<PAGE>
As filed with the Securities and Exchange Commission on October 14, 1997
File No. 33-73568
811-7426
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. _9_ [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. _17_ [X]
ITT HARTFORD AND ANNUITY LIFE INSURANCE COMPANY
SEPARATE ACCOUNT ONE
(Exact Name of Registrant)
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
(Name of Depositor)
P.O. BOX 2999
HARTFORD, CT 06104-2999
(Address of Depositor's Principal Offices)
(860) 843-6731
(Depositor's Telephone Number, Including Area Code)
LESLIE SOLER, ESQ.
HARTFORD LIFE
P.O. BOX 2999
HARTFORD, CT 06104-2999
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b) of Rule 485
_X_ on October 17, 1997 pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on October 17, 1997 pursuant to paragraph (a)(1) of Rule 485
___ this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
PURSUANT TO RULE 24F-2(a)(1) UNDER THE INVESTMENT COMPANY ACT OF 1940, THE
REGISTRANT HAS REGISTERED AN INDEFINITE AMOUNT OF SECURITIES. THE RULE 24F-2
NOTICE FOR THE REGISTRANT'S MOST RECENT FISCAL YEAR WAS FILED ON OR ABOUT
FEBRUARY 28, 1997.
<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)
N-4 Item No. Prospectus Heading
------------ ------------------
1. Cover Page ITT Hartford Life and Annuity
Insurance Company - Separate Account One
2. Definitions Glossary of Special Terms
3. Synopsis or Highlights Introduction
4. Condensed Financial Yield Information
Information
5. General Description of Hartford, Separate Account
Registrant One, the Fixed Account, and the Funds
6. Deductions Charges Under the Contract
7. General Description of The Contracts, Separate Account, the Fixed
Annuity Contracts Account, and Surrender Benefits
8. Annuity Period Annuity Benefits
9. Death Benefit Death Benefits
10. Purchases and Contract Value The Contract, Contracts Offered, Premium
Payments and Initial Allocations and
Contract Value
11. Redemptions Surrender Benefits
12. Taxes Federal Tax Considerations
13. Legal Proceedings Legal Matters & Experts
14. Table of Contents of the Table of Contents to Statement
Statement of Additional of Additional Information
Information
15. Cover Page Part B; Statement of Additional
Information
<PAGE>
N-4 Item No. Prospectus Heading
------------ ------------------
16. Table of Contents Table of Contents
17. General Information and
History Introduction
18. Services None
19. Purchase of Securities Distribution of Contracts
being Offered
20. Underwriters Distribution of Contracts
21. Calculation of Performance Calculation of Yield and Return
Data
22. Annuity Payments Annuity Benefits
23. Financial Statements Financial Statements
24. Financial Statements and Financial Statements and
Exhibits Exhibits
25. Directors and Officers of Directors and Officers of the
the Depositor Depositor
26. Persons Controlled by or Persons Controlled by or Under
Under Common Control Common Control with the
with the Depositor or Depositor or Registrant
Registrant
27. Number of Contract Owners Number of Contract Owners
28. Indemnification Indemnification
29. Principal Underwriters Principal Underwriters
30. Location of Accounts and Location of Accounts and Records
Records
31. Management Services Management Services
32. Undertakings Undertakings
<PAGE>
THE DIRECTOR
SEPARATE ACCOUNT ONE
ITT HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY
P.O. BOX 5085
HARTFORD, CONNECTICUT 06102-5085
TELEPHONE: 1-800-862-6668 (CONTRACT
OWNERS)
[LOGO] 1-800-862-7155 (INVESTMENT REPRESENTATIVES)
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This Prospectus describes The Director, an individual and group tax deferred
variable annuity contract designed for retirement planning purposes
("Contracts").
The Contracts are issued by ITT Hartford Life and Annuity Insurance Company
("Hartford"). On January 1, 1998, Hartford's name will change to Hartford Life
and Annuity Insurance Company. Payments for the Contracts will be held in a
series of ITT Hartford Life and Annuity Insurance
Company Separate Account One (the "Separate Account") or in the Fixed Account of
Hartford. Allocations to and transfers to and from the Fixed Account are not
permitted in certain states.
The following Sub-Accounts are available under the Contracts. Opposite each
Sub-Account is the name of the underlying investment for that Sub-Account.
<TABLE>
<S> <C> <C>
Advisers Fund Sub-Account -- shares of Hartford Advisers Fund, Inc. ("Advisers Fund")
Bond Fund Sub-Account -- shares of Hartford Bond Fund, Inc. ("Bond Fund")
Capital Appreciation Fund Sub-Account -- shares of Hartford Capital Appreciation Fund, Inc.
("Capital Appreciation Fund")
Dividend and Growth Fund Sub-Account -- shares of Hartford Dividend and Growth Fund, Inc.
("Dividend and Growth Fund")
Index Fund Sub-Account -- shares of Hartford Index Fund, Inc. ("Index Fund")
International Advisers Fund Sub-Account -- shares of Hartford International Advisers Fund, Inc.
("International Advisers Fund")
International Opportunities Fund Sub-Account -- shares of Hartford International Opportunities Fund, Inc.
("International Opportunities Fund")
MidCap Fund Sub-Account -- shares of Hartford MidCap Fund, Inc. ("MidCap Fund")
Money Market Fund Sub-Account -- shares of HVA Money Market Fund, Inc. ("Money Market
Fund")
Mortgage Securities Fund Sub-Account -- shares of Hartford Mortgage Securities Fund, Inc.
("Mortgage Securities Fund")
Small Company Fund Sub-Account -- shares of Hartford Small Company Fund, Inc.
("Small Company Fund")
Stock Fund Sub-Account -- shares of Hartford Stock Fund, Inc. ("Stock Fund")
</TABLE>
This Prospectus sets forth the information concerning the Separate Account and
the Fixed Account that investors should know before investing. This Prospectus
should be kept for future reference. Additional information about the Separate
Account and the Fixed Account has been filed with the Securities and Exchange
Commission and is available without charge upon request. To obtain the Statement
of Additional Information send a written request to, or call ITT Hartford Life
and Annuity Insurance Company, Attn: Individual Annuity Services, P.O. Box 5085,
Hartford, CT 06102-5085. The Table of Contents for the Statement of Additional
Information may be found on page 28 of this Prospectus. The Statement of
Additional Information is incorporated by reference to this Prospectus.
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VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED
BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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PROSPECTUS DATED: OCTOBER 17, 1997
STATEMENT OF ADDITIONAL INFORMATION DATED: OCTOBER 17, 1997
<PAGE>
2 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GLOSSARY OF SPECIAL TERMS............................................. 3
FEE TABLE............................................................. 5
ACCUMULATION UNIT VALUES.............................................. 6
INTRODUCTION.......................................................... 7
HARTFORD, SEPARATE ACCOUNT ONE, THE FIXED ACCOUNT AND THE FUNDS....... 7
ITT Hartford Life and Annuity Insurance Company..................... 7
Separate Account One................................................ 8
The Funds........................................................... 8
The Fixed Account................................................... 10
Performance Related Information..................................... 11
THE CONTRACTS......................................................... 12
Contracts Offered................................................... 12
Premium Payments and Initial Allocations............................ 12
Contract Value...................................................... 12
Transfers Between the Sub-Accounts/Fixed Account.................... 13
Charges Under the Contract.......................................... 13
Waiver of Sales Charge.............................................. 15
Death Benefits...................................................... 15
Surrender Benefits.................................................. 16
Annuity Benefits.................................................... 17
Other Information................................................... 19
FEDERAL TAX CONSIDERATIONS............................................ 19
A. General......................................................... 19
B. Taxation of Hartford and the Separate Account................... 20
C. Taxation of Annuities--General Provisions Affecting Purchasers
other than Qualified Retirement Plans........................... 20
D. Federal Income Tax Withholding.................................. 23
E. General Provisions Affecting Qualified Retirement Plans......... 23
F. Annuity Purchases by Nonresident Aliens and Foreign
Corporations....................................................... 23
MISCELLANEOUS......................................................... 23
How Contracts Are Sold.............................................. 23
Legal Matters and Experts........................................... 23
Additional Information.............................................. 24
APPENDIX I INFORMATION REGARDING TAX QUALIFIED PLANS.................. 25
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION............. 28
</TABLE>
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 3
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GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT: An accounting unit of measure used to calculate values before
Annuity payments begin.
ANNUAL WITHDRAWAL AMOUNT: The amount which can be withdrawn in any Contract Year
prior to incurring surrender charges.
ANNUITANT: The person or Participant upon whose life the Contract is issued.
ANNUITY: A series of payments for life, or for life with a minimum number of
payments or a determinable sum guaranteed, or for a joint lifetime and
thereafter during the lifetime of the survivor, or for a designated period.
ANNUITY COMMENCEMENT DATE: The date on which Annuity payments are to commence.
Under a group unallocated Contract, the date for each Participant is determined
by the Contract Owner in accordance with the terms of the Plan.
ANNUITY UNIT: An accounting unit of measure used to calculate the value of
Annuity payments.
BENEFICIARY: The person(s) who receive Contract Values in the event of the
Annuitant's or Contract Owner's death under certain conditions. Under a group
unallocated Contract, the person named by the Participant within the Plan
documents/enrollment forms who is entitled to receive benefits in case of the
death of the Participant.
CODE: The Internal Revenue Code of 1986, as amended.
COMMISSION: Securities and Exchange Commission.
CONTINGENT ANNUITANT: The person so designated by the Contract Owner, who upon
the Annuitant's death, prior to the Annuity Commencement Date, becomes the
Annuitant.
CONTRACT ANNIVERSARY: The anniversary of the Contract Date.
CONTRACT OWNER(S): The owner(s) of the Contract, trustee or other entity,
sometimes herein referred to as "you".
CONTRACT VALUE: The aggregate value of any Sub-Account Accumulation Units held
under the Contract plus the value of the Fixed Account.
CONTRACT YEAR: A period of 12 months commencing with the Contract Date or any
anniversary thereof.
DEATH BENEFIT: The amount payable upon the death of a Contract Owner, Annuitant
or Participant, in the case of group Contracts before annuity payments have
commenced.
FIXED ACCOUNT: Part of the General Account of Hartford to which a Contract Owner
may allocate all or a portion of his Premium Payment or Contract Value.
FIXED ANNUITY: An Annuity providing for guaranteed payments which remain fixed
in amount throughout the payment period and which do not vary with the
investment experience of a separate account.
FUNDS: The Funds described commencing on page 8 of this Prospectus and any
additional Funds which may be made available from time to time.
GENERAL ACCOUNT: The General Account of Hartford which consists of all assets of
Hartford other than those allocated to the separate accounts of Hartford.
HOME OFFICE OF THE COMPANY: Currently located at 200 Hopmeadow Street, Simsbury,
CT. All correspondence concerning this Contract should be sent to P.O. Box 5085,
Hartford, CT 06102-5085, Attn: Individual Annuity Services.
HARTFORD: ITT Hartford Life and Annuity Insurance Company.
MAXIMUM ANNIVERSARY VALUE: Value used in determining the death benefit. It is
based on a series of calculations of Contract Values on Contract Anniversaries,
premium payments and partial surrenders, as described on page 15.
NON-QUALIFIED CONTRACT: A Contract which is not part of a tax-qualified
retirement plan or arrangement which qualifies for special tax treatment under
the Code.
PARTICIPANT (FOR GROUP UNALLOCATED CONTRACTS ONLY): Any eligible employee of an
employer/Contract Owner participating in the Plan.
PLAN: A voluntary plan of an employer or other person which qualifies for
special tax treatment under the Code.
PREMIUM PAYMENT: The payment made to Hartford pursuant to the terms of the
Contract.
PREMIUM TAX: A tax on premiums charged by a state or municipality on Premium
Payments or Contract Values.
QUALIFIED CONTRACT: A Contract which is a part of a tax-qualified retirement
plan or arrangement which qualifies for special tax treatment under the Code,
such as an employer-sponsored Section401(k) plan or an Individual Retirement
Annuity (IRA).
SEPARATE ACCOUNT: The Hartford separate account entitled "ITT Hartford Life and
Annuity Insurance Company Separate Account One".
SUB-ACCOUNT: Accounts established within the Separate Account with respect to a
Fund.
TERMINATION VALUE: The Contract Value upon termination of the Contract prior to
the Annuity Commencement Date, less any applicable Premium Taxes, the Annual
Maintenance Fee and any applicable contingent deferred sales charges.
UNALLOCATED CONTRACTS: Contracts issued to employers, or other entity, as
Contract Owner under which no allocation
<PAGE>
4 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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of Contract Values is made for a specific Participant. The Plans will be
responsible for the individual allocations.
VALUATION DAY: Every day the New York Stock Exchange is open for trading. The
value of the Separate Account is determined at the close of the New York Stock
Exchange (currently 4:00 p.m. Eastern Time) on such days.
VALUATION PERIOD: The period between the close of business on successive
Valuation Days.
VARIABLE ANNUITY: An Annuity providing for payments varying in amount in
accordance with the investment experience of the assets of the Separate Account.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 5
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FEE TABLE
SUMMARY
Contract Owner Transaction Expenses
(All Sub-Accounts)
<TABLE>
<S> <C>
Sales Load Imposed on Purchases (as a percentage of premium
payments)...................................................... None
Exchange Fee...................................................... $ 0
Deferred Sales Load (as a percentage of amounts withdrawn)
First Year (1)................................................ 6%
Second Year................................................... 6%
Third Year.................................................... 5%
Fourth Year................................................... 5%
Fifth Year.................................................... 4%
Sixth Year.................................................... 3%
Seventh Year.................................................. 2%
Eighth Year................................................... 0%
Annual Contract Fee (2)........................................... $ 30
Annual Expenses-Separate Account (as percentage of average account
value)
Mortality and Expense Risk.................................... 1.250%
</TABLE>
Annual Fund Operating Expenses
(as a percentage of net assets)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
FEES EXPENSES EXPENSES
---------- -------- ----------
<S> <C> <C> <C>
Hartford Bond Fund.............................. 0.490% 0.030% 0.520%
Hartford Stock Fund............................. 0.441% 0.016% 0.457%
HVA Money Market Fund........................... 0.423% 0.021% 0.444%
Hartford Advisers Fund.......................... 0.615% 0.017% 0.632%
Hartford Capital Appreciation Fund.............. 0.629% 0.017% 0.646%
Hartford Mortgage Securities Fund............... 0.424% 0.029% 0.453%
Hartford Index Fund............................. 0.374% 0.019% 0.393%
Hartford International Opportunities Fund....... 0.691% 0.095% 0.786%
Hartford Dividend & Growth Fund................. 0.709% 0.017% 0.726%
Hartford International Advisers Fund............ 0.746% 0.214% 0.960%
Hartford MidCap Fund (3)........................ 0.520% 0.150% 0.670%
Hartford Small Company Fund..................... 0.750% 0.040% 0.790%
</TABLE>
- ------------------------------
(1) Length of time from premium payment.
