<PAGE>
As filed with the Securities and Exchange Commission April 13, 1999.
File No. 333-50467
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
-------
Post-Effective Amendment No. 1 [ X ]
-------
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 35 [ X ]
------
HARTFORD LIFE INSURANCE COMPANY
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT
(Exact Name of Registrant)
HARTFORD LIFE INSURANCE COMPANY
(Name of Depositor)
P.O. BOX 2999
HARTFORD, CT 06104-2999
(Address of Depositor's Principal Offices)
(860) 843-6320
(Depositor's Telephone Number, Including Area Code)
THOMAS S. CLARK, ESQ.
HARTFORD LIFE INSURANCE COMPANY
P.O. BOX 2999
HARTFORD, CT 06104-2999
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the registration statement.
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485
---------
X on May 3, 1999 pursuant to paragraph (b) of Rule 485
---------
60 days after filing pursuant to paragraph (a)(1) of Rule 485
---------
on ____________ pursuant to paragraph (a)(1) of Rule 485
---------
this post-effective amendment designates a new effective date for
--------- a previously filed post-effective amendment.
PURSUANT TO RULE 24F-2(a) UNDER THE INVESTMENT COMPANY ACT OF 1940, THE
REGISTRANT HAS REGISTERED AN INDEFINITE AMOUNT OF SECURITIES.
<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)
-----------------------
<TABLE>
<CAPTION>
N-4 ITEM NO. PROSPECTUS HEADING
------------ ------------------
<S> <C>
1. Cover Page Hartford Life Insurance Company
2. Definitions Definitions
3. Synopsis or Highlights Fee Table; Highlights
4. Condensed Financial Information Accumulation Unit Values;
Performance Related Information
5. General Description of Registrant, General Contract Information
Depositor, and Portfolio Companies
6. Deductions Charges and Fees
7. General Description of Variable The Contract
Annuity Contracts
8. Annuity Period Annuity Payouts
9. Death Benefit Death Benefit
10. Purchases and Contract Value Purchases and Contract Value
11. Redemptions Surrenders
12. Taxes Federal Tax Considerations
13. Legal Proceedings Legal Matters and Experts
14. Table of Contents of the Statement of Table of Contents of the Statement
Additional Information of Additional Information
15. Cover Page Part B: Statement of Additional
Information
16. Table of Contents Table of Contents
17. General Information and History Introduction
18. Services Independent Public Accountants
<PAGE>
<CAPTION>
N-4 ITEM NO. PROSPECTUS HEADING
------------ ------------------
<S> <C>
19. Purchases of Securities Being Offered Distribution of the Contracts
20. Underwriters Distribution of the Contracts
21. Calculation of Performance Data Calculation of Yield and Return
22. Annuity Payments N/A
23. Financial Statements Financial Statements
24. Financial Statements and Exhibits Financial Statements and Exhibits
25. Directors and Officers of the Depositor Directors and Officers of the
Depositor
26. Persons Controlled by or Under Persons Controlled by or Under
Common Control with the Depositor or Common Control with the Depositor
Registrant or Registrant
27. Number of Contract Owners Number of Contract Owners
28. Indemnification Indemnification
29. Principal Underwriters Principal Underwriters
30. Location of Accounts and Records Location of Accounts and Records
31. Management Services Management Services
32. Undertakings Undertakings
</TABLE>
<PAGE>
PART A
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
PUTNAM HARTFORD CAPITAL ACCESS VARIABLE ANNUITY
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT
P.O. Box 5085
Hartford, Connecticut 06102-5085
Telephone: 1-800-521-0538
- --------------------------------------------------------------------------------
This Prospectus describes information you should know before you purchase the
Putnam Hartford Capital Access variable annuity. Please read it carefully.
Putnam Hartford Capital Access variable annuity is a contract between you and
Hartford Life Insurance Company where you agree to make at least one Premium
Payment to us and we agree to make a series of Annuity Payouts at a later date.
This Annuity is a flexible premium, tax-deferred, variable annuity offered to
both individuals and groups. It is:
X Flexible, because you may add Premium Payments at any time.
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 funds 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:
- - Putnam Asia Pacific Growth Sub-Account which purchases Class IB shares of
Putnam VT Asia Pacific Growth Fund of Putnam Variable Trust
- - Putnam Diversified Income Sub-Account which purchases Class IB shares of
Putnam VT Diversified Income Fund of Putnam Variable Trust
- - Putnam The George Putnam Fund of Boston Sub-Account which purchases Class IB
shares of Putnam VT The George Putnam Fund of Boston of Putnam Variable Trust
- - Putnam Global Asset Allocation Sub-Account which purchases Class IB shares of
of Putnam VT Global Asset Allocation Fund of Putnam Variable Trust
- - Putnam Global Growth Sub-Account which purchases Class IB shares of Putnam VT
Global Growth Fund of Putnam Variable Trust
- - Putnam Growth and Income Sub-Account which purchases Class IB shares of Putnam
VT Growth and Income Fund of Putnam Variable Trust
- - Putnam Health Sciences Sub-Account which purchases Class IB shares of Putnam
VT Health Sciences Fund of Putnam Variable Trust
- - Putnam High Yield Sub-Account which purchases Class IB shares of Putnam VT
High Yield Fund of Putnam Variable Trust
- - Putnam Income Sub-Account (formerly known as Putnam U.S. Government and High
Quality Bond Sub-Account) which purchases Class IB shares of Putnam VT Income
Fund (formerly known as Putnam VT U.S. Government and High Quality Bond Fund)
of Putnam Variable Trust
- - Putnam International Growth Sub-Account which purchases Class IB shares of
Putnam VT International Growth Fund of Putnam Variable Trust
- - Putnam International Growth and Income Sub-Account which purchases Class IB
shares of Putnam VT International Growth and Income Fund of Putnam Variable
Trust
- - Putnam International New Opportunities Sub-Account which purchases Class IB
shares of Putnam VT International New Opportunities Fund of Putnam Variable
Trust
- - Putnam Investors Sub-Account which purchases Class IB shares of Putnam VT
Investors Fund of Putnam Variable Trust
- - Putnam Money Market Sub-Account which purchases Class IB shares of Putnam VT
Money Market Fund of Putnam Variable Trust
1 - PROSPECTUS
<PAGE>
- - Putnam New Opportunities Sub-Account which purchases Class IB shares of Putnam
VT New Opportunities Fund of Putnam Variable Trust
- - Putnam New Value Sub-Account which purchases Class IB shares of Putnam VT New
Value Fund of Putnam Variable Trust
- - Putnam OTC & Emerging Growth Sub-Account which purchases Class IB shares of
Putnam VT OTC & Emerging Growth Fund of Putnam Variable Trust
- - Putnam Research Sub-Account which purchases Class IB shares of Putnam VT
Research Fund of the Putnam Variable Trust
- - Putnam Small Cap Value Sub-Account which purchases Class IB shares of Putnam
VT Small Cap Value Fund of Putnam Variable Trust
- - Putnam Utilities Growth and Income Sub-Account which purchases Class IB shares
of Putnam VT Utilities Growth and Income Fund of Putnam Variable Trust
- - Putnam Vista Sub-Account which purchases Class IB shares of Putnam VT Vista
Fund of Putnam Variable Trust
- - Putnam Voyager Sub-Account which purchases Class IB shares of Putnam VT
Voyager Fund of Putnam Variable Trust
If you decide to buy this Annuity, you should keep this prospectus for your
records. You can also call us at 1-800-521-0538 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 3, 1999
Statement of Additional Information Dated: May 3, 1999
2 - PROSPECTUS
<PAGE>
TABLE OF CONTENTS
-------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
----------------------------------------------------------------------------
<S> <C>
Definitions 4
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Fee Table 6
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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
----------------------------------------------------------------------------
<CAPTION>
Page
<S> <C>
----------------------------------------------------------------------------
Charges and Fees 16
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Death Benefit 17
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Surrenders 18
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Annuity Payouts 20
----------------------------------------------------------------------------
Other Programs Available 22
----------------------------------------------------------------------------
Other Information 23
----------------------------------------------------------------------------
Year 2000 23
----------------------------------------------------------------------------
Legal Matters and Experts 24
----------------------------------------------------------------------------
More Information 25
----------------------------------------------------------------------------
Federal Tax Considerations 25
----------------------------------------------------------------------------
Appendix I - Information Regarding Tax-Qualified Retirement Plans 30
----------------------------------------------------------------------------
Table of Contents to Statement of Additional Information 33
----------------------------------------------------------------------------
</TABLE>
3 - PROSPECTUS
<PAGE>
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
Annuitization.
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, CT 06102-5085.
ANNIVERSARY VALUE: The value equal to the Contract Value as of a Contract
Anniversary, increased by the dollar amount of any Premium Payments made since
that anniversary and reduced by the dollar amount of any partial Surrenders
since that anniversary.
ANNUAL MAINTENANCE FEE: An annual $30 charge deducted on a Contract Anniversary
or upon full Surrender if the Contract Value at either of those times is less
than $50,000. The charge is deducted proportionately from each Account in which
you are invested.
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 PAYOUT: The money we pay out after the Annuity Commencement Date for the
duration and frequency you select.
ANNUITY PAYOUT OPTION: Any of the options available for payout after the Annuity
Commencement Date or death of the Contract Owner or Annuitant.
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(s) entitled to receive a Death Benefit upon the death of
the Contract Owner or Annuitant.
CHARITABLE REMAINDER TRUST: An irrevocable trust, where an individual donor
makes a gift to the trust, and in return receives an income tax deduction. In
addition, the individual donor has the right to receive a percentage of the
trust earnings for a specified period of time.
CODE: The Internal Revenue Code of 1986, as amended.
COMMUTED VALUE: The present value of any remaining guaranteed Annuity Payouts.
CONTINGENT ANNUITANT: The person you may designate to become the Annuitant if
the original Annuitant dies before the Annuity Commencement Date. You must name
a Contingent Annuitant before the original Annuitant's death.
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 OWNER OR YOU: The owner or holder of this Annuity. We do not capitalize
"you" in the prospectus.
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: This account holds our company assets and any assets not
allocated to a Separate Account. The assets in this account are available to the
creditors of Hartford.
HARTFORD, WE OR OUR: Hartford Life Insurance Company. Only Hartford is a
capitalized term in the prospectus.
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: This is the highest Anniversary Value prior to the
deceased's 81st birthday or the date of death, if earlier.
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-QUALIFIED CONTRACT: A Contract that is not defined as a tax-qualified
retirement plan by the Code.
NON-VALUATION DAY: Any day the New York Stock Exchange is not open for trading.
4 - PROSPECTUS
<PAGE>
PAYEE: The person or party you designate to receive Annuity Payouts.
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.
QUALIFIED CONTRACT: A Contract that is defined as a tax-qualified retirement
plan in the Code.
REQUIRED MINIMUM DISTRIBUTION: A federal requirement that individuals age 70 1/2
and older must take a distribution from their tax-qualified retirement account
by December 31, each year. For employer sponsored Qualified Contracts, the
individual must begin taking distributions at the age of 70 1/2 or upon
retirement, whichever comes later.
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 amount we pay you if you terminate your Contract before the
Annuity Commencement Date. The Surrender Value is equal to the Contract Value
minus any applicable charges.
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.
5 - PROSPECTUS
<PAGE>
FEE TABLE
-------------------------------------------------------------------
CONTRACT OWNER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Sales Load Imposed on Purchases (as a percentage of Premium
Payments) None
---------------------------------------------------------------------------
Deferred Sales Charge (as a percentage of amounts Surrendered) None
Annual Maintenance Fee (1) $30
---------------------------------------------------------------------------
SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of average
Sub-Account Value)
Mortality and Expense Risk Charge (Contract Years 1-7) 1.50%
Mortality and Expense Risk Charge (Contract Years 8+) 1.25%
---------------------------------------------------------------------------
</TABLE>
(1) An annual $30 charge deducted on a Contract Anniversary or upon full
Surrender if the Contract Value at either of those times is less than
$50,000. The charge is deducted proportionately from each Account in which
you are invested.
The purpose of this table is to assist you in understanding various fees and
charges you will pay directly or indirectly. The table reflects expenses of the
Separate Account and underlying Funds. Premium Taxes, if any, have been taken
into account. This 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" 0.08% annual charge.
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
Total Fund
Management Operating
Fees Expenses
including 12b-1 Other including
waivers Fees Expenses waivers (1)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Putnam VT Asia Pacific Growth Fund 0.800% 0.150% 0.320% 1.270%
- --------------------------------------------------------------------------------------------------------------------
Putnam VT Diversified Income Fund 0.670% 0.150% 0.110% 0.930%
- --------------------------------------------------------------------------------------------------------------------
Putnam VT The George Putnam Fund of Boston (2) 0.490% 0.150% 0.360% 1.000%
- --------------------------------------------------------------------------------------------------------------------
Putnam VT Global Asset Allocation Fund 0.650% 0.150% 0.130% 0.930%
- --------------------------------------------------------------------------------------------------------------------
Putnam VT Global Growth Fund 0.600% 0.150% 0.120% 0.870%
- --------------------------------------------------------------------------------------------------------------------
Putnam VT Growth and Income Fund 0.460% 0.150% 0.040% 0.650%
- --------------------------------------------------------------------------------------------------------------------
Putnam VT Health Sciences Fund (2) 0.560% 0.150% 0.340% 1.050%
- --------------------------------------------------------------------------------------------------------------------
Putnam VT High Yield Fund 0.640% 0.150% 0.070% 0.860%
- --------------------------------------------------------------------------------------------------------------------
Putnam VT Income Fund (formerly known as Putnam VT U.S.
Government and High Quality Bond Fund) 0.600% 0.150% 0.070% 0.820%
- --------------------------------------------------------------------------------------------------------------------
Putnam VT International Growth Fund 0.800% 0.150% 0.270% 1.220%
- --------------------------------------------------------------------------------------------------------------------
Putnam VT International Growth and Income Fund 0.800% 0.150% 0.190% 1.140%
- --------------------------------------------------------------------------------------------------------------------
Putnam VT International New Opportunities Fund (2) 0.920% 0.150% 0.680% 1.750%
- --------------------------------------------------------------------------------------------------------------------
Putnam VT Investors Fund (2) 0.520% 0.150% 0.330% 1.000%
- --------------------------------------------------------------------------------------------------------------------
Putnam VT Money Market Fund 0.450% 0.150% 0.080% 0.680%
- --------------------------------------------------------------------------------------------------------------------
Putnam VT New Opportunities Fund 0.560% 0.150% 0.050% 0.760%
- --------------------------------------------------------------------------------------------------------------------
Putnam VT New Value Fund 0.700% 0.150% 0.110% 0.960%
- --------------------------------------------------------------------------------------------------------------------
Putnam VT OTC & Emerging Growth Fund (2) 0.560% 0.150% 0.340% 1.050%
- --------------------------------------------------------------------------------------------------------------------
Putnam VT Research Fund (1)(2) 0.370% 0.150% 0.480% 1.000%
- --------------------------------------------------------------------------------------------------------------------
Putnam VT Small Cap Value Fund (1) 0.800% 0.150% 0.590% 1.540%
- --------------------------------------------------------------------------------------------------------------------
Putnam VT Utilities Growth and Income Fund 0.650% 0.150% 0.070% 0.870%
- --------------------------------------------------------------------------------------------------------------------
Putnam VT Vista Fund 0.650% 0.150% 0.120% 0.920%
- --------------------------------------------------------------------------------------------------------------------
Putnam VT Voyager Fund 0.540% 0.150% 0.040% 0.730%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Expenses shown are based on estimated expenses for the first fiscal year.
The Class IB 12b-1 plans provide for payments by each Fund to Putnam Mutual
Funds at the annual rate of up to 0.35%. The Trustees currently limit 12b-1
payments on Class IB shares to 0.15% of average net assets.
6 - PROSPECTUS
<PAGE>
(2) The Management Fees and Other Expenses shown in the table above reflect an
expense limitation. In the absence of an expense limitation, Management
Fees, Other Expenses, and Total Fund Operating Expenses would have been:
<TABLE>
<CAPTION>
Management
Fees
including
waivers
<S> <C>
Putnam VT The George Putnam Fund of Boston 0.650%
- ------------------------------------------------------------------------------------------------------------------------------
Putnam VT Health Sciences Fund 0.700%
- ------------------------------------------------------------------------------------------------------------------------------
Putnam VT International New Opportunities Fund 1.200%
- ------------------------------------------------------------------------------------------------------------------------------
Putnam VT Investors Fund 0.650%
- ------------------------------------------------------------------------------------------------------------------------------
Putnam VT OTC & Emerging Growth Fund 0.700%
- ------------------------------------------------------------------------------------------------------------------------------
Putnam VT Research Fund 0.650%
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
12b-1
Fees
<S> <C>
Putnam VT The George Putnam Fund of Boston 0.150%
- --------------------------------------------------------------------------------------------------------------
Putnam VT Health Sciences Fund 0.150%
- --------------------------------------------------------------------------------------------------------------
Putnam VT International New Opportunities Fund 0.150%
- --------------------------------------------------------------------------------------------------------------
Putnam VT Investors Fund 0.150%
- --------------------------------------------------------------------------------------------------------------
Putnam VT OTC & Emerging Growth Fund 0.150%
- --------------------------------------------------------------------------------------------------------------
Putnam VT Research Fund 0.150%
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
Other
Expenses
Putnam VT The George Putnam Fund of Boston 0.360%
- --------------------------------------------------------------------------------------------------------------
Putnam VT Health Sciences Fund 0.340%
- --------------------------------------------------------------------------------------------------------------
Putnam VT International New Opportunities Fund 0.680%
- --------------------------------------------------------------------------------------------------------------
Putnam VT Investors Fund 0.330%
- --------------------------------------------------------------------------------------------------------------
Putnam VT OTC & Emerging Growth Fund 0.340%
- --------------------------------------------------------------------------------------------------------------
Putnam VT Research Fund 0.480%
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
Total Fund
Operating
Expenses
including
waivers
Putnam VT The George Putnam Fund of Boston 1.160%
- --------------------------------------------------------------------------------------------------------------
Putnam VT Health Sciences Fund 1.190%
- --------------------------------------------------------------------------------------------------------------
Putnam VT International New Opportunities Fund 2.030%
- --------------------------------------------------------------------------------------------------------------
Putnam VT Investors Fund 1.130%
- --------------------------------------------------------------------------------------------------------------
Putnam VT OTC & Emerging Growth Fund 1.190%
- --------------------------------------------------------------------------------------------------------------
Putnam VT Research Fund 1.280%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
EXAMPLE
<TABLE>
<CAPTION>
If you do not
Surrender your
Contract, you
would pay the
following
If you Surrender your Contract If you annuitize your Contract expenses on a
at the end of the applicable at the end of the applicable $1,000
time period you would pay the time period you would pay the investment,
following expenses on a $1,000 following expenses on a $1,000 assuming a 5%
investment, assuming a 5% investment, assuming a 5% annual return
annual return on assets: annual return on assets: on assets:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3 5 10 3 5 10 3
Sub-Account 1 year years years years 1 year years years years 1 year years
- -------------------------------------------------------------------------------------------------------------------------------
Putnam Asia Pacific Growth $29 $89 $N/A $N/A $28 $88 $N/A $N/A $29 $89
- -------------------------------------------------------------------------------------------------------------------------------
Putnam Diversified Income 26 78 N/A N/A 25 78 N/A N/A 26 78
- -------------------------------------------------------------------------------------------------------------------------------
The George Putnam Fund 26 81 N/A N/A 26 80 N/A N/A 26 81
- -------------------------------------------------------------------------------------------------------------------------------
Putnam Global Asset Allocation 26 78 N/A N/A 25 78 N/A N/A 26 78
- -------------------------------------------------------------------------------------------------------------------------------
Putnam Global Growth 25 77 N/A N/A 24 76 N/A N/A 25 77
- -------------------------------------------------------------------------------------------------------------------------------
Putnam Growth and Income 23 70 N/A N/A 22 69 N/A N/A 23 70
- -------------------------------------------------------------------------------------------------------------------------------
Putnam Health Sciences 27 82 N/A N/A 26 81 N/A N/A 27 82
- -------------------------------------------------------------------------------------------------------------------------------
Putnam High Yield 25 76 N/A N/A 24 76 N/A N/A 25 76
- -------------------------------------------------------------------------------------------------------------------------------
Putnam Inter-national Growth 28 87 N/A N/A 28 87 N/A N/A 28 87
- -------------------------------------------------------------------------------------------------------------------------------
Putnam International Growth and Income 28 85 N/A N/A 27 84 N/A N/A 28 85
- -------------------------------------------------------------------------------------------------------------------------------
Putnam International New Opportunities 34 103 N/A N/A 33 103 N/A N/A 34 103
- -------------------------------------------------------------------------------------------------------------------------------
Putnam Investors 26 81 N/A N/A 26 80 N/A N/A 26 81
- -------------------------------------------------------------------------------------------------------------------------------
Putnam Money Market 31 95 N/A N/A 30 94 N/A N/A 31 95
- -------------------------------------------------------------------------------------------------------------------------------
Putnam New Opportunities 24 73 N/A N/A 23 73 N/A N/A 24 73
- -------------------------------------------------------------------------------------------------------------------------------
Putnam New Value 26 79 N/A N/A 25 79 N/A N/A 26 79
- -------------------------------------------------------------------------------------------------------------------------------
Putnam OTC & Emerging Growth 27 82 N/A N/A 26 81 N/A N/A 27 82
- -------------------------------------------------------------------------------------------------------------------------------
Putnam Income (formerly known as Putnam U.S.
Government and High Quality Bond) 24 75 N/A N/A 24 74 N/A N/A 24 75
- -------------------------------------------------------------------------------------------------------------------------------
Putnam Utilities Growth and Income 25 77 N/A N/A 24 76 N/A N/A 25 77
- -------------------------------------------------------------------------------------------------------------------------------
Putnam Vista 25 78 N/A N/A 25 78 N/A N/A 25 78
- -------------------------------------------------------------------------------------------------------------------------------
Putnam Voyager 23 72 N/A N/A 23 72 N/A N/A 23 72
- -------------------------------------------------------------------------------------------------------------------------------
Putnam Research 26 81 N/A N/A 26 80 N/A N/A 26 81
- -------------------------------------------------------------------------------------------------------------------------------
Putnam Small Cap Value 32 97 N/A N/A 31 96 N/A N/A 32 97
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
5 10
Sub-Account years years
- ---------------------------------------------
Putnam Asia Pacific Growth $N/A $N/A
- ---------------------------------------------
Putnam Diversified Income N/A N/A
- ---------------------------------------------
The George Putnam Fund N/A N/A
- ---------------------------------------------
Putnam Global Asset Allocation N/A N/A
- ---------------------------------------------
Putnam Global Growth N/A N/A
- ---------------------------------------------
Putnam Growth and Income N/A N/A
- ---------------------------------------------
Putnam Health Sciences N/A N/A
- ---------------------------------------------
Putnam High Yield N/A N/A
- ---------------------------------------------
Putnam Inter-national Growth N/A N/A
- ---------------------------------------------
Putnam International Growth and Income N/A N/A
- ---------------------------------------------
Putnam International New Opportunities N/A N/A
- ---------------------------------------------
Putnam Investors N/A N/A
- ---------------------------------------------
Putnam Money Market N/A N/A
- ---------------------------------------------
Putnam New Opportunities N/A N/A
- ---------------------------------------------
Putnam New Value N/A N/A
- ---------------------------------------------
Putnam OTC & Emerging Growth N/A N/A
- ---------------------------------------------
Putnam Income (formerly known as Putnam U.S.
Government and High Quality Bond) N/A N/A
- ---------------------------------------------
Putnam Utilities Growth and Income N/A N/A
- ---------------------------------------------
Putnam Vista N/A N/A
- ---------------------------------------------
Putnam Voyager N/A N/A
- ---------------------------------------------
Putnam Research N/A N/A
- ---------------------------------------------
Putnam Small Cap Value N/A N/A
- ---------------------------------------------
</TABLE>
7 - PROSPECTUS
<PAGE>
ACCUMULATION UNIT VALUES
(For an Accumulation Unit outstanding throughout the period)
The following information has been derived from the audited financial statements
of the Separate 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 the Putnam Small Cap
Value Sub-Account because the Sub-Account had not yet commenced operations as of
December 31, 1998.
<TABLE>
<CAPTION>
Year Ended
December 31, 1998
<S> <C>
- --------------------------------------------------------------------------------------------------------------------------------
PUTNAM ASIA PACIFIC GROWTH SUB-ACCOUNT
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at beginning of period $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 10.544
- --------------------------------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in thousands) 1
- --------------------------------------------------------------------------------------------------------------------------------
PUTNAM DIVERSIFIED INCOME SUB-ACCOUNT
Accumulation Unit Value at beginning of period $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 9.484
- --------------------------------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in thousands) 23
- --------------------------------------------------------------------------------------------------------------------------------
THE GEORGE PUTNAM FUND SUB-ACCOUNT
Accumulation Unit Value at beginning of period $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 10.398
- --------------------------------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in thousands) 7
- --------------------------------------------------------------------------------------------------------------------------------
PUTNAM GLOBAL ASSET ALLOCATION SUB-ACCOUNT
Accumulation Unit Value at beginning of period $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 10.191
- --------------------------------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in thousands) 1
- --------------------------------------------------------------------------------------------------------------------------------
PUTNAM GLOBAL GROWTH SUB-ACCOUNT
Accumulation Unit Value at beginning of period $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 10.425
- --------------------------------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in thousands) 6
- --------------------------------------------------------------------------------------------------------------------------------
PUTNAM GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value at beginning of period $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 10.443
- --------------------------------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in thousands) 23
- --------------------------------------------------------------------------------------------------------------------------------
PUTNAM HEALTH SCIENCES SUB-ACCOUNT
Accumulation Unit Value at beginning of period $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 10.785
- --------------------------------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of (in thousands) 4
- --------------------------------------------------------------------------------------------------------------------------------
PUTNAM HIGH YIELD SUB-ACCOUNT
Accumulation Unit Value at end of period $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 8.895
- --------------------------------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in thousands) 6
- --------------------------------------------------------------------------------------------------------------------------------
PUTNAM INCOME SUB-ACCOUNT (FORMERLY KNOWN AS PUTNAM U.S. GOVERNMENT AND HIGH QUALITY BOND SUB-ACCOUNT)
Accumulation Unit Value at beginning of period $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 10.300
- --------------------------------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in thousands) 38
- --------------------------------------------------------------------------------------------------------------------------------
PUTNAM INTERNATIONAL GROWTH SUB-ACCOUNT
Accumulation Unit Value at beginning of period $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 9.507
- --------------------------------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in thousands) 19
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8 - PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
Year Ended
December 31, 1998
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
PUTNAM INTERNATIONAL GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value at beginning of period $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 9.524
- --------------------------------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in thousands) 3
- --------------------------------------------------------------------------------------------------------------------------------
PUTNAM INTERNATIONAL NEW OPPORTUNITIES SUB-ACCOUNT
Accumulation Unit Value at beginning of period $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 9.530
- --------------------------------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in thousands) 1
- --------------------------------------------------------------------------------------------------------------------------------
PUTNAM INVESTORS SUB-ACCOUNT
Accumulation Unit Value at beginning of period $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 10.838
- --------------------------------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in thousands) 12
- --------------------------------------------------------------------------------------------------------------------------------
PUTNAM MONEY MARKET SUB-ACCOUNT
Accumulation Unit Value at beginning of period $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 10.014
- --------------------------------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in thousands) 445
- --------------------------------------------------------------------------------------------------------------------------------
PUTNAM NEW OPPORTUNITIES SUB-ACCOUNT
Accumulation Unit Value at beginning of period $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 10.572
- --------------------------------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in thousands) 22
- --------------------------------------------------------------------------------------------------------------------------------
PUTNAM NEW VALUE SUB-ACCOUNT
Accumulation Unit Value at beginning of period $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 10.301
- --------------------------------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in thousands) 2
- --------------------------------------------------------------------------------------------------------------------------------
PUTNAM OTC & EMERGING GROWTH SUB-ACCOUNT
Accumulation Unit Value at beginning of period $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 10.276
- --------------------------------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in thousands) 5
- --------------------------------------------------------------------------------------------------------------------------------
PUTNAM RESEARCH SUB-ACCOUNT
Accumulation Unit Value at beginning of period $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 12.481
- --------------------------------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in thousands) 2
- --------------------------------------------------------------------------------------------------------------------------------
PUTNAM UTILITIES GROWTH AND INCOME SUB-ACCOUNT
Accumulation Unit Value at beginning of period $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 11.064
- --------------------------------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in thousands) 15
- --------------------------------------------------------------------------------------------------------------------------------
PUTNAM VISTA SUB-ACCOUNT
Accumulation Unit Value at beginning of period $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 10.273
- --------------------------------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in thousands) 9
- --------------------------------------------------------------------------------------------------------------------------------
PUTNAM VOYAGER SUB-ACCOUNT
Accumulation Unit Value at beginning of period $ 10.000
- --------------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value at end of period $ 10.742
- --------------------------------------------------------------------------------------------------------------------------------
Number Accumulation Units outstanding at end of period (in thousands) 29
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
9 - PROSPECTUS
<PAGE>
HIGHLIGHTS
-------------------------------------------------------------------
HOW DO I PURCHASE THIS ANNUITY?
