QP.................................................. 2,095 2.802645 5,871
Money Market Fund 1.25% DCII.......................................................... 905,063 2.511791 2,273,329
Money Market Fund .15% DCII........................................................... 265,801 2.416025 642,182
Advisers Fund 1.25% DCII.............................................................. 8,279,212 2.875723 23,808,720
Advisers Fund .15% DCII............................................................... 528,996 3.268187 1,728,857
U.S. Government Money Market Fund 1.25% DCII.......................................... 483,107 1.758459 849,524
U.S. Government Money Market Fund .15% DCII........................................... 37,301 2.003628 74,738
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
30
<PAGE>
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------ ---------- ---------------
GROUP SUB-ACCOUNTS -- (CONTINUED)
<S> <C> <C> <C>
Aggressive Growth Fund 1.25% DCII..................................................... 6,922,578 4.256870 29,468,515
Aggressive Growth Fund .15% DCII...................................................... 599,956 4.785486 2,871,082
Mortgage Securities Fund 1.25% DCII................................................... 993,777 2.033647 2,020,991
Mortgage Securities Fund .15% DCII.................................................... 78,285 2.268923 177,623
Index Fund 1.25% DCII................................................................. 2,375,877 1.737856 4,128,933
Index Fund .15% DCII.................................................................. 216,621 1.875849 406,348
International Opportunities Fund 1.25% DCII........................................... 3,640,068 1.181488 4,300,697
International Opportunities Fund .15% DCII............................................ 333,919 1.241199 414,460
Socially Responsive Fund 1.25% DCII................................................... 692,817 1.417414 982,008
---------------
Sub-total Group Sub-Accounts.......................................................... 159,315,650
---------------
TOTAL ACCUMULATION PERIOD............................................................... 4,099,789,604
---------------
ANNUITY CONTRACTS IN THE ANNUITY PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Bond Fund Non-Qualified 1.00%......................................................... 704 3.034781 2,138
Bond Fund 1.25%....................................................................... 129,039 1.606681 207,325
Stock Fund Non-Qualified 1.00%........................................................ 7,925 3.994491 31,657
Stock Fund 1.25%...................................................................... 191,847 2.180436 418,310
Money Market Fund Qualified 1.00%..................................................... 20,342 2.261057 45,994
Money Market Fund Non-Qualified 1.00%................................................. 129,600 2.262124 293,172
Money Market Fund 1.25%............................................................... 434,331 1.462471 635,196
Advisers Fund Qualified 1.00%......................................................... 5,523 2.959828 16,347
Advisers Fund Non-Qualified 1.00%..................................................... 75,862 2.959828 224,538
Advisers Fund 1.25%................................................................... 786,775 1.990804 1,566,314
U.S. Government Money Market Fund Qualified 1.00%..................................... 25,034 1.810814 45,331
Aggressive Growth Fund Non-Qualified 1.00%............................................ 5,273 4.366578 23,026
Aggressive Growth Fund 1.25%.......................................................... 53,426 2.615288 139,725
Mortgage Securities Fund Qualified 1.00%.............................................. 8,740 2.084988 18,223
Mortgage Securities Fund Non-Qualified 1.00%.......................................... 118,956 2.084988 248,021
Mortgage Securities Fund 1.25%........................................................ 82,741 1.636791 135,429
Index Fund 1.25%...................................................................... 26,043 1.749714 45,568
International Opportunities Fund 1.25%................................................ 132,984 1.181321 157,097
---------------
Sub-total Individual Sub-Accounts..................................................... 4,253,411
---------------
GROUP SUB-ACCOUNTS:
Bond Fund Qualified 1.00% QP.......................................................... 91,006 3.609357 328,473
Bond Fund 1.25% DCII.................................................................. 308,096 3.499674 1,078,236
Bond Fund 1.00% DCII.................................................................. 14,445 3.595086 51,932
Stock Fund Qualified 1.00% QP......................................................... 233,773 6.985679 1,633,062
Stock Fund Qualified .825% QP......................................................... 54,011 5.600682 302,500
Stock Fund Non-Qualified 1.00% NQ..................................................... 728 5.481096 3,988
Stock Fund Non-Qualified .825% NQ..................................................... 65,133 5.610519 365,428
Stock Fund 1.25% DCII................................................................. 964,557 6.771260 6,531,268
Stock Fund 1.00% DCII................................................................. 4,948 6.963798 34,458
Stock Fund .15% DCII.................................................................. 3,585 5.201059 18,646
Money Market Fund 1.25% DCII.......................................................... 178,327 2.511791 447,919
Advisers Fund 1.25% DCII.............................................................. 1,609,483 2.875723 4,628,427
Advisers Fund .15% DCII............................................................... 24,841 3.268187 81,184
U.S. Government Money Market Fund 1.25% DCII.......................................... 77,431 1.758459 136,159
Aggressive Growth Fund 1.25% DCII..................................................... 402,001 4.256870 1,711,264
Mortgage Securities Fund 1.25% DCII................................................... 129,833 2.033647 264,035
Index Fund 1.25% DCII................................................................. 399,168 1.737856 693,697
International Opportunities Fund 1.25% DCII........................................... 98,542 1.181488 116,426
Socially Responsive Fund 1.25% DCII................................................... 29,864 1.417414 42,330
---------------
Sub-total Group Sub-Accounts.......................................................... 18,469,432
---------------
TOTAL ANNUITY PERIOD.................................................................... 22,722,843
---------------
GRAND TOTAL............................................................................. $ 4,122,512,447
---------------
---------------
</TABLE>
31
<PAGE>
- - -------------------------------------------------------------------------------
SEPARATE ACCOUNT TWO
- - -------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY U.S. GOVERNMENT
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND MONEY MARKET FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------- ------------ -------------- -----------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 10,129,126 $ 13,298,486 $ 8,730,379 $ 57,979,079 $ 42,603
EXPENSES:
Mortality and expense undertakings.... (1,981,904) (7,426,331) (2,661,371) (21,578,163) (13,685)
------------- ------------- ------------ -------------- --------
Net investment income (loss)........ 8,147,222 5,872,155 6,069,008 36,400,916 28,918
------------- ------------- ------------ -------------- --------
Capital gains income.................. 3,020,067 34,722,942 -- 47,447,226 --
------------- ------------- ------------ -------------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on security
transactions......................... (421,917) (203,916) -- 414,315 --
Net unrealized appreciation
(depreciation) of investments during
the period........................... (19,519,205) (59,765,259) -- (154,737,742) --
------------- ------------- ------------ -------------- --------
Net gains (losses) on investments... (19,941,122) (59,969,175) -- (154,323,427) --
------------- ------------- ------------ -------------- --------
Net increase (decrease) in net
assets resulting from operations... $ (8,773,833) $(19,374,078) $ 6,069,008 $ (70,475,285) $ 28,918
------------- ------------- ------------ -------------- --------
------------- ------------- ------------ -------------- --------
<FN>
* From Inception, March 8, 1994, to December 31, 1994.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
32
<PAGE>
<TABLE>
<CAPTION>
SMITH
SMITH BARNEY
BARNEY SHEARSON
SHEARSON SMITH BARNEY GOVERNMENT
SOCIALLY DAILY SHEARSON AND
AGGRESSIVE MORTGAGE INTERNATIONAL DIVIDEND AND RESPONSIVE DIVIDEND APPRECIATION AGENCIES
GROWTH FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- --------------- ------------- ------------------ ------------ ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 2,216,268 $ 15,801,876 $ 2,259,862 $ 3,567,586 $ 419,546 $ 31,623 $24,231 $ 1,969 $1,757
(6,812,975) (2,897,906) (1,104,316) (3,151,951) (135,382) (11,158) (6,845) (1,226) (488)
------------- --------------- ------------- ------------------ ------------ ----------- ---------- ------------ -----------
(4,596,707) 12,903,970 1,155,546 415,635 284,164 20,465 17,386 743 1,269
------------- --------------- ------------- ------------------ ------------ ----------- ---------- ------------ -----------
42,093,901 1,176,728 -- -- -- -- -- 6,550 --
------------- --------------- ------------- ------------------ ------------ ----------- ---------- ------------ -----------
316,913 (2,117,604) 177,595 (38,119) 1,622 (180) -- (476) --
(28,599,970) (19,218,450) (1,319,890) (9,418,006) (486,442) (59,462) -- (9,210) --
------------- --------------- ------------- ------------------ ------------ ----------- ---------- ------------ -----------
(28,283,057) (21,336,054) (1,142,295) (9,456,125) (484,820) (59,642) -- (9,686) --
------------- --------------- ------------- ------------------ ------------ ----------- ---------- ------------ -----------
$ 9,214,137 $ (7,255,356) $ 13,251 $(9,040,490) $(200,656) $(39,177) $17,386 $(2,393) $1,269
------------- --------------- ------------- ------------------ ------------ ----------- ---------- ------------ -----------
------------- --------------- ------------- ------------------ ------------ ----------- ---------- ------------ -----------
</TABLE>
33
<PAGE>
- - -------------------------------------------------------------------------------
SEPARATE ACCOUNT TWO
- - -------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1994
- - -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY U.S. GOVERNMENT
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND MONEY MARKET FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------- ------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 8,147,222 $ 5,872,155 $ 6,069,008 $ 36,400,916 $ 28,918
Capital gains income.................. 3,020,067 34,722,942 -- 47,447,226 --
Net realized gain (loss) on security
transactions......................... (421,917) (203,916) -- 414,315 --
Net unrealized appreciation
(depreciation) of investments during
the period........................... (19,519,205) (59,765,259) -- (154,737,742) --
------------- ------------- ------------- --------------- -----------------
Net increase (decrease) in net assets
resulting from operations............ (8,773,833) (19,374,078) 6,069,008 (70,475,285) 28,918
------------- ------------- ------------- --------------- -----------------
UNIT TRANSACTIONS:
Purchases............................. 29,721,918 105,127,448 72,433,601 419,190,064 205,153
Net transfers......................... (10,176,062) 20,445,965 10,951,538 14,104,761 (151,291)
Surrenders............................ (11,477,200) (25,527,779) (33,930,464) (88,886,489) (65,287)
Net annuity transactions.............. 284,001 1,000,538 596,459 2,114,613 (29,641)
------------- ------------- ------------- --------------- -----------------
Net increase (decrease) in net assets
resulting from unit transactions..... 8,352,657 101,046,172 50,051,134 346,522,949 (41,066)
------------- ------------- ------------- --------------- -----------------
Total increase (decrease) in net
assets............................... (421,176) 81,672,094 56,120,142 276,047,664 (12,148)
NET ASSETS:
Beginning of period................... 159,909,323 564,430,371 185,569,101 1,525,033,248 1,223,749
------------- ------------- ------------- --------------- -----------------
End of period......................... $159,488,147 $646,102,465 $241,689,243 $1,801,080,912 $1,211,601
------------- ------------- ------------- --------------- -----------------
------------- ------------- ------------- --------------- -----------------
- - -------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1993
- - -------------------------------------------------------------------------------
<CAPTION>
MONEY U.S. GOVERNMENT
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND MONEY MARKET FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------- ------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 7,572,358 $ 8,308,344 $ 2,813,416 $ 25,701,741 $ 18,672
Capital gains income.................. 99,084 18,638,665 -- 20,817,465 --
Net realized gain (loss) on security
transactions......................... 215,618 447,050 -- 182,805 --
Net unrealized appreciation
(depreciation) of investments during
the period........................... 1,690,700 30,785,479 -- 65,119,250 --
------------- ------------- ------------- --------------- -----------------
Net increase (decrease) in net assets
resulting from operations............ 9,577,760 58,179,538 2,813,416 111,821,261 18,672
------------- ------------- ------------- --------------- -----------------
UNIT TRANSACTIONS:
Purchases............................. 64,035,095 163,937,277 83,799,945 714,972,050 194,811
Net transfers......................... 4,924,354 25,227,185 (35,854,970) 105,616,425 (65,248)
Surrenders............................ (6,989,348) (15,906,440) (25,784,152) (50,149,218) (212,373)
Net annuity transactions.............. 343,986 669,968 118,488 968,114 72,905
------------- ------------- ------------- --------------- -----------------
Net increase (decrease) in net assets
resulting from unit transactions..... 62,314,087 173,927,990 22,279,311 771,407,371 (9,905)
------------- ------------- ------------- --------------- -----------------
Total increase (decrease) in net
assets............................... 71,891,847 232,107,528 25,092,727 883,228,632 8,767
NET ASSETS:
Beginning of period................... 88,017,476 332,322,843 160,476,376 641,804,616 1,214,982
------------- ------------- ------------- --------------- -----------------
End of period......................... $159,909,323 $564,430,371 $185,569,101 $1,525,033,248 $1,223,749
------------- ------------- ------------- --------------- -----------------
------------- ------------- ------------- --------------- -----------------
<FN>
* From Inception, March 8, 1994, to December 31, 1994.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
34
<PAGE>
<TABLE>
<CAPTION>
SMITH
BARNEY
SMITH BARNEY SMITH SHEARSON
SHEARSON BARNEY GOVERNMENT
INTERNATIONAL SOCIALLY DAILY SHEARSON AND
AGGRESSIVE MORTGAGE OPPORTUNITIES DIVIDEND AND RESPONSIVE DIVIDEND APPRECIATION AGENCIES
GROWTH FUND SECURITIES FUND INDEX FUND FUND GROWTH FUND FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- --------------- ------------- --------------- ------------ ------------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ (4,596,707) $ 12,903,970 $ 1,155,546 $ 415,635 $ 284,164 $ 20,465 $ 17,386 $ 743 $ 1,269
42,093,901 1,176,728 -- -- -- -- -- 6,550 --
316,913 (2,117,604) 177,595 (38,119) 1,622 (180) -- (476) --
(28,599,970) (19,218,450) (1,319,890) (9,418,006) (486,442) (59,462) -- (9,210) --
------------- --------------- ------------- --------------- ------------ ------------- ------------ ----------- ----------
9,214,137 (7,255,356) 13,251 (9,040,490) (200,656) (39,177) 17,386 (2,393) 1,269
------------- --------------- ------------- --------------- ------------ ------------- ------------ ----------- ----------
147,740,784 19,118,960 11,954,835 93,762,262 13,185,613 376,701 -- 50 --
33,684,129 (49,453,490) (438,563) 55,977,196 17,422,326 (75,712) (18,624) 2,681 --
(18,517,067) (20,146,010) (3,246,522) (7,306,583) (551,979) (19,945) (84,827) (2,515) (6,354)
396,915 137,102 59,473 (104,557) -- 4,610 -- -- --
------------- --------------- ------------- --------------- ------------ ------------- ------------ ----------- ----------
163,304,761 (50,343,438) 8,329,223 142,328,318 30,055,960 285,654 (103,451) 216 (6,354)
------------- --------------- ------------- --------------- ------------ ------------- ------------ ----------- ----------
172,518,898 (57,598,794) 8,342,474 133,287,828 29,855,304 246,477 (86,065) (2,177) (5,085)
459,950,031 271,115,397 86,041,578 167,591,795 -- 777,861 731,981 119,398 53,178
------------- --------------- ------------- --------------- ------------ ------------- ------------ ----------- ----------
$632,468,929 $213,516,603 $94,384,052 $300,879,623 $29,855,304 $1,024,338 $ 645,916 $117,221 $48,093
------------- --------------- ------------- --------------- ------------ ------------- ------------ ----------- ----------
------------- --------------- ------------- --------------- ------------ ------------- ------------ ----------- ----------
<CAPTION>
SMITH
BARNEY
SMITH SHEARSON
SMITH BARNEY SMITH BARNEY BARNEY GOVERNMENT
INTERNATIONAL SOCIALLY SHEARSON SHEARSON SHEARSON AND
AGGRESSIVE MORTGAGE OPPORTUNITIES RESPONSIVE DAILY APPRECIATION HIGH INCOME AGENCIES
GROWTH FUND SECURITIES FUND INDEX FUND FUND FUND DIVIDEND FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- --------------- ------------- --------------- ------------ ------------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 1,600,110 $ 12,652,275 $ 799,021 $ (291,109) $ 14,203 $ 13,390 $ 459 $ 1,816 $ 901
3,197,599 -- -- -- -- -- 3,734 -- --
1,188,667 109,955 25,192 (11,820) (75) -- 234 (1,362) --
49,594,313 (1,569,545) 4,591,529 23,588,342 26,706 -- 3,565 4,504 --
------------- --------------- ------------- --------------- ------------ ------------- ------------ ----------- ----------
55,580,689 11,192,685 5,415,742 23,285,413 40,834 13,390 7,992 4,958 901
------------- --------------- ------------- --------------- ------------ ------------- ------------ ----------- ----------
195,275,139 95,499,459 30,471,477 67,601,208 302,593 -- 50 -- --
22,666,403 (19,922,573) 879,825 46,857,348 1,511 (89,601) -- -- --
(8,251,678) (18,992,076) (2,314,111) (1,636,768) (44,747) (5,845) (1,830) (55,563) (4,573)
576,660 (52,421) 30,208 268,086 4,631 -- -- -- --
------------- --------------- ------------- --------------- ------------ ------------- ------------ ----------- ----------
210,266,524 56,532,389 29,067,399 113,089,874 263,988 (95,446) (1,780) (55,563) (4,573)
------------- --------------- ------------- --------------- ------------ ------------- ------------ ----------- ----------
265,847,213 67,725,074 34,483,141 136,375,287 304,822 (82,056) 6,212 (50,605) (3,672)
194,102,818 203,390,323 51,558,437 31,216,508 473,039 814,037 113,186 50,605 56,850
------------- --------------- ------------- --------------- ------------ ------------- ------------ ----------- ----------
$459,950,031 $271,115,397 $86,041,578 $167,591,795 $ 777,861 $ 731,981 $ 119,398 $ -- $53,178
------------- --------------- ------------- --------------- ------------ ------------- ------------ ----------- ----------
------------- --------------- ------------- --------------- ------------ ------------- ------------ ----------- ----------
</TABLE>
35
<PAGE>
- - -------------------------------------------------------------------------------
SEPARATE ACCOUNT TWO
- - -------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
- - -------------------------------------------------------------------------------
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.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting principles
in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments
sold is determined on the basis of identified cost. Dividend and capital
gains income are accrued as of the ex-dividend date.
b) SECURITY VALUATION--The investment in shares of the Hartford, Shearson
and Calvert Socially Responsive Series mutual funds are valued at the
closing net asset value per share as determined by the appropriate Fund
as of December 31, 1994.
c) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no
federal income taxes are payable with respect to the operations of the
Account.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
a) MORTALITY AND EXPENSE UNDERTAKINGS--The Company, as issuer of variable
annuity contracts, provides the mortality and expense undertakings and,
with respect to the Account, receives a maximum annual fee of 1.25% of
the Account's average daily net assets.
b) DEDUCTION OF ANNUAL MAINTENANCE FEE--Annual maintenance fees are
deducted through termination of units of interest from applicable
contract owners' accounts, in accordance with the terms of the contracts.
36
<PAGE>
AVERAGE ANNUAL TOTAL RETURN as of December 31, 1994
<TABLE>
<CAPTION>
DIRECTOR HARTFORD LIFE PERIODS ENDED
___________________________________________________________________________________________________________________________________
Sub-Account Inception 1 YEAR 5YEAR 10 YR/INCEPT.
Date
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bond Fund Sub-Account 08/31/77 -13.83 2.41 5.10
Stock Fund Sub-Account 08/31/77 -11.92 3.33 9.97
Money Market Fund Sub-Account 07/01/80 -6.33 -0.04 2.35
Advisers Fund Sub-Account 03/31/83 -12.67 2.82 8.43
Aggressive Growth Fund Sub-Account 04/02/84 -7.74 10.22 12.75
U.S. Government Money Market Sub-Account 04/30/83 -6.62 -0.44 1.82
Mortgage Securities Fund Sub-Account 01/15/85 -11.66 1.87 5.25
Index Fund Sub-Account 05/01/87 -9.29 3.09 4.84
International Opportunities Fund Sub-Account 07/02/90 -11.96 N/A -0.61
Dividend & Growth Fund Sub-Account 03/08/94 N/A N/A -8.07
</TABLE>
NOTE: Average annual total return assumes a hypothetical initial payment of
$1,000. At the end of each period, a total surrender is assumed.
Maintenance fees of $30 and contingent deferred sales loads of up to
6%, if applicable, are deducted to determine ending redeemable value
of the original payment. Then, the ending redeemable value is divided
by the original investment to calculate total return.
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hartford Life Insurance Company and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Hartford Life
Insurance Company (a Connecticut corporation and wholly-owned subsidiary of
Hartford Life and Accident Insurance Company) and subsidiaries as of December
31, 1994 and 1993, and the related consolidated statements of income,
stockholder's equity and cash flow for each of the three years in the period
ended December 31, 1994. These consolidated financial statements and the
schedules referred to below are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Hartford Life Insurance Company and subsidiaries as of December 31, 1994 and
1993, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994 in conformity with generally
accepted accounting principles.
As discussed in the accompanying notes to the consolidated financial statements,
the Company adopted new accounting standards promulgated by the Financial
Accounting Standards Board, changing its methods of accounting, as of January 1,
1994, for debt and equity securities, and, effective January 1, 1992, for
postretirement benefits other than pensions and postemployment benefits.
Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedules listed in the
Index to Consolidated Financial Statements and Schedules are presented for
purposes of complying with the Securities and Exchange Commission's rules and
are not a required part of the basic consolidated financial statements. These
schedules have been subjected to the auditing procedures applied in the audits
of the basic consolidated financial statements and, in our opinion, fairly
state in all material respects the financial data required to be set forth
therein in relation to the basic consolidated financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 30, 1995
F-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
1994 1993 1992
<S> <C> <C> <C>
REVENUES:
Premiums and other considerations $1,100 $ 747 $ 259
Net investment income 1,292 1,051 907
Net realized gains on investments 7 16 5
------ ------ ------
2,399 1,814 1,171
BENEFITS, CLAIMS AND EXPENSES:
Benefits, claims and claim
adjustment expenses 1,405 1,046 797
Amortization of deferred policy
acquisition costs 145 113 55
Dividends to policyholders 419 227 47
Other insurance expenses 227 210 138
------ ------ ------
2,196 1,596 1,037
INCOME BEFORE INCOME TAX AND
CUMULATIVE EFFECT OF CHANGES IN
ACCOUNTING PRINCIPLES 203 218 134
Income tax expense 65 75 45
------ ------ ------
INCOME BEFORE CUMULATIVE EFFECT OF
CHANGES IN ACCOUNTING PRINCIPLES 138 143 89
Cumulative effect of changes in
accounting principles net of tax benefit of $7 - - (13)
------ ------ ------
NET INCOME $ 138 $ 143 $ 76
------ ------ ------
------ ------ ------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-3
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
1994 1993
-------- --------
<S> <C> <C>
ASSETS
Investments:
Fixed maturities, available for sale, at fair
value in 1994 and at amortized cost in 1993
(amortized cost, $14,464 in 1994; fair
value, $12,845 in 1993) $13,429 $12,597
Equity securities, at fair value 68 90
Mortgage loans, at outstanding principal balance 316 228
Policy loans, at outstanding balance 2,614 1,397
Other investments 107 40
------- -------
16,534 14,352
Cash 20 1
Premiums and amounts receivable 160 327
Reinsurance recoverable 5,466 5,532
Accrued investment income 378 241
Deferred policy acquisition costs 1,809 1,334
Deferred income tax 590 114
Other assets 83 101
Separate account assets 22,809 16,284
------- -------
$47,849 $38,286
------- -------
------- -------
LIABILITIES AND STOCKHOLDER'S EQUITY
Future policy benefits $1,890 $1,659
Other policyholder funds 21,328 18,234
Other liabilities 1,000 916
Separate account liabilities 22,809 16,284
------- -------
47,027 37,093
Common stock - authorized 1,000 shares, $5,690
par value, issued and outstanding 1,000 shares 6 6
Capital surplus 826 676
Unrealized losses on securities, net of tax (654) (5)
Retained earnings 644 516
------- -------
822 1,193
------- -------
$47,849 $38,286
------- -------
------- -------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-4
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(IN MILLIONS)
<TABLE>
<CAPTION>
UNREALIZED
GAINS(LOSSES) TOTAL
COMMON CAPITAL ON RETAINED STOCKHOLDER'S
STOCK SURPLUS SECURITIES EARNINGS EQUITY
----- ------- ---------- -------- ------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1991 $ 6 $ 439 $ 1 $ 297 $ 743
Net Income 76 76
Capital Contribution - 25 - - 25
Excess of assets over liabilities on
reinsurance assumed from affiliate - 34 - - 34
Change in unrealized losses on equity
securities, net of tax - - (1) - (1)
------ ------- ------- ------- -------
BALANCE, DECEMBER 31, 1992 6 498 0 373 877
------ ------- ------- ------- -------
Net Income - - - 143 143
Capital Contribution - 180 - - 180
Excess of assets over liabilities on
reinsurance assumed from affiliate - (2) - - (2)
Change in unrealized losses on equity
securities, net of tax - - (5) - (5)
------ ------- ------- ------- -------
BALANCE, DECEMBER 31, 1993 6 676 (5) 516 1,193
------ ------- ------- ------- -------
Net Income - - - 138 138
Capital Contribution - 150 - - 150
Dividends Paid - - - (10) (10)
Change in unrealized losses on securities,
net of tax * - - (649) - (649)
------ ------- ------- ------- -------
BALANCE, DECEMBER 31, 1994 $ 6 $ 826 $ (654) $ 644 $ 822
------ ------- ------- ------- -------
------ ------- ------- ------- -------
<FN>
* The 1994 change in unrealized losses on securities, net of tax, includes a
gain of $91 due to adoption of SFAS #115 as discussed in note 1b to the
consolidated financial statements.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-5
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASHFLOW
(IN MILLIONS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
OPERATING ACTIVITIES:
NET INCOME $ 138 $ 143 $ 76
Cumulative effect of accounting changes - - 13
Adjustments to net income:
Net realized investment gains before tax (7) (16) (5)
Net policyholder investment losses
(gains) before tax 5 (15) (15)
Net deferred policy acquisition costs (441) (292) (278)
Net amortization of premium (discount) on
fixed maturities 41 2 (16)
Deferred income tax benefits (128) (121) (14)
(Increase) decrease in premiums and
amounts receivable 10 (28) (14)
Increase in accrued investment income (106) (4) (116)
Decrease(increase) in other assets 101 (36) 88
Decrease(increase) in reinsurance
recoverable 75 (121) 0
Increase in liability for future policy
benefits 224 360 527
Increase in other liabilities 191 176 92
-------- --------- --------
CASH PROVIDED BY OPERATING ACTIVITIES 103 48 338
-------- --------- --------
INVESTING ACTIVITIES:
Purchases of fixed maturity investments (9,127) (12,406) (8,948)
Proceeds from sales of fixed maturity
investments 5,708 8,813 5,728
Maturities and principal paydowns of
long-term investments 1,931 2,596 1,207
Net purchases of other investments (1,338) (206) (106)
Net sales (purchases) of short-term
investments 135 (564) 221
-------- --------- --------
CASH USED FOR INVESTING ACTIVITIES (2,691) (1,767) (1,898)
-------- --------- --------
FINANCING ACTIVITIES:
Net receipts from investment and UL-type
contracts credited to policyholder account
balances 2,467 1,513 1,512
Capital contribution 150 180 25
Excess of assets over liabilities on
reinsurance assumed from affiliate - - 34
Dividends paid (10) - -
-------- --------- --------
CASH PROVIDED BY FINANCING
ACTIVITIES 2,607 1,693 1,571
-------- --------- --------
NET INCREASE(DECREASE) IN CASH 19 (26) 11
Cash at beginning of period 1 27 16
-------- --------- --------
CASH AT END OF PERIOD $ 20 $ 1 $ 27
-------- --------- --------
-------- --------- --------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-6
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN MILLIONS)
1. SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION:
These consolidated financial statements include Hartford Life
Insurance Company (the Company or HLIC) and its wholly-owned
subsidiaries, ITT Hartford Life and Annuity Company (ILA) and ITT
Hartford International Life Reassurance Corporation (HLR), formerly
American Skandia Life Reinsurance Corporation. HLIC is a wholly-owned
subsidiary of Hartford Life and Accident Insurance Company (HLA).
The Company is ultimately owned by Hartford Fire Insurance Company
(Hartford Fire), which is ultimately owned by ITT Hartford Group,
Inc., a subsidiary of ITT Corporation (ITT).
The consolidated financial statements are prepared in conformity with
generally accepted accounting principles which differ in certain
material respects from the accounting practices prescribed or
permitted by various insurance regulatory authorities.
Certain reclassifications have been made to prior year financial
statements to conform to current year classifications.
(B) CHANGES IN ACCOUNTING PRINCIPLES:
Effective January 1, 1992, the Company adopted Statement of Financial
Accounting Standards (SFAS)No. 106, "Employers' Accounting for
Postretirement Benefits Other than Pensions" and SFAS No. 112,
Employers' Accounting for Postemployment Benefits", using the
immediate recognition method. Accordingly, a cumulative adjustment
(through December 31, 1991) of $7 after-tax has been recognized at
January 1, 1992.
Effective January 1, 1994, the Company adopted SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities".
The new standard requires, among other things, that fixed maturities
be classified as "held-to-maturity", "available-for-sale" or "trading"
based on the Company's intentions with respect to the ultimate
disposition of the security and its ability to effect those
intentions. The classification determines the appropriate accounting
carrying value (cost basis or fair value) and, in the case of fair
value, whether the adjustment impacts Stockholder's Equity directly or
is reflected in the Consolidated Statements of Income. Investments in
equity securities had previously been recorded at fair value with the
corresponding impact included in Stockholder's Equity. Under SFAS No.
115, the Company's fixed maturities are classified as "available for
sale" and accordingly, these investments are reflected at fair value
with the corresponding impact included as a component of Stockholder's
Equity designated as "Unrealized Loss on Securities, Net of Tax."
As with the underlying investment security, unrealized gains and
losses on derivative financial instruments are considered in
determining the fair value of the portfolios. The impact of adoption
was an increase to stockholder's equity of $91.
The Company's cash flows were not impacted by these changes in
accounting principles.
(C) REVENUE RECOGNITION:
Revenues for universal life policies and investment products consist
of policy charges for the cost of insurance,
F-7
<PAGE>
policy administration and surrender charges assessed to policy account
balances. Premiums for traditional life insurance policies are
recognized as revenues when they are due from policyholders. Deferred
acquisition costs are amortized using the retrospective deposit method
for universal life and other types of contracts where the payment
pattern is irregular or surrender charges are a significant source of
profit and the prospective deposit method is used where investment
margins are the primary source of profit.
(D) FUTURE POLICY BENEFITS AND OTHER POLICYHOLDER FUNDS:
Liabilities for future policy benefits are computed by the net level
premium method using interest rate assumptions varying from 3% to 11%
and withdrawal, mortality and morbidity assumptions which vary by
plan, year of issue and policy durations and include a provision for
adverse deviation. Liabilities for universal life insurance and
investment products represent policy account balances before
applicable surrender charges.
(E) POLICYHOLDER REALIZED GAINS AND LOSSES:
Realized gains and losses on security transactions associated with the
Company's immediate participation guaranteed contracts are excluded
from revenues, since under the terms of the contracts the realized
gains and losses will be credited to policyholders in future years as
they are entitled to receive them.
(F) DEFERRED POLICY ACQUISITION COSTS:
Policy acquisition costs, including commissions and certain
underwriting expenses associated with acquiring traditional life
insurance products, are deferred and amortized over the lesser of the
estimated or actual contract life. For universal life insurance and
investment products, acquisition costs are being amortized generally
in proportion to the present value of expected gross profits from
surrender charges, investment, mortality and expense margins.
(G) INVESTMENTS:
Investments in fixed maturities are classified as available for sale
and accordingly reflected at fair value with the corresponding impact
of unrealized gains and losses, net of tax, included as a component of
stockholder's equity. Securities and derivative instruments,
including swaps, caps, floors, futures, forward commitments and
collars, are based on dealer quotes or quoted market prices for the
same or similar securities. While the Company has the ability and
intent to hold all fixed income securities until maturity, due to
contract obligations, interest rates and tax laws, portfolio activity
occurs. These trades are motivated by the need to optimally position
investment portfolios in reaction to movements in capital markets or
distribution of policyholder liabilities. When an other than temporary
reduction in the value of publicly traded securities occurs, the
decrease is reported as a realized loss and the carrying value is
adjusted accordingly. Real estate is carried at cost less accumulated
depreciation. Equity securities, which include common stocks, are
carried at market value with the after-tax difference from cost
reflected in stockholder's equity. Realized investment gains and
losses, after deducting life and pension policyholders share are
reported as a component of revenue and are determined on a specific
identification basis.
(H) DERIVATIVE FINANCIAL INSTRUMENTS
The Company uses a variety of derivative financial instruments as part
of an overall risk management strategy. These instruments, including
swaps, caps, collars and exchange traded financial futures, are used
as a means of hedging exposure to price, foreign currency and/or
interest rate risk on planned investment purchases or existing assets
and liabilities. The Company does not hold or issue derivative
financial instruments for trading purposes. The Company's minimum
correlation threshold for hedge designation is 80%. If correlation,
which is assessed monthly and measured based on a rolling three month
average, falls below 80%, hedge accounting will be terminated. Gains
or losses on futures purchased in anticipation of the future receipt
of product cash flows are deferred and, at the time of the ultimate
purchase, reflected as a basis adjustment to the purchased asset.
Gains or losses on futures used in invested asset risk management are
deferred and adjusted into the basis of the hedged asset when the
contract is closed. The basis adjustments are amortized into
investment income over the remaining asset life.
F-8
<PAGE>
Open forward commitment contracts are marked to market through
Stockholder's Equity. Such contracts are recorded at settlement by
recording the purchase of the specified securities at the previously
committed price. Gains or losses resulting from the termination of
the forward commitment contracts before the delivery of the securities
are recognized immediately in the income statement as a component of
investment income.
The Company's accounting for interest rate swaps and purchased or
written caps, floors, and options used to manage risk is in accordance
with the concepts established in SFAS 80, "Accounting for Futures
Contracts", the American Institute of Certified Public Accountants
Statement of Position 86-2, "Accounting for Options" and various EITF
pronouncements, except for written options which are written in all
cases in conjunction with other assets and derivatives as part of an
overall risk management strategy. Such synthetic instruments are
accounted for as hedges. Derivatives, used as part of a risk
management strategy, must be designated at inception and have
consistency of terms between the synthetic instrument and the
financial instrument being replicated. Synthetic instrument
accounting, consistent with industry practice, provides that the
synthetic asset is accounted for like the financial instrument it is
intended to replicate. Interest rate swaps and purchased or written
caps, floors and options which fail to meet management criteria are
accounted for at fair market value with the impact reflected in net
income.
Interest rate swaps involve the periodic exchange of payments without
the exchange of underlying principal or notional amounts. Net
payments are recognized as an adjustment to income. Should the swap
be terminated, the gains or losses are adjusted into the basis of the
asset or liability and amortized over the remaining life. The basis
of the underlying asset or liability is adjusted to reflect changing
market conditions such as prepayment experience. Should the asset be
sold or liability terminated, the gains or losses on the terminated
position 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. That is, the settlement component is recognized in the
Statement of Income while the change in market is recognized as an
unrealized gain or loss.
Premiums paid on purchased floor or cap agreements and the premium
received on issued cap or floor agreements used for risk management,
as well as the net payments, 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.
Forward exchange contracts and foreign currency swaps are accounted
for in accordance with SFAS 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.
(I) RELATED PARTY TRANSACTIONS:
Transactions of the Company with its parent and affiliates relate
principally to tax settlements, insurance coverage, rental and service
fees and payment of dividends and capital contributions. In addition,
certain affiliated insurance companies purchased group annuity
contracts from the Company to fund pension costs and claim annuities
to settle casualty claims.
Substantially all general insurance expenses related to the Company,
including rent expenses, are initially paid by Hartford Fire. Direct
expenses are allocated to the Company using specific identification
and indirect expenses are allocated using other applicable methods.
The rent paid to Hartford Fire for the space occupied by the Company
was $3 in 1994, 1993, and 1992 respectively. The Company expects to
pay rent of $3 in 1995, 1996, 1997,1998, and 1999 respectively and
$60 thereafter, over the contract life of the lease.
See also Note (4) for the related party coinsurance agreements.
F-9
<PAGE>
2. INVESTMENTS
(A) COMPONENTS OF NET INVESTMENT INCOME:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Interest income $1,247 $1,007 $894
Income from other investments 54 53 15
------ ------ ------
GROSS INVESTMENT INCOME 1,301 1,060 909
Less: investment expenses 9 9 2
------ ------ ------
NET INVESTMENT INCOME $1,292 $1,051 $907
------ ------ ------
------ ------ ------
</TABLE>
(B) UNREALIZED GAINS (LOSSES) ON EQUITY SECURITIES:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Gross unrealized gains $ 2 $ 3 $ 2
Gross unrealized losses (11) (11) (2)
Deferred income tax expense (benefit) (3) (3) 0
------ ------ ------
NET UNREALIZED LOSSES AFTER TAX (6) (5) 0
Balance at beginning of year (5) 0 1
------ ------ ------
CHANGE IN NET UNREALIZED LOSSES ON
EQUITY SECURITIES $ (1) $ (5) $(1)
------ ------ ------
------ ------ ------
</TABLE>
(C) UNREALIZED GAINS (LOSSES) ON FIXED MATURITIES:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Gross unrealized gains $ 150 $ 538 $ 521
Gross unrealized losses (1,185) (290) (302)
-------- ------ ------
NET UNREALIZED (LOSSES) GAINS (1,035) 248 219
Unrealized losses credited to policyholders 37 0 0
Deferred income tax expense (benefit) (350) 87 75
-------- ------ ------
NET UNREALIZED (LOSSES) GAINS AFTER TAX (648) 161 144
Balance at beginning of year 161 144 297
-------- ------ ------
CHANGE IN NET UNREALIZED (LOSSES)GAINS ON
FIXED MATURITIES $ (809) $ 17 $(153)
-------- ------ ------
-------- ------ ------
</TABLE>
(D) COMPONENTS OF NET REALIZED GAINS:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Fixed maturities $(34) $(12) $20
Equity securities (11) 0 3
Real estate and other 47 43 (3)
Less: (decrease)increase in liability
to policyholders for realized gains (5) 15 15
------ ------ ------
NET REALIZED GAINS $ 7 $ 16 $ 5
------ ------ ------
------ ------ ------
</TABLE>
F-10
<PAGE>
(E) DERIVATIVE INVESTMENTS:
A summary of investments, segregated by major category along with the
types of derivatives and their respective notional amounts, are as
follows as of December 31, 1994 :
<TABLE>
<CAPTION>
SUMMARY OF INVESTMENTS
AS OF DECEMBER 31, 1994
(CARRYING AMOUNTS)
ISSUED CAPS, PURCHASED
TOTAL CARRYING NON- FLOORS & CAPS, FLOORS FUTURES SWAPS
VALUE DERIVATIVE OPTIONS (B) & OPTIONS (C) (D) (F)
-------------- ---------- ------------ ------------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Asset Backed Securities $5,670 $5,690 $(31) $24 $0 $(13)
Inverse Floaters (A) 474 482 (9) 4 0 (3)
Anticipatory (E) (30) 0 0 2 0 (32)
-------- ------- ------ ------ ------ ------
TOTAL ASSET BACKED SECURITIES 6,114 6,172 (40) 30 0 (48)
Other Bonds and Notes 6,533 6,606 0 0 0 (73)
Short-Term Investments 782 782 0 0 0 0
-------- ------- ------ ------ ------ ------
TOTAL FIXED MATURITIES 13,429 13,560 (40) 30 0 (121)
Other Investments 3,105 3,105 0 0 0 0
-------- ------- ------ ------ ------ ------
TOTAL INVESTMENTS $16,534 $16,665 $(40) $30 $0 $(121)
-------- ------- ------ ------ ------ ------
-------- ------- ------ ------ ------ ------
</TABLE>
SUMMARY OF INVESTMENTS IN DERIVATIVES
AS OF DECEMBER 31, 1994
(NOTIONAL AMOUNTS)
<TABLE>
<CAPTION>
ISSUED CAPS, PURCHASED
TOTAL NOTIONAL FLOORS, & CAPS, FLOORS, FUTURES SWAPS
AMOUNT OPTIONS (B) & OPTIONS (C) (D) (F)
-------------- ------------ ------------- -------- ------
<S> <C> <C> <C> <C> <C>
Asset Backed Securities $4,244 $1,311 $2,546 $75 $312
Inverse Floaters (A) 1,129 277 63 3 786
Anticipatory (E) 835 0 209 101 525
------- ------- ------- ------- -------
TOTAL ASSET BACKED 6,208 1,588 2,818 179 1,623
Other Bonds and Notes 670 0 72 74 524
Short-Term Investments 0 0 0 0 0
------- ------- ------- ------- -------
TOTAL FIXED MATURITIES 6,878 1,588 2,890 253 2,147
Other Investments 16 0 3 0 13
------- ------- ------- ------- -------
TOTAL INVESTMENTS $6,894 $1,588 $2,893 $253 $2,160
------- ------- ------- ------- -------
------- ------- ------- ------- -------
</TABLE>
F-11
<PAGE>
A summary of the notional and fair value of derivatives with off Balance Sheet
risk as of December 31, 1993 is as follows:
<TABLE>
<CAPTION>
ISSUED SWAPS, CAPS
FLOORS AND COLLARS FUTURES FORWARDS TOTAL
------------------ ------- -------- -----
<S> <C> <C> <C> <C>
Notional $7,015 $1,792 $91 $8,898
Fair Value $(4) $0 $1 $(3)
</TABLE>
(A) Inverse floaters, which are variations of CMO's for which the coupon
rates move inversely with an index rate (e.g. LIBOR). The risk to
principal is considered negligible as the underlying collateral for
the securities is guaranteed or sponsored by government agencies. To
address the volatility risk created by the coupon variability, the
Company uses a variety of derivative instruments, primarily interest
rate swaps and issued floors.