(2) The Annual Contract Fee is a single $30 charge on a Contract. It is deducted
proportionally from the investment options in use at the time of the charge.
Pursuant to requirements of the 1940 Act, the policy fees has been reflected
in the Examples by a method intended to show the "average" impact of the
policy fee on an investment in the Separate Account. The Policy Fee is
deducted only when the accumulated value is less than $50,000. In the
Example, the Annual Contract Fee is approximated as a 0.06% annual asset
charge based on the experience of the Contracts.
(3) Hartford MidCap Fund is a new Fund: Operating expenses are based on
annualized estimates of such expenses to be incurred in the current fiscal
year. HL Investment Advisors, Inc. has agreed to waive its fees for the
MidCap Fund until the assets of the Fund (excluding assets contributed by
companies affiliated with HL Investment Advisors, Inc.) first reach $20
million. Absent this waiver, the investment advisory fee would be 0.575%
annually and total fund operating expense ratio would be 0.900%
(annualized).
EXAMPLE
<TABLE>
<CAPTION>
If you surrender your Contract If you annuitize your Contract If you do not surrender your
at the end of the applicable at the end of the applicable Contract, you would pay the
time period, you would pay the time period, you would pay the following expenses on a $1,000
following expenses on a $1,000 following expenses on a $1,000 investment, assuming a 5%
investment, assuming a 5% investment, assuming a 5% annual return on assets:
annual return on assets: annual return on assets:
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------- ------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Hartford Bond Fund........... $ 79 $ 108 $ 140 $ 216 $ 18 $ 57 $ 99 $ 215 $ 19 $ 58 $ 100 $ 216
Hartford Stock Fund.......... 78 106 137 209 17 55 96 209 18 56 97 209
HVA Money Market Fund........ 78 106 136 208 17 55 95 207 18 56 96 208
Hartford Advisers Fund....... 80 112 146 228 19 61 105 227 20 62 106 228
Hartford Capital Appreciation
Fund....................... 80 112 146 230 19 61 106 229 20 62 106 230
Hartford Mortgage Securities
Fund....................... 78 106 136 209 17 55 96 208 18 56 96 209
Hartford Index Fund.......... 77 104 133 202 17 53 92 202 17 54 93 202
Hartford International
Opportunities Fund......... 81 116 154 245 21 66 113 244 21 66 114 245
Hartford Dividend & Growth
Fund....................... 81 114 151 238 20 64 110 237 21 64 111 238
Hartford International
Advisers Fund.............. 83 122 163 263 23 71 122 262 23 72 123 263
Hartford MidCap Fund......... 80 113 N/A N/A 19 62 N/A N/A 20 63 N/A N/A
Hartford Small Company
Fund....................... 81 116 N/A N/A 21 66 N/A N/A 21 66 N/A N/A
</TABLE>
The purpose of this table is to assist the Contract Owner in understanding
various costs and expenses that a Contract Owner will bear directly or
indirectly. The table reflects expenses of the Separate Account and underlying
Funds. Premium taxes may also be applicable.
This EXAMPLE should not be considered a representation of past or future
expenses and actual expenses may be greater or less than those shown.
<PAGE>
6 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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ACCUMULATION UNIT VALUES
(FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT THE PERIOD)
The following information, insofar as it relates to the period ended
December 31, 1996, has been examined by Arthur Andersen LLP, independent public
accountants, whose report thereon is included in the Statement of Additional
Information, which is incorporated by reference to this Prospectus. No
information is included for the MidCap Fund Sub-Account because as of December
31, 1996, the Sub-Account had not commerced operations.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1996 1995 1994 1993
------- ------- ------- -------
<S> <C> <C> <C> <C>
BOND FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $1.880 $1.607 $1.694 $1.556(a)
Accumulation unit value at end of period.................. $1.922 $1.880 $1.607 $1.694
Number accumulation units outstanding at end of period (in
thousands)............................................... 76,247 48,354 33,950 23,803
STOCK FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $2.887 $2.180 $2.250 $1.993(a)
Accumulation unit value at end of period.................. $3.547 $2.887 $2.180 $2.250
Number accumulation units outstanding at end of period (in
thousands)............................................... 317,416 186,727 110,928 60,431
MONEY MARKET FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $1.528 $1.462 $1.424 $1.401(a)
Accumulation unit value at end of period.................. $1.587 $1.528 $1.462 $1.424
Number accumulation units outstanding at end of period (in
thousands)............................................... 110,350 66,468 30,871 14,881
ADVISERS FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $2.523 $1.991 $2.072 $1.870(a)
Accumulation unit value at end of period.................. $2.905 $2.523 $1.991 $2.072
Number accumulation units outstanding at end of period (in
thousands)............................................... 784,326 645,105 414,318 244,980
CAPITAL APPRECIATION FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $3.364 $2.615 $2.583 $2.165(a)
Accumulation unit value at end of period.................. $4.010 $3.364 $2.615 $2.583
Number accumulation units outstanding at end of period (in
thousands)............................................... 353,466 216,591 116,535 58,645
MORTGAGE SECURITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $1.878 $1.637 $1.685 $1.604(a)
Accumulation unit value at end of period.................. $1.949 $1.878 $1.637 $1.685
Number accumulation units outstanding at end of period (in
thousands)............................................... 38,304 31,288 20,674 28,380
INDEX FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $2.359 $1.750 $1.755 $1.629(a)
Accumulation unit value at end of period.................. $2.845 $2.359 $1.750 $1.755
Number accumulation units outstanding at end of period (in
thousands)............................................... 77,074 32,779 12,030 7,491
INTERNATIONAL OPPORTUNITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $1.329 $1.181 $1.220 $0.924(a)
Accumulation unit value at end of period.................. $1.482 $1.329 $1.181 $1.220
Number accumulation units outstanding at end of period (in
thousands)............................................... 326,954 222,606 175,763 66,084
DIVIDEND & GROWTH FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $1.359 $1.009 $1.000(b)
Accumulation unit value at end of period.................. $1.650 $1.359 $1.009
Number accumulation units outstanding at end of period (in
thousands)............................................... 301,767 101,085 21,973
INTERNATIONAL ADVISERS FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $1.146 $1.000(c)
Accumulation unit value at end of period.................. $1.266 $1.146
Number accumulation units outstanding at end of period (in
thousands)............................................... 56,743 10,717
SMALL COMPANY FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............ $1.000(d)
Accumulation unit value at end of period.................. $1.066
Number accumulation units outstanding at end of period (in
thousands)............................................... 24,397
</TABLE>
(a) Inception date May 1, 1993.
(b) Inception date March 8, 1994.
(c) Inception date March 1, 1995.
(d) Inception date August 9, 1996.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 7
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INTRODUCTION
This Prospectus has been designed to provide you with the necessary
information to make a decision on purchasing an individual or group tax deferred
Variable Annuity Contract offered by ITT Hartford Life and Annuity Insurance
Company ("Hartford") in the Fixed Account and/or a series of Separate Account
One. (See "ITT Hartford Life and Annuity Insurance Company," page 7; "The
Contracts," page 12; and "The Separate Account," page 8.) Please read the
Glossary of Special Terms on pages 3 and 4 prior to reading this Prospectus to
familiarize yourself with the terms being used.
The Contracts are available for purchase by individuals and groups on both a
non-qualified and qualified basis. The maximum issue age for the Contract is 85
years old. (See "The Contracts," page 12.) Generally, the minimum initial
Premium Payment is $1,000. Thereafter, the minimum payment is $500. There is no
deduction for sales expenses from Premium Payments when made. A deduction will
be made for state Premium Taxes for Contracts sold in certain states. (See
"Charges Under the Contract," page 13.)
Generally, the Contracts are purchased by completing and submitting an
application or an order to purchase, along with the initial Premium Payment, to
Hartford for its approval. Generally, a Contract Owner may exercise his right to
cancel the Contract within ten days of delivery of the Contract by returning the
Contract to Hartford at its Home Office. If the Contract Owner exercises his
right to cancel, Hartford will return either the Contract Value or the original
Premium Payments to the Contract Owner. The duration of the right to cancel
period and Hartford's obligation to either return the Contract Value or the
original Premium Payment will depend on state law.
The investment options for the contracts are the Hartford Advisers Fund,
Inc., Hartford Bond Fund, Inc., Hartford Capital Appreciation Fund, Inc.,
Hartford Dividend and Growth Fund, Inc., Hartford Index Fund, Inc., Hartford
International Advisers Fund, Inc., Hartford International Opportunities Fund,
Inc., Hartford MidCap Fund, Inc., Hartford Mortgage Securities Fund, Inc.,
Hartford Small Company Fund, Inc., Hartford Stock Fund, Inc., HVA Money Market
Fund, Inc. and such other funds as shall be offered from time to time (the
"Funds"), and the Fixed Account. (See "The Funds," page 8, and "The Fixed
Account," page 10.) With certain limitations, Contract Owners may allocate their
Premium Payments and Contract Values to one or a combination of these investment
options and transfer among the investment options. (See "Transfers Between
Sub-Accounts/Fixed Account," page 13.)
An Annual Maintenance Fee in the amount of $30.00 is deducted from Contract
Values each Contract Year (not applicable to Contracts with Account Values of
$50,000 or more or under other circumstances at the sole discretion of Hartford)
and there is a 1.25% per annum mortality and expense risk charge applied against
all Contract Values held in the Separate Account. (See "Charges Under the
Contract," page 13). Finally, the Funds are subject to certain fees, charges and
expenses (see the Funds' prospectus accompanying this Prospectus).
The Contracts may be surrendered, or portions of the value of the Contracts
may be withdrawn, at any time prior to the Annuity Commencement Date. (See
"Surrender Benefits," page 16). However, a contingent deferred sales charge may
be assessed against Contract Values when they are surrendered. Contingent
deferred sales charges will not be assessed in certain instances, including
withdrawals up to the annual withdrawal amount and the payment of Death
Benefits. (See "Charges Under the Contract," page 13.)
The Contract provides for a minimum death benefit in the event of the death
of the Annuitant or Contract Owner before Annuity payments have commenced (see
"Death Benefits," page 15). Various annuity options are available under the
Contract for election by the Contract Owner on either a fixed or variable basis.
In the absence of an annuity option election, the Contract Value (less
applicable Premium Taxes) will be applied on the Annuity Commencement Date to
provide a life annuity with 120 monthly payments certain (see "Annuity
Benefits," page 17).
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 financial institutions affiliated therewith)
that have a sales agreement with Hartford and its principal underwriter to sell
the Contract.
HARTFORD, SEPARATE ACCOUNT
ONE, THE FIXED ACCOUNT
AND THE FUNDS
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
ITT Hartford Life and Annuity Insurance Company ("Hartford") is a stock life
insurance company engaged in the business of writing life insurance and
annuities, both individual and group, in all states of the United States,
<PAGE>
8 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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except New York, and the District of Columbia. On January 1, 1998, Hartford's
name will change to Hartford Life and Annuity Insurance Company. Hartford was
originally incorporated under the laws of Wisconsin on January 9, 1956, and was
subsequently redomiciled to Connecticut. Its offices are located in Simsbury,
Connecticut; however, its mailing address is P.O. Box 2999, Hartford, CT
06104-2999. Hartford is a subsidiary of Hartford Fire Insurance Company, one of
the largest multiple lines insurance carriers in the United States. Hartford is
ultimately controlled by The Hartford Financial Services Group, Inc., a Delaware
corporation.
HARTFORD RATING
<TABLE>
<CAPTION>
EFFECTIVE
DATE OF
RATING AGENCY RATING RATING BASIS OF RATING
- ------------------------ ---------- ----------- ------------------------
<S> <C> <C> <C>
A.M. Best and Company,
Inc.................... 9/9/97 A+ Financial soundness and
operating performance
Standard & Poor's....... 7/2/97 AA Claims paying ability
Duff & Phelps........... 2/24/97 AA+ Claims paying ability
</TABLE>
SEPARATE ACCOUNT ONE
The Separate Account was established on May 20, 1991. It is the Separate
Account in which Hartford sets aside and invests the assets attributable to
variable annuity Contracts, including the Contracts sold under this Prospectus.
Separate Account assets are held by Hartford under a safekeeping arrangement.
Although the Separate Account is an integral part of Hartford, it is registered
as a unit investment trust under the Investment Company Act of 1940. This
registration does not, however, involve Commission supervision of the management
or the investment practices or policies of the Separate Account or Hartford. The
Separate Account meets the definition of "separate account" under federal
securities law.
Your investment in the Separate Account is allocated to one or more
Sub-Accounts as per your specifications. Each Sub-Account is invested
exclusively in the assets of one underlying Fund. Hartford reserves the right,
subject to compliance with the law, to substitute the shares of any other
registered investment company for the shares of any Fund already purchased or to
be purchased in the future by the Separate Account provided that the
substitution has been approved by the Commission.
Net Premium Payments and proceeds of transfers between Sub-Accounts are
applied to purchase shares in the appropriate Fund at net asset value determined
as of the end of the Valuation Period during which the payments were received or
the transfer made. All distributions from the Fund are reinvested at net asset
value. The value of your investment will therefore vary in accordance with the
net income and fluctuation in the individual investments within the underlying
Fund portfolio or portfolios. During the Variable Annuity payout period, both
your Annuity payments and reserve values will vary in accordance with these
factors.
Under Connecticut law, the assets of the Separate Account attributable to
the Contracts offered under this Prospectus are held for the benefit of the
owners of, and the persons entitled to payments under, those Contracts. Income,
gains, and losses, whether or not realized, from assets allocated to the
Separate Account, are, in accordance with the Contracts, credited to or charged
against the Separate Account. Also, the assets in the Separate Account are not
chargeable with liabilities arising out of any other business Hartford may
conduct. Contract Values allocated to the Separate Account is not affected by
the rate of return of Hartford's General Account, nor by the investment
performance of any of Hartford's other separate accounts. The Separate Account
may be subject to liabilities arising from a Sub-Account of the Separate Account
whose assets are attributable to other variable annuity Contracts or variable
life insurance policies offered by the Separate Account which are not described
in this Prospectus. However, all obligations arising under the Contracts are
general corporate obligations of Hartford.