You must complete our application or order request and submit it to us for
approval with your first Premium Payment. Your first Premium Payment must be at
least $10,000 and subsequent Premium Payments must be at least $500, unless you
take advantage of our InvestEase Program-Registered Trademark- or are part of
certain retirement plans.
- - For a limited time, usually within ten days after you receive your Contract,
you may cancel your Annuity. 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.
IS THERE AN ANNUAL MAINTENANCE FEE?
We deduct this $30.00 fee each year on your Contract Anniversary or when you
fully Surrender your Annuity, if, on either of those dates, the value of your
Annuity is less than $50,000.
WHAT CHARGES WILL I PAY ON AN ANNUAL BASIS?
In addition to the Annual Maintenance Fee, you pay two different types of
charges each year. The first type of charge is the fee you pay for insurance.
This charge is:
During Contract Years 1-7, a mortality and expense risk charge is subtracted
daily and is equal to an annual charge of 1.50% of your Contract Value invested
in the Funds. In Contract Year 8 or after the Annuity Commencement Date,
whichever comes sooner, the mortality and expense risk charge drops to 1.25% of
your Contract Value invested in the Funds.
The second type of charge is the fee you pay for the Funds.
Currently, Fund charges range from 0.65% to 1.75% annually of the average daily
value of the amount you have invested in 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?
You may Surrender all or part of the amounts you have invested at any time
before we start making Annuity Payouts, or after Annuity Payouts begin under the
Payment for a Period Certain Annuity Payout Option.
- - 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.
WILL HARTFORD PAY A DEATH BENEFIT?
There is a Death Benefit if the Contract Owner, joint owner or the Annuitant die
before we begin to make Annuity Payouts. The Death Benefit will be calculated as
of the date we receive a certified death certificate or other legal document
acceptable to us and will be the greater of:
- - The total Premium Payments you have made to us minus any amounts you have
Surrendered, or
- - The Contract Value of your Annuity, or
- - Your Maximum Anniversary Value, which is described below.
The Maximum Anniversary Value is based on a series of calculations on Contract
Anniversaries of Contract Values, Premium Payments and partial Surrenders. We
will calculate an Anniversary Value for each Contract Anniversary prior to the
deceased's 81st birthday or date of death, whichever is earlier. The Anniversary
Value is equal to the Contract Value as of a Contract Anniversary, increased by
the dollar amount of any Premium Payments made since that anniversary and
reduced by the dollar amount of any partial Surrenders since that anniversary.
The Maximum Anniversary Value is equal to the greatest Anniversary Value
attained from this series of calculations.
This Death Benefit amount will remain invested in the Sub-Accounts according to
your last instructions and will fluctuate with the performance of the underlying
Funds.
WHAT ANNUITY PAYOUT OPTIONS ARE AVAILABLE?
When it comes time for us to make payouts, you may choose one of the following
Annuity Payout Options: Option 1 -- Life Annuity, Option 2 -- Life Annuity with
a Cash Refund, Option 3 -- Life Annuity with Payments for a Period Certain,
Option 4 -- Joint and Last Survivor Life Annuity, Option 5 -- Joint and Last
Survivor Life Annuity with Payments for Period Certain and Option 6 -- Payments
For a Period Certain. We may make other Annuity Payout Options available at any
time.
You must begin to take payouts by the Annuitant's 90th birthday or the end of
the 10th Contract Year, whichever is later. If you do not tell us what Annuity
Payout Option you want before that time, we will make payments under Option 3 --
Life Annuity with Payments for Period Certain using a ten year period certain.
10 - PROSPECTUS
<PAGE>
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. 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 06104-5085. 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 of
Rating Agency Rating Rating Basis of Rating
<S> <C> <C> <C>
- -----------------------------------------------------------------
A.M. Best and Financial
Company, Inc. 1/1/99 A+ performance
- -----------------------------------------------------------------
Standard & Insurer financial
Poor's 6/1/98 AA strength
- -----------------------------------------------------------------
Claims paying
Duff & Phelps 12/21/98 AA + 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 22, 1987 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 Hartford's General Account or by the
investment performance of any of Hartford's other Separate Accounts.
- - May be subject to liabilities from a Sub-Account of the Separate Account that
holds assets of other 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 of the payments
you make to us.
THE FUNDS
The Sub-Accounts purchase shares of Putnam Variable Trust, an open-end series
investment company with multiple portfolios ("Funds"). Putnam Investment
Management, Inc. ("Putnam Management") serves as the investment manager for the
Funds. Putnam Management is ultimately controlled by Marsh & McLennan Companies,
Inc., a publicly owned holding company whose principal businesses are
international insurance brokerage and employee benefit consulting.
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 prospectus for the Funds, and the 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:
PUTNAM VT ASIA PACIFIC GROWTH FUND Seeks capital appreciation by investing
primarily in securities of companies located in Asia and in the Pacific Basin.
The fund's investments will normally include common stocks, preferred stocks,
securities convertible into common stocks or preferred stocks, and warrants to
purchase common stocks or preferred stocks.
PUTNAM VT DIVERSIFIED INCOME FUND Seeks high current income consistent with
capital preservation by investing in the following three sectors of the fixed
income securities markets: a U.S. Government and Investment Grade Sector, a High
Yield Sector (which invests primarily in securities commonly known as "junk
bonds"), and an International Sector. See the special considerations for
investments in high yield securities described in the Fund prospectus.
PUTNAM VT THE GEORGE PUTNAM FUND OF BOSTON Seeks to provide a balanced
investment composed of a well-diversified portfolio of stocks and bonds which
will produce both capital growth and current income.
PUTNAM VT GLOBAL ASSET ALLOCATION FUND Seeks a high level of long-term total
return consistent with preservation of capital by investing in U.S. equities,
international equities, U.S. fixed income securities, and international fixed
income securities.
11 - PROSPECTUS
<PAGE>
PUTNAM VT GLOBAL GROWTH FUND Seeks capital appreciation through a globally
diversified portfolio of common stocks.
PUTNAM VT GROWTH AND INCOME FUND Seeks capital growth and current income by
investing primarily in common stocks that offer potential for capital growth,
current income, or both.
PUTNAM VT HEALTH SCIENCES FUND Seeks capital appreciation by investing primarily
in common stocks and other securities of companies in the health sciences
industries.
PUTNAM VT HIGH YIELD FUND Seeks high current income and, when consistent with
this objective, a secondary objective of capital growth, by investing primarily
in high-yielding, lower-rated fixed income securities, constituting a portfolio
which Putnam Management believes does not involve undue risk to income or
principal. See the special considerations for investments in high yield
securities described in the Fund prospectus.
PUTNAM VT INCOME FUND (formerly known as Putnam VT U.S. Government and High
Quality Bond Fund) Seeks high current income consistent with what Putnam
Management believes to be prudent risk. The Fund will normally invest mostly in
bonds and other debt securities, and, to a lesser degree, in preferred stocks.
PUTNAM VT INTERNATIONAL GROWTH FUND Seeks capital appreciation by investing
primarily in equity securities of companies located in a country other than the
United States.
PUTNAM VT INTERNATIONAL GROWTH AND INCOME FUND Seeks capital growth, and a
secondary objective of high current income by investing primarily in common
stocks that Putnam Management believes offer potential for capital growth and
may, when consistent with its investment objectives, invest in common stocks
that Putnam Management believes offer potential for current income. Under normal
market conditions, the fund expects to invest substantially all of its assets in
securities principally traded on markets outside the United States.
PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND Seeks long term capital
appreciation by investing in companies that have above-average growth prospects
due to the fundamental growth of their market sector. Under normal market
conditions, the fund expects to invest substantially all of its total assets,
other than cash or short-term investments held pending investment, in common
stocks, preferred stocks, convertible preferred stocks, convertible bonds and
other equity securities principally traded in securities markets outside the
United States.
PUTNAM VT INVESTORS FUND Seeks long-term growth of capital and any increased
income that results from this growth by investing primarily in common stocks
that Putnam Management believes afford the best opportunity for capital growth
over the long term.
PUTNAM VT MONEY MARKET FUND Seeks as high a rate of current income as Putnam
Management believes is consistent with preservation of capital and maintenance
of liquidity by investing in high-quality money market instruments.
PUTNAM VT NEW OPPORTUNITIES FUND Seeks long-term capital appreciation by
investing principally in common stocks of companies in sectors of the economy
which Putnam Management believes possess above-average long-term growth
potential.
PUTNAM VT NEW VALUE FUND Seeks long-term capital appreciation by investing
primarily in common stocks that Putnam Management believes are undervalued at
the time of purchase and have the potential for long-term capital appreciation.
PUTNAM VT OTC & EMERGING GROWTH FUND Seeks capital appreciation by investing
primarily in common stocks that Putnam Management believes have potential for
capital appreciation significantly greater than that of market averages.
PUTNAM VT RESEARCH FUND Seeks capital appreciation. The Fund is not intended to
be a complete investment program, and there is no assurance it will achieve its
objective.
PUTNAM VT SMALL CAP VALUE FUND Seeks capital appreciation. The Fund will
generally invest in value stocks, which stocks are those that Putnam Management
believes are currently undervalued compared to their true worth.
PUTNAM VT UTILITIES GROWTH AND INCOME FUND Seeks capital growth and current
income by concentrating its investments in debt and equity securities issued by
companies in the public utilities industries.
PUTNAM VT VISTA FUND Seeks capital appreciation by investing in a diversified
portfolio of common stocks which Putnam Management believes have the potential
for above-average capital appreciation.
PUTNAM VT VOYAGER FUND Seeks capital appreciation by investing primarily in
common stocks of companies that Putnam Management believes have potential for
capital appreciation that is significantly greater than that of market averages.
The Funds are generally managed in styles similar to other open-end investment
companies which are managed by Putnam Management and whose shares are generally
offered to the public. These other Putnam funds may, however, employ different
investment practices and may invest in securities different from those in which
their counterpart Funds invest, and consequently will not have identical
portfolios or experience identical investment results.
12 - PROSPECTUS
<PAGE>
Subject to the general oversight of the Trustees of Putnam Variable Trust,
Putnam Management manages the Funds' portfolios in accordance with their stated
investment objectives and policies, makes investment decisions for the Funds,
places orders to purchase and sell securities on behalf of the Funds, and
administers the affairs of the Funds. For its services, the Funds pay Putnam
Management a quarterly fee. See the accompanying Funds prospectus for a more
complete description of Putnam Management and the respective fees of the Funds.
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 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
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.
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.
13 - PROSPECTUS
<PAGE>
In addition to the standardized total return, the Sub-Account may advertise a
NON-STANDARDIZED TOTAL RETURN that pre-dates the inception of the Separate
Account. This figure will usually be calculated for one year, five years, and
ten years or other periods. Non-standardized total return is measured in the
same manner as the standardized total return described above, except that the
Annual Maintenance Fee is not deducted. Therefore, non-standardized total return
for a Sub-Account is higher than standardized total return for a Sub-Account.
These non-standardized returns must be accompanied by standardized total
returns.
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 including the Annual Maintenance Fee.
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
including the Annual Maintenance Fee.
The Separate Account may also disclose YIELD for periods prior to the date the
Separate Account commenced operations. For these periods, performance
information for the Sub-Accounts will be calculated based on the performance of
the underlying Funds and the assumption that the Sub-Accounts were in existence
for the same periods as those of the underlying Funds, with a level of charges
equal to those currently assessed against the Sub-Accounts. No yield disclosure
for periods prior to the date of the Separate Account will be used without the
yield disclosure for periods as of the inception of the Separate Account.
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 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 or group tax-deferred variable annuity contract.
It is designed for retirement planning purposes and may be purchased by any
individual, group or trust, including:
- - Any trustee or custodian for a retirement plan qualified under Sections 401(a)
or 403(a) of the Code;
- - Annuity purchase plans adopted by public school systems and certain tax-exempt
organizations according to Section 403(b) 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.
HOW DO I PURCHASE A CONTRACT?
You may purchase a Contract by completing and submitting an application or an
order request along with an initial Premium Payment. For most Contracts, the
minimum Premium Payment is $10,000. For additional Premium Payments, the minimum
Premium Payment is $500. Under certain situations, we may allow smaller Premium
Payments, for example, if you enroll in our InvestEase-Registered Trademark-
Program or are part of certain tax qualified retirement plans. Prior approval is
required for Premium Payments of $1,000,000 or more.
14 - PROSPECTUS
<PAGE>
You and your Annuitant must not be older than age 90 on the date that your
Contract is issued, or age 85 if your Contract is issued in New York. 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 before the close of the
New York Stock Exchange, it will be priced on the same Valuation Day. If we
receive your Premium Payment after the close of the New York Stock Exchange, it
will be processed on the next Valuation Day. If we receive your Premium Payment
on a Non-Valuation Day, the amount will be invested on the next Valuation Day.
Unless we receive new instructions, we will invest the Premium Payment based on
your last allocation instructions. 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 your 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 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 ANNUITY COMMENCEMENT 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 Premium Payments are credited to your Sub-Accounts, they are converted into
Accumulation Units by dividing the amount of your Premium Payments, minus any
Premium Taxes, by the Accumulation Unit Value for that day. The more Premium
Payments 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:
- - 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.
We will send you a statement in each calendar quarter, which tells you how many
Accumulation Units you have, their value and your total Contract Value.
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 Annuity Commencement 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
15 - PROSPECTUS
<PAGE>
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
Owner's 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.
TELEPHONE TRANSFERS. In most states, you can make transfers by calling us at
(800) 521-0538. Hartford, our agents or our affiliates are NOT responsible for
losses resulting from telephone requests that we believe are genuine. We will
use reasonable procedures to confirm that telephone instructions are genuine,
including requiring that callers provide certain identification information and
recording all telephone transfer instructions.
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 from your
designated third party, subject to any transfer restrictions in place, 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 4 charges and fees associated with the Contract:
1. MORTALITY AND EXPENSE RISK CHARGE
For assuming risks under the Contract during Contract Years 1-7, we will deduct
a daily charge at the rate of 1.50% per year of Contract Value (estimated at
.95% for mortality and .55% for expenses). After Contract Year 7 or at the
Annuity Commencement Date, whichever comes sooner, we will deduct a daily charge
totaling 1.25% per year of Contract Value (estimated at .90% for mortality and
.35% for expense).
- - MORTALITY RISK -- There are two types of mortality risks that we assume, those
made while your Premium Payments are accumulating and those made once Annuity
Payouts have begun.
During the period your Premium Payments are accumulating, we are required to
cover any difference between the Death Benefit paid and the Surrender Value.
These differences may occur during periods of declining value. The risk that we
bear during this period is that actual mortality rates may be lower than
anticipated.
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.
- - EXPENSE RISK -- We also bear an expense risk that the Annual Maintenance Fee
collected before the Annuity Commencement 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.
2. ANNUAL MAINTENANCE FEE
The Annual Maintenance Fee is a flat fee that is deducted from your Contract
Value to reimburse us for expenses relating to the administrative maintenance of
the Contract and the Accounts. The annual $30 charge is deducted on a Contract
Anniversary or when the Contract is fully Surrendered if the Contract Value at
either of those times is less than $50,000. The charge is deducted
proportionately from each Account in which you are invested.
WHEN IS THE ANNUAL MAINTENANCE FEE WAIVED?
We will waive the Annual Maintenance Fee if your Contract Value is $50,000 or
more on your Contract Anniversary or when you fully Surrender your Contract. In
addition, we will waive one Annual Maintenance Fee for Contract Owners who
16 - PROSPECTUS
<PAGE>
own more than one Contract with a combined Contract Value between $50,000 and
$100,000. If you have multiple Contracts with a combined Contract Value of
$100,000 or greater, we will waive the Annual Maintenance Fee on all Contracts.
However, we reserve the right to limit the number of waivers to a total of six
Contracts. We also reserve the right to waive the Annual Maintenance Fee under
certain other conditions.
3. PREMIUM TAXES
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 Commencement 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.
4. 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 THE MORTALITY AND EXPENSE RISK CHARGE, AND THE ANNUAL MAINTENANCE
FEE, 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.
The calculated Death Benefit will remain invested in the same Accounts,
according to the Contract Owner's last instructions until we receive complete
written settlement instructions from the Beneficiary. Therefore, the Death
Benefit amount will fluctuate with the performance of the underlying Funds. When
there is more than one Beneficiary, we will calculate the Accumulation Units for
each Sub-account for each Beneficiary's portion of the proceeds.
If death occurs before the Annuity Commencement Date, the Death Benefit is the
greatest of:
- - The Contract Value on the date the death certificate or other legal document
acceptable to us is received; or
- - 100% of all Premium Payments paid into the Contract minus any partial
Surrenders; or
- - The Maximum Anniversary Value, which is described below.
The Maximum Anniversary Value is based on a series of calculations on Contract
Anniversaries of Contract Values, Premium Payments and partial Surrenders. We
will calculate an Anniversary Value for each Contract Anniversary prior to the
deceased's 81st birthday or date of death, whichever is earlier. The Anniversary
Value is equal to the Contract Value as of a Contract Anniversary, increased by
the dollar amount of any Premium Payments made since that anniversary and
reduced by the dollar amount of any partial Surrenders since that anniversary.
The Maximum Anniversary Value is equal to the greatest Anniversary Value
resulting from this series of calculations.
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. On the date we receive complete
instructions from the Beneficiary, we will compute the Death Benefit amount to
be paid out or applied to a selected Annuity Payout Option. 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.
The Beneficiary may elect, under the Annuity Proceeds Settlement Option, 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 Annuity
Commencement Date. Once we receive a certified death certificate or other legal
document acceptable to us, the Beneficiary can: (a) make Sub-Account transfers
and (b) take Surrenders.
REQUIRED DISTRIBUTIONS: If the Contract Owner dies before the Annuity
Commencement 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 Annuity Commencement 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.
17 - PROSPECTUS
<PAGE>
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 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 Annuity Commencement Date.
IF DEATH OCCURS BEFORE THE ANNUITY COMMENCEMENT DATE:
<TABLE>
<CAPTION>
IF THE DECEASED
IS THE... AND... AND... THEN THE...
<S> <C> <C> <C>
- ------------------------------------------------------------------
Contract Owner There is a The Annuitant Joint Contract
surviving joint is living or Owner receives
Contract Owner deceased the Death
Benefit.
Contract Owner There is no The Annuitant Designated
surviving joint is living or Beneficiary
Contract Owner deceased receives the
Death Benefit.
Contract Owner There is no The Annuitant Contract
surviving joint is living or Owner's estate
Contract Owner deceased receives the
and the Death Benefit.
Beneficiary
predeceases the
Contract Owner
Annuitant The Contract There is no Death Benefit
Owner is living named is paid to the
Contingent Contract
Annuitant Owner(s) and
not the
designated
Beneficiary.
Annuitant The Contract The Contingent Contingent
Owner is living Annuitant is Annuitant
living becomes the
Annuitant, and
the Contract
continues.
- ------------------------------------------------------------------
</TABLE>
IF DEATH OCCURS ON OR AFTER THE ANNUITY COMMENCEMENT DATE:
<TABLE>
<CAPTION>
IF THE DECEASED
IS THE... AND... THEN THE...
<S> <C> <C>
- -------------------------------------------------------------
Contract Owner The Annuitant is Designated
living Beneficiary becomes
the Contract Owner
Annuitant The Contract Owner is Contract Owner
living receives the Death
Benefit.
Annuitant The Annuitant is also Designated
the Contract Owner 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.
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. This spousal continuation is available only once for each
Contract.
SURRENDERS
WHAT KINDS OF SURRENDERS ARE AVAILABLE?
FULL SURRENDERS BEFORE THE ANNUITY COMMENCEMENT DATE: When you Surrender your
Contract before the Annuity Commencement 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 and the Annual Maintenance Fee. The
Surrender Value may be more or less than the amount of the Premium Payments made
to a Contract.
PARTIAL SURRENDERS BEFORE THE ANNUITY COMMENCEMENT DATE: You may request a
partial Surrender of Contract Values at any time before the Annuity Commencement
Date. There are two restrictions:
- - The partial Surrender amount must be at least equal to $100, our current
minimum for partial Surrenders, and
- - The Contract must have a minimum Contract Value of $500 after the Surrender.
The minimum Contract Value in New York must be $1000 after the Surrender. We
reserve the right to close your Contract and pay the full Surrender Value if
the Contract Value is under the minimum after the Surrender. If your Contract
was issued in Texas, a remaining value of $500 is not required to continue the
Contract if Premium Payments were made in the last two Contract Years.
18 - PROSPECTUS
<PAGE>
FULL SURRENDERS AFTER THE ANNUITY COMMENCEMENT DATE: You may Surrender your
Contract on or after the Annuity Commencement Date only if you selected the
Payment For a Period Certain Annuity Payout Option. Under this option, we pay
you the Commuted Value of your Contract. The Commuted Value is determined on the
day we receive your written request for Surrender.
PARTIAL SURRENDERS AFTER THE ANNUITY COMMENCEMENT DATE: Partial Surrenders are
permitted after the Annuity Commencement Date if you elect the Payments for a
Period Certain Annuity Payout Option, but check with your tax advisor because
there may be adverse tax consequences.
HOW DO I REQUEST A SURRENDER?
Requests for full Surrenders must be in writing. Requests for partial Surrenders
can be made in writing or by telephone. 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 full or partial 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. For a
partial Surrender, specify the Accounts that you want your Surrender to come
from, otherwise, the Surrender will be taken in proportion to the value in each
Account.
TELEPHONE REQUESTS To request a partial Surrender by telephone, we must have
received your completed Telephone Redemption Program Enrollment Form. If there
are joint Contract Owners, both must sign this form. By signing the form, you
authorize us to accept telephone instructions for partial Surrenders from either
Contract Owner. Telephone authorization will remain in effect until we receive a
written cancellation notice from you or your joint Contract Owner, we
discontinue the program; or you are no longer the owner of the Contract. There
are some restrictions on telephone surrenders, please call us with any
questions.
We may record telephone calls and use other procedures to verify information and
confirm that instructions are genuine. We will not be liable for losses or
expenses arising from telephone instructions reasonably believed to be genuine.
WE MAY MODIFY THE REQUIREMENTS FOR TELEPHONE REDEMPTIONS AT ANY TIME.
Telephone Surrender instructions received before the close of the New York Stock
Exchange will be processed on that Valuation Day. Otherwise, your request will
be processed on the next Valuation Day.
COMPLETING A POWER OF ATTORNEY FORM FOR ANOTHER PERSON TO ACT ON YOUR BEHALF MAY
PREVENT YOU FROM MAKING SURRENDERS VIA TELEPHONE.
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 Annuity Commencement 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 and partial 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.
19 - PROSPECTUS
<PAGE>
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:
1. When do you want Annuity Payouts to begin?
2. What Annuity Payout Option do you want to use?
3. How often do you want to receive Annuity Payouts?
4. What level of Assumed Investment Return should you choose?
5. Do you want Annuity Payouts to be fixed or variable or a combination?
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 Annuity Commencement Date when you purchase your Contract or at
any time before you begin receiving Annuity Payouts. You may change the Annuity
Commencement Date by notifying us within thirty days prior to the date. The
Annuity Commencement Date cannot be deferred beyond the Annuitant's 90th
birthday or the end of the 10th Contract Year, whichever is earlier. If your
Contract is issued in New York, you cannot defer beyond the Annuitant's 90th
birthday. If this Contract is issued to the trustee of a Charitable Remainder
Trust, the Annuity Commencement Date may be deferred to the Annuitant's 100th
birthday.
The Annuity Calculation Date is when the amount of your Annuity Payout is
determined. This occurs within five Valuation Days before your selected Annuity
Commencement Date.
All Annuity Payouts, regardless of frequency, will occur on the same day of the
month as the Annuity Commencement 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.
OPTION 1 -- 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.
OPTION 2 -- LIFE ANNUITY WITH A CASH REFUND -- We will make Annuity Payouts as
long as the Annuitant is living. When the Annuitant dies, if the Annuity Payouts
already made are less than the Contract Value minus any Premium Tax, the
remaining value will be paid to the Beneficiary. The remaining value is equal to
the Contract Value minus any Premium Tax minus the Annuity Payouts already made.
This option is only available for Annuity Payouts using the 5% Assumed
Investment Return.
OPTION 3 -- LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN -- We will make
Annuity Payouts as long as the Annuitant is living, but we at least guarantee to
make Annuity Payouts for a time period you select, between 5 years and 100 years
minus the Annuitant's age. If the Annuitant dies before the guaranteed number of
years have passed, then the Beneficiary may elect to (a) continue Annuity
Payouts for the remainder of the guaranteed number of years or (b) receive the
Commuted Value in one sum.
For Qualified Contracts, the guaranteed number of years must be less than the
life expectancy of the Annuitant at the time the Annuity Payouts begin. We
compute life expectancy using the IRS mortality tables.
OPTION 4 -- 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 Payout 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-dollar amount Annuity Payouts, these percentages represent Annuity
Units. For fixed-dollar amount Annuity Payouts, the percentages 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.
OPTION 5 -- JOINT AND LAST SURVIVOR LIFE ANNUITY WITH PAYMENTS FOR A PERIOD
CERTAIN -- We will make Annuity Payouts as long as either the Annuitant or Joint
Annuitant are living, but we at least guarantee to make Annuity Payouts for a
time period you select, between 5 years and 100 years minus the Annuitant's age.
If the Annuitant and the Joint Annuitant both die before the guaranteed number
of years
20 - PROSPECTUS
<PAGE>
have passed, then the Beneficiary has two options, (a) continue Annuity Payouts
for the remainder of the guaranteed number of years or (b) receive the Commuted
Value in one sum.
When choosing this option, you must decide what will happen to the Annuity
Payouts 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 dollar amount Annuity Payouts, these percentages represent Annuity
Units. For fixed-dollar amount Annuity Payouts, these percentages 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.
OPTION 6 -- PAYMENTS FOR A PERIOD CERTAIN -- We will make Annuity Payouts for
the number of years that you select. You can select between 5 years and 30
years.
IMPORTANT INFORMATION:
- - You cannot Surrender your Contract once Annuity Payouts begin, unless you have
selected the Payments for a Period Certain Annuity Payout Option.
- - For Non-Qualified Contracts, if you do not elect an Annuity Payout Option,
fixed Annuity Payouts will automatically begin on the Annuity Commencement
Date under the Payments for a Period Certain Annuity Payout Option using a ten
year period certain.
- - For Qualified Contracts and Contracts issued in Texas, if you do not elect an
Annuity Payout Option, fixed Annuity Payouts will begin automatically on the
Annuity Commencement Date, under the Annuity Payout Option 1 -- Life Annuity.
3. HOW OFTEN DO YOU WANT THE PAYEE TO RECEIVE ANNUITY PAYOUTS?
In addition to selecting an Annuity Commencement 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
- - 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. WHAT LEVEL OF ASSUMED INVESTMENT RETURN DO YOU PREFER?
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.
5. DO YOU WANT FIXED-DOLLAR AMOUNT OR VARIABLE DOLLAR AMOUNT ANNUITY PAYOUTS OR
A COMBINATION OF BOTH?
You may choose an Annuity Payout Option with fixed-dollar amounts,
variable-dollar amounts or a combination depending on your income needs.
FIXED-DOLLAR AMOUNT ANNUITY PAYOUTS -- Once a fixed-dollar amount Annuity Payout
begins, you cannot change your selection to receive variable-dollar amount
Annuity Payout. You will receive equal fixed-dollar amount Annuity Payouts
throughout the Annuity Payout period. Fixed-dollar amount Annuity Payout amounts
are determined by multiplying the Contract Value, minus any applicable Premium
Taxes, by an Annuity rate. The annuity rate is set by us and is not less than
the rate specified in the fixed-dollar amount Annuity Payout Option tables in
your Contract.
VARIABLE-DOLLAR AMOUNT ANNUITY PAYOUTS -- 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
21 - PROSPECTUS
<PAGE>
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 for 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, multiplied by the Annuity Unit
Value for the preceding Valuation Period.
