<PAGE>
<TABLE>
<S> <C>
DIRECTOR IMMEDIATE VARIABLE ANNUITY
SEPARATE ACCOUNT TWO
HARTFORD LIFE INSURANCE COMPANY
P.O. BOX 5085
HARTFORD, CONNECTICUT 06102-5085
TELEPHONE: 1-800-862-6668 (CONTRACT OWNERS)
1-800-862-7155 (REGISTERED REPRESENTATIVES) [LOGO]
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This Prospectus describes information you should know before you purchase
Director Immediate Variable Annuity. Please read it carefully.
The Director Immediate Variable Annuity is a contract between you and Hartford
Life Insurance Company where you agree to make one Premium Payment to us and we
agree to make a series of Annuity Payouts at a later date. This Annuity is an
immediate, tax-deferred, variable annuity offered to individuals. It is:
x Immediate, because we start making Annuity Payouts within 60 days.
x Tax-deferred, which means you don't pay taxes until you take money out or
until we start to make Annuity Payouts.
x Variable, because the value of your Annuity will fluctuate with the
performance of the underlying funds.
- --------------------------------------------------------------------------------
At the time you purchase your Annuity, you allocate your Premium Payment to
"Sub-Accounts". These are subdivisions of our Separate Account, an account that
keeps your Annuity assets separate from our company assets. The Sub-Accounts
then purchase shares of mutual funds set up exclusively for variable annuity or
variable life insurance products. These are not the same mutual funds that you
buy through your stockbroker or through a retail mutual fund. They may have
similar investment strategies and the same portfolio managers as retail mutual
funds. This Annuity offers you Funds with investment strategies ranging from
conservative to aggressive and you may pick those Funds that meet your
investment goals and risk tolerance. The Sub-Accounts and the Funds are listed
below:
- - HARTFORD ADVISERS HLS FUND SUB-ACCOUNT which purchases shares of Class IA of
Hartford Advisers HLS Fund, Inc.
- - HARTFORD BOND HLS FUND SUB-ACCOUNT which purchases shares of Class IA of
Hartford Bond HLS Fund, Inc.
- - HARTFORD CAPITAL APPRECIATION HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Capital Appreciation HLS Fund, Inc.
- - HARTFORD DIVIDEND AND GROWTH HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Dividend and Growth HLS Fund, Inc.
- - HARTFORD GLOBAL HEALTH HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Global Health HLS Fund of Hartford Series Fund, Inc.
- - HARTFORD GLOBAL LEADERS HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Global Leaders HLS Fund of Hartford Series Fund, Inc.
- - HARTFORD GLOBAL TECHNOLOGY HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Global Technology HLS Fund of Hartford
Series Fund, Inc.
- - HARTFORD GROWTH AND INCOME HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Growth and Income HLS Fund of Hartford
Series Fund, Inc.
- - HARTFORD HIGH YIELD HLS FUND SUB-ACCOUNT which purchases shares of Class IA of
Hartford High Yield HLS Fund of Hartford Series Fund, Inc.
- - HARTFORD INDEX HLS FUND SUB-ACCOUNT which purchases shares of Class IA of
Hartford Index HLS Fund, Inc.
- - HARTFORD INTERNATIONAL ADVISERS HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford International Advisers HLS Fund, Inc.
- - HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND SUB-ACCOUNT which purchases
shares of Class IA of Hartford International Opportunities HLS Fund, Inc.
- - HARTFORD MIDCAP HLS FUND SUB-ACCOUNT which purchases shares of Class IA of
Hartford MidCap HLS Fund, Inc.
- - HARTFORD MONEY MARKET HLS FUND SUB-ACCOUNT which purchases shares of Class IA
of Hartford Money Market HLS Fund, Inc.
- - HARTFORD MORTGAGE SECURITIES HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Mortgage Securities HLS Fund, Inc.
- - HARTFORD SMALL COMPANY HLS FUND SUB-ACCOUNT which purchases shares of
Class IA of Hartford Small Company HLS Fund, Inc.
- - HARTFORD STOCK HLS FUND SUB-ACCOUNT which purchases of Class IA of Hartford
Stock HLS Fund, Inc
<PAGE>
If you decide to buy this Annuity, you should keep this prospectus for your
records. You can also call us at 1-800-862-6668 to get a Statement of Additional
Information, free of charge. The Statement of Additional Information contains
more information about this Annuity and, like this prospectus, is filed with the
Securities and Exchange Commission ("SEC"). We have included the Table of
Contents for the Statement of Additional Information at the end of this
prospectus.
Although we file the prospectus and the Statement of Additional information with
the SEC, the SEC doesn't approve or disapprove these securities or determine if
the information is truthful or complete. Anyone who represents that the SEC does
these things may be guilty of a criminal offense. This Prospectus and the
Statement of Additional Information can also be obtained from the SEC's website
(HTTP://WWW.SEC.GOV).
This annuity IS NOT:
- A bank deposit or obligation
- Federally insured
- Endorsed by any bank or governmental agency
This annuity may not be available for sale in all states.
- --------------------------------------------------------------------------------
PROSPECTUS DATED: MAY 1, 2000
STATEMENT OF ADDITIONAL INFORMATION DATED: MAY 1, 2000
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 3
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
- ----------------------------------------------------------------------
DEFINITIONS 4
- ----------------------------------------------------------------------
FEE TABLE 5
- ----------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES 6
- ----------------------------------------------------------------------
ACCUMULATION UNIT VALUES 8
- ----------------------------------------------------------------------
HIGHLIGHTS 10
- ----------------------------------------------------------------------
GENERAL CONTRACT INFORMATION 11
- ----------------------------------------------------------------------
Hartford Life Insurance Company 11
- ----------------------------------------------------------------------
The Separate Account 11
- ----------------------------------------------------------------------
The Funds 11
- ----------------------------------------------------------------------
PERFORMANCE RELATED INFORMATION 13
- ----------------------------------------------------------------------
THE CONTRACT 14
- ----------------------------------------------------------------------
Purchases and Contract Value 14
- ----------------------------------------------------------------------
Charges and Fees 15
- ----------------------------------------------------------------------
Death Benefit 16
- ----------------------------------------------------------------------
Surrenders 17
- ----------------------------------------------------------------------
ANNUITY PAYOUTS 18
- ----------------------------------------------------------------------
OTHER INFORMATION 21
- ----------------------------------------------------------------------
Assignment 21
- ----------------------------------------------------------------------
Contract Modification 21
- ----------------------------------------------------------------------
How Contracts are Sold 21
- ----------------------------------------------------------------------
Legal Matters and Experts 21
- ----------------------------------------------------------------------
More Information 21
- ----------------------------------------------------------------------
FEDERAL TAX CONSIDERATIONS 21
- ----------------------------------------------------------------------
A. General 21
- ----------------------------------------------------------------------
B. Taxation of Hartford and the Separate Account 21
- ----------------------------------------------------------------------
C. Taxation of Purchasers of Non-Qualified Contracts 22
- ----------------------------------------------------------------------
D. Contract Owners that are Nonresident Aliens or Foreign
Corporation 24
- ----------------------------------------------------------------------
E. Other Tax Consequences 24
- ----------------------------------------------------------------------
TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION 25
- ----------------------------------------------------------------------
APPENDIX I -- INFORMATION REGARDING TAX-QUALIFIED RETIREMENT
PLANS 26
- ----------------------------------------------------------------------
ILLUSTRATIONS OF ANNUITY PAYMENTS ASSUMING HYPOTHETICAL
RATES OF RETURN 29
- ----------------------------------------------------------------------
ILLUSTRATIONS OF ANNUITY PAYMENTS USING HISTORIC RATES OF
RETURN 31
- ----------------------------------------------------------------------
</TABLE>
<PAGE>
4 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
DEFINITIONS
These terms are capitalized when used throughout this prospectus. Please refer
to these defined terms if you have any questions as you read your prospectus.
ACCOUNT: Any of the Sub-Accounts.
ACCUMULATION UNITS: If you allocate your Premium Payment to any of the
Sub-Accounts, we will convert those payments into Accumulation Units in the
selected Sub-Accounts. Accumulation Units are valued at the end of each
Valuation Day and are used to calculate the value of your Contract prior to the
Income Start Date.
ACCUMULATION UNIT VALUE: The daily price of Accumulation Units on any Valuation
Day.
ADMINISTRATIVE OFFICE OF THE COMPANY: Our location and overnight mailing address
is: 200 Hopmeadow Street, Simsbury, Connecticut 06089. Our standard mailing
address is: Investment Product Services, P.O. Box 5085, Hartford, Connecticut
06102-5085.
ANNIVERSARY VALUE: An amount equal to the present value of any remaining
guaranteed Annuity Payouts determined as of a Contract Anniversary.
ANNUITANT: The person on whose life the Contract is based. The Annuitant may not
be changed after your Contract is issued.
ANNUITY CALCULATION DATE: The date we calculate the first Annuity Payout.
ANNUITY PAYOUTS: The money we pay after the Income Start Date for the duration
and frequency selected.
ANNUITY UNIT: The unit of measure we use to calculate the value of your Annuity
Payouts under a variable dollar amount Annuity Payout Option.
ANNUITY UNIT VALUE: The daily price of Annuity Units on any Valuation Day.
BENEFICIARY The person entitled to receive a Death Benefit upon the death of the
Contract Owner or Annuitant.
CODE: The Internal Revenue Code of 1986, as amended.
COMMUTED VALUE: The present value of any remaining guaranteed Annuity Payouts.
This amount is calculated using the Assumed Investment Return for variable
dollar amount Annuity Payouts or the underlying rate of return for fixed dollar
amount Annuity Payouts.
CONTINGENT DEFERRED SALES CHARGE: The deferred sales charge that will apply when
you Surrender.
CONTRACT ANNIVERSARY: The anniversary of the date we issued your Contract. If
the Contract Anniversary falls on a Non-Valuation Day, then the Contract
Anniversary will be the next Valuation Day.
CONTRACT VALUE: The total value of the Accounts on any Valuation Day.
CONTRACT YEAR: Any 12 month period between Contract Anniversaries, beginning
with the date the Contract was issued.
DEATH BENEFIT: The amount payable after the Contract Owner or the Annuitant
dies.
DOLLAR COST AVERAGING: A program that allows you to systematically make
transfers between Accounts available in your Contract.
GENERAL ACCOUNT: The General Account includes our company assets.
HARTFORD, WE OR OUR: Hartford Life Insurance Company. Only Hartford is a
capitalized term in the prospectus.
INCOME PAYOUT DATE: The date we use to compute the Annuity Payouts.
INCOME START DATE: The time when regularly scheduled Annuity Payouts begin.
JOINT ANNUITANT: The person on whose life Annuity Payouts are based if the
Annuitant dies after Annuitization. You may name a Joint Annuitant only if your
Annuity Payout Option provides for a survivor. The Joint Annuitant may not be
changed.
MAXIMUM ANNIVERSARY VALUE: As of the date we receive a certified death
certificate or other legal document acceptable to us, we will calculate an
Anniversary Value for each Contract Anniversary. The highest Anniversary Value
is the Maximum Anniversary Value.
NET INVESTMENT FACTOR: This is used to measure the investment performance of a
Sub-Account from one Valuation Day to the next, and is also used to calculate
your Annuity Payout amount.
NON-VALUATION DAY: Any day the New York Stock Exchange is not open for trading.
PAYEE: The person or party you designate to receive Annuity Payouts.
PAYOUT FACTOR: A number used to calculate the first Annuity Payout.
PREMIUM PAYMENT: Money sent to us to be invested in your Annuity.
PREMIUM TAX: A tax charged by a state or municipality on Premium Payments.
SUB-ACCOUNT VALUE: The value on or before the Annuity Calculation Date, which is
determined on any day by multiplying the number of Accumulation Units by the
Accumulation Unit Value for that Sub-Account.
SURRENDER: A complete or partial withdrawal from your Contract.
SURRENDER VALUE: The Contract Value minus any applicable Premium Tax if
requested before the Annuity Calculation Date or the Commuted Value minus any
applicable Contingent Deferred Sales Charge if requested on or after the Annuity
Calculation Date.
VALUATION DAY: Every day the New York Stock Exchange is open for trading. Values
of the Separate Account are determined as of the close of the New York Stock
Exchange, generally 4:00 p.m. Eastern Time.
VALUATION PERIOD: The time span between the close of trading on the New York
Stock Exchange from one Valuation Day to the next.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 5
- --------------------------------------------------------------------------------
FEE TABLE
CONTRACT OWNER TRANSACTION EXPENSES
<TABLE>
<S> <C>
SALES CHARGE IMPOSED ON PREMIUM PAYMENT (as a percentage of
Premium Payment) None
- ---------------------------------------------------------------------
CONTINGENT DEFERRED SALES CHARGE (as a percentage of
Commuted Value) *
- ---------------------------------------------------------------------
First Year 6%
- ---------------------------------------------------------------------
Second Year 6%
- ---------------------------------------------------------------------
Third Year 5%
- ---------------------------------------------------------------------
Fourth Year 5%
- ---------------------------------------------------------------------
Fifth Year 4%
- ---------------------------------------------------------------------
Sixth Year 3%
- ---------------------------------------------------------------------
Seventh Year 2%
- ---------------------------------------------------------------------
Eighth Year 0%
- ---------------------------------------------------------------------
SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of average
daily Sub-Account Value)
- ---------------------------------------------------------------------
Mortality and Expense Risk Charge 1.25%
- ---------------------------------------------------------------------
Total Separate Account Annual Expenses 1.25%
- ---------------------------------------------------------------------
</TABLE>
* Only applies to the following Annuity Payout Options after the Income Start
Date: Life Annuity with Payments Guaranteed for a Specified Number of Years,
Joint and Last Survivor Annuity with Payments Guaranteed for a Specified
Number of Years, and Payments Guaranteed for a Specified Number of Years.
The purpose of the Fee Table and Example is to assist you in understanding
various costs and expenses that you will pay directly or indirectly. The Fee
Table and Example reflect expenses of the Separate Account and underlying Funds.
We will deduct any Premium Taxes that apply.
The Example should not be considered a representation of past or future expenses
and actual expenses may be greater or less than those shown. The Annual
Maintenance Fee has been reflected in the Example by a method intended to show
the "average" impact of the Annual Maintenance Fee on an investment in the
Separate Account. We do this by approximating an "average" 0.06% annual charge.
<PAGE>
6 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
Annual Fund Operating Expenses
as of the Fund's Year End
(as a percentage of net assets)
<TABLE>
<CAPTION>
OTHER TOTAL FUND
EXPENSES OPERATING EXPENSES
MANAGEMENT FEES (INCLUDING ANY (INCLUDING ANY WAIVERS
(INCLUDING ANY WAIVERS) REIMBURSEMENTS) AND ANY REIMBURSEMENTS)
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
Hartford Advisers HLS Fund 0.63% 0.02% 0.65%
- ---------------------------------------------------------------------------------------------------------------------------
Hartford Bond HLS Fund 0.49% 0.03% 0.52%
- ---------------------------------------------------------------------------------------------------------------------------
Hartford Capital Appreciation HLS Fund 0.64% 0.02% 0.66%
- ---------------------------------------------------------------------------------------------------------------------------
Hartford Dividend and Growth HLS Fund 0.65% 0.03% 0.68%
- ---------------------------------------------------------------------------------------------------------------------------
Hartford Global Health HLS Fund (1) 0.85% 0.25% 1.10%
- ---------------------------------------------------------------------------------------------------------------------------
Hartford Global Leaders HLS Fund 0.74% 0.12% 0.86%
- ---------------------------------------------------------------------------------------------------------------------------
Hartford Global Technology HLS Fund (1) 0.85% 0.25% 1.10%
- ---------------------------------------------------------------------------------------------------------------------------
Hartford Growth and Income HLS Fund 0.78% 0.04% 0.82%
- ---------------------------------------------------------------------------------------------------------------------------
Hartford High Yield HLS Fund 0.66% 0.06% 0.72%
- ---------------------------------------------------------------------------------------------------------------------------
Hartford Index HLS Fund 0.40% 0.03% 0.43%
- ---------------------------------------------------------------------------------------------------------------------------
Hartford International Advisers HLS Fund 0.76% 0.09% 0.85%
- ---------------------------------------------------------------------------------------------------------------------------
Hartford International Opportunities HLS Fund 0.69% 0.09% 0.78%
- ---------------------------------------------------------------------------------------------------------------------------
Hartford MidCap HLS Fund 0.76% 0.03% 0.79%
- ---------------------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS Fund 0.45% 0.02% 0.47%
- ---------------------------------------------------------------------------------------------------------------------------
Hartford Mortgage Securities HLS Fund 0.45% 0.03% 0.48%
- ---------------------------------------------------------------------------------------------------------------------------
Hartford Small Company HLS Fund 0.75% 0.03% 0.78%
- ---------------------------------------------------------------------------------------------------------------------------
Hartford Stock HLS Fund 0.46% 0.02% 0.48%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Hartford Global Health HLS Fund and Hartford Global Technology HLS Fund are
new Funds. "Total Fund Operating Expenses" are based on annualized estimates
of such expenses to be incurred during the current fiscal year.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 7
- --------------------------------------------------------------------------------
EXAMPLE
<TABLE>
<CAPTION>
If you surrender your Contract at the If you annuitize your Contract at the
end of the applicable time period you end of the applicable time period you
would pay the following expenses on would pay the following expenses on
a $1,000 investment, assuming a 5% 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 Advisers HLS Fund $76 $110 $144 $224 $19 $60 $104 $224
- --------------------------------------------------------------------------------------------------------------------
Hartford Bond HLS Fund $75 $106 $137 $210 $18 $56 $ 97 $210
- --------------------------------------------------------------------------------------------------------------------
Hartford Capital Appreciation
HLS Fund $77 $111 $144 $225 $20 $61 $104 $225
- --------------------------------------------------------------------------------------------------------------------
Hartford Dividend and Growth
HLS Fund $77 $111 $145 $227 $20 $61 $105 $227
- --------------------------------------------------------------------------------------------------------------------
Hartford Global Health HLS
Fund $81 $124 N/A N/A $24 $74 N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Hartford Global Leaders HLS
Fund $79 $117 $154 $246 $22 $67 $114 $246
- --------------------------------------------------------------------------------------------------------------------
Hartford Global Technology
HLS Fund $81 $124 N/A N/A $24 $74 N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Hartford Growth and Income
HLS Fund $78 $116 $152 $242 $21 $66 $112 $242
- --------------------------------------------------------------------------------------------------------------------
Hartford High Yield HLS Fund $77 $112 $147 $231 $20 $62 $107 $231
- --------------------------------------------------------------------------------------------------------------------
Hartford Index HLS Fund $74 $103 $132 $200 $17 $53 $ 92 $200
- --------------------------------------------------------------------------------------------------------------------
Hartford International
Advisers HLS Fund $79 $116 $154 $245 $22 $66 $114 $245
- --------------------------------------------------------------------------------------------------------------------
Hartford International
Opportunities HLS Fund $78 $114 $150 $238 $21 $64 $110 $238
- --------------------------------------------------------------------------------------------------------------------
Hartford MidCap HLS Fund $78 $115 $151 $239 $21 $65 $111 $239
- --------------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS
Fund $75 $105 $134 $204 $18 $55 $ 94 $204
- --------------------------------------------------------------------------------------------------------------------
Hartford Mortgage Securities
HLS Fund $75 $105 $135 $205 $18 $55 $ 95 $205
- --------------------------------------------------------------------------------------------------------------------
Hartford Small Company HLS
Fund $78 $114 $150 $238 $21 $64 $110 $238
- --------------------------------------------------------------------------------------------------------------------
Hartford Stock HLS Fund $75 $105 $135 $205 $18 $55 $ 95 $205
- --------------------------------------------------------------------------------------------------------------------
<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 Advisers HLS Fund $19 $60 $104 $224
- -----------------------------
Hartford Bond HLS Fund $18 $56 $ 97 $210
- -----------------------------
Hartford Capital Appreciation
HLS Fund $20 $61 $104 $225
- -----------------------------
Hartford Dividend and Growth
HLS Fund $20 $61 $105 $227
- -----------------------------
Hartford Global Health HLS
Fund $24 $74 N/A N/A
- -----------------------------
Hartford Global Leaders HLS
Fund $22 $67 $114 $246
- -----------------------------
Hartford Global Technology
HLS Fund $24 $74 N/A N/A
- -----------------------------
Hartford Growth and Income
HLS Fund $21 $66 $112 $242
- -----------------------------
Hartford High Yield HLS Fund $20 $62 $107 $231
- -----------------------------
Hartford Index HLS Fund $17 $53 $ 92 $200
- -----------------------------
Hartford International
Advisers HLS Fund $22 $66 $114 $245
- -----------------------------
Hartford International
Opportunities HLS Fund $21 $64 $110 $238
- -----------------------------
Hartford MidCap HLS Fund $21 $65 $111 $239
- -----------------------------
Hartford Money Market HLS
Fund $18 $55 $ 94 $204
- -----------------------------
Hartford Mortgage Securities
HLS Fund $18 $55 $ 95 $205
- -----------------------------
Hartford Small Company HLS
Fund $21 $64 $110 $238
- -----------------------------
Hartford Stock HLS Fund $18 $55 $ 95 $205
- ---------------------------------------------------------------------------------
</TABLE>
<PAGE>
8 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
ACCUMULATION UNIT VALUES
(For an Accumulation Unit outstanding throughout the period)
The following information has been derived from the audited financial statements
of the Separate Account, which have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and should be read in conjunction with those statements, which are
included in the Statement of Additional Information, which is incorporated by
reference in this Prospectus. No information is shown for Hartford Global Health
HLS Fund and Hartford Global Technology HLS Fund Sub-Accounts because, as of
December 31, 1999 the Sub-Accounts had not yet commenced operations.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
HARTFORD BOND HLS FUND SUB-ACCOUNT (Inception date August 1,
1986)
Accumulation Unit Value at beginning of period $ 2.258 $ 2.114 $ --
- ---------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 2.185 $ 2.258 $ 2.114
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in
thousands) 167,707 162,501 111,586
- ---------------------------------------------------------------------------------------------------------
HARTFORD STOCK HLS FUND SUB-ACCOUNT (Inception date
August 1, 1986)
Accumulation Unit Value at beginning of period $ 6.066 $ 4.602 $ --
- ---------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 7.176 $ 6.066 $ 4.602
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in
thousands) 432,424 403,629 372,754
- ---------------------------------------------------------------------------------------------------------
HARTFORD MONEY MARKET HLS FUND SUB-ACCOUNT (Inception date
August 1, 1986)
Accumulation Unit Value at beginning of period $ 1.716 $ 1.650 $ --
- ---------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 1.777 $ 1.716 $ 1.650
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in
thousands) 213,832 183,614 140,797
- ---------------------------------------------------------------------------------------------------------
HARTFORD ADVISERS HLS FUND SUB-ACCOUNT (Inception date
August 1, 1986)
Accumulation Unit Value at beginning of period $ 4.398 $ 3.572 $ --
- ---------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 4.803 $ 4.398 $ 3.572
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in
thousands) 1,156,230 1,095,048 1,012,472
- ---------------------------------------------------------------------------------------------------------
HARTFORD CAPITAL APPRECIATION HLS FUND SUB-ACCOUNT
(Inception date August 1, 1986)
Accumulation Unit Value at beginning of period $ 5.526 $ 4.845 $ --
- ---------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 7.501 $ 5.526 $ 4.845
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in
thousands) 347,433 352,482 351,189
- ---------------------------------------------------------------------------------------------------------
HARTFORD MORTGAGE SECURITIES HLS FUND SUB-ACCOUNT (Inception
date August 1, 1986)
Accumulation Unit Value at beginning of period $ 2.211 $ 2.098 $ --
- ---------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 2.217 $ 2.211 $ 2.098
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in
thousands) 69,555 78,026 81,143
- ---------------------------------------------------------------------------------------------------------
HARTFORD INDEX HLS FUND SUB-ACCOUNT (Inception date May 1,
1987)
Accumulation Unit Value at beginning of period $ 4.712 $ 3.726 $ --
- ---------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 5.608 $ 4.712 $ 3.726
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in
thousands) 152,272 131,579 109,837
- ---------------------------------------------------------------------------------------------------------
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND SUB-ACCOUNT
(Inception date July 2, 1990)
Accumulation Unit Value at beginning of period $ 1.641 $ 1.469 $ --
- ---------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 2.267 $ 1.641 $ 1.469
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in
thousands) 218,272 240,090 264,642
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 9
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1999 1998 1997
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
HARTFORD DIVIDEND AND GROWTH HLS FUND SUB-ACCOUNT (Inception
date March 8, 1994)
Accumulation Unit Value at beginning of period $ 2.471 $ 2.149 $ --
- ---------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 2.570 $ 2.471 $ 2.149
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in
thousands) 381,269 391,151 308,682
- ---------------------------------------------------------------------------------------------------------
HARTFORD INTERNATIONAL ADVISERS HLS FUND SUB-ACCOUNT
(Inception date March 1, 1995)
Accumulation Unit Value at beginning of period $ 1.476 $ 1.319 $ --
- ---------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 1.796 $ 1.476 $ 1.319
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in
thousands) 57,797 50,971 43,217
- ---------------------------------------------------------------------------------------------------------
HARTFORD MIDCAP HLS FUND SUB-ACCOUNT (Inception date
July 30, 1997)
Accumulation Unit Value at beginning of period $ 1.371 $ 1.097 $ --
- ---------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 2.056 $ 1.371 $ 1.097
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in
thousands) 118,306 33,348 8,306
- ---------------------------------------------------------------------------------------------------------
HARTFORD SMALL COMPANY HLS FUND SUB-ACCOUNT (Inception date
August 9, 1996)
Accumulation Unit Value at beginning of period $ 1.374 $ 1.247 $ --
- ---------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 2.251 $ 1.374 $ 1.247
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in
thousands) 107,808 85,431 56,706
- ---------------------------------------------------------------------------------------------------------
HARTFORD GLOBAL LEADERS HLS FUND SUB-ACCOUNT (Inception date
September 30, 1998)
Accumulation Unit Value at beginning of period $ 1.315 $ -- $ --
- ---------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 1.952 $ 1.315 $ --
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in
thousands) 25,343 416 --
- ---------------------------------------------------------------------------------------------------------
HARTFORD GROWTH AND INCOME HLS FUND SUB-ACCOUNT (Inception
date June 1, 1998)
Accumulation Unit Value at beginning of period $ 1.182 $ -- $ --
- ---------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 1.422 $ 1.182 $ --
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in
thousands) 41,232 4,982 --
- ---------------------------------------------------------------------------------------------------------
HARTFORD HIGH YIELD HLS FUND SUB-ACCOUNT (Inception date
September 30, 1998)
Accumulation Unit Value at beginning of period $ 1.035 $ -- $ --
- ---------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 1.070 $ 1.035 $ --
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in
thousands) 14,681 1,832 --
- ---------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
10 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
HIGHLIGHTS
HOW DO I PURCHASE THIS ANNUITY?
You must complete our application or order request and submit it to us for
approval with your Premium Payment. You may also transfer from another
investment. Your Premium Payment must be at least $25,000. You may not make
additional Premium Payments.
- For a limited time, usually within ten days after you receive your Contract,
you may cancel your Annuity without paying a Contingent Deferred Sales
Charge. You may bear the investment risk for your Premium Payment prior to
our receipt of your request for cancellation.
WHAT TYPE OF SALES CHARGE WILL I PAY?
You don't pay a sales charge when you purchase your Annuity. If you selected the
Life Annuity with Payments Guaranteed for a Specified Number of Years, Joint and
Last Survivor Annuity with Payments Guaranteed for a Specified Number of Years
or the Payments Guaranteed for a Specified Number of Years Annuity Payout
Options, we will charge you a Contingent Deferred Sales Charge when you fully or
partially Surrender your Annuity.
The Contingent Deferred Sales Charge is a percentage of the Commuted Value and
is equal to:
<TABLE>
<CAPTION>
CONTRACT YEAR
SURRENDER CHARGE
AS A PERCENTAGE OF CONTINGENT DEFERRED
COMMUTED VALUE SALES CHARGE
<S> <C>
- ---------------------------------------
1 6%
- ---------------------------------------
2 6%
- ---------------------------------------
3 5%
- ---------------------------------------
4 5%
- ---------------------------------------
5 4%
- ---------------------------------------
6 3%
- ---------------------------------------
7 2%
- ---------------------------------------
8 or more 0%
- ---------------------------------------
</TABLE>
If you select the Life Annuity with Payments Guaranteed for a Specified Number
of Years, Joint and Last Survivor Annuity with Payments Guaranteed for a
Specified Number of Years or the Payments Guaranteed for a Specified Number of
Years Annuity Payout Options, Hartford agrees to make Annuity Payouts for at
least the Specified Number of Years you select. Commuted Value is the present
value of any remaining Annuity Payouts to be made during the Specified Number of
Years. We calculate the Commuted Value for variable dollar amount Annuity
Payouts using the Assumed Investment Return you selected.
WHAT CHARGES WILL I PAY ON AN ANNUAL BASIS?
You pay two different types of charges each year. The first type of charge is
the fee you pay for insurance. This charge is:
A Mortality and Expense Risk Charge that is subtracted daily and is equal to an
annual charge of 1.25% of your Contract Value invested in the Funds.
The second type of charge is the fee you pay for the Funds. See the Annual Fund
Operating Expenses table for more complete information and the Funds'
prospectuses accompanying this prospectus.
CAN I TAKE OUT ANY OF MY MONEY?
If you selected the Life Annuity with Payments Guaranteed for a Specified Number
of Years, Joint and Last Survivor Annuity with Payments Guaranteed for a
Specified Number of Years or the Payments Guaranteed for a Specified Number of
Years Annuity Payout Options, you may Surrender some or all of the amount you
invested after Annuity Payouts begin.
- You may have to pay income tax on the money you take out and, if you
Surrender before you are age 59 1/2, you may have to pay an income tax
penalty.
- You may have to pay a Contingent Deferred Sales Charge on the money you
Surrender.
- Partial Surrenders may have adverse tax consequences, so please consult your
tax adviser.
WILL HARTFORD PAY A DEATH BENEFIT?
There is a Death Benefit if the Contract Owner or the Annuitant die. The Death
Benefit will be calculated as of the date we receive a certified death
certificate or other legal document acceptable to us.
If the Contract Owner dies before the Income Start Date, the Death Benefit will
be equal to the Contract Value on the date the certified death certificate or
other legal document acceptable to us is received. The Death Benefit may be
taken in one lump sum or under any of the Annuity Payout Options then being
offered.
If the Annuitant dies on or after the Income Start Date, the Death Benefit will
be paid according to the Annuity Payout Option selected. Under some Annuity
Payout Options, there is no Death Benefit.
Under the Payments Guaranteed for a Specified Number of Years Annuity Payout
Option on or after the Income Start Date, the Death Benefit is the greater of:
x Commuted Value;
x 100% of the Premium Payment minus all Annuity Payouts made since the Income
Start Date; or
x the Maximum Anniversary Value minus all Annuity Payouts made since that
anniversary.
As of the date we receive a certified death certificate or other legal document
acceptable to us, we will calculate an Anniversary Value for each Contract
Anniversary. The highest Anniversary Value is the Maximum Anniversary Value.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 11
- --------------------------------------------------------------------------------
Until complete instructions are received from the Beneficiary, the Death Benefit
will be transferred to the Money Market Sub-Account.
WHAT ANNUITY PAYOUT OPTIONS ARE AVAILABLE?
You may choose one of the following Annuity Payout Options: Life Annuity, Life
Annuity with Cash Refund, Life Annuity with Payments Guaranteed for a Specified
Number of Years, Joint and Last Survivor Life Annuity, Joint and Last Survivor
Annuity with Payments Guaranteed for a Specified Number of Years and Payments
Guaranteed for a Specified Number of Years. We may make other Annuity Payout
Options available at any time.
GENERAL CONTRACT INFORMATION
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
Hartford Life Insurance Company is a stock life insurance company engaged in the
business of writing life insurance, both individual and group, in all states of
the United States as well as the District of Columbia and Puerto Rico. We were
originally incorporated under the laws of Massachusetts on June 5, 1902, and
subsequently redomiciled to Connecticut. Our offices are located in Simsbury,
Connecticut; however, our mailing address is P.O. Box 5085, Hartford, CT
06102-5085. We are ultimately controlled by The Hartford Financial Services
Group, Inc., one of the largest financial service providers in the United
States.
HARTFORD'S RATINGS
<TABLE>
<CAPTION>
EFFECTIVE DATE
RATING AGENCY OF RATING RATING BASIS OF RATING
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
A.M. Best and
Company, Inc. 1/1/99 A+ Financial performance
- --------------------------------------------------------------------------------
Standard & Poor's 8/1/99 AA Insurer financial strength
- --------------------------------------------------------------------------------
Duff & Phelps 7/1/99 AA+ Claims paying ability
- --------------------------------------------------------------------------------
</TABLE>
THE SEPARATE ACCOUNT
The Separate Account is where we set aside and invest the assets of some of our
annuity contracts, including this Contract. The Separate Account was established
on June 2, 1986 and is registered as a unit investment trust under the
Investment Company Act of 1940. This registration does not involve supervision
by the SEC of the management or the investment practices of the Separate Account
or Hartford. The Separate Account meets the definition of "Separate Account"
under federal securities law. This Separate Account holds only assets for
variable annuity contracts. The Separate Account:
- - Holds assets for your benefit and the benefit of other Contract Owners, and
the persons entitled to the payouts described in the Contract.
- - Is not subject to the liabilities arising out of any other business Hartford
may conduct.
- - Is not affected by the rate of return of our General Account or by the
investment performance of any of our other Separate Accounts.
- - May be subject to liabilities from a Sub-Account of the Separate Account that
holds assets of other variable annuity contracts offered by the Separate
Account, which are not described in this Prospectus.
- - Is credited with income and gains, and takes losses, whether or not realized,
from the assets it holds.
We do not guarantee the investment results of the Separate Account. There is no
assurance that the value of your Annuity will equal the total Premium Payment
you make to us.
THE FUNDS
Hartford HLS Funds are sponsored and administered by Hartford Life Insurance
Company. HL Investment Advisors, LLC ("HL Advisors") serves as the investment
adviser to each of the Hartford HLS Funds. Wellington Management Company, LLP
("Wellington Management") and Hartford Investment Management Company ("HIMCO")
serve as sub-investment advisors and provide day to day investment services.
Each Hartford HLS Fund, except for Hartford Global Health HLS Fund, Hartford
Global Leaders HLS Fund, Hartford Global Technology HLS Fund, Hartford Growth
and Income HLS Fund and Hartford High Yield HLS Fund, is a separate Maryland
corporation registered with the Securities and Exchange Commission as an
open-end management investment company. Hartford Global Leaders HLS Fund,
Hartford Growth and Income HLS Fund and Hartford High Yield HLS Fund are
diversified series of Hartford Series Fund, Inc., a Maryland corporation, also
registered with the Securities and Exchange Commission as an open-end management
investment company. Hartford Global Health HLS Fund and Hartford Global
Technology HLS Fund are non-diversified series of Hartford Series Fund, Inc. The
shares of each Fund have been divided into Class IA and Class IB. Only Class IA
shares are available in this Annuity.
We do not guarantee the investment results of any of the underlying Funds. Since
each underlying Fund has different investment objectives, each is subject to
different risks. These risks and the Funds' expenses are more fully described in
the accompanying Funds' prospectus and Statement of Additional Information,
which may be ordered from us. The Funds' prospectus should be read in
conjunction with this Prospectus before investing.
The Funds may not be available in all states.
The investment goals of each of the Funds are as follows:
HARTFORD ADVISERS HLS FUND -- Seeks maximum long-term total rate of return by
investing in common stocks and other equity securities, bonds and other debt
securities, and money market instruments. Sub-advised by Wellington Management.
<PAGE>
12 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
HARTFORD BOND HLS FUND -- Seeks maximum current income consistent with
preservation of capital by investing primarily in investment grade fixed-income
securities. Up to 20% of the total assets of this Fund may be invested in debt
securities rated in the highest category below investment grade ("Ba" by Moody's
Investor Services, Inc. or "BB" by Standard & Poor's) or, if unrated, are
determined to be of comparable quality by the Fund's investment adviser.