Hartford does not guarantee the investment results of the Separate Accounts
or any of the underlying investments. There is no assurance that the value of a
Contract during the years prior to retirement or the aggregate amount of the
Variable Annuity payments will equal the total of Premium Payments made under
the Contract. Since each underlying Fund has different investment objectives,
each is subject to different risks. These risks are more fully described in the
accompanying Funds' prospectus.
THE FUNDS
All of the Funds are sponsored by Hartford and are incorporated under the
laws of the State of Maryland. HL Investment Advisors, Inc. ("HL Advisors")
serves as the investment adviser to each of the Hartford Funds.
Wellington Management Company, LLP serves as sub-investment adviser for
Hartford Advisers Fund, Hartford Capital Appreciation Fund, Hartford Dividend
and Growth Fund, Hartford International Advisers Fund, Hartford International
Opportunities Fund, Hartford MidCap Fund, Hartford Small Company Fund and
Hartford Stock Fund.
In addition, HL Advisors has entered into an investment services agreement
with The Hartford Investment Management Company, Inc. ("HIMCO"), pursuant to
which HIMCO will provide certain investment services to Hartford Bond Fund,
Hartford Index Fund, Hartford Mortgage Securities Fund and HVA Money Market
Fund.
A full description of the Funds, their investment policies and restrictions,
risks, charges and expenses and all
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 9
- --------------------------------------------------------------------------------
other aspects of their operation is contained in the accompanying Funds'
prospectus, which should be read in conjunction with this Prospectus before
investing, and in the Funds' Statement of Additional Information which may be
ordered from Hartford. The Funds may not be available in all states.
Depending on where you purchase the Contract, other investment options may
be available.
The investment objectives of each of the Funds are as follows:
HARTFORD ADVISERS FUND, INC.
Seeks maximum long-term total rate of return consistent with prudent
investment risk by investing in common stock and other equity securities, bonds
and other debt securities, and money market instruments.
HARTFORD BOND FUND, INC.
Seeks maximum current income consistent with preservation of capital by
investing primarily in fixed-income securities. Up to 20% of the total assets of
this Fund may be invested in debt securities rated in the highest category below
investment grade ("Ba" by Moody's Investor Services, Inc. or "BB" by Standard &
Poor's) or, if unrated, are determined to be of comparable quality by the Fund's
investment adviser. Securities rated below investment grade are commonly
referred to as "high yield-high risk securities" or "junk bonds." For more
information concerning the risks associated with investing in such securities,
please refer to the section in the accompanying prospectus for the Funds
entitled "Hartford Bond Fund, Inc. -- Investment Policies."
HARTFORD CAPITAL APPRECIATION FUND, INC.
Seeks growth of capital by investing in securities selected solely on the
basis of potential for capital appreciation; income, if any, is an incidental
consideration.
HARTFORD DIVIDEND AND GROWTH FUND, INC.
Seeks a high level of current income consistent with growth of capital and
reasonable investment risk.
HARTFORD INDEX FUND, INC.
Seeks to provide investment results which approximate the price and yield
performance of publicly-traded common stocks in the aggregate, as represented by
the Standard & Poor's 500 Composite Stock Price Index.*
HARTFORD INTERNATIONAL ADVISERS FUND, INC.
Seeks maximum long-term total return consistent with prudent investment risk
by investing in a portfolio of equity, debt and money market securities.
Securities in which the Fund invests primarily will be denominated in non-U.S.
currencies and will be traded in non-U.S. markets.
HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC.
Seeks long-term total rate of return consistent with prudent investment risk
through investment primarily in equity securities issued by non-U.S. companies.
HARTFORD MIDCAP FUND, INC.
Seeks to achieve long-term capital growth through capital appreciation by
investing primarily in equity securities.
HARTFORD MORTGAGE SECURITIES FUND, INC.
Seeks maximum current income consistent with safety of principal and
maintenance of liquidity by investing primarily in mortgage-related securities,
including securities issued by the Government National Mortgage Association.
HARTFORD SMALL COMPANY FUND, INC.
Seeks growth of capital by investing primarily in equity securities selected
on the basis of potential for capital appreciation.
HARTFORD STOCK FUND, INC.
Seeks long-term capital growth primarily through capital appreciation, with
income as a secondary consideration, by investing primarily in equity
securities.
HVA MONEY MARKET FUND, INC.
Seeks maximum current income consistent with liquidity and preservation of
capital.
VOTING RIGHTS -- Hartford is the legal owner of all Fund shares held in the
Separate Account. As the owner, Hartford has the right to vote at the Funds'
shareholder meetings. However, to the extent required by federal securities laws
or regulations, Hartford will:
1. Vote all Fund shares attributable to a Contract according to instructions
received from the Contract Owner, and
2. Vote shares attributable to a Contract for which no voting instructions are
received in the same proportion as shares for which instructions are
received.
If any federal securities laws or regulations, or their present
interpretation change to permit Hartford to vote Fund shares in its own right,
Hartford may elect to do so.
*"STANDARD & POOR'S-REGISTERED TRADEMARK-", "S&P-REGISTERED TRADEMARK-", "S&P
500-REGISTERED TRADEMARK-", "STANDARD & POOR'S 500", AND "500" ARE TRADEMARKS OF
THE MCGRAW-HILL COMPANIES, INC. AND HAVE BEEN LICENSED FOR USE BY HARTFORD LIFE
INSURANCE COMPANY. THE HARTFORD INDEX FUND ("INDEX FUND") IS NOT SPONSORED,
ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR'S AND STANDARD & POOR'S MAKES NO
REPRESENTATION REGARDING THE ADVISABILITY OF INVESTING IN THE INDEX FUND.
<PAGE>
10 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
Hartford will send proxy materials and a form of instruction by means of
which you can instruct Hartford with respect to the voting of the Fund shares
held for your account.
In connection with the voting of Fund shares held by it, Hartford will
arrange for the handling and tallying of proxies received from Contract Owners.
Hartford as such, shall have no right, except as hereinafter provided, to vote
any Fund shares held by it hereunder which may be registered in its name or the
names of its nominees. Hartford will, however, vote the Fund shares held by it
in accordance with the instructions received from the Contract Owners for whose
accounts the Fund shares are held. If a Contract Owner desires to attend any
meeting at which shares held for the Contract Owner's benefit may be voted, the
Contract Owner may request Hartford to furnish a proxy or otherwise arrange for
the exercise of voting rights with respect to the Fund shares held for such
Contract Owner's account. Hartford will vote shares for which no instructions
have been given and shares which are not attributable to Contract Owners (i.e.
shares owned by Hartford) in the same proportion as it votes shares of that Fund
for which it has received instructions. During the Annuity period under a
Contract the number of votes will decrease as the assets held to fund Annuity
benefits decrease.
The Funds are available only to serve as the underlying investment for
variable annuity and variable life insurance Contracts issued by Hartford. It is
conceivable that in the future it may be disadvantageous for variable annuity
separate accounts and variable life insurance separate accounts to invest in the
Funds simultaneously. Although Hartford and the Funds do not currently foresee
any such disadvantages either to variable annuity Contract Owners or to variable
life insurance Policyowners, the Funds' Board of Directors intends to monitor
events in order to identify any material conflicts between such Contract Owners
and Policyowners and to determine what action, if any, should be taken in
response thereto. If the Board of Directors of the Funds were to conclude that
separate funds should be established for variable life and variable annuity
separate accounts, the variable annuity Contract Owners would not bear any
expenses attendant to the establishment of such separate funds.
THE FIXED ACCOUNT
THAT PORTION OF THE CONTRACT RELATING TO THE FIXED ACCOUNT IS NOT REGISTERED
UNDER THE SECURITIES ACT OF 1933 ("1933 ACT") AND THE FIXED ACCOUNT IS NOT
REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940
("1940 ACT"). ACCORDINGLY, NEITHER THE FIXED ACCOUNT NOR ANY INTERESTS THEREIN
ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT,
AND THE DISCLOSURE REGARDING THE FIXED ACCOUNT HAS NOT BEEN REVIEWED BY THE
STAFF OF THE SECURITIES AND EXCHANGE COMMISSION. THE FOLLOWING DISCLOSURE ABOUT
THE FIXED ACCOUNT MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF
THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND COMPLETENESS OF
DISCLOSURE.
Premium Payments and Contract Values allocated to the Fixed Account become a
part of the general assets of Hartford. Hartford invests the assets of the
General Account in accordance with applicable law governing the investments of
Insurance Company General Accounts.
Currently, Hartford guarantees that it will credit interest at a rate of not
less than 3% per year, compounded annually, to amounts allocated to the Fixed
Account under the Contracts. However, Hartford reserves the right to change the
rate according to state insurance law. Hartford may credit interest at a rate in
excess of 3% per year. There is no specific formula for the determination of
excess interest credits. Some of the factors that Hartford may consider in
determining whether to credit excess interest to amounts allocated to the Fixed
Account and the amount thereof, are general economic trends, rates of return
currently available and anticipated on Hartford's investments, regulatory and
tax requirements and competitive factors.
ANY INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF
3% PER YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF HARTFORD. THE OWNER
ASSUMES THE RISK THAT INTEREST CREDITED TO FIXED ACCOUNT ALLOCATIONS MAY NOT
EXCEED THE MINIMUM GUARANTEE OF 3% FOR ANY GIVEN YEAR.
From time to time, Hartford may credit increased interest rates to Contract
Owners under certain programs established at the discretion of Hartford.
Effective August 6, 1997, Contract Owners may enroll in a special preauthorized
transfer program known as Hartford's Dollar Cost Averaging Bonus Program (the
"Program"). Under this Program, Contract Owners who enroll may allocate a
minimum of $5,000 of their Premium Payment into the Program and preauthorize
between 3 and 12 monthly transfers to any of the Sub-Accounts. Contract Owners
enrolled in the Program will receive an increased interest rate guaranteed for a
12 month period.
The preauthorized transfers will begin on or about 15 days following receipt
of an initial Program Premium Payment. That Premium Payment plus any subsequent
Premium Payments and any accrued interest will be completely transferred into
Sub-Accounts within twelve months of receipt of the initial Program Premium
Payment. This will be accomplished by equal monthly transfers for the
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 11
- --------------------------------------------------------------------------------
period selected, and a final transfer of the entire amount remaining in the
Program.
Any subsequent Premium Payments received by Hartford within the period
selected for transfer will be allocated to the Sub-Accounts over the remainder
of the transfer period. If, while the Program is still in effect but the
transfer period has expired, a subsequent Premium Payment of $5,000 is received
by Hartford, a new Program cycle will be initiated. Unless instructed otherwise,
Hartford will allocate the Premium Payment in the same number of transfers and
into the same Sub-Accounts as the previous election. If, while the Program is
still in effect but the transfer period has expired, a subsequent Premium
Payment of less than $5,000 is received by Hartford, the entire amount will be
credited with the non-Program interest rate then in effect for the Fixed
Account.
If complete Program enrollment instructions are not received by Hartford
within 15 days of receipt of the initial Program Premium Payment, the Program
will be voided and the entire balance in the Program will be credited with the
non-Program interest rate then in effect for the Fixed Account.
The Contract Owner may elect to terminate the preauthorized transfers by
calling or writing Hartford of their intent to cancel their enrollment in the
Program. Upon cancellation of enrollment in the Program the Contract Owner will
no longer receive the increased interest rate. Hartford reserves the right to
discontinue, modify or amend the Program or any other interest rate program
established by Hartford. Any change to the Program will not affect Contract
Owners currently enrolled in the Program.
PERFORMANCE RELATED INFORMATION
The Separate Account may advertise certain performance related information
concerning its Sub-Accounts. Performance information about a Sub-Account is
based on the Sub-Account's past performance only and is no indication of future
performance.
The Hartford Advisers Fund, Hartford Bond Fund, Hartford Capital
Appreciation Fund, Hartford Dividend and Growth Fund, Hartford Index Fund,
Hartford International Advisers Fund, Hartford International Opportunities Fund,
Hartford Mortgage Securities Fund, Hartford Small Company Fund, Hartford Stock
Fund, and HVA Money Market Fund Sub-Accounts may include total return in
advertisements or other sales material.
When a Sub-Account advertises its standardized total return, it will usually
be calculated for one year, five years, and ten years or some other relevant
periods if the Sub-Account has not been in existence for at least ten years.
Total return is measured by comparing the value of an investment in the
Sub-Account at the beginning of the relevant period to the value of the
investment at the end of the period (assuming the deduction of any contingent
deferred sales charge which would be payable if the investment were redeemed at
the end of the period).
In addition to the standardized total return, the Sub-Account may advertise
a non-standardized total return. This figure will usually be calculated for one
year, five years, and ten years or other periods. Non-standardized total return
is measured in the same manner as the standardized total return described above,
except that the contingent deferred sales charge and the Annual Maintenance Fee
are not deducted. Therefore, non-standardized total return for a Sub-Account is
higher than standardized total return for a Sub-Account.
The Hartford Bond Fund and Hartford Mortgage Securities Fund Sub-Accounts
may advertise yield in addition to total return. The yield will be computed in
the following manner: The net investment income per unit earned during a recent
one month period is divided by the unit value on the last day of the period.
This figure reflects the recurring charges at the Separate Account level
including the annual maintenance fee.
The HVA Money Market Fund Sub-Account may advertise yield and effective
yield. The yield of a Sub-Account is based upon the income earned by the
Sub-Account over a seven-day period and then annualized, i.e. the income earned
in the period is assumed to be earned every seven days over a 52-week period and
stated as a percentage of the investment. Effective yield is calculated
similarly but when annualized, the income earned by the investment is assumed to
be reinvested in Sub-Account units and thus compounded in the course of a
52-week period. Yield and effective yield reflect the recurring charges at the
Separate Account level including the annual maintenance fee.
The Separate Account may also disclose yield, standard total return, and
non-standard total return for periods prior to the date the Separate Account
commenced operations. For periods prior to the date the Separate Account
commenced operations, performance information for the Sub-Accounts will be
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.
Hartford may provide information on various topics to Contract Owners and
prospective Contract Owners in advertising, sales literature or other materials.
These topics may include the relationship between sectors of the economy and the
economy as a whole and its effect on various securities markets, investment
strategies and techniques (such as value investing, dollar cost averaging and
asset allocation), the advantages and disadvantages of investing in tax-
<PAGE>
12 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
advantaged and taxable instruments, customer profiles and hypothetical purchase
scenarios, financial management and tax and retirement planning, and other
investment alternatives, including comparisons between the Contracts and the
characteristics of and market for such alternatives.