COMBINATION ANNUITY PAYOUTS -- You may choose to receive a combination of
fixed-dollar amount and variable-dollar amount annuity payouts as long as they
total 100% of your Annuity Payout. For example, you may choose to receive 40%
fixed-dollar amount and 60% variable-dollar amount to meet your income needs.
TRANSFER OF ANNUITY UNITS: After the Annuity Calculation 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.
OTHER PROGRAMS AVAILABLE
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INVESTEASE -- InvestEase is an electronic transfer program that allows you to
have money automatically transferred from your checking or savings account, and
invested in your Contract. It is available for Premium Payments made after your
initial Premium Payment. The minimum amount for each transfer is $50. You can
elect to have transfers occur either monthly or quarterly, and they can be made
into any Account available in your Contract.
AUTOMATIC INCOME PROGRAM -- The Automatic Income Program allows you to Surrender
up to 10% of your total Premium Payments each Contract Year. We can Surrender
from the Accounts you select systematically on a monthly, quarterly, semiannual,
or annual basis. The Automatic Income Program may change based on your
instructions after your seventh Contract Year.
AUTOMATIC REBALANCING PROGRAM -- Automatic Rebalancing is a program that allows
you to choose a customized allocation for your Sub-Accounts to help you reach
your investment goals. Over time, Sub-Account performance may cause your
Contract's allocation percentages to change, but under the Automatic Rebalancing
Program, your Sub-Account allocations are rebalanced to the percentages you have
chosen. You can only participate in one model at a time.
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OTHER INFORMATION
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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. However, if the
Annuitant is still living, the Contingent Annuitant may be changed at any time
prior to the Annuity Commencement Date by sending us written notice. We may
modify the Contract, but no modification will affect 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 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. HSD is an affiliate of
ours. Both HSD and Hartford are ultimately controlled by The Hartford Financial
Services Group, Inc. The principal business address of HSD is the same as ours.
The securities will be sold individuals who represent us as insurance agents and
who are registered representatives of Broker-Dealers that have entered into
distribution agreements with HSD.
Commissions will be paid by Hartford and will not be more than 6% 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 affect the amounts paid by the policyholders or Contract
Owners to purchase, hold or Surrender variable insurance products.
The Contract may be sold directly to certain individuals under certain
circumstances that do not involve payment of any sales compensation to a
registered representative. In such case, Hartford will credit the Contract with
an additional 5.0% of the Premium Payment. This additional percentage of Premium
Payment in no way affects present or future charges, rights, benefits or current
values of other Contract Owners. The following class of individuals are eligible
for this feature: (1) current or retired officers, directors, trustees and
employees (and their families) of the ultimate parent and affiliates of
Hartford; and (2) employees and registered representatives (and their families)
of registered broker-dealers (or their financial institutions) that have a sales
agreement with Hartford and its principal underwriter to sell the Contracts.
YEAR 2000
IN GENERAL The Year 2000 issue relates to the ability or inability of computer
hardware, software and other information technology (IT) systems, as well as
non-IT systems, such as equipment and machinery with imbedded chips and
microprocessors, to properly process information and data containing or related
to dates beginning with the year 2000 and beyond. The Year 2000 issue exists
because, historically, many IT and non-IT systems that are in use today were
developed years ago when a year was identified using a two-digit date field
rather than a four-digit date field. As information and data containing or
related to the century date are introduced to date sensitive systems, these
systems may recognize the year 2000 as "1900", or not at all, which may result
in systems processing information incorrectly. This, in turn, may significantly
and adversely affect the integrity and reliability of information databases of
IT systems, may cause the malfunctioning of certain non-IT systems, and may
result in a wide variety of adverse consequences to a company. In addition, Year
2000 problems that occur with third parties with which a company does business,
such as suppliers, computer vendors, distributors and others, may also adversely
affect any given company.
The integrity and reliability of Hartford's IT systems, as well as the
reliability of its non-IT systems, are integral aspects of Hartford's business.
Hartford issues insurance policies, annuities, mutual funds and other financial
products to individual and business customers, nearly all of which contain date
sensitive data, such as policy expiration dates, birth dates and premium payment
dates. In addition, various IT systems support communications and other systems
that integrate Hartford's various business segments and field offices. Hartford
also has business relationships with numerous third parties that affect
virtually all aspects of Hartford's business, including, without limitation,
suppliers, computer hardware and software vendors, insurance agents and brokers,
securities broker-dealers and other distributors of
23 - PROSPECTUS
<PAGE>
financial products, many of which provide date sensitive data to Hartford, and
whose operations are important to Hartford's business.
INTERNAL YEAR 2000 EFFORTS AND TIMETABLE Beginning in 1990, Hartford began
working on making its IT systems Year 2000 ready, either through installing new
programs or replacing systems. Since January 1998, Hartford's Year 2000 efforts
have focused on the remaining Year 2000 issues related to IT and non-IT systems
in all of Hartford's business segments. These Year 2000 efforts include the
following five main initiatives: (1) identifying and assessing Year 2000 issues;
(2) taking actions to remediate IT and non-IT systems so that they are Year 2000
ready; (3) testing IT and non-IT systems for Year 2000 readiness; (4) deploying
such remediated and tested systems back into their respective production
environments; and (5) conducting internal and external integrated testing of
such systems. As of December 31, 1998, Hartford substantially completed
initiatives (1) through (4) of its internal Year 2000 efforts. Hartford has
begun initiative (5) and management currently anticipates that such activity
will continue into the fourth quarter of 1999.
THIRD PARTY YEAR 2000 EFFORTS AND TIMETABLE Hartford's Year 2000 efforts include
assessing the potential impact on Hartford of third parties' Year 2000
readiness. Hartford's third party Year 2000 efforts include the following three
main initiatives: (1) identifying third parties which have significant business
relationships with Hartford, including, without limitation, insurance agents,
brokers, third party administrators, banks and other distributors and servicers
of financial products, and inquiring of such third parties regarding their Year
2000 readiness; (2) evaluating such third parties' responses to Hartford's
inquiries; and (3) based on the evaluation of third party responses (or a third
party's failure to respond) and the significance of the business relationship,
conducting additional activities with respect to third parties as determined to
be necessary in each case. These activities may include conducting additional
inquiries, more in-depth evaluations of Year 2000 readiness and plans, and
integrated IT systems testing. Hartford has completed the first third party
initiative and, as of early 1999, had substantially completed evaluating third
party responses received. Hartford has begun conducting the additional
activities described in initiative (3) and management currently anticipates that
it will continue to do so through the end of 1999. However, notwithstanding
these third party Year 2000 efforts, Hartford does not have control over these
third parties and, as a result, Hartford cannot currently determine to what
extent future operating results may be adversely affected by the failure of
these third parties to adequately address their Year 2000 issues.
YEAR 2000 COSTS The costs of Hartford's Year 2000 program that were incurred
through the year ended December 31, 1997 were not material to Hartford's
financial condition or results of operations. The after-tax costs of Hartford's
Year 2000 efforts for the year ended December 31, 1998 were approximately $3
million. Management currently estimates that after-tax costs related to the Year
2000 program to be incurred in 1999 will be less than $10 million. These costs
are being expensed as incurred.
RISKS AND CONTINGENCY PLANS If significant Year 2000 problems arise, including
problems arising with third parties, failures of IT and non-IT systems could
occur, which in turn could result in substantial interruptions in Hartford's
business. In addition, Hartford's investing activities are an important aspect
of its business and Hartford may be exposed to the risk that issuers of
investments held by it will be adversely impacted by Year 2000 issues. Given the
uncertain nature of Year 2000 problems that may arise, especially those related
to the readiness of third parties discussed above, management cannot determine
at this time whether the consequences of Year 2000 related problems that could
arise will have a material impact on Hartford's financial condition or results
of operations.
Hartford is in the process of developing certain contingency plans so that if,
despite its Year 2000 efforts, Year 2000 problems ultimately arise, the impact
of such problems may be avoided or minimized. These contingency plans are being
developed based on, among other things, known or reasonably anticipated
circumstances and potential vulnerabilities. The contingency planning also
includes assessing the dependency of Hartford's business on third parties and
their Year 2000 readiness. Hartford currently anticipates that internal and
external contingency plans will be substantially complete by the end of the
second quarter of 1999. However, in many contexts, Year 2000 issues are dynamic,
and ongoing assessments of business functions, vulnerabilities and risks must be
made. As such, new contingency plans may be needed in the future and/or existing
plans may need to be modified as circumstances warrant.
LEGAL 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.
24 - PROSPECTUS
<PAGE>
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: Individual Annuity Services
P.O. Box 5085
Hartford, Connecticut 06102-5085.
Telephone: (800) 521-0538
FEDERAL TAX CONSIDERATIONS
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What are some of the federal tax consequences which affect these Contracts?
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 in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Separate Account will not be taxed as a
"regulated investment company" under subchapter M of Chapter 1 of the Code.
Investment income and any realized capital gains on the assets of the Separate
Account are reinvested and are taken into account in determining the value of
the Accumulation and Annuity Units (See "Value of Accumulation Units"). As a
result, such investment income and realized capital gains are automatically
applied to increase reserves under the 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 ANNUITIES - GENERAL PROVISIONS AFFECTING PURCHASERS OTHER THAN
QUALIFIED RETIREMENT PLANS
Section 72 of the Code governs the taxation of annuities in general.
1. NON-NATURAL PERSONS, CORPORATIONS, ETC. 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. OTHER CONTRACT OWNERS (NATURAL PERSONS). A Contract Owner is not taxed on
increases in the value of the Contract until an amount is received or deemed
received, e.g., in the form of a lump sum payment (full or partial value of a
Contract) or as Annuity payments under the settlement option elected.
25 - PROSPECTUS
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The provisions of Section 72 of the Code concerning distributions are summarized
briefly below. Also summarized are special rules affecting distributions from
Contracts obtained in a tax-free exchange for other annuity contracts or life
insurance contracts which were purchased prior to August 14, 1982.
a. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
i. Total premium payments less amounts received which were not includable in
gross income equal the "investment in the contract" under Section 72 of the
Code.
ii. To the extent that the value of the Contract (ignoring any surrender
charges except on a full surrender) exceeds the "investment in the
contract," such excess constitutes the "income on the contract."
iii. Any amount received or deemed received prior to the Annuity Commencement
Date (e.g., upon a partial surrender) is deemed to come first from any
such "income on the contract" and then from "investment in the contract,"
and for these purposes such "income on the contract" shall be computed by
reference to any aggregation rule in subparagraph 2.c. below. As a result,
any such amount received or deemed received (1) shall be includable in
gross income to the extent that such amount does not exceed any such
"income on the contract," and (2) shall not be includable in gross income
to the extent that such amount does exceed any such "income on the
contract." If at the time that any amount is received or deemed received
there is no "income on the contract" (e.g., because the gross value of the
Contract does not exceed the "investment in the contract" and no
aggregation rule applies), then such amount received or deemed received
will not be includable in gross income, and will simply reduce the
"investment in the contract."
iv. The receipt of any amount as a loan under the Contract or the assignment or
pledge of any portion of the value of the Contract shall be treated as an
amount received for purposes of this subparagraph a. and the next
subparagraph b.
v. In general, the transfer of the Contract, without full and adequate
consideration, will be treated as an amount received for purposes of this
subparagraph a. and the next subparagraph b. This transfer rule does not
apply, however, to certain transfers of property between spouses or incident
to divorce.
b. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE. Annuity payments made
periodically after the Annuity Commencement Date are includable in gross income
to the extent the payments exceed the amount determined by the application of
the ratio of the "investment in the contract" to the total amount of the
payments to be made after the Annuity Commencement Date (the "exclusion ratio").
i. When the total of amounts excluded from income by application of the
exclusion ratio is equal to the investment in the contract as of the Annuity
Commencement Date, any additional payments (including surrenders) will be
entirely includable in gross income.
ii. If the annuity payments cease by reason of the death of the Annuitant and,
as of the date of death, the amount of annuity payments excluded from gross
income by the exclusion ratio does not exceed the investment in the
contract as of the Annuity Commencement Date, then the remaining portion of
unrecovered investment shall be allowed as a deduction for the last taxable
year of the Annuitant.
iii. Generally, nonperiodic amounts received or deemed received after the
Annuity Commencement Date are not entitled to any exclusion ratio and
shall be fully includable in gross income. However, upon a full surrender
after such date, only the excess of the amount received (after any
surrender charge) over the remaining "investment in the contract" shall be
includable in gross income (except to the extent that the aggregation rule
referred to in the next subparagraph c. may apply).
c. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS. Contracts issued after
October 21, 1988 by the same insurer (or affiliated insurer) to the same
Contract Owner within the same calendar year (other than certain contracts held
in connection with a tax-qualified retirement arrangement) will be treated as
one annuity Contract for the purpose of determining the taxation of
distributions prior to the Annuity Commencement Date. An annuity contract
received in a tax-free exchange for another annuity contract or life insurance
contract may be treated as a new Contract for this purpose. Hartford believes
that for any annuity subject to such aggregation, the values under the Contracts
and the investment in the contracts will be added together to determine the
taxation under subparagraph 2.a., above, of amounts received or deemed received
prior to the Annuity Commencement Date. Withdrawals will first be treated as
withdrawals of income until all of the income from all such Contracts is
withdrawn. As of the date of this Prospectus, there are no regulations
interpreting this provision.
d. 10% PENALTY TAX - APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY
PAYMENTS.
i. If any amount is received or deemed received on the Contract (before or
after the Annuity Commencement Date), the Code applies a penalty tax equal
to ten percent of the portion of the amount includable in gross income,
unless an exception applies.
26 - PROSPECTUS
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ii. The 10% penalty tax will not apply to the following distributions
(exceptions vary based upon the precise plan involved):
1. Distributions made on or after the date the recipient has attained the
age of 59 1/2.
2. Distributions made on or after the death of the holder or where the
holder is not an individual, the death of the primary annuitant.
3. Distributions attributable to a recipient's becoming disabled.
4. A distribution that is part of a scheduled series of substantially equal
periodic payments (not less frequently than annually) for the life (or
life expectancy) of the recipient (or the joint lives or life
expectancies of the recipient and the recipient's designated
Beneficiary).
5. Distributions of amounts which are allocable to the "investment in the
contract" prior to August 14, 1982 (see next subparagraph e.).
e. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-FREE
EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS PURCHASED PRIOR TO AUGUST
14, 1982. If the Contract was obtained by a tax-free exchange of a life
insurance or annuity Contract purchased prior to August 14, 1982, then any
amount received or deemed received prior to the Annuity Commencement Date shall
be deemed to come (1) first from the amount of the "investment in the contract"
prior to August 14, 1982 ("pre-8/14/82 investment") carried over from the prior
Contract, (2) then from the portion of the "income on the contract" (carried
over to, as well as accumulating in, the successor Contract) that is
attributable to such pre-8/14/82 investment, (3) then from the remaining "income
on the contract" and (4) last from the remaining "investment in the contract."
As a result, to the extent that such amount received or deemed received does not
exceed such pre-8/14/82 investment, such amount is not includable in gross
income. In addition, to the extent that such amount received or deemed received
does not exceed the sum of (a) such pre-8/14/82 investment and (b) the "income
on the contract" attributable thereto, such amount is not subject to the 10%
penalty tax. In all other respects, amounts received or deemed received from
such post-exchange Contracts are generally subject to the rules described in
this subparagraph 3.
f. REQUIRED DISTRIBUTIONS
i. Death of Contract Owner or Primary Annuitant
Subject to the alternative election or spouse beneficiary provisions in ii or
iii below:
1. If any Contract Owner dies on or after the Annuity Commencement Date and
before the entire interest in the Contract has been distributed, the
remaining portion of such interest shall be distributed at least as
rapidly as under the method of distribution being used as of the date of
such death;
2. If any Contract Owner dies before the Annuity Commencement Date, the
entire interest in the Contract will be distributed within 5 years after
such death; and
3. If the Contract Owner is not an individual, then for purposes of 1. or
2. above, the primary annuitant under the Contract shall be treated as
the Contract Owner, and any change in the primary annuitant shall be
treated as the death of the Contract Owner. The primary annuitant is the
individual, the events in the life of whom are of primary importance in
affecting the timing or amount of the payout under the Contract.
ii. Alternative Election to Satisfy Distribution Requirements
If any portion of the interest of a Contract Owner described in i. above is
payable to or for the benefit of a designated beneficiary, such beneficiary may
elect to have the portion distributed over a period that does not extend beyond
the life or life expectancy of the beneficiary. The election must be made and
payments must begin within a year of the death.
iii. Spouse Beneficiary
If any portion of the interest of a Contract Owner is payable to or for the
benefit of his or her spouse, and the Annuitant or Contingent Annuitant is
living, such spouse shall be treated as the Contract Owner of such portion for
purposes of section i. above. This spousal continuation shall apply only once
for this contract.
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.
27 - PROSPECTUS
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The Treasury Department's diversification regulations require, among other
things, that:
- - no more than 55% of the value of the total assets of the segregated asset
account underlying a variable contract is represented by any one investment,
- - no more than 70% is represented by any two investments,
- - no more than 80% is represented by any three investments and
- - no more than 90% is represented by any four investments.
In determining whether the diversification standards are met, all securities of
the same issuer, all interests in the same real property project, and all
interests in the same commodity are each treated as a single investment. In the
case of government securities, each government agency or instrumentality is
treated as a separate issuer.
A separate account must be in compliance with the diversification standards on
the last day of each calendar quarter or within 30 days after the quarter ends.
If an insurance company inadvertently fails to meet the diversification
requirements, the company may still comply within a reasonable period and avoid
the taxation of contract income on an ongoing basis. However, either the company
or the contract owner must agree to pay the tax due for the period during which
the diversification requirements were not met.
We monitor the diversification of investments in the separate accounts and test
for diversification as required by the Code. We intend to administer all
contracts subject to the diversification requirements in a manner that will
maintain adequate diversification.
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.
D. FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient will be
subject to federal income tax withholding, pursuant to Section 3405 of the Code.
The application of this provision is summarized below:
1. NON-PERIODIC DISTRIBUTIONS. The portion of a non-periodic distribution which
constitutes taxable income will be subject to federal income tax withholding
unless the recipient elects not to have taxes withheld. If there is no election
to waive withholding, 10% of the taxable distribution will be withheld as
federal income tax. Election forms will be provided at the time distributions
are requested. If the necessary election forms are not submitted to Hartford,
Hartford will automatically withhold 10% of the taxable distribution.
2. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN ONE
YEAR). The portion of a periodic distribution which constitutes taxable income
will be subject to federal income tax withholding as if the recipient were
married claiming three exemptions. A recipient may elect not to have income
taxes withheld or have income taxes withheld at a different rate by providing a
completed election form. Election forms will be provided at the time
distributions are requested.
E. GENERAL PROVISIONS AFFECTING QUALIFIED RETIREMENT PLANS
The Contract may be used for a number of qualified retirement plans. If the
Contract is being purchased with respect to some form of qualified retirement
plan, please refer to Appendix I for information relative to the types of
28 - PROSPECTUS
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plans for which it may be used and the general explanation of the tax features
of such plans.
F. ANNUITY PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal income
tax consequences to annuity purchasers that are U.S. citizens or residents.
Purchasers that are not U.S. citizens or residents will generally be subject to
U.S. federal income tax and withholding on annuity distributions at a 30% rate,
unless a lower treaty rate applies. In addition, purchasers may be subject to
state premium tax, other state and/or municipal taxes, and taxes that may be
imposed by the purchaser's country of citizenship or residence. Prospective
purchasers are advised to consult with a qualified tax adviser regarding U.S.,
state, and foreign taxation with respect to an annuity purchase.
29 - PROSPECTUS
<PAGE>
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 $10,000 (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 1999, $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
established by a governmental employer after August 20, 1996, 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. Eligible Deferred Compensation Plans that were in existence on August
20, 1996 may be
30 - PROSPECTUS
<PAGE>
amended to satisfy the trust and exclusive benefit requirements any time prior
to January 1, 1999, and must be amended not later than that date to continue to
receive favorable tax treatment. The requirement of a trust does not apply to
amounts under a Deferred Compensation Plan of a tax-exempt (non-governmental)
employer. In addition, the requirement of a trust does not apply to amounts
under a Deferred Compensation Plan of a governmental employer if the Deferred
Compensation Plan is not an eligible plan within the meaning of section 457(b)
of the Code. In the absence of such a trust, amounts under the plan will be
subject to the claims of the employer's general creditors.
In general, distributions from an eligible Deferred Compensation Plan are
prohibited under section 457 of the Code unless made after the participating
employee:
- - attains age 70 1/2,
- - separates from service,
- - dies, or
- - suffers an unforeseeable financial emergency as defined in the Code.
Under present federal tax law, amounts accumulated in a Deferred Compensation
Plan under section 457 of the Code cannot be transferred or rolled over on a
tax-deferred basis except for certain transfers to other Deferred Compensation
Plans under section 457 in limited cases.
4. INDIVIDUAL RETIREMENT ANNUITIES ("IRAS") UNDER SECTION 408
TRADITIONAL IRAS. Eligible individuals can establish individual retirement
programs under section 408 of the Code through the purchase of an IRA. Section
408 imposes limits with respect to IRAs, including limits on the amount that may
be contributed to an IRA, the amount of such contributions that may be deducted
from taxable income, the persons who may be eligible to contribute to an IRA,
and the time when distributions commence from an IRA. Distributions from certain
tax-qualified retirement plans may be "rolled-over" to an IRA on a tax-deferred
basis.
SIMPLE IRAS. Eligible employees may establish SIMPLE IRAs in connection with a
SIMPLE IRA plan of an employer under section 408(p) of the Code. Special
rollover rules apply to SIMPLE IRAs. Amounts can be rolled over from one SIMPLE
IRA to another SIMPLE IRA. However, amounts can be rolled over from a SIMPLE IRA
to a Traditional IRA only after two years have expired since the employee first
commenced participation in the employer's SIMPLE IRA plan. Amounts cannot be
rolled over to a SIMPLE IRA from a qualified plan or a Traditional IRA. Hartford
is a non-designated financial institution for purposes of the SIMPLE IRA rules.
ROTH IRAS. Eligible individuals may establish Roth IRAs under section 408A of
the Code. Contributions to a Roth IRA are not deductible. Subject to special
limitations, a Traditional IRA may be converted into a Roth IRA or a
distribution from a Traditional IRA may be rolled over to a Roth IRA. However, a
conversion or a rollover from a Traditional IRA to a Roth IRA is not excludable
from gross income. If certain conditions are met, qualified distributions from a
Roth IRA are tax-free.
5. FEDERAL TAX PENALTIES AND WITHHOLDING Distributions from tax-qualified
retirement plans are generally taxed as ordinary income under section 72 of the
Code. Under these rules, a portion of each distribution may be excludable from
income. The excludable amount is the portion of the distribution that bears the
same ratio as the after-tax contributions bear to the expected return.
(a) PENALTY TAX ON EARLY DISTRIBUTIONS Section 72(t) of the Code imposes an
additional penalty tax equal to 10% of the taxable portion of a distribution
from certain tax-qualified retirement plans. However, the 10% penalty tax
does not apply to a distribution 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.
31 - PROSPECTUS
<PAGE>
If you are a participant in a SIMPLE IRA plan, you should be aware that the 10%
penalty tax is increased to 25% with respect to non-exempt early distributions
made from your SIMPLE IRA during the first two years following the date you
first commenced participation in any SIMPLE IRA plan of your employer.
(b) MINIMUM DISTRIBUTION PENALTY TAX If the amount distributed is less than the
minimum required distribution for the year, the Participant is subject to a
50% penalty tax on the amount that was not properly distributed.
An individual's interest in a tax-qualified retirement plan generally must be
distributed, or begin to be distributed, not later than the Required Beginning
Date. Generally, the Required Beginning Date is April 1 of the calendar year
following the later of:
- - the calendar year in which the individual attains age 70 1/2; or
- - the calendar year in which the individual retires from service with the
employer sponsoring the plan.
The Required Beginning Date for an individual who is a five (5) percent owner
(as defined in the Code), or who is the owner of an IRA, is April 1 of the
calendar year following the calendar year in which the individual attains age
70 1/2.
The entire interest of the Participant must be distributed beginning no later
than the Required Beginning Date over:
- - the life of the Participant or the lives of the Participant and the
Participant's designated beneficiary, or
- - over a period not extending beyond the life expectancy of the Participant or
the joint life expectancy of the Participant and the Participant's designated
beneficiary.
Each annual distribution must equal or exceed a "minimum distribution amount"
which is determined by dividing the account balance by the applicable life
expectancy. This account balance is generally based upon the account value as of
the close of business on the last day of the previous calendar year. In
addition, minimum distribution incidental benefit rules may require a larger
annual distribution.
If an individual dies before reaching his or her Required Beginning Date, the
individual's entire interest must generally be distributed within five years of
the individual's death. However, this rule will be deemed satisfied, if
distributions begin before the close of the calendar year following the
individual's death to a designated beneficiary and distribution is over the life
of such designated beneficiary (or over a period not extending beyond the life
expectancy of the beneficiary). If the beneficiary is the individual's surviving
spouse, distributions may be delayed until the individual would have attained
age 70 1/2.
If an individual dies after reaching his or her Required Beginning Date or after
distributions have commenced, the individual's interest must generally be
distributed at least as rapidly as under the method of distribution in effect at
the time of the individual's death.
(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.
32 - PROSPECTUS
<PAGE>
TABLE OF CONTENTS TO
STATEMENT OF ADDITIONAL INFORMATION
-------------------------------------------------------------------
<TABLE>
<CAPTION>
SECTION PAGE
- -----------------------------------------------------------
<S> <C>
Description of Hartford Life Insurance
Company
- -----------------------------------------------------------
Safekeeping of Assets
- -----------------------------------------------------------
Independent Public Accountants
- -----------------------------------------------------------
Distribution of Contracts
- -----------------------------------------------------------
Calculation of Yield and Return
- -----------------------------------------------------------
Performance Comparisons
- -----------------------------------------------------------
Financial Statements
- -----------------------------------------------------------
</TABLE>
33 - PROSPECTUS
<PAGE>
This form must be completed for all tax-sheltered annuities.
SECTION 403(B)(11) ACKNOWLEDGMENT FORM
- ---------------------------------------------------------------
The Hartford Variable Annuity Contract that you have recently purchased is
subject to certain restrictions imposed by the Tax Reform Act of 1986.
Contributions to the Contract after December 31, 1988 and any increases in cash
value after December 31, 1988 may not be distributed to you unless you have:
a. Attained age 59 1/2,
b. Separated from service,
c. Died, or
d. Become disabled.
Distributions of post December 31, 1988 contributions (excluding any income
thereon) may also be made if you have experienced a financial hardship.
Also, there may be a 10% penalty tax for distributions made prior to age
59 1/2because of financial hardship or separation from service.
Also, please be aware that your 403(b) Plan may also offer other financial
alternatives other than the Hartford Variable Annuity. Please refer to your
Plan.
Please complete the following and return to:
Hartford Life Insurance Company
Individual Annuity Services
P.O. Box 5085
Hartford, CT 06102-5085
Name of Contract Owner/Participant _____________________
Address ________________________________________________
City or Plan/School District ___________________________
Date: __________________________________________________
Contract No: ___________________________________________
Signature: _____________________________________________
- --------------------------------------------------------------------------------
To obtain a Statement of Additional Information, please complete the form below
and mail to:
Hartford Life Insurance Company
Attn: Individual Annuity Services
P.O. Box 5085
Hartford, CT 06102-5085
Please send a Statement of Additional Information to me at the following
address:
- -------------------------------------------------------
Name
- -------------------------------------------------------
Address
- -------------------------------------------------------
City/State Zip Code
<PAGE>
PART B
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
HARTFORD LIFE INSURANCE COMPANY
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT
PUTNAM HARTFORD CAPITAL ACCESS
This Statement of Additional Information is not a prospectus. The information
contained herein should be read in conjunction with the Prospectus.
To obtain a Prospectus, send a written request to Hartford Life Insurance
Company Attn: Individual Annuity Services, P.O. Box 5085, Hartford, CT
06102-5085.
Date of Prospectus: May 3, 1999
Date of Statement of Additional Information: May 3, 1999
<PAGE>
-2-
TABLE OF CONTENTS
SECTION PAGE
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY . . . . . . . . . . . . . . 3
SAFEKEEPING OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . 3
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . 3
DISTRIBUTION OF CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . 3
CALCULATION OF YIELD AND RETURN. . . . . . . . . . . . . . . . . . . . . . 4
PERFORMANCE COMPARISONS. . . . . . . . . . . . . . . . . . . . . . . . . . 9
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
-3-
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY
Hartford Life Insurance Company is a stock life insurance company engaged in the
business of writing life insurance, both individual and group, in all states of
the United States and the District of Columbia. We were originally incorporated
under the laws of Massachusetts on June 5, 1902, and subsequently redomiciled to
Connecticut. Our offices are located in Simsbury, Connecticut; however, our
mailing address is P.O. Box 2999, Hartford, CT 06104-2999. We are ultimately
controlled by The Hartford Financial Services Group, Inc., one of the largest
financial service providers in the United States.