(B) Comprised primarily of caps ($1,459) with a weighted average strike
rate of 7.7% (ranging from 6.8% to 10.2%). Over 70% mature in 1997
and 1998. Issued floors total $125 with a weighted average strike
rate of 8.3% and mature in 2004.
(C) Comprised of purchased floors ($1,856), purchased options and collars
($633) and purchased caps ($404). The floors have a weighted average
strike price of 5.8% (ranging from 4.8% and 6.6%) and over 85% mature
in 1997 and 1998. The options and collars generally mature in 1995
and 2002. The caps have a weighted average strike price of 7.2%
(ranging from 4.5% and 8.9%) and over 66% mature in 1997 through
1999.
(D) Over 95% of futures contracts expire before December 31, 1995.
(E) Deferred gains and losses on anticipatory transactions are included in
the carrying value of bond investments in the consolidated balance
sheets. At the time of the ultimate purchase, they are reflected as
a basis adjustment to the purchased asset. At December 31, 1994,
these were $(33) million in net deferred losses for futures, interest
rate swaps and purchased options.
(F) The following table summarizes the maturities of interest rate and
foreign currency swaps outstanding at December 31, 1994 and the
related weighted average interest pay rate or receive rate assuming
current market conditions:
MATURITY OF SWAPS ON INVESTMENTS AS OF DECEMBER 31, 1994
<TABLE>
<CAPTION>
MATURITY
DERIVATIVE TYPE 1995 1996 1997 1998 1999 2000+ TOTAL LAST
--------------- ---- ---- ---- ---- ---- ----- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST RATE SWAPS:
PAY FIXED/RECEIVE VARIABLE:
Notional Value $0 $15 $50 $0 $446 $268 $779 2004
Weighted Average Pay Rate 0.0% 5.0% 7.2% 0.0% 8.2% 7.8% 7.9%
Weighted Average Receive Rate 0.0% 6.4% 5.7% 0.0% 7.5% 6.5% 7.0%
PAY VARIABLE/RECEIVE FIXED:
Notional Value $311 $50 $100 $25 $175 $100 $761 2002
Weighted Average Pay Rate 5.1% 5.3% 5.5% 5.3% 5.4% 6.0% 5.4%
Weighted Average Receive Rate 8.0% 8.0% 7.5% 4.0% 4.5% 7.2% 6.9%
PAY VARIABLE/RECEIVE DIFFERENT VARIABLE:
Notional Value $95 $50 $18 $15 $5 $232 $415 2005
Weighted Average Pay Rate 4.2% 6.4% 6.8% 6.2% 0.0% 6.0% 5.7%
Weighted Average Receive Rate 9.1% 6.3% 9.5% 6.4% 0.0% 6.3% 7.1%
TOTAL INTEREST RATE SWAPS $406 $115 $168 $40 $626 $600 $1,955 2004
Total Weighted Average Pay Rate 4.9% 5.7% 6.1% 5.6% 7.4% 6.8% 6.5%
Total Weighted Average Receive Rate 8.2% 7.1% 7.2% 4.9% 6.7% 6.5% 7.0%
FOREIGN CURRENCY SWAPS $35 $46 $29 $15 $10 $70 $205 2002
TOTAL SWAPS $441 $161 $197 $55 $636 $670 $2,160 2005
</TABLE>
F-12
<PAGE>
In addition to risk management through derivative financial
instruments pertaining to the investment portfolio, interest rate
sensitivity related to certain Company liabilities was altered
primarily through interest rate swap agreements. The notional amount
of the liability agreements in which the Company generally pays one
variable rate in exchange for another, was $1.7 billion and $1.3
billion at December 31, 1994 and 1993 respectively. The weighted
average pay rate is 6.2%; the weighted average receive rate is 6.6% ,
and these agreements mature at various times through 2004.
(F) CONCENTRATION OF CREDIT RISK:
The Company has a reinsurance recoverable of $4.4 billion from
Mutual Benefit Life Assurance Corporation (Mutual Benefit). The risk
of Mutual Benefit becoming insolvent is mitigated by the reinsurance
agreement's requirement that the assets be kept in a security trust
with the Company as sole beneficiary. Excluding investments in U.S.
government and agencies, the Company has no other significant
concentrations of credit risk.
The Company currently owns $39.2 million par value of Orange County,
California Pension Obligation Bonds, $17.1 million of which it
continues to carry as available for sale under FASB 115 and $22.1
million which are included in the Separate Account Assets. While
Orange County is currently operating under Protection of Chapter 9 of
the Federal Bankruptcy Laws, the Company believes it is probable that
it will collect all amounts due under the contractual terms of the
bonds and that the bonds are not permanently or other than temporarily
impaired.
As of December 31, 1994 the Company owned $66.1 million of Mexican
bonds, $52.3 million of which are payable in Mexican pesos but are
fully hedged back to U.S. dollars, and $13.8 million of U.S. Dollar
Denomination Mexican bonds. The primary risks associated with these
securities is a default by the Mexican government or imposition of
currency controls that prevent conversion of Mexican pesos to U.S.
dollars. The Company believes both of these risks are remote.
(G) FIXED MATURITIES:
The schedule below details the amortized cost and fair values of the
Company's fixed maturities by component, along with the gross
unrealized gains and losses:
<TABLE>
<CAPTION>
1994
----
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 $1,516 $1 $(87) $1,430
- - - guaranteed and sponsored
- asset backed 4,256 78 (571) 3,763
States, municipalities and
political subdivisions 148 1 (12) 137
International governments 189 1 (14) 176
Public utilities 531 1 (32) 500
All other corporate 3,717 38 (297) 3,458
All other corporate
- asset backed 2,442 30 (121) 2,351
Short-term investments 1,665 0 (51) 1,614
------- ----- -------- -------
TOTAL $14,464 $150 $(1,185) $13,429
------- ----- -------- -------
------- ----- -------- -------
</TABLE>
F-13
<PAGE>
<TABLE>
<CAPTION>
1993
----
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ------
<S> <C> <C> <C> <C>
U.S. Government and government
agencies and authorities:
- - - guaranteed and sponsored $ 1,637 $ 15 $ (12) $ 1,640
- - - guaranteed and sponsored
- asset backed 4,070 235 (219) 4,086
States, municipalities and
political subdivisions 73 9 0 82
International governments 100 5 (3) 102
Public utilities 423 20 (2) 441
All other corporate 3,598 180 (42) 3,736
All other corporate
- asset backed 1,806 74 (12) 1,868
Short-term investments 890 0 0 890
-------- ------- -------- --------
TOTAL $12,597 $ 538 $ (290) $12,845
-------- ------- -------- --------
-------- ------- -------- --------
</TABLE>
The amortized cost and estimated fair value of fixed maturity
investments at December 31, 1994, by maturity, are shown below. Asset
backed securities are distributed to maturity year based on the
Company's estimate of the rate of future prepayments of principal over
the remaining life of the securities. Expected maturities differ from
contractual maturities reflecting the borrowers' rights to call or
prepay their obligations.
<TABLE>
<CAPTION>
AMORTIZED COST ESTIMATED FAIR VALUE
-------------- --------------------
MATURITY
- - --------
<S> <C> <C>
Due in one year or less $ 2,214 $ 2,183
Due after one year through five years 7,000 6,647
Due after five years through ten years 3,678 3,334
Due after ten years 1,572 1,265
--------- ---------
$14,464 $13,429
--------- ---------
--------- ---------
</TABLE>
Sales of fixed maturities excluding short-term fixed maturities for
the years ended 1994, 1993, and 1992 resulted in proceeds of $5,708,
$8,813, and $5,728, respectively, resulting in gross realized gains of
$71, $192, and $140, and gross realized losses of $100, $219, and
$135, respectively, not including policyholder gains and losses.
Sales of equity securities and other investments for the years ended
December 31, 1994, 1993, and 1992 resulted in proceeds of $159, $127
and $7, respectively, resulting in gross realized gains of $3, $0, and
$3, and gross realized losses of $14, $0, and $0, respectively, not
including policyholder gains and losses.
F-14
<PAGE>
(H) FAIR VALUE OF FINANCIAL INSTRUMENTS NOT DISCLOSED ELSEWHERE :
BALANCE SHEET ITEMS:
<TABLE>
<CAPTION>
1994 1993
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- ------ -------- ------
<S> <C> <C> <C> <C>
ASSETS
Other invested assets:
Policy loans $2,614 $2,614 $1,397 $1,397
Mortgage loans 316 316 228 228
Investments in partnership
and trusts 36 42 14 34
Miscellaneous 67 67 22 63
LIABILITIES
Other policy claims and
benefits $13,001 $12,374 $11,140 $11,415
</TABLE>
The following methods and assumptions were used to estimate the fair
value of each class of financial instrument:policy and mortgage loan
carrying amounts approximate fair value; investments in partnerships
and trusts are based on external market valuations from partnership
and trust management; and other policy claims and benefits payable are
determined by estimating future cash flows discounted at the current
market rate.
3. INCOME TAX
The Company is included in ITT's consolidated U.S. Federal income tax
return and remits to (receives from) ITT a current income tax
provision (benefit) computed in accordance with the tax sharing
arrangements between ITTand its insurance subsidiaries. The
effective tax rate was 32% in 1994, and approximates the U.S.
statutory tax rates of 35% in 1993 and 34% in 1992. The provision for
income taxes was as follows:
<TABLE>
<CAPTION>
INCOME TAX EXPENSE:
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Current $185 $ $ 190 $ $ 124
Deferred (120) (115) (79)
------- -------- --------
$ 65 $ $ 75 $ $ 45
------- -------- --------
------- -------- --------
</TABLE>
F-15
<PAGE>
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
TAX PROVISION AT U.S. STATUTORY RATE $71 $76 $46
Tax-exempt income (3) 0 0
Foreign tax credit (1) 0 0
Other (2) (1) (1)
----- ----- -----
PROVISION FOR INCOME TAX $ 65 $75 $45
----- ----- -----
----- ----- -----
</TABLE>
Income taxes paid were $ 244 , $301 and $36 in 1994, 1993, and 1992
respectively. The current taxes due from or (to) Hartford Fire were $46,
and $19 in 1994 and 1993 respectively.
Deferred tax assets include the following:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Tax deferred acquisition cost $284 $158
Book deferred acquisition costs and reserves (134) (30)
Employee benefits 7 7
Unrealized loss on "available for sale"
securities 353 3
Investments and other 80 (24)
------- -------
$590 $114
------- -------
------- -------
</TABLE>
Prior to the Tax Reform Act of 1984, the Life Insurance Company Income Tax
Act of 1959 permitted the deferral from taxation of a portion of statutory
income under certain circumstances. In these situations, the deferred
income was accumulated in a "Policyholders' Surplus Account" and will be
taxable in the future only under conditions which management considers to
be remote; therefore, no Federal income taxes have been provided on this
deferred income. The balance for tax return purposes of the Policyholders'
Surplus Account as of December 31, 1994 was $24.
4. REINSURANCE
The Company cedes insurance to non-affiliated insurers in order to limit
its maximum loss. Such transfer does not relieve the Company of its
primary liability. The Company also assumes insurance from other
insurers. Group life and accident and health insurance business is
substantially reinsured to affiliated companies.
Life insurance net retained premiums were comprised of the following:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Gross premiums $1,316 $1,135 $680
Reinsurance assumed 299 93 30
Reinsurance ceded 515 481 451
------- ------- -----
NET RETAINED PREMIUMS $1,100 $747 $259
------- ------- -----
------- ------- -----
</TABLE>
F-16
<PAGE>
Life reinsurance recoveries, which reduced death and other benefits, for
the years ended December 31, 1994, 1993 and 1992 approximated $164, $149,
and $73, respectively.
In December 1994, the Company assumed from a third party approximately
$500 million of corporate owned life insurance reserves on a coinsurance
basis. Also in December 1994, ILA ceded to ITT Lyndon Insurance Company
$1 billion in individual fixed and variable annuities on a modified
coinsurance basis. These transactions did not have a material impact on
consolidated net income.
In October 1994, HLR recaptured approximately $500 million of corporate
owned life insurance from a third party reinsurer. Subsequent to this
transaction, HLIC and HLR restructured their coinsurance agreement from
coinsurance to modified coinsurance, with the assets and policy liabilities
placed in the separate account. In May 1994, HLIC assumed and reinsured
the life insurance policies and the individual annuities of Pacific
Standard with reserves and account values of approximately $400 million.
The Company received cash and investment grade assets to support the life
insurance and individual annuity contract obligations assumed.
In June 1993, the Company assumed and partially reinsured the annuity, life
and accident and sickness insurance policies of Fidelity Bankers Life
Insurance Company in Receivership for Conservation and Rehabilitation, with
account values of $3.2 billion. The Company received cash and investment
grade assets to assume insurance and annuity contract obligations.
Substantially all of these contracts were placed in the Company's separate
accounts.
In November 1993, ILA acquired, through an assumption reinsurance
transaction, substantially all of the individual fixed and variable annuity
business of HLA. As a result of this transaction, the assets and
liabilities of the company increased approximately $1 billion. The excess
of liabilities assumed over assets received, of $2, was recorded as a
decrease to capital surplus. The impact on consolidated net income was not
significant.
On November 4, 1992, the Company entered into a definitive agreement
whereby the Company assumed the contract obligations of Mutual Benefit Life
Assurance Corporation's (Mutual Benefit) individual corporate owned life
insurance (COLI) contracts. The Company received $5.6 billion in cash and
invested assets, $5.3 billion of which were policy loans, from Mutual
Benefit for assuming the contract obligations. Simultaneously, the Company
coinsured approximately 84% of the contract obligations back to Mutual
Benefit, HLR and an unaffiliated reinsurer. In August 1993, the Company
received assets of $300 million for assuming the group COLI contract
obligations of Mutual Benefit, through an assumption reinsurance
transaction. Under the terms of the agreement, the Company coinsured back
75% of the liabilities to Mutual Benefit. All assets supporting Mutual
Benefit's reinsurance liability to HLIC are placed in a "security trust",
with Hartford Life as the sole beneficiary. The impact on 1992
consolidated net income was not significant.
In 1992, all ordinary individual life insurance written and in force in
HLA was assumed by HLIC. As a result of this transaction, the assets of
HLIC increased by approximately $437, liabilities increased approximately
$403. The excess of assets over liabilities of $34 was recorded as an
increase in capital.
5. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
The Company's employees are included in Hartford Fire's noncontributory
defined benefit pension plans. These plans provide pension benefits that
are based on years of service and the employee's compensation during the
last ten years of employment. The Company's funding policy is to
contribute annually an amount between the minimum funding requirements set
forth in the Employee Retirement Income Security Act of 1974 and the
maximum amount that can be deducted for Federal income tax purposes.
Generally, pension costs are funded through the purchase of the Company's
group pension contracts. The cost to the Company was approximately $2, $3
and $2 in 1994, 1993 and 1992, respectively.
The Company provides 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.
Effective January 1, 1992, the Company adopted SFAS No. 106, using the
immediate recognition method for all benefits accumulated to date. As of
June 1992, the Company amended its plans, effective January 1, 1993,
whereby 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 amendments increased deductibles and set a defined dollar cap which
F-17
<PAGE>
limits average company contributions. The effect of these changes is not
material. 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 Hartford Fire, was $1, $1,
and $1, for 1994, 1993, and 1992 respectively.
The assumed rate of future increases in the per capita cost of health care
(the health care trendrate) was 11% for 1994, decreasing ratably to 6 %
in the year 2001. Increasing the health care trend rates by one percent
per year would have an immaterial impact on the accumulated postretirement
benefit obligation and the annual expense. The assumed weighted average
discount rate was 8.5%. To the extent that the actual experience differs
from the inherent assumptions, the effect will be amortized over the
average future service of the covered employees.
6. BUSINESS SEGMENT INFORMATION
The reportable segments and product groups of HLIC and its subsidiaries are:
INDIVIDUAL LIFE AND ANNUITIES (ILAD)
- - -Individual life
- - -Fixed and variable retirement annuities
ASSET MANAGEMENT SERVICES (AMS)
- - -Group Pension Plans products and services
- - -Deferred Compensation Plans products and services
- - -Structured Settlements and lottery annuities
SPECIALTY
- - -Corporate Owned Life Insurance (COLI) and HLR
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
REVENUES:
ILAD $691 $595 $305
AMS 789 794 770
Specialty 919 425 96
------- ------- -------
$2,399 $1,814 $1,171
------- ------- -------
------- ------- -------
INCOME BEFORE INCOME TAX:
ILAD $139 $129 $73
AMS 38 71 56
Specialty 26 18 5
------- ------- -------
$203 $218 $134
------- ------- -------
------- ------- -------
IDENTIFIABLE ASSETS:
ILAD $26,668 $19,147 $9,474
AMS 13,334 12,416 11,198
Specialty 7,847 6,723 5,910
------- ------- -------
$47,849 $ 38,286 $ 26,582
------- ------- -------
------- ------- -------
</TABLE>
7. STATUTORY NET INCOME AND SURPLUS
Substantially all of the statutory surplus is permanently reinvested or is
subject to dividend restrictions relating to various state regulations
which limit the payment of dividends without prior approval.
Statutory net income and surplus as of December 31 were:
F-18
<PAGE>
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Statutory net income $58 $63 $65
Statutory surplus $941 $812 $614
</TABLE>
The Company prepares its statutory financial statements in accordance with
accounting practices prescribed by the State of Connecticut Insurance
Department. Prescribed statutory accounting practices include publications
of the National Association of Insurance Commissioners ("NAIC"), as well as
state laws, regulations, and general administrative rules.
8. SEPARATE ACCOUNTS:
The Company maintains separate account assets and liabilities totaling
$22.8 billion and $16.3 billion at December 31, 1994 and 1993, respectively
which are reported at fair value. Separate account assets are segregated
from other investments and are not subject to claims that arise out of any
other business of the Company. Investment income and gains and losses of
separate accounts accrue directly to the policyholder. Separate accounts
reflect two categories of risk assumption: non-guaranteed separate
accounts totaling $14.8 billion and $11.5 billion at December 31, 1994 and
1993, respectively, wherein the policyholder assumes the investment risk,
and guaranteed separate account assets totaling $8.0 billion and $4.8
billion at December 31, 1994 and 1993, respectively, wherein the Company
contractually guarantees either a minimum return or account value to the
policyholder. Investment income (including investment gains and losses) on
separate account assets are not reflected in the Consolidated Statements of
Income. Separate account management fees, net of minimum guarantees, were
$256, $189, and $92, in 1994, 1993, and 1992, respectively.
The guaranteed separate accounts include modified guaranteed individual
annuity, and modified guaranteed life insurance. The average credit
interest rate on these contracts is 6.44%. The assets that support these
liabilities are comprised of $7.5 billion in bonds and $.5 billion in
policy loans. The portfolios are segregated from other investments and
are managed so as to minimize liquidity and interest rate risk. In order
to minimize the risk of disintermediation associated with early
withdrawals, individual annuity and modified guaranteed life insurance
contracts carry a graded surrender charge as well as a market value
adjustment. Additional investment risk is hedged using a variety of
derivatives which total $(16.2) million in carrying value and $3.2 billion
in notional amounts.
9. COMMITMENTS AND CONTINGENCIES
In August 1994, HLIC renewed a two year note purchase facility agreement
which in certain instances obligates the Company to purchase up to $100
million in collateralized notes from a third party. The Company is
receiving fees for this commitment. At December 31, 1994, the Company has
not purchased any notes under this agreement.
In March 1987, HLIC guaranteed the commercial mortgages (principal and
accrued interest) that were sold under a pooling and servicing agreement of
the same date. Mortgages aggregating approximately $53.0million were sold
in this transaction, and the remaining balance on these loans is $21.1
million. There was no impact on operations due to this guarantee.
Under insurance guaranty fund laws in most states, insurers doing business
therein can be assessed up to prescribed limits for policyholder losses
incurred by insolvent companies. The amount of any future assessments on
HLIC under these laws cannot be reasonably estimated. Most of these laws
do provide, however, that an assessment may be excused or deferred if it
would threaten an insurer's own financial strength. Additionally, guaranty
fund assessments are used to reduce state premium taxes paid by the Company
in certain states.
The Company is involved in various legal actions, some of which involve
claims for substantial amounts. In the opinion of management the ultimate
liability with respect to such lawsuits, as well as other contingencies, is
not considered material in relation to the consolidated financial position
of the Company.
F-19
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) All financial statements are included in Part A and Part B of the
Registration Statement.
(b) (1) A copy of the resolution authorizing the Separate Account is
filed herein.
(2) Not applicable. HL maintains custody of all assets.
(3) Principal Underwriter Agreement between Hartford Life Insurance
Company and Hartford Equity Sales Company, is filed herein.
Form of Dealer Agreement is filed herein.
(4) A copy of the Individual Flexible Premium Variable Annuity
Contract is incorporated herein.
(5) The Form of Application is filed herein.
(6) (a) Certificate of Incorporation of Hartford Life Insurance
Company incorporated herein.
(b) Bylaws of Hartford Life Insurance Company are filed herein.
(7) Not applicable.
(8) Not applicable.
(9) Not applicable.
(10) Not applicable.
<PAGE>
Hartford Life has contributed seed money to the Index Fund. On December 31,
1994, Hartford Life had ownership of 4,000,000 shares (4.4%) of Hartford Index
Fund and Hartford Life and Accident Insurance Company had ownership of 1 million
shares (1.1%) of the Index Fund. On December 31, 1994, Hartford Life had
ownership of 5,000,000 shares of the Hartford International Opportunities Fund,
representing 2.2% of the total outstanding shares of the Fund.