THE CONTRACTS
CONTRACTS OFFERED
The Contracts are individual or group tax deferred Variable Annuity
Contracts designed for retirement planning purposes and may be purchased by any
individual, group or trust, including any trustee or custodian for a retirement
plan qualified under Sections 401(a) or 403(a) of the 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 or
instrumentality of either a state or a political subdivision of a state, and
certain eligible deferred compensation plans as defined in Section 457 of the
Code ("Qualified Contracts").
PREMIUM PAYMENTS AND INITIAL ALLOCATIONS
The minimum initial Premium Payment is $1,000. Thereafter, the minimum
Premium Payment is $500. Certain plans may make smaller periodic payments. Each
Premium Payment may be split among the various Sub-Accounts and/or the Fixed
Account subject to minimum amounts then in effect.
REFUND RIGHTS -- If you are not satisfied with your purchase you may cancel
the Contract by returning it within ten days (or longer in some states) after
you receive it. A written request for cancellation must accompany the Contract.
In such event, Hartford will, without deduction for any charges normally
assessed thereunder, pay you an amount equal to the Contract Value on the date
of receipt of the request for cancellation. You bear the investment risk during
the period prior to Hartford's receipt of request for cancellation. Hartford
will refund the premium paid only for Individual Retirement Annuities (if
returned within seven days of receipt) and in those states where required by
law.
CREDITING AND VALUATION -- The balance of the initial Premium Payment
remaining after the deduction of any applicable Premium Tax is credited to your
Contract within two business days of receipt of a properly completed application
or an order to purchase a Contract and the initial Premium Payment by Hartford
at its Home Office, P. O. Box 5085, Hartford, CT 06102-5085. It will be credited
to the Sub-Account(s) and/or the Fixed Account in accordance with your election.
If the application or other information is incomplete when received, the balance
of the initial Premium Payment, after deduction of any applicable Premium Tax,
will be credited to the Sub-Account(s) or the Fixed Account within five business
days of receipt. If the initial Premium Payment is not credited within five
business days, the Premium Payment will be immediately returned unless you have
been informed of the delay and request that the Premium Payment not be returned.
The number of Accumulation Units in each Sub-Account to be credited to a
Contract will be determined by dividing the portion of the Premium Payment being
credited to each Sub-Account by the value of an Accumulation Unit in that
Sub-Account on that date.
Subsequent Premium Payments are priced on the Valuation Day received by
Hartford at its Home Office, or other designated administrative offices.
CONTRACT VALUE
The value of the Sub-Account investments under your Contract at any time
prior to the commencement of Annuity payments can be determined by multiplying
the total number of Accumulation Units credited to your Contract in each
Sub-Account by the then current Accumulation Unit values for the applicable
Sub-Account. The value of the Fixed Account under your Contract will be the
amount allocated to the Fixed Account plus interest credited. You will be
advised at least semiannually of the number of Accumulation Units credited to
each Sub-Account, the current Accumulation Unit values, the Fixed Account value,
and the total value of your Contract.
ACCUMULATION UNIT VALUES -- The Accumulation Unit value for each Sub-Account
will vary to reflect the investment experience of the applicable Fund and will
be determined on each Valuation Day by multiplying the Accumulation Unit value
of the particular Sub-Account on the preceding Valuation Day by a "Net
Investment Factor" for that Sub-Account for the Valuation Period then ended. The
"Net Investment Factor" for each of the Sub-Accounts is equal to (a) the net
asset value per share of the corresponding Fund at the end of the Valuation
Period (plus the per share amount of any dividends or capital gains distributed
by that Fund if the ex-dividend date occurs in the Valuation Period then ended)
divided by the net asset value per share of the corresponding Fund at the
beginning of the Valuation Period, minus (b) the mortality and expense risk
charge and the administration charge described below. You should refer to the
prospectus for each of the Funds which accompanies this Prospectus for a
description of how the assets of each Fund are valued since each determination
has a direct bearing on the Accumulation Unit value of the Sub-Account and
therefore the value of a Contract. The Accumulation Unit Value is affected by
the performance of the underlying Fund(s), expenses and deduction of the charges
described in this Prospectus.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 13
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VALUATION OF FUND SHARES -- The shares of the Fund are valued at net asset
value on each Valuation Day. A complete description of the valuation method used
in valuing Fund shares may be found in the accompanying Funds' prospectus.
VALUATION OF THE FIXED ACCOUNT -- Hartford will determine the value of the
Fixed Account by crediting interest to amounts allocated to the Fixed Account.
TRANSFERS BETWEEN SUB-ACCOUNTS/FIXED ACCOUNT
You may transfer the values of your Sub-Account allocations from one or more
Sub-Accounts to another free of charge. However, Hartford reserves the right to
limit the number of transfers to twelve (12) per Contract Year, with no two (2)
transfers occurring on consecutive Valuation Days. Transfers by telephone may be
made by a Contract Owner or by the attorney-in-fact pursuant to a power of
attorney by calling (800) 862-6668 or by the agent of record by calling (800)
862-7155. Telephone transfers may not be permitted by some states for their
residents who purchase variable annuities.
The policy of Hartford and its agents and affiliates is that they will not
be responsible for losses resulting from acting upon telephone requests
reasonably believed to be genuine. Hartford will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine; otherwise,
Hartford may be liable for any losses due to unauthorized or fraudulent
instructions. The procedures Hartford follows for transactions initiated by
telephone include requirements that callers provide certain information for
identification purposes. All transfer instructions by telephone are tape
recorded.
Hartford may permit the Contract Owner to preauthorize transfers among
Sub-Accounts and between Sub-Accounts and the Fixed Account under certain
circumstances. Transfers between the Sub-Accounts may be made both before and
after Annuity payments commence (limited to once a quarter) provided that the
minimum allocation to any Sub-Account may not be less than $500. No minimum
balance is required in any Sub-Account.
It is the responsibility of the Contract Owner or Participant to verify the
accuracy of all confirmations of transfers and to promptly advise Hartford of
any inaccuracies within one business day of receipt of the confirmation.
Hartford will send the Contract Owner a confirmation of the transfer within five
days from the date of any instruction.
Transfers from the Fixed Account into a Sub-Account may be made at any time
during the Contract Year. The maximum amount which may be transferred from the
Fixed Account during any Contract Year is the greater of 30% of the Fixed
Account balance as of the last Contract Anniversary or the greatest amount of
any prior transfer from the Fixed Account. If Hartford permits preauthorized
transfers from the Fixed Account to the Sub-Accounts, this restriction is
inapplicable. Also, if any interest rate is renewed at a rate of at least one
percentage point less than the previous rate, the Contract Owner may elect to
transfer up to 100% of the funds receiving the reduced rate within 60 days of
notification of the interest rate decrease. Generally, transfers may not be made
from any Sub-Account into the Fixed Account for the six-month period following
any transfer from the Fixed Account into one or more of the Sub-Accounts.
Hartford reserves the right to modify the limitations on transfers from the
Fixed Account and to defer transfers from the Fixed Account for up to six months
from the date of request.
Subject to the exceptions set forth in the following two paragraphs, the
right to reallocate Contract Values is subject to modification if Hartford
determines, in its sole opinion, that the exercise of that right by one or more
Contract Owners is, or would be, to the disadvantage of other Contract Owners.
Any modification could be applied to transfers to or from some or all of the
Sub-Accounts and the Fixed Account and could include, but not be limited to, the
requirement of a minimum time period between each transfer, not accepting
transfer requests of an agent acting under a power of attorney on behalf of more
than one Contract Owner, or limiting the dollar amount that may be transferred
between the Sub-Accounts and the Fixed Account by a Contract Owner at any one
time. Such restrictions may be applied in any manner reasonably designed to
prevent any use of the transfer right which is considered by Hartford to be to
the disadvantage of other Contract Owners.
Currently, and with respect to Contracts issued in all states, the only
restriction in effect is that Hartford will not accept instructions from agents
acting under a power of attorney of multiple Contract Owners whose accounts
aggregate more than $2 million, unless the agent has entered into a third party
transfer services agreement with Hartford.
CHARGES UNDER THE CONTRACT
CONTINGENT DEFERRED SALES CHARGES
There is no deduction for sales expenses from Premium Payments when made.
However, a contingent deferred sales charge may be assessed against Contract
Values when they are surrendered. The length of time from receipt of a Premium
Payment to the time of surrender determines the contingent deferred sales
charge. Premium payments will be deemed to be surrendered in the order in which
they were received.
A Contract Owner who chooses to surrender a Contract in full who has not yet
withdrawn the Annual Withdrawal Amount during the current Contract Year (as
described on page 14 under the sub-heading "Payments Not Subject to
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14 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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Sales Charges") may, depending upon the amount of investment gain experienced
under the Contract, reduce the amount of any contingent deferred sales charge
paid by first withdrawing the Annual Withdrawal Amount and then requesting a
full surrender of the Contract. Currently, regardless of whether a Contract
Owner first requests a partial withdrawal of the Annual Withdrawal Ammount, upon
receiving a request for a full surrender of a Contract, Hartford assesses any
applicable contingent deferred sales charge against the surrender proceeds
representing the lesser of: (1) aggregate Premium Payments under the Contract
not previously withdrawn; and (2) the Contract Value, less the Annual Withdrawal
Amount available at the time of the full surrender, less the Annual Maintenance
Fee.
PAYMENTS SUBJECT TO SALES CHARGES DURING THE FIRST SEVEN CONTRACT YEARS
During the first seven Contract Years, a contingent deferred sales charge
will be assessed against the surrender of the Premium Payments. All surrenders
will be first from Premium Payments and then from other Contract Values.
AFTER THE SEVENTH CONTRACT YEAR
After the seventh Contract Year, all surrenders will first be from earnings
and then from Premium Payments. A contingent deferred sales charge will not be
assessed against the surrender of earnings. If an amount equal to all earnings
has been surrendered, a contingent deferred sales charge will not be assessed
against Premium Payments received more than seven years prior to surrender, but
will be assessed against Premium Payments received less than seven years prior
to surrender.
The charge is a percentage of the amount withdrawn (not to exceed the
aggregate amount of the Premium Payments made) and equals:
<TABLE>
<CAPTION>
LENGTH OF TIME
CHARGE FROM PREMIUM PAYMENT
- ----------- -----------------------
<S> <C>
(NUMBER OF YEARS)
6% 1
6% 2
5% 3
5% 4
4% 5
3% 6
2% 7
0% 8 or more
</TABLE>
PAYMENTS NOT SUBJECT TO SALES CHARGES -- During the first seven Contract
Years, on a non-cumulative basis, a Contract Owner may make a partial surrender
of Contract Values of up to 10% of the aggregate Premium Payments made to the
Contract (as determined on the date of the requested withdrawal) without the
application of the contingent deferred sales charge. After the seventh Contract
Year, the Contract Owner may make a partial surrender of 10% of Premium Payments
made during the seven years prior to the surrender and 100% of the Contract
Value less the Premium Payments made during the seven years prior to the
surrender. The amount which can be withdrawn in any Contract Year prior to
incurring sales charges is the "Annual Withdrawal Amount." An Extended
Withdrawal Privilege rider allows an Annuitant who attains age 70 1/2 under a
Qualified Plan to withdraw an amount in excess of the Annual Withdrawal Amount
to comply with IRS minimum distribution rules.
Certain plans or programs may have different withdrawal privileges. Any such
withdrawal will be deemed to be from Contract Values other than Premium
Payments. From time to time, Hartford may permit the Contract Owner to
preauthorize partial surrenders subject to certain limitations then in effect.
Additional surrenders or any surrender of the Contract Values in excess of such
amount in any Contract Year during the period when contingent deferred sales
charges are applicable will be subject to the appropriate charge.
No contingent deferred sales charges otherwise applicable will be assessed
in the event of death of the Annuitant, death of the Contract Owner or if
payments are made under an Annuity option (other than a surrender out of Option
4) provided for under the Contract.
PURPOSE OF SALES CHARGES -- The contingent deferred sales charges are used
to cover expenses relating to the sale and distribution of the Contracts,
including commissions paid to any distribution organization and its sales
personnel, the cost of preparing sales literature and other promotional
activities. To the extent that these charges do not cover such distribution
expenses they will be borne by Hartford from its general assets, including
surplus. The surplus might include profits resulting from unused mortality and
expense risk charges.
MORTALITY AND EXPENSE RISK CHARGE -- Although Variable Annuity payments made
under the Contracts will vary in accordance with the investment performance of
the underlying Fund shares held in the Sub-Account(s), the payments will not be
affected by (a) Hartford's actual mortality experience among Annuitants before
or after the Annuity Commencement Date or (b) Hartford's actual expenses, if
greater than the deductions provided for in the Contracts because of the expense
and mortality undertakings by Hartford.
For assuming these risks under the Contracts, Hartford will make a daily
charge at the rate of 1.25% per annum against all Contract Values held in the
Sub-Accounts during the life of the Contract (estimated at .90% for mortality
and .35% for expense).
The mortality undertakings provided by Hartford under the Contracts,
assuming the selection of one of the forms of life Annuities, is to make monthly
Annuity
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ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 15
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payments (determined in accordance with the 1983a Individual Annuity Mortality
Table and other provisions contained in the Contract) to Annuitants regardless
of how long an Annuitant may live, and regardless of how long all Annuitants as
a group may live. Hartford also assumes the liability for payment of a minimum
death benefit under the Contract.
The mortality undertakings are based on Hartford's determination of expected
mortality rates among all Annuitants. If actual experience among Annuitants
during the Annuity payment period deviates from Hartford's actuarial
determination of expected mortality rates among Annuitants because, as a group,
their longevity is longer than anticipated, Hartford must provide amounts from
its general funds to fulfill its Contract obligations. Hartford will bear the
loss in such a situation. Also, in the event of the death of an Annuitant or
Contract Owner before commencement of Annuity payments, Hartford can, in periods
of declining value or in periods where the contingent deferred sales loads would
have been applicable, experience a loss resulting from the assumption of the
mortality risk relative to the guaranteed death benefit.
In providing an expense undertaking, Hartford assumes the risk that the
contingent deferred sales charges and the Annual Maintenance Fee for maintaining
the Contracts prior to the Annuity Commencement Date may be insufficient to
cover the actual cost of providing such items.