Securities rated below investment grade are commonly referred to as "high
yield-high risk securities" or "junk bonds." For more information concerning the
risks associated with investing in such securities, please refer to the section
in the accompanying prospectus for the Funds entitled "Hartford Bond HLS Fund,
Inc." Sub-advised by HIMCO.
HARTFORD CAPITAL APPRECIATION HLS FUND -- Seeks growth of capital by investing
in equity securities selected solely on the basis of potential for capital
appreciation. Sub-advised by Wellington Management.
HARTFORD DIVIDEND AND GROWTH HLS FUND -- Seeks a high level of current income
consistent with growth of capital by investing primarily in dividend paying
equity securities. Sub-advised by Wellington Management.
HARTFORD GLOBAL HEALTH HLS FUND -- Seeks long-term capital appreciation by
investing in equity securities of health care companies worldwide. Sub-advised
by Wellington Management.
HARTFORD GLOBAL LEADERS HLS FUND -- Seeks growth of capital by investing
primarily in equity securities issued by high quality growth companies worldwide
that, in the opinion of Wellington Management, are leaders within their
respective industries as indicated by an established market presence and strong
competitive position on a global, regional or country basis. Sub-advised by
Wellington Management.
HARTFORD GLOBAL TECHNOLOGY HLS FUND -- Seeks long-term capital appreciation by
investing in equity securities technology companies worldwide. Sub-advised by
Wellington Management.
HARTFORD GROWTH AND INCOME HLS FUND -- Seeks growth of capital and current
income by investing primarily in equity securities with earnings growth
potential and steady or rising dividends. Sub-advised by Wellington Management.
HARTFORD HIGH YIELD HLS FUND -- Seeks high current income by investing in
non-investment grade fixed-income securities. Growth of capital is a secondary
objective. Securities rated below investment grade are commonly referred to as
"high yield-high risk securities" or "junk bonds." For more information
concerning the risks associated with investing in such securities, please refer
to the section in the accompanying prospectus for the Funds entitled "Hartford
High Yield HLS Fund." Sub-advised by HIMCO.
HARTFORD INDEX HLS FUND -- Seeks to provide investment results that approximate
the price and yield performance of publicly traded common stocks in the
aggregate, as represented by the Standard & Poor's 500 Composite Stock Price
Index.* Sub-advised by HIMCO.
HARTFORD INTERNATIONAL ADVISERS HLS FUND -- Seeks maximum long-term total return
by investing in a portfolio of equity, debt and money market 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. Sub-advised by Wellington
Management.
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND -- Seeks growth of capital by
investing primarily in equity securities issued by non-U.S. companies.
Sub-advised by Wellington Management.
HARTFORD MIDCAP HLS FUND -- Seeks to achieve long-term capital growth through
capital appreciation by investing primarily in equity securities of companies
with market capitalizations within the range represented by the Standard &
Poor's MidCap 400 Index. Sub-advised by Wellington Management.
HARTFORD MONEY MARKET HLS FUND -- Seeks maximum current income consistent with
liquidity and preservation of capital. Sub-advised by HIMCO.
HARTFORD MORTGAGE SECURITIES HLS FUND -- Seeks maximum current income consistent
with safety of principal and maintenance of liquidity by investing primarily in
mortgage-related securities. Sub-advised by HIMCO.
HARTFORD SMALL COMPANY HLS FUND -- Seeks growth of capital by investing
primarily in equity securities within the range represented by the Russell 2000
Index selected on the basis of potential for capital appreciation. Sub-advised
by Wellington Management.
HARTFORD STOCK HLS FUND -- Seeks long-term growth by investing primarily in
equity securities. Sub-advised by Wellington Management.
MIXED AND SHARED FUNDING -- Shares of the Funds may be sold to our other
separate accounts and our insurance company affiliates or other unaffiliated
insurance companies to serve as the underlying investment for both variable
annuity contracts and variable life insurance policies, a practice known as
"mixed and shared funding." As a result, there is a possibility that a material
conflict may arise between the interests of Contract Owners, and of owners of
other contracts whose contract values are allocated to one or more of these
other separate accounts investing in any one of the Funds. In the event of any
such material conflicts, we will consider what action may be appropriate,
including removing the Fund from the Separate Account or replacing the Fund with
another underlying fund. There are certain risks associated with mixed and
shared funding, as disclosed in the Funds' prospectus.
VOTING RIGHTS -- We are the legal owners of all Fund shares held in the Separate
Account and we have the right to vote at the
* "Standard & Poor's," "S&P-Registered Trademark-," "S&P
500-Registered Trademark-," "Standard & Poor's 500," and "500" are trademarks
of The McGraw-Hill Companies, Inc. and have been licensed for use by Hartford.
The Index Fund is not sponsored, endorsed, sold or promoted by Standard &
Poor's and Standard & Poor's makes no representation regarding the
advisability of investing in the Index Fund.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 13
- --------------------------------------------------------------------------------
Fund's shareholder meetings. To the extent required by federal securities laws
or regulations, we will:
- - Notify you of any Fund shareholders' meeting if the shares held for your
Contract may be voted.
- - Send proxy materials and a form of instructions that you can use to tell us
how to vote the Fund shares held for your Contract.
- - Arrange for the handling and tallying of proxies received from Contract
Owners.
- - Vote all Fund shares attributable to your Contract according to instructions
received from you, and
- - Vote all Fund shares for which no voting instructions are received in the same
proportion as shares for which instructions have been received.
If any federal securities laws or regulations, or their present interpretation,
change to permit us to vote Fund shares on our own, we may decide to do so. You
may attend any Shareholder Meeting at which shares held for your Contract may be
voted. After we begin to make Annuity Payouts to you, the number of votes you
have will decrease.
SUBSTITUTIONS, ADDITIONS, OR DELETIONS OF FUNDS -- We reserve the right, subject
to any applicable law, to make certain changes to the Funds offered under your
Contract. We may, in our sole discretion, establish new Funds. New Funds will be
made available to existing Contract Owners as we determine appropriate. We may
also close one or more Funds to additional Payments or transfers from existing
Sub-Accounts.
We reserve the right to eliminate the shares of any of the Funds for any reason
and to substitute shares of another registered investment company for the shares
of any Fund already purchased or to be purchased in the future by the Separate
Account. To the extent required by the Investment Company Act of 1940 (the "1940
Act"), substitutions of shares attributable to your interest in a Fund will not
be made until we have the approval of the Commission and we have notified you of
the change.
In the event of any substitution or change, we may, by appropriate endorsement,
make any changes in the Contract necessary or appropriate to reflect the
substitution or change. If we decide that it is in the best interest of the
Contracts Owners, the Separate Account may be operated as a management company
under the 1940 Act or any other form permitted by law, may be de-registered
under the 1940 Act in the event such registration is no longer required, or may
be combined with one or more other Separate Accounts.
ADMINISTRATIVE SERVICES -- Hartford has entered into agreements with the
investment advisers or distributors of many of the Funds. Under the terms of
these agreements, Hartford provides administrative services and the Funds pay a
fee to Hartford that is usually based on an annual percentage of the average
daily net assets of the Funds. These agreements may be different for each Fund
or each Fund family.
PERFORMANCE RELATED INFORMATION
- --------------------------------------------------------------------------------
The Separate Account may advertise certain performance-related information
concerning the 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.
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.
The Separate Account may also advertise NON-STANDARD TOTAL RETURNS THAT PRE-DATE
THE INCEPTION DATE OF THE SEPARATE ACCOUNT. These non-standardized total returns
are calculated by assuming that the Sub-Accounts have been in existence for the
same periods as the underlying Funds and by taking deductions for charges equal
to those currently assessed against the Sub-Accounts. These non-standardized
returns must be accompanied by standardized total returns.
If applicable, the 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 includes the recurring charges at the
Separate Account level.
The 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 include the recurring charges at the Separate Account level.
We may provide information on various topics to Contract Owners and prospective
Contract Owners in advertising, sales literature or other materials. These
topics may include the relationship between sectors of the economy and the
economy as a whole and its effect on various securities markets, investment
strategies and techniques (such as systematic investing, Dollar Cost Averaging
and asset allocation), the advantages and disadvantages of investing in
tax-deferred and taxable instruments, customer profiles and hypothetical
purchase scenarios, financial management and tax and retirement planning, and
other investment alternatives, including comparisons between the
<PAGE>
14 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
Contract and the characteristics of and market for such alternatives.
THE CONTRACT
- --------------------------------------------------------------------------------
PURCHASES AND CONTRACT VALUE
WHAT TYPES OF CONTRACTS ARE AVAILABLE?
The Contract is an individual tax-deferred variable annuity contract. It is
designed for retirement planning purposes and may be purchased by any individual
or trust, including:
- - Any trustee or custodian for a retirement plan qualified under
Sections 401(a) or 403(a) of the Code;
- - Individual Retirement Annuities adopted according to Section 408 of the Code;
- - Employee pension plans established for employees by a state, a political
subdivision of a state, or an agency of either a state or a political
subdivision of a state, and
- - Certain eligible deferred compensation plans as defined in Section 457 of the
Code.
The examples above represent Qualified Contracts, as defined by the Code. In
addition, individuals and trusts can also purchase Contracts that are not part
of a tax qualified retirement plan. These are known as Non-Qualified Contracts.
If you are purchasing the Contract for use in an IRA or other qualified
retirement plan, you should consider other features of the Contract besides tax
deferral, since any investment vehicle used within an IRA or other qualified
plan receives tax deferred treatment under the Code.
HOW DO I PURCHASE A CONTRACT?
You may purchase a Contract by completing and submitting an application or an
order request along with a Premium Payment. You may also transfer assets from an
existing investment. The minimum Premium Payment is $25,000. No additional
Premium Payments may be made. Prior approval is required for Premium Payments of
$1,000,000 or more.
You and your Annuitant must not be older than age 90 on the date that your
Contract is issued. You must be of legal age in the state where the Contract is
being purchased or a guardian must act on your behalf.
HOW ARE PREMIUM PAYMENTS APPLIED TO MY CONTRACT?
Your initial Premium Payment will be invested within two Valuation Days of our
receipt of a properly completed application or an order request and the Premium
Payment. If we receive your subsequent Premium Payment on a Non-Valuation Day,
the amount will be invested on the next Valuation Day. We will send you a
confirmation when we invest your Premium Payment.
If the request or other information accompanying the Premium Payment is
incomplete when received, we will hold the money in a non-interest bearing
account for up to five Valuation Days while we try to obtain complete
information. If we cannot obtain the information within five Valuation Days, we
will either return the Premium Payment and explain why the Premium Payment could
not be processed or keep the Premium Payment if you authorize us to keep it
until you provide the necessary information.
CAN I CANCEL MY CONTRACT AFTER I PURCHASE IT?
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 Contract, simply return it within ten days after you receive it with a
written request for cancellation that indicates your tax-withholding
instructions. In some states, you may be allowed more time to cancel your
Contract. We will not deduct any Contingent Deferred Sales Charges during this
time. We may require additional information, including a signature guarantee,
before we can cancel your Contract.
You bear the investment risk from the time the Contract is issued until we
receive your complete cancellation request.
The amount we pay you upon cancellation depends on the requirements of the state
where you purchased your Contract, the method of purchase, the type of Contract
you purchased and your age.
HOW IS THE VALUE OF MY CONTRACT CALCULATED BEFORE THE INCOME START DATE?
The Contract Value is the sum of all Accounts. There are two things that affect
your Sub-Account value: (1) the number of Accumulation Units and (2) the
Accumulation Unit Value. The Sub-Account value is determined by multiplying the
number of Accumulation Units by the Accumulation Unit Value. Therefore, on any
Valuation Day your Contract Value reflects the investment performance of the
Sub-Accounts and will fluctuate with the performance of the underlying Funds.
When your Premium Payment is credited to your Sub-Accounts, it is converted into
Accumulation Units by dividing the amount of your Premium Payment, minus any
Premium Taxes, by the Accumulation Unit Value for that day. The larger the
Premium Payment you put into your Contract, the more Accumulation Units you will
own. You decrease the number of Accumulation Units you have by requesting
Surrenders, transferring money out of an Account, settling a Death Benefit claim
or by annuitizing your Contract.
To determine the current Accumulation Unit Value, we take the prior Valuation
Day's Accumulation Unit Value and multiply it by the Net Investment Factor for
the current Valuation Day.
The Net Investment Factor is used to measure the investment performance of a
Sub-Account from one Valuation Day to the next. The Net Investment Factor for
each Sub-Account equals:
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 15
- --------------------------------------------------------------------------------
- - The net asset value per share of each Fund held in the Sub-Account at the end
of the current Valuation Day divided by
- - The net asset value per share of each Fund held in the Sub-Account at the end
of the prior Valuation Day; minus
- - The daily mortality and expense risk charge adjusted for the number of days in
the period, and any other applicable charge.
CAN I TRANSFER FROM ONE SUB-ACCOUNT TO ANOTHER?
TRANSFERS BETWEEN SUB-ACCOUNTS -- You may transfer from one Sub-Account to
another before and after the Income Start Date at no extra charge. Your transfer
request will be processed on the day that it is received as long as it is
received on a Valuation Day before the close of the New York Stock Exchange.
Otherwise, your request will be processed on the following Valuation Day. We
will send you a confirmation when we process your transfer. You are responsible
for verifying transfer confirmations and promptly advising us of any errors
within 30 days of receiving the confirmation.
SUB-ACCOUNT TRANSFER RESTRICTIONS -- We reserve the right to limit the number of
transfers to 12 per Contract Year, with no transfers occurring on consecutive
Valuation Days. We also have the right to restrict transfers if we believe that
the transfers could have an adverse effect on other Contract Owners. In all
states except New York, Florida, Maryland and Oregon, we may:
- - Require a minimum time period between each transfer,
- - Limit the dollar amount that may be transferred on any one Valuation Day, and
- - Not accept transfer requests from an agent acting under a power of attorney
for more than one Contract Owner.
We also have a restriction in place that involves individuals who act under a
power of attorney for multiple Contract Owners. If the value of the Contract
Owners' Accounts add up to more than $2 million, we will not accept transfer
instructions from the power of attorney unless the power of attorney has entered
into a Third Party Transfer Services Agreement with us.
Some states may have different restrictions.
POWER OF ATTORNEY -- You may authorize another person to make transfers on your
behalf by submitting a completed Power of Attorney form. Once we have the
completed form on file, we will accept transfer instructions, subject to our
transfer limitations, from your designated third party until we receive new
instructions in writing from you. You will not be able to make transfers or
other changes to your Contract if you have authorized someone else to act under
a power of attorney.
CHARGES AND FEES
There are 3 charges and fees associated with the Contract:
1. THE CONTINGENT DEFERRED SALES CHARGE
The Contingent Deferred Sales Charge is deducted only under the Life Annuity
with Payments Guaranteed for a Specified Number of Years, Joint and Last
Survivor Annuity with Payments Guaranteed for a Specified Number of Years or the
Payments Guaranteed for a Specified Number of Years Annuity Payout Options. It
covers some of the expenses relating to the sale and distribution of the
Contract, including commissions paid to registered representatives and the cost
of preparing sales literature and other promotional activities.
We assess a Contingent Deferred Sales Charge when you request a full or partial
Surrender. The Contingent Deferred Sales Charge will not exceed the total amount
of the Premium Payments made. The longer you leave your Premium Payment in the
Contract, the lower the Contingent Deferred Sales Charge will be when you
Surrender.
The Contingent Deferred Sales Charge is a percentage of the Commuted Value and
is equal to:
<TABLE>
<CAPTION>
CONTRACT YEAR
SURRENDER CHARGE
AS A PERCENTAGE OF CONTINGENT DEFERRED
COMMUTED VALUE SALES CHARGE
<S> <C>
- ---------------------------------------
1 6%
- ---------------------------------------
2 6%
- ---------------------------------------
3 5%
- ---------------------------------------
4 5%
- ---------------------------------------
5 4%
- ---------------------------------------
6 3%
- ---------------------------------------
7 2%
- ---------------------------------------
8 or more 0%
- ---------------------------------------
</TABLE>
THE FOLLOWING SITUATIONS ARE NOT SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE:
- - Upon death of the Annuitant or Contract Owner
- - Upon cancellation during the Right to Cancel Period
2. MORTALITY AND EXPENSE RISK CHARGE
For assuming mortality and expense risks under the Contract, we deduct a daily
charge at the rate of 1.25% per year of Sub-Account Value (estimated at .90% for
mortality and .35% for expenses). The mortality and expense risk charge is
broken into charges for mortality risks and for an expense risk:
- - MORTALITY RISK -- The primary mortality risk that we assume is made once
Annuity Payouts have begun. Once Annuity Payouts have begun, we may be
required to make Annuity Payouts as long as the Annuitant is living,
regardless of how long the Annuitant lives. We would be required to make these
payments if the Payout Option chosen is the Life Annuity, Life Annuity With
Payments for a Period Certain or Joint and Last Survivor Life Annuity Payout
Option. The risk that we bear during this period is that the actual mortality
rates, in aggregate, may be lower than the expected mortality rates.
For the Payments Guaranteed for a Specified Number of Years Annuity Payout
Option, we must cover any difference between the Death Benefit paid and the
Surrender Value. These
<PAGE>
16 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
differences may occur in periods of declining value or periods when the
Contingent Deferred Sales Charges would have been deducted. The risk that we
bear during this period is that actual mortality rates, in aggregate, may be
higher than expected.
- - EXPENSE RISK -- We also bear an expense risk that the Contingent Deferred
Sales Charges collected before the Income Start Date may not be enough to
cover the actual cost of selling, distributing and administering the Contract.
Although variable Annuity Payouts will fluctuate with the performance of the
underlying Fund selected, your Annuity Payouts will not be affected by (a) the
actual mortality experience of our Annuitants, or (b) our actual expenses if
they are greater than the deductions stated in the Contract. Because we cannot
be certain how long our Annuitants will live, we charge this percentage fee
based on the mortality tables currently in use. The mortality and expense risk
charge enables us to keep our commitments and to pay you as planned.
3. PREMIUM TAX
We deduct Premium Taxes, if required, by a state or other government agency.
Some states collect the taxes when Premium Payments are made; others collect at
Annuitization. Since we pay Premium Taxes when they are required by applicable
law, we may deduct them from your Contract when we pay the taxes, upon
Surrender, or on the Annuity Calculation Date. The Premium Tax rate varies by
state or municipality. Currently, the maximum rate charged by any state is 3.5%
and 4% in Puerto Rico.
CHARGES AGAINST THE FUNDS -- The Separate Account purchases shares of the Funds
at net asset value. The net asset value of the Fund shares reflects investment
advisory fees and administrative expenses already deducted from the assets of
the Funds. These charges are described in the Funds' prospectuses accompanying
this Prospectus.
WE MAY OFFER, IN OUR DISCRETION, REDUCED FEES AND CHARGES INCLUDING, BUT NOT
LIMITED TO CONTINGENT DEFERRED SALES CHARGES AND THE MORTALITY AND EXPENSE RISK
CHARGE FOR CERTAIN CONTRACTS (INCLUDING EMPLOYER SPONSORED SAVINGS PLANS) WHICH
MAY RESULT IN DECREASED COSTS AND EXPENSES. REDUCTIONS IN THESE FEES AND CHARGES
WILL NOT BE UNFAIRLY DISCRIMINATORY AGAINST ANY CONTRACT OWNER.
DEATH BENEFIT
WHAT IS THE DEATH BENEFIT AND HOW IS IT CALCULATED?
The Death Benefit is the amount we will pay upon the death of the Contract Owner
or the Annuitant. The Death Benefit is calculated when we receive a certified
death certificate or other legal document acceptable to us.
BEFORE THE INCOME START DATE -- If the Contract Owner dies before the Income
Start Date, the Death Benefit will be equal to the Contract Value on the date
the certified death certificate or other legal document acceptable to us is
received. The Death Benefit may be taken in one lump sum or under any of the
Annuity Payout Options then being offered.
ON OR AFTER THE INCOME START DATE -- If the Annuitant dies on or after the
Income Start Date, the Death Benefit will be paid according to the Annuity
Payout Option selected. Under some Annuity Payout Options, there is no Death
Benefit.
Under the Payments Guaranteed for a Specified Number of Years Annuity Payout
Option on or after the Income Start Date, the Death Benefit is the greater of:
x Commuted Value;
x 100% of the Premium Payment minus all Annuity Payouts made since the Income
Start Date; or
x the Maximum Anniversary Value minus all Annuity Payouts made since that
anniversary.
As of the date we receive a certified death certificate or other legal document
acceptable to us, we will calculate an Anniversary Value for each Contract
Anniversary. The highest Anniversary Value is the Maximum Anniversary Value. The
Maximum Anniversary Value is only calculated until the earlier of the Contract
Owner or Annuitant's 81st birthday or death.
HOW IS THE DEATH BENEFIT PAID?
The Death Benefit may be taken in one lump sum or under any of the Annuity
Payout Options then being offered by us. When there is more than one
Beneficiary, we will calculate the Death Benefit amount for each Beneficiary's
portion of the proceeds and then pay it out or apply it to a selected Annuity
Payout Option according to each Beneficiary's instructions. If we receive the
complete instructions on a Non-Valuation Day, computations will take place on
the next Valuation Day. Until complete instructions are received from the
Beneficiary, the Death Benefit will be transferred to the Money Market
Sub-Account.
The Beneficiary may elect under the Annuity Payout Option "Death Benefit
Remaining with the Company" to leave proceeds from the Death Benefit with us for
up to five years from the date of the Contract Owner's death if the Contract
Owner died before the Income Start Date. Once we receive a certified death
certificate or other legal documents acceptable to us, the Beneficiary can: (a)
make Sub-Account transfers and (b) take a full Surrender without paying
Contingent Deferred Sales Charges.
REQUIRED DISTRIBUTIONS -- If the Annuitant dies before the Income Start Date,
the Death Benefit must be distributed within five years after death. The
Beneficiary can choose any Annuity Payout Option that results in complete
Annuity Payout within five years.
If the Contract Owner dies on or after the Income Start Date under an Annuity
Payout Option with a Death Benefit, any remaining value must be distributed at
least as rapidly as under the payment method being used as of the Contract
Owner's death.
If the Contract Owner is not an individual (e.g. a trust), then the original
Annuitant will be treated as the Contract Owner in the
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HARTFORD LIFE INSURANCE COMPANY 17
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situations described above and any change in the original Annuitant will be
treated as the death of the Contract Owner.
WHO WILL RECEIVE THE DEATH BENEFIT?
The distribution of the Death Benefit is based on whether death is before, on or
after the Income Start Date.
WHAT SHOULD THE BENEFICIARY CONSIDER?
ALTERNATIVES TO THE REQUIRED DISTRIBUTIONS -- The selection of an Annuity Payout
Option and the timing of the selection will have an impact on the tax treatment
of the Death Benefit. To receive favorable tax treatment, the Annuity Payout
Option selected: (a) cannot extend beyond the Beneficiary's life or life
expectancy, and (b) must begin within one year of the date of death.
If these conditions are NOT met, the Death Benefit will be treated as a lump sum
payment for tax purposes. This sum will be taxable in the year in which it is
considered received.
SPOUSAL CONTRACT CONTINUATION -- If the Beneficiary is the Contract Owner's
spouse, the Beneficiary may elect to continue the Contract as the contract
owner, receive the death benefit in one lump sum payment or elect an Annuity
Payout Option. Spousal continuation is available only once for each Contract.
IF DEATH OCCURS BEFORE THE INCOME START DATE:
<TABLE>
<CAPTION>
IF THE DECEASED IS THE . . . AND . . . AND . . . THEN THE . . .
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
Contract Owner There is a surviving joint The Annuitant is living or Joint Contract Owner
Contract Owner deceased receives the Death
Benefit.
- ----------------------------------------------------------------------------------------------------------------
Contract Owner There is no surviving The Annuitant is living or Designated Beneficiary
joint Contract Owner deceased receives the Death
Benefit.
- ----------------------------------------------------------------------------------------------------------------
Contract Owner There is no surviving The Annuitant is living or Contract Owner's estate
joint Contract Owner and deceased receives the Death
the Beneficiary Benefit.
predeceases the Contract
Owner
- ----------------------------------------------------------------------------------------------------------------
Annuitant The Contract Owner is Death Benefit is paid to
living the Contract Owner and not
the designated
Beneficiary.
</TABLE>
IF DEATH OCCURS ON OR AFTER THE INCOME START DATE:
<TABLE>
<CAPTION>
IF THE DECEASED IS THE . . . AND . . . THEN THE . . .
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
Contract Owner Designated Beneficiary becomes the
Contract Owner
- ----------------------------------------------------------------------------------------------------------------
Annuitant The Contract Owner is living Contract Owner receives the Death
Benefit.
- ----------------------------------------------------------------------------------------------------------------
Annuitant The Annuitant is also the Contract Owner Designated Beneficiary receives the
Death Benefit.
</TABLE>
THESE ARE THE MOST COMMON DEATH BENEFIT SCENARIOS, HOWEVER, THERE ARE OTHERS.
SOME OF THE ANNUITY PAYOUT OPTIONS MAY NOT RESULT IN A DEATH BENEFIT PAYOUT. IF
YOU HAVE QUESTIONS ABOUT THESE AND ANY OTHER SCENARIOS, PLEASE CONTACT YOUR
REGISTERED REPRESENTATIVE OR US.
SURRENDERS
WHAT KINDS OF SURRENDERS ARE AVAILABLE?
FULL SURRENDERS BEFORE THE INCOME START DATE -- When you Surrender your Contract
before the Income Start Date, the Surrender Value of the Contract will be made
in a lump sum payment. The Surrender Value is the Contract Value minus any
applicable Premium Taxes, or Contingent Deferred Sales Charges. The Surrender
Value may be more or less than the amount of the Premium Payments made to a
Contract.
SURRENDERS AFTER THE INCOME START DATE -- Partial Surrenders are permitted after
the Income Start Date if you select the Life Annuity with Payments Guaranteed
for a Specified Number of Years, Joint and Last Survivor Annuity with Payments
Guaranteed for a Specified Number of Years or the Payments Guaranteed for a
Specified Number of Years Annuity Payout Option. You may take partial Surrenders
of amounts equal to the Commuted Value of the payments that we would have made
during the "Specified Number of Years" you select under the Annuity Payout
Option.
To qualify for partial Surrenders under these Annuity Payout Options you must
elect a variable dollar amount Annuity Payout
<PAGE>
18 HARTFORD LIFE INSURANCE COMPANY
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and you must make the Surrender request during the Specified Number of Years.
Hartford will deduct any applicable Contingent Deferred Sales Charges.
If you elect to take the entire Commuted Value of the Annuity Payouts we would
have made during the Specified Number of Years, Hartford will not make any
Annuity Payouts during the remaining Specified Number of Years. If you elect to
take only some of the Commuted Value of the Annuity Payouts we would have made
during the Specified Number of Years, Hartford will reduce the remaining Annuity
Payouts during the remaining Specified Number of Years. The remaining Annuity
Payouts are reduced by the same percentage as the percentage of Commuted Value
Surrendered. If the partial Surrender represented 25% of the Commuted Value, the
total of the remaining Annuity Payouts would be reduced by 25%.
Annuity Payouts that are to be made after the Specified Number of Years is over
will not change.
Please check with your qualified tax adviser because there could be adverse tax
consequences for partial Surrenders after the Income Start Date.
HOW DO I REQUEST A SURRENDER?
Requests for Surrenders must be in writing. We will send your money within seven
days of receiving complete instructions. However, we may postpone payment of
Surrenders whenever: (a) the New York Stock Exchange is closed, (b) trading on
the New York Stock Exchange is restricted by the SEC, (c) the SEC permits and
orders postponement or (d) the SEC determines that an emergency exists to
restrict valuation.
WRITTEN REQUESTS -- To request a Surrender, complete a Surrender Form or send us
a letter, signed by you, stating:
- - the dollar amount that you want to receive, either before or after we withhold
taxes and deduct for any applicable charges,
- - your tax withholding amount or percentage, if any, and
- - your mailing address.
If there are joint Contract Owners, both must authorize all Surrenders. The
partial Surrender will be taken in proportion to the value in each Account.
WHAT SHOULD BE CONSIDERED ABOUT TAXES?
There are certain tax consequences associated with Surrenders:
PRIOR TO AGE 59 1/2 -- If you make a Surrender prior to age 59 1/2, there may be
adverse tax consequences including a10% federal income tax penalty on the
taxable portion of the Surrender payment. Surrendering before age 59 1/2 may
also affect the continuing tax-qualified status of some Contracts.
WE DO NOT MONITOR SURRENDER REQUESTS. TO DETERMINE WHETHER A SURRENDER IS
PERMISSIBLE, WITH OR WITHOUT FEDERAL INCOME TAX PENALTY, PLEASE CONSULT YOUR
PERSONAL TAX ADVISER.
MORE THAN ONE CONTRACT ISSUED IN THE SAME CALENDAR YEAR:
If you own more than one contract issued by us or our affiliates in the same
calendar year, then these contracts may be treated as one contract for the
purpose of determining the taxation of distributions prior to the Income Start
Date. Please consult your tax adviser for additional information.
INTERNAL REVENUE CODE SECTION 403(B) ANNUITIES -- As of December 31, 1988, all
section 403(b) annuities have limits on full Surrenders. Contributions to your
Contract made after December 31, 1988 and any increases in cash value after
December 31, 1988 may not be distributed unless you are: (a) age 59 1/2, (b) no
longer employed, (c) deceased, (d) disabled, or (e) experiencing a financial
hardship (cash value increases may not be distributed for hardships prior to age
59 1/2). Distributions prior to age 59 1/2 due to financial hardship;
unemployment or retirement may still be subject to a penalty tax of 10%.
WE ENCOURAGE YOU TO CONSULT WITH YOUR TAX ADVISER BEFORE MAKING ANY SURRENDERS.
PLEASE SEE THE "FEDERAL TAX CONSIDERATIONS" SECTION FOR MORE INFORMATION.
ANNUITY PAYOUTS
- --------------------------------------------------------------------------------
THIS SECTION DESCRIBES WHAT HAPPENS WHEN WE BEGIN TO MAKE REGULAR ANNUITY
PAYOUTS FROM YOUR CONTRACT. YOU, AS THE CONTRACT OWNER, SHOULD ANSWER FIVE
QUESTIONS:
- - When do you want Annuity Payouts to begin?
- - Which Annuity Payout Option do you want to use?
- - How often do you want to receive Annuity Payouts?
- - Do you want to receive level monthly Annuity Payouts?
- - What is the Assumed Investment Return?
- - How are the variable dollar amount Annuity Payouts determined?
Please check with your financial advisor to select the Annuity Payout Option
that best meets your income needs.
1. WHEN DO YOU WANT ANNUITY PAYOUTS TO BEGIN?
You select an Income Start Date and an Annuity Payout Option when you purchase
your Contract. The Income Start Date is any date after the right to cancel
period is over and no later than 60 days after your Contract is issued. Once
selected, neither the Income Start Date nor your Annuity Payout Option can be
changed.
The Annuity Calculation Date is when the amount of your Annuity Payout is
determined. This occurs within five Valuation Days before your selected Income
Start Date.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 19
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All Annuity Payouts, regardless of frequency, will occur on the same day of the
month as the Income Start Date. After the initial payout, if an Annuity Payout
date falls on a Non-Valuation Day, the Annuity Payout is computed on the prior
Valuation Day. If the Annuity Payout date does not occur in a given month due to
a leap year or months with only 28 days (i.e. the 31st), the Annuity Payout will
be computed on the last Valuation Day of the month.
2. WHICH ANNUITY PAYOUT OPTION DO YOU WANT TO USE?
Your Contract contains the Annuity Payout Options described below. The Annuity
Proceeds Settlement Option is an option that can be elected by the Beneficiary
after the death of the Contract Owner and is described in the "Death Benefit"
section. We may at times offer other Annuity Payout Options. Once we begin to
make Annuity Payouts, the Annuity Payout Option cannot be changed.
LIFE ANNUITY -- We make Annuity Payouts as long as the Annuitant is living. When
the Annuitant dies, we stop making Annuity Payouts. A Payee would receive only
one Annuity Payout if the Annuitant dies after the first payout, two Annuity
Payouts if the Annuitant dies after the second payout, and so forth.
LIFE ANNUITY WITH CASH REFUND -- We will make Annuity Payouts as long as the
Annuitant is living. When the Annuitant dies, we pay the Beneficiary the
Contract Value as of the Annuity Calculation Date, minus applicable Premium
Taxes, and minus any Annuity Payouts already made. This Annuity Payout Option is
only available if you select the 5% Assumed Investment Return.
LIFE ANNUITY WITH PAYMENTS GUARANTEED FOR A SPECIFIED NUMBER OF YEARS -- We make
monthly Annuity Payouts during the lifetime of the Annuitant but Annuity Payouts
are at least guaranteed for a time period you select which is between 5 years
and 100 years minus the age of Annuitant. If, at the death of the Annuitant,
Annuity Payouts have been made for less than the time period selected, then the
Beneficiary may elect to either continue the Annuity Payouts for the remainder
of the period, receive the Commuted Value in one lump sum or take the Death
Benefit.
For Qualified Contracts, the Annuity Payout period remaining must be less than
the life expectancy of the Annuitant when the Contact is issued.
JOINT AND LAST SURVIVOR LIFE ANNUITY -- We will make Annuity Payouts as long as
the Annuitant and Joint Annuitant are living. When one Annuitant dies, we
continue to make Annuity Payouts to the other Annuitant until that second
Annuitant dies. When choosing this option, you must decide what will happen to
the Annuity Payouts; either fixed or variable, after the first Annuitant dies.
You must select Annuity Payouts that:
- - Remain the same at 100%, or
- - Decrease to 66.67%, or
- - Decrease to 50%.
For variable Annuity Payouts, these percentages represent Annuity Units; for
fixed Annuity Payouts, they represent actual dollar amounts. The percentage will
also impact the Annuity Payout amount we pay while both Annuitants are living.
If you pick a lower percentage, your original Annuity Payouts will be higher
while both Annuitants are alive.
JOINT AND LAST SURVIVOR ANNUITY WITH PAYMENTS GUARANTEED FOR A SPECIFIED NUMBER
OF YEARS -- We will make Annuity Payouts as long as the Annuitant and Joint
Annuitant are living, but Annuity Payouts are at least guaranteed for a time
period you select which is between 5 years and 100 years minus the age of
younger Annuitant. When one Annuitant dies, we continue to make Annuity Payouts
to the other Annuitant until that second Annuitant dies. If the Annuitant and
the Joint Annuitant both die before Annuity Payouts have been made for less than
the time period selected, then the Beneficiary may elect to either continue the
Annuity Payouts for the remainder of the period or receive the Commuted Value in
one lump sum.
When choosing this option, you must decide what will happen to the Annuity
Payouts; either fixed or variable, after the first Annuitant dies. You must
select Annuity Payouts that:
- - Remain the same at 100%, or
- - Decrease to 66.67%, or
- - Decrease to 50%.
For variable Annuity Payouts, these percentages represent Annuity Units. The
percentage will also impact the Annuity Payout amount we pay while both
Annuitants are living. If you pick a lower percentage, your Annuity Payouts will
be higher while both Annuitants are alive.
PAYMENTS GUARANTEED FOR A SPECIFIED NUMBER OF YEARS -- We will make Annuity
Payouts for the number of years that you select. You can select between 5 years
and 100 years minus the age of the Annuitant. If the Annuitant dies before the
specified number of years have passed, the Beneficiary may elect either to
continue Annuity Payouts for the rest of the specified number of years, or
receive the Commuted Value in one sum.
IMPORTANT INFORMATION:
- - YOU CANNOT SURRENDER YOUR CONTRACT ONCE ANNUITY PAYOUTS BEGIN, UNLESS YOU HAVE
SELECTED THE PAYMENTS GUARANTEED FOR A SPECIFIED NUMBER OF YEARS ANNUITY
PAYOUT OPTION. A CONTINGENT DEFERRED SALES CHARGE MAY BE DEDUCTED.
3. HOW OFTEN DO YOU WANT THE PAYEE TO RECEIVE ANNUITY PAYOUTS?
In addition to selecting an Income Start Date and an Annuity Payout Option, you
must also decide how often you want the Payee to receive Annuity Payouts. You
may choose to receive Annuity Payouts:
- - monthly,
- - quarterly,
- - semi-annually, or
<PAGE>
20 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- - annually.