At December 31, 1994, certain Hartford Life Insurance Company group pension
contracts held direct interest in shares as follows:
<TABLE>
<CAPTION>
Percent of
Shares Total Shares
------ ------------
<S> <C> <C>
Hartford Advisers Fund, Inc............... 7,791,627 0.56%
Hartford Capital Appreciation Fund, Inc... 1,969,288 0.77%
Hartford Index Fund, Inc............. 5,884,206 6.48%
Hartford International Opportunities Fund, Inc... 1,650,931 0.71%
Hartford Mortgage Securities Fund, Inc......... 16,427,360 4.83%
Hartford Stock Fund, Inc.................. 60,809 0.02%
</TABLE>
(12) Schedule of Performance Data is filed herein.
Item 25. Directors and Officers of the Depositor
Louis J. Abdou Vice President
David H. Annis Vice President
Paul J. Boldischar, Jr. Vice President
Wendell J. Bossen Vice President
Peter W. Cummins Vice President
Juliana B. Dalton Vice President
Ann M. deRaismes Vice President
Allen Douma, M.D. Medical Director
Donald R. Frahm Chairman & CEO
Bruce D. Gardner General Counsel & Secretary
Joseph H. Gareau Executive Vice President & Chief Investment
Officer
<PAGE>
Richard J. Garrett Vice President & Treasurer
John P. Ginnetti Executive Vice President and Director Asset
Management Services
Lynda Godkin Assistant General Counsel & Secretary
Lois W. Grady Vice President
David A. Hall Senior Vice President & Actuary
Joseph Kanarek Vice President
Kevin J. Kirk Vice President
Andrew W. Kohnke Vice President
Stephen M. Maher Vice President & Actuary
William B. Malchodi, Jr. Vice President & Director of Taxes
Thomas M. Marra Senior Vice President & Actuary and Director
Individual Life and Annuity Division
David J. McDonald Senior Vice President
Kevin A. North Vice President
Joseph J. Noto Vice President
Leonard E. Odell, Jr. Senior Vice President
Michael C. O'Halloran Vice President & Senior Associate General
Counsel
Craig R. Raymond Vice President & Chief Actuary
Lowndes A. Smith President & Chief Operating Officer
Edward J. Sweeney Vice President
James E. Trimble Vice President & Actuary
Raymond P. Welnicki Senior Vice President
James T. Westervelt Senior Vice President & Group Comptroller
<PAGE>
Lizabeth H. Zlatkus Vice President
Donald J. Znamierowski Vice President
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 01604-2999.
Item 26. Persons Controlled By or Under Common Control with the Depositor or
Registrant
Exhibit 26 is incorporated herein by reference to the Registration
Statement filed on April 11, 1988.
Item 27. Number of Contract Owners
As of ________ there were ____ Contract Owners.
Item 28. Indemnification - Incorporated herein by reference to the Registration
Statement filed on July 10, 1986.
Item 29. Principal Underwriters
(a) HESCO acts as principal underwriter for the following investment
companies:
Hartford Life Insurance Company - DC Variable Account I
Hartford Life Insurance Company - Separate Account Two
(DC Variable Account II)
Hartford Life Insurance Company - Separate Account Two
(Variable Account "A")
Hartford Life Insurance Company - Separate Account Two
(NQ Variable Account)
Hartford Life Insurance Company - Separate Account Two
(QP Variable Account)
Hartford Life Insurance Company - Separate Account One
Hartford Life Insurance Company - Separate Account Two (Director)
Hartford Life Insurance Company -
Putnam Capital Manager Trust Separate Account
<PAGE>
Hartford Life and Accident Insurance Company-
Putnam Capital Manager Separate Account One
Hartford Life and Accident Insurance Company-
Separate Account One
ITT Hartford Life and Annuity Insurance Company Separate Account One
ITT Hartford Life and Annuity Insurance Company -
Putnam Capital Manager Separate Account Two
HVA Money Market Fund, Inc.
Hartford Life Insurance Company - Separate Account Three
ITT Hartford Life and Annuity Insurance Company - Separate Account
Three
Hartford Life Insurance Company - Separate Account Five
ITT Hartford Life and Annuity Insurance Company - Separate Account
Five
ITT Hartford Life and Annuity Insurance Company - Separate Account
Six
Hartford Life Insurance Company - Separate Account VL I
(b) Directors and Officers of HESCO
Name and Principal Positions and Offices
Business Address With Underwriter
------------------ ---------------------
Donald P. Waggaman, Jr. Treasurer
Bruce D. Gardner Secretary
George R. Jay Controller
Lowndes A. Smith President
Item 30. Location of Accounts and Records
Accounts and records are maintained by:
Hartford Life Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
<PAGE>
Item 31. Management Services
None
Item 32. Undertakings
(a) The Registrant hereby undertakes to file a post-effective amendment
to this registration statement as frequently as is necessary to
ensure that the audited financial statements in the registration
statement are never more than 16 months old so long as payments under
the variable annuity contracts may be accepted.
(b) The Registrant hereby undertakes to include either (1) as part of any
application to purchase a contract offered by the Prospectus, a space
that an applicant can check to request a Statement of Additional
Information, or (2) a post card or similar written communication
affixed to or included in the Prospectus that the applicant can
remove to send for a Statement of Additional Information.
(c) The Registrant hereby undertakes to deliver any Statement of
Additional Information and any financial statements required to be
made available under this Form promptly upon written or oral request.
The Registrant is relying on the no-action letter issued by the Division of
Investment Management to American Counsel of Life Insurance, Ref. No. IP-6-88,
November 28, 1988. The Registrant has complied with the four provisions of the
no-action letter.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company act of
1940, the Registrant certifies that it meets all the requirements for
effectiveness of this Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and duly caused this Registration Statement to be signed
on its behalf, in the City of Hartford, and State of Connecticut on this
27th day of April, 1995.
HARTFORD LIFE INSURANCE COMPANY -
SEPARATE ACCOUNT TWO
(Registrant)
* By: * By: /s/ Rodney J. Vessels
---------------------------------------- -----------------------
Thomas M. Marra, Senior Vice President Rodney J. Vessels
Attorney-in-Fact
HARTFORD LIFE INSURANCE COMPANY
(Depositor)
* By:
---------------------------------------------
Thomas M. Marra, Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons and in the capacity
and on the date indicated.
Donald R. Frahm, Chairman and
Chief Executive Officer, Director *
Bruce D. Gardner, General Counsel
Corporate Secretary, Director *
Joseph H. Gareau, Executive Vice
President and Chief Investment
Officer, Director *
John P. Ginnetti, Senior Vice
President, Director *
Thomas M. Marra, Senior Vice * By: /s/ Rodney J. Vessels
President, Director * -----------------------------
Leonard E. Odell, Jr., Senior Rodney J. Vessels
Vice President, Director * Attorney-In-Fact
Lowndes A. Smith, President
Chief Operating Officer, Dated: 4/27/95
Director * -----------------------------
Raymond P. Welnicki, Senior Vice
President, Director *
Lizabeth H. Zlatkus, Vice President
Director *
Donald J. Znamierowski, Vice President
Comptroller, Director *
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE 1 - SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN AFFILIATES
DECEMBER 31, 1994
(IN MILLIONS)
<TABLE>
<CAPTION>
AMOUNT
SHOWN ON
BALANCE
TYPE OF INVESTMENT COST FAIR VALUE SHEET
------------------ ---------- ---------- ----------
<S> <C> <C> <C>
FIXED MATURITIES
BONDS
U.S. Government and government agencies
and authorities:
- guaranteed and sponsored $ 1,516 $ 1,429 $ 1,429
- guaranteed and sponsored - asset backed 4,256 3,763 3,763
States, municipalities and political subdivisions 148 137 137
International governments 189 176 176
Public utilities 531 500 500
All other corporate 3,717 3,458 3,458
All other corporate - asset backed 2,442 2,350 2,350
Short-term investments 1,665 1,616 1,616
------ ------ ------
TOTAL FIXED MATURITIES 14,464 13,429 13,429
EQUITY SECURITIES
Common Stocks - industrial, miscellaneous and all other 76 68 68
------ ------ ------
TOTAL FIXED MATURITIES AND EQUITY SECURITIES 14,540 13,497 13,497
Policy loans 2,614 2,614 2,614
Mortgage loans 316 316 316
Other investments 103 109 107
------ ------ ------
TOTAL INVESTMENTS $ 17,573 $ 16,536 $ 16,534
------ ------ ------
------ ------ ------
</TABLE>
Note: Fair values for stocks and bonds approximate those quotations published
by applicable stock exchanges or are received from other reliable
sources. The fair value for short - term investments approximates
cost.
Policy and mortgage loan carrying amounts approximate fair value.
S-1
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION
(IN MILLIONS)
<TABLE>
<CAPTION>
BENEFITS, AMORTIZ-
CLAIMS ATION OF
AND CLAIM DEFERRED
DEFERRED FUTURE OTHER PREMIUMS NET ADJUST- POLICY OTHER
POLICY POLICY POLICYHOL- AND OTHER INVESTMENT MENT ACQUISI- INSURANCE
ACQUISITION BENEFITS DER FUNDS CONSIDERA- INCOME EXPENSES TION EXPENSES
SEGMENT COSTS * * TIONS (1) (2) COSTS (3)
- - ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year ended
December 31,
1994
- - -------------
I LAD $ 1,708 $ 582 $ 4,257 $ 492 $ 199 $ 334 $ 137 $ 80
AMS 101 845 10,160 39 750 695 8 48
SPECIALTY 0 463 6,911 569 350 376 0 518
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 1,809 $ 1,890 $ 21,328 $ 1,100 $ 1,299 $ 1,405 $ 145 $ 646
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Year ended
December 31,
1993
- - -------------
I LAD $ 1,237 $ 428 $ 3,535 $ 423 $ 172 $ 249 $ 97 $ 120
AMS 97 703 9,026 35 759 662 16 45
SPECIALTY 0 528 5,673 289 136 135 0 272
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 1,334 $ 1,659 $ 18,234 $ 747 $ 1,067 $ 1,046 $ 113 $ 437
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Year ended
December 31,
1992
- - -------------
I LAD $ 698 $ 1,115 $ 1,004 $ 175 $ 127 $ 104 $ 49 $ 79
AMS 101 583 8,256 27 743 657 6 51
SPECIALTY 0 46 5,822 54 42 36 0 55
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 799 $ 1,744 $ 15,082 $ 256 $ 912 $ 797 $ 55 $ 185
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<FN>
(*) As Restated
(1) Investment income is allocated to the segments based on each segment's
share of investable funds or on a direct basis, where applicable, including
realized capital gains and losses.
(2) Benefits, claims and claim adjustment expenses includes the increase in
liability for future policy benefits and death, disability and other
contract benefit payments.
(3) Other insurance expenses are allocated to the segments based on specific
identification, where possible, and related activities, including dividends
to policyholders.
</TABLE>
S-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE IV - REINSURANCE
(IN MILLIONS)
<TABLE>
<CAPTION>
PERCENTAGE
CEDED TO ASSUMED OF AMOUNT
GROSS OTHER FROM OTHER NET ASSUMED
AMOUNT COMPANIES COMPANIES AMOUNT TO NET
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994
LIFE INSURANCE IN FORCE $ 136,929 $ 87,553 $ 35,016 $ 84,392 41.5%
--------- --------- --------- ---------
Premiums and other considerations
ILAD $ 448 $ 71 $ 106 $ 483 22.0%
AMS 39 0 0 39 0.0%
Specialty 521 140 188 569 33.0%
Accident and Health 308 304 5 9 55.6%
--------- --------- --------- ---------
TOTAL $ 1,316 515 299 1,100 27.2%
--------- --------- --------- ---------
--------- --------- --------- ---------
YEAR ENDED DECEMBER 31, 1993
LIFE INSURANCE IN FORCE $ 93,099 $ 71,415 $ 27,067 $ 48,751 55.5%
--------- --------- --------- ---------
Premiums and other considerations
ILAD $ 417 $ 85 $ 91 $ 423 21.5%
AMS 25 0 0 25 0.0%
Specialty 386 97 0 289 0.0%
Accident and Health 307 299 2 10 20.0%
--------- --------- --------- ---------
TOTAL $ 1,135 $ 481 $ 93 $ 747 12.4%
--------- --------- --------- ---------
--------- --------- --------- ---------
YEAR ENDED DECEMBER 31, 1992
LIFE INSURANCE IN FORCE $ 44,661 $ 64,207 $ 51,430 $ 31,884 161.3%
--------- ---------
Premiums and other considerations
ILAD $ 208 $ 71 $ 27 $ 164 16.5%
AMS 27 0 0 27 0.0%
Specialty 153 99 0 54 0.0%
Accident and Health 292 281 3 14 21.4%
--------- --------- --------- ---------
TOTAL $ 680 $ 451 $ 30 $ 259 37.9%
--------- --------- --------- ---------
</TABLE>
S-3
<PAGE>
Exhibit (b)(1)
CERTIFICATION
I, John P. Ginnetti, Secretary of Hartford Life Insurance Company,
hereby certify that the attached is a true copy of a resolution adopted
at a meeting of the Board of Directors of said company held on June 2, 1986.
/s/ John P. Ginnetti
----------------------------
June 13,1986
<PAGE>
EXHIBIT 1
HARTFORD LIFE INSURANCE COMPANY
CONSENT
The undersigned, being all of the Directors of Hartford Life Insurance
Company, hereby consent to the following resolution, such action to have the
same force and effect as if taken at a meeting duly held for such purpose:
RESOLVED, That Hartford Life Insurance Company is hereby authorized to
establish a new separate account to be designated "Separate Account Two"
(the "Account") and to issue variable annuity contracts with reserves for
such contracts being segregated in such Account.
FURTHER RESOLVED, That the officers of Hartford Life Insurance Company
are hereby authorized and directed to take all actions necessary to:
(1) Comply with applicable state and federal laws and regulations
applicable to the establishment and operation of the Account;
(2) Establish, from time to time, the terms and conditions pursuant to
which interests in the Account will be sold to contract owners;
(3) Establish all procedures, standards and arrangements necessary or
appropriate for the operation of the Account including, but not
limited to, the establishment of the investment policies of the
Account; and
(4) Transfer funds to the Account, up to a maximum of $100,000 to
provide for its efficient operation, all on such terms and for
such periods as said officers deem to be necessary or appropriate.
/s/ Edward N. Bennett /s/ R. Fred Richardson
-------------------------- ---------------------------
Edward N. Bennett R. Fred Richardson
/s/ Joel P. Brighton /s/ Lowndes A. Smith
-------------------------- ---------------------------
Joel P. Brighton Lowndes A. Smith
/s/ Larry A. Lance /s/ Donald R. Sondergelo
-------------------------- ---------------------------
Larry A. Lance Donald R. Sondergelo
/s/ Derby C. Thomas
--------------------------
Derby C. Thomas
Dated: June 2, 1986
<PAGE>
EXHIBIT 3(a)
PRINCIPAL UNDERWRITER AGREEMENT
THIS AGREEMENT, dated as of the 16st day of June, 1986, made by and between
HARTFORD LIFE INSURANCE COMPANY ("HLIC or the Sponsor"), a corporation organized
and existing under the laws of the State of Connecticut, and HARTFORD EQUITY
SALES COMPANY, INC. ("HESCO"), a corporation organized and existing under the
laws of the State of Connecticut,
WITNESSETH:
WHEREAS, the Board of Directors of the HLIC has made provision for the
establishment of a separate account within the HLIC in accordance with the
laws of the State of Connecticut, which separate account was organized and is
established and registered as a unit trust type investment company with
the Securities and Exchange Commission under the Investment Company Act of 1940,
as amended, and which is designated Hartford Life Insurance Company Separate
Account Two (referred to as the "Unit Trust"); and
WHEREAS, HESCO offers to the public certain Individual Flexible Premium
Annuity Insurance Contracts (the "Contract") issued by the HLIC with respect to
the Unit Trust and units of interest thereunder which are registered under the
Securities Act of 1933, as amended; and
WHEREAS, HESCO has previously agreed to act as distributor in connection
with offers and sales of the Contract under the terms and conditions set
forth in this Distribution Agreement.
NOW THEREFORE, in consideration of the mutual agreements made herein, the
Sponsor and HESCO agree as follows:
I.
HESCO'S DUTIES
1. HESCO, as principal underwriter for the Contract, will use its best
efforts to effect offers and sales of the Contract through broker-dealers that
are members of the National Association of Securities Dealers, Inc. and whose
registered representatives are duly licensed as insurance agents of HLIC.
HESCO is responsible for compliance with all applicable requirements of
the Securities Act of 1933, as amended, the Securities Exchange Act of 1934,
as amended, and the Investment Company Act of 1940, as amended, and the rules
<PAGE>
and regulations thereunder, and all other applicable laws, rules and regulations
relating to the sales and distribution of the Contract, the need for which
arises out of its duties as principal underwriter of said Contract and
relating to the creation of the Unit Trust.
2. HESCO agrees that it will not use any prospectus, sales literature, or
any other printed matter or material or offer for sale or sell the Contract if
any of the foregoing in any way represent the duties, obligations, or
liabilities of HLIC as being greater than, or different from, such duties,
obligations and liabilities as are set forth in this Agreement, as it may be
amended from time to time.
3. HESCO agrees that it will utilize the then currently effective
prospectus relating to the Unit Trust's Contracts in connection with its selling
efforts.
As to the other types of sales materials, HESCO agrees that it will use only
sales materials which conform to the requirements of federal and state insurance
laws and regulations and which have been filed, where necessary, with the
appropriate regulatory authorities.
4. HESCO agrees that it or its duly designated agent shall maintain records
of the name and address of, and the securities issued by the Unit Trust
and held by, every holder of any security issued pursuant to this Agreement,
as required by the Section 26(a)(4) of the Investment Company Act of 1940,
as amended.
5. HESCO's services pursuant to this Agreement shall not be deemed to be
exclusive, and it may render similar services and act as an underwriter,
distributor, or dealer for other investment companies in the offering of their
shares.
6. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties hereunder on the part of HESCO,
HESCO shall not be subject to liability to the Unit Trust or to any Contract
Owner or party in interest under a Contract for any act or omission in
the course, or connected with, rendering services hereunder.
II.
1. The Unit Trust reserves the right at any time to suspend or limit
the public offering of the Contracts upon thirty days' written notice to HESCO,
except where the notice period may be shortened because of legal action taken
by any regulatory agency.
2. The Unit Trust agrees to advise HESCO immediately:
(a) Of any request by the Securities and Exchange Commission for
amendment of its Securities Act registration statement or for additional
information;
<PAGE>
(b) Of the issuance by the Securities and Exchange Commission of any
order suspending the effectiveness of the Securities Act registration
statement relating to uits of interest issued with respect to the Unit
Trust or of the initiation of any proceedings for that purpose;
(c) Of the happening of any material event, if known, which makes untrue
any statement in said Securities Act registration statement or which
requires change therein in order to make any statement therein not
misleading.
HLIC will furnish to HESCO such information with respect to the HLIC by such
of its officers and directors of Unit Trust and the Contracts in such form and
signed HESCO may reasonably request and will warrant that the statements therein
contained when so signed will be true and correct. HLIC will also furnish, from
time to time, such additional information regarding the Unit Trust's financial
condition as HESCO may reasonably request.
III.
COMPENSATION
For providing the principal underwriting functions on behalf of the Unit
Trust, HESCO shall be entitled to receive compensation as agreed upon from
time to time by the HLIC and HESCO.
IV.
RESIGNATION AND REMOVAL OF
PRINCIPAL UNDERWRITER
HESCO may resign as Principal Underwriter hereunder, upon 120 days' prior
written notice to the HLIC. However, such resignation shall not become
effective until either the HLIC. Unit Trust has been completely liquidated and
the proceeds of the liquidation distributed through the HLIC to the Contract
Owners or a successor Principal Underwriter has been designated and has
accepted its duties.
V.
MISCELLANEOUS
1. This Agreement may not be assigned by any of the parties hereto without
the written consent of the other party.
2. All notices and other communications provided for hereunder shall be in
writing and shall be delivered by hand or mailed first class, postage pre-paid,
addressed as follows:
(a) If to the HLIC -- Hartford Life Insurance Company, Hartford Plaza,
Hartford, Connecticut 06115
(b) If to HESCO -- Hartford Equity Sales Company, Inc., Hartford Plaza,
Hartford, Connecticut 06115
or to such other address as HESCO or the Sponsor shall designate by written
notice to the other.
<PAGE>
3. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original and all of which shall be deemed one
instrument, and an executed copy of this Agreement and all amendments hereto
shall be kept on file by the Sponsor and shall be open to inspection at any
time during the business hours of the Sponsor.
4. This Agreement shall inure to the benefit of and be binding upon the
successor of the parties hereto.
5. This Agreement shall be construed and governed by and according to the
laws of the State of Connecticut.
6. This Agreement may be amended from time to time by the mutual agreement
and consent of the parties hereto.