HARTFORD'S RATINGS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
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 6/1/98 AA Insurer financial strength
- --------------------------------------------------------------------------------
Duff & Phelps 12/21/98 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 and
will offer the Contracts on a continuous basis.
<PAGE>
-4-
HSD is an affiliate of Hartford. Hartford's parent company indirectly owns 100%
of HSD. The principal business address of HSD is the same as that of Hartford.
The securities will be sold by salespersons of HSD, who represent Hartford as
insurance and Variable Annuity agents and who are registered representatives of
Broker-Dealers who have entered into distribution agreements with HSD.
HSD is registered with the Securities and Exchange Commission under the
Securities and 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
principal underwriter of all variable annuities associated with this Separate
Account. For the past three years, the aggregate dollar amount of
underwriting commissions paid to HSD in its role as principal underwriter has
been: 1998: $46,531,128; 1997: $66,116,496; and 1996: $109,275,713. HSD has
retained none of these commissions.
CALCULATION OF YIELD AND RETURN
YIELD OF THE PUTNAM MONEY MARKET SUB-ACCOUNT. As summarized in the Prospectus
under the heading "Performance Related Information," the yield of the Putnam
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 divided by 7 and subtracting 1
from the result, according to the following formula:
365/7
Effective Yield = [(Base Period Return + 1) ] - 1
The yield and effective yield for the seven day period ending December 31,
1998 for the Putnam Money Market Sub-Account is as follows ($30 Annual
Maintenance Fee):
<TABLE>
<CAPTION>
- -------------------------------------------------------------
SUB-ACCOUNT YIELD EFFECTIVE YIELD
<S> <C> <C>
- -------------------------------------------------------------
Putnam Money Market * 3.22% 3.27%
- -------------------------------------------------------------
</TABLE>
* Yield and effective yield for the seven day period ending December 31, 1998.
<PAGE>
-5-
THE PUTNAM 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, INCLUDING THE MAXIMUM ANNUAL MAINTENANCE FEE.
YIELDS OF THE PUTNAM DIVERSIFIED INCOME, PUTNAM GROWTH AND INCOME, PUTNAM
INTERNATIONAL GROWTH AND INCOME, PUTNAM HIGH YIELD, AND PUTNAM INCOME
SUB-ACCOUNTS. As summarized in the Prospectus under the heading "Performance
Related Information," yields of these Sub-Accounts will be computed by
annualizing a recent month's net investment income, divided by a Fund share's
net asset value on the last trading day of that month. Net changes in the value
of a hypothetical account will assume the change in the underlying fund's "net
asset value per share" for the same period in addition to the daily expense
charge assessed at the sub-account level for the respective period. These
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 Funds.
THE YIELD REFLECTS RECURRING CHARGES ON THE SEPARATE ACCOUNT LEVEL, INCLUDING
THE ANNUAL MAINTENANCE FEE.
Yield calculations of the Sub-Accounts used for illustration purposes reflect
the interest earned by the Sub-Accounts, less applicable asset based charges
assessed under the Contract over the base period. Yield quotations based on a
30 day period are computed by dividing the dividends and interests earned during
the period by the maximum offering price per unit on the last day of the period,
according to the following formula:
Example:
6
Current Yield Formula for the Sub-Account 2[((A-B)/(CD) + 1) - 1]
Where A = Dividends and interest earned during the period.
B = Expenses accrued for the period (net of reimbursements).
C = The average daily number of units outstanding during the period that
were entitled to receive dividends.
D = The maximum offering price per unit on the last day of the period.
At any time in the future, yields and total return may be higher or lower than
past yields and there can be no assurance that any historical results will
continue.
<PAGE>
-6-
<TABLE>
<CAPTION>
- ---------------------------------------------------------
SUB-ACCOUNT YIELD
- ---------------------------------------------------------
<S> <C>
Putnam Growth and Income ** -0.09%
- ---------------------------------------------------------
Putnam Global Asset Allocation ** 0.47%
- ---------------------------------------------------------
Putnam High Yield ** 8.88%
- ---------------------------------------------------------
Putnam Utilities Growth and Income ** 1.20%
- ---------------------------------------------------------
Putnam Income ** 4.23%
- ---------------------------------------------------------
Putnam Diversified Income ** 5.77%
- ---------------------------------------------------------
</TABLE>
** Yield quotation based on a 30 day period ended December 31, 1998.
CALCULATION OF TOTAL RETURN. As summarized in the Prospectus under the heading
"Performance Related Information," total return is a measure of the change in
value of an investment in a Sub-Account over the period covered. The formula
for total return used herein includes three steps: (1) calculating the value of
the hypothetical initial investment of $1,000 as of the end of the period by
multiplying the total number of units owned at the end of the period by the unit
value per unit on the last trading day of the period; (2) assuming redemption at
the end of the period and deducting any applicable contingent deferred sales
charge and (3) dividing this account value for the hypothetical investor by the
initial $1,000 investment and annualizing the result for periods of less than
one year. Total return will be calculated for one year, five years and ten
years or some other relevant periods if a Sub-Account has not been in existence
for at least ten years.
The following are the standardized average annual total return quotations for
the Sub-Accounts for the 1, 5, and 10 year periods ended December 31, 1998.
(These returns assume a mortality and risk expense charge of 1.50%).
<PAGE>
-7-
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FOR YEAR ENDED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
INCEPTION SINCE
SUB-ACCOUNT DATE 1 YEAR 5 YEAR 10 YEAR INCEPTION
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Putnam Asia Pacific Growth 5/1/95 -9.94% N/A N/A -7.82%
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Diversified Income 9/15/93 -6.06% 0.95% N/A 0.71%
- -----------------------------------------------------------------------------------------------------------------------------
The George Putnam Fund 5/1/98 N/A N/A N/A -0.65%
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Global Asset 2/1/88 9.46% 9.40% 8.70% N/A
Allocation
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Global Growth 5/1/90 24.72% 10.10% N/A 8.19%
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Growth and Income 2/1/88 10.42% 14.67% 12.13% N/A
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Health Sciences 5/1/98 N/A N/A N/A 5.10%
- -----------------------------------------------------------------------------------------------------------------------------
Putnam High Yield 2/1/88 -10.30% 2.80% 5.72% N/A
- -----------------------------------------------------------------------------------------------------------------------------
Putnam International 1/2/97 6.81% N/A N/A 10.81%
Growth and Income
- -----------------------------------------------------------------------------------------------------------------------------
Putnam International Growth 1/2/97 13.42% N/A N/A 12.51%
- -----------------------------------------------------------------------------------------------------------------------------
Putnam International New 1/2/97 10.70% N/A N/A 2.63%
Opportunities
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Investors 5/1/98 N/A N/A N/A 11.17%
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Money Market 2/1/88 0.61% 0.29% 0.95% N/A
- -----------------------------------------------------------------------------------------------------------------------------
Putnam New 5/2/94 19.35% N/A N/A 18.83%
Opportunities
- -----------------------------------------------------------------------------------------------------------------------------
Putnam New Value 1/2/97 1.53% N/A N/A 7.16%
- -----------------------------------------------------------------------------------------------------------------------------
Putnam OTC & Emerging 5/1/98 N/A N/A N/A -3.28%
Growth
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Research 10/1/98 N/A N/A N/A 18.62%
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Income 2/1/88 4.53% 2.51% 5.27% N/A
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Utility Growth and 5/1/92 10.17% 10.97% N/A 10.23%
Income
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Vista 1/2/97 14.61% N/A N/A 16.68%
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Voyager 2/1/88 19.28% 15.91% 16.55% 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 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 Annual Maintenance Fee is not deducted and the time periods used
to calculate return are based on the inception date of the underlying Funds.
Therefore, non-standardized total return for a Sub-Account is higher than
standardized total return for a Sub-Account.
The following are the non-standardized annualized total return quotations for
the Sub-Accounts for the 1, 5, and 10 year periods ended December 31, 1998.
(These returns assume a mortality and risk expense charge of 1.50% and an Annual
Maintenance Fee of $30.)
<PAGE>
-8-
NON-STANDARDIZED ANNUALIZED TOTAL RETURN THAT PRE-DATE THE
INCEPTION DATE OF THE SEPARATE ACCOUNT FOR YEAR ENDED
DECEMBER 31, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
INCEPTION SINCE
SUB-ACCOUNT DATE 1 YEAR 5 YEAR 10 YEAR INCEPTION
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Putnam Asia Pacific Growth 5/1/95 -6.94% N/A N/A -4.39%
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Diversified Income 9/15/93 -3.06% 3.88% N/A 4.01%
- -----------------------------------------------------------------------------------------------------------------------------
The George Putnam Fund 5/1/98 N/A N/A N/A 2.35%
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Global Asset 2/1/88 12.46% 12.11% 11.00% N/A
Allocation
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Global Growth 5/1/90 27.72% 12.91% N/A 10.90%
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Growth & Income 2/1/88 13.42% 17.13% 14.21% N/A
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Health Sciences 5/1/98 N/A N/A N/A 8.10%
- -----------------------------------------------------------------------------------------------------------------------------
Putnam High Yield 2/1/88 -7.30% 5.58% 8.19% N/A
- -----------------------------------------------------------------------------------------------------------------------------
Putnam International 1/2/97 9.81% N/A N/A 13.62%
Growth and Income
- -----------------------------------------------------------------------------------------------------------------------------
Putnam International 1/2/97 16.42% N/A N/A 15.37%
Growth
- -----------------------------------------------------------------------------------------------------------------------------
Putnam International New 1/2/97 13.70% N/A N/A 5.72%
Opportunities
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Investors 5/1/98 N/A N/A N/A 14.17%
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Money Market 2/1/88 3.61% 3.29% 3.78% N/A
- -----------------------------------------------------------------------------------------------------------------------------
Putnam New Opportunities 5/2/94 22.35% N/A N/A 21.18%
- -----------------------------------------------------------------------------------------------------------------------------
Putnam New Value 1/2/97 4.53% N/A N/A 9.99%
- -----------------------------------------------------------------------------------------------------------------------------
Putnam OTC & Emerging 5/1/98 N/A N/A N/A -0.28%
Growth
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Research 10/1/98 N/A N/A N/A 24.81%
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Income 2/1/88 7.53% 5.46% 7.61% N/A
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Utility Growth and 5/1/92 13.17% 13.70% N/A 12.89%
Income
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Vista 1/2/97 17.61% N/A N/A 19.45%
- -----------------------------------------------------------------------------------------------------------------------------
Putnam Voyager 2/1/88 22.28% 18.38% 18.27% N/A
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-9-
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 about 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; and all corporate debt guaranteed by the U.S.
Government. Mortgage-backed securities, flower bonds and foreign targeted
issues are not included in the SL Government Index.
The Shearson Lehman Government/Corporate Bond Index (the "SL
Government/Corporate Index") is a measure of the market value of approximately
5,300 bonds with a face value currently in excess of $1.3 trillion. To be
included in the SL Government/Corporate Index, an issue must have amounts
outstanding in excess of $1 million, have at least one year to maturity and be
rated "Baa" or higher ("investment grade") by a nationally recognized rating
agency.
The Composite Index for Hartford Advisers HLS Fund is comprised of the S&P 500
(55%), the Lehman Government/Corporate Bond Index (35%), both mentioned above,
and 90 Day U.S. Treasury Bills (10%).
<PAGE>
Report of Independent Public Accountants
To Hartford Life Insurance Company Putnam Capital Manager Trust Separate Account
and to the Owners of Units of Interest therein:
We have audited the accompanying statements of assets and liabilities of
Hartford Life Insurance Company Putnam Capital Manager Trust Separate Account
(Asia Pacific Growth, Diversified Income, The George Putnam Fund of Boston,
Global Asset Allocation, Global Growth, Growth and Income, Health Sciences, High
Yield, International Growth, International Growth and Income, International New
Opportunities, Investors, Money Market, New Opportunities, New Value, OTC &
Emerging Growth, Research, U.S. Government and High Quality Bond, Utilities
Growth and Income, Vista, and Voyager), (collectively, the Account) as of
December 31, 1998, 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,
1998, and the results of their operations and the changes in their net assets
for the periods presented in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 15, 1999
SA-1 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT -- HARTFORD LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS & LIABILITIES
- -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1998 Asia Pacific Diversified The Global Asset Global Growth
Growth Income George Putnam Allocation Growth and Income
Sub-Account Sub-Account Fund of Boston Sub-Account Sub-Account Sub-Account
ASSETS Sub-Account
Investments:
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PUTNAM VT ASIA PACIFIC GROWTH FUND
CLASS IA
Shares 3,714,891
Cost $37,859,086
- ----------------------------------------------------------------------------------------------------------------------------------
Market Value: $30,945,046 $ -- $ -- $ -- $ -- $ --
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS IB
Shares 1,266
Cost $39,939
- ----------------------------------------------------------------------------------------------------------------------------------
Market Value: 10,544 -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT DIVERSIFIED INCOME FUND
CLASS IA
Shares 32,609,055
Cost $342,141,824
- ----------------------------------------------------------------------------------------------------------------------------------
Market Value: -- 342,068,986 -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS IB
Shares 20,585
Cost $214,228
- ----------------------------------------------------------------------------------------------------------------------------------
Market Value: -- 215,528 -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT THE GEORGE PUTNAM FUND
OF BOSTON
CLASS IA
Shares 4,555,470
Cost $44,864,303
- ----------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- 46,830,233 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS IB
Shares 6,798
Cost $67,585
- ----------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- 69,885 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL ASSET ALLOCATION FUND
CLASS IA
Shares 25,934,719
Cost $348,895,623
- ----------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- -- 491,462,931 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS IB
Shares 603
Cost $11,093
- ----------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- -- 11,425 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL GROWTH FUND
CLASS IA
Shares 42,227,561
Cost $574,482,281
- ----------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- -- -- 856,374,936 --
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS IB
Shares 3,170
Cost $57,569
- ----------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- -- -- 64,283 --
- ----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND
CLASS IA
Shares 172,044,473
Cost $3,399,251,998
- ----------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- -- -- -- 4,949,719,496
- ----------------------------------------------------------------------------------------------------------------------------------
CLASS IB
Shares 8,448
Cost $232,384
- ----------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- -- -- -- 242,881
- ----------------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company 32,749 -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Receivable from fund shares sold -- 160,738 3 321,238 12,465 163,640
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 30,988,339 342,445,252 46,900,121 491,795,594 856,451,684 4,950,126,017
- ----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Due to Hartford Life Insurance
Company -- 160,005 3 321,508 12,439 165,016
- ----------------------------------------------------------------------------------------------------------------------------------
Payable for fund shares purchased 32,750 -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 32,750 160,005 3 321,508 12,439 165,016
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE ANNUITY
CONTRACT LIABILITIES) $30,955,589 $342,285,247 $46,900,118 $491,474,086 $856,439,245 $4,949,961,001
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-2 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT -- HARTFORD LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS & LIABILITIES (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
December 31, 1998 Health High Yield International International International Investors
Sciences Sub-Accounts Growth Growth New Sub-Account
Sub-Account Sub-Account and Income Opportunities
ASSETS Sub-Account Sub-Account
Investments:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PUTNAM VT HEALTH SCIENCES FUND
CLASS IA
Shares 4,921,393
Cost $18,621,983
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: $53,840,037 $ -- $ -- $ -- $ -- $ --
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS IB
Shares 4,360
Cost $43,516
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: 47,658 -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT HIGH YIELD FUND
CLASS IA
Shares 37,957,388
Cost $441,577,369
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: -- 444,101,440 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS IB
Shares 4,838
Cost $56,813
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: -- 56,599 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH FUND
CLASS IA
Shares 8,570,131
Cost $103,407,751
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- 115,868,167 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS IB
Shares 13,428
Cost $165,212
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- 181,413 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH AND INCOME FUND
CLASS IA
Shares 9,982,365
Cost $116,029,080
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- -- 122,184,144 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS IB
Shares 1,983
Cost $24,283
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- -- 24,268 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND
CLASS IA
Shares 4,681,795
Cost $49,515,137
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- -- -- 53,793,826 --
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS IB
Shares 1,211
Cost $13,529
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- -- -- 13,899 --
- ------------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INVESTORS FUND
CLASS IA
Shares 9,162,465
Cost $93,333,369
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- -- -- -- 106,742,721
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS IB
Shares 11,340
Cost $111,419
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- -- -- -- 131,993
- ------------------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance Company 240,827 -- -- -- -- 1,265,450
- ------------------------------------------------------------------------------------------------------------------------------------
Receivable from fund shares sold -- 311,922 335,160 17,081 311,323 --
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 54,128,522 444,469,961 116,384,740 122,225,493 54,119,048 108,140,164
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Due to Hartford Life Insurance Company -- 323,350 335,159 17,124 311,324 --
- ------------------------------------------------------------------------------------------------------------------------------------
Payable for fund shares purchased 240,824 -- -- -- -- 1,265,055
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 240,824 323,350 335,159 17,124 311,324 1,265,055
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE ANNUITY CONTRACT $53,887,698 $444,146,611 $116,049,581 $122,208,369 $53,807,724 $106,875,109
LIABILITIES)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-3 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT -- HARTFORD LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS & LIABILITIES (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
December 31, 1998 Money New New OTC & Research U.S.Government
Market Opportunities Value Emerging Growth Sub-Account and High
Sub-Account Sub-Account Sub-Account Sub-Account Quality Bond
ASSETS Sub-Account
Investments:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PUTNAM VT MONEY MARKET FUND
CLASS IA
Shares 299,592,219
Cost $299,592,219
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: $299,592,219 $ -- $ -- $ -- $ -- $ --
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS IB
Shares 451,277
Cost $451,277
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: 451,277 -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT NEW OPPORTUNITIES FUND
CLASS IA
Shares 42,213,667
Cost $677,920,498
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: -- 1,100,088,159 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS IB
Shares 8,860
Cost $186,386
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: -- 230,713 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT NEW VALUE FUND
CLASS IA
Shares 8,244,993
Cost $92,162,692
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- 99,187,264 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS IB
Shares 1,587
Cost $18,969
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- 19,081 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT OTC & EMERGING GROWTH FUND
CLASS IA
Shares 913,109
Cost $8,124,409
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- -- 9,213,266 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS IB
Shares 4,722
Cost $42,031
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- -- 47,647 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
PUTNAM RESEARCH FUND
CLASS IA
Shares 547,455
Cost $6,031,684
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- -- -- 6,531,138 --
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS IB
Shares 2,489
Cost $25,142
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- -- -- 29,669 --
- ------------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT U.S. GOVERNMENT AND HIGH
QUALITY BOND FUND
CLASS IA
Shares 45,418,418
Cost $549,919,269
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- -- -- -- 623,594,879
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS IB
Shares 28,700
Cost $388,191
- ------------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- -- -- -- 394,056
- ------------------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company -- 1,552,849 -- -- 21,882 125,435
- ------------------------------------------------------------------------------------------------------------------------------------
Receivable from fund shares sold 2,080,089 -- 120,870 41,653 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 302,123,585 1,101,871,721 99,327,215 9,302,566 6,582,689 624,114,370
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Due to Hartford Life Insurance
Company 2,104,752 -- 121,458 41,652 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Payable for fund shares purchased -- 1,552,749 -- -- 21,904 125,431
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 2,104,752 1,552,749 121,458 41,652 21,904 125,431
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE ANNUITY
CONTRACT LIABILITIES) $300,018,833 $1,100,318,972 $99,205,757 $9,260,914 $6,560,785 $623,988,939
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-4 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT -- HARTFORD LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS & LIABILITIES (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1998 Utilities Vista Voyager
Growth Sub-Account Sub-Account
and Income
Sub-Account
ASSETS
Investments:
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PUTNAM VT UTILITIES GROWTH AND INCOME FUND
CLASS IA
Shares 29,513,095
Cost $358,181,763
- -----------------------------------------------------------------------------------------------------------------------------------
Market Value: $536,843,202 $ -- $ --
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS IB
Shares 9,061
Cost $150,291
- -----------------------------------------------------------------------------------------------------------------------------------
Market Value: 164,817 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT VISTA FUND
CLASS IA
Shares 8,368,063
Cost $98,333,369
- -----------------------------------------------------------------------------------------------------------------------------------
Market Value: -- 123,177,883 --
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS IB
Shares 6,233
Cost $78,343
- -----------------------------------------------------------------------------------------------------------------------------------
Market Value: -- 91,809 --
- -----------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT VOYAGER FUND
CLASS IA
Shares 57,039,630
Cost $1,366,305,736
- -----------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- 2,615,267,050
- -----------------------------------------------------------------------------------------------------------------------------------
CLASS IB
Shares 6,764
Cost $264,849
- -----------------------------------------------------------------------------------------------------------------------------------
Market Value: -- -- 309,849
- -----------------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance Company -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Receivable from fund shares sold 184,049 378,758 165,678
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 537,192,068 123,648,450 2,615,742,577
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Due to Hartford Life Insurance Company 180,838 378,759 165,972
- -----------------------------------------------------------------------------------------------------------------------------------
Payable for fund shares purchased -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 180,838 378,759 165,972
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE ANNUITY CONTRACT LIABILITIES) $537,011,230 $123,269,691 $2,615,576,605
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-5 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT -- HARTFORD LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1998 Units Unit Contract
Owned by Price Liability
Participants
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred annuity contracts in the accumulation period:
- -----------------------------------------------------------------------------------------------------------------------------------
Asia Pacific Growth Fund Class IA .40% 991 $ 8.871834 $ 8,794
- -----------------------------------------------------------------------------------------------------------------------------------
Asia Pacific Growth Fund Class IA 3,614,223 8.552078 30,909,115
- -----------------------------------------------------------------------------------------------------------------------------------
Asia Pacific Growth Fund Class IB 1,000 10.544040 10,544
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified Income Fund Class IA .40% 1,048 13.426807 14,073
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified Income Fund Class IA 27,361,752 12.488636 341,710,967
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified Income Fund Class IB 22,725 9.483976 215,528
- -----------------------------------------------------------------------------------------------------------------------------------
George Putnam Fund of Boston Class IA .40% 1,000 10.310830 10,311
- -----------------------------------------------------------------------------------------------------------------------------------
George Putnam Fund of Boston Class IA 4,571,284 10.242185 46,819,922
- -----------------------------------------------------------------------------------------------------------------------------------
George Putnam Fund of Boston Class IB 6,721 10.397822 69,885
- -----------------------------------------------------------------------------------------------------------------------------------
Global Asset Allocation Fund Class IA .40% 1,056 19.595370 20,702
- -----------------------------------------------------------------------------------------------------------------------------------
Global Asset Allocation Fund Class IA 16,196,269 30.255566 490,027,281
- -----------------------------------------------------------------------------------------------------------------------------------
Global Asset Allocation Fund Class IB 1,121 10.190632 11,425
- -----------------------------------------------------------------------------------------------------------------------------------
Global Growth Fund Class IA .40% 1,504 20.255888 30,464
- -----------------------------------------------------------------------------------------------------------------------------------
Global Growth Fund Class IA 34,221,421 24.939571 853,467,552
- -----------------------------------------------------------------------------------------------------------------------------------
Global Growth Fund Class IB 6,166 10.425449 64,283
- -----------------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund Class IA 40% 1,782 24.085764 42,913
- -----------------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund Class IA 108,445,621 45.567032 4,941,545,097
- -----------------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund Class IB 23,258 10.443057 242,881
- -----------------------------------------------------------------------------------------------------------------------------------
Health Sciences Fund Class IA .40% 1,000 10.921400 10,921
- -----------------------------------------------------------------------------------------------------------------------------------
Health Sciences Fund Class IA 4,961,771 10.848771 53,829,119
- -----------------------------------------------------------------------------------------------------------------------------------
Health Sciences Fund Class IB 4,419 10.784889 47,658
- -----------------------------------------------------------------------------------------------------------------------------------
High Yield Fund Class IA .40% 1,055 14.072697 14,841
- -----------------------------------------------------------------------------------------------------------------------------------
High Yield Fund Class IA 18,670,384 23.742124 443,274,583
- -----------------------------------------------------------------------------------------------------------------------------------
High Yield Fund Class IB 6,363 8.895343 56,599
- -----------------------------------------------------------------------------------------------------------------------------------
International Growth Fund Class IA .40% 2,832 13.673735 38,727
- -----------------------------------------------------------------------------------------------------------------------------------
International Growth Fund Class IA 8,641,583 13.402515 115,818,942
- -----------------------------------------------------------------------------------------------------------------------------------
International Growth Fund Class IB 19,075 9.510657 181,413
- -----------------------------------------------------------------------------------------------------------------------------------
International Growth and Income Fund Class IA .40% 1,146 13.184402 15,116
- -----------------------------------------------------------------------------------------------------------------------------------
International Growth and Income Fund Class IA 9,449,531 12.922223 122,108,950
- -----------------------------------------------------------------------------------------------------------------------------------
International Growth and Income Fund Class IB 2,548 9.523514 24,268
- -----------------------------------------------------------------------------------------------------------------------------------
International New Opportunities Fund Class IA .40% 1,181 11.453824 13,523
- -----------------------------------------------------------------------------------------------------------------------------------
International New Opportunities Fund Class IA 4,790,220 11.225771 53,773,916
- -----------------------------------------------------------------------------------------------------------------------------------
International New Opportunities Fund Class IB 1,458 9.530122 13,899
- -----------------------------------------------------------------------------------------------------------------------------------
Investors Fund Class IA .40% 1,000 11.508270 11,508
- -----------------------------------------------------------------------------------------------------------------------------------
Investors Fund Class IA 9,335,885 11.431551 106,723,645
- -----------------------------------------------------------------------------------------------------------------------------------
Investors Fund Class IB 12,179 10.837505 131,993
- -----------------------------------------------------------------------------------------------------------------------------------
Money Market Fund Class IA .40% 42,347 1.232976 52,213
- -----------------------------------------------------------------------------------------------------------------------------------
Money Market Fund Class IA 194,640,604 1.538127 299,381,968
- -----------------------------------------------------------------------------------------------------------------------------------
Money Market Fund Class IB 444,980 1.014151 451,277
- -----------------------------------------------------------------------------------------------------------------------------------
New Opportunities Fund Class IA .40% 1,249 28.085839 35,091
- -----------------------------------------------------------------------------------------------------------------------------------
New Opportunities Fund Class IA 44,314,582 24.804633 1,099,206,949
- -----------------------------------------------------------------------------------------------------------------------------------
New Opportunities Fund Class IB 21,822 10.572464 230,713
- -----------------------------------------------------------------------------------------------------------------------------------
New Value Fund Class IA .40% 1,000 12.396380 12,396
- -----------------------------------------------------------------------------------------------------------------------------------
New Value Fund Class IA 8,157,500 12.151266 99,123,950
- -----------------------------------------------------------------------------------------------------------------------------------
New Value Fund Class IB 1,852 10.301448 19,081
- -----------------------------------------------------------------------------------------------------------------------------------
OTC & Emerging Fund Class IA .40% 1,000 10.047430 10,047
- -----------------------------------------------------------------------------------------------------------------------------------
OTC & Emerging Fund Class IA 922,190 9.979745 9,203,220
- -----------------------------------------------------------------------------------------------------------------------------------
OTC & Emerging Fund Class IB 4,637 10.276087 47,647
- -----------------------------------------------------------------------------------------------------------------------------------
Research Fund Class IA .40% 1,000 12.527710 12,528
- -----------------------------------------------------------------------------------------------------------------------------------
Research Fund Class IA 521,626 12.496667 6,518,588
- -----------------------------------------------------------------------------------------------------------------------------------
Research Fund Class IB 2,377 12.480896 29,669
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-6 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT -- HARTFORD LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1998 Units Unit Contract
Owned by Price Liability
Participants
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Government and High Quality Bond Fund Class IA .40% 1,028 $14.305046 $ 14,705
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Government and High Quality Bond Fund Class IA 29,232,323 21.305276 622,802,709
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Government and High Quality Bond Fund Class IB 38,269 10.297077 394,058
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities Growth and Income Fund Class IA .40% 1,024 22.252083 22,793
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities Growth and Income Fund Class IA 23,490,227 22.825900 536,185,574
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities Growth and Income Fund Class IB 14,897 11.063684 164,817
- -----------------------------------------------------------------------------------------------------------------------------------
Vista Fund Class IA .40% 1,000 14.604110 14,604
- -----------------------------------------------------------------------------------------------------------------------------------
Vista Fund Class IA 8,596,391 14.316454 123,069,843
- -----------------------------------------------------------------------------------------------------------------------------------
Vista Fund Class IB 8,959 10.247684 91,809
- -----------------------------------------------------------------------------------------------------------------------------------
Voyager Fund Class IA .40% 2,347 27.501510 64,536
- -----------------------------------------------------------------------------------------------------------------------------------
Voyager Fund Class IA 47,034,107 55.426380 2,606,930,283
- -----------------------------------------------------------------------------------------------------------------------------------
Voyager Fund Class IB 28,846 10.741598 309,849
- -----------------------------------------------------------------------------------------------------------------------------------
Sub-total: 13,005,703,481
- -----------------------------------------------------------------------------------------------------------------------------------
Annuity contracts in the annuity period:
- -----------------------------------------------------------------------------------------------------------------------------------
Asia Pacific Growth Fund Class IA 3,173 8.552078 27,136
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified Income Fund Class IA 27,599 12.488636 344,679
- -----------------------------------------------------------------------------------------------------------------------------------
Global Asset Allocation Fund Class IA 46,758 30.255566 1,414,678
- -----------------------------------------------------------------------------------------------------------------------------------
Global Growth Fund Class IA 115,357 24.939571 2,876,946
- -----------------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund Class IA 178,421 45.567032 8,130,110
- -----------------------------------------------------------------------------------------------------------------------------------
High Yield Fund Class IA 31,087 23.742124 738,062
- -----------------------------------------------------------------------------------------------------------------------------------