Once you select a frequency, it cannot be changed. If you do not make a
selection, the Payee will receive monthly Annuity Payouts. You must select a
frequency that results in an Annuity Payout of at least $50. If the amount falls
below $50, we have the right to change the frequency to bring the Annuity Payout
up to at least $50. For Contracts issued in New York, the minimum monthly
Annuity Payout is $20.
4. DO YOU WANT TO RECEIVE LEVEL MONTHLY ANNUITY PAYOUTS?
You may elect to receive Annuity Payouts that vary in amount each Contract Year,
but are level each month throughout the Contract Year. We offer these level
payouts on a monthly frequency only. You can begin receiving these level monthly
Annuity Payouts on your Income Start Date or as of any anniversary of your
Income Start Date. You can cancel these level Annuity Payouts by notifying us
within 30 days of the anniversary of the Income Start Date.
The level payouts are available only under the following Annuity Payout Options:
- - Life Annuity with Cash Refund
- - Life Annuity with Payments Guaranteed for a Specified Number of Years
- - Joint and Survivor Life Annuity with Payments Guaranteed for a Specified
Number of Years
- - Payments Guaranteed for a Specified Number of Years
We will transfer the annual variable Annuity Payout amount to the General
Account to provide your level monthly Annuity Payouts. The assets of the General
Account are subject to the claims of our creditors. The level monthly Annuity
Payouts will be calculated using a fixed interest rate which will be determined
annually on each anniversary of your Income Start Date. The minimum interest
rate will be 3%, compounded annually.
In situations where we make Annuity Payouts based on the life of the Annuitant,
we will calcuate the level monthly Annuity Payout using the mortality table
listed in the Contract.
5. WHAT IS THE ASSUMED INVESTMENT RETURN?
The Assumed Investment Return ("AIR") is the investment return you select before
we start to make Annuity Payouts. It is a critical assumption for calculating
variable dollar amount Annuity Payouts. The first Annuity Payout will be based
upon the AIR. The remaining Annuity Payouts will fluctuate based on the
performance of the underlying Funds.
Subject to the approval of your State, you can select one of three AIRs: 3%, 5%
or 6%. The greater the AIR, the greater the initial Annuity Payout. A higher AIR
may result in smaller potential growth in the Annuity Payouts. On the other
hand, a lower AIR results in a lower initial Annuity Payout, but future Annuity
Payouts have the potential to be greater.
For example, if the second monthly Annuity Payout is the same as the first, the
sub-accounts earned exactly the same return as the AIR. If the second monthly
Annuity Payout is more than the first, the sub-accounts earned more than the
AIR. If the second Annuity Payout is less than the first, the sub-account earned
less than the AIR.
Level variable dollar amount Annuity Payouts would be produced if the investment
returns remained constant and equal to the AIR. In fact, Annuity Payouts will
vary up or down as the investment rate varies up or down from the AIR.
6. HOW ARE VARIABLE-DOLLAR AMOUNT ANNUITY PAYOUTS DETERMINED?
A variable-dollar amount Annuity Payout is based on the investment performance
of the Sub-Accounts. The variable-dollar amount Annuity Payouts may fluctuate
with the performance of the underlying Funds. To begin making variable-dollar
amount Annuity Payouts, we convert the first Annuity Payout amount to a set
number of Annuity Units and then price those units to determine the Annuity
Payout amount. The number of Annuity Units that determines the Annuity Payout
amount remains fixed unless you transfer units between Sub-Accounts.
The dollar amount of the first variable Annuity Payout depends on:
- - the Annuity Payout Option chosen,
- - the Annuitant's attained age and gender (if applicable), and,
- - the applicable annuity purchase rates based on the 1983a Individual Annuity
Mortality table
- - the Assumed Investment Return
The total amount of the first variable-dollar amount Annuity Payout is
determined by dividing the Contract Value minus any applicable Premium Taxes, by
$1,000 and multiplying the result by the payment factor defined in the Contract
for the selected Annuity Payout Option.
The dollar amount of each subsequent variable-dollar amount Annuity Payout is
equal to the total of:
Annuity Units for each Sub-Account multiplied by Annuity Unit Value of each
Sub-Account.
The Annuity Unit Value of each Sub-Account for any Valuation Period is equal to
the Accumulation Unit Value Net Investment Factor for the current Valuation
Period multiplied by the Annuity Unit factor found in your Contract, multiplied
by the Annuity Unit Value for the preceding Valuation Period.
TRANSFER OF ANNUITY UNITS -- After the Income Start Date, you may transfer
dollar amounts of Annuity Units from one Sub-Account to another. On the day you
make a transfer, the dollar amounts are equal for both Sub-Accounts and the
number of Annuity Units will be different. We will transfer the dollar amount of
your Annuity Units the day we receive your written request if received before
the close of the New York Stock Exchange. Otherwise, the transfer will be made
on the next Valuation Day.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 21
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OTHER INFORMATION
ASSIGNMENT
Ownership of this Contract is generally assignable. However, if the Contract is
issued to a tax qualified retirement plan, it is possible that the ownership of
the Contract may not be transferred or assigned. An assignment of a
Non-Qualified Contract may subject the Contract Values or Surrender Value to
income taxes and certain penalty taxes.
CONTRACT MODIFICATION
The Annuitant may not be changed. We may modify the Contract, but no
modification will effect the amount or term of any Contract unless a
modification is required to conform the Contract to applicable Federal or State
law. No modification will effect the method by which Contract Values are
determined.
HOW CONTRACTS ARE SOLD
Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account. HSD
is an affiliate of Hartford. Both HSD and Hartford are ultimately controlled by
The Hartford Financial Services Group, Inc. The principal business address of
HSD is the same as that of Hartford.
The securities will be sold by salesperson of HSD who represent Hartford as
insurance and variable annuity agents and who are registered representatives of
Broker-Dealers who have entered into distribution agreements with HSD.
HSD is registered with the Commission under the Securities Exchange Act of 1934
as a Broker-Dealer and is a member of the National Association of Securities
Dealers, Inc.
Commissions will be paid by Hartford and will not be more than 7% of premium
payments. From time to time, Hartford may pay or permit other promotional
incentives, in cash or credit or other compensation.
Broker-dealers or financial institutions are compensated according to a schedule
set forth by HSD and any applicable rules or regulations for variable insurance
compensation. Compensation is generally based on premium payments made by
policyholders or contract owners. This compensation is usually paid from the
sales charges described in this prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HSD, its affiliates or Hartford may also make compensation
arrangements with certain broker-dealers or financial institutions based on
total sales by the broker-dealer or financial institution of insurance products.
These payments, which may be different for different broker-dealers or financial
institutions, will be made by HSD, its affiliates or Hartford out of their own
assets and will not effect the amounts paid by the policyholders or contract
owners to purchase, hold or Surrender variable insurance products.
LEGAL MATTERS AND EXPERTS
There are no material legal proceedings pending to which the Separate Account is
a party.
Counsel with respect to federal laws and regulations applicable to the issue and
sale of the Contracts and with respect to Connecticut law is Lynda Godkin,
Senior Vice President, General Counsel and Corporate Secretary, Hartford Life
Insurance Company, P.O. Box 2999, Hartford, Connecticut 06104-2999.
The audited financial statements and financial statement schedules included in
this registration statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports. The principal business address of Arthur
Andersen LLP is One Financial Plaza, Hartford, Connecticut 06103.
MORE INFORMATION
You may call your Representative if you have any questions or write or call us
at the address below:
Hartford Life Insurance Company
Attn: Investment Product Services
P.O. Box 5085
Hartford, Connecticut 06102-5085
Telephone: (800) 862-6668 (Contract Owners)
(800) 862-7155 (Registered Representatives)
FEDERAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
A. GENERAL
Since federal tax law is complex, the tax consequences of purchasing this
contract will vary depending on your situation. You may need tax or legal advice
to help you determine whether purchasing this contract is right for you.
Our general discussion of the tax treatment of this contract is based on our
understanding of federal income tax laws as they are currently interpreted. A
detailed description of all federal income tax consequences regarding the
purchase of this contract cannot be made in the prospectus. We also do not
discuss state, municipal or other tax laws that may apply to this contract. For
detailed information, you should consult with a qualified tax adviser familiar
with your situation.
B. TAXATION OF HARTFORD AND THE SEPARATE ACCOUNT
The Separate Account is taxed as part of Hartford which is taxed as a life
insurance company under Subchapter L of Chapter 1 of the Code. Accordingly, the
Separate Account is not separately taxed as a "regulated investment company"
under subchapter
<PAGE>
22 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
M. 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. 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.
C. TAXATION OF PURCHASERS OF NON-QUALIFIED CONTRACTS
1. CORPORATIONS, TRUSTS AND OTHER NON-NATURAL PERSONS
Code Section 72 contains provisions for contract owners which are not natural
persons. Non-natural persons include corporations, trusts, limited liability
companies, partnerships and other types of legal entities. The tax rules for
contracts owned by non-natural persons are different from the rules for
contracts owned by individuals. For example, the annual net increase in the
value of the contract is currently includible in the gross income of a
non-natural person, unless the non-natural person holds the contract as an agent
for a natural person. There are additional exceptions from current inclusion
for:
- - certain annuities held by structured settlement companies,
- - certain annuities held by an employer with respect to a terminated qualified
retirement plan and
- - certain immediate annuities.
A non-natural person which is a tax-exempt entity for federal tax purposes will
not be subject to income tax as a result of this provision.
If the contract owner is a non-natural person, the primary annuitant is treated
as the contract owner in applying mandatory distribution rules. These rules
require that certain distributions be made upon the death of the contract owner.
A change in the primary annuitant is also treated as the death of the contract
owner.
2. NATURAL PERSONS
Section 72 generally provides that a Contract Owner is not taxed on increases in
the value of the Contract until an amount distributed from the Contract is
received (or deemed received) by the Contract Owner, either in the form of
Annuity Payments, as contemplated by the Contract, or in some other form (i.e.,
surrender or Death Benefit). However, this tax deferral generally applies only
if: (1) the investments in the Separate Account are "adequately diversified" in
accordance with Treasury Department regulations, (2) Hartford, rather than the
Contract Owner, is considered the owner of such assets for federal income tax
purposes, and (3) certain distribution requirements are met in the event that
the Contract Owner dies. These requirements are discussed further under the
caption "Tax Status of the Contract" below.
A. DISTRIBUTIONS PRIOR TO THE INCOME START DATE.
The Contract does not permit partial withdrawals or partial surrenders or loans.
If, however, a Contract is surrendered prior to the Income Start Date, amounts
received by the Contract Owner are includable in his or her income to the extent
that such amounts exceed the "investment in the contract." For this purpose, the
investment in the contract at any time equals the Premium Payment (to the extent
that such Payment was neither deductible when made nor excludable from income
as, for example, in the case of certain contributions to Qualified Contracts),
less any amounts previously received from the Contract which were not includable
in income. Also, the Surrender Value may be subject to a penalty tax, described
below. In general, an assignment of the Contract (or other change of ownership)
without full and adequate consideration will be treated as a distribution from
the Contract and taxed in the same manner as a surrender (except where the
Contract is transferred between spouses or incident to a divorce).
The Contract provides that upon the death of Contract Owner, Annuitant or Joint
Annuitant, the Beneficiary will receive the Contract Value. This distribution is
includable in the Beneficiary's income as follows: (1) if distributed in a lump
sum, it is taxed in the same manner as a surrender, (2) if it is distributed in
the form of Annuity Payments, it is taxed in the same manner as Annuity Payments
(see below).
B. DISTRIBUTIONS AFTER THE INCOME START DATE.
The portion of each Annuity Payment taxable as ordinary income is equal to the
excess of the Annuity Payment over the "exclusion amount." The "exclusion
amount" is the investment in the Contract (described above), adjusted for any
guaranteed period, divided by the number of Annuity Payments expected to be made
(determined by Treasury Department regulations that take into account the
Annuitant's life expectancy and the Annuity Payment Option elected). After the
dollar amount of the investment in the Contract, adjusted for any guaranteed
period, is deemed to be recovered, the entire amount of each Annuity Payment is
fully includable in income. Nonetheless, should the Annuity Payments cease
before the adjusted investment in the Contract is fully recovered, a deduction
is allowed for the unrecovered amount of the adjusted investment in the
Contract. Where a guaranteed period of Annuity Payments is selected and the
Annuitant does not live to the end of that period, the Annuity Payments for the
remainder of the period are includable in income as follows: (1) if distributed
in a lump sum, they are included in income to the extent that they exceed the
unrecovered investment in the Contract at that time, or (2) if received as
Annuity Payments, they are fully excluded from income until the remaining
investment in the Contract is deemed to be recovered. All Annuity Payments
thereafter are fully includable in income.
C. PENALTY TAX ON CERTAIN DISTRIBUTIONS.
Distributions received (or deemed received) from a Contract (before or after the
Income Start Date) may be subject to a penalty tax equal to 10% of the amount
treated as taxable
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HARTFORD LIFE INSURANCE COMPANY 23
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income. In general, however, there is no penalty tax on distributions:
- - made on or after a taxpayer reaches age 59 1/2;
- - made on or after the death of the Contract Owner;
- - attributable to a taxpayer's becoming disabled;
- - that are part of a series of substantially equal periodic payments (not less
frequently than annually) for the life (or the life expectancy) of the
taxpayer or the joint lives (or joint life expectancies) of the taxpayer and
his or her designated beneficiary;
- - made under certain annuities issued in connection with structured settlement
agreements; and
- - made under an annuity contract that is purchased with a single premium payment
when the annuity date is no later than a year from purchase and substantially
equal periodic payments are made, not less frequently than annually, during
the annuity payment period.
D. AGGREGATION OF TWO OR MORE CONTRACTS.
All non-qualified deferred annuity contracts that are issued by Hartford (or its
affiliates) to the same owner during any calendar year are treated as one
annuity contract for purposes of determining the amount includable in gross
income under Section 72(e) of the Code. The effects of this rule are not yet
clear; however, it could affect the time when income is taxable and the amount
that might be subject to the 10% penalty tax described above. In addition, the
Treasury Department has specific authority to issue regulations that prevent the
avoidance of Section 72(e) of the Code through the serial purchase of annuity
contracts or otherwise. There may also be other situations in which the Treasury
Department may conclude that it would be appropriate to aggregate two or more
deferred or immediate annuity contracts purchased by the same owner.
Accordingly, a Contract Owner should consult a competent tax adviser before
purchasing more than one annuity contract in a calendar year.
E. POSSIBLE CHANGES IN TAXATION.
In past years, legislation has been proposed that would have adversely modified
the federal taxation of certain annuity contracts. For example, one such
proposal would have changed the tax treatment of non-qualified annuities that
did not have "substantial life contingencies" by taxing income as it is credited
to the annuity contract. Although as of the date of this Prospectus Congress is
not considering any legislation regarding taxation of annuity contracts, there
is always the possibility that the tax treatment of annuities could change by
legislation or other means (such as IRS regulations, revenue rulings, judicial
decisions, etc.). Moreover, it is also possible that any change could be
retroactive (that is, effective prior to the date of the change).
F. CONTRACTS OBTAINED THROUGH A TAX-FREE EXCHANGE OF OTHER ANNUITY OR LIFE
INSURANCE CONTRACTS.
Section 1035 of the Code generally provides that no gain or loss shall be
recognized on the exchange of one annuity contract for another. If the
surrendered contract was issued prior to August 14, 1982, the tax rules formerly
provided that the surrender was taxable only to the extent the amount received
exceeds the owner's investment in the contract will and continue to apply to
amounts allocable to investments in that contract prior to August 14, 1982. In
contrast, contracts issued after January 19, 1985 in a Code Section 1035
exchange are treated as new contracts for purposes of the penalty and
distribution-at-death rules. Special rules and procedures apply to Section 1035
transactions. Prospective Contract Owners wishing to take advantage of
Section 1035 should consult their tax adviser.
G. TAX STATUS OF THE CONTRACTS.
The foregoing discussion assumes that the Contracts qualify as "annuity
contracts" for federal income tax purposes under the Code.
3. DIVERSIFICATION REQUIREMENTS
The Code requires that investments supporting your contract be adequately
diversified. Code Section 817 provides that a variable annuity contract will not
be treated as an annuity contract for any period during which the investments
made by the separate account or underlying fund are not adequately diversified.
If a contract is not treated as an annuity contract, the contract owner will be
subject to income tax on annual increases in cash value.
The Treasury Department's diversification regulations require, among other
things, that:
- - no more than 55% of the value of the total assets of the segregated asset
account underlying a variable contract is represented by any one investment,
- - no more than 70% is represented by any two investments,
- - no more than 80% is represented by any three investments and
- - no more than 90% is represented by any four investments.
In determining whether the diversification standards are met, all securities of
the same issuer, all interests in the same real property project, and all
interests in the same commodity are each treated as a single investment. In the
case of government securities, each government agency or instrumentality is
treated as a separate issuer.
A separate account must be in compliance with the diversification standards on
the last day of each calendar quarter or within 30 days after the quarter ends.
If an insurance company inadvertently fails to meet the diversification
requirements, the company may still comply within a reasonable period and avoid
the taxation of contract income on an ongoing basis. However, either the company
or the contract owner must agree to pay the tax due for the period during which
the diversification requirements were not met.
We monitor the diversification of investments in the separate accounts and test
for diversification as required by the Code. We intend to administer all
contracts subject to the diversification
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24 HARTFORD LIFE INSURANCE COMPANY
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requirements in a manner that will maintain adequate diversification.
4. OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT
In order for a variable annuity contract to qualify for tax deferral, assets in
the separate accounts supporting the contract must be considered to be owned by
the insurance company and not by the contract owner. It is unclear under what
circumstances an investor is considered to have enough control over the assets
in the separate account to be considered the owner of the assets for tax
purposes.
The IRS has issued several rulings discussing investor control. These rulings
say that certain incidents of ownership by the contract owner, such as the
ability to select and control investments in a separate account, will cause the
contract owner to be treated as the owner of the assets for tax purposes.
In its explanation of the diversification regulations, the Treasury Department
recognized that the temporary regulations "do not provide guidance concerning
the circumstances in which investor control of the investments of a segregated
asset account may cause the investor, rather than the insurance company, to be
treated as the owner of the assets in the account." The explanation further
indicates that "the temporary regulations provide that in appropriate cases a
segregated asset account may include multiple sub-accounts, but do not specify
the extent to which policyholders may direct their investments to particular
sub-accounts without being treated as the owners of the underlying assets.
Guidance on this and other issues will be provided in regulations or revenue
rulings under Section 817(d), relating to the definition of variable contract."
The final regulations issued under Section 817 did not provide guidance
regarding investor control, and as of the date of this prospectus, guidance has
yet to be issued. We do not know if additional guidance will be issued. If
guidance is issued, we do not know if it will have a retroactive effect.
Due to the lack of specific guidance on investor control, there is some
uncertainty about when a contract owner is considered the owner of the assets
for tax purposes. We reserve the right to modify the contract, as necessary, to
prevent you from being considered the owner of assets in the separate account.
5. REQUIRED DISTRIBUTIONS
In order to be treated as an annuity contract for federal income tax purposes,
Section 72(s) of the Code requires any Non-Qualified Contract to provide that:
(a) if any Contract Owner dies on or after the Income Start Date but prior to
the time the entire interest in the Contract has been distributed, the remaining
portion of such interest will be distributed at least as rapidly as under the
method of distribution being used as of the date of that Contract Owner's death;
and (b) if any Contract Owner dies prior to the Income Start Date, the entire
interest in the Contract will be distributed within five years after the date of
the Contract Owner's death. These requirements will be considered satisfied as
to any portion of the Contract Owner's interest that is payable to or for the
benefit of a "designated beneficiary," and that is distributed over the life of
such Beneficiary or over a period not extending beyond the life expectancy of
that Beneficiary, provided that such distributions begin within one year of that
Contract Owner's death. The Contract Owner's "designated beneficiary" is the
person designated by such Contract Owner as a Beneficiary and must be a natural
person. However, if the Contract Owner's sole designated beneficiary is the
surviving spouse of the Contract Owner, the Contract may be continued with the
surviving spouse as the new Contract Owner. This spousal continuation shall
apply only once for this contract. The requirements further provide that if the
Contract Owner is not an individual, the primary Annuitant shall be treated as
the Contract Owner for purposes of making distributions that 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. The
Contract does not permit a change of the Annuitants, however.
Non-Qualified Contracts contain provisions that are intended to comply with the
requirements of Section 72(s) of the Code, although no regulations interpreting
these requirements have yet been issued. Hartford will review such provisions
and modify them if necessary to assure that they comply with the requirements of
Code Section 72(s) when clarified by regulation or otherwise.
D. CONTRACT OWNERS THAT ARE NONRESIDENT
ALIENS OR FOREIGN CORPORATIONS.
The discussion above provides general information regarding U.S. federal income
tax consequences to Contract Owners that are U.S. citizens or residents.
Purchasers that are not U.S. citizens or residents will generally be subject to
U.S. federal income tax and withholding on annuity distributions at a 30% rate,
unless a lower treaty rate applies and any required tax forms are submitted to
Hartford. In addition, purchasers may be subject to state premium tax, other
state and/or municipal taxes, and taxes that may be imposed by the purchaser's
country of citizenship or residence. Prospective purchasers are advised to
consult with a qualified tax adviser regarding U.S., state, and foreign taxation
with respect to the purchase of a Contract.
E. OTHER TAX CONSEQUENCES
As noted above, the foregoing comments about the federal tax consequences under
these Contracts are not exhaustive, and special rules may apply to other tax
situations not discussed in this Prospectus. Further, the federal income tax
consequences discussed herein reflect Hartford's understanding of current law
and the law may change. Federal estate and state and local estate, inheritance
and other tax consequences of ownership or receipt of distributions under a
Contract depend on the individual circumstances of each Contract Owner or
recipient of the distribution. In particular, gift and/or estate tax
consequences may result in situations where the Contract Owner is not also the
Annuitant, Payee, and Beneficiary. A competent tax adviser should be consulted
for further information.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 25
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TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
SECTION
<S> <C>
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DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY
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SAFEKEEPING OF ASSETS
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INDEPENDENT PUBLIC ACCOUNTANTS
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DISTRIBUTION OF CONTRACTS
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CALCULATION OF YIELD AND RETURN
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PERFORMANCE COMPARISONS
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VARIABLE ANNUITY PAYMENTS
- ----------------------------------------------------------------------
OTHER INFORMATION
- ----------------------------------------------------------------------
FINANCIAL STATEMENTS
- ----------------------------------------------------------------------
</TABLE>
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26 HARTFORD LIFE INSURANCE COMPANY
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APPENDIX I -- INFORMATION REGARDING TAX-QUALIFIED RETIREMENT PLANS
This summary does not attempt to provide more than general information about the
federal income tax rules associated with use of a Contract by a tax-qualified
retirement plan. Because of the complexity of the federal tax rules, owners,
participants and beneficiaries are encouraged to consult their own tax advisors
as to specific tax consequences.
The federal tax rules applicable to owners of Contracts under tax-qualified
retirement plans vary according to the type of plan as well as the terms and
conditions of the plan itself. Contract owners, plan participants and
beneficiaries are cautioned that the rights and benefits of any person may be
controlled by the terms and conditions of the tax-qualified retirement plan
itself, regardless of the terms and conditions of a Contract. We are not bound
by the terms and conditions of such plans to the extent such terms conflict with
a Contract, unless we specifically consent to be bound.
Some tax-qualified retirement plans are subject to distribution and other
requirements that are not incorporated into our administrative procedures.
Contract owners, participants and beneficiaries are responsible for determining
that contributions, distributions and other transactions comply with applicable
law. Tax penalties may apply to transactions with respect to tax-qualified
retirement plans if applicable federal income tax rules and restrictions are not
carefully observed.
We do not currently offer the Contracts in connection with all of the types of
tax-qualified retirement plans discussed below and may not offer the Contracts
for all types of tax-qualified retirement plans in the future.
1. TAX-QUALIFIED PENSION OR PROFIT-SHARING PLANS -- Eligible employers can
establish certain tax-qualified pension and profit-sharing plans under
section 401 of the Code. Rules under section 401(k) of the Code govern certain
"cash or deferred arrangements" under such plans. Rules under section 408(k)
govern "simplified employee pensions". Tax-qualified pension and profit-sharing
plans are subject to limitations on the amount that may be contributed, the
persons who may be eligible to participate and the time when distributions must
commence. Employers intending to use the Contracts in connection with
tax-qualified pension or profit-sharing plans should seek competent tax and
other legal advice.
2. TAX SHELTERED ANNUITIES UNDER SECTION 403(B) -- Public schools and certain
types of charitable, educational and scientific organizations, as specified in
section 501(c)(3) of the Code, can purchase tax-sheltered annuity contracts for
their employees. Tax-deferred contributions can be made to tax-sheltered annuity
contracts under section 403(b) of the Code, subject to certain limitations.
Generally, such contributions may not exceed the lesser of $10,500 (indexed) or
20% of the employee's "includable compensation" for such employee's most recent
full year of employment, subject to other adjustments. Special provisions under
the Code may allow some employees to elect a different overall limitation.
Tax-sheltered annuity programs under section 403(b) are subject to a PROHIBITION
AGAINST DISTRIBUTIONS FROM THE CONTRACT ATTRIBUTABLE TO CONTRIBUTIONS MADE
PURSUANT TO A SALARY REDUCTION AGREEMENT, unless such distribution is made:
- - after the participating employee attains age 59 1/2;
- - upon separation from service;
- - upon death or disability; or
- - in the case of hardship (and in the case of hardship, any income attributable
to such contributions may not be distributed).
Generally, the above restrictions do not apply to distributions attributable to
cash values or other amounts held under a section 403(b) contract as of December
31, 1988.
3. DEFERRED COMPENSATION PLANS UNDER SECTION 457 -- A governmental employer or a
tax-exempt employer other than a governmental unit can establish a Deferred
Compensation Plan under section 457 of the Code. For these purposes, a
"governmental employer" is a State, a political subdivision of a State, or an
agency or an instrumentality of a State or political subdivision of a State.
Employees and independent contractors performing services for a governmental or
tax-exempt employer can elect to have contributions made to a Deferred
Compensation Plan of their employer in accordance with the employer's plan and
section 457 of the Code.
Deferred Compensation Plans that meet the requirements of section 457(b) of the
Code are called "eligible" Deferred Compensation Plans. Section 457(b) limits
the amount of contributions that can be made to an eligible Deferred
Compensation Plan on behalf of a participant. Generally, the limitation on
contributions is 33 1/3% of a participant's includable compensation (typically
25% of gross compensation) or, for 2000, $8,000 (indexed), whichever is less.
The plan may provide for additional "catch-up" contributions during the three
taxable years ending before the year in which the participant attains normal
retirement age.
All of the assets and income of an eligible Deferred Compensation Plan of a
governmental employer must be held in trust for the exclusive benefit of
participants and their beneficiaries. For this purpose, custodial accounts and
certain annuity contracts are treated as trusts. The requirement of a trust does
not apply to amounts under a Deferred Compensation Plan of a tax-exempt
(non-governmental) employer. In addition, the requirement of a trust does not
apply to amounts under a Deferred Compensation Plan of a governmental employer
if the Deferred Compensation Plan is not an eligible plan within the meaning of
section 457(b) of the Code. In the absence of such a trust,
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HARTFORD LIFE INSURANCE COMPANY 27
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amounts under the plan will be subject to the claims of the employer's general
creditors.
In general, distributions from an eligible Deferred Compensation Plan are
prohibited under section 457 of the Code unless made after the participating
employee:
- - attains age 70 1/2,
- - separates from service,
- - dies, or
- - suffers an unforeseeable financial emergency as defined in the Code.
Under present federal tax law, amounts accumulated in a Deferred Compensation
Plan under section 457 of the Code cannot be transferred or rolled over on a
tax-deferred basis except for certain transfers to other Deferred Compensation
Plans under section 457 in limited cases.
4. INDIVIDUAL RETIREMENT ANNUITIES ("IRAS") UNDER
SECTION 408
TRADITIONAL IRAS -- Eligible individuals can establish individual retirement
programs under section 408 of the Code through the purchase of an IRA. Section
408 imposes limits with respect to IRAs, including limits on the amount that may
be contributed to an IRA, the amount of such contributions that may be deducted
from taxable income, the persons who may be eligible to contribute to an IRA,
and the time when distributions commence from an IRA. Distributions from certain
tax-qualified retirement plans may be "rolled-over" to an IRA on a tax-deferred
basis.
SIMPLE IRAS -- Eligible employees may establish SIMPLE IRAs in connection with a
SIMPLE IRA plan of an employer under section 408(p) of the Code. Special
rollover rules apply to SIMPLE IRAs. Amounts can be rolled over from one SIMPLE
IRA to another SIMPLE IRA. However, amounts can be rolled over from a SIMPLE IRA
to a Traditional IRA only after two years have expired since the employee first
commenced participation in the employer's SIMPLE IRA plan. Amounts cannot be
rolled over to a SIMPLE IRA from a qualified plan or a Traditional IRA. Hartford
is a non-designated financial institution for purposes of the SIMPLE IRA rules.
ROTH IRAS -- Eligible individuals may establish Roth IRAs under section 408A of
the Code. Contributions to a Roth IRA are not deductible. Subject to special
limitations, a Traditional IRA may be converted into a Roth IRA or a
distribution from a Traditional IRA may be rolled over to a Roth IRA. However, a
conversion or a rollover from a Traditional IRA to a Roth IRA is not excludable
from gross income. If certain conditions are met, qualified distributions from a
Roth IRA are tax-free.
5. FEDERAL TAX PENALTIES AND WITHHOLDING -- Distributions from tax-qualified
retirement plans are generally taxed as ordinary income under section 72 of the
Code. Under these rules, a portion of each distribution may be excludable from
income. The excludable amount is the portion of the distribution that bears the
same ratio as the after-tax contributions bear to the expected return.
(A) PENALTY TAX ON EARLY DISTRIBUTIONS Section 72(t) of the Code imposes an
additional penalty tax equal to 10% of the taxable portion of a distribution
from certain tax-qualified retirement plans. However, the 10% penalty tax
does not apply to a distributions that is:
- - Made on or after the date on which the employee reaches age 59 1/2;
- - Made to a beneficiary (or to the estate of the employee) on or after the death
of the employee;
- - Attributable to the employee's becoming disabled (as defined in the Code);
- - Part of a series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the employee or the
joint lives (or joint life expectancies) of the employee and his or her
designated beneficiary;
- - Except in the case of an IRA, made to an employee after separation from
service after reaching age 55; or
- - Not greater than the amount allowable as a deduction to the employee for
eligible medical expenses during the taxable year.
IN ADDITION, THE 10% PENALTY TAX DOES NOT APPLY TO A DISTRIBUTION FROM AN IRA
THAT IS:
- - Made after separation from employment to an unemployed IRA owner for health
insurance premiums, if certain conditions are met;
- - Not in excess of the amount of certain qualifying higher education expenses,
as defined by section 72(t)(7) of the Code; or
- - A qualified first-time homebuyer distribution meeting the requirements
specified at section 72(t)(8) of the Code.
If you are a participant in a SIMPLE IRA plan, you should be aware that the 10%
penalty tax is increased to 25% with respect to non-exempt early distributions
made from your SIMPLE IRA during the first two years following the date you
first commenced participation in any SIMPLE IRA plan of your employer.
(B) MINIMUM DISTRIBUTION PENALTY TAX If the amount distributed is less than the
minimum required distribution for the year, the Participant is subject to a
50% penalty tax on the amount that was not properly distributed.
An individual's interest in a tax-qualified retirement plan generally must be
distributed, or begin to be distributed, not later than the Required Beginning
Date. Generally, the Required Beginning Date is April 1 of the calendar year
following the later of:
- - the calendar year in which the individual attains age 70 1/2; or
- - the calendar year in which the individual retires from service with the
employer sponsoring the plan.
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28 HARTFORD LIFE INSURANCE COMPANY
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The Required Beginning Date for an individual who is a five (5) percent owner
(as defined in the Code), or who is the owner of an IRA, is April 1 of the
calendar year following the calendar year in which the individual attains age
70 1/2.
The entire interest of the Participant must be distributed beginning no later
than the Required Beginning Date over:
- - the life of the Participant or the lives of the Participant and the
Participant's designated beneficiary, or
- - over a period not extending beyond the life expectancy of the Participant or
the joint life expectancy of the Participant and the Participant's designated
beneficiary.
Each annual distribution must equal or exceed a "minimum distribution amount"
which is determined by dividing the account balance by the applicable life
expectancy. This account balance is generally based upon the account value as of
the close of business on the last day of the previous calendar year. In
addition, minimum distribution incidental benefit rules may require a larger
annual distribution.
If an individual dies before reaching his or her Required Beginning Date, the
individual's entire interest must generally be distributed within five years of
the individual's death. However, this rule will be deemed satisfied, if
distributions begin before the close of the calendar year following the
individual's death to a designated beneficiary and distribution is over the life
of such designated beneficiary (or over a period not extending beyond the life
expectancy of the beneficiary). If the beneficiary is the individual's surviving
spouse, distributions may be delayed until the individual would have attained
age 70 1/2.
If an individual dies after reaching his or her Required Beginning Date or after
distributions have commenced, the individual's interest must generally be
distributed at least as rapidly as under the method of distribution in effect at
the time of the individual's death.
(C) WITHHOLDING In general, regular wage withholding rules apply to
distributions from IRAs and plans described in section 457 of the Code.
Periodic distributions from other tax-qualified retirement plans that are
made for a specified period of 10 or more years or for the life or life
expectancy of the participant (or the joint lives or life expectancies of
the participant and beneficiary) are generally subject to federal income tax
withholding as if the recipient were married claiming three exemptions. The
recipient of periodic distributions may generally elect not to have
withholding apply or to have income taxes withheld at a different rate by
providing a completed election form.
Mandatory federal income tax withholding at a flat rate of 20% will generally
apply to other distributions from such other tax-qualified retirement plans
unless such distributions are:
- - the non-taxable portion of the distribution;
- - required minimum distributions; or
- - direct transfer distributions.
Direct transfer distributions are direct payments to an IRA or to another
eligible retirement plan under Code section 401(a)(31).
Certain states require withholding of state taxes when federal income tax is
withheld.
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HARTFORD LIFE INSURANCE COMPANY 29
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ILLUSTRATIONS OF ANNUITY PAYMENTS
ASSUMING HYPOTHETICAL RATES OF RETURN
The following graph has been prepared to show how investment performance could
affect Variable Annuity Payments over time. The graph illustrates the Variable
Annuity Payments of a Non-Qualified Contact under three rate of return
scenarios. Of course, the illustrations merely represent what Variable Annuity
Payments might be paid under a HYPOTHETICAL Non-Qualified Contract.
WHAT THE GRAPHS ILLUSTRATE -- Each curve plotted on the graph illustrates the
payments under a hypothetical Non-Qualified Contract (described in more detail
below) assuming a different hypothetical rate of return for a single Sub-Account
supporting the Contract by plotting one point for each contract year. Each such
annual point on the graph represents the average of twelve monthly Variable
Annuity Payments made in that contract year under the hypothetical Contract
(hereinafter, an "Average Monthly Payment"). Each curve on the graph assumes
that the initial Variable Annuity Payment under the hypothetical Contract is
$1,000 (discussed in more detail below).
HYPOTHETICAL RATES OF RETURN -- The Variable Annuity Payments reflect three
different assumptions for a constant investment return before fees and expenses:
0%, 6% and 12%. Net of all expenses, these constant returns are: -1.85%, 4.04%
and 9.93%. Average Monthly Payments reflect the assumed investment return net of
all expenses of the illustrated Sub-Account (and the Funds) over the periods
shown in each graph. Fund management fees and operating expenses are assumed to
be at an annual rate of 0.62% of their average daily net assets. This is the
weighted average of Fund expenses shown in the fee table on page 5. The
mortality and expense risk charge is assumed to be at an annual rate of 1.25% of
the illustrated Sub-Account's average daily net assets.