7. a. This Agreement shall become effective On June 16, 1986, and shall
continue in effect for a period of two years from that date and,
unless sooner terminated in accordance with 7(b) below, shall
continue in effect from year to year thereafter provided that its
continuance is specifically approvied at least annually by a majority
of the members of the Board of Directors of HLIC.
b. This Agreement (1) may be terminated at any time, without the
payment of any penalty, either by a vote of a majroity of the
members of the Board of Directors of HLIC on sixty days prior
written notice to HESCO; (2) shall immediately terminate in the
event of its assignmnent and (3) may be terminiated by HESCO on
sixty days prior written notice to HLIC but such terminiation will
not be effective until HLIC shall have contracted with one or more
persons to act as principal underwriter of the Contracts. HESCO
hereby agrees that it will continue to act as principal underwriter
until its successor or successors assume such undertaking.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
(SEAL) HARTFORD LIFE INSURANCE COMPANY
Attest:
- - ------------------------------------ By----------------------------------
(SEAL) HARTFORD EQUITY SALES COMPANY, INC.
Attest:
- - ------------------------------------ By----------------------------------
<PAGE>
Exhibit (b)(3)
[ITT LOGO]
SALES AGREEMENT
1.0 APPOINTMENT
1.1 The Hartford insurance company(ies) named in the Sales Agreement
Specifications Page and, with respect to SEC Registered contracts,
Hartford Equity Sales Company, Inc., as Principal Underwriter,
(hereinafter collectively referred to as "Company") hereby appoint the
named individual(s) or organization(s) as "Agent" of Company for the
solicitation and procurement of applications for insurance contracts
(hereinafter referred to as "Contracts") in the line(s) of business
set forth in the Sales Agreement Specifications Page, in all states in
which Company is authorized to do business and in which Agent is
properly licensed and appointed, without exclusive representation.
2.0 AUTHORITY
2.1 Agent has the power or authority to represent Company only to the
extent expressly granted in this Agreement and no further power or
authority is implied.
2.2 Nothing contained herein is intended to create a relationship of
employer and employee between Company and Agent. Agent and, if
applicable, any sub-agents appointed by Agent, shall be independent
contractors as to Company and free to exercise their own judgment as
to the time, place and means of performing all acts hereunder, but
they shall conform to all regulations of Company not unreasonably
interfering with freedom of action or judgment.
2.3 This Agreement terminates all previous Agency agreements, if any,
between Company and Agent. However, the execution of this Agreement
shall not affect any obligations which have already accrued under any
prior agreement.
2.4 Agent does not have the authority to collect premiums for each line of
business, other than initial premiums, unless specifically set forth
in the applicable commission schedule.
2.5 If Agent is a Class I through Class XX Agent, Agent is authorized to
procure and solicit applications for Contracts through sub-agents
which Agent may appoint with the approval of Company. No agreement
between Agent and any sub-agent shall impose any liability or
obligation upon Company unless Company is a party thereto in writing.
All sub-agents shall be duly licensed under the applicable insurance
laws to sell annuity, life and health insurance contracts by the
proper authorities in the jurisdictions in which Agent proposes to
offer such Contracts. The sub-agents shall indicate in each
application for a Contract that it has been solicited on behalf of
Agent.
2.5.1 Agent shall supervise any sub-agents appointed by Agent to
solicit sales of the Contracts and Agent shall be responsible
for all acts and omissions of each sub-agent within the scope
of his agency appointment at all times. Agent shall exercise
all responsibilities required by the applicable federal and
state law and regulations. Company shall not have any
responsibility for the supervision of any sub-agents of Agent.
2.5.2 Company may, by written notice to Agent, refuse to permit any
sub-agent to solicit applications for the sale of any of the
Contracts hereunder and may, by such notice, require Agent to
cause any such sub-agent to cease any such solicitation or
sales, and Company may require Agent to cancel the appointment
of any sub-agent with Company.
-1-
<PAGE>
2.6 If Agent is assigned a different Agent Class for different Lines of
Business (i.e. Class I Agent for Variable Annuities and a Class V
Agent for Individual Life, Annuity and Health Insurance), the
provisions of this Agreement, which specifically relate only to a
particular Class of Agent shall only apply to Agent in transacting
that Line of Business for which Agent is so classified, if any.
3.0 SEC REGISTERED CONTRACTS
3.1 If Agent is a Class I through Class XX Agent and an NASD registered
Broker-Dealer, Agent agrees that, with respect to SEC Registered
Contracts, Agent has full responsibility for the training and
supervision of all persons, including sub-agents of Agent, associated
with Agent who are engaged directly or indirectly in the offer or sale
of such Contracts and that all such persons shall be subject to the
control of Agent with respect to such persons' activities in
connection with the Contracts. Agent will cause the sub-agents to be
trained in the sale of the Contracts and will cause such sub-agents to
be registered representatives of Agent before such sub-agents engage
in the offer or sale of the Contracts. Agent shall cause Agent's sub-
agents' qualifications to be certified to the satisfaction of Company
and shall notify Company if any sub-agents cease to be registered
representatives of Agent.
3.1.1 Agent will fully comply with the requirements of the National
Association of Securities Dealers, Inc. and of the Securities
Exchange Act of 1934 and all other applicable federal or state
laws and will establish such rules and procedures as may be
necessary to cause diligent supervision of the securities
activities of the sub-agents. Upon request by Company, Agent
shall furnish any records necessary to establish such diligent
supervision.
3.1.2 Before a sub-agent is permitted to solicit and procure
applications for the Contracts, Agent and the sub-agent shall
have entered into an agreement pursuant to which the sub-agent
will be appointed a sub-agent and a registered representative
of Agent and in which the sub-agent will agree that his
selling activities relating to the Contracts will be under the
supervision and control of Agent, and the sub-agent's right to
continue to sell such Contracts is subject to his continued
compliance with such agreement.
3.1.3 In the event a sub-agent fails or refuses to submit to
supervision of Agent in accordance with this Agreement, or
otherwise fails to meet the rules and standards imposed by
Agent, Agent shall immediately notify such sub-agent that he
is no longer authorized to sell the Contracts, and Agent shall
take whatever additional action may be necessary to terminate
the sales activities of such sub-agent relating to the
Contracts including immediate notification of Company of such
termination.
3.2 If Agent is not an NASD Registered Broker/Dealer but is a member of an
affiliated group of legal entities one of which is an NASD Registered
Broker/Dealer ("Broker/Dealer") and a party to this Agreement, Agent
agrees that, with respect to SEC Registered contracts, the sub-agents
of Agent shall be registered representatives of such Broker/Dealer.
3.2.1 As appropriate, any reference in this Agreement to Agent shall
apply equally to such Broker/Dealer.
3.2.2 Each Agent which is not a Broker/Dealer hereby directs Company
to pay any compensation due, pursuant to Paragraph 4, to the
Broker/Dealer.
3.2.3 If Agent is not a Broker/Dealer but is a member of an
affillated group of leagal entities one of which is a
Broker/Dealer and a party to this Agreement Agent and
Broker/Dealer agree that, with respect to SEC Registered
Contracts, Agent and Broker/Dealer have responsibility
for the training and supervision of all registered
representiatives of Broker/Dealer and who are sub-agents
of Agent and who are engaged directly orIndirectly in the offer
or sale of such SEC Registered Contracts and that all such
representatives shall be subject to the control of Agent and
Broker/Dealer with respect to their activities in connection
with the SEC Registered Contracts.
-2-
<PAGE>
3.3 If Agent is neither an NASD Registered Broker-Dealer nor a member of
an affiliated group of legal entities one of which is a Broker/Dealer,
Agent and any sub-agents shall be registered representatives of
Hartford Equity Sales Company, Inc.
3.4 All other provisions of this Agreement apply to the sale of SEC
Registered Contracts.
4.0 COMPENSATION
4.1 Company will pay Agent as full compensation hereunder, commissions
and/or service fees on premiums paid to Company on account of
Contracts issued upon applications procured pursuant to this Agreement
and while this Agreement is in effect.
4.1.1 Commission and/or service fees will be paid in the amounts and
for the periods of time as set forth in the Commission
Schedules included in this Agreement or subsequently made a
part hereof, and which are in effect at the time such
Contracts are sold.
4.1.2 The Commission Schedules included in this Agreement are
subject to change by Company at any time, but only upon
written notice to Agent. No such change shall affect any
Contracts issued upon applications received by Company at
Company's Home Office prior to the effective date of such
change.
4.1.3 Any Commission Schedule included in this Agreement or
subsequently made a part hereof may provide other or
additional conditions regarding compensation and if so, will
be controlling to the extent of the other or additional
conditions.
4.2 Compensation will be earned by Agent only for those applications
accepted by Company, and only after receipt by Company at Company's
Home Office in Hartford, Connecticut, of the required premium and
compliance by Agent with any outstanding delivery requirements.
4.2.1 No compensation will be earned or paid on premiums (other than
premiums on health insurance contracts) waived by Company
pursuant to any "waiver of premium" provision.
4.2.2 Should Company for any reason return any premium on a policy
issued hereunder, Agent agrees to repay Company the total
amount of any compensation which may have been paid thereon
within thirty (30) business days of notice of such refund.
4.3 Any compensation otherwise payable to Agent in accordance with this
Section 4.0 shall be reduced by the amount, if any, of such
compensation paid directly, at the direction of Agent, by Company to
any person and appointed by Company and Agent or, in connection with
group policies, the amounts paid by Company to a resident licensed
agent in a state which requires the countersignature by, or the
effectuating of the insurance through, a resident licensed agent.
4.4 In the event of termination of this Agreement for one or more of the
reasons specified in Subparagraphs 7.2.2 or 7.2.3 below, no further
commissions or other compensation shall thereafter be payable.
4.5 In the event of termination in accordance with 7.1 below if in any
calendar year following such termination the aggregate commission
payable hereunder for all life and health policies (not SEC regulated
contracts) total less than $100.00, no further commissions shall be
payable hereunder, other reverences to vesting to the contrary not
withstanding. This rule is not applicable to any SEC registered
equity product.
4.6 With respect to registered Contracts, if Agent is disqualified for
continued registration with the NASD, Company shall not be obligated
to pay any compensation, the payment of which would represent a
violation of NASD rules.
-3-
<PAGE>
In such event, Company shall hold any commission otherwise due on any
Contract in force in "escrow" from the date of such disqualification
until the termination of any litigation or administrative proceedings
relating to such disqualification, provided Agent commences an appeal
to the NASD within 180 days following the disqualification notice and
actively pursues such appeal. Should Agent's registration in the NASD
be reinstated, all compensation due or becoming due Agent during the
period of disqualification shall be immediately paid, provided this
does not violate any NASD rules or regulations in effect at said time.
5.0 GENERAL PROVISIONS
5.1 Agent shall cooperate with Company in the investigation and
settlement of all claims against Agent and/or Company relating to the
solicitation or sale of Contracts under this Agreement. Agent shall
promptly forward to Company any notice of claim or other relevant
information which may come into Agent's possession.
5.2 Agent shall keep full and accurate records of the business transacted
by Agent under this Agreement and shall forward to Company such
reports of said business as Company may prescribe. Company shall have
the right to examine said records at reasonable times. All rate books,
manuals, forms, supplies and any other properties furnished by Company
and in the possession of Agent shall be returned to Company on
termination of this Agreement.
5.3 Agent shall bear all of Agent's expenses incurred in the performance
of this Agreement.
5.4 Agent shall have a duty to obtain applications for Company and, where
appropriate, to conserve and renew coverage placed with Company.
5.5 All applications for the purchase of Contracts shall be subject to
acceptance by Company. Company reserves the right to prescribe
conditions, rules and regulations for the offer and acceptance of its
Contracts, which may be changed from time to time and which shall be
forwarded to Agent.
5.6 Company reserves the right to modify, change or discontinue the
offering of any form of Contract at any time.
5.7 No waiver or modification of this Agreement will be effective unless
it be in writing and signed by a duly authorized officer of Company
and Agent or a duly authorized officer of Agent.
5.8 The failure of Company to enforce any provisions of this Agreement
shall not constitute a waiver of any such provision. The past waiver
of a provision by Company shall not constitute a course of conduct or
a waiver in the future of that same provision.
5.9 In the event any legal process or notice is served on Agent in a suit
or proceeding against Company, Agent shall forward forthwith such
process or notice to Company at its Home Office in Hartford,
Connecticut, by certified mail.
5.10 Agent shall not use any advertising material, prospectus, proposal, or
representation either in general or in relation to a Contract of
Company unless furnished by Company or until the consent of Company
shall have been first secured. Agent shall not issue or recirculate
any illustration, circular, statement or memorandum of any sort,
misrepresenting the terms, benefits or advantages of any Contract
issued by Company, or make any misleading statement as to dividends or
other benefits to be received thereon, or as to the financial position
of Company.
-4-
<PAGE>
5.10.1 In regard to SEC Registered Contracts, Agent agrees not to
make written or oral representations except such as are
contained in current prospectuses and authorized supplementary
sales literature made available by Company. In respect to such
products Agent also agrees to comply with the Securities and
Exchange Commission Statement of Policy and the regulations
thereunder of the National Association of Securities Dealers,
Inc.
5.11 Agent shall indemnify and save Company harmless from any loss or
expense on account of any unauthorized act or transaction by Agent, or
persons employed or appointed by Agent, or any claim by a sub-agent of
Agent for compensation due or to become due on account of such sub-
agent's sale of Contracts.
5.11.1 Agent expressly authorizes Company to charge against all
compensation due or to become due to Agent under this
Agreement any monies paid or liabilities incurred by Company
under this Paragraph 5.11.
5.12 Agent shall not offer or pay any rebate of premium or make any offer
of any other inducement not specified in the Contracts to any person
to insure with Company. Agent shall not make any misrepresentation or
incomplete comparison for the purpose of inducing a policyholder in
any other company to lapse, forfeit or surrender its insurance
therein.
5.13 No assignment of this Agreement, or commissions payable hereunder,
shall be valid unless authorized in writing by Company. Every
assignment shall be subject to any indebtedness and obligation of
Agent that may be due or become due to Company and any applicable
state insurance regulations pertaining to such assignments.
5.14 Company may at any time deduct, from any monies due under this
Agreement, every indebtedness or obligation of Agent to Company.
5.14.1 On termination of this Agreement, any outstanding indebtedness
to Company shall become immediately due and payable.
6.0 LIMITATION OF AUTHORITY
6.1 Agent is not authorized, and is expressly forbidden on behalf of
Company, to incur any indebtedness or liability, or to make, alter or
discharge agreements, or to waive forfeitures, extend the time of
payment of any premium, waive payment in cash, or to receive any money
due or to become due Company, except as specifically provided in this
Agreement.
6.2 No individual Contract providing life, health or disability insurance
coverage shall be delivered if a sub-agent or Agent has knowledge that
the health of the proposed insured has changed since the application
was taken or unless the first premium has been fully paid and delivery
made by the delivery date specified by Company or, if no delivery date
is specified, within sixty (60) days from the date said Contract is
mailed from Company's Home Office.
6.2.1 Any Contract not delivered, in accordance with this Paragraph
6.2, shall be returned to Company immediately.
7.0 TERMINATION
7.1 This entire Agreement may be terminated by either party by giving
thirty (30) days' notice in writing to the other party.
-5-
<PAGE>
7.1.1 Such notice of termination shall be mailed to the last known
address of Agent appearing on Company's records, or in the
event of termination by Agent, to the Home Office of Company
at P.O. Box 2999, Hartford, Connecticut 06104-2999.
7.1.2 Such notice shall be an effective notice of termination of
this Agreement as of the time the notice is deposited in the
United States mail or the time of actual receipt of such
notice if delivered by means other than mail.
7.2 This Agreement shall automatically terminate without notice upon the
occurrence of any of the events set forth below:
7.2.1 Upon the bankruptcy or dissolution of Agent provided, however,
that if there is more than one Agent, the Agreement shall
automatically terminate only with respect to the bankrupt or
dissolved Agent.
7.2.2 When and if Agent commits fraud or gross negligence in the
performance of any duties imposed upon Agent by this Agreement
or wrongfully withholds or misappropriates, for Agent's own
use, funds of Company, its policyholders or applicants.
7.2.3 When and if Agent materially breaches this Agreement or
materially violates the insurance or Federal or State
securities laws of a state in which Agent transacts business.
7.2.4 When and if Agent fails to obtain renewal of a necessary
license in any jurisdiction, but only as to that jurisdiction.
7.2.5 When and if Agent is disqualified for continued membership
with the NASD or registration with the Securities and Exchange
Commission, but only as to SEC registered Contracts.
7.3 The provisions of Sections 4.0 and 6.0 shall survive the termination
of this Agreement, as appropriate.
-6-
<PAGE>
SALES AGREEMENT SPECIFICATIONS PAGE
-----------------------------------
The Company or Companies (set for below) hereby appoint the following,
individual(s) or organization(s) as Agent of Company and Agent hereby agrees
to be bound by the terms and conditions of this Agreement.
MAILING ADDRESS: MAILING ADDRESS:
- - ----------------------------- ------------------------------
- - ----------------------------- ------------------------------
- - ----------------------------- ------------------------------
AGENT: BROKER/DEALER (If Applicable):
TAX ID (SS#) 12-1467210 TAX ID (SS#)
AGENT:
- - -----------------------------
- - -----------------------------
- - -----------------------------
TAX ID (SS#)
-----------------
AGENT:
- - -----------------------------
- - -----------------------------
- - -----------------------------
TAX ID (SS#)
-----------------
AGENT:
- - -----------------------------
- - -----------------------------
- - -----------------------------
TAX ID (SS#)
-----------------
AGENT:
- - -----------------------------
- - -----------------------------
- - -----------------------------
TAX ID (SS#)
-----------------
AGENT:
- - -----------------------------
- - -----------------------------
- - -----------------------------
TAX ID (SS#)
-----------------
AGREEMENT EFFECTIVE DATE (NO NEW BUSINESS SHOULD BE WRITTEN PRIOR TO THIS
DATE): March 1, 1986
------------------
<PAGE>
LINES OF BUSINESS
-----------------
INDIVIDUAL ANNUITY, LIFE AND HEALTH
TYPE OF CONTRACT: General Agent
--------------------------------------
CODE ASSIGNED TO PRODUCER TO BE PUT ON ALL NEW BUSINESS: I-00-0000
-------------------
FIELD OFFICE NO. TO BE PLACED ON ALL NEW BUSINESS: C43
-------------------------
HARTFORD LIFE INSURANCE COMPANY
SCHEDULE NO. SCHEDULE DESCRIPTION EFFECTIVE DATE
- - ------------ -------------------- --------------
HL 0000 Current Rate Compounding Annuity (CRC) March 1, 1986
---------- -------------------------------------- ---------------
HL II440 Flexible Premium Variable Life March 1, 1986
---------- -------------------------------------- ---------------
(The Builder)
---------- -------------------------------------- ---------------
VARIABLE ANNUITY
TYPE OF CONTRACT: Class I - A General Agent
---------------------------------------------------------
CODE ASSIGNED TO PRODUCER TO BE PUT ON ALL NEW BUSINESS: 1234-456789
-------------------
FIELD OFFICE NO. TO BE PLACED ON ALL NEW BUSINESS: C43
-------------------------
HARTFORD LIFE ANNUITY LIFE INSURANCE COMPANY
SCHEDULE NO. SCHEDULE DESCRIPTION EFFECTIVE DATE
- - ------------ -------------------- --------------
HV I653-1 Individual Tax Deferred Variable March 1, 1986
---------- -------------------------------------- ---------------
Annuity (The Director)
---------- -------------------------------------- ---------------
---------- -------------------------------------- ---------------
<PAGE>
This Agreement includes any Schedules referenced above, any replacements for
such Schedules and any Commission Schedules which may be added to it in the
future as set forth herein.
By executing this Sales Agreement Specifications Page, the Agent (including
any specified Broker/Dealer) acknowledges that he or she has read the
Agreement in its entirety and is in agreement with the terms and conditions
outlining the rights of Company and Agent, under this Agreement.
IN WITNESS WHEREOF, the undersigned parties have executed this Agreement to
be effective as set forth above.
BROKER/DEALER HARTFORD EQUITY SALES COMPANY
By: By
-------------------------- ------------------------------
Title: Title:
----------------------- --------------------------
Date: Date:
------------------------ ---------------------------
AGENT HARTFORD LIFE INSURANCE COMPANY
By: By
-------------------------- ------------------------------
Title: Title:
----------------------- --------------------------
Date: Date:
------------------------ ---------------------------
AGENT HARTFORD LIFE AND ACCIDENT
INSURANCE COMPANY
By: By
-------------------------- ------------------------------
Title: Title:
----------------------- --------------------------
Date: Date:
------------------------ ---------------------------
AGENT HARTFORD VARIABLE ANNUITY LIFE
INSURANCE COMPANY
By: By
-------------------------- ------------------------------
Title: Title:
----------------------- --------------------------
Date: Date:
------------------------ ---------------------------
AGENT
By:
--------------------------
Title:
-----------------------
Date:
------------------------
AGENT
By:
--------------------------
Title:
-----------------------
Date:
------------------------
AGENT
By:
--------------------------
Title:
-----------------------
Date:
------------------------
<PAGE>
Exhibit (b)(4)
INDIVIDUAL FLEXIBLE PREMIUM
VARIABLE ANNUITY CONTRACT
ITT Hartford Life and Annuity Insurance Company
P.O. Box 2999
Hartford, Connecticut 06104-2999
(a stock life insurance company, herein called the Company)
Unless otherwise directed by the Contract Owner, the Company agrees to pay the
named Annuitant, on the Annuity Commencement Date, if the Annuitant and Contract
Owner are then living, the first of a series of annuity payments the frequency,
period and dollar amounts of which shall be determined on the basis as set forth
herein, in accordance with the Annuity Option selected.