ANNUAL MAINTENANCE FEE -- Each year, on each Contract Anniversary on or
before the Annuity Commencement Date, Hartford will deduct an Annual Maintenance
Fee, if applicable, from Contract Values to reimburse it for expenses relating
to the maintenance of the Contract, the Fixed Account, and the Sub-Account(s)
thereunder. If during a Contract Year the Contract is surrendered for its full
value, Hartford will deduct the Annual Maintenance Fee at the time of such
surrender. The fee is a flat fee which will be due in the full amount regardless
of the time of the Contract Year that Contract Values are surrendered. The
Annual Maintenance Fee is $30.00 per Contract Year for Contracts with less than
$50,000 Contract Value on the Contract Anniversary. The deduction will be made
pro rata according to the value in each Sub-Account and the Fixed Account under
a Contract.
PREMIUM TAXES -- A deduction is also made for Premium Tax, if applicable,
imposed by a state or other governmental entity. Certain states impose a Premium
Tax, currently ranging up to 3.5%. Some states assess the tax at the time
purchase payments are made; others assess the tax at the time of annuitization.
Hartford will pay Premium Taxes at the time imposed under applicable law. At its
sole discretion, Hartford may deduct Premium Taxes at the time Hartford pays
such taxes to the applicable taxing authorities, at the time the Contract is
surrendered, or at the time the Contract annuitizes.
EXCEPTIONS -- Hartford may offer, in its discretion, reduced fees and
charges including, but not limited to, the contingent deferred sales charges,
the mortality and expense risk charge and the maintenance fee for certain sales
(including employer sponsored savings plans) under circumstances which may
result in savings of certain costs and expenses. Reductions in these fees and
charges will not be unfairly discriminatory against any Contract Owner.
WAIVER OF SALES CHARGE
Hartford will waive any contingent deferred sales charges applicable to a
partical or full surrender of the Contract Value if the Annuitant is confined,
at the recommendation of a physician, for medically necessary reasons, for at
least 180 calendar days to: a hospital recognized as a general hospital by the
proper authority of the state in which it is located; or a hospital recognized
as a general hospital by the Joint Commission on the Accreditation of Hospitals;
or a facility certified as a hospital or long-term care facility; or a nursing
home licensed by the state in which it is located and offers the services of a
registered nurse 24 hours a day.
The Annuitant cannot be confined at the time the Contract was purchased in
order to receive the waiver and the Contract Owner(s) must have been the
Contract Owner(s) continuously since the Contract issue date; must provide
written proof of confinement satisfactory to Hartford; and must request the
partial or full surrender of the Contract Value within 91 calendar days of the
last day of confinement.
This contingent deferred charge waiver may not be available in all states.
Please contact your registered representative or Hartford to determine state
availability.
DEATH BENEFITS
The Contract provides that in the event the Annuitant dies before the
selected Annuity Commencement Date, the Contingent Annuitant will become the
Annuitant. If (1) the Annuitant dies before the Annuity Commencement Date and
either (a) there is no designated Contingent Annuitant or (b) the Contingent
Annuitant predeceases the Annuitant, or (2) if any Contract Owner dies before
the Annuity Commencement Date, the Beneficiary as determined under the Contract
Control Provisions, will receive the Death Benefit as determined on the date of
receipt of due proof of death by Hartford in its Home Office. With regard to
Joint Contract Owners, at the first death of a joint Contract Owner prior to the
Annuity Commencement Date, the Beneficiary will be the surviving Contract Owner
notwithstanding that the Beneficiary designation may be different.
<PAGE>
16 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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GUARANTEED DEATH BENEFIT -- If the Annuitant dies before the Annuity
Commencement Date and there is no designated Contingent Annuitant surviving, or
if the Contract Owner dies before the Annuity Commencement Date, the Beneficiary
will receive the greatest of (a) the Contract Value determined as of the day
written proof of death of such person is received by Hartford, or (b) 100% of
the total Premium Payments made to such Contract, reduced by the dollar amount
of any partial surrenders since the issue date, or (c) the Maximum Anniversary
Value immediately preceding the date of death. The Maximum Anniversary Value is
equal to the greatest Anniversary Value attained from the following:
As of the date of receipt of due proof of death, Hartford will calculate an
Anniversary Value for each Contract Anniversary prior to the deceased's attained
age 81. The Anniversary Value is equal to the Contract Value on a Contract
Anniversary, increased by the dollar amount of any Premium Payments made since
that anniversary and reduced by the dollar amount of any partial surrenders
since that anniversary.
If the Annuitant or Contract Owner, as applicable, dies after the Annuity
Commencement Date, then the Death Benefit will equal the present value of any
remaining payments under the elected Annuity Option. In computing such present
value for the portion of such remaining payments attributable to the Separate
Account, Hartford will assume a net investment rate of 5.0% per year.
PAYMENT OF DEATH BENEFIT -- Death Benefit proceeds will remain invested in
the Separate Account in accordance with the allocation instructions given by the
Contract Owner until the proceeds are paid or Hartford receives new instructions
from the Beneficiary. The death benefit may be taken in one sum, payable within
7 days after the date Due Proof of Death is received, or under any of the
settlement options then being offered by Hartford provided, however, that: (a)
in the event of the death of any Contract Owner prior to the Annuity
Commencement Date, the entire interest in the Contract will be distributed
within 5 years after the death of the Contract Owner and (b) in the event of the
death of any Contract Owner or Annuitant which occurs on or after the Annuity
Commencement Date, any remaining interest in the Contract will be paid at least
as rapidly as under the method of distribution in effect at the time of death,
or, if the benefit is payable over a period not extending beyond the life
expectancy of the Beneficiary or over the life of the Beneficiary, such
distribution must commence within one year of the date of death. The proceeds
due on the death may be applied to provide variable payments, fixed payments, or
a combination of variable and fixed payments.
However, in the event of the Contract Owner's death where the sole
Beneficiary is the spouse of the Contract Owner and the Annuitant or Contingent
Annuitant is living, such spouse may elect, in lieu of receiving the death
benefit, to be treated as the Contract Owner. The Contract Value and the Maximum
Anniversary Value of the Contract will be unaffected by treating the spouse as
the Contract Owner.
If the Contract is owned by a corporation or other non-individual, the Death
Benefit payable upon the death of the Annuitant prior to the Annuity
Commencement Date will be payable only as one sum or under the same settlement
options and in the same manner as if an individual Contract Owner died on the
date of the Annuitant's death.
There may be postponement in the payment of Death Benefits whenever (a) the
New York Stock Exchange is closed, except for holidays or weekends, or trading
on the New York Stock Exchange is restricted as determined by the Commission;
(b) the Commission permits postponement and so orders; or (c) the Commission
determines that an emergency exists making valuation of the amounts or disposal
of securities not reasonably practicable.
GROUP UNALLOCATED CONTRACTS -- Hartford requires that detailed accounting of
cumulative purchase payments, cumulative gross surrenders, and current Contract
Value attached to each Plan Participant be submitted on an annual basis by the
Contract Owner. Failure to submit accurate data satisfactory to Hartford will
give Hartford the right to terminate this extension of benefits.
SURRENDER BENEFITS
FULL SURRENDERS -- At any time prior to the Annuity Commencement Date (and
after the Annuity Commencement Date with respect to values applied to Option 4
or 5), the Contract Owner has the right to terminate the Contract. In such
event, the Termination Value of the Contract may be taken in the form of a lump
sum cash settlement.
Under any of the Annuity options excluding Options 4 and 5, no surrenders
are permitted after Annuity payments commence. Only full surrenders are allowed
out of Option 4 and any such surrender will be subject to contingent deferred
sales charges, if applicable. Full or partial withdrawals may be made from
Option 5 at any time and contingent deferred sales charges will not be applied.
The Termination Value of the Contract is equal to the Contract Value less
any applicable Premium Taxes, the Annual Maintenance Fee if applicable and any
applicable contingent deferred sales charges. The Termination Value may be more
or less than the amount of the Premium Payments made to a Contract.
PARTIAL SURRENDERS -- The Contract Owner may make a partial surrender of
Contract Values at any time prior to the Annuity Commencement Date so long as
the amount surrendered is at least equal to the minimum amount rules then in
effect. Additionally, if the remaining Contract Value following a surrender is
less than $500, Hartford may
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 17
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terminate the Contract and pay the Termination Value. For Contracts issued in
Texas, there is an additional requirement that the Contract will not be
terminated when the remaining Contract Value after a surrender is less than $500
unless there were no Premium Payments made during the previous two Contract
Years.
In requesting a partial withdrawal you should specify the Sub-Account(s)
and/or the Fixed Account from which the partial withdrawal is to be taken.
Otherwise, such withdrawal and any applicable contingent deferred sales charges
will be effected on a pro rata basis according to the value in the Fixed Account
and each Sub-Account under a Contract.
Hartford may permit the Contract Owner to preauthorize partial surrenders
subject to certain limitations then in effect.
PAYMENT OF SURRENDER BENEFITS -- Payment on any request for a full or
partial surrender from the Sub-Accounts will be made as soon as possible and in
any event no later than seven days after the written request is received by
Hartford at its Home Office, Attn: Individual Annuity Services, P.O. Box 5085,
Hartford, CT 06102-5085. Hartford may defer payment of any amounts from the
Fixed Account for up to six months from the date of the request for surrender.
If Hartford defers payment for more than 30 days, Hartford will pay interest of
at least 3% per annum on the amount deferred.
There may be postponement in the payment of Surrender Benefits whenever (a)
the New York Stock Exchange is closed, except for holidays or weekends, or
trading on the New York Stock Exchange is restricted as determined by the
Commission; (b) the Commission permits postponement and so orders; or (c) the
Commission determines that an emergency exists making valuation of the amounts
or disposal of securities not reasonably practicable.
CERTAIN QUALIFIED CONTRACT SURRENDERS -- THERE ARE CERTAIN RESTRICTIONS ON
SECTION 403(B) TAX SHELTERED ANNUITIES. AS OF DECEMBER 31, 1988, ALL SECTION
403(B) ANNUITIES HAVE LIMITS ON FULL AND PARTIAL SURRENDERS. CONTRIBUTIONS TO
THE CONTRACT MADE AFTER DECEMBER 31, 1988 AND ANY INCREASES IN CASH VALUE AFTER
DECEMBER 31, 1988 MAY NOT BE DISTRIBUTED UNLESS THE CONTRACT OWNER/ EMPLOYEE HAS
A) ATTAINED AGE 59 1/2, B) SEPARATED FROM SERVICE, C) DIED, D) BECOME DISABLED
OR E) EXPERIENCED FINANCIAL HARDSHIP. (CASH VALUE INCREASES MAY NOT BE
DISTRIBUTED PRIOR TO AGE 59 1/2 FOR HARDSHIPS.)
DISTRIBUTIONS PRIOR TO AGE 59 1/2 DUE TO FINANCIAL HARDSHIP OR SEPARATION
FROM SERVICE MAY STILL BE SUBJECT TO A PENALTY TAX OF 10%.
HARTFORD WILL NOT ASSUME ANY RESPONSIBILITY IN DETERMINING WHETHER A
WITHDRAWAL IS PERMISSIBLE, WITH OR WITHOUT TAX PENALTY, IN ANY PARTICULAR
SITUATION; OR IN MONITORING WITHDRAWAL REQUESTS REGARDING PRE OR POST JANUARY 1,
1989 ACCOUNT VALUES.
ANY SUCH FULL OR PARTIAL SURRENDER DESCRIBED ABOVE MAY AFFECT THE CONTINUING
TAX QUALIFIED STATUS OF SOME CONTRACTS OR PLANS AND MAY RESULT IN ADVERSE TAX
CONSEQUENCES TO THE CONTRACT OWNER. THE CONTRACT OWNER, THEREFORE, SHOULD
CONSULT WITH HIS TAX ADVISER BEFORE UNDERTAKING ANY SUCH SURRENDER. (SEE
"FEDERAL TAX CONSIDERATIONS," PAGE 19.)
ANNUITY BENEFITS
You select an Annuity Commencement Date and an Annuity option which may be
on a fixed or variable basis, or a combination thereof. The Annuity Commencement
Date will not be deferred beyond the Annuitant's 90th birthday (85th birthday in
some states, 100th birthday if sold as part of a Charitable Remainder Trust).
The Annuity Commencement Date and/or the Annuity option may be changed from time
to time, but any change must be at least 30 days prior to the date on which
Annuity payments are scheduled to begin. The Contract allows the Contract Owner
to change the Sub-Accounts on which variable payments are based after payments
have commenced once every three months. Any Fixed Annuity allocation may not be
changed.
ANNUITY OPTIONS
The Contract contains the five optional Annuity forms described below.
Options 2, 4 and 5 are available to Qualified Contracts only if the guaranteed
payment period is less than the life expectancy of the Annuitant at the time the
option becomes effective. Such life expectancy shall be computed on the basis of
the mortality table prescribed by the IRS, or if none is prescribed, the
mortality table then in use by Hartford. With respect to Non-Qualified
Contracts, if you do not elect otherwise, payments in most states will
automatically begin at the Annuitant's age 90 (with the exception of states that
do not allow deferral past age 85) under Option 2 with 120 monthly payments
certain. For Qualified Contracts and Contracts issued in Texas, if you do not
elect otherwise, payments will begin automatically at the Annuitant's age 90
under Option 1 to provide a life Annuity. After the Annuity Commencement Date,
the Annuity option elected may not be changed.
Under any of the Annuity options excluding Options 4 and 5, no surrenders
are permitted after Annuity payments commence. Only full surrenders are allowed
out of Option
<PAGE>
18 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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4 and any such surrender will be subject to contingent deferred sales charges,
if applicable. Full or partial withdrawals may be made from Option 5 at any time
and contingent deferred sales charges will not be applied.
OPTION 1 -- Life Annuity
A life Annuity is an Annuity payable during the lifetime of the Annuitant
and terminating with the last payment due preceding the death of the Annuitant.
This options offers the largest payment amount of any of the life Annuity
options since there is no guarantee of a minimum number of payments nor a
provision for a death benefit payable to a Beneficiary.
It would be possible under this option for an Annuitant to receive only one
Annuity payment if he died prior to the due date of the second Annuity payment,
two if he died before the date of the third Annuity payment, etc.
OPTION 2 -- Life Annuity with 120, 180 or 240 Monthly Payments Certain
This Annuity option is an Annuity payable monthly during the lifetime of an
Annuitant with the provision that payments will be made for a minimum of 120,
180 or 240 months, as elected. If, at the death of the Annuitant, payments have
been made for less than the minimum elected number of months, then the present
value as of the date of the Annuitant's death, of any remaining guaranteed
payments will be paid in one sum to the Beneficiary or Beneficiaries designated
unless other provisions have been made and approved by Hartford.