Nevertheless, THE AVERAGE MONTHLY PAYMENTS DEPICTED IN THE GRAPH ARE BASED ON
HYPOTHETICAL CONTRACTS AND HYPOTHETICAL INVESTMENT RESULTS AND ARE NOT
PROJECTIONS OR INDICATIONS OF FUTURE RESULTS. HARTFORD DOES NOT GUARANTEE OR
EVER SUGGEST THAT ANY SUB-ACCOUNT OR CONTRACT ISSUED BY IT WOULD GENERATE THESE
OR SIMILAR AVERAGE MONTHLY PAYMENTS FOR ANY PERIOD OF TIME. THE GRAPHS ARE FOR
ILLUSTRATION PURPOSES ONLY AND DO NOT REPRESENT FUTURE VARIABLE ANNUITY PAYMENTS
OR FUTURE INVESTMENT RETURNS. Variable Annuity Payments under a real Contract
may be more or less than those forming the basis for the Average Monthly
Payments shown in these illustrations if the actual returns of the Sub-Accounts
selected by a Contract Owner are different from the hypothetical returns.
Because it is very likely that a Sub-Account's investment return will fluctuate
over time, one can expect Variable Annuity Payments under a real Contract to
fluctuate. Moreover, under a real Contract, the total amount of Variable Annuity
Payments ultimately received by a Payee depends upon which Annuity Payment
Option the Contract Owner selects and, for life contingent annuity payment
options, how long the Annuitant lives. See "Annuity Payouts".
ASSUMPTIONS ON WHICH THE HYPOTHETICAL CONTRACT IS BASED -- In order to
illustrate a hypothetical Contract, Hartford had to make several assumptions
about the Contract. These assumptions are that: (1) the hypothetical Contract is
a Non-Qualified Contract, (2) the entire Contract Value of the hypothetical
Contract is allocated (on the Annuity Calculation Date) to a Sub-Account having
a constant investment return before fees and expenses of 0%, 6%, or 12%,
(3) the Contract Owner selected an Assumed Investment Return of 5%, (4) the
Contract Owner elects to receive monthly Variable Annuity Payments, and (5) the
Contract Value (less any applicable Premium Tax) applied to the purchase of
Annuity Units on the Annuity Calculation Date under the Annuity Payment Option
selected results in an initial Variable Annuity Payment of $1,000.
For a discussion of how a Contract Owner may elect to receive monthly,
quarterly, semi-annual or annual Variable Annuity Payments, see "Annuity
Payouts".
ASSUMED INVESTMENT RETURN -- Among the most important factors that determine
that amount of Variable Annuity Payments is the Assumed Investment Return
selected by the Contract Owner. The hypothetical Contract has an Assumed
Investment Return of 5%. Subject to state approval, a Contract Owner may,
however, select a 3%, 5% or 6% Assumed Investment Return under a real Contract.
Generally, Variable Annuity Payments will increase in size from one Income
Payment Date to the next if the annualized net rate of return during that time
is greater than the Assumed Investment Return, and will decrease if the
annualized net rate of return over this period is less than the Assumed
Investment Return. (The Assumed Investment Return is an important component of
the Payment Factor.) For a detailed discussion of Assumed Investment Returns,
see "Annuity Payouts".
THE $1,000 INITIAL ANNUITY PAYMENT -- The hypothetical Contract has an initial
Variable Annuity Payment of $1,000. The dollar amount of the first Variable
Annuity Payment under a real Contract generally depends upon the Annuity Payment
Option selected by the Contract Owner, the amount of Contract Value applied to
purchase the Variable Annuity Payments, the annuity purchase rates in the
Contract at the time it is purchased (i.e., the Payment Factor), the age of the
Annuitant, and, in most cases (e.g., Non-Qualified Contracts), the sex of the
Annuitant. For each of the illustrations, the entire Contract Value under the
hypothetical Contract is allocated to a Sub-Account having a constant investment
return before fees and expenses of 0%, 6%, or 12%. However, for a real Contract,
Contract Value is often allocated among several Sub-Accounts prior to the
Annuity Calculation Date. The dollar amount of the first Variable Annuity
Payment attributable to each Sub-Account is determined under a real Contract by
dividing the dollar amount of Contract Value (less applicable Premium Tax)
applied to that Sub-Account on the Annuity Calculation Date by $1,000, and
multiplying the result by the annuity Payment Factor in the Contract for the
selected Annuity Payment Option. The dollar value of the first Variable Annuity
Payment is the sum of the first Variable Annuity Payments attributable to each
Sub-Account. For a detailed discussion of how the first Variable Annuity Payment
is determined, see "Annuity Payouts".
<PAGE>
30 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
HYPOTHETICAL ILLUSTRATIONS
<TABLE>
<CAPTION>
HYPOTHETICAL 0% GROSS RATE HYPOTHETICAL 6% GROSS RATE
AVERAGE MONTHLY PAYMENT AVERAGE MONTHLY PAYMENT
FOR EACH YEAR SHOWN FOR EACH YEAR SHOWN
$1,000 INITIAL PAYMENT; 5% AIR $1,000 INITIAL PAYMENT; 5% AIR
- -------------------------------- -------------------------------
AVERAGE AVERAGE
CONTRACT MONTHLY CONTRACT MONTHLY
YEAR PAYMENT YEAR PAYMENT
- --------------------- -------- -------------- --------------
<S> <C> <C> <C>
1 970 1 996
2 906 2 988
3 847 3 980
4 791 4 972
5 740 5 964
6 691 6 956
7 646 7 948
8 604 8 940
9 564 9 932
10 527 10 924
11 493 11 917
12 461 12 909
13 430 13 902
14 402 14 894
15 376 15 887
16 351 16 879
17 328 17 872
18 307 18 865
19 287 19 858
20 268 20 851
<CAPTION>
HYPOTHETICAL 0% GR HYPOTHETICAL 12% GROSS RATE
AVERAGE MONTHLY P AVERAGE MONTHLY PAYMENT
FOR EACH YEAR S FOR EACH YEAR SHOWN
$1,000 INITIAL PAYME $1,000 INITIAL PAYMENT; 5% AIR
- --------------------- -------------------------------
AVERAGE
CONTRACT CONTRACT MONTHLY
YEAR YEAR PAYMENT
- --------------------- -------------- --------------
<S> <C> <C>
1 1 1,022
2 2 1,072
3 3 1,125
4 4 1,179
5 5 1,237
6 6 1,298
7 7 1,361
8 8 1,427
9 9 1,497
10 10 1,570
11 11 1,647
12 12 1,727
13 13 1,812
14 14 1,900
15 15 1,993
16 16 2,091
17 17 2,193
18 18 2,300
19 19 2,412
20 20 2,530
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT
<S> <C> <C> <C>
CONTRACT 0% 6% 12%
YEAR Gross Rate Gross Rate Gross Rate
1 970 996 1,022
2 906 988 1,072
3 847 980 1,125
4 791 972 1,179
5 740 964 1,237
6 691 956 1,298
7 646 948 1,361
8 604 940 1,427
9 564 932 1,497
10 527 924 1,570
11 493 917 1,647
12 461 909 1,727
13 430 902 1,812
14 402 894 1,900
15 376 887 1,993
16 351 879 2,091
17 328 872 2,193
18 307 865 2,300
19 287 858 2,412
20 268 851 2,530
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 31
- --------------------------------------------------------------------------------
ILLUSTRATIONS OF ANNUITY PAYMENTS
USING HISTORIC RATES OF RETURN
The following graphs have been prepared to show how investment performance
affects Variable Annuity Payments over time. These graphs illustrate the
"performance" of a Non-Qualified Contract under which Variable Annuity Payments
begin at the end of the month that the Contract was issued which is the same
month that each Sub-Account illustrated began operations. Of course, Hartford
did not sell Contracts prior to the date of this Prospectus (i.e., during any of
the time periods shown) and therefore the illustrations merely represent what
Variable Annuity Payments might have been under a HYPOTHETICAL Non-Qualified
Contract had one existed during the years shown.
WHAT THE GRAPHS ILLUSTRATE -- Each graph illustrates the "performance" of a
particular Sub-Account based on hypothetical Non-Qualified Contract (described
in more detail below) by plotting one point for each calendar year since the
Sub-Account began operations. Each such annual point on the graph represents the
average of twelve monthly Variable Annuity Payments made in that year under the
hypothetical Contract. Each graph assumes that the initial Variable Annuity
Payment under the hypothetical Contract is $1,000 (discussed in more detail
below). All of the graphs end on December 31, 1998. Where a Sub-Account began
operations in mid-year, the point for the first year represents the average of
monthly Variable Annuity Payments made (which is fewer than 12) under the
hypothetical Contract during that year. The points therefore represent, in each
case, the average monthly Variable Annuity Payment (hereinafter, an "Average
Monthly Payment").
Average Monthly Payments reflect the actual past investment return after all
expenses of the Sub-Accounts over the periods shown in each graph. Nevertheless,
THE AVERAGE MONTHLY PAYMENTS DEPICTED IN THE GRAPHS ARE BASED ON HYPOTHETICAL
CONTRACTS AND PAST INVESTMENT RESULTS AND ARE NOT PROJECTIONS OR INDICATIONS OF
FUTURE RESULTS. HARTFORD DOES NOT GUARANTEE OR EVEN SUGGEST THAT ANY CONTRACT
ISSUED BY IT WOULD GENERATE THESE OR SIMILAR VARIABLE ANNUITY PAYMENTS FOR ANY
PERIOD OF TIME. THE GRAPHS ARE FOR ILLUSTRATION PURPOSES ONLY AND DO NOT
REPRESENT FUTURE VARIABLE ANNUITY PAYMENTS OR FUTURE INVESTMENT RETURNS.
Variable Annuity Payments under a real Contract may be more or less than those
forming the basis for the Average Monthly Payments shown in these illustrations
if the actual returns of the Sub-Accounts selected by a Contract Owner are
different from the past returns of the Sub-Accounts. Because it is very likely
that a Sub-Account's investment return will fluctuate over time, one can expect
Variable Annuity Payments under a real Contract to fluctuate. Moreover, under a
real Contract, the total amount of Variable Annuity Payments ultimately received
by a Payee depends upon which Annuity Payment Option the Contract Owner selects
and, for life contingent annuity options, how long the Annuitant lives. (See
"Annuity Payouts".)
ASSUMPTIONS ON WHICH THE HYPOTHETICAL CONTRACT IS BASED -- In order to
illustrate a hypothetical Contract, Hartford had to make several assumptions
about the Contract. These assumptions are that: (1) the hypothetical Contract is
a Non-Qualified Contract, (2) the entire Contract Value of the hypothetical
Contract is allocated (on the Annuity Calculation Date) to the Sub-Account being
illustrated, (3) the Contract Owner selected an Assumed Investment Return of 5%,
(4) the Contract Owner elects to receive monthly Variable Annuity Payments and
elects an Income Start Date that is the last day of the month in which the
Contract was issued, (5) the Contract Value (less any applicable premium tax)
applied to the purchase of Annuity Units on the Annuity Calculation Date under
the Annuity Payment Option selected results in an initial Variable Annuity
Payment of $1,000, and (6) the Income Start Date is the last day of the month
that the Sub-Account illustrated began operations. TO THE EXTENT THAT A REAL
CONTRACT IS ISSUED BY HARTFORD ON A BASIS DIFFERENT FROM THE FOREGOING
ASSUMPTIONS, THAT REAL CONTRACT WOULD HAVE HAD AVERAGE MONTHLY PAYMENTS
DIFFERENT FROM THOSE ILLUSTRATED EVEN DURING THE PERIODS ILLUSTRATED.
For a discussion of how a Contract Owner may elect to receive monthly,
quarterly, semi-annual or annual Variable Annuity Payments, see "Annuity
Payouts".
ASSUMED INVESTMENT RETURN -- Among the most important factors that determine
that amount of Variable Annuity Payments is the Assumed Investment Return
selected by the Contract Owner. The hypothetical Contract has an Assumed
Investment Return of 5%. Subject to state approval, a Contract Owner may,
however, select a 3%, 5% or 6% Assumed Investment Return under a real Contract.
Generally, Variable Annuity Payments will increase in size from one Income
Payment Date to the next if the annualized net rate of return during that time
is greater than the Assumed Investment Return, and will decrease if the
annualized net rate of return over this period is less than the Assumed
Investment Return. (The Assumed Investment Return is an important component of
the Payment Factor.) For a detailed discussion of Assumed Investment Returns,
see "Variable Annuity Payments". Standardized and non-standardized average
annual total returns as well as the Sub-Account Annual Percentage Change column
reflect the performance of the Sub-Account being illustrated without adjustment
for an Assumed Investment Return.
THE $1,000 INITIAL ANNUITY PAYMENT -- The hypothetical Contract has an initial
Variable Annuity Payment of $1,000. The dollar amount of the first Variable
Annuity Payment under a real Contract generally depends upon the Annuity Payment
Option selected by the Contract Owner, the amount of Contract Value applied to
purchase the Variable Annuity Payments, the annuity purchase rates in the
Contract at the time it is purchased (i.e., the Payment Factor), the age of the
Annuitant, and, in most cases (e.g., Non-Qualified Contracts), the sex of the
Annuitant. For each of the illustrations, the entire Contract Value under the
hypothetical Contract is allocated to the Sub-Account shown in
<PAGE>
32 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
the illustrations. However, for a real Contract, Contract Value is often
allocated among several Sub-Accounts prior to the Annuity Calculation Date. The
dollar amount of the first Variable Annuity Payment attributable to each
Sub-Account is determined under a real Contract by dividing the dollar amount of
Contract Value (less applicable Premium Tax) applied to that Sub-Account on the
Annuity Calculation Date by $1,000, and multiplying the result by the annuity
Payment Factor in the Contract for the selected Annuity Payment Option. The
dollar value of the first Variable Annuity Payment is the sum of the first
Variable Annuity Payments attributable to each Sub-Account. For a detailed
discussion of how the first Variable Annuity Payment is determined, see "Annuity
Payouts".
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 33
- --------------------------------------------------------------------------------
ADVISERS FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- -----------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ------------------------ ----------- ------------------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983* 990 1.26%
1984 948 6.05%
1985 1,078 25.26%
1986 1,253 11.27%
1987 1,337 4.66%
1988 1,322 12.71%
1989 1,479 20.24%
1990 1,459 0.01%
1991 1,584 18.88%
1992 1,630 6.96%
1993 1,731 10.86%
1994 1,688 -3.94%
1995 1,821 26.74%
1996 2,042 15.14%
1997 2,384 22.96%
1998 2,745 23.11%
1999 2,991 9.21%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- ---------------------------------------------
<S> <C>
1 Year 9.21%
5 Year 19.26%
10 Year 12.57%
Since Inception 12.25%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- ---------------------------------------------
<S> <C>
1 Year 3.21%
5 Year 18.86%
10 Year 12.57%
Since Inception 12.25%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE
<S> <C>
CALENDAR MONTHLY
YEAR PAYMENT
1977
1978
1979
1980
1981
1982
1983* 990
1984 948
1985 1,078
1986 1,253
1987 1,337
1988 1,322
1989 1,479
1990 1,459
1991 1,584
1992 1,630
1993 1,731
1994 1,688
1995 1,821
1996 2,042
1997 2,384
1998 2,745
1999 2,991
</TABLE>
* Fund inception was 4/83. Therefore, the Average Monthly Payment represents
the average monthly payment from April 1983 to December 1983. The Annual Sub-
Account Return is based on the period from April 1983 to December 1983.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
contingent deferred sales charge where the latter do not.
<PAGE>
34 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
CAPITAL APPRECIATION FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- -----------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ------------------------ ----------- ------------------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984* 1,038 9.16%
1985 1,237 34.37%
1986 1,485 7.65%
1987 1,496 -5.55%
1988 1,451 24.67%
1989 1,694 22.60%
1990 1,550 -12.02%
1991 1,852 52.16%
1992 2,100 15.55%
1993 2,492 19.30%
1994 2,562 1.26%
1995 2,897 28.63%
1996 3,328 19.20%
1997 3,881 20.83%
1998 4,150 14.04%
1999 4,864 35.75%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- ---------------------------------------------
<S> <C>
1 Year 35.75%
5 Year 23.46%
10 Year 18.28%
Since Inception 17.26%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- ---------------------------------------------
<S> <C>
1 Year 29.75%
5 Year 23.11%
10 Year 18.28%
Since Inception 17.26%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE
<S> <C>
CALENDAR MONTHLY
YEAR PAYMENT
1977
1978
1979
1980
1981
1982
1983
1984* 1,038
1985 1,237
1986 1,485
1987 1,496
1988 1,451
1989 1,694
1990 1,550
1991 1,852
1992 2,100
1993 2,492
1994 2,562
1995 2,897
1996 3,328
1997 3,881
1998 4,150
1999 4,864
</TABLE>
* Fund inception was 4/84. Therefore, the Average Monthly Payment represents
the average monthly payment from April 1984 to December 1984. The Annual Sub-
Account Return is based on the period from April 1984 to December 1984.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
contingent deferred sales charge where the latter do not.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 35
- --------------------------------------------------------------------------------
DIVIDEND AND GROWTH FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- -----------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ------------------------- ------------ ----------------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994* 1,024 4.07%
1995 1,146 34.68%
1996 1,383 21.39%
1997 1,695 30.25%
1998 1,932 14.97%
1999 2,006 4.01%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- ---------------------------------------------
<S> <C>
1 Year 4.01%
5 Year 20.55%
10 Year --
Since Inception 17.61%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- -----------------------------------------------------
<S> <C>
1 Year -1.99%
5 Year 20.17%
10 Year --
Since Inception 17.61%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE
<S> <C>
CALENDAR MONTHLY
YEAR PAYMENT
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994* 1,024
1995 1,146
1996 1,383
1997 1,695
1998 1,932
1999 2,006
</TABLE>
* Fund inception was 3/94. Therefore, the Average Monthly Payment represents
the average monthly payment from March 1994 to December 1994. The Annual Sub-
Account Return is based on the period from March 1994 to December 1994.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
contingent deferred sales charge where the latter do not.
<PAGE>
36 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
GLOBAL LEADERS FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- -----------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ------------------------- ------------ ----------------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998* 1,159 31.47%
1999 1,450 48.51%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- ---------------------------------------------
<S> <C>
1 Year 48.51%
5 Year --
10 Year --
Since Inception 70.84%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/99**
- ---------------------------------------------
<S> <C>
1 Year 42.51%
5 Year --
10 Year --
Since Inception 70.84%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE
<S> <C>
CALENDAR MONTHLY
YEAR PAYMENT
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998* 1,159
1999 1,450
</TABLE>
* Fund inception was 9/98. Therefore, the Average Monthly Payment represents
the average monthly payment from September 1998 to December 1998. The Annual
Sub-Account Return is based on this period.
** These returns are not annualized.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 37
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- -----------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ------------------------- ------------ ----------------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998* 1,018 18.18%
1999 1,219 20.32%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/99**
- ---------------------------------------------
<S> <C>
1 Year 20.32%
5 Year --
10 Year --
Since Inception 24.75%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- ---------------------------------------------
<S> <C>
1 Year 14.32%
5 Year --
10 Year --
Since Inception 24.75%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE
<S> <C>
CALENDAR MONTHLY
YEAR PAYMENT
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998* 1,018
1999 1,219
</TABLE>
* Fund inception was 6/1/98. Therefore, the Average Monthly Payment represents
the average monthly payment from June 1998 to December 1998. The Annual Sub-
Account Return is based on this period.
** These returns are not annualized.
<PAGE>
38 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
HIGH YIELD FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- -----------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ------------------------- ------------ ----------------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998* 1,011 3.49%
1999 1,019 3.40%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/99**
- ---------------------------------------------
<S> <C>
1 Year 3.40%
5 Year --
10 Year --
Since Inception 5.57%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- -----------------------------------------------------
<S> <C>
1 Year -2.60%
5 Year --
10 Year --
Since Inception 5.57%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE
<S> <C>
CALENDAR MONTHLY
YEAR PAYMENT
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998* 1,011
1999 1,019
</TABLE>
* Fund inception was 9/98. Therefore, the Average Monthly Payment represents
the average monthly payment from September 1998 to December 1998. The Annual
Sub-Account Return is based on this period.
** These returns are not annualized.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 39
- --------------------------------------------------------------------------------
INDEX FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- -----------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ------------------------ ----------- ------------------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987* 978 -14.02%
1988 890 14.75%
1989 1,049 28.73%
1990 1,035 -5.24%
1991 1,145 27.93%
1992 1,205 5.49%
1993 1,256 7.76%
1994 1,228 -0.31%
1995 1,401 34.85%
1996 1,653 20.58%
1997 2,044 30.96%
1998 2,408 26.47%
1999 2,829 19.00%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- ---------------------------------------------
<S> <C>
1 Year 19.00%
5 Year 26.23%
10 Year 15.98%
Since Inception 14.57%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- ---------------------------------------------
<S> <C>
1 Year 13.00%
5 Year 25.91%
10 Year 15.98%
Since Inception 14.57%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE
<S> <C>
CALENDAR MONTHLY
YEAR PAYMENT
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987* 978
1988 890
1989 1,049
1990 1,035
1991 1,145
1992 1,205
1993 1,256
1994 1,228
1995 1,401
1996 1,653
1997 2,044
1998 2,408
1999 2,829
</TABLE>
* Fund inception was 5/87. Therefore, the Average Monthly Payment represents
the average monthly payment from May 1987 to December 1987. The Annual Sub-
Account Return is based on the period from May 1987 to December 1987.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
contingent deferred sales charge where the latter do not.
<PAGE>
40 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
INTERNATIONAL ADVISERS FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- -----------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ------------------------ ----------- ------------------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995* 1,037 11.45%
1996 1,099 10.41%
1997 1,143 4.20%
1998 1,180 11.94%
1999 1,251 21.63%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- ---------------------------------------------
<S> <C>
1 Year 21.63%
5 Year --
10 Year --
Since Inception 12.86%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- ---------------------------------------------
<S> <C>
1 Year 15.63%
5 Year --
10 Year --
Since Inception 12.86%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE
<S> <C>
CALENDAR MONTHLY
YEAR PAYMENT
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995* 1,037
1996 1,099
1997 1,143
1998 1,180
1999 1,251
</TABLE>
* Fund inception was 3/95. Therefore, the Average Monthly Payment represents
the average monthly payment from March 1995 to December 1995. The Annual Sub-
Account Return is based on the period from March 1995 to December 1995.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
contingent deferred sales charge where the latter do not.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 41
- --------------------------------------------------------------------------------
INTERNATIONAL OPPORTUNITIES SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- -----------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ------------------------ ----------- ------------------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990* 900 -12.18%
1991 890 11.60%
1992 869 -5.62%
1993 911 32.07%
1994 999 -3.15%
1995 967 12.51%
1996 1,056 11.53%
1997 1,090 -0.91%
1998 1,086 11.72%
1999 1,195 38.12%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- ---------------------------------------------
<S> <C>
1 Year 38.12%
5 Year 13.92%
10 Year --
Since Inception 8.99%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- ---------------------------------------------
<S> <C>
1 Year 32.12%
5 Year 13.44%
10 Year --
Since Inception 8.99%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE
<S> <C>
CALENDAR MONTHLY
YEAR PAYMENT
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990* 900
1991 890
1992 869
1993 911
1994 999
1995 967
1996 1,056
1997 1,090
1998 1,086
1999 1,195
</TABLE>
* Fund inception was 7/90. Therefore, the Average Monthly Payment represents
the average monthly payment from July 1990 to December 1990. The Annual Sub-
Account Return is based on the period from July 1990 to December 1990.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
contingent deferred sales charge where the latter do not.
<PAGE>
42 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MID-CAP FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- -----------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ------------------------- ------------ ----------------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997* 1,026 9.68%
1998 1,143 25.00%
1999 1,464 49.92%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- ---------------------------------------------
<S> <C>
1 Year 49.92%
5 Year --
10 Year --
Since Inception 34.65%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- ---------------------------------------------
<S> <C>
1 Year 43.92%
5 Year --
10 Year --
Since Inception 34.65%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE
<S> <C>
CALENDAR MONTHLY
YEAR PAYMENT
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997* 1,026
1998 1,143
1999 1,464
</TABLE>
* Fund inception was 7/97. Therefore, the Average Monthly Payment represents
the average monthly payment from July 1997 to December 1997. The Annual Sub-
Account Return is based on the period from July 1997 to December 1997.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
contingent deferred sales charge where the latter do not.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 43
- --------------------------------------------------------------------------------
MONEY MARKET FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- -----------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ------------------------ ----------- ------------------
<S> <C> <C>
1977
1978
1979
1980* 1,009 5.09%
1981 1,074 14.29%
1982 1,162 12.39%
1983 1,212 8.01%
1984 1,254 9.35%
1985 1,296 7.19%
1986 1,313 5.45%
1987 1,311 5.17%
1988 1,319 6.06%
1989 1,347 7.77%
1990 1,375 6.76%
1991 1,386 4.72%
1992 1,364 2.35%
1993 1,324 1.66%
1994 1,286 2.67%
1995 1,272 4.45%
1996 1,261 3.86%
1997 1,248 4.02%
1998 1,237 3.96%
1999 1,221 3.59%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- ---------------------------------------------
<S> <C>
1 Year 3.59%
5 Year 3.98%
10 Year 3.80%
Since Inception 6.05%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- -----------------------------------------------------
<S> <C>
1 Year -2.41%
5 Year 3.28%
10 Year 3,80%
Since Inception 6.05%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE
<S> <C>
CALENDAR MONTHLY
YEAR PAYMENT
1977
1978
1979
1980* 1,009
1981 1,074
1982 1,162
1983 1,212
1984 1,254
1985 1,296
1986 1,313
1987 1,311
1988 1,319
1989 1,347
1990 1,375
1991 1,386
1992 1,364
1993 1,324
1994 1,286
1995 1,272
1996 1,261
1997 1,248
1998 1,237
1999 1,221
</TABLE>
* Fund inception was 6/80. Therefore, the Average Monthly Payment represents
the average monthly payment from June 1980 to December 1980. The Annual Sub-
Account Return is based on the period from June 1980 to December 1980.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
contingent deferred sales charge where the latter do not.
<PAGE>
44 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
MORTGAGE SECURITIES FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- -----------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ------------------------ ----------- ------------------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984* 1,000
1985 1,064 19.13%
1986 1,162 9.75%
1987 1,151 1.36%
1988 1,170 7.03%
1989 1,205 11.74%
1990 1,239 8.35%
1991 1,324 13.31%
1992 1,365 3.35%
1993 1,372 4.99%
1994 1,297 -2.83%
1995 1,336 14.73%
1996 1,348 3.77%
1997 1,372 7.66%
1998 1,400 5.39%
1999 1,365 0.26%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- ----------------------------------------------
<S> <C>
1 Year 0.26%
5 Year 6.25%
10 Year 5.77%
Since Inception 7.05%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- -----------------------------------------------------
<S> <C>
1 Year -5.74%
5 Year 5.62%
10 Year 5.77%
Since Inception 7.05%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE
<S> <C>
CALENDAR MONTHLY
YEAR PAYMENT
1977
1978
1979
1980
1981
1982
1983
1984* 1,000
1985 1,064
1986 1,162
1987 1,151
1988 1,170
1989 1,205
1990 1,239
1991 1,324
1992 1,365
1993 1,372
1994 1,297
1995 1,336
1996 1,348
1997 1,372
1998 1,400
1999 1,365
</TABLE>
* Fund inception was 12/84. Therefore, the Average Monthly Payment represents
the monthly payment for December 1984.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
contingent deferred sales charge where the latter do not.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 45
- --------------------------------------------------------------------------------
SMALL COMPANY FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- -------------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ------------------------- ------------ ------------------
<S> <C> <C>
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996* 1,025 4.26%
1997 1,092 16.91%
1998 1,129 10.23%
1999 1,390 63.78%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- ---------------------------------------------
<S> <C>
1 Year 63.78%
5 Year --
10 Year --
Since Inception 26.99%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- ---------------------------------------------
<S> <C>
1 Year 57.78%
5 Year --
10 Year --
Since Inception 26.99%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE
<S> <C>
CALENDAR MONTHLY
YEAR PAYMENT
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996* 1,025
1997 1,092
1998 1,129
1999 1,390
</TABLE>
* Fund inception was 8/96. Therefore, the Average Monthly Payment represents
the average monthly payment from August 1996 to December 1996. The Annual
Sub-Account Return is based on the period from August 1996 to December 1996.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
contingent deferred sales charge where the latter do not.
<PAGE>
46 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
STOCK FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- -------------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ------------------------- ------------ ------------------
<S> <C> <C>
1977* 999 1.72%
1978 992 3.55%
1979 1,044 21.10%
1980 1,228 29.61%
1981 1,349 -0.64%
1982 1,311 19.81%
1983 1,652 12.50%
1984 1,500 -0.70%
1985 1,718 29.85%
1986 2,052 10.93%
1987 2,305 4.09%
1988 2,172 17.51%
1989 2,536 24.49%
1990 2,450 -5.07%
1991 2,701 23.07%
1992 2,758 8.68%
1993 2,982 12.92%
1994 2,980 -3.11%
1995 3,306 32.43%
1996 3,937 22.83%
1997 4,893 29.75%
1998 5,892 31.82%
1999 6,930 18.30%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- ---------------------------------------------
<S> <C>
1 Year 18.30%
5 Year 26.90%
10 Year 16.42%
Since Inception 14.84%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- ---------------------------------------------
<S> <C>
1 Year 12.30%
5 Year 26.59%
10 Year 16.42%
Since Inception 14.84%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE
<S> <C>
CALENDAR MONTHLY
YEAR PAYMENT
1977* 999
1978 992
1979 1,044
1980 1,228
1981 1,349
1982 1,311
1983 1,652
1984 1,500
1985 1,718
1986 2,052
1987 2,305
1988 2,172
1989 2,536
1990 2,450
1991 2,701
1992 2,758
1993 2,982
1994 2,980
1995 3,306
1996 3,937
1997 4,893
1998 5,892
1999 6,930
</TABLE>
* Fund inception was 8/77. Therefore, the Average Monthly Payment represents
the average monthly payment from August 1977 to December 1977. The Annual
Sub-Account Return is based on the period from August 1977 to December 1977.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
contingent deferred sales charge where the latter do not.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 47
- --------------------------------------------------------------------------------
BOND FUND SUB-ACCOUNT
<TABLE>
<CAPTION>
AVERAGE MONTHLY PAYMENT FOR EACH YEAR OR PARTIAL YEAR SHOWN
$1,000 INITIAL PAYMENT: 5% AIR
- -----------------------------------------------------------
AVERAGE ANNUAL
CALENDAR MONTHLY SUB-ACCOUNT
YEAR PAYMENT RETURN
- ------------------------ ----------- ------------------
<S> <C> <C>
1977* 998 1.00%
1978 979 1.34%
1979 959 1.63%
1980 929 4.91%
1981 932 9.12%
1982 1,045 26.16%
1983 1,132 1.48%
1984 1,121 11.78%
1985 1,262 19.11%
1986 1,396 10.78%
1987 1,360 -1.26%
1988 1,364 6.25%
1989 1,397 10.73%
1990 1,416 7.06%
1991 1,506 15.02%
1992 1,579 4.23%
1993 1,645 8.86%
1994 1,541 -5.14%
1995 1,585 17.01%
1996 1,596 2.24%
1997 1,637 9.97%
1998 1,708 6.80%
1999 1,634 -3.23%
</TABLE>
<TABLE>
<CAPTION>
NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- -----------------------------------------------------
<S> <C>
1 Year -3.23%
5 Year 6.34%
10 Year 6.07%
Since Inception 7.18%
</TABLE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED 12/31/1999**
- -----------------------------------------------------
<S> <C>
1 Year -9.23%
5 Year 5.70%
10 Year 6.07%
Since Inception 7.18%
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE
<S> <C>
CALENDAR MONTHLY
YEAR PAYMENT
1977* 998
1978 979
1979 959
1980 929
1981 932
1982 1,045
1983 1,132
1984 1,121
1985 1,262
1986 1,396
1987 1,360
1988 1,364
1989 1,397
1990 1,416
1991 1,506
1992 1,579
1993 1,645
1994 1,541
1995 1,585
1996 1,596
1997 1,637
1998 1,708
1999 1,634
</TABLE>
* Fund inception was 8/77. Therefore, the Average Monthly Payment represents
the average monthly payment from August 1977 to December 1977. The Annual
Sub-Account Return is based on the period from August 1977 to December 1977.
** Standardized Average Annual Total Returns differ from Non-Standardized
Average Annual Total Returns in that the former reflect a deduction for the
contingent deferred sales charge where the latter do not.
<PAGE>
To obtain a Statement of Additional Information, please complete the form below
and mail to:
Hartford Life Insurance Company
Attn: Investment Product Services
P.O. Box 5085
Hartford, Connecticut 06102-5085
Please send a Statement of Additional Information for the Director Immediate
Variable Annuity to me at the following address:
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------------------------------------
Name
- ------------------------------------------------------------
Address
- ------------------------------------------------------------
City/State Zip
Code
</TABLE>
<PAGE>
PART B
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
HARTFORD LIFE INSURANCE COMPANY
HARTFORD LIFE INSURANCE COMPANY SEPARATE ACCOUNT TWO
DIRECTOR IMMEDIATE VARIABLE ANNUITY
This Statement of Additional Information is not a prospectus. The information
contained herein should be read in conjunction with the prospectus.
To obtain a prospectus, send a written request to Hartford Life Insurance
Company, Attn: Investment Product Services, P.O. Box 5085, Hartford,
Connecticut 06102-5085.
Date of Prospectus: May 1, 2000
Date of Statement of Additional Information: May 1, 2000
333-19605
Director Immediate Variable Annuity (HL)
<PAGE>
TABLE OF CONTENTS
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY......................... 2
SAFEKEEPING OF ASSETS.................................................. 2
INDEPENDENT PUBLIC ACCOUNTANTS......................................... 2
DISTRIBUTION OF CONTRACTS.............................................. 2
CALCULATION OF YIELD AND RETURN........................................ 3
PERFORMANCE COMPARISONS................................................ 8
VARIABLE ANNUITY PAYMENTS.............................................. 9
OTHER INFORMATION...................................................... 11
FINANCIAL STATEMENTS................................................... SA-1
<PAGE>
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY
Hartford Life Insurance Company is a stock life insurance company engaged in the
business of writing life insurance, both individual and group, in all states of
the United States and the District of Columbia. We were originally incorporated
under the laws of Massachusetts on June 5, 1902, and subsequently redomiciled to
Connecticut. Our offices are located in Simsbury, Connecticut; however, our
mailing address is P.O. Box 2999, Hartford, CT 06104-2999. We are ultimately
controlled by The Hartford Financial Services Group, Inc., one of the largest
financial service providers in the United States.
HARTFORD'S RATINGS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Rating Agency Effective Rating Basis of Rating
Date of Rating
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
A.M. Best and Company, Inc. 1/1/99 A+ Financial performance
- ------------------------------------------------------------------------------------------------
Standard & Poor's 8/1/99 AA Insurer financial strength
- ------------------------------------------------------------------------------------------------
Duff & Phelps 7/1/99 AA+ Claims paying ability
- ------------------------------------------------------------------------------------------------
</TABLE>
SAFEKEEPING OF ASSETS
Title to the assets of the Separate Account is held by Hartford. The assets are
kept physically segregated and are held separate and apart from Hartford's
general corporate assets. Records are maintained of all purchases and
redemptions of Fund shares held in each of the Sub-Accounts.
INDEPENDENT PUBLIC ACCOUNTANTS
The audited financial statements and financial statement schedules included in
this registration statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports. The principal business address of Arthur
Andersen LLP is One Financial Plaza, Hartford, Connecticut 06103.
DISTRIBUTION OF CONTRACTS
Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account.
HSD is an affiliate of Hartford. Both HSD and Hartford are ultimately controlled
by The Hartford Financial Services Group, Inc. The principal business address of
HSD is the same as that of Hartford.
2
<PAGE>
The securities will be sold by salesperson of HSD who represent Hartford as
insurance and variable annuity agents and who are registered representatives of
Broker-Dealers who have entered into distribution agreements with HSD.
HSD is registered with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 as a Broker-Dealer and is a member of the
National Association of Securities Dealers, Inc.("NASD")
Hartford currently pays HSD underwriting commissions for its role as principle
underwriter of all variable annuities associated with this Separate Account. For
the past three years, the aggregate dollar amount of underwriting commissions
paid to HSD in its role as principal underwriter has been: 1999:
$159,553,734.37; 1998: $61,629,500; and 1997: $64,851,026. HSD has retained none
of these commissions.