This contract is issued in consideration of the payment of the initial premium
payment.
This contract is subject to the laws of the jurisdiction where it is delivered.
The Contract Specifications on Page 3 and the conditions and provisions on this
and the following pages are part of the contract.
RIGHT TO EXAMINE CONTRACT
We want you to be satisfied with the contract you have purchased. We urge you to
closely examine its provisions. If for any reason you are not satisfied with
your purchase you may surrender the contract by returning the contract within
ten days after you receive it. A written request for cancellation must accompany
the contract. In such event, we will pay to the Contract Owner an amount equal
to the sum of (i) the difference between the premiums paid and the amounts
allocated to any Account under the contract and (ii) the Contract Value on the
date of surrender. The Contract Owner bears only the investment risk during the
period prior to the Company's receipt of request for cancellation.
Signed for the Company
/s/ Bruce D. Gardner /s/ Lowndes A. Smith
--------------------------- ---------------------------
Bruce D. Gardner, SECRETARY Lowndes A. Smith, PRESIDENT
Premium Payments are flexible as described herein.
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SUB-ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED
DOLLAR AMOUNT. DETAILS OF THE VARIABLE PROVISIONS ARE DESCRIBED UNDER VALUATION
PROVISIONS, PAGES 9 AND 10.
[ITT HARTFORD LOGO]
<PAGE>
TABLE OF CONTENTS
Page
Contract Specifications 3
Definition of Certain Terms 4
Premium Payments Provision 5
Contract Control Provisions 6
General Provisions 7
Valuation Provisions 9
Termination Provisions 10
Settlement Provisions 12
Annuity Tables 15
Page 2
<PAGE>
CONTRACT SPECIFICATIONS
CONTRACT NUMBER [SPECIMEN] CONTRACT DATE [FEBRUARY 8, 1992]
NAME OF ANNUITANT [JAMES SCOTT] DATE OF ISSUE [FEBRUARY 8, 1992]
AGE OF ANNUITANT [35] ANNUITY COMMENCEMENT
DATE [JANUARY 1, 2020]
SEX OF ANNUITANT [MALE] INITIAL PREMIUM PAYMENT [$20,000]
MINIMUM SUBSEQUENT
PAYMENT 500
MINIMUM FIXED ACCOUNT
INTEREST RATE 3%
CONTINGENT
ANNUITANT [PAUL SCOTT]
DESIGNATED
BENEFICIARY [ANN SCOTT] CONTRACT OWNER [SAME]
(IF OTHER THAN ANNUITANT)
- - --------------------------------------------------------------------------------
DESCRIPTION OF BENEFITS
INDIVIDUAL FLEXIBLE VARIABLE ANNUITY CONTRACT
ANNUAL WITHDRAWAL AMOUNT: CONTRACT YEARS 1-7
10% OF PREMIUM PAYMENTS
AFTER CONTRACT YEAR 7
THE GREATER OF:
100% OF THE CONTRACT VALUE REDUCED BY THE
TOTAL OF ANY PREMIUM PAYMENTS MADE DURING
THE 7 YEARS PRIOR TO WITHDRAWAL; OR
10% OF PREMIUM PAYMENTS MADE DURING THE 7
YEARS PRIOR TO WITHDRAWAL.
ANNUAL CONTRACT MAINTENANCE FEE: $0 IF THE CONTRACT VALUE IS $50,000 OR MORE
ON THE CONTRACT ANNIVERSARY.
$30 IF THE CONTRACT VALUE IS LESS THAN
$50,000 ON THE CONTRACT ANNIVERSARY.
MORTALITY AND EXPENSE RISK CHARGE: 1.25% PER ANNUM OF THE AVERAGE DAILY
CONTRACT VALUE.
ADMINISTRATION CHARGE: 0% PER ANNUM OF THE AVERAGE DAILY CONTRACT
VALUE.
Page 3
<PAGE>
CONTINGENT DEFERRED SALES CHARGES:
SUBJECT TO THE ANNUAL WITHDRAWAL AMOUNT, SURRENDERS OF CONTRACT VALUES
ATTRIBUTABLE TO PREMIUM PAYMENTS MAY BE SUBJECT TO A CONTINGENT DEFERRED SALES
CHARGE ("CHARGE"). THE LENGTH OF TIME FROM RECEIPT OF THE PREMIUM PAYMENT TO THE
TIME OF SURRENDER DETERMINES THE CHARGES.
DURING THE FIRST SEVEN CONTRACT YEARS, ALL SURRENDERS WILL BE FIRST FROM PREMIUM
PAYMENTS AND THEN FROM EARNINGS. IF AN AMOUNT EQUAL TO ALL PREMIUM PAYMENTS HAS
BEEN SURRENDERED, A CHARGE WILL NOT BE ASSESSED AGAINST THE SURRENDER OF THE
REMAINING CONTRACT VALUE.
AFTER THE SEVENTH CONTRACT YEAR, ALL SURRENDERS WILL FIRST BE FROM EARNINGS AND
THEN FROM PREMIUM PAYMENTS. A CHARGE WILL NOT BE ASSESSED AGAINST THE SURRENDER
OF EARNINGS. IF AN AMOUNT EQUAL TO ALL EARNINGS HAS BEEN SURRENDERED, A CHARGE
WILL NOT BE ASSESSED AGAINST PREMIUM PAYMENTS RECEIVED MORE THAN SEVEN YEARS
PRIOR TO SURRENDER, BUT WILL BE ASSESSED AGAINST PREMIUM PAYMENTS RECEIVED LESS
THAN SEVEN YEARS PRIOR TO SURRENDER. FOR THIS PURPOSE, PREMIUM PAYMENTS WILL BE
DEEMED TO BE SURRENDERED IN THE ORDER IN WHICH THEY WERE RECEIVED.
THE CHARGE IS A PERCENTAGE OF THE AMOUNT SURRENDERED (NOT TO EXCEED THE
AGGREGATE AMOUNT OF THE PREMIUM PAYMENTS MADE) AND EQUALS:
LENGTH OF TIME FROM PREMIUM PAYMENT
CHARGE (NUMBER OF YEARS)
6% 1
6% 2
5% 3
5% 4
4% 5
3% 6
2% 7
0% 8 AND THEREAFTER
NO CONTINGENT DEFERRED SALES CHARGES WILL BE ASSESSED IN THE EVENT THE CONTRACT
TERMINATES DUE TO THE DEATH OF THE ANNUITANT OR CONTRACT OWNER (AS APPLICABLE),
OR IF CONTRACT VALUES ARE APPLIED TO AN ANNUITY OPTION PROVIDED FOR UNDER THIS
CONTRACT (PROVIDED HOWEVER, ANY SURRENDER OUT OF OPTION 4 WILL BE SUBJECT TO
CONTINGENT DEFERRED SALES CHARGES, IF APPLICABLE) OR UPON THE EXERCISE OF THE
ANNUAL WITHDRAWAL AMOUNT.
Page 3 (Continued)
<PAGE>
FUND OPTIONS
THE INITIAL PREMIUM PAYMENT WILL BE ALLOCATED AS SPECIFIED IN YOUR APPLICATION.
THE SAME ALLOCATION WILL BE MADE FOR SUBSEQUENT PREMIUM PAYMENTS UNLESS YOU
CHANGE THE ALLOCATION OR, AT THE TIME OF A PREMIUM PAYMENT, YOU INSTRUCT US TO
ALLOCATE THAT PAYMENT DIFFERENTLY.
SEPARATE ACCOUNT: PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT TWO
SUB-ACCOUNT BASED ON:
ADVISERS FUND HVA ADVISERS FUND, INC.
STOCK FUND HVA STOCK FUND, INC.
AGGRESSIVE GROWTH FUND HVA AGGRESSIVE GROWTH FUND, INC.
INTERNATIONAL OPPORTUNITIES FUND HARTFORD INTERNATIONAL OPPORTUNITIES
FUND, INC.
DIVIDEND AND GROWTH FUND HARTFORD DIVIDEND AND GROWTH FUND, INC.
INDEX FUND HARTFORD INDEX FUND, INC.
GNMA/MORTGAGE SECURITIES FUND HARTFORD GNMA/MORTGAGE SECURITIES
FUND, INC.
BOND/DEBT SECURITIES FUND HVA BOND/DEBT SECURITIES FUND, INC.
MONEY MARKET FUND HVA MONEY MARKET FUND, INC.
OR OTHER FUNDS AS MAY BE MADE AVAILABLE FROM TIME TO TIME.
Page 3 (Continued)
<PAGE>
DEFINITION OF ACCOUNT - Any of the Sub-Accounts or the Fixed Account.
CERTAIN TERMS
ACCUMULATION UNIT - An accounting unit of measure used to
calculate the value of a Sub-Account of this contract before
annuity payments begin.
ADMINISTRATIVE OFFICE OF THE COMPANY - Currently located at
200 Hopmeadow St., Simsbury, Ct. All correspondence concerning
this contract should be sent to our mailing address at P.O.
Box 2999, Attn: Individual Annuity Operations, Hartford, CT
06104-2999.
ANNUAL WITHDRAWAL AMOUNT - The amount that can be withdrawn in
any Contract Year prior to incurring surrender charges.
ANNUITANT - The person on whose life this contract is issued.
ANNUITY COMMENCEMENT DATE - The date on which annuity payments
are to begin as described under Settlement Provisions in this
contract.
ANNUITY UNIT - An accounting unit of measure used to calculate
the amount of annuity payments under the variable annuity
option.
BENEFICIARY - The person entitled to receive benefits as per
the terms of the contract in case of the death of the Contract
Owner or Annuitant, as applicable.
COMPANY - The ITT Hartford Life and Annuity Insurance Company.
CONTINGENT ANNUITANT - The person so designated by the
Contract Owner who, upon the Annuitant's death, prior to the
Annuity Commencement Date, becomes the Annuitant.
CONTRACT ANNIVERSARY - An anniversary of the Contract Date.
Similarly, Contract Years are measured from the Contract Date.
The Contract Date is shown on Page 3.
CONTRACT MAINTENANCE FEE - An amount which is deducted from
the value of the contract at the end of the Contract Year or
on the date of surrender of this contract, if earlier.
CONTRACT OWNER - The owner(s) of the contract.
CONTRACT VALUE - The value of the Sub-Accounts plus the value
of the Fixed Account on any day.
DATE OF ISSUE - The date on which an Account is established
for the Contract Owner by the Company.
DOLLAR COST AVERAGING - Contract Owner initiated systematic
transfers from one or more Accounts to any other available
Sub-Accounts.
DUE PROOF OF DEATH - A certified copy of the death
certificate, an order of a court of competent jurisdiction, a
statement from a physician who attended the deceased, or any
other proof acceptable to the Company.
FIXED ACCOUNT - Part of the Company's General Account to which
all or a portion of the Contract Value may be allocated.
Page 4
<PAGE>
DEFINITION OF FUND(S) - Currently the Funds specified on Page 3 or any other
CERTAIN TERMS Fund(s) that may be added by the Company.
(CONTINUED)
GENERAL ACCOUNT - All assets of the Company other than those
allocated to the Separate Accounts of the Company.
MAXIMUM ANNIVERSARY VALUE - A value used in determining the
death benefit. It is based on a series of calculations of
Account Values on Contract Anniversaries, premium payments and
partial surrenders.
As of the date of death, the Company will calculate an
Anniversary Value for each Contract Anniversary prior to the
deceased's attained age 81. The Anniversary Value is equal to
the Account Value on a Contract Anniversary, increased by the
dollar amount of any premium payments made since that
anniversary and reduced by the dollar amount of any partial
surrenders since that anniversary. The Maximum Anniversary
Value is equal to the greatest Anniversary Value attained from
this series of calculations.
PREMIUM TAX - The amount of tax, if any, charged by a federal,
state or municipal entity on premium payments or Contract
Values.
SEPARATE ACCOUNT - An Account established by the Company to
separate the assets funding the variable benefits for the
class of contracts to which this contract belongs from the
other assets of the Company. The assets in the Separate
Account are not chargeable with liabilities arising out of any
other business the Company may conduct. The Separate Account
and the Funds, which are the underlying securities of the
Separate Account, are listed on the Contract Specifications on
Page 3 of this contract.
SUB-ACCOUNT - The subdivisions of the Separate Account which
are used to determine how the Contract Owner's Account is
allocated between the Funds.
TERMINATION VALUE - The value of the contract upon
termination, as described in the section of the contract
captioned "Termination Provisions."
VALUATION DAY - Every day the New York Stock Exchange is open
for trading.
PREMIUM PREMIUM PAYMENTS
PAYMENTS
Premium payments are payable at the Administrative Office of
the Company. Payments may be made by check payable to
ITT Hartford Life and Annuity Insurance Company or by any
other method which the Company deems acceptable.
The Initial Premium Payment is shown on Page 3. This is a
flexible premium annuity. Additional payments may be accepted
by the Company. The additional payments must be at least equal
to the minimum subsequent premium payment shown on Page 3.
ALLOCATION OF PREMIUM PAYMENTS
The Contract Owner shall specify that portion of any premium
payment to be allocated to each Account, provided, however,
that the minimum allocation to any Account may not be less
than the Company's minimum amount then in effect.
Page 5
<PAGE>
PREMIUM The Contract Owner may transfer Contract Values held in the
PAYMENTS Accounts into other Accounts; however, the Company reserves
(CONTINUED) the right to limit the number of transfers to no more
frequently than 12 per Contract Year with no two transfers
being made on consecutive Valuation Days. Subject to the
following two paragraphs, any such limitations will apply to
all Contract Owners.
The right to reallocate Contract Values between the Accounts
is subject to modification if the Company determines, in its
sole opinion, that the exercise of that right by one or more
Contract Owners is, or would be, to the disadvantage of other
Contract Owners. Any modification could be applied to
transfers to or from some or all of the 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 Contract Owner, or limiting the dollar
amount that may be transferred between the Accounts by a
Contract Owner at any one time. Such restrictions may be
applied in any manner reasonably designed to prevent any use
of the transfer right which is considered by the Company to be
to the disadvantage of other Contract Owners.
The maximum amount transferable from the Fixed Account during
any Contract Year is the greater of 30% of the Fixed Account
balance as of the last Contract Anniversary or the greatest of
any prior transfer from the Fixed Account. This limitation
does not apply to Dollar Cost Averaging. However, if any
interest rate is renewed at a rate at least one percentage
point less than the previous rate, the Contract Owner may
elect to transfer up to 100% of the Funds receiving that
reduced rate within 60 days of notification of the interest
rate decrease. Transfers may not be made from the Sub-Accounts
into the Fixed Account for the six-month period following any
transfer from the Fixed Account into the other Sub-Accounts.
The Company reserves the right to defer transfers from the
Fixed Account for up to six months from the date of request.
CONTRACT ANNUITANT, CONTINGENT ANNUITANT, CONTRACT OWNER
CONTROL
PROVISIONS The Annuitant may not be changed.
The designations of Contract Owner and Contingent Annuitant
will remain in effect until changed by the Contract Owner.
Changes in the designation of the Contract Owner may be made
during the lifetime of the Annuitant by written notice to the
Company. Changes in the designation of Contingent Annuitant
may be made at any time prior to the Annuity Commencement Date
by written notice to the Company. Notwithstanding the
foregoing, if no Contingent Annuitant has been named and the
Contract Owner/Annuitant's spouse is the Beneficiary, it will
be assumed that the Contract Owner/Annuitant's spouse is the
Contingent Annuitant.
The Contract Owner has the sole power to exercise all the
rights, options and privileges granted by this contract or
permitted by the Company and to agree with the Company to any
change in or amendment to the contract. The rights of the
Contract Owner shall be subject to the rights of any assignee
of record with the Company and of any irrevocably designated
Beneficiary. In the case of joint Contract Owners, each
Contract Owner alone may exercise all rights, options and
privileges, except with respect to the Termination and Partial
Surrender/Annual Withdrawal Amount Provisions and change of
ownership.
Page 6
<PAGE>
CONTRACT BENEFICIARY
CONTROL
PROVISIONS The Designated Beneficiary will remain in effect until
(Continued) changed by the Contract Owner. Changes in the Designated
Beneficiary may be made during the lifetime of the
Annuitant by written notice to the Administrative Office of
the Company. If the Designated Beneficiary has been designated
irrevocably, however, such designation cannot be changed or
revoked without such Beneficiary's written consent. Upon
receipt of such notice and written consent, if required, at
the Administrative Office of the Company, the new designation
will take effect as of the date the notice is signed, whether
or not the Annuitant or Contract Owner is alive at the time of
receipt of such notice. The change will be subject to any
payments made or other action taken by the Company before the
receipt of the notice.
In the event of the death of the Annuitant when there is no
surviving Contingent Annuitant, the Beneficiary will be as
follows. If the death of the Annuitant occurs prior to the
Annuity Commencement Date, the Beneficiary shall be the
surviving Contract Owner, or joint Contract Owners, if
applicable, notwithstanding that the Designated Beneficiary
may be different. Otherwise, the Beneficiary will be the
Designated Beneficiary then in effect. If the Annuitant is the
sole Contract Owner and there is no Designated Beneficiary in
effect, the Annuitant's estate will be the Beneficiary.
In the event of the death of a Contract Owner prior to the
Annuity Commencement Date, the Beneficiary will be as follows.
If the owner was the sole Contract Owner, the Beneficiary
shall be the Designated Beneficiary then in effect. If no
Beneficiary designation is in effect or if the Designated
Beneficiary has predeceased the Contract Owner, the Contract
Owner's estate shall be the Beneficiary. At the first death of
a joint Contract Owner prior to the Annuity Commencement Date,
the Beneficiary shall be the surviving Contract Owner
notwithstanding that the Designated Beneficiary may be
different.
GENERAL THE CONTRACT
PROVISIONS
This contract constitutes the entire contract.
MODIFICATION
No modification of this contract shall be made except over the
signature of the President, a Vice President, a Secretary or
an Assistant Secretary of the Company.
The Company reserves the right to modify the contract, but
only 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 the
Company is subject; (ii) is necessary to assure continued
qualification of the contract under the Internal Revenue Code
or other federal or state laws relating to retirement
annuities or annuity contracts; (iii) is necessary to reflect
a change in the operation of the Separate Account or the Sub-
Account(s); (iv) provides additional Account options; or (v)
withdraws Account options. In the event of any such
modification, the Company will provide notice to the Contract
Owner, or to the payee(s) during the annuity period. The
Company may also make appropriate endorsement in the Contract
to reflect such modification.
Page 7
<PAGE>
GENERAL MINIMUM VALUE STATEMENT
PROVISIONS
(CONTINUED) Any Termination Values, death benefits or settlement
provisions available under this contract equal or exceed those
required by the state in which the contract is delivered.
NON-PARTICIPATION
This contract does not share in the surplus earnings of the
Company. That portion of the assets of the Separate Account
equal to the reserves and other contract liabilities of the
Separate Account shall not be chargeable with liabilities
arising out of any other business the Company may conduct.
MISSTATEMENT OF AGE AND SEX
If the age or sex of the Annuitant has been misstated, the
amount of the annuity payable by the Company shall be that
provided by that portion of the amounts allocated to effect
such annuity on the basis of the corrected information without
changing the date of the first payment of such annuity. Any
underpayments by the Company shall be made up immediately and
any overpayments shall be charged against future amounts
becoming payable.
If the age of the Annuitant or Contract Owner has been
misstated, the amount of any death benefit payable shall be
determined based upon the correct age of the Annuitant or
Contract Owner.
INCONTESTABILITY
We cannot contest this Contract.
REPORTS TO THE CONTRACT OWNER
There shall be furnished to each Contract Owner copies of any
shareholder reports of the Funds and of any other notices,
reports or documents required by law to be delivered to
Contract Owners. Annually, a statement of the Contract Value
is sent to the Contract Owner.
VOTING RIGHTS
The Company shall notify the Contract Owner of any Fund
shareholder's meetings at which the shares held for the
Contract Owner's Account may be voted and shall also send
proxy materials and a form of instruction by means of which
the Contract Owner can instruct the Company with respect to
the voting of the shares held for the Contract Owner's
Account. In connection with the voting of Fund shares held by
it, the Company shall arrange for the handling and tallying of
proxies received from Contract Owners. The Company will vote
the Fund shares held by it in accordance with the instructions
received from the Contract Owners having the right to give
voting instructions. If a Contract Owner desires to attend any
meeting which shares held for the Contract Owner's benefit may
be voted, the Contract Owner may request the Company to
furnish a proxy or otherwise arrange for the exercise of
voting rights with respect to the Fund shares held for such
Contract Owner's Account.