OPTION 3 -- Joint and Last Survivor Annuity
An Annuity payable monthly during the joint lifetime of the Annuitant and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
Based on the options currently offered by Hartford, the Annuitant may elect that
the payment to the survivor be less than the payment made during the joint
lifetime of the Annuitant and a designated second person.
It would be possible under this option for an Annuitant and designated
second person to receive only one payment in the event of the common or
simultaneous death of the parties prior to the due date for the second payment
and so on.
OPTION 4 -- Payments for a Designated Period
An amount payable monthly for the number of years selected which may be from
five to 30 years. Under this option, you may, at any time, surrender the
Contract and receive, within seven days, the Termination Value of the Contract
as determined by Hartford.
In the event of the Annuitant's death prior to the end of the designated
period, the present value as of the date of the Annuitant's death, of any
remaining guaranteed payments will be paid in one sum to the Beneficiary or
Beneficiaries designated unless other provisions have been made and approved by
Hartford.
Option 4 is an option that does not involve life contingencies and thus no
mortality guarantee. Charges made for the mortality undertaking under the
Contracts thus provide no real benefit to a Contract Owner.
OPTION 5 -- Death Benefit Remaining with Hartford
Proceeds from the Death Benefit may be left with Hartford for a period not
to exceed five years from the date of the Contract Owner's death prior to the
Annuity Commencement Date. These proceeds will remain in the Sub-Account(s) to
which they were allocated at the time of death unless the Beneficiary elects to
reallocate them. Full or partial withdrawals may be made at any time. In the
event of withdrawals, the remaining value will equal the Contract Value of the
proceeds left with Hartford, minus any withdrawals.
Hartford may offer other annuity options from time to time.
VARIABLE AND FIXED ANNUITY PAYMENTS -- When an Annuity is effected under a
Contract, unless otherwise specified, Contract Values (less applicable Premium
Taxes) held in the Sub-Accounts will be applied to provide a Variable Annuity
based on the pro rata amount in the various Sub-Accounts. Fixed Account Contract
Values will be applied to provide a Fixed Annuity. YOU SHOULD CONSIDER THE
QUESTION OF ALLOCATION OF CONTRACT VALUES (LESS APPLICABLE PREMIUM TAXES) AMONG
SUB-ACCOUNTS OF THE SEPARATE ACCOUNT AND THE GENERAL ACCOUNT OF HARTFORD TO MAKE
CERTAIN THAT ANNUITY PAYMENTS ARE BASED ON THE INVESTMENT ALTERNATIVE BEST
SUITED TO YOUR NEEDS FOR RETIREMENT.
The minimum monthly Annuity payment is $50.00. No election may be made which
results in a first payment of less than $50.00. If at any time Annuity payments
are or become less than $50.00, Hartford has the right to change the frequency
of payment to intervals that will result in payments of at least $50.00. For New
York Contracts, the minimum monthly Annuity payment is $20.00.
When Annuity payments are to commence, the value of the Contract is
determined as the sum of (1) the value of the Fixed Account no earlier than the
close of business on the fifth Valuation Day preceding the date the first
Annuity payment is due plus (2) the product of (a) the value of the Accumulation
Unit of each Sub-Account on that same day and (b) the number of Accumulation
Units credited to each Sub-Account as of the date the Annuity is to commence.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 19
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The first payment under any option shall be made on the 15th day of the
month immediately following approval of the claim for settlement. Subsequent
payments shall be made on the 15th day of each subsequent month in accordance
with the manner of payment selected.
VARIABLE ANNUITY -- The Contract contains tables indicating the minimum
dollar amount of the first monthly payment under the optional variable forms of
Annuity for each $1,000 of value of a Sub-Account under a Contract. The first
monthly payment varies according to the form and type of Variable Payment
Annuity selected. The Contract contains Variable Payment Annuity tables derived
from the 1983(a) Individual Annuity Mortality Table with ages set back one year
and with an assumed investment rate ("A.I.R.") of 5% per annum. The total first
monthly Variable Annuity payment is determined by multiplying the value
(expressed in thousands of dollars) of a Sub-Account (less any applicable
Premium Taxes) by the amount of the first monthly payment per $1,000 of value
obtained from the tables in the Contracts.
The amount of the first monthly Variable Annuity payment is divided by the
value of an Annuity Unit for the appropriate Sub-Account no earlier than the
close of business on the fifth Valuation Day preceding the day on which the
payment is due in order to determine the number of Annuity Units represented by
the first payment. This number of Annuity Units remains fixed during the Annuity
payment period, and in each subsequent month the dollar amount of the Variable
Annuity payment is determined by multiplying this fixed number of Annuity Units
by the then current Annuity Unit value.
The value of the Annuity Unit for each Sub-Account in the Separate Account
for any day is determined by multiplying the value for the preceding day by the
product of (1) the net investment factor for the day for which the Annuity Unit
value is being calculated, and (2) a factor to neutralize the assumed investment
rate of 5.00% per annum. The Annuity Unit value used in calculating the amount
of the Variable Annuity payments will be based on an Annuity Unit value
determined as of the close of business on a day no earlier than the fifth
Valuation Day preceding the date of the Annuity payment.
LEVEL VARIABLE ANNUITY PAYMENTS WOULD BE PRODUCED IF THE INVESTMENT RATE
REMAINED CONSTANT AND EQUAL TO THE A.I.R. IN FACT, PAYMENTS WILL VARY UP OR DOWN
AS THE INVESTMENT RATE VARIES UP OR DOWN FROM THE A.I.R.
FIXED ANNUITY -- Fixed Annuity payments are determined at annuitization by
multiplying the Contract Value (less applicable Premium Taxes) by a rate to be
determined by Hartford which is no less than the rate specified in the Fixed
Payment Annuity tables in the Contract. The Annuity payment will remain level
for the duration of the Annuity.
OTHER INFORMATION
ASSIGNMENT -- Ownership of a Contract described herein is generally
assignable. However, if the Contracts are issued pursuant to some form of
Qualified Plan, it is possible that the ownership of the Contracts may not be
transferred or assigned depending on the type of tax-qualified retirement plan
involved. An assignment of a Non-Qualified Contract may subject the Contract
values or assignment proceeds to income taxes and certain penalty taxes.
CONTRACT MODIFICATION -- The Annuitant may not be changed; however, the
Contingent Annuitant may be changed at any time prior to the Annuity
Commencement Date by written notice to Hartford.
Hartford reserves the right to modify the Contract, but only if such
modification: (i) is necessary to make the Contract or the Separate Account
comply with any law or regulation issued by a governmental agency to which
Hartford is subject; or (ii) is necessary to assure continued qualification of
the Contract under the Code or other federal or state laws relating to
retirement annuities or annuity Contracts; or (iii) is necessary to reflect a
change in the operation of the Separate Account or the Sub-Account(s) or (iv)
provides additional Separate Account options or (v) withdraws Separate Account
options. In the event of any such modification Hartford will provide notice to
the Contract Owner or to the payee(s) during the Annuity period. Hartford may
also make appropriate endorsement in the Contract to reflect such modification.
HARTFORD'S INTEREST IN FUNDS -- Hartford has no interest in the Funds.
FEDERAL TAX CONSIDERATIONS
WHAT ARE SOME OF THE FEDERAL TAX CONSEQUENCES WHICH AFFECT THESE CONTRACTS?
A. GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING
TO THE ACTUAL STATUS OF THE CONTRACT OWNER INVOLVED AND THE TYPE OF PLAN UNDER
WHICH THE CONTRACT IS PURCHASED, LEGAL AND TAX ADVICE MAY BE NEEDED BY A PERSON,
TRUSTEE, OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A CONTRACT DESCRIBED
HEREIN.
It should be understood that any detailed description of the federal income
tax consequences regarding the purchase of these Contracts cannot be made in
this
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20 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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Prospectus and that special tax rules may be applicable with respect to certain
purchase situations not discussed herein. In addition, no attempt is made here
to consider any applicable state or other tax laws. For detailed information, a
qualified tax adviser should always be consulted. The discussion here and in
Appendix I commencing on page 25 is based on Hartford's understanding of
existing federal income tax laws as they are currently interpreted.
B. TAXATION OF HARTFORD AND THE
SEPARATE ACCOUNT
The Separate Account is taxed as part of Hartford which is taxed as a life
insurance company in accordance with the 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," page 6).
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.
Section 72 contains provisions for Contract Owners which are non-natural
persons. Non-natural persons include corporations, trusts, and partnerships. The
annual net increase in the value of the Contract is currently includable in the
gross income of a non-natural person unless the non-natural person holds the
Contract as an agent for a natural person. There is an exception from current
inclusion for certain annuities held in tax-qualified retirement arrangements,
certain annuities held by structured settlement companies, certain annuities
held by an employer with respect to a terminated tax-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 not an individual, the primary Annuitant shall be
treated as the Contract Owner for purposes of making distributions which are
required to be made upon the death of the Contract Owner. If there is a change
in the primary Annuitant, such change shall be treated as the death of the
Contract Owner.
2. OTHER CONTRACT OWNERS (NATURAL PERSONS).
A Contract Owner is not taxed on increases in the value of the Contract
until an amount is received or deemed received, e.g., in the form of a lump sum
payment (full or partial value of a Contract) or as Annuity payments under the
settlement option elected.
The provisions of Section 72 of the Code concerning distributions are
summarized briefly below. Also summarized are special rules affecting
distributions from Contracts obtained in a tax-free exchange for other annuity
contracts or life insurance contracts which were purchased prior to August 14,
1982.
A. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
i. Total premium payments less 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.
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ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 21
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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 10% of the portion of the amount includable in gross income, unless an
exception applies.
ii. The 10% penalty tax will not apply to the following distributions
(exceptions vary based upon the precise plan involved):
1. Distributions made on or after the date the recipient has attained the
age of 59 1/2.
2. Distributions made on or after the death of the holder or where the
holder is not an individual, the death of the primary annuitant.
3. Distributions attributable to a recipient's becoming disabled.
4. A distribution that is part of a scheduled series of substantially equal
periodic payments for the life (or life expectancy) of the recipient (or
the joint lives or life expectancies of the recipient and the
recipient's Beneficiary).
5. Distributions of amounts which are allocable to the "investment in the
contract" prior to August 14, 1982 (see next subparagraph e.).
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
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22 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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 five 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 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.
3. DIVERSIFICATION REQUIREMENTS.
Section 817 of the Code provides that a variable annuity contract will not
be treated as an annuity contract for any period during which the investments
made by the separate account or underlying fund are not adequately diversified
in accordance with regulations prescribed by the Treasury Department. If a
Contract is not treated as an annuity contract, the Contract Owner will be
subject to income tax on the annual increases in cash value.
The Treasury Department has issued diversification regulations which
generally require, among other things, that no more than 55% of the value of the
total assets of the segregated asset account underlying a variable contract is
represented by any one investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three investments, and no
more than 90% is represented by any four investments. In determining whether the
diversification standards are met, all securities of the same issuer, all
interests in the same real property project, and all interests in the same
commodity are each treated as a single investment. In addition, in the case of
government securities, each government agency or instrumentality shall be
treated as a separate issuer.
A separate account must be in compliance with the diversification standards
on the last day of each calendar quarter or within 30 days after the quarter
ends. If an insurance company inadvertently fails to meet the diversification
requirements, the company may comply within a reasonable period and avoid the
taxation of contract income on an ongoing basis. However, either the company or
the Contract Owner must agree to pay the tax due for the period during which the
diversification requirements were not met.
Hartford monitors the diversification of investments in the separate
accounts and tests for diversification as required by the Code. Hartford intends
to administer all contracts subject to the diversification requirements in a
manner that will maintain adequate diversification.
4. OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT.
In order for a variable annuity contract to qualify for tax deferral, assets
in the segregated asset accounts supporting the variable contract must be
considered to be owned by the insurance company and not by the variable contract
owner for tax purposes. The Internal Revenue Service ("IRS") has issued several
rulings which discuss investor control. The IRS has ruled that certain incidents
of ownership by the contract owner, such as the ability to select and control
investments in a separate account, could cause the contract owner to be treated
as the owner of the assets for tax purposes.
Further, in the explanation to the temporary Section 817 diversification
regulations, the Treasury Department noted that the temporary regulations "do
not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset account may cause the investor, rather
than the insurance company, to be treated as the owner of the assets in the
account." The explanation further indicates that "the temporary regulations
provide that in appropriate cases a segregated asset account may include
multiple sub-accounts, but do not specify the extent to which policyholders may
direct their investments to particular sub-accounts without being treated as the
owners of the underlying assets. Guidance on this and other issues will be
provided in regulations or revenue rulings under Section 817(d), relating to the
definition of variable contract." The final regulations issued under Section 817
do not provide guidance regarding investor control, and as of the date of this
Prospectus, no other such guidance has been issued. Further, Hartford
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ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 23
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does not know if or in what form such guidance will be issued. In addition,
although regulations are generally issued with prospective effect, it is
possible that regulations may be issued with retroactive effect. Due to the lack
of specific guidance regarding the issue of investor control, there is
necessarily some uncertainty regarding whether a Contract Owner could be
considered the owner of the assets for tax purposes. Hartford reserves the right
to modify the contracts, as necessary, to prevent Contract Owners from being
considered the owners of the assets in the separate accounts.
D. FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient will
be subject to federal income tax withholding, pursuant to Section 3405 of the
Code. The application of this provision is summarized below:
1. NON-PERIODIC DISTRIBUTIONS.
The portion of a non-periodic distribution which constitutes taxable income
will be subject to federal income tax withholding unless the recipient elects
not to have taxes withheld. If an election not to have taxes withheld is not
provided, 10% of the taxable distribution will be withheld as federal income
tax. Election forms will be provided at the time distributions are requested. If
the necessary election forms are not submitted to Hartford, Hartford will
automatically withhold 10% of the taxable distribution.
2. PERIODIC DISTRIBUTIONS (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, unless the recipient elects otherwise. A recipient
may elect not to have income taxes withheld or to 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 tax-qualified retirement plans. If
the Contract is being purchased with respect to some form of tax-qualified
retirement plan, please refer to Appendix I, commencing on page 25, for
information relative to the types of plans for which it may be used and the
general explanation of the tax features of such plans.
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 advisor
regarding U.S., state, and foreign taxation with respect to an annuity purchase.
MISCELLANEOUS
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 a wholly-owned subsidiary of Hartford Life Insurance Company. The principal
business address of HSD is the same as Hartford's.
The securities will be sold by salespersons of HSD who represent Hartford as
insurance and variable annuity agents and who are registered representatives or
Broker-Dealers who have entered into distribution agreements with HSD.