CALCULATION OF YIELD AND RETURN
YIELD OF A MONEY MARKET SUB-ACCOUNT. As summarized in the Prospectus under the
heading "Performance Related Information," the yield of a Money Market
Sub-Account for a seven-day period (the "base period") will be computed by
determining the "net change in value" (calculated as set forth below) of a
hypothetical account having a balance of one accumulation unit of the
Sub-Account at the beginning of the period, subtracting a hypothetical charge
reflecting deductions from Contract Owner accounts, and dividing the difference
by the value of the account at the beginning of the base period to obtain the
base period return, and then multiplying the base period return by 365/7 with
the resulting yield figure carried to the nearest hundredth of one percent. Net
changes in value of a hypothetical account will include net investment income of
the account (accrued daily dividends as declared by the underlying funds, less
daily expense charges of the account) for the period, but will not include
realized gains or losses or unrealized appreciation or depreciation on the
underlying fund shares.
The effective yield is calculated by compounding the base period return by
adding 1, raising the sum to a power equal to 365/7 and subtracting 1 from the
result, according to the following formula:
365/7
Effective Yield = [(Base Period Return + 1) ] - 1
A MONEY MARKET SUB-ACCOUNT'S YIELD AND EFFECTIVE YIELD WILL VARY IN RESPONSE TO
FLUCTUATIONS IN INTEREST RATES AND IN THE EXPENSES OF THE SUB-ACCOUNT. THE
CURRENT YIELD AND EFFECTIVE YIELD REFLECT RECURRING CHARGES ON THE SEPARATE
ACCOUNT LEVEL.
3
<PAGE>
YIELD AND EFFECTIVE YIELD FOR THE SEVEN-DAY PERIOD ENDING DECEMBER 31, 1999.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SUB-ACCOUNT YIELD EFFECTIVE YIELD
- --------------------------------------------------------------------------------
<S> <C> <C>
Hartford Money Market HLS Fund 4.09% 4.18%
- --------------------------------------------------------------------------------
</TABLE>
YIELD OF SUB-ACCOUNTS. As summarized in the Prospectus under the heading
"Performance Related Information," yields of Sub-Accounts will be computed by
annualizing a recent month's net investment income, divided by a Fund share's
net asset value on the last trading day of that month. The Sub-Accounts' yields
will vary from time-to-time depending upon market conditions and, the
composition of the underlying funds' portfolios. Yield should also be considered
relative to changes in the value of the Sub-Accounts' shares and to the relative
risks associated with the investment objectives and policies of the
Sub-Accounts.
THE YIELD REFLECTS RECURRING CHARGES ON THE SEPARATE ACCOUNT LEVEL.
Yield calculations of the Sub-Accounts used for illustration purposes reflect
the interest earned by the Sub-Accounts, less applicable asset charges assessed
against a Contract Owner's account over the base period. Yield quotations based
on a 30-day period were computed by dividing the dividends and interest earned
during the period by the maximum offering price per unit on the last day of the
period, according to the following formula:
Example:
(6)
Current Yield Formula for the Sub-Account 2[((A-B)/(CD) + 1) - 1]
Where A = Dividends and interest earned during the period.
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.
4
<PAGE>
YIELD QUOTATION BASED ON A 30-DAY PERIOD ENDED DECEMBER 31, 1999.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
SUB-ACCOUNT YIELD
- ----------------------------------------------------------------------------
<S> <C>
Hartford Bond HLS Fund 5.69%
- ----------------------------------------------------------------------------
Hartford High Yield HLS Fund 8.30%
- ----------------------------------------------------------------------------
Hartford Mortgage Securities HLS Fund 5.51%
- ----------------------------------------------------------------------------
</TABLE>
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.
CALCULATION OF TOTAL RETURN. As summarized in the Prospectus under the heading
"Performance Related Information," total return is a measure of the change in
value of an investment in a Sub-Account over the period covered. The formula for
total return used herein includes three steps: (1) calculating the value of the
hypothetical initial investment of $1,000 as of the end of the period by
multiplying the total number of units owned at the end of the period by the unit
value per unit on the last trading day of the period; (2) assuming redemption at
the end of the period and deducting any applicable contingent deferred sales
charge (the contingent deferred sales charged deducted under the "Since
Inception" column below depends on the fund inception date; 6% is deducted for 1
Year, 4% for 5 Year, and 0% for 10 Year periods); and (3) dividing this account
value for the hypothetical investor by the initial $1,000 investment and
annualizing the result for periods of less than one year. Standardized total
return will be calculated since the inception of the Separate Account for one
year, five years and ten years or some other relevant periods if a Sub-Account
has not been in existence for at least ten years.
The following are the standardized average annual total return quotations for
the Sub-Accounts. No information is shown for Hartford Global Health HLS Fund
and Hartford Global Technology HLS Fund Sub-Accounts because, as of December 31,
1999 the Sub-Accounts had not yet commenced operations.
5
<PAGE>
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FOR YEAR ENDED
DECEMBER 31, 1999
- --------------------------------------------------------------------------------------------------------------------
SEPARATE SINCE
SUB-ACCOUNT ACCOUNT 1 YEAR 5 YEAR 10 YEAR INCEPTION OF
INCEPTION SEPARATE
DATE ACCOUNT
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Hartford Advisers HLS Fund 6/2/86 2.21% 18.86% 12.57% N/A
- --------------------------------------------------------------------------------------------------------------------
Hartford Bond HLS Fund 6/2/86 -10.23% 5.70% 6.07% N/A
- --------------------------------------------------------------------------------------------------------------------
Hartford Capital Appreciation 6/2/86 28.75% 23.11% 18.28% N/A
HLS Fund
- --------------------------------------------------------------------------------------------------------------------
Hartford Dividend and Growth 3/8/94 -2.99% 20.17% N/A 17.37%
HLS Fund
- --------------------------------------------------------------------------------------------------------------------
Hartford Global Leaders HLS Fund 10/1/98 41.51% N/A N/A 66.63%
- --------------------------------------------------------------------------------------------------------------------
Hartford Growth and Income HLS 5/29/98 13.32% N/A N/A 21.41%
Fund
- --------------------------------------------------------------------------------------------------------------------
Hartford High Yield HLS Fund 10/1/98 -3.60% N/A N/A 0.81%
- --------------------------------------------------------------------------------------------------------------------
Hartford Index HLS Fund 5/1/87 12.00% 25.91% 15.98% N/A
- --------------------------------------------------------------------------------------------------------------------
Hartford International Advisers 3/1/95 14.63% N/A N/A 12.34%
HLS Fund
- --------------------------------------------------------------------------------------------------------------------
Hartford International 7/2/90 31.12% 13.44% N/A 8.99%
Opportunities HLS Fund
- --------------------------------------------------------------------------------------------------------------------
Hartford MidCap HLS Fund 7/30/97 42.92% N/A N/A 33.01%
- --------------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS Fund 6/2/86 -3.41% 3.28% 3.80% N/A
- --------------------------------------------------------------------------------------------------------------------
Hartford Mortgage Securities 6/2/86 -6.74% 5.62% 5.77% N/A
HLS Fund
- --------------------------------------------------------------------------------------------------------------------
Hartford Small Company HLS Fund 8/9/96 56.78% N/A N/A 26.16%
- --------------------------------------------------------------------------------------------------------------------
Hartford Stock HLS Fund 6/2/86 11.30% 26.59% 16.42% N/A
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
In addition to the standardized total return, the Sub-Account may advertise a
non-standardized total return. This figure will usually be calculated since the
inception of the underlying fund 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 is not deducted. Therefore, non-standardized total return
for a Sub-Account is higher than standardized total return for a Sub-Account.
6
<PAGE>
The following are the non-standardized annualized total return quotations for
the Sub-Accounts. No information is shown for Hartford Global Health HLS Fund
and Hartford Global Technology HLS Fund Sub-Accounts because, as of December 31,
1999 the Sub-Accounts had not yet commenced operations.
NON-STANDARDIZED ANNUALIZED TOTAL RETURN THAT PRE-DATE THE
INCEPTION DATE OF THE SEPARATE ACCOUNT FOR YEAR ENDED
DECEMBER 31, 1999
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
FUND SINCE
INCEPTION 1 YEAR 5 YEAR 10 YEAR INCEPTION OF
SUB-ACCOUNT DATE FUND
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Hartford Advisers HLS Fund 3/31/83 9.21% 19.26% 12.57% N/A
- -------------------------------------------------------------------------------------------------------------------
Hartford Bond HLS Fund 8/31/77 -3.23% 6.34% 6.07% N/A
- -------------------------------------------------------------------------------------------------------------------
Hartford Capital Appreciation 4/2/84 35.75% 23.46% 18.28% N/A
HLS Fund
- -------------------------------------------------------------------------------------------------------------------
Hartford Dividend and Growth 3/8/94 4.01% 20.55% N/A 17.61%
HLS Fund
- -------------------------------------------------------------------------------------------------------------------
Hartford Global Leaders HLS Fund 10/1/98 48.51% N/A N/A 70.84%
- -------------------------------------------------------------------------------------------------------------------
Hartford Growth and Income HLS 5/29/98 20.32% N/A N/A 24.75%
Fund
- -------------------------------------------------------------------------------------------------------------------
Hartford High Yield HLS Fund 10/1/98 3.40% N/A N/A 5.57%
- -------------------------------------------------------------------------------------------------------------------
Hartford Index HLS Fund 5/1/87 19.00% 26.23% 15.98% N/A
- -------------------------------------------------------------------------------------------------------------------
Hartford International Advisers 3/1/95 21.63% N/A N/A 12.86%
HLS Fund
- -------------------------------------------------------------------------------------------------------------------
Hartford International 7/2/90 38.12% 13.92% N/A 8.99%
Opportunities HLS Fund
- -------------------------------------------------------------------------------------------------------------------
Hartford MidCap HLS Fund 7/30/97 49.92% N/A N/A 34.65%
- -------------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS Fund 6/30/80 3.59% 3.98% 3.80% N/A
- -------------------------------------------------------------------------------------------------------------------
Hartford Mortgage Securities 1/1/85 0.26% 6.25% 5.77% N/A
HLS Fund
- -------------------------------------------------------------------------------------------------------------------
Hartford Small Company HLS Fund 8/9/96 63.78% N/A N/A 26.99%
- -------------------------------------------------------------------------------------------------------------------
Hartford Stock HLS Fund 8/31/77 18.30% 26.90% 16.42% N/A
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
PERFORMANCE COMPARISONS
YIELD AND TOTAL RETURN. Each Sub-Account may from time-to-time include its total
return in advertisements or in information furnished to present or prospective
shareholders. Each Sub-Account may from time-to-time include its yield and total
return in advertisements or information furnished to present or prospective
shareholders. Each Sub-Account may from time-to-time include in advertisements
its total return (and yield in the case of certain Sub-Accounts) the ranking of
those performance figures relative to such figures for groups of other annuities
analyzed by Lipper Analytical Services and Morningstar, Inc. as having the same
investment objectives.
The total return and yield may also be used to compare the performance of the
Sub-Accounts against certain widely acknowledged outside standards or indices
for stock and bond market performance. The Standard & Poor's Composite Index of
500 Stocks (the "S&P 500") is a market value-weighted and unmanaged index
showing the changes in the aggregate market value of 500 stocks relative to the
base period 1941-43. The S&P 500 is composed almost entirely of common stocks of
companies listed on the New York Stock Exchange, although the common stocks of a
few companies listed on the American Stock Exchange or traded over-the-counter
are included. The 500 companies represented include 400 industrial, 60
transportation and 40 financial services concerns. The S&P 500 represents about
80% of the market value of all issues traded on the New York Stock Exchange.
The NASDAQ-OTC 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 Shearson Lehman Government Bond Index (the "SL Government Index") is a
measure of the market value of all public obligations of the U.S. Treasury; all
publicly issued debt of all agencies of the U.S. Government and all
quasi-federal corporations;
8
<PAGE>
and all corporate debt guaranteed by the U.S. Government. Mortgage-backed
securities, flower bonds and foreign targeted issues are not included in the SL
Government Index.
The Shearson Lehman Government/Corporate Bond Index (the "SL
Government/Corporate Index") is a measure of the market value of approximately
5,300 bonds with a face value currently in excess of $1.3 trillion. To be
included in the SL Government/Corporate Index, an issue must have amounts
outstanding in excess of $1 million, have at least one year to maturity and be
rated "Baa" or higher ("investment grade") by a nationally recognized rating
agency.
The Composite Index for Hartford Advisers 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%).
VARIABLE ANNUITY PAYMENTS
ANNUITY UNIT VALUE
The value of an Annuity Unit is calculated at the same time that the value of an
Accumulation Unit is calculated and is based on the same values for Fund shares
and other assets and liabilities. (See "Annuity Payouts" in the Prospectus.) The
Annuity Unit Value for each Sub-Account's first Valuation Period was set at $10.
The Annuity Unit Value of each Sub-Account for any subsequent Valuation Period
is equal to (a) multiplied by (b) divided by (c) where:
(a) is the Net Investment Factor for the Valuation Period for which the
Annuity Unit Value is being calculated;
(b) is the Annuity Unit Value for the preceding Valuation Period; and
(c) is a daily Assumed Investment Return factor (for the 3%, 5% or 6%
Assumed Investment Return) adjusted for the number of days in the
Valuation Period.
The Assumed Investment Return factor is equal to one plus the applicable
percentage. Therefore, for 3%, it is 1.03, for 4% it is 1.04 and for 6% it is
1.06. The annual factors can be translated into daily factor of 1.000080986,
1.00010746, and 1.000159654, respectively.
If a Contract Owner selects a 5% Assumed Investment Return rate and if the net
investment return of the Sub-Account for an Annuity Payment period is equal to
the pro-rated
9
<PAGE>
portion of the 5% Assumed Investment Return, the Variable Annuity Payment
attributable to that Sub-Account for that period will equal the Payment for the
prior period. To the extent that such net investment return exceeds an
annualized rate of return of 5% for a Payment period, the Payment for that
period will be greater than the Payment for the prior period and to the extent
that such return for a period falls short of an annualized rate of 5%, the
Payment for that period will be less than the Payment for the prior period.
The following illustrations show, by use of hypothetical examples, the method of
determining the Annuity Unit Value and the amount of several Variable Annuity
Payments based on one Sub-Account.
ILLUSTRATION OF CALCULATION OF ANNUITY UNIT VALUE
1. Annuity Unit Value for immediately preceding
Valuation Period 10.00000000
2. Net Investment Factor 1.00036164
3. Daily factor to compensate for Assumed Investment
Return of 5% 1.00013368
4. Adjusted Net Investment Factor (2)/(3) 1.00028063
5. Annuity Unit Value for current Valuation
Period (4)x(1) 10.00280630
ILLUSTRATION OF VARIABLE ANNUITY PAYMENTS
(assuming no premium tax is applicable)
1. Number of Accumulation Units at Annuity Date 1,000.00
2. Accumulation Unit Value 12.55548000
3. Adjusted Contract Value (1)x(2) $12,555.48
4. First monthly Annuity Payment per $1,000 of
adjusted Contract Value $ 9.63
5. First monthly Annuity Payment (3)x(4)/1,000 $ 120.91
6. Annuity Unit Value 10.00280630
7. Number of Annuity Units (5)/(6) 12.08760785
8. Assume Annuity Unit value for second month
equal to 10.04000000
9. Second Monthly Annuity Payment (7)X(8) $ 121.36
10. Assume Annuity Unit value for third month
equal to 10.05000000
11. Third Monthly Annuity Payment (7)X(10) $ 121.48
10
<PAGE>
OTHER INFORMATION
A registration statement has been filed with the Securities and Exchange
Commission ("SEC") under the Securities Act of 1933, as amended, with respect to
the Contracts discussed in this Statement of Additional Information. Not all of
the information set forth in the registration statement, amendments and exhibits
thereto has been included in this Statement of Additional Information.
Statements contained in this Statement of Additional Information concerning the
content of the Contracts and other legal instruments are summaries. For a
complete statement of the terms of these documents, reference should be made to
the instruments filed with the SEC.
11
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT TWO AND TO THE OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statements of assets and liabilities of
Hartford Life Insurance Company Separate Account Two (Bond Fund, Stock Fund,
Money Market Fund, Advisers Fund, Capital Appreciation Fund, Mortgage Securities
Fund, Index Fund, International Opportunities Fund, Dividend and Growth Fund,
International Advisers Fund, Small Company Fund, MidCap Fund, Growth and Income
Fund, High Yield Fund, Global Leaders Fund, Smith Barney Cash Portfolio, Smith
Barney Appreciation Fund, Smith Barney Government Portfolio, BB&T Growth &
Income Fund, AmSouth Equity Income Fund, Mentor VIP Capital Growth Fund, Mentor
VIP Perpetual International Fund, Mentor VIP Growth Fund, Mitchell Hutchins
Growth and Income Portfolio, Mitchell Hutchins Strategic Income Portfolio,
Mitchell Hutchins Tactical Allocation Portfolio, Huntington VA Income Equity
Fund and AmSouth Select Equity Fund) (collectively, the Account) as of December
31, 1999, and the related statements of operations and the statements of changes
in net assets for the periods presented. These financial statements are the
responsibility of the Account's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Account as of December 31,
1999, and the results of their operations and the changes in their net assets
for the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 17, 2000 ARTHUR ANDERSEN LLP
_____________________________________SA-1 _____________________________________
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ -------------- ------------
<S> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. -
Class IA
Shares 381,925,372
Cost $398,919,676
Market Value...................... $379,581,114 -- --
Hartford Stock HLS Fund, Inc. -
Class IA
Shares 446,551,430
Cost $1,739,620,114
Market Value...................... -- $3,191,676,331 --
Hartford Money Market HLS
Fund, Inc. - Class IA
Shares 416,009,296
Cost $416,009,296
Market Value...................... -- -- $416,009,296
Hartford Advisers HLS Fund, Inc. -
Class IA
Shares 1,924,549,471
Cost $3,837,456,863
Market Value...................... -- -- --
Hartford Capital Appreciation HLS
Fund, Inc. - Class IA
Shares 437,319,084
Cost $1,404,391,777
Market Value...................... -- -- --
Hartford Mortgage Securities HLS
Fund, Inc. - Class IA
Shares 163,664,753
Cost $176,379,736
Market Value...................... -- -- --
Hartford Index HLS Fund, Inc. -
Class IA
Shares 208,576,729
Cost $500,271,928
Market Value...................... -- -- --
Hartford International Opportunities
HLS Fund, Inc. - Class IA
Shares 270,848,565
Cost $312,238,682
Market Value...................... -- -- --
Hartford Dividend and Growth HLS
Fund, Inc. - Class IA
Shares 462,406,230
Cost $749,888,851
Market Value...................... -- -- --
Due from Hartford Life Insurance
Company.............................. -- -- --
Receivable from fund shares sold...... 160,437 77,855 38,653,596
------------ -------------- ------------
Total Assets.......................... 379,741,551 3,191,754,186 454,662,892
------------ -------------- ------------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. 160,617 79,461 38,625,437
Payable for fund shares purchased..... -- -- --
------------ -------------- ------------
Total Liabilities..................... 160,617 79,461 38,625,437
------------ -------------- ------------
Net Assets (variable annuity contract
liabilities)......................... $379,580,934 $3,191,674,725 $416,037,455
============ ============== ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
_____________________________________SA-2 ______________________________________
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL
ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------- ----------------- --------------- -------------- ------------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. -
Class IA
Shares 381,925,372
Cost $398,919,676
Market Value...................... -- -- -- -- --
Hartford Stock HLS Fund, Inc. -
Class IA
Shares 446,551,430
Cost $1,739,620,114
Market Value...................... -- -- -- -- --
Hartford Money Market HLS
Fund, Inc. - Class IA
Shares 416,009,296
Cost $416,009,296
Market Value...................... -- -- -- -- --
Hartford Advisers HLS Fund, Inc. -
Class IA
Shares 1,924,549,471
Cost $3,837,456,863
Market Value...................... $5,705,854,235 -- -- -- --
Hartford Capital Appreciation HLS
Fund, Inc. - Class IA
Shares 437,319,084
Cost $1,404,391,777
Market Value...................... -- $2,665,629,499 -- -- --
Hartford Mortgage Securities HLS
Fund, Inc. - Class IA
Shares 163,664,753
Cost $176,379,736
Market Value...................... -- -- $170,128,202 -- --
Hartford Index HLS Fund, Inc. -
Class IA
Shares 208,576,729
Cost $500,271,928
Market Value...................... -- -- -- $ 873,682,031 --
Hartford International Opportunities
HLS Fund, Inc. - Class IA
Shares 270,848,565
Cost $312,238,682
Market Value...................... -- -- -- -- $508,094,303
Hartford Dividend and Growth HLS
Fund, Inc. - Class IA
Shares 462,406,230
Cost $749,888,851
Market Value...................... -- -- -- -- --
Due from Hartford Life Insurance
Company.............................. -- 14,808,231 85,563 205,321 1,011,121
Receivable from fund shares sold...... 2,195,184 -- -- -- --
-------------- -------------- ------------ ------------- ------------
Total Assets.......................... 5,708,049,419 2,680,437,730 170,213,765 873,887,352 509,105,424
-------------- -------------- ------------ ------------- ------------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. 2,196,979 -- -- -- --
Payable for fund shares purchased..... -- 14,808,295 81,591 206,074 1,012,471
-------------- -------------- ------------ ------------- ------------
Total Liabilities..................... 2,196,979 14,808,295 81,591 206,074 1,012,471
-------------- -------------- ------------ ------------- ------------
Net Assets (variable annuity contract
liabilities)......................... $5,705,852,440 $2,665,629,435 $170,132,174 $ 873,681,278 $508,092,953
============== ============== ============ ============= ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DIVIDEND AND
GROWTH FUND
SUB-ACCOUNT
--------------
<S> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. -
Class IA
Shares 381,925,372
Cost $398,919,676
Market Value...................... --
Hartford Stock HLS Fund, Inc. -
Class IA
Shares 446,551,430
Cost $1,739,620,114
Market Value...................... --
Hartford Money Market HLS
Fund, Inc. - Class IA
Shares 416,009,296
Cost $416,009,296
Market Value...................... --
Hartford Advisers HLS Fund, Inc. -
Class IA
Shares 1,924,549,471
Cost $3,837,456,863
Market Value...................... --
Hartford Capital Appreciation HLS
Fund, Inc. - Class IA
Shares 437,319,084
Cost $1,404,391,777
Market Value...................... --
Hartford Mortgage Securities HLS
Fund, Inc. - Class IA
Shares 163,664,753
Cost $176,379,736
Market Value...................... --
Hartford Index HLS Fund, Inc. -
Class IA
Shares 208,576,729
Cost $500,271,928
Market Value...................... --
Hartford International Opportunities
HLS Fund, Inc. - Class IA
Shares 270,848,565
Cost $312,238,682
Market Value...................... --
Hartford Dividend and Growth HLS
Fund, Inc. - Class IA
Shares 462,406,230
Cost $749,888,851
Market Value...................... $ 993,631,453
Due from Hartford Life Insurance
Company.............................. --
Receivable from fund shares sold...... 398,320
-------------
Total Assets.......................... 994,029,773
-------------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. 397,708
Payable for fund shares purchased..... --
-------------
Total Liabilities..................... 397,708
-------------
Net Assets (variable annuity contract
liabilities)......................... $ 993,632,065
=============
</TABLE>
_____________________________________SA-3 ______________________________________
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
INTERNATIONAL SMALL
ADVISERS COMPANY MIDCAP
FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments:
International Advisers HLS Fund, Inc.
- Class IA
Shares 78,142,562
Cost $91,062,085
Market Value...................... $109,141,013 -- --
Small Company HLS Fund, Inc. -
Class IA
Shares 116,111,010
Cost $161,087,349
Market Value...................... -- $254,024,997 --
MidCap HLS Fund, Inc. - Class IA
Shares 126,461,413
Cost $205,816,508
Market Value...................... -- -- $259,688,385
Hartford Growth and Income HLS Fund
- Class IA
Shares 44,914,208
Cost $57,056,947
Market Value...................... -- -- --
Hartford High Yield HLS Fund -
Class IA
Shares 17,416,534
Cost $18,153,355
Market Value...................... -- -- --
Hartford Global Leaders HLS Fund -
Class IA
Shares 27,623,494
Cost $42,769,890
Market Value...................... -- -- --
Smith Barney Cash Portfolio
Shares 471,343
Cost $471,343
Market Value...................... -- -- --
Smith Barney Appreciation Fund
Shares 14,215
Cost $117,589
Market Value...................... -- -- --
Smith Barney Government Portfolio
Shares 31,310
Cost $31,310
Market Value...................... -- -- --
BB&T Growth & Income Fund
Shares 2,248,623
Cost $27,485,794
Market Value...................... -- -- --
AmSouth Equity Income Fund
Shares 2,572,237
Cost $28,494,557
Market Value...................... -- -- --
Due from Hartford Life Insurance
Company.............................. 119,851 5,463,600 16,063,484
Receivable from fund shares sold...... -- -- --
------------ ------------ ------------
Total Assets.......................... 109,260,864 259,488,597 275,751,869
------------ ------------ ------------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. -- -- --
Payable for fund shares purchased..... 120,096 5,463,705 16,063,809
------------ ------------ ------------
Total Liabilities..................... 120,096 5,463,705 16,063,809
------------ ------------ ------------
Net Assets (variable annuity contract
liabilities)......................... $109,140,768 $254,024,892 $259,688,060
============ ============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
____________________________________ SA-4 ______________________________________
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND GLOBAL SMITH BARNEY SMITH BARNEY SMITH BARNEY
INCOME HIGH YIELD LEADERS CASH APPRECIATION GOVERNMENT
FUND FUND FUND PORTFOLIO FUND PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
International Advisers HLS Fund, Inc
- Class IA
Shares 78,142,562
Cost $91,062,085
Market Value...................... -- -- -- -- -- --
Small Company HLS Fund, Inc. -
Class IA
Shares 116,111,010
Cost $161,087,349
Market Value...................... -- -- -- -- -- --
MidCap HLS Fund, Inc. - Class IA
Shares 126,461,413
Cost $205,816,508
Market Value...................... -- -- -- -- -- --
Hartford Growth and Income HLS Fund
- Class IA
Shares 44,914,208
Cost $57,056,947
Market Value...................... $64,301,022 -- -- -- -- --
Hartford High Yield HLS Fund -
Class IA
Shares 17,416,534
Cost $18,153,355
Market Value...................... -- $17,501,387 -- -- -- --
Hartford Global Leaders HLS Fund -
Class IA
Shares 27,623,494
Cost $42,769,890
Market Value...................... -- -- $52,840,981 -- -- --
Smith Barney Cash Portfolio
Shares 471,343
Cost $471,343
Market Value...................... -- -- -- $ 471,343 -- --
Smith Barney Appreciation Fund
Shares 14,215
Cost $117,589
Market Value...................... -- -- -- -- $223,601 --
Smith Barney Government Portfolio
Shares 31,310
Cost $31,310
Market Value...................... -- -- -- -- -- $31,310
BB&T Growth & Income Fund
Shares 2,248,623
Cost $27,485,794
Market Value...................... -- -- -- -- -- --
AmSouth Equity Income Fund
Shares 2,572,237
Cost $28,494,557
Market Value...................... -- -- -- -- -- --
Due from Hartford Life Insurance
Company.............................. 119,444 -- 279,383 26,631 -- --
Receivable from fund shares sold...... -- 16,018 -- -- 14 11
----------- ----------- ----------- --------- -------- -------
Total Assets.......................... 64,420,466 17,517,405 53,120,364 497,974 223,615 31,321
----------- ----------- ----------- --------- -------- -------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. -- 15,974 -- -- 77 19
Payable for fund shares purchased..... 119,350 -- 279,292 27,259 -- --
----------- ----------- ----------- --------- -------- -------
Total Liabilities..................... 119,350 15,974 279,292 27,259 77 19
----------- ----------- ----------- --------- -------- -------
Net Assets (variable annuity contract
liabilities)......................... $64,301,116 $17,501,431 $52,841,072 $ 470,715 $223,538 $31,302
=========== =========== =========== ========= ======== =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BB&T AMSOUTH
GROWTH & EQUITY INCOME
INCOME FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -------------
<S> <C> <C>
ASSETS:
Investments:
International Advisers HLS Fund, Inc
- Class IA
Shares 78,142,562
Cost $91,062,085
Market Value...................... -- --
Small Company HLS Fund, Inc. -
Class IA
Shares 116,111,010
Cost $161,087,349
Market Value...................... -- --
MidCap HLS Fund, Inc. - Class IA
Shares 126,461,413
Cost $205,816,508
Market Value...................... -- --
Hartford Growth and Income HLS Fund
- Class IA
Shares 44,914,208
Cost $57,056,947
Market Value...................... -- --
Hartford High Yield HLS Fund -
Class IA
Shares 17,416,534
Cost $18,153,355
Market Value...................... -- --
Hartford Global Leaders HLS Fund -
Class IA
Shares 27,623,494
Cost $42,769,890
Market Value...................... -- --
Smith Barney Cash Portfolio
Shares 471,343
Cost $471,343
Market Value...................... -- --
Smith Barney Appreciation Fund
Shares 14,215
Cost $117,589
Market Value...................... -- --
Smith Barney Government Portfolio
Shares 31,310
Cost $31,310
Market Value...................... -- --
BB&T Growth & Income Fund
Shares 2,248,623
Cost $27,485,794
Market Value...................... $28,017,845 --
AmSouth Equity Income Fund
Shares 2,572,237
Cost $28,494,557
Market Value...................... -- $35,728,377
Due from Hartford Life Insurance
Company.............................. 2,564 170,059
Receivable from fund shares sold...... -- --
----------- -----------
Total Assets.......................... 28,020,409 35,898,436
----------- -----------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. -- --
Payable for fund shares purchased..... 2,585 170,055
----------- -----------
Total Liabilities..................... 2,585 170,055
----------- -----------
Net Assets (variable annuity contract
liabilities)......................... $28,017,824 $35,728,381
=========== ===========
</TABLE>
_____________________________________SA-5 ______________________________________
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
MENTOR VIP MENTOR VIP
CAPITAL GROWTH PERPETUAL INTERNATIONAL
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
-------------- -----------------------
<S> <C> <C>
ASSETS:
Investments:
Mentor VIP Capital Growth Fund
Shares 1,714,877
Cost $21,738,831
Market Value..................................... $24,728,524 --
Mentor VIP Perpetual International Fund
Shares 1,160,994
Cost $16,298,880
Market Value..................................... -- $22,755,484
Mentor VIP Growth Fund
Shares 1,040,522
Cost $11,202,467
Market Value..................................... -- --
Mitchell Hutchins Growth & Income Portfolio -
Class I
Shares 245,997
Cost $3,654,815
Market Value..................................... -- --
Mitchell Hutchins Strategic Income Portfolio -
Class I
Shares 98,344
Cost $1,219,298
Market Value..................................... -- --
Mitchell Hutchins Tactical Allocation Portfolio -
Class I
Shares 1,320,950
Cost $21,338,736
Market Value..................................... -- --
Huntington VA Income Equity Fund
Shares 23,178
Cost $228,633
Market Value..................................... -- --
AmSouth Select Equity Fund
Shares 290,955
Cost $2,680,109
Market Value..................................... -- --
Due from Hartford Life Insurance Company............. -- 17,786
Receivable from fund shares sold..................... 7,221 --
----------- -----------
Total Assets......................................... 24,735,745 22,773,270
----------- -----------
LIABILITIES:
Due to Hartford Life Insurance Company............... 7,301 --
Payable for fund shares purchased.................... -- 17,847
----------- -----------
Total Liabilities.................................... 7,301 17,847
----------- -----------
Net Assets (variable annuity contract liabilities)... $24,728,444 $22,755,423
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
____________________________________SA-6 ______________________________________
<PAGE>
<TABLE>
<CAPTION>
MENTOR VIP MITCHELL HUTCHINS MITCHELL HUTCHINS MITCHELL HUTCHINS
GROWTH GROWTH AND INCOME STRATEGIC INCOME TACTICAL ALLOCATION
FUND PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------------- ----------------- -------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Mentor VIP Capital Growth Fund
Shares 1,714,877
Cost $21,738,831
Market Value..................................... -- -- -- --
Mentor VIP Perpetual International Fund
Shares 1,160,994
Cost $16,298,880
Market Value..................................... -- -- -- --
Mentor VIP Growth Fund
Shares 1,040,522
Cost $11,202,467
Market Value..................................... $14,432,037 -- -- --
Mitchell Hutchins Growth & Income Portfolio -
Class I
Shares 245,997
Cost $3,654,815
Market Value..................................... -- $4,022,057 -- --
Mitchell Hutchins Strategic Income Portfolio -
Class I
Shares 98,344
Cost $1,219,298
Market Value..................................... -- -- $1,153,572 --
Mitchell Hutchins Tactical Allocation Portfolio -
Class I
Shares 1,320,950
Cost $21,338,736
Market Value..................................... -- -- -- $21,769,264
Huntington VA Income Equity Fund
Shares 23,178
Cost $228,633
Market Value..................................... -- -- -- --
AmSouth Select Equity Fund
Shares 290,955
Cost $2,680,109
Market Value..................................... -- -- -- --
Due from Hartford Life Insurance Company............. 9,714 -- -- 1,537
Receivable from fund shares sold..................... -- 137 -- --
----------- ---------- ---------- -----------
Total Assets......................................... 14,441,751 4,022,194 1,153,572 21,770,801
----------- ---------- ---------- -----------
LIABILITIES:
Due to Hartford Life Insurance Company............... -- 134 38 --
Payable for fund shares purchased.................... 9,738 -- -- 1,531
----------- ---------- ---------- -----------
Total Liabilities.................................... 9,738 134 38 1,531
----------- ---------- ---------- -----------
Net Assets (variable annuity contract liabilities)... $14,432,013 $4,022,060 $1,153,534 $21,769,270
=========== ========== ========== ===========
<CAPTION>
HUNTINGTON VA AMSOUTH
INCOME EQUITY SELECT EQUITY
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- -------------
<S> <C> <C>
ASSETS:
Investments:
Mentor VIP Capital Growth Fund
Shares 1,714,877
Cost $21,738,831
Market Value..................................... -- --
Mentor VIP Perpetual International Fund
Shares 1,160,994
Cost $16,298,880
Market Value..................................... -- --
Mentor VIP Growth Fund
Shares 1,040,522
Cost $11,202,467
Market Value..................................... -- --
Mitchell Hutchins Growth & Income Portfolio -
Class I
Shares 245,997
Cost $3,654,815
Market Value..................................... -- --
Mitchell Hutchins Strategic Income Portfolio -
Class I
Shares 98,344
Cost $1,219,298
Market Value..................................... -- --
Mitchell Hutchins Tactical Allocation Portfolio -
Class I
Shares 1,320,950
Cost $21,338,736
Market Value..................................... -- --
Huntington VA Income Equity Fund
Shares 23,178
Cost $228,633
Market Value..................................... $228,763 --
AmSouth Select Equity Fund
Shares 290,955
Cost $2,680,109
Market Value..................................... -- $2,476,028
Due from Hartford Life Insurance Company............. -- 21,838
Receivable from fund shares sold..................... -- --
-------- ----------
Total Assets......................................... 228,763 2,497,866
-------- ----------
LIABILITIES:
Due to Hartford Life Insurance Company............... 8 --
Payable for fund shares purchased.................... -- 21,834
-------- ----------
Total Liabilities.................................... 8 21,834
-------- ----------
Net Assets (variable annuity contract liabilities)... $228,755 $2,476,032
======== ==========
</TABLE>
____________________________________SA-7 _____________________________________
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------- ---------- ---------------
<S> <C> <C> <C>
DEFERRED ANNUITY CONTRACTS IN THE
ACCUMULATION PERIOD:
Bond Fund Qualified 1.00%........ 213,341 $ 4.242785 $ 905,161
Bond Fund Non-Qualified 1.00%.... 1,528,336 4.178271 6,385,802
Bond Fund 1.25%.................. 167,706,691 2.184598 366,371,702
Bond Fund .25%................... 52,746 1.498860 79,060
Bond Fund 1.4%................... 755,787 2.182434 1,649,454
Bond Fund 1.5%................... 2,733,792 0.994947 2,719,978
Stock Fund Qualified 1.00%....... 2,764,533 13.310539 36,797,424
Stock Fund Qualified 1.00%....... 679,578 13.920026 9,459,745
Stock Fund 1.25%................. 432,423,789 7.175612 3,102,905,327
Stock Fund .25%.................. 1,068,046 3.885218 4,149,591
Stock Fund 1.4%.................. 2,104,901 7.168535 15,089,057
Stock Fund 1.5%.................. 11,808,607 1.223394 14,446,580
Stock Fund 1.65%................. 69,390 1.222948 84,860
Money Market Fund Qualified
1.00%........................... 459,952 2.782454 1,279,796
Money Market Fund Non-Qualified
1.00%........................... 6,995,552 2.783765 19,473,975
Money Market Fund 1.25%.......... 213,832,400 1.777341 380,053,091
Money Market Fund .25%........... 423,001 1.359855 575,220
Money Market Fund 1.65%.......... 95,824 1.049997 100,615
Money Market Fund 1.4%........... 1,061,435 1.775591 1,884,675
Money Market Fund 1.5%........... 11,251,805 1.050377 11,818,637
Advisers Fund Qualified 1.00%.... 2,884,286 7.230781 20,855,639
Advisers Fund Non-Qualified
1.00%........................... 8,513,289 7.230781 61,557,730
Advisers Fund 1.25%.............. 1,156,230,489 4.803097 5,553,487,191
Advisers Fund .25%............... 1,122,511 2.760456 3,098,643
Advisers Fund 1.65%.............. 90,120 1.127468 101,608
Advisers Fund 1.4%............... 4,952,412 4.798347 23,763,390
Advisers Fund 1.5%............... 24,758,627 1.127880 27,924,760
Capital Appreciation Fund
Qualified 1.00%................. 693,728 12.687752 8,801,850
Capital Appreciation Fund
Non-Qualified 1.00%............. 1,995,203 12.682513 25,304,182
Capital Appreciation Fund
1.25%........................... 347,433,441 7.501418 2,606,243,470
Capital Appreciation Fund .25%... 1,770,832 3.719454 6,586,527
Capital Appreciation Fund
1.65%........................... 56,270 1.334003 75,064
Capital Appreciation Fund 1.4%... 1,112,300 7.494011 8,335,584
Capital Appreciation Fund 1.5%... 5,291,692 1.334491 7,061,715
Mortgage Securities Fund
Qualified 1.00%................. 455,136 2.859263 1,301,354
Mortgage Securities Fund
Non-Qualified 1.00%............. 4,637,303 2.859263 13,259,270
Mortgage Securities Fund 1.25%... 69,554,953 2.216665 154,180,031
Mortgage Securities Fund .25%.... 14,431 1.476954 21,314
Mortgage Securities Fund 1.4%.... 120,468 2.214471 266,772
Mortgage Securities Fund 1.5%.... 435,786 1.022434 445,563
Index Fund Qualified 1.00%....... 180,991 2.226696 403,011
Index Fund Non-Qualified 1.00%... 705,606 2.226696 1,571,169
Index Fund 1.25%................. 152,272,495 5.607574 853,879,286
Index Fund .25%.................. 225,894 3.702905 836,463
Index Fund 1.65%................. 7,659 1.239923 9,497
Index Fund 1.4%.................. 1,106,937 5.602011 6,201,075
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
____________________________________SA-8 _____________________________________
<PAGE>
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------- ---------- ---------------
<S> <C> <C> <C>
Index Fund 1.5%.................. 5,947,828 $ 1.240377 $ 7,377,549
International Opportunities Fund
Qualified 1.00%................. 164,957 2.321965 383,024
International Opportunities Fund
Non-Qualified 1.00%............. 1,040,352 2.320729 2,414,376
International Opportunities Fund
1.25%........................... 218,271,540 2.266827 494,783,822
International Opportunities Fund
.25%............................ 693,181 2.614527 1,812,341
International Opportunities Fund
1.4%............................ 449,187 2.264582 1,017,221
International Opportunities Fund
1.5%............................ 5,242,257 1.273461 6,675,810
Dividend and Growth Fund
Qualified 1.00%................. 302,679 2.607548 789,249
Dividend and Growth Fund
Non-Qualified 1.00%............. 1,206,465 2.607548 3,145,915
Dividend and Growth Fund 1.25%... 381,269,170 2.569946 979,841,178
Dividend and Growth Fund .25%.... 208,016 2.723583 566,550
Dividend and Growth Fund 1.65%... 17,587 1.045671 18,390
Dividend and Growth Fund 1.4%.... 1,030,411 2.567396 2,645,474
Dividend and Growth Fund 1.5%.... 4,376,833 1.046052 4,578,395
International Advisers Fund
Qualified 1.00%................. 12,397 1.817544 22,533
International Advisers Fund
Non-Qualified 1.00%............. 153,873 1.817544 279,670
International Advisers Fund
1.25%........................... 57,796,510 1.795704 103,785,423
International Advisers Fund
.25%............................ 38,176 1.884645 71,947
International Advisers Fund
1.65%........................... 8,093 1.178048 9,534
International Advisers Fund
1.4%............................ 390,910 1.793926 701,264
International Advisers Fund
1.5%............................ 3,383,042 1.178481 3,986,850
Small Company Fund Qualified
1.00%........................... 227,604 2.269744 516,604
Small Company Fund Non-Qualified
1.00%........................... 2,533,564 2.269744 5,750,541
Small Company Fund 1.25%......... 107,808,156 2.250630 242,636,270
Small Company Fund .25%.......... 237,848 2.328130 553,741
Small Company Fund 1.65%......... 23,341 1.592576 37,173
Small Company Fund 1.4%.......... 725,945 2.248401 1,632,216
Small Company Fund 1.5%.......... 1,659,166 1.593152 2,643,303
MidCap Fund Sub-Account 1.00%
Qualified....................... 276,421 2.068062 571,655