High Yield Fund Class IA .40% 4,443 14.072697 62,526
- -----------------------------------------------------------------------------------------------------------------------------------
International Growth Fund Class IA 783 13.402515 10,499
- -----------------------------------------------------------------------------------------------------------------------------------
International Growth and Income Fund Class IA 4,646 12.922223 60,035
- -----------------------------------------------------------------------------------------------------------------------------------
International New Opportunities Fund Class IA 569 11.225771 6,386
- -----------------------------------------------------------------------------------------------------------------------------------
Investors Fund Class IA 697 11.431551 7,963
- -----------------------------------------------------------------------------------------------------------------------------------
Money Market Fund Class IA 103,308 1.538127 158,901
- -----------------------------------------------------------------------------------------------------------------------------------
New Opportunities Fund Class IA 34,115 24.804633 846,219
- -----------------------------------------------------------------------------------------------------------------------------------
New Value Fund Class IA 4,142 12.151266 50,330
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Government and High Quality Bond Fund Class IA 36,461 21.305276 776,812
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities Growth and Income Fund Class IA 27,953 22.825900 638,046
- -----------------------------------------------------------------------------------------------------------------------------------
Vista Fund Class IA 6,526 14.316454 93,435
- -----------------------------------------------------------------------------------------------------------------------------------
Voyager Fund Class IA 149,242 55.426380 8,271,937
- -----------------------------------------------------------------------------------------------------------------------------------
Sub-total: 24,514,700
- -----------------------------------------------------------------------------------------------------------------------------------
GRAND TOTAL: $13,030,218,181
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-7 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT -- HARTFORD LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
For the Year Ended Asia Pacific Diversified The Global Asset
December 31, 1998 Growth Income George Putnam Allocation
Sub-Account Sub-Account Fund of Boston Sub-Account
Sub-Account*
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 1,564,512 $13,802,701 $ 374,415 $10,955,687
- -----------------------------------------------------------------------------------------------------------------------------------
Capital gains income -- 5,862,590 -- 47,058,496
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Mortality and expense
undertakings (452,707) (4,663,472) (188,593) (6,906,953)
- -----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss)
on security transactions (1,764,199) (32,192) 2,058 (842,305)
- -----------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments
during the period (1,930,185) (24,771,299) 1,968,230 4,041,060
- -----------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments (3,694,384) (24,803,491) 1,970,288 3,198,755
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS $(2,582,579) $(9,801,672) $2,156,110 $54,305,985
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
For the Year Ended Global Growth Health
December 31, 1998 Growth and Income Sciences
Sub-Account Sub-Account Sub-Account*
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 19,995,172 $ 77,068,358 $ 46,972
- -----------------------------------------------------------------------------------------------------------------------------------
Capital gains income 99,975,864 503,102,245 --
- -----------------------------------------------------------------------------------------------------------------------------------
EXPENSES:
Mortality and expense
undertakings (10,932,941) (65,020,082) (235,070)
- -----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss)
on security transactions 86,719 (13,044,218) 7,391
- -----------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments
during the period 81,122,328 87,730,466 5,222,198
- -----------------------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 81,209,047 74,686,248 5,229,589
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS $190,247,142 $589,836,769 $5,041,491
- -----------------------------------------------------------------------------------------------------------------------------------
*From inception, April 30, 1998, to December 31, 1998.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-8 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT -- HARTFORD LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------
For the Year Ended High Yield International International International
December 31, 1998 Sub-Account Growth Growth New
Sub-Account and Income Opportunities
Sub-Account Sub-Account
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $36,812,133 $377,732 $1,524,102 $91,665
- -----------------------------------------------------------------------------------------------------------------------
Capital gains income 5,776,463 -- 3,952,074 --
- -----------------------------------------------------------------------------------------------------------------------
EXPENSES:
Mortality and expense undertakings (6,563,827) (1,217,351) (1,543,135) (661,010)
- -----------------------------------------------------------------------------------------------------------------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain
(loss) on security transactions (1,068,781) 325,406 226,178 69,499
- -----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments
during the period (68,167,310) 11,216,654 3,897,830 6,461,818
- -----------------------------------------------------------------------------------------------------------------------
Net gain (loss)
on investments (69,236,091) 11,542,060 4,124,008 6,531,317
- -----------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS $(33,211,322) $10,702,441 $8,057,049 $5,961,972
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
For the Year Ended Investors Money New
December 31, 1998 Sub-Account* Market Opportunities
Sub-Account Sub-Account
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 128,830 $12,897,668 $ --
- -----------------------------------------------------------------------------------------------------------------------
Capital gains income -- -- 13,104,760
- -----------------------------------------------------------------------------------------------------------------------
EXPENSES:
Mortality and expense undertakings (402,141) (3,568,319) (13,261,139)
- -----------------------------------------------------------------------------------------------------------------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain
(loss) on security transactions 26,606 -- (4,633,710)
- -----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments
during the period 13,225,708 -- 200,446,907
- -----------------------------------------------------------------------------------------------------------------------
Net gain (loss)
on investments 13,252,314 -- 195,813,197
- -----------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS $12,979,003 $ 9,329,349 $195,656,818
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-9 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT -- HARTFORD LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------
For the Year Ended New OTC & Research U.S.Government
December 31, 1998 Value Emerging Growth Sub-Account** and High
Sub-Account Sub-Account* Quality Bond
Sub-Account
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 1,752,027 $ 3,372 $ 8,448 $ 28,417,527
- -----------------------------------------------------------------------------------------------------------------------
Capital gains income 1,734,664 -- 444 739,634
- -----------------------------------------------------------------------------------------------------------------------
EXPENSES:
Mortality and expense
undertakings (1,255,209) (38,610) (9,355) (7,860,470)
- -----------------------------------------------------------------------------------------------------------------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss)
on security transactions (166,487) (29,039) 2,141 297,895
- -----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments
during the period 2,140,264 1,094,473 503,979 14,444,406
- -----------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 1,973,777 1,065,434 506,120 14,742,301
- -----------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS $ 4,205,259 $1,030,196 $505,657 $36,038,992
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
For the Year Ended Utilities Vista Voyager
December 31, 1998 Growth Sub-Account Sub-Account
and Income
Sub-Account
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends $13,533,429 $-- $5,509,636
- -----------------------------------------------------------------------------------------------------------------------
Capital gains income 23,325,262 -- 134,435,124
- -----------------------------------------------------------------------------------------------------------------------
EXPENSES:
Mortality and expense
undertakings (6,659,080) (1,312,949) (32,325,889)
- -----------------------------------------------------------------------------------------------------------------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss)
on security transactions (255,617) (369,767) (11,140,387)
- -----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments
during the period 31,863,022 17,028,097 377,719,434
- -----------------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 31,607,405 16,658,330 366,579,047
- -----------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS $61,807,016 $15,345,381 $474,197,918
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
**From inception, October 1, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-10 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT -- HARTFORD LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------
For the Year Ended Asia Pacific Diversified The Global Asset
December 31, 1998 Growth Income George Putnam Allocation
Sub-Account Sub-Account Fund of Boston Sub-Account
Sub-Account*
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $1,111,805 $9,139,229 $185,822 $4,048,734
- -----------------------------------------------------------------------------------------------------------------------
Capital gains income -- 5,862,590 -- 47,058,496
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss)
on security transactions (1,764,199) (32,192) 2,058 (842,305)
- -----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments
during the period (1,930,185) (24,771,299) 1,968,230 4,041,060
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations (2,582,579) (9,801,672) 2,156,110 54,305,985
- -----------------------------------------------------------------------------------------------------------------------
UNIT TRANSACTIONS:
Purchases 1,897,548 35,579,052 17,802,735 17,160,875
- -----------------------------------------------------------------------------------------------------------------------
Net transfers (4,187,927) 28,378,148 27,784,759 (24,301,956)
- -----------------------------------------------------------------------------------------------------------------------
Surrenders (1,899,643) (26,103,606) (843,486) (42,326,606)
- -----------------------------------------------------------------------------------------------------------------------
Net annuity transactions 21,039 115,109 -- (220,472)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from unit transactions (4,168,983) 37,968,703 44,744,008 (49,688,159)
- -----------------------------------------------------------------------------------------------------------------------
Total increase (decrease)
in net assets (6,751,562) 28,167,031 46,900,118 4,617,826
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 37,707,151 314,118,216 -- 486,856,260
- -----------------------------------------------------------------------------------------------------------------------
END OF PERIOD $30,955,589 $342,285,247 $46,900,118 $491,474,086
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
For the Year Ended Global Growth Health
December 31, 1998 Growth and Income Sciences
Sub-Account Sub-Account Sub-Account*
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $9,062,231 $12,048,276 $(188,098)
- -----------------------------------------------------------------------------------------------------------------------
Capital gains income 99,975,864 503,102,245 --
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss)
on security transactions 86,719 (13,044,218) 7,391
- -----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments
during the period 81,122,328 87,730,466 5,222,198
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations 190,247,142 589,836,769 5,041,491
- -----------------------------------------------------------------------------------------------------------------------
UNIT TRANSACTIONS:
Purchases 26,176,679 328,888,237 14,760,637
- -----------------------------------------------------------------------------------------------------------------------
Net transfers (24,478,828) 42,388,882 34,890,394
- -----------------------------------------------------------------------------------------------------------------------
Surrenders (57,450,776) (348,342,759) (804,824)
- -----------------------------------------------------------------------------------------------------------------------
Net annuity transactions (239,956) 274,015 --
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from unit transactions (55,992,881) 23,208,375 48,846,207
- -----------------------------------------------------------------------------------------------------------------------
Total increase (decrease)
in net assets 134,254,261 613,045,144 53,887,698
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 722,184,984 4,336,915,857 --
- -----------------------------------------------------------------------------------------------------------------------
END OF PERIOD $856,439,245 $4,949,961,001 $53,887,698
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-11 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT -- HARTFORD LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------
For the Year Ended High Yield International International International
December 31, 1998 Sub-Account Growth Growth New
Sub-Account and Income Opportunities
Sub-Account Sub-Account
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $30,248,306 $(839,619) $(19,033) $(569,345)
- -----------------------------------------------------------------------------------------------------------------------
Capital gains income 5,776,463 -- 3,952,074 --
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss)
on security transactions (1,068,781) 325,406 226,178 69,499
- -----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments
during the period (68,167,310) 11,216,654 3,897,830 6,461,818
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations (33,211,322) 10,702,441 8,057,049 5,961,972
- -----------------------------------------------------------------------------------------------------------------------
UNIT TRANSACTIONS:
Purchases 51,499,798 21,335,522 18,854,378 4,709,200
- -----------------------------------------------------------------------------------------------------------------------
Net transfers 12,289,356 33,636,206 15,236,673 6,135,412
- -----------------------------------------------------------------------------------------------------------------------
Surrenders (39,936,318) (4,476,094) (6,213,054) (2,667,147)
- -----------------------------------------------------------------------------------------------------------------------
Net annuity transactions 36,497 3,222 6,980 3,206
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from unit transactions 23,889,333 50,498,856 27,884,977 8,180,671
- -----------------------------------------------------------------------------------------------------------------------
Total increase (decrease)
in net assets (9,321,989) 61,201,297 35,942,026 14,142,643
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 453,468,600 54,848,284 86,266,343 39,665,081
- -----------------------------------------------------------------------------------------------------------------------
END OF PERIOD $444,146,611 $116,049,581 $122,208,369 $53,807,724
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
For the Year Ended Investors Money New
December 31, 1998 Sub-Account* Market Opportunities
Sub-Account Sub-Account
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $(273,311) $9,329,349 $(13,261,139)
- -----------------------------------------------------------------------------------------------------------------------
Capital gains income -- -- 13,104,760
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss)
on security transactions 26,606 -- (4,633,710)
- -----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments
during the period 13,225,708 -- 200,446,907
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations 12,979,003 9,329,349 195,656,818
- -----------------------------------------------------------------------------------------------------------------------
UNIT TRANSACTIONS:
Purchases 28,303,782 27,561,765 72,077,164
- -----------------------------------------------------------------------------------------------------------------------
Net transfers 66,945,761 157,861,043 23,187,515
- -----------------------------------------------------------------------------------------------------------------------
Surrenders (1,361,265) (97,002,613) (51,328,474)
- -----------------------------------------------------------------------------------------------------------------------
Net annuity transactions 7,828 (18,974) 173,750
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from unit transactions 93,896,106 88,401,221 44,109,955
- -----------------------------------------------------------------------------------------------------------------------
Total increase (decrease)
in net assets 106,875,109 97,730,570 239,766,773
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period -- 202,288,263 860,552,199
- -----------------------------------------------------------------------------------------------------------------------
END OF PERIOD $106,875,109 $300,018,833 $1,100,318,972
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-12 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT -- HARTFORD LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------
For the Year Ended New OTC & Research U.S.Government
December 31, 1998 Value Emerging Growth Sub-Account** and High
Sub-Account Sub-Account* Quality Bond
Sub-Account
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 496,818 $ (35,238) $ (907) $ 20,557,057
- -----------------------------------------------------------------------------------------------------------------------
Capital gains income 1,734,664 -- 444 739,634
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss)
on security transactions (166,487) (29,039) 2,141 297,895
- -----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments
during the period 2,140,264 1,094,473 503,979 14,444,406
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations 4,205,259 1,030,196 505,657 36,038,992
- -----------------------------------------------------------------------------------------------------------------------
UNIT TRANSACTIONS:
Purchases 15,989,831 2,889,609 505,479 33,368,472
- -----------------------------------------------------------------------------------------------------------------------
Net transfers 9,386,671 5,444,882 5,638,915 90,450,321
- -----------------------------------------------------------------------------------------------------------------------
Surrenders (5,428,168) (103,773) (89,266) (64,755,540)
- -----------------------------------------------------------------------------------------------------------------------
Net annuity transactions 21,783 -- -- (36,669)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from unit transactions 19,970,117 8,230,718 6,055,128 59,026,584
- -----------------------------------------------------------------------------------------------------------------------
Total increase (decrease)
in net assets 24,175,376 9,260,914 6,560,785 95,065,576
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 75,030,381 -- -- 528,922,708
- -----------------------------------------------------------------------------------------------------------------------
END OF PERIOD $99,205,757 $9,260,914 $6,560,785 $623,988,284
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
For the Year Ended Utilities Vista Voyager
December 31, 1998 Growth Sub-Account Sub-Account
and Income
Sub-Account
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $6,874,349 $(1,312,949) $(26,816,253)
- -----------------------------------------------------------------------------------------------------------------------
Capital gains income 23,325,262 -- 134,435,124
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss)
on security transactions (255,617) (369,767) (11,140,387)
- -----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments
during the period 31,863,022 17,028,097 377,719,434
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations 61,807,016 15,345,381 474,197,918
- -----------------------------------------------------------------------------------------------------------------------
UNIT TRANSACTIONS:
Purchases 34,808,733 22,600,733 137,173,587
- -----------------------------------------------------------------------------------------------------------------------
Net transfers 28,255,011 21,059,612 20,389,207
- -----------------------------------------------------------------------------------------------------------------------
Surrenders (35,590,822) (4,630,951) (160,084,953)
- -----------------------------------------------------------------------------------------------------------------------
Net annuity transactions 28,596 (11,796) (103,887)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from unit transactions 27,501,518 39,017,598 (2,626,046)
- -----------------------------------------------------------------------------------------------------------------------
Total increase (decrease)
in net assets 89,308,534 54,362,979 471,571,872
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 447,702,696 68,906,712 2,144,004,733
- -----------------------------------------------------------------------------------------------------------------------
END OF PERIOD $537,011,230 $123,269,691 $2,615,576,605
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
**From inception, October 1, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-13 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT -- HARTFORD LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------
For the Year Ended Asia Pacific Diversified Global Asset Global
December 31, 1997 Growth Income Allocation Growth
Sub-Account Sub-Account Sub-Account Sub-Account
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $286,716 $10,935,700 $7,734,396 $5,584,154
- -----------------------------------------------------------------------------------------------------------------------
Capital gains income -- 2,352,102 24,114,921 16,781,057
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss)
on security transactions (317,227) (2,032) 382,203 1,854,347
- -----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments
during the period (7,411,215) 3,452,605 41,346,816 58,240,028
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations (7,441,726) 16,738,375 73,578,336 82,459,586
- -----------------------------------------------------------------------------------------------------------------------
UNIT TRANSACTIONS:
Purchases 6,824,313 54,269,125 39,248,244 60,530,559
- -----------------------------------------------------------------------------------------------------------------------
Net transfers (7,793,253) 6,390,705 2,130,067 (14,835,954)
- -----------------------------------------------------------------------------------------------------------------------
Surrenders (2,299,932) (17,669,198) (30,639,160) (43,839,765)
- -----------------------------------------------------------------------------------------------------------------------
Net annuity transactions 6,521 103,403 2,282 109,879
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from unit transactions (3,262,351) 43,094,035 10,741,433 1,964,719
- -----------------------------------------------------------------------------------------------------------------------
Total increase (decrease)
in net assets (10,704,077) 59,832,410 84,319,769 84,424,305
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 48,411,228 254,285,806 402,536,491 637,760,679
- -----------------------------------------------------------------------------------------------------------------------
END OF PERIOD $37,707,151 $314,118,216 $486,856,260 $722,184,984
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
For the Year Ended Growth High Yield International International
December 31, 1997 and Income Sub-Account Growth Growth
Sub-Account Sub-Account* and Income
Sub-Account*
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $16,099,755 $21,220,896 $431,084 $2,256,907
- -----------------------------------------------------------------------------------------------------------------------
Capital gains income 170,606,295 3,112,539 -- --
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss)
on security transactions (549,025) 667,197 225,798 52,035
- -----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments
during the period 566,542,304 22,952,048 1,259,962 2,257,219
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations 752,699,329 47,952,680 1,916,844 4,566,161
- -----------------------------------------------------------------------------------------------------------------------
UNIT TRANSACTIONS:
Purchases 539,289,509 71,464,742 27,282,314 42,203,655
- -----------------------------------------------------------------------------------------------------------------------
Net transfers 132,038,932 (2,036,158) 27,001,396 41,543,461
- -----------------------------------------------------------------------------------------------------------------------
Surrenders (244,974,411) (38,465,815) (1,358,447) (2,094,535)
- -----------------------------------------------------------------------------------------------------------------------
Net annuity transactions 635,758 313,873 6,177 47,601
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from unit transactions 426,989,788 31,276,642 52,931,440 81,700,182
- -----------------------------------------------------------------------------------------------------------------------
Total increase (decrease)
in net assets 1,179,689,117 79,229,322 54,848,284 86,266,343
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 3,157,226,740 374,239,278 -- --
- -----------------------------------------------------------------------------------------------------------------------
END OF PERIOD $4,336,915,857 $453,468,600 $54,848,284 $86,266,343
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
*From inception, January 2, 1997 to December 31, 1997.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-14 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT -- HARTFORD LIFE INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
- -----------------------------------------------------------------------------------------------------------------------
For the Year Ended International Money New New
December 31, 1997 New Market Opportunities Value
Opportunities Sub-Account Sub-Account Sub-Account*
Sub-Account*
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $(270,796) $8,471,138 $(10,320,489) $(571,860)
- -----------------------------------------------------------------------------------------------------------------------
Capital gains income -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss)
on security transactions 8,774 -- (2,114,704) (22,915)
- -----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments
during the period (2,182,759) -- 155,175,963 4,884,420
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations (2,444,781) 8,471,138 142,740,770 4,289,645
- -----------------------------------------------------------------------------------------------------------------------
UNIT TRANSACTIONS:
Purchases 23,052,814 77,901,178 115,804,514 34,449,270
- -----------------------------------------------------------------------------------------------------------------------
Net transfers 20,167,867 (22,892,448) 4,241,130 38,150,975
- -----------------------------------------------------------------------------------------------------------------------
Surrenders (1,113,600) (61,475,251) (39,637,945) (1,885,996)
- -----------------------------------------------------------------------------------------------------------------------
Net annuity transactions 2,781 118,204 224,473 26,487
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from unit transactions 42,109,862 (6,348,317) 80,632,172 70,740,736
- -----------------------------------------------------------------------------------------------------------------------
Total increase (decrease)
in net assets 39,665,081 2,122,821 223,372,942 75,030,381
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period -- 200,165,442 637,179,257 --
- -----------------------------------------------------------------------------------------------------------------------
END OF PERIOD $39,665,081 $202,288,263 $860,552,199 $75,030,381
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
For the Year Ended U.S.Government Utilities Vista Voyager
December 31, 1997 and High Growth Sub-Account* Sub-Account
Quality Bond and Income
Sub-Account Sub-Account
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $26,900,731 $8,298,407 $(518,559) $(22,763,932)
- -----------------------------------------------------------------------------------------------------------------------
Capital gains income -- 18,719,685 -- 76,888,318
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss)
on security transactions 1,827,985 1,649,879 (123,252) (585,530)
- -----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation
(depreciation) of investments
during the period 7,319,022 62,148,682 7,829,883 359,796,040
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations 36,047,738 90,816,653 7,188,072 413,334,896
- -----------------------------------------------------------------------------------------------------------------------
UNIT TRANSACTIONS:
Purchases 31,430,418 28,593,076 32,854,577 197,024,558
- -----------------------------------------------------------------------------------------------------------------------
Net transfers (38,035,230) (17,843,601) 30,909,118 (13,299,198)
- -----------------------------------------------------------------------------------------------------------------------
Surrenders (48,896,007) (25,522,719) (2,131,040) (121,850,857)
- -----------------------------------------------------------------------------------------------------------------------
Net annuity transactions 34,145 72,442 85,985 6,165
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from unit transactions (55,466,674) (14,700,802) 61,718,640 61,880,668
- -----------------------------------------------------------------------------------------------------------------------
Total increase (decrease)
in net assets (19,418,936) 76,115,851 68,906,712 475,215,564
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 548,341,644 371,586,845 -- 1,668,789,169
- -----------------------------------------------------------------------------------------------------------------------
END OF PERIOD $528,922,708 $447,702,696 $68,906,712 $2,144,004,733
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
*From inception, January 2, 1997 to December 31, 1997.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-15 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT -- HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
1. ORGANIZATION:
Putnam Capital Manager Trust Separate Account (the Account) is a separate
investment account within Hartford Life Insurance Company (the Company) and is
registered with the Securities and Exchange Commission (SEC) as a unit
investment trust under the Investment Company Act of 1940, as amended. 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 the
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). Cost of investments sold is
determined on the basis of identified cost. Dividend and capital gains income is
accrued as of the ex-dividend date. Capital gains income represents dividends
from the Funds which are characterized as capital gains under tax regulations.
B) SECURITY VALUATION -- The investments in shares of the Funds are valued at
the closing net asset value per share as determined by the appropriate Fund as
of December 31, 1998.
C) SECURITY CLASS -- Putnam Variable Trust consists of a series of funds, each
of which is represented by a separate series of class IA shares and class IB
shares.
Class IA shares are offered at net asset value and are not subject to a
distribution fee. Class IA .40% are for Company employees only.
Class IB shares are offered at net asset value and pay an ongoing
distribution fee.
D) FEDERAL INCOME TAXES -- The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no
federal income taxes are payable with respect to the operations of the
Account.
E) USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported
amounts of income and expenses during the period. Operating results in the
future could vary from the amounts derived from management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
A) MORTALITY AND EXPENSE UNDERTAKINGS -- The Company, as issuer of variable
annuity contracts, provides the mortality and expense undertakings and, with
respect to the Account, receives a maximum annual fee of 1.50% of the
Account's average daily net assets.
B) DEDUCTION OF OTHER FEES -- Annual maintenance fees are deducted
through termination of units of interest from applicable contract owners'
accounts, in accordance with the terms of the contracts. These expenses are
reflected in surrenders on the accompanying statements of changes in net
assets.
SA-16 PROSPECTUS
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-1
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hartford Life Insurance Company:
We have audited the accompanying Consolidated Balance Sheets of Hartford Life
Insurance Company and subsidiaries as of December 31, 1998 and 1997, and the
related Consolidated Statements of Income, Changes in Stockholder's Equity and
Cash Flows for each of the three years in the period ended December 31, 1998.
These Consolidated Financial Statements and the schedules referred to below are
the responsibility of Hartford Life Insurance Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the Consolidated Financial Statements referred to above present
fairly, in all material respects, the financial position of Hartford Life
Insurance Company and subsidiaries as of December 31, 1998 and 1997, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1998 in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the Index to
Consolidated Financial Statements and Schedules are presented for the purpose of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 26, 1999
<PAGE>
F-2 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
------------------------
1998 1997 1996
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Premiums and other considerations............... $2,218 $1,637 $1,705
Net investment income........................... 1,759 1,368 1,397
Net realized capital (losses) gains............. (2) 4 (213)
------ ------ ------
Total revenues................................ 3,975 3,009 2,889
------ ------ ------
Benefits, claims and expenses
Benefits, claims and claim adjustment
expenses....................................... 1,911 1,379 1,535
Amortization of deferred policy acquisition
costs.......................................... 431 335 234
Dividends to policyholders...................... 329 240 635
Other expenses.................................. 766 586 427
------ ------ ------
Total benefits, claims and expenses........... 3,437 2,540 2,831
------ ------ ------
Income before income tax expense................ 538 469 58
Income tax expense.............................. 188 167 20
------ ------ ------
Net income........................................ $ 350 $ 302 $ 38
------ ------ ------
------ ------ ------
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-3
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER
31,
-----------------
1998 1997
------- -------
<S> <C> <C>
(IN MILLIONS,
EXCEPT FOR SHARE
DATA)
Assets
Investments
Fixed maturities, available for sale, at fair
value (amortized cost of $14,505 and
$13,885)....................................... $14,818 $14,176
Equity securities, at fair value................ 31 180
Policy loans, at outstanding balance............ 6,684 3,756
Other investments, at cost...................... 264 47
------- -------
Total investments............................. 21,797 18,159
Cash............................................ 17 54
Premiums receivable and agents' balances........ 17 18
Reinsurance recoverables........................ 1,257 6,114
Deferred policy acquisition costs............... 3,754 3,315
Deferred income tax............................. 464 348
Other assets.................................... 695 682
Separate account assets......................... 90,262 69,055
------- -------
Total assets.................................. $118,263 $97,745
------- -------
------- -------
Liabilities
Future policy benefits.......................... $ 3,595 $ 3,059
Other policyholder funds........................ 19,615 21,034
Other liabilities............................... 2,094 2,254
Separate account liabilities.................... 90,262 69,055
------- -------
Total liabilities............................. 115,566 95,402
------- -------
Stockholder's Equity
Common stock -- 1,000 shares authorized, issued
and outstanding, par value $5,690.............. 6 6
Capital surplus................................. 1,045 1,045
Accumulated other comprehensive income
Net unrealized capital gains on securities,
net of tax................................... 184 179
------- -------
Total accumulated other comprehensive
income....................................... 184 179
------- -------
Retained earnings............................... 1,462 1,113
------- -------
Total stockholder's equity.................... 2,697 2,343
------- -------
Total liabilities and stockholder's equity...... $118,263 $97,745
------- -------
------- -------
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
F-4 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMPREHENSIVE
INCOME
---------------
NET UNREALIZED
CAPITAL GAINS
(LOSSES) ON TOTAL
COMMON CAPITAL SECURITIES, RETAINED STOCKHOLDER'S
STOCK SURPLUS NET OF TAX EARNINGS EQUITY
------ -------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
(IN MILLIONS)
1998
Balance, December 31, 1997.............. $6 $ 1,045 $179 $1,113 $2,343
Comprehensive income
Net income............................ -- -- -- 350 350
------
Other comprehensive income, net of tax
(1):
Changes in net unrealized capital
gains on securities (2).............. -- -- 5 -- 5
------
Total other comprehensive income........ 5
------
Total comprehensive income 355
------
Dividends............................... -- -- -- (1) (1)
--
------ ----- ----------- ------
Balance, December 31, 1998.......... $6 $ 1,045 $184 $1,462 $2,697
--
------ ----- ----------- ------
1997
Balance, December 31, 1996.............. $6 $ 1,045 $ 30 $ 811 $1,892
Comprehensive income
Net income............................ -- -- -- 302 302
------
Other comprehensive income, net of tax
(1):
Changes in net unrealized capital
gains on securities (2).............. -- -- 149 -- 149
------
Total other comprehensive income........ 149
------
Total comprehensive income 451
--
------ ----- ----------- ------
Balance, December 31, 1997.......... $6 $ 1,045 $179 $1,113 $2,343
--
------ ----- ----------- ------
1996
Balance, December 31, 1995.............. $6 $ 1,007 $(57) $ 773 $1,729
Comprehensive income
Net income............................ -- -- -- 38 38
------
Other comprehensive income, net of tax
(1):
Changes in net unrealized capital
gains on securities (2).............. -- -- 87 -- 87
------
Total other comprehensive income........ 87
------
Total comprehensive income............ 125
------
Capital contribution.................... -- 38 -- -- 38
--
------ ----- ----------- ------
Balance, December 31, 1996.......... $6 $ 1,045 $ 30 $ 811 $1,892
--
--
------ ----- ----------- ------
------ ----- ----------- ------
</TABLE>
- ---------
(1) Net unrealized capital gain on securities is reflected net of tax of $3,
$80 and $47, as of December 31, 1998, 1997 and 1996, respectively.