HSD is registered with the Commission under the Securities Exchange Act of
1934 as a Broker-Dealer and is a member of the National Association of
Securities Dealers, Inc.
Commissions will be paid by Hartford and will not be more than 6% of Premium
Payments. From time to time, Hartford may pay or permit other promotional
incentives, in cash or credit or other compensation.
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,
General Counsel, Hartford Life Insurance Companies, P.O. Box 2999, Hartford,
Connecticut 06104-2999.
The audited financial statements included in this Prospectus and elsewhere
in the 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. Reference is made to said report on the
statutory-basis financial statements of ITT Hartford Life and Annuity Insurance
Company which states the statutory-basis financial statements are presented in
accordance with statutory
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24 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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accounting practices prescribed or permitted by the National Association of
Insurance Commissioners and the State of Connecticut Insurance Department, not
presented in accordance with generally accepted accounting principles. Reference
is made to said report on the statutory-basis financial statements of ITT
Hartford Life and Annuity Insurance Company (the Depositor), which includes an
explanatory paragraph with respect to the change in valuation method in
determining aggregate reserves for future benefits in 1994, as discussed in Note
1 to Notes to Statutory Financial Statements. The principal business address of
Arthur Andersen LLP is One Financial Plaza, Hartford, CT 06103.
ADDITIONAL INFORMATION
Inquiries will be answered by calling your representative or by writing:
ITT Hartford Life and Annuity Insurance Company
Attn: Individual Annuity Services
P.O. Box 5085
Hartford, Connecticut 06102-5085
Telephone: (800) 862-6668 (Contract Owner)
(800)862-7155 (Investment Representatives)
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ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 25
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APPENDIX I
INFORMATION REGARDING TAX-QUALIFIED RETIREMENT PLANS
The tax rules applicable to tax qualified contract owners, including
restrictions on contributions and distributions, taxation of distributions, and
tax penalties, vary according to the type of plan as well as the terms and
conditions of the plan itself. Various tax penalties may apply to contributions
in excess of specified limits, to distributions in excess of specified limits,
distributions which do not satisfy certain requirements and certain other
transactions with respect to qualified plans. Accordingly, this summary provides
only general information about the tax rules associated with use of the Contract
by a qualified plan. Contract owners, plan participants, and beneficiaries are
cautioned that the rights and benefits of any person to benefits are controlled
by the terms and conditions of the plan regardless of the terms and conditions
of the Contract. Some qualified plans are subject to distribution and other
requirements which are not incorporated into Hartford's administrative
procedures. Owners, participants and beneficiaries are responsible for
determining that contributions, distributions and other transactions comply with
applicable law. Because of the complexity of these rules, owners, participants
and beneficiaries are encouraged to consult their own tax advisers as to
specific tax consequences.
A. TAX-QUALIFIED PENSION OR
PROFIT-SHARING PLANS
Provisions of the Code permit eligible employers to establish tax-qualified
pension or profit sharing plans (described in Section 401(a) and 401(k), if
applicable, and exempt from taxation under Section 501(a) of the Code), and
Simplified Employee Pension Plans (described in Section 408(k)). Such plans are
subject to limitations on the amount that may be contributed, the persons who
may be eligible and the time when distributions must commence. Employers
intending to use these contracts in connection with such plans should seek
competent tax and other legal advice.
B. TAX SHELTERED ANNUITIES
UNDER SECTION 403(B)
Section 403(b) of the Code permits public school employees and employees of
certain types of charitable, educational and scientific organizations specified
in Section 501(c)(3) of the Code to purchase annuity contracts, and, subject to
certain limitations, exclude such contributions from gross income. Generally,
such contributions may not exceed the lesser of $9,500 or 20% of the employees
"includable compensation" for his most recent full year of employment, subject
to other adjustments. Special provisions 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:
(1) after the participating employee attains age 59 1/2;
(2) upon separation from service;
(3) upon death or disability; or
(4) in the case of hardship (and in the case of hardship, any income
attributable to such contributions need 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.
C. DEFERRED COMPENSATION PLANS
UNDER SECTION 457
Employees and independent contractors performing services for such eligible
governmental or other tax-exempt employers may have contributions made to
Eligible Deferred Compensation Plans of their employers, in accordance with the
employer's plan and Section 457 of the Code. Section 457 places limitations on
contributions to Eligible Deferred Compensation Plans maintained by a State or
other tax-exempt organization. ("State" means a State, a political sub-division
of a State, and an agency or instrumentality of a State or political
sub-division of a State). Generally, the limitation is 33 1/3% of includable
compensation (typically 25% of gross compensation) or $7,500 (indexed),
whichever is less. Such a plan may also provide for additional "catch-up"
deferrals during the three taxable years ending before a Participant attains
normal retirement age.
An employee electing to participate in an Eligible Deferred Compensation
Plan should understand that his or her rights and benefits are governed strictly
by the terms of the plan and that the employer is the legal owner of any
contract issued with respect to the plan. The employer, as owner of the
contract(s), retains all voting and redemption rights which may accrue to the
contract(s) issued with respect to the plan. The participating employee should
look to the terms of his or her plan for any charges in regard to participating
therein other than those disclosed in this Prospectus. Participants should also
be aware that effective August 20, 1996, the Small Business Job Protection Act
of 1996 requires that all assets and income of an Eligible Deferred Compensation
Plan established by a governmental employer which is a State, a political
subdivision of a State,
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26 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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or any agency or instrumentality of a State or political subdivision of a State,
must be held in trust (or under certain specified annuity contracts or custodial
accounts) for the exclusive benefit of Participants and their Beneficiaries.
Special transition rules apply to such governmental Eligible Deferred
Compensation Plans already in existence on August 20, 1996, and provide that
such plans need not establish a trust before January 1, 1999. However, this
requirement does not apply to amounts under an Eligible Deferred Compensation
Plan of a tax-exempt (non-governmental) organization and such amounts will be
subject to the claims of such tax-exempt 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. Present federal tax law does not allow
tax-free transfers or rollovers for amounts accumulated in a Section 457 plan
except for transfers to other Section 457 plans in limited cases.
D. INDIVIDUAL RETIREMENT ANNUITIES
UNDER SECTION 408
Section 408 of the Code permits eligible individuals to establish individual
retirement programs through the purchase of Individual Retirement Annuities
("IRAs"). IRAs are subject to limitations on the amount that may be contributed,
the contributions that may be deducted from gross income, the persons who may be
eligible and the time when distributions may commence. Also, distributions from
certain qualified plans may be "rolled-over" on a tax-deferred basis into an
IRA.
IRA's generally may not invest in life insurance contracts. However, an
annuity that is used as an IRA may provide a death benefit that equals the
greater of the premiums paid and the annuity's cash value. The Contract offers
an enhanced Death Benefit that may exceed the greater of the Contract Value and
total Premium Payments less prior surrenders. For Contracts issued in most
states, Hartford has obtained approval from the Internal Revenue Service to use
the Contract as an IRA. For Contracts issued in New York, Hartford has asked the
Internal Revenue Service to approve use of the Contract as an IRA, but there is
no assurance that approval will be granted.
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 regular IRA only after two years have expired since the
participant first commenced participation in the SIMPLE IRA. Amounts cannot be
rolled over to a SIMPLE IRA from a qualified plan or regular IRA.
Effective after December 31, 1997, the Contract can be offered as ROTH IRAs
under Section 408A of the Code. Contributions to a ROTH IRA are not deductible.
Subject to special limitations, a distribution from a regular IRA may be rolled
over to a ROTH IRA. However, a rollover to a ROTH IRA is not excludable from
gross income. If certain specified conditions are met, qualified distributions
from a ROTH IRA are tax-free.
E. TAX PENALTIES
Distributions from retirement plans are generally taxed 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 which
bears the same ratio as the after-tax contributions bear to the expected return.
1. PREMATURE DISTRIBUTION
Distributions from a qualified plan before the Participant attains age
59 1/2 are generally subject to an additional tax equal to 10% of the taxable
portion of the distribution. The 10% penalty does not apply to distributions
made after the employee's death, on account of disability, for eligible medical
expenses and distributions in the form of a life annuity and, except in the case
of an IRA, certain distributions after separation from service after age 55. For
these purposes, "life annuity" means a scheduled series of substantially equal
periodic payments for the life or life expectancy of the Participant (or the
joint lives or life expectancies of the Participant and Beneficiary).
In addition, effective for distributions made from an IRA after December 31,
1997, there is no such penalty tax on distributions that do not exceed the
amount of certain qualifying higher education expenses, as defined by Section
72(t)(7) of the Code, or which are qualified first-time home buyer distributions
meeting the requirements of Section 72(t)(8) of the Code.
If you are a participant in a SIMPLE IRA plan, you should be aware that the
10% penalty tax described above is increased to 25% with respect to non-exempt
premature 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.
2. MINIMUM DISTRIBUTION TAX
If the amount distributed is less than the minimum required distribution for
the year, the Participant is subject to a 50% tax on the amount that was not
properly distributed.
An individual's interest in a tax-qualified retirement plan must generally
be distributed, or begin to be distributed, not later than April 1 of the
calendar year following the later of (i) the calendar year in which the
individual attains age 70 1/2 or (ii) the calendar year in which the individual
retires from service with the employer sponsoring the plan ("required beginning
date"). However, the required
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ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 27
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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
this required beginning date over a period which may not extend beyond a maximum
of the life expectancy of the Participant and a designated Beneficiary. Each
annual distribution must equal or exceed a "minimum distribution amount" which
is determined by dividing the account balance by the applicable life expectancy.
This account balance is generally based upon the account value as of the close
of business on the last day of the previous calendar year. In addition, minimum
distribution incidental benefit rules may require a larger annual distribution.
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 (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.
3. EXCESS DISTRIBUTION TAX
If the aggregate distributions from all IRAs and certain other tax-qualified
retirement plans in a calendar year exceed the greater of (i) $150,000, or (ii)
$112,500 as indexed for inflation, a penalty tax of 15% is generally imposed on
the excess portion of the distribution.
4. WITHHOLDING
In general, distributions from IRAs and plans described in Section 457 of
the Code are subject to regular wage withholding rules.
Periodic distributions from other tax-qualified retirement plans that are
made for a specified period of ten or more years or for the life or life
expectancy of the Participant (or the joint lives or life expectancies of the
Participant and the Beneficiary) are generally subject to federal income tax
withholding as if the recipient were married claiming three exemptions, unless
the recipient elects otherwise. 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.
Other distributions from such other tax-qualified retirement plans are
generally subject to mandatory income tax withholding at the flat rate of 20%
unless such distributions are:
(1) the non-taxable portion of the distribution;
(2) required minimum distributions; or
(3) direct transfer distributions.
Direct transfer distributions are direct payments to an IRA or to another
eligible retirement plan under Section 401(a)(31) of the Code.
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28 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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TABLE OF CONTENTS
TO
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
SECTION
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<S> <C>
INTRODUCTION............................................................
DESCRIPTION OF ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY..........
SAFEKEEPING OF ASSETS...................................................
INDEPENDENT PUBLIC ACCOUNTANTS..........................................
DISTRIBUTION OF CONTRACTS...............................................
CALCULATION OF YIELD AND RETURN.........................................
PERFORMANCE COMPARISONS.................................................
FINANCIAL STATEMENTS....................................................
</TABLE>
<PAGE>
This form must be completed for all tax sheltered annuities.
SECTION 403(B)(11) ACKNOWLEDGMENT FORM
The Hartford variable annuity Contract which you have recently purchased is
subject to certain restrictions imposed by the Tax Reform Act of 1986.
Contributions to the Contract after December 31, 1988 and any increases in cash
value after December 31, 1988 may not be distributed to you unless you have:
a. attained age 59 1/2,
b. separated from service,
c. died, or
d. become disabled.
Distributions of post December 31, 1988 contributions (excluding any income
thereon) may also be made if you have experienced a financial hardship.
Also, there may be a 10% penalty tax for distributions made prior to age 59 1/2
because of financial hardship or separation from service.
Also, please be aware that your 403(b) Plan may also offer other financial
alternatives other than the Hartford variable annuity. Please refer to your
Plan.
Please complete the following and return to:
ITT Hartford Life and Annuity Insurance Company
Attn: 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:
- --------------------------------------------------------------------------------
<PAGE>
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 for the Director to me at
the following address:
- ----------------------------------------------------
Name
- ------------------------------------------------------------------
Address
- ------------------------------------------------------------------
City/State Zip Code
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT ONE
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 ITT Hartford Life and
Annuity Insurance Company Attn: Individual Annuity Services, P.O. Box 5085,
Hartford, CT 06102-5085.
Date of Prospectus: October 17, 1997
Date of Statement of Additional Information: October 17, 1997
<PAGE>
-2-
TABLE OF CONTENTS
SECTION PAGE
INTRODUCTION
DESCRIPTION OF ITT HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY .......................................................
SAFEKEEPING OF ASSETS ...............................................
INDEPENDENT PUBLIC ACCOUNTANTS .....................................
DISTRIBUTION OF CONTRACTS ...........................................
CALCULATION OF YIELD AND RETURN ....................................
PERFORMANCE COMPARISONS .............................................
FINANCIAL STATEMENTS ...............................................
<PAGE>
-3-
INTRODUCTION
The individual and group tax-deferred variable annuity Contracts described in
the Prospectus are designed to provide Annuity benefits to individuals who
have established or wish to establish retirement programs which may or may
not qualify for special federal income tax treatment. The Annuitant under
these Contracts may receive Annuity benefits in accordance with the Annuity
option selected and the retirement program, if any, under which the Contracts
have been purchased. Annuity payments under a Contract will begin on a
particular future date which may be selected at any time under the Contract
or automatically when the Annuitant reaches age 90 except in certain states
where deferral past age 85 is not permitted. There are several alternative
annuity payment options available under the Contract (see "Optional Annuity
Forms," commencing on page __).
The Premium Payments under a Contract, less any applicable Premium Taxes,
will be applied to the Separate Account and/or the Fixed Account.
Accordingly, the net Premium Payment under the Contract will be applied to
purchase interests in one or more of the Hartford Bond Fund, Hartford Stock
Fund, HVA Money Market Fund (for qualified Contracts issued prior to May 1,
1987), Hartford Advisers Fund, Hartford Capital Appreciation Fund,
Hartford Dividend and Growth Fund, Hartford Index Fund, Hartford International
Advisers Fund, Hartford International Opportunities Fund, Hartford MidCap
Fund, Hartford Mortgage Securities Fund, and Hartford Small Company Fund
Sub-Accounts.