Page 8
<PAGE>
GENERAL In the event that the Contract Owner gives no
PROVISIONS instructions or leaves the manner of voting
(CONTINUED) discretionary, the Company will vote such shares of the
appropriate Fund in the same proportion as shares of that Fund
for which instructions have been received. Also, the Company
will vote the Fund Shares in this proportionate manner which
are held by the Company for its own Account. During the
annuity period under a contract the number of votes will
decrease as the assets held to fund annuity benefits decrease.
SUBSTITUTION
The Company reserves the right to substitute the shares of any
other registered investment company for the shares of any Fund
already purchased or to be purchased in the future by the
Separate Account provided that the substitution has been
approved by the Securities and Exchange Commission.
CHANGE IN THE OPERATION OF THE SEPARATE ACCOUNT
At the Company's election and subject to any necessary vote by
persons having the right to give instructions with respect to
the voting of the Fund shares held by the Sub-Accounts, the
Variable Account may be operated as a management company under
the Investment Company Act of 1940 or it may be deregistered
under the Investment Company Act of 1940 in the event
registration is no longer required. Deregistration of the
Variable Account requires an order by the Securities and
Exchange Commission.
PROOF OF SURVIVAL
The payment of any annuity benefit will be subject to evidence
that the Annuitant is alive on the date such payment is
otherwise due.
VALUATION NET PREMIUM PAYMENTS
PROVISIONS
The net premium payment is equal to the premium payment minus
any applicable Premium Taxes. The net premium payment is
applied to provide Fixed Account values or Sub-Account
Accumulation Units with respect to the Sub-Account(s) selected
by the Contract Owner.
The number of Accumulation Units credited to each Sub-Account
is determined by dividing the net premium payment allocated to
a Sub-Account by the dollar value of one Accumulation Unit for
such Sub-Account, next computed after the receipt of a premium
payment by the Company. The number of Accumulation Units so
determined will not be affected by any subsequent change in
the value of such Accumulation Units. The Accumulation Unit
value in any Sub-Account may increase or decrease from day to
day as described below.
The Company will determine the value of the Fixed Account by
crediting interest to amounts allocated to the Fixed Account.
The minimum Fixed Account interest rate is the rate shown on
Page 3, compounded annually. The Company, at its discretion,
may credit interest rates greater than the minimum Fixed
Account interest rate.
Page 9
<PAGE>
VALUATION NET INVESTMENT FACTOR
PROVISIONS
(CONTINUED) The net investment factor for each of the Sub-Accounts is
equal to the net asset value per share of the corresponding
Fund at the end of the valuation period (plus the per share
amount of any unpaid dividends or capital gains by that Fund)
divided by the net asset value per share of the corresponding
Fund at the beginning of the valuation period and subtracting
from that amount the mortality and expense risk charge and the
administration charge shown on Page 3. The General Account net
investment factor is guaranteed to be equal to the Minimum
Fixed Account Interest Rate shown on Page 3.
ACCUMULATION UNIT VALUE
The Accumulation Unit Value for each Sub-Account will vary to
reflect the investment experience of the applicable Fund and
will be determined on each Valuation Day by multiplying the
Accumulation Unit Value of the particular Sub-Account on the
preceding Valuation Day by the net investment factor for that
Sub-Account for the valuation period then ended. The value of
the Sub-Account on each Valuation Day is then determined by
multiplying the number of Accumulation Units in that Sub-
Account by the Accumulation Unit Value on that Valuation Day.
ANNUITY UNIT VALUE
The value of an Annuity Unit for each Sub-Account of the
Separate Account will vary to reflect the investment
experience of the applicable Funds and will be determined by
multiplying the value of the Annuity Unit for that Sub-Account
on the preceding day by the product of (a) the net investment
factor for that Sub-Account for the day for which the Annuity
Unit value is being calculated, and (b) 0.999866, which is a
factor that neutralizes an assumed interest rate of 5%.
CONTRACT MAINTENANCE FEE
During each year that this contract is in force prior to the
Annuity Commencement Date, a fee will be deducted from the
contract at the end of the Contract Year or on the date of
surrender of this contract, if earlier. The fee will be
charged against the Contract Value by reducing the Fixed
Account value and, with respect to the Sub-Accounts, the
number of Accumulation Units held on that date on a pro-rata
basis with respect to each active Account.
The number of Accumulation Units deducted from the Sub-Account
is determined by dividing the pro-rata portion of the Contract
Maintenance Fee applicable to that Sub-Account, by the value
of an Accumulation Unit for the Sub-Account at the end of the
Contract Year, or on the date of surrender, as applicable.
TERMINATION TERMINATION PRIOR TO THE ANNUITY COMMENCEMENT DATE
PROVISIONS
FULL SURRENDER
At any time prior to the Annuity Commencement Date, the
Contract Owner has the right to terminate the contract by
submitting a written request to the Administrative Office of
the Company. In such event, the Termination Value of the
contract may be taken in the form of a cash settlement.
Page 10
<PAGE>
TERMINATION The Termination Value of the contract is equal
PROVISIONS to the Contract Value less:
(CONTINUED)
(a) any applicable Premium Taxes not previously deducted;
(b) the Contract Maintenance Fee as specified on Page 3; and
(c) any applicable contingent deferred sales charges as
specified on Page 3.
The Termination Value provided by the contract is not less
than the minimum values required by the insurance laws of the
state in which this contract is issued.
PARTIAL SURRENDERS/ANNUAL WITHDRAWAL AMOUNT
The Contract Owner may request, in writing, a partial
surrender of Contract Values at any time prior to the Annuity
Commencement Date provided the Contract Value remaining after
the surrender is at least equal to the Company's minimum
amount rules then in effect. If the remaining Contract Value
following such surrender is less than the Company's minimum
amount rules, the Company will terminate the contract and pay
the Termination Value.
The contingent deferred sales charge will be assessed against
any Contract Values surrendered as described on Page 3.
However, on a noncumulative basis, the Contract Owner may make
partial surrenders during any Contract Year, up to the Annual
Withdrawal Amount shown on Page 3 and the contingent deferred
sales charge will not be assessed against such amounts.
Surrender of Contract Values in excess of the Withdrawal
Amount and additional surrenders made in any Contract Year
will be subject to the contingent deferred sales charge, as
described on Page 3, if applicable.
For Federal tax purposes, any surrenders will be deemed to be
first from earnings, to the extent that they exist, and then
from the premium payments.
TERMINATION AFTER THE ANNUITY COMMENCEMENT DATE
This contract may not be surrendered for its Termination Value
after the commencement of annuity payments, except with
respect to Options Four and Five.
PAYMENT ON SURRENDER - DEFERRAL OF PAYMENT
Payment on any request for surrender will be made as soon as
possible and, with respect to the Contract Values in the Sub-
Accounts, no later than seven days after the written request
is received by the Company. However, such payment may be
subject to postponement:
(a) for any period during which the New York Stock Exchange
is closed or during which trading on the New York Stock
Exchange is restricted;
(b) for any period during which an emergency exists as a
result of which (i) disposal of the securities held in
the Sub-Accounts is not reasonably practicable, or (ii)
it is not reasonably practicable for the value of the net
assets of the Separate Account to be fairly determined;
and
(c) for such other periods as the Securities and Exchange
Commission may, by order, permit for the protection of
the Contract Owners. The conditions under which trading
shall be deemed to be restricted or any emergency shall
be deemed to exist shall be determined by rules and
regulations of the Securities and Exchange Commission.
Page 11
<PAGE>
TERMINATION The Company may defer payment of any amounts
PROVISIONS from the Fixed Account for up to six months
(CONTINUED) from the date of the request to surrender. If the Company
defers payment for more than 30 days, the Company will pay
interest of at least 3% per annum on the amount deferred.
DEATH BENEFIT
If the Annuitant dies before the Annuity Commencement Date and
there is no designated Contingent Annuitant surviving, or if
the Contract Owner dies before the Annuity Commencement Date,
the Death Benefit will be payable as determined under the
Contract Control Provisions. The Death Benefit is calculated
as of the date the Company receives written notification of
Due Proof of Death at the Administrative Office of the
Company.
The Death Benefit will be the greatest of:
(a) The Contract Value on the date of receipt of Due Proof of
Death at the Administrative Office of the Company; or
(b) The Maximum Anniversary Value as described on Page 5 of
this Contract; or
(c) 100% of all premium payments made under the Contract,
reduced by the dollar amount of any partial surrenders
since the Date of Issue.
The Death Benefit may be taken in one sum or under any of the
settlement options then being offered by the Company provided,
however, that, in the event of a Contract Owner's death, any
settlement option must provide that any amount payable as a
death benefit will commence upon notification of Due Proof of
Death and be completed within five years of the date of death
or, if the benefit is payable over a period not extending
beyond the life expectancy of the Beneficiary or over the life
of the Beneficiary, such distribution must commence within one
year of the date of death. Notwithstanding the foregoing, in
the event of the Contract Owner's death where the sole
Beneficiary is the spouse of the Contract Owner and the
Annuitant or Contingent Annuitant is living, such spouse may
elect, in lieu of receiving the death benefit, to be treated
as the Contract Owner.
SETTLEMENT When payment is taken in one sum, payment will be made within
PROVISIONS 7 days after the date Due Proof of Death is received, except
when the Company is permitted to defer such payment under the
Investment Company Act of 1940.
ANNUITY COMMENCEMENT DATE
The Annuity Commencement Date is shown on Page 3. This date
may be changed by the Contract Owner with 30 days advance
written notification, and may be the fifteenth day of any month
before or including the month of the Annuitant's 90th
birthday. In the event the Contingent Annuitant becomes the
Annuitant and in the absence of a written election to the
contrary, the Annuity Commencement Date will be the fifteenth
day of the month coincident with or next following the
Annuitant's 90th birthday.
Page 12
<PAGE>
SETTLEMENT ELECTION OF ANNUITY OPTION
PROVISIONS
(CONTINUED) The Contract Owner may elect to have the Termination Value,
without deduction for any contingent deferred sales charge,
applied on the Annuity Commencement Date under any one of the
annuity options described below except the fifth option or
under any of the settlement options then being offered by the
Company. The Termination Value is determined on the basis of
the Accumulation Unit value of each Sub-Account and the value
of the Fixed Account no later than the fifth Valuation Day
preceding the date annuity payments are to commence.
DATE OF PAYMENT
The first payment under any option shall be made on the
fifteenth day of the month immediately following approval of
claim for settlement. Subsequent payments shall be made on the
fifteenth day of each subsequent month in accordance with the
manner of payment selected.
DEATH OF THE ANNUITANT
In the event of the death of the Annuitant while receiving
annuity payments, the present value of any remaining payments
will be paid in one sum to the Beneficiary unless other
provisions shall have been made and approved by the Company.
If the Annuitant was also the Contract Owner, any method of
distribution must provide that any amount payable as a death
benefit will be distributed at least as rapidly as under the
method of distribution in effect at the Contract Owner's
death. In the case of the Separate Account calculations, for
such present value of the remaining payments the Company will
assume a net investment rate of 5% per annum. The Annuity Unit
value on the date of receipt of Due Proof of Death shall be
used for the purpose of determining such present value. In the
case of the General Account the net investment rate assumed
will be the rate used by the Company to determine the amount
of each certain payment.
ALLOCATION OF ANNUITY
The person electing an annuity option may further elect to
have the value of the contract applied to provide a variable
annuity, a fixed dollar annuity a or combination of both. Once
very 3 months, following the commencement of annuity payments,
the Contract Owner may elect, in writing, to transfer among
any Sub-Account(s) on which variable annuity payments are
based. No transfers may be made between the Sub-Accounts and
the General Account.
If no election is made to the contrary, the value of each Sub-
Account shall be applied to provide a variable annuity based
thereon, and the value of the Fixed Account shall be applied
to provide a fixed dollar annuity.
VARIABLE ANNUITY AND FIXED DOLLAR ANNUITY
VARIABLE ANNUITY - A variable annuity is an annuity with
payments increasing or decreasing in amount in accordance
with the net investment results of the Sub-Account(s) of the
Separate Account (as described in the Valuation Provisions).
After the first monthly payment for a variable annuity has
been determined in accordance with the provisions of this
contract, a number of Sub-Account Annuity Units is determined
by dividing that first monthly payment by the appropriate Sub-
Account Annuity Unit value on the effective date of the
annuity payments.
Page 13
<PAGE>
SETTLEMENT Once variable annuity payments have begun, the number
PROVISIONS of Annuity Units remains fixed with respect to a particular
(CONTINUED) Sub-Account. If the Contract Owner elects that continuing
annuity payments be based on a different Sub-Account, the
number will change effective with that election but will
remain fixed in number following such election. The method of
calculating the unit value is described under Valuation
Provisions.
The dollar amount of the second and subsequent variable
annuity payments is not predetermined and may increase or
decrease from month to month. The actual amount of each
variable annuity payment after the first is determined by
multiplying the number of Sub-Account Annuity Units by the
Sub-Account Annuity Unit value as described in the Valuation
Provisions. The Sub-Account Annuity Unit value will be
determined no earlier than the fifth Valuation Day preceding
the date the annuity payment is due.
The Company guarantees that the dollar amount of variable
annuity payments will not be adversely affected by variations
in the expense results and in the actual mortality experience
of payees from the mortality assumptions, including any age
adjustment, used in determining the first monthly payment.
Fixed Dollar Annuity - A fixed dollar annuity is an annuity
with payments which remain fixed as to dollar amount
throughout the payment period.
ANNUITY OPTIONS
FIRST OPTION - Life Annuity - An annuity payable monthly
during the lifetime of the payee, ceasing with the last
payment due prior to the death of the payee.
SECOND OPTION - Life Annuity with 120, 180 or 240 Monthly
Payments Certain - An annuity providing monthly income to the
payee for a fixed period of 120 months, 180 months, or 240
months (as selected), and for as long thereafter as the
payee shall live.
THIRD OPTION - Joint and Last Survivor Life Annuity - An
annuity payable monthly during the joint lifetime of the payee
and a secondary payee, and thereafter during the remaining
lifetime of the survivor, ceasing with the last payment prior
to the death of the survivor.
FOURTH OPTION - Payment for a Designated Period - An amount
payable monthly for the number of years selected which may be
from 5 to 30 years. The remaining balance of proceeds in the
General Account or the Separate Account for any day is equal
to the balance on the previous day decreased by the amount of
any installment paid on that day and the remainder multiplied
by the applicable net investment factor for the day as
described in the valuation provisions. Any surrender out of
this option will be subject to contingent deferred sales
charges, as described on Page 3.
If this contract is issued to qualify under Section 401, 403,
or 408 of the Internal Revenue Code of 1954 as amended, the
fourth option shall be available only if the guaranteed
payment period is less than the life expectancy of the
Annuitant at the time the option becomes effective. Such life
expectancy will be computed under the mortality table then in
use by the Company.
Page 14
<PAGE>
<TABLE>
<CAPTION>
<S><C>
Application for U.S.P.S.-First Class or Express-Mail to: Private Express Mail Carriers-Mo
Variable Annuity Contract ITT Hartford 200 Hopmeadow Street
Attn: IAO-PCM Simsbury, CT 06089
Hartford Life Insurance Company P.O. Box 2999
Hartford, CT 06104-2999
[ITT HARTFORD LOGO]
- - ------------------------------------------------------------------------------------------------------------------------------------
--- -- ----
1. Contract Owner James Scott SS#/TIN 123 45 6789
------------------------------------ --- -- ----
If no Annuitant is Name -- -- --
specified in Section 3, Date of Birth 09 10 58
the Contract Owner 1 Main Street -- -- --
will be the Annuitant. ------------------------------------ month day year
Street Address
Hartford CT 06106
------------------------------------ /X/ Male / / Female / / Trustee
City State Zip
- - ------------------------------------------------------------------------------------------------------------------------------------
2. Joint Contract ------------------------------------
Owner (if any) Name
--- -- ----
------------------------------------ SS#/TIN
Relationship to Contract Owner / / Male / / Female --- -- ----
-- -- --
Date of Birth
-- -- --
month day year
- - ------------------------------------------------------------------------------------------------------------------------------------
3. Annuitant ------------------------------------ --- -- ----
Name SS#/TIN
Complete only if --- -- ----
different from the ------------------------------------
contract owner in Street Address -- -- --
Section 1. Date of Birth
------------------------------------ -- -- --
City State Zip / / Male / / Female
month day year
- - ------------------------------------------------------------------------------------------------------------------------------------
4. Contingent Annuitant Paul Scott Brother
------------------------------------------------------------------------------------------------------
Name Relationship to Owner
- - ------------------------------------------------------------------------------------------------------------------------------------
5. Beneficiary (ies) Ann Scott Wife 100%
------------------------------------------------------------------------------------------------------
Designated Name(s) Relationship to Contract Owner Percentage
------------------------------------------------------------------------------------------------------
Contingent Name(s) Relationship to Contract Owner Percentage
- - ------------------------------------------------------------------------------------------------------------------------------------
6. Tax Qualified Plans A. / / Initial / / Transfer / / Rollover
Check the appropriate B. / / IRA / / 403(b) / / 401(k) / / 401(a) / / SEP-IRA / / Other
box(es) in A, B, and C. --------------------
C. / / Individual Accounts / / Unallocated Plan Account
Tax Year for which initial contribution is being made:
-------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
7. Fund Selection Please check selected fund(s) and note whole percentage allocations.
The initial premium /X/ PCM Voyager Fund 50 % / / PCM High Yield Fund %
will be allocated as ---- ----
selected here. If / / PCM Global Growth Fund % / / PCM Diversified Income Fund %
Dollar Cost Averaging, ---- ----
complete the DCA / / PCM Global Asset Allocation Fund % / / PCM U.S. Gov. & High Quality Bond %
enrollment section ---- Fund ----
on the reverse side. / / PCM Growth & Income Fund % / / PCM Money Market Fund %
---- ----
/X/ PCM Utilities Growth & Income Fund 50 % / / PCM Fixed Account %
---- ----
/ / Other %
-------------------- ----
Make checks payable to: ITT Hartford Life Insurance Companies Initial $ 20,000 Total 100 %
-------- ----
Monies remitted via /X/ check / / wire / / 1035 / / Qualified Transfer
- - ------------------------------------------------------------------------------------------------------------------------------------
8. Special Remarks
- - ------------------------------------------------------------------------------------------------------------------------------------
Will the annuity applied for replace one or more existing annuity or life insurance contracts? / / Yes /X/ No (If yes, explain
Have you purchased another ITT Hartford Annuity during the previous 12 months? / / Yes /X/ No in Special
Remarks)
I hereby represent my answers to the above questions to be true and correct to the best of my knowledge and belief. I UNDERSTAND
THAT ANNUITY PAYMENTS OR SURRENDER VALUES, WHEN BASED UPON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND NOT
GUARANTEED AS TO A FIXED DOLLAR AMOUNT.
/X/ RECEIPT OF A VARIABLE ANNUITY AND FUND PROSPECTUS IS HEREBY ACKNOWLEDGED. If not checked, the appropriate prospectus will be
mailed to you.
SIGNED AT Hartford, CT ON 2-4-94 /s/ James Scott
------------------------ ---------- ------------------------------------------------------------------
City, State Date (Contract Owner's signature)
Do you, as Agent, have reason to believe the contract applied
for will replace existing annuities or insurance? / / Yes /X/ No ------------------------------------------------------------------
(Joint Contract Owner's signature)
LICENSED
AGENT /s/ John Adams Broker/Dealer Paine Webber
--------------------------------- ----------------------------------------------------
(signature)
John Adams Address Financial Plaza, Hartford, CT
--------------------------------- -----------------------------------------------------------
(print)
Telephone # (203) 547-5000
--------------------------------- -------------------------------------------------------
License I.D. # (Florida Agents Only)
</TABLE>
<PAGE>
Exhibit 6(a)
RESTATED CERTIFICATE OF INCORPORATION
HARTFORD LIFE INSURANCE COMPANY
This Restated Certificate of Incorporation gives effect to the amendment of
the Certificate of Incorporation of the corporation and otherwise purports
merely to restate all those provisions already in effect. This Restated
Certificate of Incorporation has been adopted by the Board of Directors and by
the sole shareholder.
Section 1. The name of the corporation is Hartford Life Insurance
Company and it shall have all the powers granted by the general
statutes, as now enacted or hereinafter amended to corporations formed
under the Stock Corporation Act.
Section 2. The corporation shall have the purposes and powers to write
any and all forms of insurance which any other corporation now or
hereafter chartered by Connecticut and empowered to do an insurance
business may now or hereafter may lawfully do; to accept and to cede
reinsurance; to issue policies and contracts for any kind or
combinations of kinds of insurance; to issue policies or contracts
either with or without participation in profits; to acquire and hold any
or all of the shares or other securities of any insurance corporation;
and to engage in any lawful act or activity for which corporations may
be formed under the Stock Corporation Act. The corporation is authorized
to exercise the powers herein granted in any state, territory or
jurisdiction of the United States or in any foreign country.
Section 3. The capital with which the corporation shall commence
business shall be an amount not less than one thousand dollars. The
authorized capital shall be two million five hundred thousand dollars
divided into one thousand shares of common capital stock with a par
value of twenty-five hundred dollars each.
We hereby declare, under the penalties of false statement that the
statements made in the foregoing Certificate are true.
Dated: February 10, 1982 HARTFORD LIFE INSURANCE COMPANY
By: /s/ Robert B. Goode, Jr.