(2) There was no reclassification adjustment for after-tax gains (losses)
realized in net income for the years ended December 31, 1998 and 1997. December
31, 1996 is net of a $142 reclassification adjustment for after-tax losses
realized in net income.
See Notes to Consolidated Financial Statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-5
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
------------------------------
1998 1997 1996
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Operating Activities
Net income............................ $ 350 $ 302 $ 38
Adjustments to reconcile net income to
net cash provided by operating
activities
Depreciation and amortization......... (23) 8 14
Net realized capital losses (gains)... 2 (4) 213
Decrease in premiums receivable and
agents' balances..................... 1 119 10
(Decrease) increase in other
liabilities.......................... (79) 223 577
Change in receivables, payables, and
accruals............................. 83 107 (22)
Increase (decrease) in accrued
taxes................................ 60 126 (91)
(Increase) decrease in deferred income
taxes................................ (118) 40 (102)
Increase in deferred policy
acquisition costs.................... (439) (555) (572)
Increase in future policy benefits.... 536 585 101
(Increase) decrease in reinsurance
recoverables and other related
assets............................... (2) 21 (146)
-------- -------- --------
Net cash provided by operating
activities......................... 371 972 20
-------- -------- --------
Investing Activities
Purchases of investments.............. (6,061) (6,869) (5,854)
Sales of investments.................. 4,901 4,256 3,543
Maturity of investments............... 1,761 2,329 2,693
-------- -------- --------
Net cash provided by (used for)
investing activities............... 601 (284) 382
-------- -------- --------
Financing Activities
Capital contribution.................. -- -- 38
Net disbursements for investment and
universal life-type contracts charged
against policyholder accounts........ (1,009) (677) (443)
-------- -------- --------
Net cash used for financing
activities......................... (1,009) (677) (405)
-------- -------- --------
Net (decrease) increase in cash....... (37) 11 (3)
Cash -- beginning of year............. 54 43 46
-------- -------- --------
Cash -- end of year................... $ 17 $ 54 $ 43
-------- -------- --------
-------- -------- --------
Supplemental Disclosure of Cash Flow
Information:
Net Cash Paid During the Year for:
Income taxes.......................... $ 263 $ 9 $ 189
Noncash Investing Activities:
Due to the recapture of an in force block of business previously ceded
to MBL Life Assurance Co. of New Jersey, reinsurance recoverables of
$4,546 were exchanged for the fair value of assets comprised of
$4,354 in policy loans and $192 in other assets.
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
F-6 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA UNLESS OTHERWISE STATED)
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
These Consolidated Financial Statements include Hartford Life Insurance
Company and its wholly-owned subsidiaries ("Hartford Life Insurance Company" or
the "Company"), Hartford Life and Annuity Insurance Company (ILA) and Hartford
International Life Reassurance Corporation (HLRe), formerly American Skandia
Life Reinsurance Corporation. The Company is a wholly-owned subsidiary of
Hartford Life and Accident Insurance Company (HLA), a wholly-owned subsidiary of
Hartford Life, Inc. (Hartford Life). Hartford Life is a direct subsidiary of
Hartford Accident and Indemnity Company (HA&I), an indirect subsidiary of The
Hartford Financial Services Group, Inc. (The Hartford). Pursuant to an initial
public offering (the "IPO") on May 22, 1997, Hartford Life sold 26 million
shares of Class A Common Stock at $28.25 per share and received proceeds, net of
offering expenses, of $687. Of the proceeds, $527 was used to retire debt
related to Hartford Life's outstanding promissory notes and line of credit with
the remaining $160 contributed by Hartford Life to HLA to support growth in its
core businesses. Hartford Life became a publicly traded company upon the sale of
26 million shares representing approximately 18.6% of the equity ownership in
Hartford Life. On December 19, 1995, ITT Industries, Inc. (formerly ITT
Corporation) (ITT) distributed all the outstanding shares of capital stock of
The Hartford to ITT stockholders of record on such date. As a result, The
Hartford became an independent, publicly traded company.
Along with its parent, HLA, the Company is a leading financial services and
insurance company which provides (a) investment products such as individual
variable annuities and fixed market value adjusted annuities, deferred
compensation and retirement plan services and mutual funds for savings and
retirement needs; (b) life insurance for income protection and estate planning;
and (c) employee benefits products such as group life and disability insurance
that is directly written by the Company and is substantially ceded to its
parent, HLA, and (d) corporate owned life insurance.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION
These Consolidated Financial Statements present the financial position,
results of operations and cash flows of the Company. All material intercompany
transactions and balances between the Company, its subsidiaries and affiliates
have been eliminated. The Consolidated Financial Statements are prepared on the
basis of generally accepted accounting principles which differ materially from
the statutory accounting practices prescribed by various insurance regulatory
authorities.
The preparation of financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The most
significant estimates include those used in determining deferred policy
acquisition costs and the liability for future policy benefits and other
policyholder funds. Although some variability is inherent in these estimates,
management believes the amounts provided are adequate.
Certain reclassifications have been made to prior year financial information
to conform to the current year presentation.
(B) CHANGES IN ACCOUNTING PRINCIPLES
In November 1998, the Emerging Issues Task Force (EITF) reached consensus on
Issue No. 98-15, "Structured Notes Acquired for a Specific Investment Strategy".
This EITF issue requires companies to account for structured notes acquired for
a specific investment strategy, as a unit. Affected companies that entered into
these notes prior to September 25, 1998 are required to either restate prior
period financial statements to conform with the prescribed unit accounting model
or disclose the related impact on earnings for all periods presented and
cumulatively over the life of the instruments had the registrant accounted for
the structure as a unit. Based upon recently prescribed current generally
accepted accounting principles for such types of transactions entered into after
September 24, 1998, there was no additional earnings impact to the Company
related to combined structured note transactions. As of December 31, 1998, the
Company does not hold any combined structured notes.
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities". The new standard establishes
accounting and reporting guidance for derivative instruments, including certain
derivative instruments embedded in other contracts. The standard requires, among
other things, that all derivatives be carried on the balance sheet at fair
value. The standard also specifies hedge accounting criteria under which a
derivative can qualify for special accounting. In order to receive special
accounting, the derivative instrument must qualify as either
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-7
- --------------------------------------------------------------------------------
a hedge of the fair value or the variability of the cash flow of a qualified
asset or liability. Special accounting for qualifying hedges provides for
matching the timing of gain or loss recognition on the hedging instrument with
the recognition of the corresponding changes in value of the hedged item. SFAS
No. 133 will be effective for fiscal years beginning after June 15, 1999.
Initial application for Hartford Life Insurance Company will begin for the first
quarter of the year 2000. While Hartford Life Insurance Company is currently in
the process of quantifying the impact of SFAS No. 133, the Company is reviewing
its derivative holdings in order to take actions needed to minimize potential
volatility, while at the same time maintaining the economic protection needed to
support the goals of its business.
In March 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position (SOP) No. 98-1, "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use". The SOP provides
guidance on accounting for the costs of internal use software and in determining
whether the software is for internal use. The SOP defines internal use software
as software that is acquired, internally developed, or modified solely to meet
internal needs and identifies stages of software development and accounting for
the related costs incurred during the stages. This statement is effective for
fiscal years beginning after December 15, 1998 and is not expected to have a
material impact on the Company's financial condition or results of operations.
Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income", which establishes standards for reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. The objective of this statement is to report a measure of
all changes in equity of an enterprise that result from transactions and other
economic events of the period other than transactions with owners. Comprehensive
income is the total of net income and all other nonowner changes in equity.
Accordingly, the Company has reported comprehensive income in the Consolidated
Statements of Changes in Stockholder's Equity.
In December 1997, the AICPA issued SOP No. 97-3 "Accounting by Insurance and
Other Enterprises for Insurance Related Assessments". This SOP provides guidance
on accounting by insurance and other enterprises for assessments related to
insurance activities. Specifically, the SOP provides guidance on when a guaranty
fund or other assessment should be recognized, how to measure the liability, and
what information should be disclosed. This SOP will be effective for fiscal
years beginning after December 15, 1998. Adoption of SOP 97-3 is not expected to
have a material impact on the Company's financial condition or results of
operations.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information". The new standard requires public
business enterprises to disclose certain financial and descriptive information
about reportable operating segments in annual financial statements and in
condensed financial statements of interim periods. Operating segments are
components of an enterprise about which separate financial information is
available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and assessing performance. SFAS No. 131 also
establishes standards for related disclosures about products and services,
geographic areas and major customers. The Company adopted SFAS No. 131 in 1998.
For additional information, see Note 13.
On November 14, 1996, the EITF reached a consensus on Issue No. 96-12,
"Recognition of Interest Income and Balance Sheet Classification of Structured
Notes". This EITF issue requires companies to record income on certain
structured securities on a retrospective interest method. The Company adopted
EITF No. 96-12 for structured securities acquired after November 14, 1996.
Adoption of EITF No. 96-12 did not have a material effect on the Company's
financial condition or results of operations.
In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities" which is
effective for transfers and servicing of financial assets and extinguishments of
liabilities occurring after December 31, 1996. This statement established
criteria for determining whether transferred assets should be accounted for as
sales or secured borrowings. Adoption of SFAS No. 125 did not have a material
effect on the Company's financial condition or results of operations.
Effective January 1, 1996, Hartford Life Insurance Company adopted SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of ". This statement establishes accounting standards for
the impairment of long-lived assets, certain identifiable intangibles and
goodwill related to those assets to be held and used and for long-lived assets
and certain identifiable intangibles to be disposed. Adoption of SFAS No. 121
did not have a material effect on the Company's financial condition or results
of operations.
The Company's cash flows were not impacted by these changes in accounting
principles.
(C) REVENUE RECOGNITION
Revenues for investment products and universal life-type policies consist of
policy charges for policy administration, cost of insurance and surrender
charges assessed to policy account balances and are recognized in the period in
which services are provided. Premiums for traditional life insurance policies
are recognized as revenues when they are due from policyholders.
<PAGE>
F-8 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
(D) FUTURE POLICY BENEFITS AND OTHER POLICYHOLDER FUNDS
Liabilities for future policy benefits are computed by the net level premium
method using interest rate assumptions varying from 3% to 11% and withdrawal and
mortality assumptions appropriate at the time the policies were issued.
Liabilities for universal life-type and investment contracts are stated at
policyholder account values before surrender charges.
(E) INVESTMENTS
Hartford Life Insurance Company's investments in fixed maturities include
bonds and commercial paper which are considered "available for sale" and
accordingly are carried at fair value with the after-tax difference from cost
reflected as a component of stockholder's equity designated "net unrealized
capital gains on securities, net of tax". Equity securities, which include
common and non-redeemable preferred stocks, are carried at fair values with the
after-tax difference from cost reflected in stockholder's equity. Policy loans
are carried at outstanding balance which approximates fair value. Realized
capital gains and losses on security transactions associated with the Company's
immediate participation guaranteed contracts are excluded from revenues and
deferred over the expected maturity of the securities, since under the terms of
the contracts the realized gains and losses will be credited to policyholders in
future years as they are entitled to receive them. Net realized capital gains
and losses, excluding those related to immediate participation guaranteed
contracts, are reported as a component of revenue and are determined on a
specific identification basis.
The Company's accounting policy for impairment requires recognition of an
other than temporary impairment charge on a security if it is determined that
the Company is unable to recover all amounts due under the contractual
obligations of the security. In addition, for securities expected to be sold, an
other than temporary impairment charge is recognized if the Company does not
expect the fair value of a security to recover to cost or amortized cost prior
to the expected date of sale. Once an impairment charge has been recorded, the
Company then continues to review the other than temporarily impaired securities
for additional impairment, if necessary.
(F) DERIVATIVE INSTRUMENTS
Hartford Life Insurance Company uses a variety of derivative instruments
including swaps, caps, floors, forwards and exchange traded financial futures
and options as part of an overall risk management strategy. These instruments
are used as a means of hedging exposure to price, foreign currency and/or
interest rate risk on planned investment purchases or existing assets and
liabilities. The Company does not hold or issue derivative instruments for
trading purposes. Hartford Life Insurance Company's accounting for derivative
instruments used to manage risk is in accordance with the concepts established
in SFAS No. 80, "Accounting for Futures Contracts", SFAS No. 52, "Foreign
Currency Translation", AICPA SOP 86-2, "Accounting for Options" and various EITF
pronouncements. Written options are used, in all cases in conjunction with other
assets and derivatives, as part of the Company's asset and liability management
strategy. Derivative instruments are carried at values consistent with the asset
or liability being hedged. Derivative instruments used to hedge fixed maturities
or equity securities are carried at fair value with the after-tax difference
from cost reflected in Stockholder's Equity. Derivative instruments used to
hedge other invested assets or liabilities are carried at cost. For a discussion
of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities"
issued in June 1998, see (b) Changes in Accounting Principles.
Derivative instruments must be designated at inception as a hedge and
measured for effectiveness both at inception and on an ongoing basis. Hartford
Life Insurance Company's correlation threshold for hedge designation is 80% to
120%. If correlation, which is assessed monthly and measured based on a rolling
three month average, falls outside the 80% to 120% range, hedge accounting will
be terminated. Derivative instruments used to create a synthetic asset must meet
synthetic accounting criteria including designation at inception and consistency
of terms between the synthetic and the instrument being replicated. Consistent
with industry practice, synthetic instruments are accounted for like the
financial instrument it is intended to replicate. Derivative instruments which
fail to meet risk management criteria, subsequent to acquisition, are marked to
market with the impact reflected in the Consolidated Statements of Income.
Gains or losses on financial futures contracts entered into in anticipation
of the investment of future receipt of product cash flows are deferred and, at
the time of the ultimate investment purchase, reflected as an adjustment to the
cost basis of the purchased asset. Gains or losses on futures used in invested
asset risk management are deferred and adjusted into the cost basis of the
hedged asset when the contract futures are closed, except for futures used in
duration hedging which are deferred and basis adjusted on a quarterly basis. The
basis adjustments are amortized into net investment income over the remaining
asset life.
Open forward commitment contracts are marked to market through stockholder's
equity. Such contracts are accounted for at settlement by recording the purchase
of the specified securities at the previously committed price. Gains or losses
resulting from the termination of forward commitment contracts before the
delivery of the securities are recognized immediately in the Consolidated
Statements of Income as a component of net investment income.
The cost of options entered into as part of a risk management strategy are
basis adjusted to the underlying asset or liability and amortized over the
remaining life of the
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-9
- --------------------------------------------------------------------------------
option. Gains or losses on expiration or termination are adjusted into the basis
of the underlying asset or liability and amortized over the remaining asset
life.
Interest rate swaps involve the periodic exchange of payments without the
exchange of underlying principal or notional amounts. Net receipts or payments
are accrued and recognized over the life of the swap agreement as an adjustment
to investment income. Should the swap be terminated, the gain or loss is
adjusted into the basis of the asset or liability and amortized over the
remaining life. Should the hedged asset be sold or liability terminated without
terminating the swap position, any swap gains or losses are immediately
recognized in net investment income. Interest rate swaps purchased in
anticipation of an asset purchase (anticipatory transaction) are recognized
consistent with the underlying asset components such that the settlement
component is recognized in the Consolidated Statements of Income while the
change in market value is recognized as an unrealized capital gain or loss.
Premiums paid on purchased floor or cap agreements and the premium received
on issued cap or floor agreements (used for risk management) are adjusted into
the basis of the applicable asset and amortized over the asset life. Gains or
losses on termination of such positions are adjusted into the basis of the asset
or liability and amortized over the remaining asset life. Net payments are
recognized as an adjustment to income or basis adjusted and amortized depending
on the specific hedge strategy.
Forward exchange contracts and foreign currency swaps are accounted for in
accordance with SFAS No. 52. Changes in the spot rate of instruments designated
as hedges of the net investment in a foreign subsidiary are reflected in the
cumulative translation adjustments component of stockholder's equity. Cash flows
from futures, options, and swaps, accounted for as hedges, are included with the
cash flows of the item being hedged.
(G) SEPARATE ACCOUNTS
Hartford Life Insurance Company maintains separate account assets and
liabilities which are reported at fair value. Separate account assets are
segregated from other investments. Separate accounts reflect two categories of
risk assumption: non-guaranteed separate accounts, wherein the policyholder
assumes the investment risk and rewards, and guaranteed separate account assets,
wherein the Company contractually guarantees either a minimum return or account
value to the policyholder.
(H) DEFERRED POLICY ACQUISITION COSTS
Policy acquisition costs, which include commissions and certain underwriting
expenses associated with acquiring business, are deferred and amortized over the
estimated lives of the contracts, usually 20 years. Generally, acquisition costs
are deferred and amortized using the retrospective deposit method. Under the
retrospective deposit method, acquisition costs are amortized in proportion to
the present value of expected gross profits from surrender charges, investment
charges, mortality and expense margins. Actual gross profits can vary from
management's estimates resulting in increases or decreases in the rate of
amortization. Management periodically updates these estimates, when appropriate,
and evaluates the recoverability of the deferred acquisition cost asset. When
appropriate, management revises its assumptions on the estimated gross profits
of these contracts and the cumulative amortization for the books of business are
re-estimated and adjusted by a cumulative charge or credit to income.
Acquisition costs and their related deferral are included in the Company's
other expenses as follows:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Commissions.......................... $ 1,069 $ 976 $ 848
Deferred acquisition costs........... (891) (862) (823)
Other................................ 588 472 402
--------- --------- ---------
Total other expenses............. $ 766 $ 586 $ 427
--------- --------- ---------
--------- --------- ---------
</TABLE>
(I) DIVIDENDS TO POLICYHOLDERS
Certain life insurance policies contain dividend payment provisions that
enable the policyholder to participate in the earnings on that participating
block of business. The participating insurance in force accounted for 71%, 55%
and 44% in 1998, 1997 and 1996, respectively, of total insurance in force.
3. INVESTMENTS AND DERIVATIVE INSTRUMENTS
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Interest income from fixed
maturities......................... $ 952 $ 932 $ 918
Interest income from policy loans... 789 425 477
Income from other investments....... 32 26 15
--------- --------- ---------
Gross investment income............. 1,773 1,383 1,410
Less: Investment expenses........... 14 15 13
--------- --------- ---------
Net investment income............... $ 1,759 $ 1,368 $ 1,397
--------- --------- ---------
--------- --------- ---------
</TABLE>
(B) COMPONENTS OF NET REALIZED CAPITAL (LOSSES) GAINS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1998 1997 1996
--------- ----- ---------
<S> <C> <C> <C>
Fixed maturities......................... $ (28) $ (7) $ (201)
Equity securities........................ 21 12 2
Real estate and other.................... 5 (1) (4)
Less: Decrease in liability to
policyholders for realized capital
gains................................... -- -- (10)
--------- --- ---------
Net realized capital (losses) gains...... $ (2) $ 4 $ (213)
--------- --- ---------
--------- --- ---------
</TABLE>
<PAGE>
F-10 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
(C) NET UNREALIZED CAPITAL (LOSSES) GAINS ON EQUITY SECURITIES
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Gross unrealized capital gains.............. $ 2 $ 14 $ 13
Gross unrealized capital losses............. (1) -- (1)
--- --- ---
Net unrealized capital gains................ 1 14 12
Deferred income tax expense................. -- 5 4
--- --- ---
Net unrealized capital gains, net of tax.... 1 9 8
Balance -- beginning of year................ 9 8 1
--- --- ---
Net change in unrealized capital gains on
equity securities.......................... $ (8) $ 1 $ 7
--- --- ---
--- --- ---
</TABLE>
(D) NET UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED MATURITIES
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Gross unrealized capital gains.......... $ 421 $ 371 $ 386
Gross unrealized capital losses......... (108) (80) (341)
Unrealized capital gains credited to
policyholders.......................... (32) (30) (11)
--------- --------- ---------
Net unrealized capital gains............ 281 261 34
Deferred income tax expense............. 98 91 12
--------- --------- ---------
Net unrealized capital gains, net of
tax.................................... 183 170 22
Balance -- beginning of year............ 170 22 (58)
--------- --------- ---------
Net change in unrealized capital gains
(losses) on fixed maturities........... $ 13 $ 148 $ 80
--------- --------- ---------
--------- --------- ---------
</TABLE>
(E) FIXED MATURITY INVESTMENTS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1998
---------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
U. S. Government and Government agencies and authorities
(guaranteed and sponsored)...................................... $ 121 $ 2 $ -- $ 123
U. S. Government and Government agencies and authorities
(guaranteed and sponsored) -- asset backed...................... 1,001 23 (8) 1,016
States, municipalities and political subdivisions................ 165 8 -- 173
International governments........................................ 393 26 (7) 412
Public utilities................................................. 844 33 (3) 874
All other corporate including international...................... 5,469 260 (42) 5,687
All other corporate -- asset backed.............................. 4,155 58 (42) 4,171
Short-term investments........................................... 1,847 -- -- 1,847
Certificates of deposit.......................................... 510 11 (6) 515
---------- ----- ----------- ----------
Total fixed maturities....................................... $14,505 $421 $(108) $14,818
---------- ----- ----------- ----------
---------- ----- ----------- ----------
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
---------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
U. S. Government and Government agencies and authorities
(guaranteed and sponsored)...................................... $ 217 $ 3 $ (1) $ 219
U. S. Government and Government agencies and authorities
(guaranteed and sponsored) -- asset backed...................... 1,175 64 (35) 1,204
States, municipalities and political subdivisions................ 211 7 (1) 217
International governments........................................ 376 20 (3) 393
Public utilities................................................. 871 26 (3) 894
All other corporate including international...................... 5,033 200 (25) 5,208
All other corporate -- asset backed.............................. 4,091 41 (8) 4,124
Short-term investments........................................... 1,318 -- -- 1,318
Certificates of deposit.......................................... 593 10 (4) 599
---------- ----- ----- ----------
Total fixed maturities....................................... $13,885 $371 $(80) $14,176
---------- ----- ----- ----------
---------- ----- ----- ----------
</TABLE>
The amortized cost and estimated fair value of fixed maturity investments as
of December 31, 1998 by estimated maturity year are shown below. Expected
maturities differ from contractual maturities due to call or prepayment
provisions. Asset backed securities, including mortgage backed securities and
collateralized mortgage obligations, are distributed to maturity year based on
the Company's estimates of the rate of future prepayments of principal over the
remaining lives of the securities. These estimates are developed using
prepayment speeds provided in broker
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-11
- --------------------------------------------------------------------------------
consensus data. Such estimates are derived from prepayment speeds experienced at
the interest rate levels projected for the applicable underlying collateral and
can be expected to vary from actual experience.
MATURITY
<TABLE>
<CAPTION>
AMORTIZED
COST FAIR VALUE
----------- -----------
<S> <C> <C>
One year or less......................... $ 3,047 $ 3,116
Over one year through five years......... 4,796 4,843
Over five years through ten years........ 3,242 3,318
Over ten years........................... 3,420 3,541
----------- -----------
Total................................ $ 14,505 $ 14,818
----------- -----------
----------- -----------
</TABLE>
Sales of fixed maturities, excluding short-term fixed maturities, for the
years ended December 31, 1998, 1997 and 1996 resulted in proceeds of $3.2
billion, $4.2 billion and $3.5 billion, gross realized capital gains of $103,
$169 and $87, gross realized capital losses (including writedowns) of $131, $176
and $298, respectively. In 1996, gross realized capital losses includes an other
than temporary impairment of $137 related to the Company's block of guaranteed
investment contract business written prior to 1995 which could not recover to
amortized cost prior to sale. Sales of equity security investments for the years
ended December 31, 1998, 1997 and 1996 resulted in proceeds of $35, $132 and $74
and gross realized capital gains of $21, $12 and $2, respectively, and no gross
realized capital losses for all periods.
(F) CONCENTRATION OF CREDIT RISK
The Company is not exposed to any significant concentration of credit risk
in fixed maturities of a single issuer greater than 10% of stockholder's equity.
(G) DERIVATIVE INSTRUMENTS
Hartford Life Insurance Company utilizes a variety of derivative
instruments, including swaps, caps, floors, forwards and exchange traded futures
and options, in accordance with Company policy and in order to achieve one of
three Company approved objectives: to hedge risk arising from interest rate,
price or currency exchange rate volatility; to manage liquidity; or, to control
transactions costs. The Company utilizes derivative instruments to manage market
risk through four principal risk management strategies: hedging anticipated
transactions, hedging liability instruments, hedging invested assets and hedging
portfolios of assets and/or liabilities. The Company does not trade in these
instruments for the express purpose of earning trading profits.
Hartford Life Insurance Company maintains a derivatives counterparty
exposure policy which establishes market-based credit limits, favors long-term
financial stability and creditworthiness, and typically requires credit
enhancement/credit risk reducing agreements. Credit risk is measured as the
amount owed to the Company based on current market conditions and potential
payment obligations between the Company and its counterparties. Credit exposures
are quantified weekly and netted, and collateral is pledged to or held by the
Company to the extent the current value of derivatives exceed exposure policy
thresholds.
Hartford Life Insurance Company's derivative program is monitored by an
internal compliance unit and is reviewed by senior management and Hartford
Life's Finance Committee of the Board of Directors. Notional amounts, which
represent the basis upon which pay or receive amounts are calculated and are not
reflective of credit risk, pertaining to derivative financial instruments
(excluding the Company's guaranteed separate account derivative investments),
totaled $6.2 billion and $6.5 billion ($3.9 billion and $4.6 billion related to
the Company's investments, $2.3 billion and $1.9 billion on the Company's
liabilities) as of December 31, 1998 and 1997, respectively.