MidCap Fund Sub-Account 1.00%
Non-Qualified................... 4,561,273 2.068062 9,432,996
MidCap Fund Sub-Account .25%..... 100,099 2.105927 210,800
MidCap Fund 1.65%................ 12,943 1.520083 19,674
MidCap Fund 1.4%................. 1,455,391 2.053534 2,988,695
MidCap Fund 1.5%................. 2,064,651 1.520630 3,139,571
MidCap Fund 1.25%................ 118,305,628 2.055574 243,185,973
Growth and Income Fund 1.65%..... 16,881 1.308008 22,081
Growth and Income Fund 1.4%...... 1,551,524 1.420460 2,203,878
Growth and Income Fund Non-
Qualified 1.00%................. 94,246 1.427512 134,538
Growth and Income Fund Qualified
1.00%........................... 297,288 1.427512 424,382
Growth and Income Fund .25%...... 18,437 1.444538 26,633
Growth and Income Fund 1.25%..... 41,231,825 1.421882 58,626,791
Growth and Income Fund 1.5%...... 2,107,446 1.308485 2,757,561
High Yield Fund 1.4%............. 707,437 1.069043 756,281
High Yield Fund 1.5%............. 754,351 1.066776 804,723
High Yield Fund .25%............. 10,000 1.083588 10,836
High Yield Fund 1.25%............ 14,681,047 1.070110 15,710,335
High Yield Fund Qualified
1.00%........................... 9,996 1.073454 10,730
High Yield Fund Non-Qualified
1.00%........................... 28,832 1.073454 30,950
</TABLE>
__________________________________ SA-9 _____________________________________
<PAGE>
SEPARATE ACCOUNT TWO
- -------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------- ---------- ---------------
<S> <C> <C> <C>
Global Leaders Fund 1.4%......... 601,937 $ 1.950512 $ 1,174,085
Global Leaders Fund .25%......... 34,138 1.976824 67,485
Global Leaders Fund 1.25%........ 25,342,886 1.952453 49,480,795
Global Leaders Fund Non-Qualified
1.00%........................... 132,669 1.958438 259,824
Global Leaders Fund 1.00%........ 30,778 1.958438 60,278
Global Leaders Fund 1.5%......... 912,978 1.946293 1,776,922
Smith Barney Cash Portfolio
Qualified 1.00%................. 40,848 2.996122 122,387
Smith Barney Cash Portfolio
Non-Qualified 1.00%............. 112,352 3.100326 348,328
Smith Barney Appreciation Fund
1.00%........................... 17,669 12.651528 223,538
Smith Barney Government Portfolio
1.00%........................... 11,614 2.695221 31,302
BB&T Growth and Income Fund
1.4%............................ 164,327 1.263735 207,666
BB&T Growth and Income Fund
1.25%........................... 21,984,471 1.264991 27,810,158
AmSouth Equity Income Fund
1.4%............................ 868,023 1.400354 1,215,539
AmSouth Equity Income Fund
1.25%........................... 24,604,396 1.401746 34,489,115
Mentor VIP Capital Growth Fund
1.4%............................ 100,477 1.129778 113,517
Mentor VIP Capital Growth Fund
1.25%........................... 21,765,940 1.130892 24,614,927
Mentor VIP Perpetual
International Fund 1.4%......... 117,617 1.531949 180,183
Mentor VIP Perpetual
International Fund 1.25%........ 14,721,728 1.533464 22,575,240
Mentor VIP Growth Fund 1.4%...... 39,023 1.085030 42,341
Mentor VIP Growth Fund 1.25%..... 13,248,938 1.086100 14,389,672
Mitchell Hutchins Growth and
Income Portfolio 1.5%........... 28,159 1.082851 30,491
Mitchell Hutchins Growth and
Income Portfolio 1.4%........... 24,198 1.168150 28,267
Mitchell Hutchins Growth and
Income Portfolio 1.25%.......... 3,389,460 1.169302 3,963,302
Mitchell Hutchins Strategic
Income Portfolio 1.5%........... 39,574 0.975253 38,595
Mitchell Hutchins Strategic
Income Portfolio 1.4%........... 48,568 1.002380 48,683
Mitchell Hutchins Strategic
Income Portfolio 1.25%.......... 1,062,673 1.003372 1,066,256
Mitchell Hutchins Tactical
Allocation Portfolio 1.5%....... 1,771,459 1.065485 1,887,463
Mitchell Hutchins Tactical
Allocation Portfolio 1.4%....... 260,842 1.235332 322,226
Mitchell Hutchins Tactical
Allocation Portfolio 1.25%...... 15,817,865 1.236550 19,559,581
Huntington VA Income Equity Fund
1.4%............................ 6,274 0.992986 6,230
Huntington VA Income Equity Fund
1.25%........................... 224,042 0.993229 222,525
AmSouth Select Equity Fund
1.4%............................ 213,869 0.846981 181,143
AmSouth Select Equity Fund
1.25%........................... 2,706,783 0.847829 2,294,889
---------------
SUB-TOTAL:....................... 15,780,380,307
---------------
ANNUITY CONTRACTS IN THE ANNUITY
PERIOD:
Bond Fund Non-Qualified 1.00%.... 13,487 4.178271 56,352
Bond Fund 1.25%.................. 646,995 2.184598 1,413,425
Stock Fund Non-Qualified 1.00%... 21,934 13.310539 291,952
Stock Fund 1.25%................. 1,177,626 7.175612 8,450,189
Money Market Fund Qualified
1.00%........................... 317 2.782454 883
Money Market Fund Non-Qualified
1.00%........................... 70,673 2.783765 196,736
Money Market Fund 1.25%.......... 367,868 1.777341 653,827
Advisers Fund Qualified 1.00%.... 1,924 7.230781 13,909
Advisers Fund Non-Qualified
1.00%........................... 107,185 7.230781 775,030
Advisers Fund 1.25%.............. 2,971,945 4.803097 14,274,540
Capital Appreciation Fund
Non-Qualified 1.00%............. 15,299 12.682513 194,028
Capital Appreciation Fund
1.25%........................... 403,526 7.501418 3,027,015
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
___________________________________ SA-10 _____________________________________
<PAGE>
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------- ---------- ---------------
<S> <C> <C> <C>
Mortgage Securities Fund
Non-Qualified 1.00%............. 57,599 $ 2.859263 $ 164,690
Mortgage Securities Fund 1.25%... 222,487 2.216665 493,180
Index Fund 1.25%................. 603,079 5.607574 3,381,807
Index Fund Non-Qualified 1.00%... 9,620 2.226696 21,421
International Opportunities Fund
Non-Qualified 1.00%............. 4,586 2.320729 10,643
International Opportunities Fund
1.25%........................... 439,255 2.266827 995,716
Dividend and Growth Fund 1.25%... 796,481 2.569946 2,046,914
International Advisers Fund
1.25%........................... 157,903 1.795704 283,547
Small Company Fund 1.25%......... 113,321 2.250630 255,044
MidCap Fund 1.25%................ 67,473 2.055574 138,696
Growth and Income Fund 1.25%..... 74,023 1.421882 105,252
High Yield Fund 1.25%............ 165,941 1.070110 177,576
Global Leaders Fund 1.25%........ 11,105 1.952453 21,683
AmSouth Equity Income Fund....... 16,927 1.401746 23,727
---------------
SUB-TOTAL........................ 37,467,782
---------------
GRAND TOTAL........................ $15,817,848,089
===============
</TABLE>
___________________________________ SA-11 _____________________________________
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
BOND STOCK
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 20,856,394 $ 21,835,245
EXPENSES:
Mortality and expense undertakings.... (4,786,965) (35,154,364)
------------ ------------
Net investment income (loss)........ 16,069,429 (13,319,119)
------------ ------------
CAPITAL GAINS INCOME.................... 2,623,245 216,819,144
------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized (loss) gain on security
transactions......................... (203,417) 318,938
Net unrealized (depreciation)
appreciation of investments during
the period........................... (31,230,646) 275,463,487
------------ ------------
Net (loss) gain on investments...... (31,434,063) 275,782,425
------------ ------------
Net (decrease) increase in net
assets resulting from operations... $(12,741,389) $479,282,450
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
__________________________________ SA-12 _____________________________________
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL
MONEY MARKET ADVISERS APPRECIATION SECURITIES INDEX OPPORTUNITIES
FUND FUND FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------ ------------ ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................. $19,516,607 $119,254,083 $ 8,050,639 $ 9,514,435 $ 8,124,740 $ 4,967,210
EXPENSES:
Mortality and expense undertakings.... (5,024,718) (66,290,644) (27,044,767) (2,222,251) (9,248,662) (5,283,728)
----------- ------------ ------------ ----------- ------------ ------------
Net investment income (loss)........ 14,491,889 52,963,439 (18,994,128) 7,292,184 (1,123,922) (316,518)
----------- ------------ ------------ ----------- ------------ ------------
CAPITAL GAINS INCOME.................... 9,037 410,469,104 127,112,714 -- 10,953,439 --
----------- ------------ ------------ ----------- ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized (loss) gain on security
transactions......................... -- 2,721,491 8,239,831 106,051 3,676 12,898,810
Net unrealized (depreciation)
appreciation of investments during
the period........................... -- 6,294,211 578,461,865 (6,915,906) 121,670,024 137,769,735
----------- ------------ ------------ ----------- ------------ ------------
Net (loss) gain on investments...... -- 9,015,702 586,701,696 (6,809,855) 121,673,700 150,668,545
----------- ------------ ------------ ----------- ------------ ------------
Net (decrease) increase in net
assets resulting from operations... $14,500,926 $472,448,245 $694,820,282 $ 482,329 $131,503,217 $150,352,027
=========== ============ ============ =========== ============ ============
<CAPTION>
DIVIDEND
AND GROWTH
FUND
SUB-ACCOUNT
------------
<S> <C>
INVESTMENT INCOME:
Dividends............................. $ 16,011,869
EXPENSES:
Mortality and expense undertakings.... (12,526,370)
------------
Net investment income (loss)........ 3,485,499
------------
CAPITAL GAINS INCOME.................... 38,610,231
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized (loss) gain on security
transactions......................... 2,185,191
Net unrealized (depreciation)
appreciation of investments during
the period........................... (5,417,975)
------------
Net (loss) gain on investments...... (3,232,784)
------------
Net (decrease) increase in net
assets resulting from operations... $ 38,862,946
============
</TABLE>
__________________________________ SA-13 ______________________________________
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
INTERNATIONAL SMALL
ADVISERS COMPANY
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 1,927,226 $ --
EXPENSES:
Mortality and expense undertakings.... (1,089,997) (1,741,126)
----------- -----------
Net investment income (loss)........ 837,229 (1,741,126)
----------- -----------
CAPITAL GAINS INCOME.................... -- 315,082
----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on security
transactions......................... 295,153 4,251,712
Net unrealized appreciation
(depreciation) of investments during
the period........................... 17,296,426 81,907,566
----------- -----------
Net gain (loss) on investments...... 17,591,579 86,159,278
----------- -----------
Net increase (decrease) in net
assets resulting from operations... $18,428,808 $84,733,234
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
__________________________________ SA-14 ______________________________________
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND GLOBAL SMITH BARNEY SMITH BARNEY
MIDCAP INCOME HIGH YIELD LEADERS CASH APPRECIATION
FUND FUND FUND FUND PORTFOLIO FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ -- $ 172,552 $ 967,224 $ 67,709 $22,683 $ 1,997
EXPENSES:
Mortality and expense undertakings.... (1,335,119) (353,581) (122,260) (182,154) (4,908) (2,133)
----------- ---------- --------- ----------- ------- -------
Net investment income (loss)........ (1,335,119) (181,029) 844,964 (114,445) 17,775 (136)
----------- ---------- --------- ----------- ------- -------
CAPITAL GAINS INCOME.................... 10,415,254 397,311 1,135 238,680 -- 22,203
----------- ---------- --------- ----------- ------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on security
transactions......................... (224,429) 46,869 (15,929) (9,270) -- 123
Net unrealized appreciation
(depreciation) of investments during
the period........................... 46,937,316 6,503,899 (642,094) 10,060,655 -- 5,735
----------- ---------- --------- ----------- ------- -------
Net gain (loss) on investments...... 46,712,887 6,550,768 (658,023) 10,051,385 -- 5,858
----------- ---------- --------- ----------- ------- -------
Net increase (decrease) in net
assets resulting from operations... $55,793,022 $6,767,050 $ 188,076 $10,175,620 $17,775 $27,925
=========== ========== ========= =========== ======= =======
<CAPTION>
SMITH BARNEY BB&T GROWTH AMSOUTH
GOVERNMENT & INCOME EQUITY INCOME
PORTFOLIO FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................. $1,568 $ 300,770 $ 354,120
EXPENSES:
Mortality and expense undertakings.... (347) (320,977) (336,848)
------ ----------- ----------
Net investment income (loss)........ 1,221 (20,207) 17,272
------ ----------- ----------
CAPITAL GAINS INCOME.................... -- 393,152 --
------ ----------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on security
transactions......................... -- 3,527 (4,172)
Net unrealized appreciation
(depreciation) of investments during
the period........................... -- (1,805,236) 6,229,908
------ ----------- ----------
Net gain (loss) on investments...... -- (1,801,709) 6,225,736
------ ----------- ----------
Net increase (decrease) in net
assets resulting from operations... $1,221 $(1,428,764) $6,243,008
====== =========== ==========
</TABLE>
___________________________________ SA-15 _____________________________________
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
MENTOR VIP MENTOR VIP
CAPITAL GROWTH PERPETUAL INTERNATIONAL
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
-------------- -----------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 32,268 $ --
EXPENSES:
Mortality and expense undertakings.... (282,453) (195,980)
---------- ----------
Net investment (loss) income........ (250,185) (195,980)
---------- ----------
CAPITAL GAINS INCOME.................... 37,363 10,315
---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on security
transactions......................... 496 9,042
Net unrealized appreciation
(depreciation) of investments during
the period........................... 1,293,466 5,855,275
---------- ----------
Net gain (loss) on investments...... 1,293,962 5,864,317
---------- ----------
Net increase (decrease) in net
assets resulting from operations... $1,081,140 $5,678,652
========== ==========
</TABLE>
* From inception, November 1, 1999 to December 31, 1999
** From inception, May 3, 1999 to December 31, 1999
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
__________________________________ SA-16 ______________________________________
<PAGE>
<TABLE>
<CAPTION>
MENTOR VIP MITCHELL HUTCHINS MITCHELL HUTCHINS MITCHELL HUTCHINS HUNTINGTON VA
GROWTH GROWTH AND INCOME STRATEGIC INCOME TACTICAL ALLOCATION INCOME
FUND PORTFOLIO PORTFOLIO PORTFOLIO EQUITY FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT*
----------- ----------------- ----------------- ------------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 16,104 $ 41 $ 63,920 $ 71,190 $1,302
EXPENSES:
Mortality and expense undertakings.... (131,586) (27,575) (7,295) (111,510) (175)
---------- -------- -------- ---------- ------
Net investment (loss) income........ (115,482) (27,534) 56,625 (40,320) 1,127
---------- -------- -------- ---------- ------
CAPITAL GAINS INCOME.................... -- -- -- 1,339,390 --
---------- -------- -------- ---------- ------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on security
transactions......................... 21,602 3,219 165 31,237 --
Net unrealized appreciation
(depreciation) of investments during
the period........................... 2,619,527 367,262 (65,581) 430,021 131
---------- -------- -------- ---------- ------
Net gain (loss) on investments...... 2,641,129 370,481 (65,416) 461,258 131
---------- -------- -------- ---------- ------
Net increase (decrease) in net
assets resulting from operations... $2,525,647 $342,947 $ (8,791) $1,760,328 $1,258
========== ======== ======== ========== ======
<CAPTION>
AMSOUTH
SELECT EQUITY
FUND
SUB-ACCOUNT**
-------------
<S> <C>
INVESTMENT INCOME:
Dividends............................. $ 6,148
EXPENSES:
Mortality and expense undertakings.... (11,570)
---------
Net investment (loss) income........ (5,422)
---------
CAPITAL GAINS INCOME.................... --
---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on security
transactions......................... 73
Net unrealized appreciation
(depreciation) of investments during
the period........................... (204,081)
---------
Net gain (loss) on investments...... (204,008)
---------
Net increase (decrease) in net
assets resulting from operations... $(209,430)
=========
</TABLE>
* From inception, November 1, 1999 to December 31, 1999
** From inception, May 3, 1999 to December 31, 1999
__________________________________ SA-17 ______________________________________
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
BOND STOCK
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 16,069,429 $ (13,319,119)
Capital gains income.................. 2,623,245 216,819,144
Net realized (loss) gain on security
transactions......................... (203,417) 318,938
Net unrealized (depreciation)
appreciation of investments during
the period........................... (31,230,646) 275,463,487
------------ --------------
Net (decrease) increase in net assets
resulting from operations............ (12,741,389) 479,282,450
------------ --------------
UNIT TRANSACTIONS:
Purchases............................. 27,921,938 243,534,289
Net transfers......................... 28,910,921 204,580,762
Surrenders for benefit payments and
fees................................. (42,745,328) (238,079,087)
Net annuity transactions.............. 414,745 4,064,471
------------ --------------
Net increase (decrease) in net assets
resulting from unit transactions..... 14,502,276 214,100,435
------------ --------------
Net increase (decrease) in net
assets............................... 1,760,887 693,382,885
NET ASSETS:
Beginning of period................... 377,820,047 2,498,291,840
------------ --------------
End of period......................... $379,580,934 $3,191,674,725
============ ==============
</TABLE>
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
BOND STOCK
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 14,116,691 $ (7,282,872)
Capital gains income.................. -- 63,980,079
Net realized (loss) gain on security
transactions......................... (17,730) (1,720,391)
Net unrealized appreciation
(depreciation) of investments during
the period........................... 5,723,478 522,612,064
------------ --------------
Net increase in net assets resulting
from operations...................... 19,822,439 577,588,880
------------ --------------
UNIT TRANSACTIONS:
Purchases............................. 41,906,997 201,628,213
Net transfers......................... 95,280,889 107,789,657
Surrenders for benefit payments and
fees................................. (24,892,187) (143,970,482)
Net annuity transactions.............. 321,142 560,255
------------ --------------
Net increase (decrease) in net assets
resulting from unit transactions..... 112,616,841 166,007,643
------------ --------------
Net increase (decrease) in net
assets............................... 132,439,280 743,596,523
NET ASSETS:
Beginning of period................... 245,380,767 1,754,695,317
------------ --------------
End of period......................... $377,820,047 $2,498,291,840
============ ==============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
____________________________________ SA-18 ____________________________________
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE
MONEY MARKET ADVISERS APPRECIATION SECURITIES INDEX
FUND FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 14,491,889 $ 52,963,439 $ (18,994,128) $ 7,292,184 $ (1,123,922)
Capital gains income.................. 9,037 410,469,104 127,112,714 -- 10,953,439
Net realized (loss) gain on security
transactions......................... -- 2,721,491 8,239,831 106,051 3,676
Net unrealized (depreciation)
appreciation of investments during
the period........................... -- 6,294,211 578,461,865 (6,915,906) 121,670,024
------------- -------------- -------------- ------------ ------------
Net (decrease) increase in net assets
resulting from operations............ 14,500,926 472,448,245 694,820,282 482,329 131,503,217
------------- -------------- -------------- ------------ ------------
UNIT TRANSACTIONS:
Purchases............................. 52,032,809 400,762,799 114,346,316 5,634,859 86,228,724
Net transfers......................... 179,073,766 425,533,878 47,043,624 2,063,743 94,024,710
Surrenders for benefit payments and
fees................................. (172,457,509) (514,511,813) (177,116,018) (28,509,889) (63,335,518)
Net annuity transactions.............. 66,069 4,945,760 853,857 213,909 2,159,559
------------- -------------- -------------- ------------ ------------
Net increase (decrease) in net assets
resulting from unit transactions..... 58,715,135 316,730,624 (14,872,221) (20,597,378) 119,077,475
------------- -------------- -------------- ------------ ------------
Net increase (decrease) in net
assets............................... 73,216,061 789,178,869 679,948,061 (20,115,049) 250,580,692
NET ASSETS:
Beginning of period................... 342,821,394 4,916,673,571 1,985,681,374 190,247,223 623,100,586
------------- -------------- -------------- ------------ ------------
End of period......................... $ 416,037,455 $5,705,852,440 $2,665,629,435 $170,132,174 $873,681,278
============= ============== ============== ============ ============
<CAPTION>
INTERNATIONAL DIVIDEND
OPPORTUNITIES AND GROWTH
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ (316,518) $ 3,485,499
Capital gains income.................. -- 38,610,231
Net realized (loss) gain on security
transactions......................... 12,898,810 2,185,191
Net unrealized (depreciation)
appreciation of investments during
the period........................... 137,769,735 (5,417,975)
------------ ------------
Net (decrease) increase in net assets
resulting from operations............ 150,352,027 38,862,946
------------ ------------
UNIT TRANSACTIONS:
Purchases............................. 13,080,473 65,414,965
Net transfers......................... (10,281,590) (15,678,141)
Surrenders for benefit payments and
fees................................. (43,785,344) (69,729,336)
Net annuity transactions.............. 123,273 320,965
------------ ------------
Net increase (decrease) in net assets
resulting from unit transactions..... (40,863,188) (19,671,547)
------------ ------------
Net increase (decrease) in net
assets............................... 109,488,839 19,191,399
NET ASSETS:
Beginning of period................... 398,604,114 974,440,666
------------ ------------
End of period......................... $508,092,953 $993,632,065
============ ============
</TABLE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE
MONEY MARKET ADVISERS APPRECIATION SECURITIES INDEX
FUND FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $11,836,148 $ 44,020,326 $ (12,238,662) $ 9,644,833 $ (1,323,774)
Capital gains income.................. -- 130,914,844 114,733,928 -- 10,662,058
Net realized (loss) gain on security
transactions......................... -- 1,826,471 (4,786,085) 473,273 (704,518)
Net unrealized appreciation
(depreciation) of investments during
the period........................... -- 709,363,622 140,386,292 (228,914) 110,953,813
------------ -------------- -------------- ------------ ------------
Net increase in net assets resulting
from operations...................... 11,836,148 886,125,263 238,095,473 9,889,192 119,587,579
------------ -------------- -------------- ------------ ------------
UNIT TRANSACTIONS:
Purchases............................. 34,983,693 374,759,005 143,597,572 9,146,977 67,409,255
Net transfers......................... 123,126,442 280,406,929 (12,597,119) 8,722,639 58,996,655
Surrenders for benefit payments and
fees................................. (94,130,526) (329,416,389) (117,626,736) (28,665,195) (34,320,175)
Net annuity transactions.............. (32,392) 3,527,169 304,016 39,959 271,456
------------ -------------- -------------- ------------ ------------
Net increase (decrease) in net assets
resulting from unit transactions..... 63,947,217 329,276,714 13,677,733 (10,755,620) 92,357,191
------------ -------------- -------------- ------------ ------------
Net increase (decrease) in net
assets............................... 75,783,365 1,215,401,977 251,773,206 (866,428) 211,944,770
NET ASSETS:
Beginning of period................... 267,038,029 3,701,271,594 1,733,908,168 191,113,651 411,155,816
------------ -------------- -------------- ------------ ------------
End of period......................... $342,821,394 $4,916,673,571 $1,985,681,374 $190,247,223 $623,100,586
============ ============== ============== ============ ============
<CAPTION>
INTERNATIONAL DIVIDEND
OPPORTUNITIES AND GROWTH
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 189,021 $ 4,915,811
Capital gains income.................. 25,347,181 25,624,259
Net realized (loss) gain on security
transactions......................... 1,455,876 (465,941)
Net unrealized appreciation
(depreciation) of investments during
the period........................... 17,463,831 82,775,505
------------ ------------
Net increase in net assets resulting
from operations...................... 44,455,909 112,849,634
------------ ------------
UNIT TRANSACTIONS:
Purchases............................. 16,804,591 141,279,121
Net transfers......................... (27,399,853) 99,305,048
Surrenders for benefit payments and
fees................................. (28,546,428) (49,052,200)
Net annuity transactions.............. 244,437 835,197
------------ ------------
Net increase (decrease) in net assets
resulting from unit transactions..... (38,897,253) 192,367,166
------------ ------------
Net increase (decrease) in net
assets............................... 5,558,656 305,216,800
NET ASSETS:
Beginning of period................... 393,045,458 669,223,866
------------ ------------
End of period......................... $398,604,114 $974,440,666
============ ============
</TABLE>
__________________________________ SA-19 ______________________________________
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
INTERNATIONAL SMALL
ADVISERS COMPANY
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 837,229 $ (1,741,126)
Capital gains income.................. -- 315,082
Net realized gain (loss) on security
transactions......................... 295,153 4,251,712
Net unrealized appreciation
(depreciation) of investments during
the period........................... 17,296,426 81,907,566
------------ ------------
Net increase (decrease) in net assets
resulting from operations............ 18,428,808 84,733,234
------------ ------------
UNIT TRANSACTIONS:
Purchases............................. 10,659,922 13,837,871
Net transfers......................... 10,728,100 42,134,966
Surrenders for benefit payments and
fees................................. (6,643,729) (9,812,254)
Net annuity transactions.............. 129,729 (1,998)
------------ ------------
Net increase (decrease) in net assets
resulting from unit transactions..... 14,874,022 46,158,585
------------ ------------
Net increase (decrease) in net
assets............................... 33,302,830 130,891,819
NET ASSETS:
Beginning of period................... 75,837,938 123,133,073
------------ ------------
End of period......................... $109,140,768 $254,024,892
============ ============
</TABLE>
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
INTERNATIONAL SMALL
ADVISERS COMPANY
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 5,711,299 $ (1,090,110)
Capital gains income.................. 1,559,601 1,255,431
Net realized (loss) gain on security
transactions......................... (62,176) 1,445,433
Net unrealized (depreciation)
appreciation of investments during
the period........................... (222,372) 9,623,019
----------- ------------
Net increase in net assets resulting
from operations...................... 6,986,352 11,233,773
----------- ------------
UNIT TRANSACTIONS:
Purchases............................. 9,244,144 17,606,410
Net transfers......................... 5,996,311 27,369,558
Surrenders for benefit payments and
fees................................. (3,894,672) (4,568,343)
Net annuity transactions.............. 83,430 98,040
----------- ------------
Net increase (decrease) in net assets
resulting from unit transactions..... 11,429,213 40,505,665
----------- ------------
Net increase (decrease) in net
assets............................... 18,415,565 51,739,438
NET ASSETS:
Beginning of period................... 57,422,373 71,393,635
----------- ------------
End of period......................... $75,837,938 $123,133,073
=========== ============
</TABLE>
** From inception, June 1, 1998 to December 31, 1998
*** From inception, September 30, 1998 to December 31, 1998
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
__________________________________ SA-20 ______________________________________
<PAGE>
<TABLE>
<CAPTION>
GROWTH AND GLOBAL SMITH BARNEY SMITH BARNEY
MIDCAP INCOME HIGH YIELD LEADERS CASH APPRECIATION
FUND FUND FUND FUND PORTFOLIO FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ (1,335,119) $ (181,029) $ 844,964 $ (114,445) $ 17,775 $ (136)
Capital gains income.................. 10,415,254 397,311 1,135 238,680 -- 22,203
Net realized gain (loss) on security
transactions......................... (224,429) 46,869 (15,929) (9,270) -- 123
Net unrealized appreciation
(depreciation) of investments during
the period........................... 46,937,316 6,503,899 (642,094) 10,060,655 -- 5,735
------------ ----------- ----------- ----------- -------- --------
Net increase (decrease) in net assets
resulting from operations............ 55,793,022 6,767,050 188,076 10,175,620 17,775 27,925
------------ ----------- ----------- ----------- -------- --------
UNIT TRANSACTIONS:
Purchases............................. 28,146,551 15,704,459 4,494,431 8,251,247 -- --
Net transfers......................... 131,121,514 36,678,430 11,579,453 34,966,058 -- --
Surrenders for benefit payments and
fees................................. (1,798,300) (1,186,192) (881,151) (1,167,939) (33,763) (4,174)
Net annuity transactions.............. 122,890 88,032 177,075 16,976 -- --
------------ ----------- ----------- ----------- -------- --------
Net increase (decrease) in net assets
resulting from unit transactions..... 157,592,655 51,284,729 15,369,808 42,066,342 (33,763) (4,174)
------------ ----------- ----------- ----------- -------- --------
Net increase (decrease) in net
assets............................... 213,385,677 58,051,779 15,557,884 52,241,962 (15,988) 23,751
NET ASSETS:
Beginning of period................... 46,302,383 6,249,337 1,943,547 599,110 486,703 199,787
------------ ----------- ----------- ----------- -------- --------
End of period......................... $259,688,060 $64,301,116 $17,501,431 $52,841,072 $470,715 $223,538
============ =========== =========== =========== ======== ========
<CAPTION>
SMITH BARNEY BB&T GROWTH AMSOUTH
GOVERNMENT & INCOME EQUITY INCOME
PORTFOLIO FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- -------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 1,221 $ (20,207) $ 17,272
Capital gains income.................. -- 393,152 --
Net realized gain (loss) on security
transactions......................... -- 3,527 (4,172)
Net unrealized appreciation
(depreciation) of investments during
the period........................... -- (1,805,236) 6,229,908
------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations............ 1,221 (1,428,764) 6,243,008
------- ----------- -----------
UNIT TRANSACTIONS:
Purchases............................. -- 2,806,902 8,947,643
Net transfers......................... -- 4,398,250 60,144
Surrenders for benefit payments and
fees................................. (4,276) (1,469,630) (2,025,318)
Net annuity transactions.............. -- -- (8,117)
------- ----------- -----------
Net increase (decrease) in net assets
resulting from unit transactions..... (4,276) 5,735,522 6,974,352
------- ----------- -----------
Net increase (decrease) in net
assets............................... (3,055) 4,306,758 13,217,360
NET ASSETS:
Beginning of period................... 34,357 23,711,066 22,511,021
------- ----------- -----------
End of period......................... $31,302 $28,017,824 $35,728,381
======= =========== ===========
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND GLOBAL SMITH BARNEY
MIDCAP INCOME HIGH YIELD LEADERS CASH
FUND FUND FUND FUND PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT** SUB-ACCOUNT*** SUB-ACCOUNT*** SUB-ACCOUNT
----------- ------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ (320,020) $ 5,967 $ 32,022 $ 472 $ 19,946
Capital gains income.................. -- -- -- 16,340 --
Net realized (loss) gain on security
transactions......................... (3,698) (2,267) (287) 1,084 --
Net unrealized (depreciation)
appreciation of investments during
the period........................... 6,597,665 740,175 (9,874) 10,436 --
----------- ---------- ---------- -------- --------
Net increase in net assets resulting
from operations...................... 6,273,947 743,875 21,861 28,332 19,946
----------- ---------- ---------- -------- --------
UNIT TRANSACTIONS:
Purchases............................. 13,468,482 1,325,581 226,463 114,768 --
Net transfers......................... 18,368,378 4,236,085 1,697,571 456,296 --
Surrenders for benefit payments and
fees................................. (982,314) (56,204) (2,348) (286) (42,255)
Net annuity transactions.............. -- -- -- -- --
----------- ---------- ---------- -------- --------
Net increase (decrease) in net assets
resulting from unit transactions..... 30,854,546 5,505,462 1,921,686 570,778 (42,255)
----------- ---------- ---------- -------- --------
Net increase (decrease) in net
assets............................... 37,128,493 6,249,337 1,943,547 599,110 (22,309)
NET ASSETS:
Beginning of period................... 9,173,890 -- -- -- 509,012
----------- ---------- ---------- -------- --------
End of period......................... $46,302,383 $6,249,337 $1,943,547 $599,110 $486,703
=========== ========== ========== ======== ========
<CAPTION>
SMITH BARNEY SMITH BARNEY BB&T GROWTH AMSOUTH
APPRECIATION GOVERNMENT & INCOME EQUITY INCOME
FUND PORTFOLIO FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------ ----------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 526 $ 1,465 $ 28,796 $ 134,592
Capital gains income.................. 15,116 -- -- --
Net realized (loss) gain on security
transactions......................... 51 -- 1,013 4,124
Net unrealized (depreciation)
appreciation of investments during
the period........................... 17,076 -- 1,927,801 971,715
-------- ------- ----------- -----------
Net increase in net assets resulting
from operations...................... 32,769 1,465 1,957,610 1,110,431
-------- ------- ----------- -----------
UNIT TRANSACTIONS:
Purchases............................. -- -- 9,760,778 14,622,450
Net transfers......................... -- -- 6,090,057 5,094,816
Surrenders for benefit payments and
fees................................. (3,555) (4,272) (574,799) (733,985)
Net annuity transactions.............. -- -- -- 25,393
-------- ------- ----------- -----------
Net increase (decrease) in net assets
resulting from unit transactions..... (3,555) (4,272) 15,276,036 19,008,674
-------- ------- ----------- -----------
Net increase (decrease) in net
assets............................... 29,214 (2,807) 17,233,646 20,119,105
NET ASSETS:
Beginning of period................... 170,573 37,164 6,477,420 2,391,916
-------- ------- ----------- -----------
End of period......................... $199,787 $34,357 $23,711,066 $22,511,021
======== ======= =========== ===========
</TABLE>
** From inception, June 1, 1998 to December 31, 1998
*** From inception, September 30, 1998 to December 31, 1998
__________________________________ SA-21 ______________________________________
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
MENTOR VIP MENTOR VIP
CAPITAL GROWTH PERPETUAL INTERNATIONAL
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
-------------- -----------------------
<S> <C> <C>
OPERATIONS:
Net investment (loss) income.......... $ (250,185) $ (195,980)
Capital gains income.................. 37,363 10,315
Net realized gain on security
transactions......................... 496 9,042
Net unrealized appreciation
(depreciation) of investments during
the period........................... 1,293,466 5,855,275
----------- -----------
Net increase (decrease) in net assets
resulting from operations............ 1,081,140 5,678,652
----------- -----------
UNIT TRANSACTIONS:
Purchases............................. 2,920,379 1,966,282
Net transfers......................... 2,776,202 4,932,157
Surrenders for benefit payments and
fees................................. (727,009) (634,023)
Net annuity transactions.............. -- --
----------- -----------
Net increase in net assets resulting
from unit transactions............... 4,969,572 6,264,416
----------- -----------
Net increase in net assets............ 6,050,712 11,943,068
NET ASSETS:
Beginning of period................... 18,677,732 10,812,355
----------- -----------
End of period......................... $24,728,444 $22,755,423
=========== ===========
</TABLE>
* From inception, November 1, 1999 to December 31, 1999
** From inception, May 3, 1999 to December 31, 1999
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
MENTOR VIP MENTOR VIP
CAPITAL GROWTH PERPETUAL INTERNATIONAL
FUND FUND
SUB-ACCOUNT* SUB-ACCOUNT*
-------------- -----------------------
<S> <C> <C>
OPERATIONS:
Net investment (loss) income.......... $ (85,499) $ (51,799)
Capital gains income.................. -- --
Net realized (loss) gain on security
transactions......................... (4,500) 1,684
Net unrealized appreciation
(depreciation) of investments during
the period........................... 1,696,228 601,328
----------- -----------
Net increase (decrease) in net assets
resulting from operations............ 1,606,229 551,213
----------- -----------
UNIT TRANSACTIONS:
Purchases............................. 11,672,774 6,236,230
Net transfers......................... 5,647,677 4,185,922
Surrenders for benefit payments and
fees................................. (248,948) (161,010)
Net annuity transactions.............. -- --
----------- -----------
Net increase in net assets resulting
from unit transactions............... 17,071,503 10,261,142
----------- -----------
Total increase in net assets.......... 18,677,732 10,812,355
NET ASSETS:
Beginning of period................... -- --
----------- -----------
End of period......................... $18,677,732 $10,812,355
=========== ===========
</TABLE>
* From inception, March 2, 1998 to December 31, 1998
**** From inception, December 16, 1998 to December 31, 1998
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
__________________________________ SA-22 ______________________________________
<PAGE>
<TABLE>
<CAPTION>
MENTOR VIP MITCHELL HUTCHINS MITCHELL HUTCHINS MITCHELL HUTCHINS HUNTINGTON VA
GROWTH GROWTH AND STRATEGIC INCOME TACTICAL ALLOCATION INCOME
FUND INCOME PORTFOLIO PORTFOLIO PORTFOLIO EQUITY FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT*
----------- ----------------- ----------------- ------------------- -------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment (loss) income.......... $ (115,482) $ (27,534) $ 56,625 $ (40,320) $ 1,127
Capital gains income.................. -- -- -- 1,339,390 --
Net realized gain on security
transactions......................... 21,602 3,219 165 31,237 --
Net unrealized appreciation
(depreciation) of investments during
the period........................... 2,619,527 367,262 (65,581) 430,021 131
----------- ---------- ---------- ----------- --------
Net increase (decrease) in net assets
resulting from operations............ 2,525,647 342,947 (8,791) 1,760,328 1,258
----------- ---------- ---------- ----------- --------
UNIT TRANSACTIONS:
Purchases............................. 1,591,255 3,251,474 741,317 12,031,575 171,554
Net transfers......................... 186,787 512,571 475,556 8,174,292 55,943
Surrenders for benefit payments and
fees................................. (341,906) (95,651) (64,519) (207,496) --
Net annuity transactions.............. -- -- -- -- --
----------- ---------- ---------- ----------- --------
Net increase in net assets resulting
from unit transactions............... 1,436,136 3,668,394 1,152,354 19,998,371 227,497
----------- ---------- ---------- ----------- --------
Net increase in net assets............ 3,961,783 4,011,341 1,143,563 21,758,699 228,755
NET ASSETS:
Beginning of period................... 10,470,230 10,719 9,971 10,571 --
----------- ---------- ---------- ----------- --------
End of period......................... $14,432,013 $4,022,060 $1,153,534 $21,769,270 $228,755
=========== ========== ========== =========== ========
<CAPTION>
AMSOUTH
SELECT EQUITY
FUND
SUB-ACCOUNT**
-------------
<S> <C>
OPERATIONS:
Net investment (loss) income.......... $ (5,422)
Capital gains income.................. --
Net realized gain on security
transactions......................... 73
Net unrealized appreciation
(depreciation) of investments during
the period........................... (204,081)
----------
Net increase (decrease) in net assets
resulting from operations............ (209,430)
----------
UNIT TRANSACTIONS:
Purchases............................. 1,791,654
Net transfers......................... 958,043
Surrenders for benefit payments and
fees................................. (64,235)
Net annuity transactions.............. --
----------
Net increase in net assets resulting
from unit transactions............... 2,685,462
----------
Net increase in net assets............ 2,476,032
NET ASSETS:
Beginning of period................... --
----------
End of period......................... $2,476,032
==========
</TABLE>
<TABLE>
<CAPTION>
MENTOR VIP MITCHELL HUTCHINS MITCHELL HUTCHINS MITCHELL HUTCHINS
GROWTH GROWTH AND INCOME STRATEGIC INCOME TACTICAL ALLOCATION
FUND PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT* SUB-ACCOUNT**** SUB-ACCOUNT**** SUB-ACCOUNT****
------------ ----------------- ----------------- -------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment (loss) income.......... $ (44,785) $ 38 $ 111 $ 7
Capital gains income.................. -- 702 6 56
Net realized (loss) gain on security
transactions......................... (1,365) -- -- --
Net unrealized appreciation
(depreciation) of investments during
the period........................... 610,042 (20) (145) 507
----------- ------- ------ -------
Net increase (decrease) in net assets
resulting from operations............ 563,892 720 (28) 570
----------- ------- ------ -------
UNIT TRANSACTIONS:
Purchases............................. 6,771,031 10,000 10,000 10,000
Net transfers......................... 3,215,967 -- -- --
Surrenders for benefit payments and
fees................................. (80,660) (1) (1) 1
Net annuity transactions.............. -- -- -- --
----------- ------- ------ -------
Net increase in net assets resulting
from unit transactions............... 9,906,338 9,999 9,999 10,001
----------- ------- ------ -------
Total increase in net assets.......... 10,470,230 10,719 9,971 10,571
NET ASSETS:
Beginning of period................... -- -- -- --
----------- ------- ------ -------
End of period......................... $10,470,230 $10,719 $9,971 $10,571
=========== ======= ====== =======
</TABLE>
__________________________________ SA-23 ______________________________________
<PAGE>
SEPARATE ACCOUNT TWO
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION:
Separate Account Two (the Account) is a separate investment account within
Hartford Life Insurance Company (the Company) and is registered with the
Securities and Exchange Commission (SEC) as a unit investment trust under
the Investment Company Act of 1940, as amended. Both the Company and the
Account are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut and the SEC. The Account invests
deposits by variable annuity contractholders of the Company in various
mutual funds (the Funds) as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Realized gains and
losses on the sales of securities are computed on the basis of identified
cost of the fund shares sold. Dividend and capital gains income is
accrued as of the ex-dividend date. Capital gains income represents those
dividends from the Funds which are characterized as capital gains under
tax regulations.