--------------------------
Attest:
/s/ Wm. A. McMahon
- - --------------------------------------
<PAGE>
BYLAWS
OF THE
HARTFORD LIFE INSURANCE COMPANY
As passed and effective
February 13, 1978
and amended on
July 13, 1978
January 5, 1979
and
February 29, 1984
<PAGE>
ARTICLE I
Name - Home Office
Section 1. This corporation shall be named HARTFORD LIFE
INSURANCE COMPANY.
Section 2. The principal place of business and Home Office
shall be in the City of Hartford, Connecticut.
ARTICLE II
Stockholders' Meetings - Notice - Quorum - Right to Vote
Section 1. All meetings of the Stockholders shall be held
at the principal business office of the Company unless the Directors
shall otherwise provide and direct.
Section 2. The annual meeting of the Stockholders shall be
held on such day and at such hour as the Board of Directors may
decide. For cause the Board of Directors may postpone or adjourn
such annual meeting to any other time during the year.
Section 3. Special meetings of the Stockholders may be
called by the Board of Directors, the Executive Committee, the
Chairman of the Board, the President or any Vice President.
Section 4. Notice of Stockholders' meetings shall be
mailed to each Stockholder, at his address as it appears on the
records of the Company, at least seven days prior to the meeting.
The notice shall state the place, date and time of the meeting and
shall specify all matters proposed to be acted upon at the meeting.
Section 5. At each annual meeting the Stockholders shall
choose Directors as hereinafter provided.
Section 6. Each Stockholder shall be entitled to one vote
for each share of stock held by him at all meetings of the Company.
Proxies may be authorized by written power of attorney.
Section 7. Holders of one-half of the whole amount of the
stock issued and outstanding shall constitute a quorum.
<PAGE>
-2-
Section 8. Each Stockholder shall be entitled to a
certificate of stock which shall be signed by the President or a
Vice President, and either the Treasurer or an Assistant Treasurer
of the Company, and shall bear the seal of the Company, but such
signatures and seal may be facsimile if permitted by the laws of the
State of Connecticut.
ARTICLE III
DIRECTORS - MEETINGS - QUORUM
Section 1. The property, business and affairs of the
Company shall be managed by a board of not less than three nor more
than twenty Directors, who shall be chosen by ballot at each annual
meeting. Vacancies occurring between annual meetings may be filled
by the Board of Directors by election. Each Director shall hold
office until the next annual meeting of Stockholders and until his
successor is chosen and qualified.
Section 2. Meetings of the Board of Directors may be
called by the direction of the Chairman of the Board, the President,
or any three Directors.
Section 3. Three days' notice of meetings of the Board of
Directors shall be given to each Director, either personally or by
mail or telegraph, at his residence or usual place of business, but
notice may be waived, at any time, in writing.
Section 4. One third of the number of existing
directorships, but not less than two Directors, shall constitute a
quorum.
ARTICLE IV
ELECTION OF OFFICERS - DUTIES OF BOARD OF
DIRECTORS AND EXECUTIVE COMMITTEE
Section 1. The President shall be elected by the Board of
Directors. The Board of Directors may also elect one of its members
to serve as Chairman of the Board of Directors. The Chairman of the
Board, or an individual appointed by him, shall have authority to
appoint all other officers, except as stated herein, including one
or more Vice Presidents and Assistant Vice Presidents, the Treasurer
<PAGE>
-3-
and one or more Associate or Assistant Treasurers, one or more
Secretaries and Assistant Secretaries and such other Officers as the
Chairman of the Board may from time to time designate. All Officers
of the Company shall hold office during the pleasure of the Board of
Directors. The Directors may require any Officer of the Company to
give security for the faithful performance of his duties.
Section 2. The Directors may fill any vacancy among the
officers by election for the unexpired term.
Section 3. The Board of Directors may appoint from its own
number an Executive Committee of not less than five Directors. The
Executive Committee may exercise all powers vested in and conferred
upon the Board of Directors at any time when the Board is not in
session. A majority of the members of said Committee shall
constitute a quorum.
Section 4. Meetings of the Executive Committee shall be
called whenever the Chairman of the Board, the President or a
majority of its members shall request. Forty-eight hours' notice
shall be given of meetings but notice may be waived, at any time, in
writing.
Section 5. The Board of Directors shall annually appoint
from its own number a Finance Committee of not less than three
Directors, whose duties shall be as hereinafter provided.
Section 6. The Board of Directors may, at any time,
appoint such other Committees, not necessarily from its own number,
as it may deem necessary for the proper conduct of the business of
the Company, which Committees shall have only such powers and duties
as are specifically assigned to them by the Board of Directors or
the Executive Committee.
Section 7. The Board of Directors may make contributions,
in such amounts as it determines to be reasonable, for public
welfare or for charitable, scientific or educational purposes,
subject to the limits and restrictions imposed by law and to such
rules and regulations consistent with law as it makes.
ARTICLE V
OFFICERS
Chairman of the Board
Section 1. The Chairman of the Board shall preside at the
meetings of the Board of Directors and the Executive Committee and,
in the absence of the Chairman of the Finance Committee, at the
meetings of the Finance Committee. In the absence or inability of
the Chairman of the Board to so preside, the President shall preside
in his place.
<PAGE>
-4-
President
Section 2. The President, under the supervision and
control of the Chairman of the Board, shall have general charge and
oversight of the business and affairs of the Company. The President
shall preside at the meetings of the Stockholders. He shall be a
member of and shall preside at all meetings of all Committees not
referred to in Section 1 of this ARTICLE except that he may
designate a Chairman for each such other Committee.
Section 3. In the absence or inability of the President to
perform his duties, the Chairman of the Board may designate a Vice
President to exercise the powers and perform the duties of the
President during such absence or inability.
Secretary
Section 4. The Secretary of the Corporation shall keep a
record of all the meetings of the Company, of the Board of Directors
and of the Executive Committee, and he shall discharge all other
duties specifically required of the Secretary by law. The other
Secretaries and Assistant Secretaries shall perform such duties as
may be assigned to them by the Board of Directors or by their senior
officers and any Secretary or Assistant Secretary may affix the seal
of the Company and attest it and the signature of any officer to any
and all instruments.
Treasurer
Section 5. The Treasurer shall keep, or cause to be kept,
full and accurate accounts of the Company. He shall see that the
funds of the Company are disbursed as may be ordered by the Board of
Directors or the Finance Committee. He shall have charge of all
moneys paid to the Company and on deposit to the credit of the
Company or in any other properly authorized name, in such banks or
depositories as may be designated in a manner provided by these
by laws. He shall also discharge all other duties that may be
required of him by law.
Other Officers
Section 6. The other officers shall perform such duties as
may be assigned to them by the President or the Board of Directors.
<PAGE>
-5-
ARTICLE VI
Finance Committee
Section 1. If a Finance Committee is established it shall
be the duty of that committee to supervise the investment of the
funds of the Company in securities in which insurance companies are
permitted by law to invest, and all other matters connected with the
management of investments. If no Finance Committee is established
this duty shall be performed by the Board of Directors.
Section 2. All loans or purchases for the investment and
reinvestment of the funds of the Company shall be submitted for
approval to the Finance Committee, if not specifically approved by
the Board of Directors.
Section 3. Sale or transfer of any stocks or bonds shall
be made upon authorization of the Finance Committee unless
specifically authorized by the Board of Directors.
Section 4. Transfers of stock and registered bonds, deeds,
leases, releases, sales, mortgages chattel or real, assignments or
partial releases of mortgages chattel or real, and in general all
instruments of defeasance of property and all agreements or
contracts affecting the same, except discharges of mortgages and
entries to foreclose the same as hereinafter provided, shall be
authorized by the Finance Committee or the Board of Directors, and
be executed jointly for the Company by two persons, to wit: The
Chairman of the Board, the President or a Vice President, and a
Secretary, the Treasurer or an Assistant Treasurer, but may be
acknowledged and delivered by either one of those executing the
instrument; provided, however, that either a Secretary, the
Treasurer, or an Assistant Treasurer alone, when authorized as
aforesaid, or any person specially authorized by the Finance
Committee as attorney for the Company, may make entry to foreclose
any mortgage, and a Secretary, the Treasurer or an Assistant
Treasurer alone is authorized, without the necessity of further
authority, to discharge by deed or otherwise any mortgage on payment
to the Company of the principal, interest and all charges due.
Section 5. The Finance Committee may fix times and places
for regular meetings. No notice of regular meetings shall be
necessary. Reasonable notice shall be given of special meetings but
the action of a majority of the Finance Committee at any meeting
shall be valid notwithstanding any defect in the notice of such
meeting.
<PAGE>
-6-
Section 6. In the absence of specific authorization from
the Board of Directors or the Finance Committee, the Chairman of the
Board, the President, a Vice President or the Treasurer shall have
the power to vote or execute proxies for voting any shares held by
the Company.
ARTICLE VII
Funds
Section 1. All monies belonging to the Company shall be
deposited to the credit of the Company, or in such other name as the
Finance Committee, the Chairman of the Finance Committee or such
executive officers as are designated by the Board of Directors shall
direct, in such bank or banks as may be designated from time to time
by the Finance Committee, the Chairman of the Finance Committee, or
by such executive officers as are designated by the Board of
Directors. Such monies shall be drawn only on checks or drafts
signed by any two executive officers of the Company, provided that
the Board of Directors may authorize the withdrawal of such monies
by check or draft signed with the facsimile signature of any one or
more executive officers, and provided further, that the Finance
Committee may authorize such alternative methods of withdrawals as
it deems proper.
The Board of Directors, the President, the Chairman of the
Finance Committee, a Vice President, or such executive officers as
are designated by the Board of Directors may authorize withdrawal of
funds by checks or drafts drawn at offices of the Company to be
signed by Managers, General Agents or employees of the Company,
provided that all such checks or drafts shall be signed by two such
authorized persons, except checks or drafts used for the payment of
claims or losses which need be signed by only one such authorized
person, and provided further that the Board of Directors of the
Company or executive officers designated by the Board of Directors
may impose such limitations or restrictions upon the withdrawal of
such funds as it deems proper.
<PAGE>
-7-
ARTICLE VIII
Indemnity of Directors and Officers
Section 1. The Company shall indemnify and hold harmless
each Director and officer now or hereafter serving the Company,
whether or not then in office, from and against any and all claims
and liabilities to which he may be or become subject by reason of
his being or having been a Director or officer of the Company, or of
any other company which he serves as a Director or officer at the
request of the Company, to the extent such is consistent with the
statutory provisions pertaining to indemnification, and shall
provide such further indemnification for legal and/or all other
expenses reasonably incurred in connection with defending against
such claims and liabilities as is consistent with statutory
requirements.
ARTICLE IX
AMENDMENT OF BYLAWS
Section 1. The Directors shall have power to adopt, amend
and repeal such bylaws as may be deemed necessary or appropriate for
the management of the property and affairs of the Company.
Section 2. The Stockholders at any annual or special
meeting may amend or repeal these bylaws or adopt new ones if the
notice of such meeting contains a statement of the proposed
alteration, amendment, repeal or adoption, or the substance thereof.
<PAGE>
2
ARTICLE I
Name - Home Office
Section 1. This corporation shall be named Hartford Life Insurance
Company.
Section 2. The principal place of business and Home Office shall be in
the City of Hartford, Connecticut.
ARTICLE II
Stockholders' Meetings - Notice- Quorum - Right to Vote
Section 1. All meetings of the Stockholders shall be held at the
principal business office of the Company unless the Directors shall otherwise
provide and direct.
Section 2. The annual meeting of the Stockholders shall be held on such
day and at such hour as the Board of Directors may decide. For cause the
Board of Directors may postpone or adjourn such annual meeting to any other
time during the year.
Section 3. Special meetings of the Stockholders may be called by the
Board of Directors, the Executive Committee, the Chairman of the Board, the
President or any Vice President.
Section 4. Notice of Stockholders' meetings shall be mailed to each
Stockholder, at his address as it appears on the records of the Company, at
least seven days prior to the meeting. The notice shall state the place, date
and time of the meeting and shall specify all matters proposed to be acted
upon at the meeting.
Section 5. At each annual meeting the Stockholders shall choose Directors
as hereinafter provided.
Section 6. Each Stockholder shall be entitled to one vote for each share
of stock held by him at all meetings of the Company. Proxies may be
authorized by written power of attorney.
Section 7. Holders of one-half of the whole amount of the stock issued
and outstanding shall constitute a quorum.
<PAGE>
3
Section 8. Each Stockholder shall be entitled to a certificate of stock
which shall be signed by the President or a Vice President, and either the
Treasurer or an Assistant Treasurer of the Company, and shall bear the seal
of the Company, but such signatures and seal may be facsimile if permitted by
the laws of the State of Connecticut.
ARTICLE III
Directors - Meetings - Quorum
Section 1. The property, business and affairs of the Company shall be
managed by a board of not less than three nor more than twenty Directors, who
shall be chosen by ballot at each annual meeting. Vacancies occurring between
annual meetings may be filled by the Board of Directors by election. Each
Director shall hold office until the next annual meeting of Stockholders and
until his successor is chosen and qualified.
Section 2. Meetings of the Board of Directors may be called by the
direction of the Chairman of the Board, the President, or any three Directors.
Section 3. Three days' notice of meetings of the Board of Directors shall
be given to each Director, either personally or by mail or telegraph, at his
residence or usual place of business, but notice may be waived, at any time,
in writing.
Section 4. One third of the number of existing directorships, but not
less than two Directors, shall constitute a quorum.
ARTICLE IV
Election of Officers - Duties of Board of
Directors and Executive Committee
Section 1. The Board of Directors shall annually elect a Chairman of the
Board, a President, a Secretary of the Corporation and a Treasurer. It may
elect such Vice Presidents, other Secretaries, Assistant Secretaries,
Assistant Treasurers and such other officers as it may determine. All
officers of the Company shall hold office during the pleasure of the Board of
Directors.
<PAGE>
4
Section 2. The Directors may fill any vacancy among the officers by
election for the unexpired term.
Section 3. The Board of Directors may appoint from its own number an
Executive Committee of not less than five Directors. The Executive Committee
may exercise all powers vested in and conferred upon the Board of Directors
at any time when the Board is not in session. A majority of the members of
said Committee shall constitute a quorum.
Section 4. Meetings of the Executive Committee shall be called
whenever the Chairman of the Board, the President or a majority of its
members shall request. Forty-eight hours' notice shall be given of meetings
but notice may be waived, at any time, in writing.
Section 5. The Board of Directors may annually appoint from its own number
a Finance Committee of not less than three Directors, whose duties shall be
as hereinafter provided.
Section 6. The Board of Directors may, at any time, appoint such other
Committees, not necessarily from its own number, as it may deem necessary for
the proper conduct of the business of the Company, which Committees shall
have only such powers and duties as are specifically assigned to them by the
Board of Directors or the Executive Committee.
Section 7. the Board of Directors may make contributions, in such amounts
as it determines to be reasonable, for public welfare or for charitable,
scientific or educational purposes, subject to the limits and restrictions
imposed by law and to such rules and regulations consistent with law as it
makes.
ARTICLE V
Officers
Chairman of the Board
Section 1. The Chairman of the Board shall preside at the meetings of the
Board of Directors and the Executive Committee and, in the
<PAGE>
5
absence of the Chairman of the Finance Committee, at the meetings of the
Finance Committee. In the absence or inability of the Chairman of the Board
to so preside, the President shall preside in his place.
President
Section 2. The President, under the supervision and control of the Chairman
of the Board, shall have general charge and oversight of the business and
affairs of the Company. The President shall preside at the meetings of the
Stockholders. He shall be a member of and shall preside at all meetings of
all Committees not referred to in Section 2 of this ARTICLE except that he
may designate a Chairman for each such other Committee.
Section 3. In the absence or inability of the President to perform his
duties, the Chairman of the Board may designate a Vice President to exercise
the powers and perform the duties of the President during such absence or
inability.
Secretary
Section 4. The Secretary of the Corporation shall keep a record of all the
meetings of the Company, of the Board of Directors and of the Executive
Committee, and he shall discharge all other duties specifically required of
the Secretary by law. The other Secretaries and the Assistant Secretaries
shall perform such duties as may be assigned to them by the Board of
Directors or by their senior officers and any Secretary or Assistant Secretary
may affix the seal of the Company and attest it and the signature of any
officer to any and all instruments.
Treasurer
Section 5. The Treasurer shall keep, or cause to be kept, full and accurate
accounts of the Company. He shall see that the funds of the Company are
disbursed as may be ordered by the Board of Directors or the Finance
Committee. He shall have charge of all moneys paid to the Company and on
deposit to the credit of the Company or in any other properly authorized
name, in such banks or depositories as may be designated in a manner provided
by these bylaws. He shall also discharge all other duties that may be required
of him by law.
<PAGE>
6
Other Officers
Section 6. The other officers shall perform such duties as may be assigned
to them by the President or the Board of Directors.
ARTICLE VI
Finance Committee
Section 1. If a Finance Committee is established it shall be the duty of the
committee to supervise the investment of the funds of the Company in
securities in which insurance companies are permitted by law to invest, and
all other matters connected with the management of investments. If no Finance
Committee is established, this duty shall be performed by the Board of
Directors.
Section 2. All loans or purchases for the investment and reinvestment
of the funds of the Company shall be submitted for approval to the Finance
Committee, if not specifically approved by the Board of Directors.
Section 3. Sale or transfer of any stocks or bonds shall be made upon
authorization of the Finance Committee unless specifically authorized by the
Board of Directors.
Section 4. Transfers of stock and registered bonds, deeds, leases, releases,
sales, mortgages chattel or real, assignments or partial releases of
mortgages chattel or real, and in general all instruments of defeasance of
property and all agreements or contracts affecting the same, except
discharges of mortgages and entries to foreclose the same as hereinafter
provided, shall be authorized by the Finance Committee or the Board of
Directors, and be executed jointly for the Company by two persons, to wit:
the Chairman of the Board, the President or a Vice President, and a
Secretary, the Treasurer or an Assistant Treasurer, but may be acknowledged
and delivered by either one of those executing the instrument; provided,
however, that either a Secretary, the Treasurer, or an Assistant Treasurer
alone, when authorized as aforesaid, or any person specifically authorized by
the Finance Committee as attorney for the Company, may make entry to
foreclose any mortgage, and a Secretary, the Treasurer or an Assistant
Treasurer alone is authorized, without the necessity of further authority, to
discharge by deed or otherwise any mortgage on payment to the Company of the
principal, interest and all charges due.
<PAGE>
7
Section 5. The Finance Committee may fix times and places for regular
meetings. No notice of regular meetings shall be necessary. Reasonable notice
shall be given of special meetings but the action of a majority of the
Finance Committee at any meeting shall be valid notwithstanding any defect in
the notice of such meeting.
Section 6. In the absence of specific authorization from the Board of
Directors or the Finance Committee, the Chairman of the Board, the
President, a Vice President or the Treasurer shall have the power to vote or
execute proxies for voting any shares held by the Company.
ARTICLE VII
Funds
Section 1. All monies belonging to the Company shall be deposited to the
credit of the Company, or in such other name as the Finance Committee, the
Chairman of the Finance Committee or such executive officers as are
designated by the Board of Directors shall direct, in such bank or banks as
may be designated from time to time by the Finance Committee, the Chairman of
the Finance Committee or by such executive officers as are designated by the
Board of Directors. Such monies shall be drawn only on checks or drafts
signed by any two executive officers of the Company, provided that the Board
of Directors may authorize the withdrawal of such monies by check or draft
signed with the facsimile signature of any one or more executive officers,
and provided further, that the Finance Committee may authorize such
alternative methods of withdrawal as it deems proper.
The Board of Directors, the President, the Chairman of the Finance Committee,
a Vice President, or such executive officers as are designated by the Board
of Directors may authorize withdrawal of funds by checks or drafts drawn at
offices of the Company to be signed by Managers, General Agents or employees
of the Company, provided that all such checks or drafts shall be signed by
two such authorized persons, except checks or drafts used for the payment of
claims or losses which need be signed by only one such authorized person, and
provided further that the Board of Directors of the Company or executive
officers designated by the Board of Directors may impose such limitations or
restrictions upon the withdrawal of such funds as it deems proper.
<PAGE>
8
ARTICLE VIII
Indemnity of Directors and Officers
Section 1. The Company shall indemnify and hold harmless each Director and
officer now or hereafter serving the Company, whether or not then in office,
from and against any and all claims and liabilities to which he may be or
become subject by reason of his being or having been a director or officer of
the Company, or of any other company which he serves as a director or officer
at the request of the Company, to the extent such is consistent with
statutory provisions pertaining to indemnification, and shall provide such
further indemnification for legal and/or all other expenses reasonably
incurred in connection with defending against such claims and liabilities as
is consistent with statutory requirements.
ARTICLE IX
Amendment of Bylaws
Section 1. The Directors shall have power to adopt, amend and repeal such
bylaws as may be deemed necessary or appropriate for the management of the
property and affairs of the Company.
Section 2. The Stockholders at any annual or special meeting may amend or
repeal these bylaws or adopt new ones if the notice of such meeting contains
a statement of the proposed alteration, amendment, repeal or adoption, or
the substance thereof.
<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. 33-73570 on Form N-4 for ITT Hartford Life
Insurance Company.
Hartford, Connecticut
April 21, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
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