The tables below provide a summary of derivative instruments held by
Hartford Life Insurance Company as of December 31, 1998 and 1997, segregated by
major investment and liability category:
<PAGE>
F-12 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 -- AMOUNT HEDGED (NOTIONAL AMOUNTS)
----------------------------------------------------------------------------------
FOREIGN
TOTAL ISSUED PURCHASED INTEREST CURRENCY TOTAL
CARRYING CAPS & CAPS & FUTURES RATE SWAPS NOTIONAL
ASSETS HEDGED VALUE FLOORS FLOORS (2) SWAPS (3) AMOUNT
- ----------------------------------- -------- -------- ---------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Asset backed securities (excluding
inverse floaters and
anticipatory)..................... $ 5,163 $ -- $ 188 $ 3 $ 885 $-- $ 1,076
Inverse floaters (1)............... 24 44 55 -- -- -- 99
Anticipatory (4)................... -- -- -- -- 235 -- 235
Other bonds and notes.............. 7,683 461 597 18 1,300 90 2,466
Short-term investments............. 1,948 -- -- -- -- -- --
-------- -------- ---------- --- ---------- --- ----------
Total fixed maturities......... 14,818 505 840 21 2,420 90 3,876
Equity securities, policy loans and
other investments................. 6,979 -- -- -- -- -- --
-------- -------- ---------- --- ---------- --- ----------
Total investments.............. $ 21,797 505 840 21 2,420 90 3,876
Other policyholder funds....... $ 19,615 1,100 50 -- 1,195 -- 2,345
-------- -------- ---------- --- ---------- --- ----------
Total derivative instruments --
notional value................ $ 1,605 $ 890 $ 21 $ 3,615 $90 $ 6,221
-------- -------- ---------- --- ---------- --- ----------
Total derivative instruments --
fair value.................... $ (6) $ 19 $ -- $ 27 $(7) $ 33
-------- -------- ---------- --- ---------- --- ----------
-------- -------- ---------- --- ---------- --- ----------
</TABLE>
<TABLE>
<CAPTION>
1997 -- AMOUNT HEDGED (NOTIONAL AMOUNTS)
--------------------------------------------------------------------------
FOREIGN
TOTAL ISSUED PURCHASED INTEREST CURRENCY TOTAL
CARRYING CAPS & CAPS & RATE SWAPS NOTIONAL
ASSETS HEDGED VALUE FLOORS FLOORS FUTURES (2) SWAPS (3) AMOUNT
- ----------------------------------- -------- ------- ------------ ----------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Asset backed securities
(excluding inverse floaters and
anticipatory)..................... $ 5,253 $ 500 $ 1,404 $ 28 $ 221 $ -- $2,153
Inverse floaters (1)............... 75 47 80 -- 25 -- 152
Anticipatory (4)................... -- -- -- -- -- -- --
Other bonds and notes.............. 7,531 462 460 22 1,258 91 2,293
Short-term investments............. 1,317 -- -- -- -- -- --
-------- ------- ------------ --- --------- --- -------
Total fixed maturities......... 14,176 1,009 1,944 50 1,504 91 4,598
Equity securities, policy loans and
other investments................. 3,983 -- -- -- -- -- --
-------- ------- ------------ --- --------- --- -------
Total investments.............. $ 18,159 1,009 1,944 50 1,504 91 4,598
Other policyholder funds....... $ 21,034 10 150 -- 1,747 -- 1,907
-------- ------- ------------ --- --------- --- -------
Total derivative instruments --
notional value................ $ 1,019 $ 2,094 $ 50 $ 3,251 $ 91 $6,505
-------- ------- ------------ --- --------- --- -------
Total derivative instruments --
fair value.................... $ (8) $ 23 $ -- $ 19 $ (6 ) $ 28
-------- ------- ------------ --- --------- --- -------
-------- ------- ------------ --- --------- --- -------
</TABLE>
- ---------
(1) Inverse floaters are variations of collateralized mortgage obligations
(CMO's) for which the coupon rates move inversely with an index rate such as the
London Interbank Offered Rate (LIBOR). The risk to principal is considered
negligible as the underlying collateral for the securities is guaranteed or
sponsored by government agencies. To address the volatility risk created by the
coupon variability, the Company uses a variety of derivative instruments,
primarily interest rate swaps, caps and floors.
(2) As of December 31, 1998 and 1997, approximately 5% and 44% ,
respectively, of the notional futures contracts expire within one year.
(3) As of December 31, 1998 and 1997, approximately 11% and 16%,
respectively, of foreign currency swaps expire within one year.
(4) Deferred gains and losses on anticipatory transactions are included in
the carrying value of fixed maturities in the Consolidated Balance Sheets. At
the time of the ultimate purchase, they are reflected as a basis adjustment to
the purchased asset. As of December 31, 1998 and 1997, the Company had no
deferred gains for interest rate swaps. During 1998, $1.5 in deferred gains were
basis adjusted.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-13
- --------------------------------------------------------------------------------
The following is a reconciliation of notional amounts by derivative type and
strategy as of December 31, 1998 and 1997:
<TABLE>
<CAPTION>
DECEMBER 31, 1997 MATURITIES/ DECEMBER 31, 1998
NOTIONAL AMOUNT ADDITIONS TERMINATIONS (1) NOTIONAL AMOUNT
----------------- -------- ----------------- -----------------
<S> <C> <C> <C> <C>
BY DERIVATIVE TYPE
Caps......................................... $1,239 $1,000 $ 327 $1,912
Floors....................................... 1,864 -- 1,281 583
Swaps/Forwards............................... 3,342 1,838 1,475 3,705
Futures...................................... 50 8 37 21
Options...................................... 10 -- 10 --
------- -------- ------- -------
Total.................................... $6,505 $2,846 $3,130 $6,221
------- -------- ------- -------
BY STRATEGY
Liability.................................... $1,907 $1,099 $ 661 $2,345
Anticipatory................................. -- 242 7 235
Asset........................................ 1,805 1,260 667 2,398
Portfolio.................................... 2,793 245 1,795 1,243
------- -------- ------- -------
Total.................................... $6,505 $2,846 $3,130 $6,221
------- -------- ------- -------
------- -------- ------- -------
</TABLE>
- ---------
(1) During 1998, the Company had no significant gains or losses on
terminations of hedge positions using derivative financial instruments.
4. FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107 "Disclosure about Fair Value of Financial Instruments" requires
disclosure of fair value information of financial instruments. For certain
financial instruments where quoted market prices are not available, other
independent valuation techniques and assumptions are used. Because considerable
judgment is used, these estimates are not necessarily indicative of amounts that
could be realized in a current market exchange. SFAS No. 107 excludes certain
financial instruments from disclosure, including insurance contracts. Hartford
Life Insurance Company uses the following methods and assumptions in estimating
the fair value of each class of financial instrument.
Fair value for fixed maturities and marketable equity securities
approximates those quotations published by applicable stock exchanges or
received from other reliable sources.
For policy loans, carrying amounts approximate fair value.
Fair value for other invested assets primarily consist of partnerships and
trusts that are based on external market valuations from partnership and trust
management as well as mortgage loans where carrying amounts approximate fair
value.
Other policyholder funds fair value information is determined by estimating
future cash flows, discounted at the current market rate.
The fair value of derivative financial instruments, including swaps, caps,
floors, futures, options and forward commitments, is determined using a pricing
model which is validated through periodic comparison to dealer quoted prices.
The carrying amount and fair values of Hartford Life Insurance Company's
financial instruments as of December 31, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
------------------ ------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- ------- --------- -------
<S> <C> <C> <C> <C>
ASSETS
Fixed maturities..................................... $ 14,818 $14,818 $ 14,176 $14,176
Equity securities.................................... 31 31 180 180
Policy loans......................................... 6,684 6,684 3,756 3,756
Other investments.................................... 264 309 47 91
LIABILITIES
Other policyholder funds (1)......................... $ 11,709 $11,726 $ 11,769 $11,755
</TABLE>
- ---------
(1) Excludes corporate owned life insurance and universal life insurance
contracts.
<PAGE>
F-14 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
5. SEPARATE ACCOUNTS
Hartford Life Insurance Company maintained separate account assets and
liabilities totaling $90.3 billion and $69.1 billion as of December 31, 1998 and
1997, respectively, which are reported at fair value. Separate account assets,
which are segregated from other investments, reflect two categories of risk
assumption: non-guaranteed separate accounts totaling $80.6 billion and $58.6
billion as of December 31, 1998 and 1997, respectively, wherein the policyholder
assumes the investment risk, and guaranteed separate accounts totaling $9.7 and
$10.5 billion as of December 31, 1998 and 1997, respectively, wherein Hartford
Life Insurance Company contractually guarantees either a minimum return or
account value to the policyholder. Included in non-guaranteed separate account
assets were policy loans totaling $1.8 billion and $1.9 billion as of December
31, 1998 and 1997, respectively. Net investment income (including net realized
capital gains and losses) and interest credited to policyholders on separate
account assets are not reflected in the Consolidated Statements of Income.
Separate account management fees and other revenues were $908, $699 and $538
in 1998, 1997 and 1996, respectively. The guaranteed separate accounts include
fixed market value adjusted (MVA) individual annuity and modified guaranteed
life insurance. The average credited interest rate on these contracts was 6.6%
and 6.5% as of December 31, 1998 and 1997, respectively. The assets that support
these liabilities were comprised of $9.5 billion and $10.2 billion in fixed
maturities as of December 31, 1998 and 1997, respectively. The portfolios are
segregated from other investments and are managed to minimize liquidity and
interest rate risk. In order to minimize the risk of disintermediation
associated with early withdrawals, fixed MVA annuity and modified guaranteed
life insurance contracts carry a graded surrender charge as well as a market
value adjustment. Additional investment risk is hedged using a variety of
derivatives which totaled $40 and $119 in carrying value and $3.5 billion and
$3.0 billion in notional amounts as of December 31, 1998 and 1997, respectively.
6. STATUTORY RESULTS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Statutory net income................ $ 211 $ 214 $ 144
--------- --------- ---------
Statutory surplus................... $ 1,676 $ 1,441 $ 1,207
--------- --------- ---------
--------- --------- ---------
</TABLE>
A significant percentage of the consolidated statutory surplus is
permanently reinvested or is subject to various state regulatory restrictions
which limit the payment of dividends without prior approval. The total amount of
statutory dividends which may be paid by the insurance subsidiaries of the
Company in 1999 is estimated to be $168.
Hartford Life Insurance Company and its domestic insurance subsidiaries
prepare their statutory financial statements in accordance with accounting
practices prescribed by the State of Connecticut. Prescribed statutory
accounting practices include publications of the National Association of
Insurance Commissioners, as well as state laws, regulations, and general
administrative rules.
7. STOCK COMPENSATION PLANS
Hartford Life Insurance Company's employees are included in the 1997
Hartford Life, Inc. Incentive Stock Plan (the "Plan"), which was adopted during
the second quarter of 1997. Under the Plan, options granted may be either
non-qualified options or incentive stock options qualifying under Section 422A
of the Internal Revenue Code. The aggregate number of shares of Class A Common
Stock which may be awarded in any one year shall be subject to an annual limit.
The maximum number of shares of Class A Common Stock which may be granted under
the Plan in each year shall be 1.5% of the total issued and outstanding shares
of Hartford Life Class A Common Stock and treasury stock as reported in the
Annual Report on Hartford Life's Form 10-K for the preceding year plus unused
portions of such limit from prior years. In addition, no more than 5 million
shares of Class A Common Stock shall be cumulatively available for awards of
incentive stock options under the Plan, and no more than 20% of the total number
of shares on a cumulative basis shall be available for restricted stock and
performance shares.
All options granted have an exercise price equal to the market price of
Hartford Life's stock on the date of grant and an option's maximum term is ten
years. Certain nonperformance based options become exercisable upon the
attainment of specified market price appreciation of Hartford Life's common
shares or at seven years after the date of grant, while the remaining
nonperformance based options become exercisable over a three year period
commencing with the date of grant.
Also included in the Plan are long-term performance awards which become
payable upon the attainment of specific performance goals achieved over a three
year period.
During the second quarter of 1997, Hartford Life established the Hartford
Life, Inc. Employee Stock Purchase Plan (ESPP). Under this plan, eligible
employees of Hartford Life and the Company may purchase Class A Common Stock of
Hartford Life at a 15% discount from the lower of the market price at the
beginning or end of the quarterly offering period. Hartford Life may sell up to
2,700,000 shares of stock to eligible employees. Hartford Life sold 121,943 and
54,316 shares under the ESPP in 1998 and 1997, respectively. The weighted
average fair value of the discount under the ESPP was $13.80 per share in 1998
and $9.63 per share in 1997.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-15
- --------------------------------------------------------------------------------
8. POSTRETIREMENT BENEFIT AND SAVINGS PLANS
(A) PENSION PLANS
Hartford Life Insurance Company's employees are included in The Hartford's
noncontributory defined benefit pension plans. These plans provide pension
benefits that are based on years of service and the employee's compensation
during the last ten years of employment. The Company's funding policy is to
contribute annually an amount between the minimum funding requirements set forth
in the Employee Retirement Income Security Act of 1974, as amended, and the
maximum amount that can be deducted for U.S. Federal income tax purposes.
Generally, pension costs are funded through the purchase of the Company's group
pension contracts. The cost to the Company was approximately $6 in 1998 and $5
in both 1997 and 1996.
The Company also provides, through The Hartford, certain health care and
life insurance benefits for eligible retired employees. A substantial portion of
the Company's employees may become eligible for these benefits upon retirement.
The Company's contribution for health care benefits will depend on the retiree's
date of retirement and years of service. In addition, the plan has a defined
dollar cap which limits average Company contributions. The Company has prefunded
a portion of the health care and life insurance obligations through trust funds
where such prefunding can be accomplished on a tax effective basis.
Postretirement health care and life insurance benefits expense, allocated by The
Hartford, was immaterial to the results of operations for 1998, 1997 and 1996.
The assumed rate in the per capita cost of health care (the health care
trend rate) was 7.8% for 1998, decreasing ratably to 5.0% in the year 2003.
Increasing the health care trend rates by one percent per year would have an
immaterial impact on the accumulated postretirement benefit obligation and the
annual expense. To the extent that the actual experience differs from the
inherent assumptions, the effect will be amortized over the average future
service of covered employees.
(B) INVESTMENT AND SAVINGS PLAN
Substantially all employees of the Company are eligible to participate in
The Hartford's Investment and Savings Plan. Under this plan, designated
contributions, which may be invested in Class A Common Stock of Hartford Life or
certain other investments, are matched, up to 3% of compensation, by the
Company. The cost to Hartford Life Insurance Company for the above-mentioned
plan was approximately $4 and $2 in 1998 and 1997, respectively.
9. REINSURANCE
Hartford Life Insurance Company cedes insurance to other insurers, including
its parent, HLA, in order to limit its maximum loss. Such transfer does not
relieve the Company of its primary liability. The Company also assumes insurance
from other insurers. Failure of reinsurers to honor their obligations could
result in losses to the Company. The Company evaluates the financial condition
of its reinsurers and monitors concentration of credit risk.
Net premiums and other considerations were comprised of the following:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Gross premiums...................... $ 2,722 $ 2,164 $ 2,138
Assumed............................. 150 159 190
Ceded............................... (654) (686) (623)
--------- --------- ---------
Net premiums and other
considerations................... $ 2,218 $ 1,637 $ 1,705
--------- --------- ---------
--------- --------- ---------
</TABLE>
The Company ceded approximately $128, $76 and $100 of group life premium to
HLA in 1998, 1997 and 1996, respectively, representing $38.4 billion, $33.6
billion and $33.3 billion of insurance in force, respectively. The Company ceded
$383, $339 and $318 of accident and health premium to HLA in 1998, 1997 and
1996, respectively. The Company assumed $82, $89 and $101 of premium in 1998,
1997 and 1996, respectively, representing $7.4 billion, $8.2 billion and $8.5
billion of individual life insurance in force, respectively, from HLA.
Life reinsurance recoveries, which reduce death and other benefits,
approximated $97, $158 and $140 for the years ended December 31, 1998, 1997 and
1996, respectively.
Hartford Life Insurance Company has no significant reinsurance-related
concentrations of credit risk.
10. INCOME TAX
Hartford Life and The Hartford have entered into a tax sharing agreement
under which each member in the consolidated U.S. Federal income tax return will
make payments between them such that, with respect to any period, the amount of
taxes to be paid by the Company, subject to certain adjustments, generally will
be determined as though the Company were filing separate Federal, state and
local income tax returns.
As long as The Hartford continues to own at least 80% of the combined voting
power and 80% of the value of the outstanding capital stock of Hartford Life,
the Company will be included for Federal income tax purposes in the affiliated
group of which The Hartford is the common parent. It is the intention of The
Hartford and its non-life subsidiaries to file a single consolidated Federal
income tax return. The life insurance companies will file a separate
consolidated federal income tax return. The Company's effective tax rate was
35%, 36% and 35% in 1998, 1997 and 1996, respectively.
<PAGE>
F-16 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
Income tax expense is as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Current.................................. $ 307 $ 162 $ 118
Deferred................................. (119) 5 (98)
--------- --------- ---------
Income tax expense..................... $ 188 $ 167 $ 20
--------- --------- ---------
--------- --------- ---------
</TABLE>
A reconciliation of the tax provision at the U.S. Federal statutory rate to
the provision for income taxes is as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1998 1997 1996
--------- --------- -----
<S> <C> <C> <C>
Tax provision at the U.S. Federal
statutory rate........................... $ 188 $ 164 $ 20
Other..................................... -- 3 --
--------- --------- ---
Total................................... $ 188 $ 167 $ 20
--------- --------- ---
--------- --------- ---
</TABLE>
Deferred tax assets (liabilities) include the following as of December 31:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Tax basis deferred policy acquisition costs.... $ 751 $ 639
Financial statement deferred policy acquisition
costs and reserves............................ 103 69
Employee benefits.............................. 4 8
Net unrealized capital gains on securities..... (98) (96)
Investments and other.......................... (296) (272)
--------- ---------
Total........................................ $ 464 $ 348
--------- ---------
--------- ---------
</TABLE>
Hartford Life Insurance Company had a current tax payable of $65 and $64 as
of December 31, 1998 and 1997, respectively.
Prior to the Tax Reform Act of 1984, the Life Insurance Company Income Tax
Act of 1959 permitted the deferral from taxation of a portion of statutory
income under certain circumstances. In these situations, the deferred income was
accumulated in a "Policyholders' Surplus Account" and, based on current tax law,
will be taxable in the future only under conditions which management considers
to be remote; therefore, no Federal income taxes have been provided on this
deferred income. The balance for tax return purposes of the Policyholders'
Surplus Account as of December 31, 1998 was $104.
11. RELATED PARTY TRANSACTIONS
Transactions of the Company with HA&I and its affiliates relate principally
to tax settlements, reinsurance, insurance coverage, rental and service fees,
payment of dividends and capital contributions. In addition, certain affiliated
insurance companies purchased group annuity contracts from the Company to fund
pension costs and claim annuities to settle casualty claims. Substantially all
general insurance expenses related to the Company, including rent and employee
benefit plan expenses, are initially paid by The Hartford. Direct expenses are
allocated to the Company using specific identification, and indirect expenses
are allocated using other applicable methods. Indirect expenses include those
for corporate areas which, depending on type, are allocated based on either a
percentage of direct expenses or on utilization. Indirect expenses allocated to
the Company by The Hartford were $47, $34 and $40 in 1998, 1997 and 1996,
respectively. Management believes that the methods used are reasonable.
12. COMMITMENTS AND CONTINGENT LIABILITIES
(A) LITIGATION
Hartford Life Insurance Company is involved in pending and threatened
litigation in the normal course of its business in which claims for monetary and
punitive damages have been asserted. Although there can be no assurances, at the
present time the Company does not anticipate that the ultimate liability arising
from such pending or threatened litigation, after consideration of provisions
made for potential losses and costs of defense, will have a material adverse
effect on the financial condition or operating results of the Company.
(B) GUARANTY FUNDS
Under insurance guaranty fund laws in each state, the District of Columbia
and Puerto Rico, insurers licensed to do business can be assessed by state
insurance guaranty associations for certain obligations of insolvent insurance
companies to policyholders and claimants. Recent regulatory actions against
certain large life insurers encountering financial difficulty have prompted
various state insurance guaranty associations to begin assessing life insurance
companies for the deemed losses. Most of these laws do provide, however, that an
assessment may be excused or deferred if it would threaten an insurer's solvency
and further provide annual limits on such assessments. Part of the assessments
paid by the Company and its subsidiaries pursuant to these laws may be used as
credits for a portion of the associated premium taxes. The Company paid guaranty
fund assessments of approximately $9, $15 and $11 in 1998, 1997 and 1996,
respectively, of which $4, $4 and $5, respectively, were estimated to be
creditable against premium taxes.
(C) LEASES
The rent paid to Hartford Fire for space occupied by the Company was $7 in
both 1998 and 1997 and $3 in 1996. Future minimum rental commitments are as
follows:
<TABLE>
<S> <C>
1999............. $ 7
2000............. 12
2001............. 12
2002............. 13
2003............. 13
Thereafter....... 74
---------
Total.......... $ 131
---------
---------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-17
- --------------------------------------------------------------------------------
Rental expense is recognized on a level basis over the term of the primary
sublease, which expires on December 31, 2009, and amounted to approximately $9
in both 1998 and 1997 and $8 in 1996.
(D) TAX MATTERS
Hartford Life's federal income tax returns are routinely audited by the
Internal Revenue Service. Hartford Life is currently under audit for the years
1993 through 1995, with the audit for the years 1996 through 1997 expected to
begin during early 1999. Management believes that adequate provision has been
made in the financial statements for items that may result from tax examinations
and other tax related matters.
(E) INVESTMENTS
As of December 31, 1998, Hartford Life Insurance Company held $71 of asset
backed securities securitized and serviced by Commercial Financial Services,
Inc. (CFS) of which $50 were included in the Company's general account and $21
in the Company's guaranteed separate account. In October 1998, the Company
became aware of allegations of improper activities at CFS. On December 11, 1998,
CFS filed for protection under Chapter 11 of the Bankruptcy Code. As of December
31, 1998, CFS continues to service the asset backed securities, which remain
current on payments of principal and interest, however, the Company does not
expect to recover all of its principal investment. Based upon information
available in the fourth quarter 1998, the Company recognized a $25, after-tax,
writedown related to its holdings in CFS of which $18 was related to the
Company's general account assets. The ultimate realizable amount depends on the
outcome of the bankruptcy of CFS and these estimates are therefore subject to
material change as new information becomes available. The Company is presently
unable to determine the amount of further potential loss, if any, related to the
securities.
13. SEGMENT INFORMATION
Hartford Life Insurance Company adopted SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information", during the fourth quarter of
1998. This statement replaces SFAS No. 14, "Financial Reporting for Segments of
a Business Enterprise", and establishes new standards for reporting information
about operating segments in annual financial statements and in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas and major customers.
This statement requires that the reportable operating segments be based on the
Company's internal operations. On this basis, Hartford Life Insurance Company's
segments represent strategic operations which offer different products and
services as well as serve different markets.
Hartford Life Insurance Company is organized into three reportable operating
segments which include Investment Products, Individual Life and Corporate Owned
Life Insurance (COLI). Investment Products offers individual variable annuities,
fixed market value adjusted (MVA) annuities and fixed and variable immediate
annuities, mutual funds, deferred compensation and retirement plan services,
structured settlement contracts and other special purpose annuity contracts.
Individual Life sells a variety of life insurance products, including variable
life, universal life, interest-sensitive whole life and term life insurance.
COLI primarily offers variable products used by employers to fund non-qualified
benefits or other post-employment benefit obligations as well as leveraged COLI.
The Company includes in "Other" corporate items not directly allocable to any of
its reportable operating segments as well as certain employee benefit products
including group life and disability insurance that is directly written by the
Company and is substantially ceded to its parent, HLA.
The accounting policies of the reportable operating segments are the same as
those described in the summary of significant accounting policies in Note 2.
Hartford Life Insurance Company evaluates performance of its segments based on
revenues, net income and the segment's return on allocated capital. The Company
charges direct operating expenses to the appropriate segment and allocates the
majority of indirect expenses to the segments based on an intercompany expense
arrangement. Intersegment revenues are not significant and primarily occur
between corporate and the operating segments. These amounts include interest
income on allocated surplus and the amortization of net realized capital gains
and losses through net investment income utilizing the duration of the segment's
investment portfolios. The Company's revenues are primarily derived from
customers within the United States. The Company's long-lived assets primarily
consist of deferred policy acquisition costs and deferred tax assets from within
the United States. The following table outlines summarized financial information
concerning the Company's segments. The information for 1997 and 1996 has been
restated to conform to the 1998 presentation.