b) SECURITY VALUATION--The investments in shares of the Funds are valued at
the closing net asset value per share as determined by the appropriate
Fund as of December 31, 1999.
c) UNIT TRANSACTIONS--Unit transactions are executed based on the unit
values calculated at the close of the business day.
d) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no
federal income taxes are payable with respect to the operations of the
Account.
e) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported
amounts of income and expense during the period. Operating results in the
future could vary from the amounts derived from management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
Certain amounts are deducted from the contracts, as described below:
a) MORTALITY AND EXPENSE RISK CHARGE--The Company, will make deductions at a
maximum annual rate of 1.50% of the contract's value for the mortality
and expense risks which the Company undertakes.
b) TAX EXPENSE CHARGE--If applicable, the Company will make deductions at a
maximum rate of 4.0% of the contract's value to meet premium tax
requirements. An additional tax charge based on a percentage of the
contract's value may be assessed to partial withrawals or surrenders.
These expenses are included in surrenders for benefit payments and fees
in the accompanying statements of changes in net assets.
c) ANNUAL MAINTENANCE FEE--An annual maintenance fee in the amount of $30
may be deducted from the contract's value each contract year. However,
this fee is not applicable to contracts with values of $50,000 or more,
as determined on the most recent contract anniversary. These expenses are
included in surrenders for benefit payments and fees in the accompanying
statements of changes in net assets.
__________________________________ SA-24 ______________________________________
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------------------
To Hartford Life Insurance Company:
We have audited the accompanying Consolidated Balance Sheets of Hartford Life
Insurance Company and subsidiaries as of December 31, 1999 and 1998, and the
related Consolidated Statements of Income, Changes in Stockholder's Equity and
Cash Flows for each of the three years in the period ended December 31, 1999.
These Consolidated Financial Statements and the schedules referred to below are
the responsibility of Hartford Life Insurance Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the Consolidated Financial Statements referred to above present
fairly, in all material respects, the financial position of Hartford Life
Insurance Company and subsidiaries as of December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the Index to
Consolidated Financial Statements and Schedules are presented for the purpose of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
Hartford, Connecticut
January 31, 2000 ARTHUR ANDERSEN LLP
F-1
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(in millions)
REVENUES
Premiums and other considerations $2,045 $2,218 $1,637
Net investment income 1,359 1,759 1,368
Net realized capital gains (losses) (4) (2) 4
- ----------------------------------------------------------------------------------------------
TOTAL REVENUES 3,400 3,975 3,009
- ----------------------------------------------------------------------------------------------
BENEFITS, CLAIMS AND EXPENSES
Benefits, claims and claim adjustment expenses 1,574 1,911 1,379
Amortization of deferred policy acquisition costs 539 431 335
Dividends to policyholders 104 329 240
Other expenses 631 766 586
- ----------------------------------------------------------------------------------------------
TOTAL BENEFITS, CLAIMS AND EXPENSES 2,848 3,437 2,540
- ----------------------------------------------------------------------------------------------
Income before income tax expense 552 538 469
Income tax expense 191 188 167
- ----------------------------------------------------------------------------------------------
NET INCOME $ 361 $ 350 $ 302
- ----------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
<S> <C> <C>
- ------------------------------------------------------------------------------------------
1999 1998
- ------------------------------------------------------------------------------------------
(in millions, except
for share data)
ASSETS
Investments
Fixed maturities, available for sale, at fair value
(amortized cost of $13,923 and $14,505) $ 13,499 $ 14,818
Equity securities, at fair value 56 31
Policy loans, at outstanding balance 4,187 6,684
Other investments 342 264
- ------------------------------------------------------------------------------------------
TOTAL INVESTMENTS 18,084 21,797
- ------------------------------------------------------------------------------------------
Cash 55 17
Premiums receivable and agents' balances 29 17
Reinsurance recoverables 1,274 1,257
Deferred policy acquisition costs 4,013 3,754
Deferred income tax 459 464
Other assets 654 695
Separate account assets 110,397 90,262
- ------------------------------------------------------------------------------------------
TOTAL ASSETS $134,965 $118,263
- ------------------------------------------------------------------------------------------
LIABILITIES
Future policy benefits $ 4,332 $ 3,595
Other policyholder funds 16,004 19,615
Other liabilities 1,613 2,094
Separate account liabilities 110,397 90,262
- ------------------------------------------------------------------------------------------
TOTAL LIABILITIES 132,346 115,566
- ------------------------------------------------------------------------------------------
STOCKHOLDER'S EQUITY
Common stock -- 1,000 shares authorized, issued and
outstanding, par value $5,690 6 6
Capital surplus 1,045 1,045
Accumulated other comprehensive income (loss)
Net unrealized capital gains (losses) on securities, net
of tax (255) 184
- ------------------------------------------------------------------------------------------
TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (255) 184
- ------------------------------------------------------------------------------------------
Retained earnings 1,823 1,462
- ------------------------------------------------------------------------------------------
TOTAL STOCKHOLDER'S EQUITY 2,619 2,697
- ------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $134,965 $118,263
- ------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-3
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Accumulated Other
Comprehensive
Income (Loss)
-----------------
<S> <C> <C> <C> <C> <C>
Net Unrealized
Capital Gains
(Losses) on Total
Common Capital Securities, Retained Stockholder's
Stock Surplus Net of Tax Earnings Equity
- -------------------------------------------------------------------------------------------------------------
(in millions)
1999
Balance, December 31, 1998 $6 $1,045 $ 184 $1,462 $2,697
Comprehensive income
Net income -- -- -- 361 361
Other comprehensive income (loss), net of
tax (1):
Changes in net unrealized capital gains
(losses) on securities (2) -- -- (439) -- (439)
Total other comprehensive income (loss) (439)
Total comprehensive income (loss) (78)
- -------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999 $6 $1,045 $(255) $1,823 $2,619
- -------------------------------------------------------------------------------------------------------------
1998
Balance, December 31, 1997 $6 $1,045 $ 179 $1,113 $2,343
Comprehensive income
Net income -- -- -- 350 350
Other comprehensive income, net of tax
(1):
Changes in net unrealized capital gains
on securities (2) -- -- 5 -- 5
Total other comprehensive income 5
Total comprehensive income 355
Dividends (1) (1)
- -------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998 $6 $1,045 $ 184 $1,462 $2,697
- -------------------------------------------------------------------------------------------------------------
1997
Balance, December 31, 1996 $6 $1,045 $ 30 $ 811 $1,892
Comprehensive income
Net income -- -- -- 302 302
Other comprehensive income, net of tax
(1):
Changes in net unrealized capital gains
on securities (2) -- -- 149 -- 149
Total other comprehensive income 149
Total comprehensive income 451
- -------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1997 $6 $1,045 $ 179 $1,113 $2,343
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Net unrealized capital gain (loss) on securities is reflected net of tax of
$(236), $3 and $80, for the years ended December 31, 1999, 1998 and 1997,
respectively.
(2) Net of reclassification adjustment for after-tax gains (losses) realized in
net income of $(2), $(1) and $2 for the years ended December 31, 1999, 1998
and 1997, respectively.
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-4
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(in millions)
OPERATING ACTIVITIES
Net income $ 361 $ 350 $ 302
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation and amortization (18) (23) 8
Net realized capital losses (gains) 4 2 (4)
Loss due to commutation of reinsurance 16 -- --
(Increase) decrease in premiums receivable and agents'
balances (18) 1 119
(Decrease) increase in other liabilities (263) (79) 223
Change in receivables, payables, and accruals 125 83 107
(Decrease) increase in accrued taxes (163) 60 126
Decrease (increase) in deferred income tax 241 (118) 40
Increase in deferred policy acquisition costs (358) (439) (555)
Increase in future policy benefits 797 536 585
Increase in reinsurance recoverables (318) (101) (31)
Other, net (81) 99 52
- --------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 325 371 972
- --------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchases of investments (5,753) (6,061) (6,869)
Sales of investments 6,383 4,901 4,256
Maturity of investments 1,818 1,761 2,329
Purchases of affiliates and other (25) -- --
- --------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 2,423 601 (284)
- --------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net disbursements for investment and universal life-type
contracts charged against policyholder accounts (2,710) (1,009) (677)
- --------------------------------------------------------------------------------------------
Net cash used for financing activities (2,710) (1,009) (677)
- --------------------------------------------------------------------------------------------
Net increase (decrease) in cash 38 (37) 11
Cash -- beginning of year 17 54 43
- --------------------------------------------------------------------------------------------
Cash -- end of year $ 55 $ 17 $ 54
- --------------------------------------------------------------------------------------------
Supplemental Disclosure of Cash Flow Information:
Net Cash Paid During the Year for:
Income taxes $ 111 $ 263 $ 9
Noncash Investing Activities:
In 1999, the Company's parent, Hartford Life and Accident Insurance Company, recaptured an
in force block of individual life insurance previously ceded to the Company. This
commutation resulted in a reduction in the Company's assets of $666, consisting of $556
of invested assets, $99 of deferred policy acquisition costs and $11 of other assets.
Liabilities decreased $650, consisting of $543 of other policyholder funds, $60 of future
policy benefits and $47 of other liabilities. As a result, the Company recognized an
after-tax loss relating to this transaction of $16.
In 1998, due to the recapture of an in force block of business previously ceded to MBL
Life Assurance Co. of New Jersey, reinsurance recoverables of $4,753 were exchanged for
the fair value of assets comprised of $4,310 in policy loans and $443 in other net
assets.
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-5
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA UNLESS OTHERWISE STATED)
-----------------------------------------------------------------------------
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
These Consolidated Financial Statements include Hartford Life Insurance Company
and its wholly-owned subsidiaries ("Hartford Life Insurance Company" or the
"Company"), Hartford Life and Annuity Insurance Company (HLAI) and Hartford
International Life Reassurance Corporation (HLRe), formerly American Skandia
Life Reinsurance Corporation. The Company is a wholly-owned subsidiary of
Hartford Life and Accident Insurance Company (HLA), a wholly-owned subsidiary of
Hartford Life, Inc. (Hartford Life). Hartford Life is a direct subsidiary of
Hartford Accident and Indemnity Company (HA&I), an indirect subsidiary of The
Hartford Financial Services Group, Inc. (The Hartford). In November 1998,
Hartford Life Insurance Company transferred in the form of a dividend, Hartford
Financial Services, LLC and its subsidiaries to HLA.
Pursuant to an initial public offering (the "IPO") on May 22, 1997, Hartford
Life sold 26 million shares of Class A Common Stock at $28.25 per share and
received proceeds, net of offering expenses, of $687. Of the proceeds, $527 was
used to retire debt related to Hartford Life's outstanding promissory notes and
line of credit with the remaining $160 contributed by Hartford Life to its
insurance subsidiaries to support growth in its core businesses. Hartford Life
became a publicly traded company upon the sale of 26 million shares representing
approximately 18.6% of the equity ownership in Hartford Life.
Along with its parent, HLA, the Company is a leading financial services and
insurance company which provides (a) investment products such as individual
variable annuities and fixed market value adjusted annuities, mutual funds and
retirement plan services for savings and retirement needs; (b) life insurance
for income protection and estate planning; (c) employee benefits products such
as group life and disability insurance that is directly written by the Company
and is substantially ceded to its parent, HLA, and (d) corporate owned life
insurance.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION
These Consolidated Financial Statements are prepared on the basis of accounting
principles generally accepted in the United States, which differ materially from
the statutory accounting practices prescribed by various insurance regulatory
authorities. All material intercompany transactions and balances between
Hartford Life Insurance Company and its subsidiaries have been eliminated.
The preparation of financial statements, in conformity with accounting
principles generally accepted in the United States, requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
The most significant estimates include those used in determining deferred policy
acquisition costs and the liability for future policy benefits and other
policyholder funds. Although some variability is inherent in these estimates,
management believes the amounts provided are adequate.
Certain reclassifications have been made to prior year financial information to
conform to the current year presentation.
(B) ADOPTION OF NEW ACCOUNTING STANDARDS
Effective January 1, 1999, Hartford Life Insurance Company adopted Statement of
Position (SOP) No. 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use". This SOP provides guidance on
accounting for the costs of internal use software and in determining whether the
software is for internal use. The SOP defines internal use software as software
that is acquired, internally developed, or modified solely to meet internal
needs and identifies stages of software development and accounting for the
related costs incurred during the stages. Adoption of this SOP did not have a
material impact on the Company's financial condition or results of operations.
Effective January 1, 1999, Hartford Life Insurance Company adopted SOP
No. 97-3, "Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments". This SOP addresses accounting by insurance and other enterprises
for assessments related to insurance activities, including recognition,
measurement and disclosure of guaranty fund or other assessments. Adoption of
this SOP did not have a material impact on the Company's financial condition or
results of operations.
The Company's cash flows were not impacted by these changes in accounting
principles.
(C) FUTURE ADOPTION OF NEW ACCOUNTING STANDARDS
In June 1999, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133". This statement amends SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", to defer its effective date for
one year, to fiscal years beginning after June 15, 2000. Initial
F-6
<PAGE>
application for Hartford Life Insurance Company will begin January 1, 2001. SFAS
No. 133 establishes accounting and reporting guidance for derivative
instruments, including certain derivative instruments embedded in other
contracts. The standard requires, among other things, that all derivatives be
carried on the balance sheet at fair value. The standard also specifies hedge
accounting criteria under which a derivative can qualify for special accounting.
In order to receive special accounting, the derivative instrument must qualify
as either a hedge of the fair value or the variability of the cash flow of a
qualified asset or liability. Special accounting for qualifying hedges provides
for matching the timing of gain or loss recognition on the hedging instrument
with the recognition of the corresponding changes in value of the hedged item.
The Company has reviewed its derivative holdings and is in the process of
quantifying the impact of SFAS No. 133. The Company is also assessing what
actions, if any, need to be taken to minimize potential volatility, while at the
same time maintaining the economic protection needed to support the goals of its
business.
In October 1998, the American Institute of Certified Public Accountants (AICPA)
issued SOP No. 98-7, "Accounting for Insurance and Reinsurance Contracts That Do
Not Transfer Insurance Risk". This SOP provides guidance on the method of
accounting for insurance and reinsurance contracts that do not transfer
insurance risk, defined in the SOP as the deposit method. This SOP is effective
for financial statements for fiscal years beginning after June 15, 1999 and is
not expected to have a material impact on the Company's financial condition or
results of operations.
(D) REVENUE RECOGNITION
Revenues for investment products and universal life-type policies consist of
policy charges for policy administration, cost of insurance and surrender
charges assessed to policy account balances and are recognized in the period in
which services are provided. Premiums for traditional life insurance and
disability policies are recognized as revenues ratably over the policy period.
(E) DIVIDENDS TO POLICYHOLDERS
Certain life insurance policies contain dividend payment provisions that enable
the policyholder to participate in the earnings on that participating block of
business of the life insurance subsidiaries of the Company. The participating
insurance in force accounted for 34%, 35% and 33% in 1999, 1998 and 1997,
respectively, of total insurance in force.
(F) INVESTMENTS
Hartford Life Insurance Company's investments in both fixed maturities, which
include bonds, redeemable preferred stock and commercial paper, and equity
securities, which include common and non-redeemable preferred stocks, are
classified as "available for sale" in accordance with SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities". Accordingly, these
securities are carried at fair value with the after-tax difference from cost
reflected in stockholder's equity as a component of accumulated other
comprehensive income. Policy loans are carried at outstanding balance which
approximates fair value. Other invested assets consist primarily of partnership
investments, which are accounted for by the equity method, and mortgage loans,
whereby the carrying value approximates fair value. Realized capital gains and
losses on security transactions associated with the Company's immediate
participation guaranteed contracts are excluded from revenues and deferred over
the expected maturity of the securities, since under the terms of the contracts
the realized gains and losses will be credited to policyholders in future years
as they are entitled to receive them. Net realized capital gains and losses,
excluding those related to immediate participation guaranteed contracts, are
reported as a component of revenue and are determined on a specific
identification basis.
The Company's accounting policy for impairment requires recognition of an other
than temporary impairment charge on a security if it is determined that the
Company is unable to recover all amounts due under the contractual obligations
of the security. In addition, for securities expected to be sold, an other than
temporary impairment charge is recognized if the Company does not expect the
fair value of a security to recover to cost or amortized cost prior to the
expected date of sale. Once an impairment charge has been recorded, the Company
then continues to review the other than temporarily impaired securities for
additional impairment, if necessary.
(G) DERIVATIVE INSTRUMENTS
HEDGE ACCOUNTING -- Hartford Life Insurance Company uses a variety of derivative
instruments, including swaps, caps, floors, forwards and exchange traded
financial futures and options as part of an overall risk management strategy.
These instruments are used as a means of hedging exposure to price, foreign
currency and/or interest rate risk on planned investment purchases or existing
assets and liabilities. Hartford Life Insurance Company does not hold or issue
derivative instruments for trading purposes. Hartford Life Insurance Company's
accounting for derivative instruments used to manage risk is in accordance with
the concepts established in SFAS No. 80, "Accounting for Futures Contracts",
SFAS No. 52, "Foreign Currency Translation", AICPA SOP No. 86-2, "Accounting for
Options" and various Emerging Issues Task Force pronouncements. Written options
are used, in all cases in conjunction with other assets and derivatives, as part
of the Company's asset and liability management strategy. Derivative instruments
are carried at values consistent with the asset or liability being hedged.
Derivative instruments used to hedge fixed maturities or equity securities are
carried at fair value with the after-tax difference from cost reflected in
stockholder's equity. Derivative instruments used to hedge other invested assets
or liabilities are carried at cost. For a discussion of SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", issued in June
1998, see (c) Future Adoption of New Accounting Standards.
Derivative instruments must be designated at inception as a hedge and measured
for effectiveness both at inception
F-7
<PAGE>
and on an ongoing basis. Hartford Life Insurance Company's correlation threshold
for hedge designation is 80% to 120%. If correlation, which is assessed monthly
or quarterly and measured based on a rolling three month average, falls outside
the 80% to 120% range, hedge accounting will be terminated. Derivative
instruments used to create a synthetic asset must meet synthetic accounting
criteria, including designation at inception and consistency of terms between
the synthetic and the instrument being replicated. Consistent with industry
practice, synthetic instruments are accounted for like the financial instrument
they are intended to replicate. Derivative instruments which fail to meet risk
management criteria, subsequent to acquisition, are marked to market with the
impact reflected in the Consolidated Statements of Income.
FUTURES -- Gains or losses on financial futures contracts entered into in
anticipation of the investment of future receipt of product cash flows are
deferred and, at the time of the ultimate investment purchase, reflected as an
adjustment to the cost basis of the purchased asset. Gains or losses on futures
used in invested asset risk management are deferred and adjusted into the cost
basis of the hedged asset when the contract futures are closed, except for
futures used in duration hedging, which are deferred and basis adjusted on a
quarterly basis. The basis adjustments are amortized into net investment income
over the remaining asset life.
FORWARD COMMITMENTS -- Open forward commitment contracts are marked to market
through stockholder's equity. Such contracts are accounted for at settlement by
recording the purchase of the specified securities at the previously committed
price. Gains or losses resulting from the termination of forward commitment
contracts are recognized immediately in the Consolidated Statements of Income as
a component of net investment income.
OPTIONS -- The cost of options entered into as part of a risk management
strategy are basis adjusted to the underlying asset or liability and amortized
over the remaining life of the option. Gains or losses on expiration or
termination are adjusted into the basis of the underlying asset or liability and
amortized over the remaining asset life.
INTEREST RATE SWAPS -- Interest rate swaps involve the periodic exchange of
payments without the exchange of underlying principal or notional amounts. Net
receipts or payments are accrued and recognized over the life of the swap
agreement as an adjustment to investment income. Should the swap be terminated,
the gain or loss is adjusted into the basis of the asset or liability and
amortized over the remaining life. Should the hedged asset be sold or liability
terminated without terminating the swap position, any swap gains or losses are
immediately recognized in earnings. Interest rate swaps purchased in
anticipation of an asset purchase (anticipatory transaction) are recognized
consistent with the underlying asset components such that the settlement
component is recognized in the Consolidated Statements of Income while the
change in market value is recognized as an unrealized capital gain or loss.
INTEREST RATE CAPS AND FLOORS -- Premiums paid on purchased cap or floor
agreements and the premium received on issued cap or floor agreements (used for
risk management) are adjusted into the basis of the applicable asset and
amortized over the asset life. Gains or losses on termination of such positions
are adjusted into the basis of the asset or liability and amortized over the
remaining asset life. Net payments are recognized as an adjustment to income or
basis adjusted and amortized depending on the specific hedge strategy.
FORWARD EXCHANGE AND CURRENCY SWAPS CONTRACTS -- Forward exchange contracts and
foreign currency swaps are accounted for in accordance with SFAS No. 52. Changes
in the spot rate of instruments designated as hedges of the net investment in a
foreign subsidiary are reflected in the cumulative translation adjustment
component of stockholder's equity.
Cash flows from futures, options and swaps, accounted for as hedges, are
included with the cash flows of the item being hedged.
(H) SEPARATE ACCOUNTS
Hartford Life Insurance Company maintains separate account assets and
liabilities which are reported at fair value. Separate account assets are
segregated from other investments. Separate accounts reflect two categories of
risk assumption: non-guaranteed separate accounts, wherein the policyholder
assumes substantially all the investment risk and rewards, and guaranteed
separate accounts, wherein the Company contractually guarantees either a minimum
return or account value to the policyholder.
(I) DEFERRED POLICY ACQUISITION COSTS
Policy acquisition costs, which include commissions and certain other expenses
associated with acquiring business, are deferred and amortized over the
estimated lives of the contracts, usually 20 years. Generally, acquisition costs
are deferred and amortized using the retrospective deposit method. Under the
retrospective deposit method, acquisition costs are amortized in proportion to
the present value of expected gross profits from surrender charges, investment
charges, mortality and expense margins. Actual gross profits can vary from
management's estimates, resulting in increases or decreases in the rate of
amortization. Management periodically updates these estimates, when appropriate,
and evaluates the recoverability of the deferred acquisition cost asset. When
appropriate, management revises its assumptions on the estimated gross profits
of these contracts and the cumulative amortization for the books of business are
re-estimated and adjusted by a cumulative charge or credit to income.
F-8
<PAGE>
Acquisition costs and their related deferral are included in the Company's other
expenses as follows:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
------------------------------
Commissions $ 887 $1,069 $ 976
Deferred acquisition costs (898) (891) (862)
Other 642 588 472
------------------------------
TOTAL OTHER EXPENSES $ 631 $ 766 $ 586
------------------------------
</TABLE>
(J) FUTURE POLICY BENEFITS
Liabilities for future policy benefits are computed by the net level premium
method using interest rate assumptions varying from 3% to 11% and withdrawal and
mortality assumptions appropriate at the time the policies were issued.
(K) OTHER POLICYHOLDER FUNDS
Other policyholder funds include reserves for investment contracts without life
contingencies, corporate owned life insurance and universal life insurance
contracts. These reserves are based on account values, which represent the
balance that accrues to the benefit of policyholders.
3. INVESTMENTS AND DERIVATIVE INSTRUMENTS
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
For the years ended
December 31,
--------------------------------
1999 1998 1997
<S> <C> <C> <C>
--------------------------------
Interest income from fixed maturities $ 934 $ 952 $ 932
Interest income from policy loans 391 789 425
Income from other investments 48 32 26
--------------------------------
Gross investment income 1,373 1,773 1,383
Less: Investment expenses 14 14 15
--------------------------------
NET INVESTMENT INCOME $1,359 $1,759 $1,368
--------------------------------
</TABLE>
(B) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
For the years ended
December 31,
--------------------------
1999 1998 1997
<S> <C> <C> <C>
--------------------------
Fixed maturities $(7) $(28) $(7)
Equity securities 2 21 12
Real estate and other 1 5 (1)
--------------------------
NET REALIZED CAPITAL GAINS (LOSSES) $(4) $(2) $ 4
--------------------------
</TABLE>
(C) NET UNREALIZED CAPITAL GAINS (LOSSES) ON EQUITY SECURITIES
<TABLE>
<CAPTION>
For the years ended
December 31,
--------------------------
1999 1998 1997
<S> <C> <C> <C>
--------------------------
Gross unrealized capital gains $ 9 $ 2 $14
Gross unrealized capital losses (2) (1) --
--------------------------
Net unrealized capital gains 7 1 14
Deferred income tax expense 2 -- 5
--------------------------
Net unrealized capital gains, net of tax 5 1 9
Balance -- beginning of year 1 9 8
--------------------------
NET CHANGE IN UNREALIZED CAPITAL GAINS (LOSSES) ON EQUITY
SECURITIES $ 4 $(8) $ 1
--------------------------
</TABLE>
F-9
<PAGE>
(D) NET UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED MATURITIES
<TABLE>
<CAPTION>
For the years ended
December 31,
----------------------------
1999 1998 1997
<S> <C> <C> <C>
----------------------------
Gross unrealized capital gains $ 48 $ 421 $371
Gross unrealized capital losses (472) (108) (80)
Unrealized capital (gains) losses credited to policyholders 24 (32) (30)
----------------------------
Net unrealized capital gains (losses) (400) 281 261
Deferred income tax expense (benefit) (140) 98 91
----------------------------
Net unrealized capital gains (losses), net of tax (260) 183 170
Balance -- beginning of year 183 170 22
----------------------------
NET CHANGE IN UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED
MATURITIES $(443) $ 13 $148
----------------------------
</TABLE>
(E) FIXED MATURITY INVESTMENTS
<TABLE>
<CAPTION>
As of December 31, 1999
---------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
---------------------------------------------
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) $ 180 $ 5 $ (3) $ 182
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) -- asset backed 1,094 5 (35) 1,064
States, municipalities and political subdivisions 155 2 (1) 156
Foreign governments 289 6 (14) 281
Public utilities 865 7 (39) 833
All other corporate, including international 5,646 18 (244) 5,420
All other corporate -- asset backed 4,103 5 (123) 3,985
Short-term investments 1,156 -- -- 1,156
Certificates of deposit 434 -- (12) 422
Redeemable preferred stock 1 -- (1) --
---------------------------------------------
TOTAL FIXED MATURITIES $13,923 $48 $(472) $13,499
---------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
As of December 31, 1998
---------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
---------------------------------------------
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) $ 121 $ 2 $ -- $ 123
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) -- asset backed 1,001 23 (8) 1,016
States, municipalities and political subdivisions 165 8 -- 173
Foreign governments 393 26 (7) 412
Public utilities 844 33 (3) 874
All other corporate, including international 5,469 260 (42) 5,687
All other corporate -- asset backed 4,155 58 (42) 4,171
Short-term investments 1,847 -- -- 1,847
Certificates of deposit 510 11 (6) 515
---------------------------------------------
TOTAL FIXED MATURITIES $14,505 $421 $(108) $14,818
---------------------------------------------
</TABLE>
The amortized cost and estimated fair value of fixed maturity investments as of
December 31, 1999 by estimated maturity year are shown below. Expected
maturities differ from contractual maturities due to call or prepayment
provisions. Asset backed securities, including mortgage backed securities and
collateralized mortgage obligations, are distributed to maturity year based on
the Company's estimates of the rate of future prepayments of principal over the
remaining lives of the securities. These estimates are developed using
prepayment speeds provided in broker consensus
F-10
<PAGE>
data. Such estimates are derived from prepayment speeds experienced at the
interest rate levels projected for the applicable underlying collateral and can
be expected to vary from actual experience.