<TABLE>
<CAPTION>
INVESTMENT INDIVIDUAL
1998 PRODUCTS LIFE COLI OTHER TOTAL
- ------------------------------------------------------- --------- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Total revenues......................................... $ 1,779 $ 543 $ 1,567 $ 86 $ 3,975
Net investment income.................................. 736 181 793 49 1,759
Amortization of deferred policy acquisition costs...... 326 105 -- -- 431
Income tax expense (benefit)........................... 145 35 12 (4) 188
Net income (loss)...................................... 270 64 24 (8) 350
Assets................................................. 87,207 5,228 22,631 3,197 118,263
</TABLE>
<PAGE>
F-18 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INDIVIDUAL
1997 PRODUCTS LIFE COLI OTHER TOTAL
- ------------------------------------------------------- --------- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Total revenues......................................... $ 1,510 $ 487 $ 980 $ 32 $ 3,009
Net investment income.................................. 739 164 429 36 1,368
Amortization of deferred policy acquisition costs...... 250 83 -- 2 335
Income tax expense..................................... 111 30 15 11 167
Net income............................................. 206 55 27 14 302
Assets................................................. 72,288 4,914 17,800 2,743 97,745
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT INDIVIDUAL
1996 PRODUCTS LIFE COLI OTHER TOTAL
- ------------------------------------------------------- --------- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Total revenues......................................... $ 1,002 $ 440 $ 1,360 $ 87 $ 2,889
Net investment income.................................. 684 153 480 80 1,397
Amortization of deferred policy acquisition costs...... 174 60 -- -- 234
Income tax expense (benefit)........................... (42 ) 24 11 27 20
Net income (loss)...................................... (77 ) 44 26 45 38
Assets................................................. 57,410 3,753 14,222 2,377 77,762
</TABLE>
14. QUARTERLY RESULTS FOR 1998 AND 1997 (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
-------------------- -------------------- -------------------- --------------------
1998 1997 1998 1997 1998 1997 1998 1997
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues........................... $ 915 $ 651 $ 721 $ 645 $ 826 $ 679 $ 1,513 $ 1,034
Benefits, claims and expenses...... 787 550 591 536 688 550 1,371 904
Net income......................... 83 63 85 74 89 81 93 84
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-19
- --------------------------------------------------------------------------------
SCHEDULE I -- SUMMARY OF INVESTMENTS -- OTHER THAN INVESTMENTS IN AFFILIATES
AS OF DECEMBER 31, 1998
(IN MILLIONS)
<TABLE>
<CAPTION>
AMOUNT AT
WHICH
FAIR SHOWN ON
TYPE OF INVESTMENT COST VALUE BALANCE SHEET
- --------------------------------------------- ------- ------- --------------
<S> <C> <C> <C>
Fixed Maturities
Bonds and Notes
U. S. Government and Government agencies
and authorities (guaranteed and
sponsored)................................ $ 121 $ 123 $ 123
U. S. Government and Government agencies
and authorities (guaranteed and sponsored)
-- asset backed........................... 1,001 1,016 1,016
States, municipalities and political
subdivisions.............................. 165 173 173
Foreign governments........................ 393 412 412
Public utilities........................... 844 874 874
All other corporate including
international............................. 5,469 5,687 5,687
All other corporate -- asset backed........ 4,155 4,171 4,171
Short-term investments..................... 1,847 1,847 1,847
Certificates of deposit...................... 510 515 515
------- ------- -------
Total fixed maturities....................... 14,505 14,818 14,818
------- ------- -------
Equity Securities
Common Stocks
Industrial and miscellaneous............... 30 31 31
------- ------- -------
Total equity securities...................... 30 31 31
------- ------- -------
Total fixed maturities and equity
securities.................................. 14,535 14,849 14,849
------- ------- -------
Policy Loans................................. 6,684 6,684 6,684
------- ------- -------
Other Investments
Mortgage loans on real estate.............. 206 207 206
Other invested assets...................... 58 102 58
------- ------- -------
Total other investments...................... 264 309 264
------- ------- -------
Total investments............................ $21,483 $21,842 $21,797
------- ------- -------
------- ------- -------
</TABLE>
<PAGE>
F-20 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
(IN MILLIONS)
<TABLE>
<CAPTION>
DEFERRED
POLICY FUTURE OTHER PREMIUMS NET
ACQUISITION POLICY POLICYHOLDER AND OTHER INVESTMENT
SEGMENT COSTS BENEFITS FUNDS CONSIDERATIONS INCOME
- --------------------------------------------- ----------- --------- ---------- --------------- ---------
<S> <C> <C> <C> <C> <C>
1998
Investment Products.......................... $2,823 $2,407 $ 9,194 $1,043 $ 736
Individual Life.............................. 931 466 2,307 363 181
Corporate Owned Life Insurance............... -- 225 8,097 774 793
Other........................................ -- 497 17 38 49
----------- --------- ---------- ------ ---------
Consolidated operations...................... $3,754 $3,595 $19,615 $2,218 $1,759
----------- --------- ---------- ------ ---------
----------- --------- ---------- ------ ---------
1997
Investment Products.......................... $2,478 $2,070 $ 9,620 $ 771 $ 739
Individual Life.............................. 837 392 2,182 323 164
Corporate Owned Life Insurance............... -- 56 9,259 551 429
Other........................................ -- 541 (27) (8) 36
----------- --------- ---------- ------ ---------
Consolidated operations...................... $3,315 $3,059 $21,034 $1,637 $1,368
----------- --------- ---------- ------ ---------
----------- --------- ---------- ------ ---------
1996
Investment Products.......................... $2,030 $1,526 $10,140 $ 537 $ 684
Individual Life.............................. 730 346 2,160 287 153
Corporate Owned Life Insurance............... -- -- 9,823 880 480
Other........................................ -- 602 11 1 80
----------- --------- ---------- ------ ---------
Consolidated operations...................... $2,760 $2,474 $22,134 $1,705 $1,397
----------- --------- ---------- ------ ---------
----------- --------- ---------- ------ ---------
<CAPTION>
NET BENEFITS, AMORTIZATION
REALIZED CLAIMS AND OF DEFERRED
CAPITAL CLAIM POLICY
GAINS ADJUSTMENT ACQUISITION DIVIDENDS TO OTHER
SEGMENT (LOSSES) EXPENSES COSTS POLICYHOLDERS EXPENSES
- --------------------------------------------- ----------- ----------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
1998
Investment Products.......................... $ -- $ 670 $326 $ -- $ 368
Individual Life.............................. (1) 262 105 -- 77
Corporate Owned Life Insurance............... -- 924 -- 329 278
Other........................................ (1) 55 -- -- 43
----------- ----------- ----- ----- -----
Consolidated operations...................... $ (2) $1,911 $431 $329 $ 766
----------- ----------- ----- ----- -----
----------- ----------- ----- ----- -----
1997
Investment Products.......................... $ -- $ 677 $250 $ -- $ 266
Individual Life.............................. -- 242 83 -- 77
Corporate Owned Life Insurance............... -- 439 -- 240 259
Other........................................ 4 21 2 -- (16)
----------- ----------- ----- ----- -----
Consolidated operations...................... $ 4 $1,379 $335 $240 $ 586
----------- ----------- ----- ----- -----
----------- ----------- ----- ----- -----
1996
Investment Products.......................... $(219) $ 744 $175 $ -- $ 203
Individual Life.............................. -- 245 59 -- 68
Corporate Owned Life Insurance............... -- 545 -- 634 144
Other........................................ 6 1 -- 1 12
----------- ----------- ----- ----- -----
Consolidated operations...................... $(213) $1,535 $234 $635 $ 427
----------- ----------- ----- ----- -----
----------- ----------- ----- ----- -----
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES F-21
- --------------------------------------------------------------------------------
SCHEDULE IV -- REINSURANCE
(IN MILLIONS)
<TABLE>
<CAPTION>
CEDED TO ASSUMED FROM PERCENTAGE
GROSS OTHER OTHER NET OF AMOUNT
AMOUNT COMPANIES COMPANIES AMOUNT ASSUMED TO NET
-------- -------------- -------------- -------- ---------------
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1998
Life insurance in force........................... $326,400 $ 200,782 $ 18,289 $143,907 12.7%
Premiums and other considerations
Life insurance and annuities.................... $ 2,329 $ 271 $ 142 $ 2,200 6.5%
Accident and health insurance................... 393 383 8 18 44.4%
-------- -------------- ------- --------
Total premiums and other considerations........... $ 2,722 $ 654 $ 150 $ 2,218 6.8%
-------- -------------- ------- --------
-------- -------------- ------- --------
For the year ended December 31, 1997
Life insurance in force......................... $245,487 $ 178,771 $ 33,156 $ 99,872 33.2%
Premiums and other considerations
Life insurance and annuities.................... $ 1,818 $ 340 $ 157 $ 1,635 9.6%
Accident and health insurance................... 346 346 2 2 100.0%
-------- -------------- ------- --------
Total premiums and other considerations........... $ 2,164 $ 686 $ 159 $ 1,637 9.7%
-------- -------------- ------- --------
-------- -------------- ------- --------
For the year ended December 31, 1996
Life insurance in force......................... $177,094 $ 106,146 $ 31,957 $102,905 31.1%
Premiums and other considerations
Life insurance and annuities.................... $ 1,801 $ 298 $ 169 $ 1,672 10.1%
Accident and health insurance................... 337 325 21 33 63.6%
-------- -------------- ------- --------
Total premiums and other considerations........... $ 2,138 $ 623 $ 190 $ 1,705 11.1%
-------- -------------- ------- --------
-------- -------------- ------- --------
</TABLE>
<PAGE>
PART C
<PAGE>
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) All financial statements are included in Part A and Part B of the
Registration Statement.
(b) (1) Resolution of the Board of Directors of Hartford Life Insurance
Company ("Hartford") authorizing the establishment of the
Separate Account.(1)
(2) Not applicable.
(3) (a) Principal Underwriter Agreement.(2)
(3) (b) Form of Dealer Agreement.(2)
(4) Form of Individual Flexible Premium Variable Annuity
Contract.(1)
(5) Form of Application.(1)
(6) (a) Certificate of Incorporation of Hartford.(3)
(6) (b) Bylaws of Hartford.(1)
(7) Not applicable.
(8) Not applicable.
(9) Opinion and Consent of Lynda Godkin, Senior Vice President,
General Counsel, and Corporate Secretary.
(10) Consent of Arthur Andersen LLP, Independent Public Accountants.
(11) No financial statements are omitted.
_____________________
(1) Incorporated by reference to Post-Effective Amendment No. 2, to the
Registration Statement File No. 33-73570, dated May 1, 1995.
(2) Incorporated by reference to Post Effective Amendment No. 3, to the
Registration Statement File No. 33-73570, dated April 29, 1996.
(3) Incorporated by reference to Post Effective Amendment No. 19, to the
Registration Statement File No. 33-73570, filed on April 14, 1997.
<PAGE>
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) Copy of Power of Attorney.
(16) Organizational Chart.
Item 25. Directors and Officers of the Depositor
- -------------------------------------------------------------------------------
NAME POSITION WITH HARTFORD
- -------------------------------------------------------------------------------
Wendell J. Bossen Vice President
- -------------------------------------------------------------------------------
Gregory A. Boyko Senior Vice President, Director*
- -------------------------------------------------------------------------------
Peter W. Cummins Senior Vice President
- -------------------------------------------------------------------------------
Timothy M. Fitch Vice President
- -------------------------------------------------------------------------------
Mary Jane B. Fortin Vice President & Chief Accounting Officer
- -------------------------------------------------------------------------------
David T. Foy Senior Vice President & Treasurer
- -------------------------------------------------------------------------------
Lynda Godkin Senior Vice President, General Counsel and
Corporate Secretary, Director*
- -------------------------------------------------------------------------------
Lois W. Grady Senior Vice President
- -------------------------------------------------------------------------------
Stephen T. Joyce Vice President
- -------------------------------------------------------------------------------
Michael D. Keeler Vice President
- -------------------------------------------------------------------------------
Robert A. Kerzner Senior Vice President
- -------------------------------------------------------------------------------
Thomas M. Marra Executive Vice President, Director*
- -------------------------------------------------------------------------------
Joseph J. Noto Vice President
- -------------------------------------------------------------------------------
Craig R. Raymond Senior Vice President and Chief Actuary
- -------------------------------------------------------------------------------
Donald A. Salama Vice President
- -------------------------------------------------------------------------------
Lowndes A. Smith President and Chief Executive Officer,
Director*
- -------------------------------------------------------------------------------
David M. Znamierowski Senior Vice President, Director*
- -------------------------------------------------------------------------------
Unless otherwise indicated, the principal business address of each of the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
________________________
*Denotes Board of Directors.
Item 26. Persons Controlled By or Under Common Control with the Depositor or
Registrant
Filed herewith as Exhibit 16.
Item 27. Number of Contract Owners
As of March 31, 1999, there were 240,709 Contract Owners.
<PAGE>
Item 28. Indemnification
Under Section 33-772 of the Connecticut General Statutes, unless
limited by its certificate of incorporation, the Registrant must
indemnify a director who was wholly successful, on the merits or
otherwise, in the defense of any proceeding to which he was a party
because he is or was a director of the corporation against reasonable
expenses incurred by him in connection with the proceeding.
The Registrant may indemnify an individual made a party to a
proceeding because he is or was a director against liability
incurred in the proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the Registrant, and, with respect to any criminal
proceeding, had no reason to believe his conduct was unlawful.
Conn. Gen. Stat. 33-771(a). Additionally, pursuant to Conn. Gen.
Stat. 33-776, the Registrant may indemnify officers and employees
or agents for liability incurred and for any expenses to which they
become subject by reason of being or having been employees or
officers of the Registrant. Connecticut law does not prescribe
standards for the indemnification of officers, employees and agents
and expressly states that their indemnification may be broader than
the right of indemnification granted to directors.
The foregoing statements are specifically made subject to the
detailed provisions of Section 33-770 et seq.
Notwithstanding the fact that Connecticut law obligates the
Registrant to indemnify only a director that was successful on
the merits in a suit, under Article III, Section 1 of the
Registrant's bylaws, the Registrant must indemnify both directors
and officers of the Registrant for (1) any claims and liabilities
to which they become subject by reason of being or having been a
directors or officers of the company and legal and (2) other
expenses incurred in defending against such claims, in each case,
to the extent such is consistent with statutory provisions.
Additionally, the directors and officers of Hartford and Hartford
Securities Distribution Company, Inc. ("HSD") are covered under a
directors and officers liability insurance policy issued to The
Hartford Financial Services Group, Inc. and its subsidiaries.
Such policy will reimburse the Registrant for any
<PAGE>
payments that it shall make to directors and officers pursuant to
law and will, subject to certain exclusions contained in the policy,
further pay any other costs, charges and expenses and settlements and
judgments arising from any proceeding involving any director or
officer of the Registrant in his past or present capacity as
such, and for which he may be liable, except as to any
liabilities arising from acts that are deemed to be uninsurable.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
Item 29. Principal Underwriters
(a) HSD acts as principal underwriter for the following investment
companies:
Hartford Life Insurance Company - Separate Account One
Hartford Life Insurance Company - Separate Account Two
Hartford Life Insurance Company - Separate Account Two
(DC Variable Account I)
Hartford Life Insurance Company - Separate Account Two
(DC Variable Account II)
Hartford Life Insurance Company - Separate Account Two
(QP Variable Account)
Hartford Life Insurance Company - Separate Account Two
(Variable Account "A")
Hartford Life Insurance Company - Separate Account Two
(NQ Variable Account)
Hartford Life Insurance Company - Putnam Capital Manager
Trust Separate Account
Hartford Life Insurance Company - Separate Account Three
Hartford Life Insurance Company - Separate Account Five
Hartford Life Insurance Company - Separate Account Seven
Hartford Life and Annuity Insurance Company - Separate
Account One
<PAGE>
Hartford Life and Annuity Insurance Company - Putnam Capital
Manager Trust Separate Account Two
Hartford Life and Annuity Insurance Company - Separate
Account Three
Hartford Life and Annuity Insurance Company - Separate
Account Five
Hartford Life and Annuity Insurance Company - Separate
Account Six
American Maturity Life Insurance Company - Separate
Account AMLVA
Royal Life Insurance Company - Separate Account One
Royal Life Insurance Company - Separate Account Two
Alpine Life Insurance Company - Separate Account One
Alpine Life Insurance Company - Separate Account Two
(b) Directors and Officers of HSD
Name and Principal Positions and Offices
Business Address With Underwriter
------------------ --------------------
Lowndes A. Smith President and Chief Executive Officer,
Director
Thomas M. Marra Executive Vice President, Director
Robert A. Kerzner Executive Vice President
Peter W. Cummins Senior Vice President
Lynda Godkin Senior Vice President, General Counsel
and Corporate Secretary
David T. Foy Treasurer
George R. Jay Controller
Unless otherwise indicated, the principal business address
of each the above individuals is P.O. Box 2999, Hartford,
CT 06104-2999.
Item 30. Location of Accounts and Records
All of the accounts, books, records or other documents required to
be kept by Section 31(a) of the Investment Company Act of 1940
and rules thereunder, are maintained by Hartford at 200 Hopmeadow
Street, Simsbury, Connecticut 06089.
Item 31. Management Services
All management contracts are discussed in Part A and Part B of this
Registration Statement.
Item 32. Undertakings
(a) The Registrant hereby undertakes to file a post-effective
amendment to this Registration Statement as frequently as
is necessary to ensure that the audited financial statements
in the Registration Statement are never more than 16 months
old so long as payments under the variable annuity
Contracts may be accepted.
<PAGE>
(b) The Registrant hereby undertakes to include either (1) as part
of any application to purchase a Contract offered by the
Prospectus, a space that an applicant can check to request a
Statement of Additional Information, or (2) a post card or
similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a
Statement of Additional Information.
(c) The Registrant hereby undertakes to deliver any Statement of
Additional Information and any financial statements required
to be made available under this Form promptly upon written
or oral request.
(d) Hartford hereby represents that the aggregate fees and charges
under the Contract are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks
assumed by Hartford.
The Registrant is relying on the no-action letter issued by the
Division of Investment Management to American Counsel of Life
Insurance, Ref. No. IP-6-88, November 28, 1988. The Registrant has
complied with conditions one through four of the no-action letter.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities
Act Rule 485(b) for effectiveness of this Registration Statement and has
caused this Registration Statement to be signed on its behalf, in the City of
Hartford, and State of Connecticut on this 12th day of April, 1999.
HARTFORD LIFE INSURANCE COMPANY -
PUTNAM CAPITAL MANAGER TRUST
SEPARATE ACCOUNT
(Registrant)
*By: Thomas M. Marra By: /s/Thomas S. Clark
--------------------------------- ----------------------------
Thomas M. Marra, Executive Vice Thomas S. Clark
President Attorney-In-Fact
HARTFORD LIFE INSURANCE COMPANY
(Depositor)
*By: Thomas M. Marra
---------------------------------
Thomas M. Marra, Executive Vice
President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons and in
the capacity and on the date indicated.
Gregory A. Boyko, Senior Vice President,
Director*
Lynda Godkin, Senior Vice President, General
Counsel and Corporate Secretary, Director*
Thomas M. Marra, Executive Vice *By: /s/Thomas S. Clark
President, Director* -----------------------
Lowndes A. Smith, President and Thomas S. Clark
Chief Executive Officer, Director* Attorney-In-Fact
David M. Znamierowski, Senior Vice President,
Director* April 12, 1999
<PAGE>
EXHIBIT INDEX
(9) Opinion and Consent of Lynda Godkin, Senior Vice President, General
Counsel and Corporate Secretary.
(10) Consent of Arthur Andersen LLP, Independent Public Accountants.
(15) Copy of Power of Attorney.
(16) Organizational Chart.
<PAGE>
EXHIBIT 9
[LOGO]
HARTFORD LIFE
April 12, 1999 LYNDA GODKIN
SENIOR VICE PRESIDENT, GENERAL
COUNSEL & CORPORATE SECRETARY
LAW DEPARTMENT
Board of Directors
Hartford Life Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
RE: PUTNAM CAPITAL MANAGER TRUST
SEPARATE ACCOUNT
HARTFORD LIFE INSURANCE COMPANY
Dear Sir/Madam:
I have acted as General Counsel to Hartford Life Insurance Company (the
"Company"), a Connecticut insurance company, and Putnam Capital Manager Trust
Separate Account (the "Account") in Connecticut with the registration of an
indefinite amount of securities in the form of variable annuity contracts
(the "Contracts") with the Securities and Exchange Commission under the
Securities Act of 1933, as amended. I have examined such documents
(including the Form N-4 registration statement) and reviewed such questions
of law as I considered necessary and appropriate, and on the basis of such
examination and review, it is my opinion that:
1. The Company is a corporation duly organized and validly existing as a
stock life insurance company under the laws of the State of Connecticut
and is duly authorized by the Insurance Department of the State of
Connecticut to issue the Contacts.
2. The Account is a duly authorized and existing separate account established
pursuant to the provisions of Section 38a-433 of the Connecticut Statutes.
3. To the extent so provided under the Contracts, that portion of the assets
of the Account equal to the reserves and other contract liabilities with
respect to the Account will not be chargeable with liabilities arising out
of any other business that the Company may conduct.
4. The Contracts, when issued as contemplated by the Form N-4 Registration
Statement, will constitute legal, validly issued and binding obligations
of the Company.
<PAGE>
Board of Directors
Hartford Life Insurance Company
April 12, 1999
Page 2
I hereby consent to the filing of this opinion as an exhibit to the Form N-4
registration statement for the Contracts and the Account.
Sincerely yours,
/s/Lynda Godkin
Lynda Godkin
<PAGE>
EXHIBIT 10
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made part of this
Registration Statement File No. 333-50467 for Hartford Life Insurance Company
Putnam Capital Manager Trust Separate Account on Form N-4.
/s/Arthur Andersen LLP
Hartford, Connnecticut
April 12, 1999
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
POWER OF ATTORNEY
-----------------
Gregory A. Boyko
David T. Foy
Lynda Godkin
Thomas M. Marra
Lowndes A. Smith
Raymond P. Welnicki
Lizabeth H. Zlatkus
David M. Znamierowski
do hereby jointly and severally authorize Lynda Godkin, Christine Repasy,
Marianne O'Doherty, Thomas S. Clark and Brian Lord to sign as their agent,
any Registration Statement, pre-effective amendment, post-effective amendment
and any application for exemptive relief of the Hartford Life Insurance
Company under the Securities Act of 1933 and/or the Investment Company Act of
1940, and do hereby ratify any such signatures heretofore made by such
persons.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for
the purpose herein set forth.
/s/ Gregory A. Boyko Dated as of January 15, 1999
- ------------------------------
Gregory A. Boyko
/s/ David T. Foy Dated as of January 15, 1999
- ------------------------------
David T. Foy
/s/ Lynda Godkin Dated as of January 15, 1999
- ------------------------------
Lynda Godkin
/s/ Thomas M. Marra Dated as of January 15, 1999
- ------------------------------
Thomas M. Marra
/s/ Lowndes A. Smith Dated as of January 15, 1999
- ------------------------------
Lowndes A. Smith
/s/ Raymond P. Welnicki Dated as of January 15, 1999
- ------------------------------
Raymond P. Welnicki
/s/ Lizabeth H. Zlatkus Dated as of January 15, 1999
- ------------------------------
Lizabeth H. Zlatkus
/s/ David M. Znamierowski Dated as of January 15, 1999
- ------------------------------
David M. Znamierowski
<PAGE>
ORGANIZATIONAL CHART
<TABLE>
<CAPTION>
<S> <C>
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(DELAWARE)
|
---------------------------------------------
NUTMEG INSURANCE COMPANY |
(CONNECTICUT) THE HARTFORD INVESTMENT
| MANAGEMENT COMPANY
HARTFORD FIRE INSURANCE COMPANY (DELAWARE)
(CONNECTICUT) |
| |
HARTFORD ACCIDENT AND INDEMNITY COMPANY HARTFORD INVESTMENT
(CONNECTICUT) SERVICES, INC.
| (CONNECTICUT)
HARTFORD LIFE, INC.
(DELAWARE)
|
HARTFORD LIFE & ACCIDENT INSURANCE COMPANY
(CONNECTICUT)
|
|
|
-------------------------------------------------------------------------------------------------------------------------
| | | | | | | | |
ITT HARTFORD LIFE | | | | | | HLIC PLANCO
INTERNATIONAL LTD. | | | | | | CANADA FINANCIAL
(CONNECTICUT) | | | | | | HOLDINGS, INC. SERVICES,
| | | | | | | (CANADA) INCORPORATED
| | | | | | | | (PENNSYLVANIA)
| | | | | | | | |
| | ALPINE LIFE HARTFORD FINANCIAL HARTFORD LIFE HARTFORD AMERICAN | |
| | INSURANCE SERVICES LIFE INSURANCE COMPANY FINANCIAL MATURITY LIFE | |
| | COMPANY INSURANCE CO. (CONNECTICUT) SERVICES, LLC INSURANCE COMPANY | |
| | (CONNECTICUT) (CONNECTICUT) | (DELAWARE) (CONNECTICUT) | PLANCO, INC.
| | | | | | (PENNSYLVANIA)
| | ------------------------------------- | AML FINANCIAL, INC. |
HARTFORD CALMA | | | | | (CONNECTICUT) |
COMPANY | ROYAL LIFE HARTFORD HARTFORD | HARTFORD
(FLORIDA) | INSURANCE INTERNATIONAL LIFE AND | LIFE INSURANCE
| COMPANY LIFE REASSURANCE ANNUITY INSURANCE | COMPANY
| OF AMERICA CORP. COMPANY | OF CANADA
|(CONNECTICUT) (CONNECTICUT) (CONNECTICUT) | (CANADA)
| | |
| | |
| ITT HARTFORD |
| LIFE, LTD. |
| (BERMUDA) |
| |
| |
----------| ---------------------------------------------------------------------------------------------
| | | | | |
INTERNATIONAL MS FUND HL INVESTMENT HARTFORD HARTFORD SECURITIES HARTFORD COMP. EMP.
CORPORATE AMERICA 1993-K ADVISORS, LLC EQUITY SALES DISTRIBUTION BENEFITS SERVICE
MARKETING GROUP, INC. SPE, INC. (CONNECTICUT) COMPANY, INC. COMPANY, INC. COMPANY
(CONNECTICUT) (DELAWARE) | (CONNECTICUT) (CONNECTICUT) (CONNECTICUT)
| |
| |
THE EVERGREEN HARTFORD INVESTMENT
GROUP, INC. FINANCIAL SERVICES
(NEW YORK) COMPANY
(DELAWARE)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(DELAWARE)
|
NUTMEG INSURANCE COMPANY
(CONNECTICUT)
|
HARTFORD FIRE INSURANCE COMPANY
(CONNECTICUT)
|
----------------------------------------------------------------------------------------------------------------------------
| | |
| | ITT HARTFORD LIFE
| | -------INTERNATIONAL LTD.
| | | (CONNECTICUT)
| | | |
| | | ITT HARTFORD
| | | ----SUDAMERICANA
| | | | HOLDING S.A.
| | | | (ARGENTINA)
| | | |------------------------------------------------------
| | | | | |
| | | | HARTFORD GALICIA INSTITUTO DE
| | | | SEGUROS VIDA COMPANIA SALTA COMPANIA DE
| | | |--------DE VIDA DE SEGUROS S.A. SEGUROS DE VIDA S.A.
| | | | (URUGUAY) (ARGENTINA) (ARGENTINA)
| | | |
| | ICATU | | ITT HARTFORD
| | HARTFORD | |-----SEGUROS DE VIDA
| | SEGUROS S.A.----------| | (ARGENTINA)
| | (BRAZIL) | |
| | | | |
| | | | | ITT HARTFORD
| | -- ----------| | |------SEGUROS DE
| | | | | | RETIRO S.A.
| | | | | | (ARGENTINA)
|-----------|----------------|---------------|---|--------------------------------------------------------------------------
| | | | | |
| | | ICATU HARTFORD | | CONSULTORA DE CAPITALES
| | | FUNDO DE PENSAO | | S.A. SOCIEDAD GERENTE
| | | (BRAZIL) | |----DE FONDOS COMUNES
| | | | | | DE ENVERSION
| | | | | | (ARGENTINA)
| | | ICATU HARTFORD | |
| | | CAPITALIZACAO S.A. | | CLARIDAD
| | | (BRAZIL) | | ADMINISTRADORA DE
| | | | | |---FONDOS DE JUBILACIONES
| | | BRAZILCAP | | Y PENSIONES S.A.
| | | CAPITALIZACAO S.A. | | (ARGENTINA)
| | | (BRAZIL) | |
| | | | |
| | -------------------------- | |
| |--------------- | | |
| | | | |
HARTFORD FIRE HARTFORD FIRE | | |------- SEGPOOL S.A.
INTERNATIONAL------------INTERNATIONAL, LTD. | | | (ARGENTINA)
(GERMANY) GMBH (CONNECTICUT) | | |
(WEST GERMANY) | | |
| | |
ICATU HARTFORD | | | THESIS S.A.
ADMINISTRACAO | | |-------- (ARGENTINA)
DE BENEFICIOS LTDA-- | | |
(BRAZIL) | |
| |
----------------- |
| |
CAB |--------- U.O.R., S.A.
CORPORATION (ARGENTINA)
(BRITISH VIRGIN ISLANDS)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(DELAWARE)
|
NUTMEG INSURANCE COMPANY
(CONNECTICUT)
|
HARTFORD FIRE INSURANCE COMPANY
(CONNECTICUT)
|
- --------------------------------------------------------------------------------------------------------------------------------|
| |
THE HARTFORD INTERNATIONAL |
|-----------------------------------------------------------------------FINANCIAL SERVICES GROUP, INC. |
| | | (DELAWARE) |
| | | ----------------------|----------------- |
| | | | | | | |
ZWOLSCHE | | ITT HARTFORD LONDON AND | HARTFORD |
ALGEMEENE N.V. | | INTERNATIONAL, LTD. EDINBURGH | EUROPE, INC. |
(NETHERLANDS) | | (U.K.) INSURANCE GROUP, LTD.| (DELAWARE) |
| | | (U.K.) | |
| | | | | |
| | | ------------- | |
| | | | | |
| ITT ASSURANCES HARTFORD INTERNATIONAL | LONDON AND --ITT ERCOS |
| S.A. INSURANCE CO., N.V. |--- EDINBURGH DE SEGUROS Y |
| ZWOLSCHE ALGEMEENE (FRANCE) (BELGIUM) | INSURANCE CO., LTD. REASEGUROS S.A.|
|----SCHADEVERZEKERING | | (U.K.) (SPAIN) |
--------| N.V.----------------------------------- | | | |
| | (NETHERLANDS) | | | | |
Z.A. | | | | EXCESS INSURANCE |
- --VERZEKERINGEN | | | | COMPANY LTD. |
| N.V. | ZWOLSCHE ALGEMEENE | | | (U.K.) |
| (BELGIUM) |------HERVERZEKERING B.V. | | | |
| | -----| (NETHERLANDS) | | | LONDON AND |
| | | | | | |--- EDINBURGH LIFE |
| Z.A. LUX S.A. | | | | ASSURANCE CO., LTD. |
| (LUXEMBURG) | ZWOLSCHE ALGEMEENE | | | (U.K.) |
| |--LEVENS-VERZEKERING N.V.------------ | | | |
| | (NETHERLANDS) | | | | |
- ----------------|------------------------------------|------------|------|--------------|---------------------------------------|
| | | | | | |
| -------- | | | | |
| | | | | | | |
| ZWOLSCHE | ZWOLSCHE ALGEMEENE ZWOLSCHE ALGEMEENE | | | |
| ALGEMEENE |-----HYPOTHEKEN N.V. BELEGGINGEN III B.V. | | | |
| EUROPA B.V. | (NETHERLANDS) (NETHERLANDS) | | | |
| (NETHERLANDS) | ---------- | | |
- --------| | | | | |
| EXPLOITATIEMAAT- BELEGGINGSMAAT- | | |
|----- SCHAPPIJ SCHAPPIJ | | |
| BUIZERDLAAN B.V. BUIZERDLAAN B.V. | | |
| (NETHERLANDS) (NETHERLANDS) | | |
| | | |
| | | -----
| HOLLAND | |-------------------------- |
|---- BELEGGINGSGROEP B.V. | | | |
(NETHERLANDS) | |----------------- | |
| -------| | | |
| | | | | |
| | | | | |
F.A. KNIGHT | MACALISTER & LONDON AND | HARTFORD FIRE
& SON N.V. | DUNDAS, LTD. EDINBURGH | INTERNATIONAL
(BELGIUM) | (SCOTLAND) TRUSTEES, LTD. | SERVICIOS
| (U.K.) | (SPAIN)
------------------------- -----------
| | |
FENCOURT QUOTEL LONDON AND
PRINTERS, LTD. INSURANCE EDINBURGH
(U.K.) SYSTEMS, LTD. SERVICES, LTD.
(U.K.) (U.K.)
|
EUROSURE
INSURANCE
MARKETING, LTD.
(U.K.)
</TABLE>