<TABLE>
<CAPTION>
Amortized
Cost Fair Value
<S> <C> <C>
----------------------------
MATURITY
One year or less $ 2,454 $ 2,440
Over one year through five years 4,874 4,787
Over five years through ten years 3,072 2,940
Over ten years 3,523 3,332
----------------------------
TOTAL $13,923 $13,499
----------------------------
</TABLE>
(F) SALES OF FIXED MATURITY AND EQUITY SECURITY INVESTMENTS
Sales of fixed maturities, excluding short-term fixed maturities, for the years
ended December 31, 1999, 1998 and 1997 resulted in proceeds of $3.4 billion,
$3.2 billion and $4.2 billion, gross realized capital gains of $153, $103 and
$169, gross realized capital losses (including writedowns) of $160, $131 and
$176, respectively. Sales of equity security investments for the years ended
December 31, 1999, 1998 and 1997 resulted in proceeds of $7, $35 and $132 and
gross realized capital gains of $2, $21 and $12, respectively, and no gross
realized capital losses for all periods.
(G) CONCENTRATION OF CREDIT RISK
The Company is not exposed to any significant concentration of credit risk in
fixed maturities of a single issuer greater than 10% of stockholder's equity.
(H) DERIVATIVE INSTRUMENTS
Hartford Life Insurance Company utilizes a variety of derivative instruments,
including swaps, caps, floors, forwards and exchange traded futures and options,
in accordance with Company policy and in order to achieve one of three Company
approved objectives: to hedge risk arising from interest rate, price or currency
exchange rate volatility; to manage liquidity; or, to control transactions
costs. The Company utilizes derivative instruments to manage market risk through
four principal risk management strategies: hedging anticipated transactions,
hedging liability instruments, hedging invested assets and hedging portfolios of
assets and/or liabilities. The Company does not trade in these instruments for
the express purpose of earning trading profits.
The Company maintains a derivatives counterparty exposure policy which
establishes market based credit limits, favors long-term financial stability and
creditworthiness, and typically requires credit enhancement/credit risk reducing
agreements. Credit risk is measured as the amount owed to the Company based on
current market conditions and potential payment obligations between the Company
and its counterparties. Credit exposures are quantified weekly and netted, and
collateral is pledged to or held by the Company to the extent the current value
of derivatives exceed exposure policy thresholds.
The Company's derivative program is monitored by an internal compliance unit and
is reviewed by senior management. Notional amounts, which represent the basis
upon which pay or receive amounts are calculated and are not reflective of
credit risk, pertaining to derivative financial instruments (excluding the
Company's guaranteed separate account derivative investments), totaled $5.5
billion and $6.2 billion ($3.9 billion and $3.9 billion related to the Company's
investments, $1.6 billion and $2.3 billion on the Company's liabilities) as of
December 31, 1999 and 1998, respectively.
The tables below provide a summary of derivative instruments held by Hartford
Life Insurance Company as of December 31, 1999 and 1998, segregated by major
investment and liability category:
F-11
<PAGE>
<TABLE>
<CAPTION>
1999 -- Amount Hedged (Notional Amounts)
----------------------------------------------------------------------------------
Total Issued Purchased Interest Rate Foreign Total
Carrying Caps & Caps, Floors Swaps & Currency Notional
ASSETS HEDGED Value Floors & Options Futures (1) Forwards Swaps (2) Amount
<S> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------
Asset backed securities (excluding
anticipatory) $ 5,049 $ -- $ -- $ -- $ 911 $-- $ 911
Anticipatory (3) -- -- -- 5 112 -- 117
Other bonds and notes 7,294 494 611 -- 1,676 80 2,861
Short-term investments 1,156 -- -- -- -- -- --
----------------------------------------------------------------------------------
TOTAL FIXED MATURITIES 13,499 494 611 5 2,699 80 3,889
Equity securities, policy loans and
other investments 4,585 -- -- -- -- -- --
----------------------------------------------------------------------------------
TOTAL INVESTMENTS $18,084 494 611 5 2,699 80 3,889
----------------------------------------------------------------------------------
OTHER POLICYHOLDER FUNDS $16,004 -- 1,150 -- 430 -- 1,580
----------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
NOTIONAL VALUE $ 494 $1,761 $ 5 $3,129 $80 $5,469
----------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
FAIR VALUE $ (22) $ 8 $ -- $ (30) $ 2 $ (42)
----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1998 -- Amount Hedged (Notional Amounts)
-------------------------------------------------------------------------------
Total Issued Purchased Interest Rate Foreign Total
Carrying Caps & Caps & Swaps & Currency Notional
ASSETS HEDGED Value Floors Floors Futures (1) Forwards Swaps (2) Amount
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------
Asset backed securities (excluding
anticipatory) $ 5,187 $ 44 $ 243 $ 3 $ 885 $-- $1,175
Anticipatory (3) -- -- -- -- 235 -- 235
Other bonds and notes 7,683 461 597 18 1,300 90 2,466
Short-term investments 1,948 -- -- -- -- -- --
-------------------------------------------------------------------------------
TOTAL FIXED MATURITIES 14,818 505 840 21 2,420 90 3,876
Equity securities, policy loans and
other investments 6,979 -- -- -- -- -- --
-------------------------------------------------------------------------------
TOTAL INVESTMENTS $21,797 505 840 21 2,420 90 3,876
-------------------------------------------------------------------------------
OTHER POLICYHOLDER FUNDS $19,615 -- 1,150 -- 1,195 -- 2,345
-------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
NOTIONAL VALUE $ 505 $1,990 $21 $3,615 $90 $6,221
-------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
FAIR VALUE $ (6) $ 19 $-- $ 27 $(7) $ 33
-------------------------------------------------------------------------------
</TABLE>
(1) As of December 31, 1999 and 1998, approximately 100% and 5%,
respectively, of the notional futures contracts expire within one year.
(2) As of December 31, 1999 and 1998, approximately 28% and 11%,
respectively, of foreign currency swaps expire within one year.
(3) Deferred gains and losses on anticipatory transactions are included in
the carrying value of fixed maturities in the Consolidated Balance Sheets. At
the time of the ultimate purchase, they are reflected as a basis adjustment to
the purchased asset. As of December 31, 1999, the Company had $1.4 of net
deferred losses on interest rate swaps and futures. The Company expects to basis
adjust the entire loss in 2000. During 1999, $0.2 of new future activity was
basis adjusted. As of December 31, 1998, the Company had no deferred gains for
interest rate swaps.
F-12
<PAGE>
The following is a reconciliation of notional amounts by derivative type and
strategy as of December 31, 1999 and 1998:
<TABLE>
<CAPTION>
BY DERIVATIVE TYPE
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1998 Maturities/ December 31, 1999
Notional Amount Additions Terminations (1) Notional Amount
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Caps $1,912 $ -- $ 148 $1,764
Floors 583 -- 178 405
Swaps/Forwards 3,705 991 1,487 3,209
Futures 21 292 308 5
Options -- 86 -- 86
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL $6,221 $1,369 $2,121 $5,469
- -------------------------------------------------------------------------------------------------------------------------------
BY STRATEGY
- -------------------------------------------------------------------------------------------------------------------------------
Liability $2,345 $ 17 $ 782 $1,580
Anticipatory 235 204 322 117
Asset 2,398 831 427 2,802
Portfolio 1,243 317 590 970
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL $6,221 $1,369 $2,121 $5,469
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) During 1999, the Company had no significant gains or losses on
terminations of hedge positions using derivative financial instruments.
4. FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107 "Disclosure about Fair Value of Financial Instruments" requires
disclosure of fair value information of financial instruments. For certain
financial instruments where quoted market prices are not available, other
independent valuation techniques and assumptions are used. Because considerable
judgment is used, these estimates are not necessarily indicative of amounts that
could be realized in a current market exchange. SFAS No. 107 excludes certain
financial instruments from disclosure, including insurance contracts. Hartford
Life Insurance Company uses the following methods and assumptions in estimating
the fair value of each class of financial instrument.
Fair value for fixed maturities and marketable equity securities approximates
those quotations published by applicable stock exchanges or received from other
reliable sources.
For policy loans, carrying amounts approximate fair value.
Other invested assets consist primarily of partnership investments, which are
accounted for by the equity method, and mortgage loans, whereby the carrying
value approximates fair value.
Other policyholder funds fair value information is determined by estimating
future cash flows, discounted at the current market rate.
The fair value of derivative financial instruments, including swaps, caps,
floors, futures, options and forward commitments, is determined using a pricing
model which is similar to external valuation models.
The carrying amount and fair values of Hartford Life Insurance Company's
financial instruments as of December 31, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
<S> <C> <C> <C> <C>
------------------------------------
ASSETS
Fixed maturities $13,499 $13,499 $14,818 $14,818
Equity securities 56 56 31 31
Policy loans 4,187 4,187 6,684 6,684
Other investments 342 348 264 309
LIABILITIES
Other policyholder funds (1) 11,734 11,168 11,709 11,726
------------------------------------
</TABLE>
(1) Excludes corporate owned life insurance and universal life insurance
contracts.
F-13
<PAGE>
5. SEPARATE ACCOUNTS
Hartford Life Insurance Company maintained separate account assets and
liabilities totaling $110.4 billion and $90.3 billion as of December 31, 1999
and 1998, respectively, which are reported at fair value. Separate account
assets, which are segregated from other investments, reflect two categories of
risk assumption: non-guaranteed separate accounts totaling $101.7 billion and
$80.6 billion as of December 31, 1999 and 1998, respectively, wherein the
policyholder assumes substantially all the investment risk, and guaranteed
separate accounts totaling $8.7 and $9.7 billion as of December 31, 1999 and
1998, respectively, wherein Hartford Life Insurance Company contractually
guarantees either a minimum return or account value to the policyholder.
Included in non-guaranteed separate account assets were policy loans totaling
$860 and $1.8 billion as of December 31, 1999 and 1998, respectively. Net
investment income (including net realized capital gains and losses) and interest
credited to policyholders on separate account assets are not reflected in the
Consolidated Statements of Income.
Separate account management fees and other revenues were $1.1 billion, $908 and
$699 in 1999, 1998 and 1997, respectively. The guaranteed separate accounts
include fixed market value adjusted (MVA) individual annuities and modified
guaranteed life insurance. The average credited interest rate on these contracts
was 6.5% and 6.6% as of December 31, 1999 and 1998, respectively. The assets
that support these liabilities were comprised of $8.7 billion and $9.5 billion
in fixed maturities as of December 31, 1999 and 1998, respectively, and $0.2
billion of other invested assets as of December 31, 1998. The portfolios are
segregated from other investments and are managed to minimize liquidity and
interest rate risk. In order to minimize the risk of disintermediation
associated with early withdrawals, fixed MVA annuity and modified guaranteed
life insurance contracts carry a graded surrender charge as well as a market
value adjustment. Additional investment risk is hedged using a variety of
derivatives which totaled $(96) and $40 in carrying value and $2.0 billion and
$3.5 billion in notional amounts as of December 31, 1999 and 1998, respectively.
6. STATUTORY RESULTS
<TABLE>
<CAPTION>
For the years ended December 31,
------------------------------------
1999 1998 1997
<S> <C> <C> <C>
------------------------------------
Statutory net income $ 151 $ 211 $ 214
------------------------------------
Statutory capital and surplus $1,905 $1,676 $1,441
------------------------------------
</TABLE>
A significant percentage of the consolidated statutory surplus is permanently
reinvested or is subject to various state regulatory restrictions which limit
the payment of dividends without prior approval. The total amount of statutory
dividends which may be paid by the insurance subsidiaries of the Company in
2000, without prior regulatory approval, is estimated to be $190.
Hartford Life Insurance Company and its domestic insurance subsidiaries prepare
their statutory financial statements in accordance with accounting practices
prescribed by the applicable state of domicile. Prescribed statutory accounting
practices include publications of the National Association of Insurance
Commissioners (NAIC), as well as state laws, regulations and general
administrative rules.
The NAIC adopted the Codification of Statutory Accounting Principles (SAP) in
March 1998. The proposed effective date for the statutory accounting guidance is
January 1, 2001. It is expected that Hartford Life Insurance Company's
domiciliary state will adopt the SAP and the Company will make the necessary
changes required for implementation. The Company has not yet determined the
impact that the SAP will have on the statutory financial statements of Hartford
Life Insurance Company and its insurance subsidiaries.
7. STOCK COMPENSATION PLANS
Hartford Life Insurance Company's employees are included in the 1997 Hartford
Life, Inc. Incentive Stock Plan (the "Plan"), which was adopted during the
second quarter of 1997. Under the Plan, options granted may be either non-
qualified options or incentive stock options qualifying under Section 422A of
the Internal Revenue Code, stock appreciation rights, performance shares or
restricted stock, or any combination of the foregoing. The aggregate number of
shares of Class A Common Stock which may be awarded in any one year shall be
subject to an annual limit. The maximum number of shares of Class A Common Stock
which may be granted under the Plan in each year shall be 1.5% of the total
issued and outstanding shares of Hartford Life Class A and Class B Common Stock
and treasury stock as reported in the Annual Report on Hartford Life's Form 10-K
of the Company for the preceding year plus unused portions of such limit from
prior years.
In addition, no more than 5 million shares of Class A Common Stock shall be
cumulatively available for awards of incentive stock options under the Plan, and
no more than 20% of the total number of shares on a cumulative basis shall be
available for restricted stock and performance shares awards. Performance shares
awards of common stock granted under the Plan become payable upon the attainment
of specific performance goals achieved over a three year period.
F-14
<PAGE>
All options granted have an exercise price equal to the market price of the
Company's stock on the date of grant and an option's maximum term is ten years.
Certain non-performance based options become exercisable upon the attainment of
specified market price appreciation of Hartford Life's common shares or at seven
years after the date of grant, while the remaining non-performance based options
become exercisable over a three year period commencing with the date of grant.
During the second quarter of 1997, Hartford Life established the Hartford Life,
Inc. Employee Stock Purchase Plan (ESPP). Under this plan, eligible employees of
Hartford Life and the Company may purchase Class A Common Stock of Hartford Life
at a 15% discount from the lower of the market price at the beginning or end of
the quarterly offering period. Hartford Life may sell up to 2,700,000 shares of
stock to eligible employees. Hartford Life sold 120,694, 121,943 and 54,316
shares under the ESPP in 1999, 1998 and 1997, respectively. The weighted average
fair value of the discount under the ESPP was $7.48 per share in 1999, $13.74
per share in 1998 and $9.63 per share in 1997.
8. POSTRETIREMENT BENEFIT AND SAVINGS PLANS
(A) PENSION PLANS
Hartford Life Insurance Company's employees are included in The Hartford's
noncontributory defined benefit pension plans. These plans provide pension
benefits that are based on years of service and the employee's compensation
during the last ten years of employment. The Company's funding policy is to
contribute annually an amount between the minimum funding requirements set forth
in the Employee Retirement Income Security Act of 1974, as amended, and the
maximum amount that can be deducted for U.S. federal income tax purposes.
Generally, pension costs are funded through the purchase of the Company's group
pension contracts. The cost to the Company was approximately $6 in both 1999 and
1998, and $5 in 1997.
The Company also provides, through The Hartford, certain health care and life
insurance benefits for eligible retired employees. A substantial portion of the
Company's employees may become eligible for these benefits upon retirement. The
Company's contribution for health care benefits will depend on the retiree's
date of retirement and years of service. In addition, the plan has a defined
dollar cap which limits average Company contributions. The Company has prefunded
a portion of the health care and life insurance obligations through trust funds
where such prefunding can be accomplished on a tax effective basis.
Postretirement health care and life insurance benefits expense, allocated by The
Hartford, was immaterial to the results of operations for 1999, 1998 and 1997.
The assumed rate in the per capita cost of health care (the health care trend
rate) was 7.1% for 1999, decreasing ratably to 5.0% in the year 2003. Increasing
or decreasing the health care trend rates by one percent per year would have an
immaterial impact on the accumulated postretirement benefit obligation and the
annual expense. To the extent that the actual experience differs from the
inherent assumptions, the effect will be amortized over the average future
service of covered employees.
(B) INVESTMENT AND SAVINGS PLAN
Substantially all employees of the Company are eligible to participate in The
Hartford's Investment and Savings Plan. Under this plan, designated
contributions, which may be invested in Class A Common Stock of Hartford Life or
certain other investments, are matched, up to 3% of compensation, by the
Company. The cost to Hartford Life Insurance Company for the above-mentioned
plan was approximately $4 in both 1999 and 1998, and $2 in 1997.
9. REINSURANCE
Hartford Life Insurance Company cedes insurance to other insurers in order to
limit its maximum losses. Such transfer does not relieve Hartford Life Insurance
Company of its primary liability. Failure of reinsurers to honor their
obligations could result in losses to Hartford Life Insurance Company. Hartford
Life Insurance Company reduces this risk by evaluating the financial condition
of reinsurers, and monitoring for possible concentrations of credit risk.
Hartford Life Insurance Company has no significant reinsurance related
concentrations of credit risk.
The Company records a receivable for the portion of reinsured benefits paid and
insurance liabilities. Reinsurance recoveries on ceded reinsurance contracts
were $397, $300 and $418 for the years ended December 31, 1999, 1998 and 1997,
respectively. Hartford Life Insurance Company also assumes insurance from other
insurers.
The effect of reinsurance on premiums and other considerations is summarized as
follows:
<TABLE>
<CAPTION>
For the years ended December 31,
------------------------------------
1999 1998 1997
<S> <C> <C> <C>
------------------------------------
Direct premiums and other considerations $2,660 $2,722 $2,164
Reinsurance assumed 95 150 159
Reinsurance ceded (710) (654) (686)
------------------------------------
PREMIUMS AND OTHER CONSIDERATIONS $2,045 $2,218 $1,637
------------------------------------
</TABLE>
F-15
<PAGE>
Hartford Life Insurance Company maintains certain reinsurance agreements with
HLA, whereby the Company cedes both group life and group accident and health
risk. Under these treaties, the Company ceded group life premium of $119, $132
and $80 in 1999, 1998 and 1997, respectively, and accident and health premium of
$430, $379, and $335, respectively, to HLA.
Pursuant to a reinsurance agreement dating back to 1992, the Company assumed
100% of certain blocks of individual life insurance from HLA. Under this
reinsurance agreement Hartford Life Insurance Company assumed $9, $13 and $18 of
premium from HLA in 1999, 1998 and 1997, respectively. On December 1, 1999, HLA
recaptured this in force block of individual life insurance previously ceded to
the Company. This commutation resulted in a reduction in the Company's assets of
$666, consisting of $556 of invested assets, $99 of deferred policy acquisition
costs and $11 of other assets. Liabilities decreased $650, consisting of $543 of
other policyholder funds, $60 of future policy benefits and $47 of other
liabilities. As a result, the Company recognized an after-tax loss relating to
this transaction of $16.
In 1998, the Hartford Life recaptured an in force block of Corporate Owned Life
Insurance (COLI) business previously ceded to MBL Assurance Co. of New Jersey
(MBL Life). The transaction was consummated through an assignment of a
reinsurance arrangement between Hartford Life and MBL Life to a Hartford Life
subsidiary. Hartford Life originally assumed the life insurance block in 1992
from Mutual Benefit Life, which was placed in court-supervised rehabilitation in
1991, and reinsured a portion of those policies back to MBL Life. This recapture
was effective January 1, 1998 and resulted in a decrease in ceded premiums and
other considerations of $163 in 1998. Additionally, this transaction resulted in
a decrease in reinsurance recoverables of $4.8 billion, which was exchanged for
the fair value of assets comprised of $4.3 billion in policy loans and $443 in
other net assets.
10. INCOME TAX
Hartford Life and The Hartford have entered into a tax sharing agreement under
which each member in the consolidated U.S. federal income tax return will make
payments between them such that, with respect to any period, the amount of taxes
to be paid by the Company, subject to certain adjustments, generally will be
determined as though the Company were filing separate federal, state and local
income tax returns.
As long as The Hartford continues to own at least 80% of the combined voting
power and 80% of the value of the outstanding capital stock of Hartford Life,
the Company will be included for federal income tax purposes in the affiliated
group of which The Hartford is the common parent. It is the intention of The
Hartford and its non-life subsidiaries to file a single consolidated federal
income tax return. The life insurance companies will file a separate
consolidated federal income tax return for 1997 and 1998 and intend to file a
separate consolidated federal income tax return for 1999. The Company's
effective tax rate was 35%, 35% and 36% in 1999, 1998 and 1997, respectively.
Income tax expense (benefit) is as follows:
<TABLE>
<CAPTION>
For the years ended
December 31,
------------------------------
1999 1998 1997
<S> <C> <C> <C>
------------------------------
Current $(50) $307 $162
Deferred 241 (119) 5
------------------------------
INCOME TAX EXPENSE $191 $188 $167
------------------------------
</TABLE>
A reconciliation of the tax provision at the U.S. federal statutory rate to the
provision (benefit) for income taxes is as follows:
<TABLE>
<CAPTION>
For the years ended
December 31,
------------------------------
1999 1998 1997
<S> <C> <C> <C>
------------------------------
Tax provision at the U.S. federal statutory rate $193 $188 $164
Other (2) -- 3
------------------------------
TOTAL $191 $188 $167
------------------------------
</TABLE>
Deferred tax assets (liabilities) include the following as of December 31:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C> <C>
---------------------
Tax basis deferred policy acquisition costs $ 720 $ 751
Financial statement deferred policy acquisition costs and
reserves 11 103
Employee benefits (3) 4
Net unrealized capital losses (gains) on securities 138 (98)
Investments and other (407) (296)
---------------------
TOTAL $ 459 $ 464
---------------------
</TABLE>
F-16
<PAGE>
Hartford Life Insurance Company had a current tax receivable of $56 as of
December 31, 1999 and a current tax payable of $65 as of December 31, 1998.
Prior to the Tax Reform Act of 1984, the Life Insurance Company Income Tax Act
of 1959 permitted the deferral from taxation of a portion of statutory income
under certain circumstances. In these situations, the deferred income was
accumulated in a "Policyholders' Surplus Account" and, based on current tax law,
will be taxable in the future only under conditions which management considers
to be remote; therefore, no federal income taxes have been provided on the
balance in this account, which for tax return purposes was $104 as of December
31, 1999.
11. RELATED PARTY TRANSACTIONS
Transactions of the Company with its affiliates relate principally to tax
settlements, reinsurance, insurance coverage, rental and service fees, payment
of dividends and capital contributions. In addition, certain affiliated
insurance companies purchased group annuity contracts from the Company to fund
pension costs and claim annuities to settle casualty claims. Substantially all
general insurance expenses related to the Company, including rent and employee
benefit plan expenses, are initially paid by The Hartford. Direct expenses are
allocated to the Company using specific identification, and indirect expenses
are allocated using other applicable methods. Indirect expenses include those
for corporate areas which, depending on type, are allocated based on either a
percentage of direct expenses or on utilization. Indirect expenses allocated to
the Company by The Hartford were $47 in both 1999 and 1998 and $39 in 1997.
12. COMMITMENTS AND CONTINGENT LIABILITIES
(A) LITIGATION
Hartford Life Insurance Company is involved in pending and threatened litigation
in the normal course of its business in which claims for alleged economic and
punitive damages have been asserted. Some of these cases have been filed as
purported class actions and some cases have been filed in certain jurisdictions
that permit punitive damage awards disproportionate to the actual damages
incurred. Although there can be no assurances, at the present time the Company
does not anticipate that the ultimate liability arising from such pending or
threatened litigation, after consideration of provisions made for estimated
losses and costs of defense, will have a material adverse effect on the
financial condition or operating results of the Company.
(B) GUARANTY FUNDS
Under insurance guaranty fund laws in each state, the District of Columbia and
Puerto Rico, insurers licensed to do business can be assessed by state insurance
guaranty associations for certain obligations of insolvent insurance companies
to policyholders and claimants. Recent regulatory actions against certain large
life insurers encountering financial difficulty have prompted various state
insurance guaranty associations to begin assessing life insurance companies for
the deemed losses. Most of these laws do provide, however, that an assessment
may be excused or deferred if it would threaten an insurer's solvency and
further provide annual limits on such assessments. Part of the assessments paid
by the Company and its subsidiaries pursuant to these laws may be used as
credits for a portion of the associated premium taxes. The Company paid guaranty
fund assessments of approximately $2, $9 and $15 in 1999, 1998 and 1997,
respectively, of which $1 in 1999 and $4 in both 1998 and 1997 were estimated to
be creditable against premium taxes.
(C) LEASES
The rent paid to Hartford Fire for space occupied by the Company was $9 in 1999
and $7 in both 1998 and 1997. Future minimum rental commitments are as follows:
<TABLE>
<S> <C>
2000 $ 14
2001 14
2002 13
2003 12
2004 12
Thereafter 62
--------
TOTAL $ 127
--------
</TABLE>
The principal executive offices of Hartford Life Insurance Company, together
with its parent, are located in Simsbury, Connecticut. Rental expense is
recognized on a level basis over the term of the primary sublease for the
facility located in Simsbury, Connecticut, which expires on December 31, 2009,
and amounted to approximately $9 in each of the years ended December 31, 1999,
1998 and 1997.
(D) TAX MATTERS
Hartford Life's federal income tax returns are routinely audited by the Internal
Revenue Service. Hartford Life's 1996-1997 federal income tax returns are
currently under audit by the Internal Revenue Service. Management believes that
sufficient provision has been made in the financial statements for issues that
may result from tax examinations and other tax related matters for all open tax
years.
F-17
<PAGE>
13. SEGMENT INFORMATION
Hartford Life Insurance Company is organized into three reportable operating
segments which include Investment Products, Individual Life and Corporate Owned
Life Insurance (COLI). Investment Products offers individual fixed and variable
annuities, mutual funds, retirement plan services other investment products.
Individual Life sells a variety of life insurance products, including variable
life, universal life, interest sensitive whole life and term life insurance.
COLI primarily offers variable products used by employers to fund non-qualified
benefits or other post-employment benefit obligations as well as leveraged COLI.
The Company includes in "Other" corporate items not directly allocable to any of
its reportable operating segments, as well as certain employee benefit products
including group life and disability insurance that is directly written by the
Company and is substantially ceded to its parent, HLA.
The accounting policies of the reportable operating segments are the same as
those described in the summary of significant accounting policies in Note 2.
Hartford Life Insurance Company evaluates performance of its segments based on
revenues, net income and the segment's return on allocated capital. The Company
charges direct operating expenses to the appropriate segment and allocates the
majority of indirect expenses to the segments based on an intercompany expense
arrangement. Intersegment revenues are not significant and primarily occur
between corporate and the operating segments. These amounts include interest
income on allocated surplus and the amortization of net realized capital gains
and losses through net investment income utilizing the duration of the segment's
investment portfolios. The Company's revenues are primarily derived from
customers within the United States. The Company's long-lived assets primarily
consist of deferred policy acquisition costs and deferred tax assets from within
the United States. The following tables outlines summarized financial
information concerning the Company's segments.
<TABLE>
<CAPTION>
Investment Individual
1999 Products Life COLI Other Total
<S> <C> <C> <C> <C> <C>
--------------------------------------------------
Total revenues $ 1,884 $ 574 $ 830 $ 112 $ 3,400
Net investment income 699 169 431 60 1,359
Amortization of deferred policy acquisition costs 411 128 -- -- 539
Income tax expense (benefit) 159 37 15 (20) 191
Net income (loss) 300 68 28 (35) 361
Assets 106,352 5,962 20,198 2,453 134,965
</TABLE>
<TABLE>
<CAPTION>
Investment Individual
1998 Products Life COLI Other Total
<S> <C> <C> <C> <C> <C>
--------------------------------------------------
Total revenues $ 1,779 $ 543 $ 1,567 $ 86 $ 3,975
Net investment income 736 181 793 49 1,759
Amortization of deferred policy acquisition costs 326 105 -- -- 431
Income tax expense (benefit) 145 35 12 (4) 188
Net income (loss) 270 64 24 (8) 350
Assets 87,207 5,228 22,631 3,197 118,263
</TABLE>
<TABLE>
<CAPTION>
Investment Individual
1997 Products Life COLI Other Total
<S> <C> <C> <C> <C> <C>
-------------------------------------------------
Total revenues $ 1,510 $ 487 $ 980 $ 32 $ 3,009
Net investment income 739 164 429 36 1,368
Amortization of deferred policy acquisition costs 250 83 -- 2 335
Income tax expense 111 30 15 11 167
Net income 206 55 27 14 302
Assets 72,288 4,914 17,800 2,743 97,745
</TABLE>
14. QUARTERLY RESULTS FOR 1999 AND 1998 (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 31, June 30, September 30, December 31,
------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------
Revenues $838 $915 $853 $721 $846 $826 $863 $1,513
Benefits, claims and expenses 703 787 722 591 695 688 728 1,371
Net income 88 83 85 85 100 89 88 93
</TABLE>
F-18
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE I -- SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN AFFILIATES
AS OF DECEMBER 31, 1999
(IN MILLIONS)
<TABLE>
<CAPTION>
Amount at
Fair which shown
Type of Investment Cost Value on Balance Sheet
<S> <C> <C> <C>
------------------------------------
FIXED MATURITIES
Bonds and Notes
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) $ 180 $ 182 $ 182
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) -- asset backed 1,094 1,064 1,064
States, municipalities and political subdivisions 155 156 156
Foreign governments 289 281 281
Public utilities 865 833 833
All other corporate, including international 5,646 5,420 5,420
All other corporate -- asset backed 4,103 3,985 3,985
Short-term investments 1,156 1,156 1,156
Certificates of deposit 434 422 422
Redeemable preferred stock 1 -- --
------------------------------------
TOTAL FIXED MATURITIES 13,923 13,499 13,499
------------------------------------
EQUITY SECURITIES
Common Stocks
Industrial and miscellaneous 49 56 56
------------------------------------
TOTAL EQUITY SECURITIES 49 56 56
------------------------------------
TOTAL FIXED MATURITIES AND EQUITY SECURITIES 13,972 13,555 13,555
------------------------------------
Policy Loans 4,187 4,187 4,187
------------------------------------
OTHER INVESTMENTS
Mortgage loans on real estate 198 198 198
Other invested assets 127 150 144
------------------------------------
TOTAL OTHER INVESTMENTS 325 348 342
------------------------------------
TOTAL INVESTMENTS $18,484 $18,090 $18,084
------------------------------------
</TABLE>
S-1
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN MILLIONS)
<TABLE>
<CAPTION>
Net Benefits,
Deferred Realized Claims and
Policy Future Other Premiums Net Capital Claim
Acquisition Policy Policyholder and Other Investment Gains Adjustment
Segment Costs Benefits Funds Considerations Income (Losses) Expenses
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------
1999
Investment Products $3,099 $2,744 $ 8,859 $1,185 $ 699 $-- $ 660
Individual Life 914 270 1,880 405 169 -- 254
Corporate Owned Life Insurance -- 321 5,244 399 431 -- 621
Other -- 997 21 56 60 (4) 39
-------------------------------------------------------------------------------------------
CONSOLIDATED OPERATIONS $4,013 $4,332 $16,004 $2,045 $1,359 $(4) $1,574
-------------------------------------------------------------------------------------------
1998
-------------------------------------------------------------------------------------------
Investment Products $2,823 $2,407 $ 9,194 $1,043 $ 736 $-- $ 670
Individual Life 931 466 2,307 363 181 (1) 262
Corporate Owned Life Insurance -- 225 8,097 774 793 -- 924
Other -- 497 17 38 49 (1) 55
-------------------------------------------------------------------------------------------
CONSOLIDATED OPERATIONS $3,754 $3,595 $19,615 $2,218 $1,759 $(2) $1,911
-------------------------------------------------------------------------------------------
1997
-------------------------------------------------------------------------------------------
Investment Products $2,478 $2,070 $ 9,620 $ 771 $ 739 $-- $ 677
Individual Life 837 392 2,182 323 164 -- 242
Corporate Owned Life Insurance -- 56 9,259 551 429 -- 439
Other -- 541 (27) (8) 36 4 21
-------------------------------------------------------------------------------------------
CONSOLIDATED OPERATIONS $3,315 $3,059 $21,034 $1,637 $1,368 $ 4 $1,379
-------------------------------------------------------------------------------------------
<CAPTION>
Amortization
of Deferred
Policy
Acquisition Dividends to Other
Segment Costs Policyholders Expenses
<S> <C> <C> <C>
---------------------------------------
1999
Investment Products $411 $ -- $354
Individual Life 128 -- 87
Corporate Owned Life Insurance -- 104 62
Other -- -- 128
---------------------------------------
CONSOLIDATED OPERATIONS $539 $104 $631
---------------------------------------
1998
---------------------------------------
Investment Products $326 $ -- $368
Individual Life 105 -- 77
Corporate Owned Life Insurance -- 329 278
Other -- -- 43
---------------------------------------
CONSOLIDATED OPERATIONS $431 $329 $766
---------------------------------------
1997
---------------------------------------
Investment Products $250 $ -- $266
Individual Life 83 -- 77
Corporate Owned Life Insurance -- 240 259
Other 2 -- (16)
---------------------------------------
CONSOLIDATED OPERATIONS $335 $240 $586
---------------------------------------
</TABLE>
S-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE IV -- REINSURANCE
(IN MILLIONS)
<TABLE>
<CAPTION>
Percentage
Gross Ceded to Assumed From Net of Amount
Amount Other Companies Other Companies Amount Assumed to Net
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------
FOR THE YEAR ENDED
DECEMBER 31, 1999
Life insurance in force $307,970 $131,162 $11,785 $188,593 6.2%
PREMIUMS AND OTHER CONSIDERATIONS
Life insurance and annuities $ 2,212 $ 275 $ 84 $ 2,021 4.2%
Accident and health insurance 448 435 11 24 45.8%
------------------------------------------------------------------------
TOTAL PREMIUMS AND OTHER CONSIDERATIONS $ 2,660 $ 710 $ 95 $ 2,045 4.6%
------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998
------------------------------------------------------------------------
Life insurance in force $326,400 $200,782 $18,289 143,907 12.7%
------------------------------------------------------------------------
PREMIUMS AND OTHER CONSIDERATIONS
Life insurance and annuities $ 2,329 $ 271 142 $ 2,200 6.5%
Accident and health insurance 393 383 8 18 44.4%
------------------------------------------------------------------------
TOTAL PREMIUMS AND OTHER CONSIDERATIONS $ 2,722 $ 654 150 $ 2,218 6.8%
------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------------------------------------------
Life insurance in force $245,487 $178,771 $33,156 $ 99,872 33.2%
------------------------------------------------------------------------
PREMIUMS AND OTHER CONSIDERATIONS
Life insurance and annuities $ 1,818 $ 340 $ 157 $ 1,635 9.6%
Accident and health insurance 346 346 2 2 100.0%
------------------------------------------------------------------------
TOTAL PREMIUMS AND OTHER CONSIDERATIONS $ 2,164 $ 686 $ 159 $ 1,637 9.7%
------------------------------------------------------------------------
</TABLE>
S-3