Shares of the Funds are purchased by the Separate Account without the
imposition of a sales charge. The value of a Contract depends on the value
of the shares of the Fund held by the Separate Account pursuant to that
Contract. As a result, the Contract Owner bears the investment risk since
market value of the shares may increase or decrease.
The Contracts provide that in the event the Annuitant dies before the
selected Annuity Commencement Date, the Contingent Annuitant will become the
Annuitant. If the Annuitant dies before the Annuity Commencement Date and
there is no designated Contingent Annuitant, or the Contingent Annuitant
predeceases the Annuitant, or if the Contract Owner dies before the Annuity
Commencement Date, the Beneficiary will receive the Contract Value determined
on the date of receipt of due proof of death by ITT Hartford Life and Annuity
Insurance Company ("Hartford") in its Home Office. If, upon death prior to
the Annuity Commencement Date, the Annuitant or Contract Owner, as
applicable, had not attained his 90th birthday, the Beneficiary will receive
the greater of (a) the Contract Value determined as of the day Hartford
receives written due proof of death of such person, or (b) 100% of the total
Premium Payments made to such Contract, reduced by any prior surrenders, or
(c) the Maximum Anniversary Value immediately preceding the date of death
established up to age 80, adjusted for additions and surrenders. (See "Death
Benefits" commencing on page __ of the Prospectus).
<PAGE>
-4-
DESCRIPTION OF ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
ITT Hartford Life and Annuity Insurance Company ("Hartford") is a stock life
insurance company engaged in the business of writing life insurance and
annuities, both individual and group, in all states of the United States,
except New York, and the District of Columbia. On January 1, 1998,
Hartford's name will change to Hartford Life and Annuity Insurance Company.
Hartford was originally incorporated under the laws of Wisconsin on January
9, 1956, and was subsequently redomiciled to Connecticut. Its offices are
located in Simsbury, Connecticut; however, its mailing address is P. O. Box
2999, Hartford, CT 06104-2999. Hartford is a subsidiary of Hartford Fire
Insurance Company, one of the largest multiple lines insurance carriers in
the United States. Hartford is ultimately controlled by The Hartford
Financial Services Group, Inc., a Delaware corporation.
HARTFORD RATINGS
<TABLE>
<CAPTION> EFFECTIVE
RATING AGENCY DATE OF RATING RATING BASIS OF RATING
- ------------- --------------- ------ ---------------
<C> <S> <S> <S>
A.M. Best and Company, Inc... 9/9/97 A+ Financial soundness and operating performance.
Standard & Poor's ............ 7/2/97 AA Claims paying ability
Duff & Phelps ................ 2/24/97 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 included in this Statement of Additional
Information and elsewhere in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports
<PAGE>
-5-
with respect thereto, and are included herein in reliance upon the authority
of said firm as experts in giving said reports. Reference is made to said
report on the statutory-basis financial statements of ITT Hartford Life and
Annuity Insurance Company which states the statutory-basis financial
statements are presented in accordance with statutory accounting practices
prescribed or permitted by the National Association of Insurance
Commissioners and the State of Connecticut Insurance Department, not
presented in accordance with generally accepted accounting principles.
Reference is made to said report on the statutory-basis financial statements
of ITT Hartford Life and Annuity Insurance Company (the Depositor), which
includes an explanatory paragraph with respect to the change in valuation
method in determining aggregate reserves for future benefits in 1994, as
discussed in Note 1 of Notes to Statutory Financial Statements. The principal
business address of Arthur Andersen LLP in 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.
HSD is a wholly-owned subsidiary of Hartford. The principal business address
of HSD is the same as Hartford.
The securities will be sold by salespersons of HSD, who represent Hartford as
insurance 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").
CALCULATION OF YIELD AND RETURN
YIELD OF THE HVA MONEY MARKET FUND SUB-ACCOUNT. As summarized in the
Prospectus under the heading "Performance Related Information," the yield of
the HVA Money Market Fund 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
<PAGE>
-6-
dividends as declared by the underlying funds, less daily expense charges of
the account) for the period, but will not include realized gains or losses or
unrealized appreciation or depreciation on the underlying fund shares.
The effective yield is calculated by compounding the base period return by
adding 1, raising the sum to a power equal to 365/7 and subtracting 1 from
the result, according to the following formula:
Effective Yield = [(Base Period Return + 1) (365/7)] - 1
The HVA Money Market Fund 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 POLICY FEE.
HVA MONEY MARKET FUND SUB-ACCOUNT
The yield and effective yield for the seven day period ending December 31,
1996 for the HVA Money Market Fund Sub-Account was as follows:
($30 annual policy fee)
Yield 3.85%
Effective Yield 3.93%
YIELDS OF HARTFORD BOND FUND AND HARTFORD MORTGAGE SECURITIES FUND
SUB-ACCOUNTS. As summarized in the Prospectus under the heading "Performance
Related Information," yields of these two Sub-Accounts will be computed by
annualizing a recent month's net investment income, divided by a Fund share's
net asset value on the last trading day of that month. Net changes in the
value of a hypothetical account will assume the change in the underlying
mutual fund's "net asset value per share" for the same period in addition to
the daily expense charge assessed, at the sub-account level for the
respective period. The Hartford Bond Fund and Hartford Mortgage Securities
Fund Sub-Accounts' yields will vary from time to time depending upon market
conditions and, the composition of the underlying funds' portfolios. Yield
should also be considered relative to changes in the value of the
Sub-Accounts' shares and to the relative risks associated with the investment
objectives and policies of the Hartford Bond Fund and Hartford Mortgage
Securities Fund.
The yield reflects recurring charges on the Separate Account level, including
the annual policy fee.
HARTFORD BOND FUND AND
HARTFORD MORTGAGE SECURITIES FUND SUB-ACCOUNTS
<PAGE>
-7-
Yield calculations of the Sub-Accounts used for illustration purposes
reflect the interest earned by the Sub-Accounts, less applicable asset
charges assessed against a Contract Owner's account over the base period.
Yield quotations based on a 30 day period ended December 31, 1996 were
computed by dividing the dividends and interests earned during the period by
the maximum offering price per unit on the last day of the period, according
to the following formula:
Example:
Current Yield Formula for the Sub-Account 2[((A-B)/(CD) + 1)(6) - 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.
Hartford Bond Fund
Yield = 4.94%
Hartford Mortgage Securities Fund
Yield = 5.35%
At any time in the future, yields and total return may be higher or lower
than past yields and there can be no assurance that any historical results
will continue.
The method of calculating yields described above for these Sub-Accounts
differs from the method used by the Sub-Accounts prior to May 1, 1988. The
denominator of the fraction used to
<PAGE>
-8-
calculate yield was previously the average unit value for the period
calculated. That denominator will hereafter be the unit value of the
Sub-Accounts on the last trading day of the period calculated.
CALCULATION OF TOTAL RETURN. As summarized in the Prospectus under the
heading "Performance Related Information," total return is a measure of the
change in value of an investment in a Sub-Account over the period covered.
The formula for total return used herein includes three steps: (1)
calculating the value of the hypothetical initial investment of $1,000 as of
the end of the period by multiplying the total number of units owned at the
end of the period by the unit value per unit on the last trading day of the
period; (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 fiscal year ended December 31, 1996. No information
is included for the Hartford MidCap Fund because as of December 31, 1996, the
Sub-Account had not commenced operations.
<TABLE>
<CAPTION>
Since
Sub-Accounts Inception 1 Year 5 Year 10 Year
- ------------ ----------- -------- ------- -------
<C> <S> <S> <S> <S>
Hartford Advisers Fund 9.12% 6.14% 7.34% 8.62%
Hartford Bond Fund 5.57% (6.76)% 1.55% 3.68%
Hartford Capital Appreciation Fund 14.42% 10.20% 13.53% 13.14%
Hartford Dividend and Growth Fund 15.07% 12.39% n/a n/a
Hartford Index Fund 8.88% 11.58% 9.68% n/a
Hartford International Advisers Fund 7.57% 1.41% n/a n/a
Hartford International Opportunities Fund 2.68% 2.53% 5.21% n/a
Hartford Mortgage Securities Fund 5.60% (5.23)% 0.93% 3.90%
Hartford Small Company Fund (5.58)% n/a n/a n/a
Hartford Stock Fund 11.74% 13.83% 10.91% 11.02%
</TABLE>
<PAGE>
-9-
In addition to the standardized total return, the Sub-Account may advertise a
non-standardized total return. This figure will usually be calculated for
one year, five years, and ten years or other periods. Non-standardized total
return is measured in the same manner as the standardized total return
described above, except that the contingent deferred sales charge and the
Annual Maintenance Fee are not deducted. Therefore, non-standardized total
return for a Sub-Account is higher than standardized total return for a
Sub-Account.
The following are the non-standardized annualized total return quotations for
the Sub-Accounts for the fiscal year ended December 31, 1996. No information
is included for the Hartford MidCap Fund because as of December 31, 1996, the
Sub-Account had not commenced operations.
<TABLE>
<CAPTION>
Since
Sub-Accounts Inception 1 Year 5 Year 10 Year
- ------------ ----------- -------- ------- -------
<S> <C> <C> <C> <C>
Hartford Advisers Fund 11.06% 15.14% 10.7% 10.86%
Hartford Bond Fund 7.63% 2.24% 5.19% 6.3%
Hartford Capital Appreciation Fund 15.97% 19.2% 16.44% 15.26%
Hartford Dividend and Growth Fund 19.33% 21.39% n/a n/a
Hartford Index Fund 11.42% 20.58% 13.01% n/a
Hartford International Advisers Fund 13.71% 10.41% n/a n/a
Hartford International Opportunities Fund 6.24% 11.53% 8.66% n/a
Hartford Mortgage Securities Fund 7.73% 3.77% 4.65% 6.45%
Hartford Small Company Fund 16.67% n/a n/a n/a
Hartford Stock Fund 13.15% 22.83% 14.1% 13.15%
</TABLE>
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
<PAGE>
-10-
market value-weighted and unmanaged index showing the changes in the
aggregate market value of 500 stocks relative to the base period 1941-43.
The S&P 500 is composed almost entirely of common stocks of companies listed
on the New York Stock Exchange, although the common stocks of a few companies
listed on the American Stock Exchange or traded over-the-counter are
included. The 500 companies represented include 400 industrial, 60
transportation and 40 financial services concerns. The S&P 500 represents
about 80% of the market value of all issues traded on the New York Stock
Exchange.
The NASDAQ-OTC Composite Price Index (The "NASDAQ Index") is a market
value-weighted and unmanaged index showing the changes in the aggregate
market value of approximately 3,500 stocks relative to the base measure of
100.00 on February 5, 1971. The NASDAQ Index is composed entirely of common
stocks of companies traded over-the-counter and often through the National
Association of Securities Dealers Automated Quotations ("NASDAQ") system.
Only those over-the-counter stocks having only one market maker or traded on
exchanges are excluded.
The Morgan Stanley Capital International EAFE Index (the "EAFE Index") is an
unmanaged index, which includes over 1,000 companies representing the stock
markets of Europe, Australia, New Zealand, and the Far East. The EAFE Index
is weighted by market capitalization, and therefore, it has a heavy
representation in countries with large stock markets, such as Japan.
The Shearson Lehman Government Bond Index (the "SL Government Index") is a
measure of the market value of all public obligations of the U.S. Treasury;
all publicly issued debt of all agencies of the U.S. Government and all
quasi-federal corporations; and all corporate debt guaranteed by the U.S.
Government. Mortgage-backed securities, flower bonds and foreign targeted
issues are not included in the SL Government Index.
The Shearson Lehman Government/Corporate Bond Index (the "SL
Government/Corporate Index") is a measure of the market value of
approximately 5,300 bonds with a face value currently in excess of $1.3
trillion. To be included in the SL Government/Corporate Index, an issue must
have amounts outstanding in excess of $1 million, have at least one year to
maturity and be rated "Baa" or higher ("investment grade") by a nationally
recognized rating agency.
The Composite Index for Hartford Advisers Fund is comprised of the S&P 500
(55%), the Lehman Government/Corporate Bond Index (35%), both mentioned
above, and 90 Day U.S. Treasury Bills (10%).
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
The following unaudited financial statements, reflect, in the opinion of
management, all adjustments which are of normal recurring nature necessary to
present fairly the financial position, the results of operations and the cash
flows for the periods presented. Certain reclassifications of prior year
results were made to conform to current presentation. Interim results are not
indicative of the results which may be expected for any other interim period
or the full year. Statements contained in this discussion, other than
statements of historical fact, are forward-looking statements. These
statements are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. The forward-looking statements are
made based upon management's expectations and beliefs concerning future
developments and their potential effect on Hartford Life Insurance Company
("the Company"). There can be no assurance that future developments will be
in accordance with management's expectations or that the effect of these
future developments on the Company will be those anticipated by management.
Actual results could differ materially from those expected by the Company,
depending on the outcome of certain factors, including those described with
the forward-looking statements. For a description of accounting policies, see
Note 1 to Consolidated Financial Statements in the 1996 Form 10-K. The
Company is an indirect subsidiary of Hartford Life, Inc. ("HLI"). Accordingly,
the financial statements presented below are a partial disclosure of HLI's
financials. For a full disclosure of HLI's operations, refer to the HLI 10Q,
as filed with the Securities and Exchange Commission as of June 30, 1997.
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions)
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- ----------------------
1997 1996 1997 1996
--------- --------- ----------- ---------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues
Premiums and other considerations........................................... $ 323 $ 299 $ 633 $ 943
Net investment income....................................................... 322 318 659 651
Net realized capital gains(losses).......................................... 0 (1) 4 (1)
--------- --------- ----------- ---------
Total revenues.......................................................... 645 616 1,296 1,593
--------- --------- ----------- ---------
Benefits, claims and expenses
Benefits, claims and claim adjustment expenses.............................. 310 392 652 788
Amortization of deferred policy acquisition costs........................... 91 63 172 129
Dividends to policyholders.................................................. 18 61 72 347
Other insurance expenses.................................................... 117 34 190 198
--------- --------- ----------- ---------
Total benefits, claims and expenses..................................... 536 550 1,086 1,462
--------- --------- ----------- ---------
Income before income tax expense............................................ 109 66 210 131
Income tax expense.......................................................... 35 23 73 45
--------- --------- ----------- ---------
Net income.................................................................. $ 74 $ 43 $ 137 $ 86
--------- --------- ----------- ---------
--------- --------- ----------- ---------
</TABLE>
3
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
----------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities, available for sale, at fair value (amortized cost $13,797
and $13,579)................................................................ $ 13,844 $ 13,624
Equity securities, available for sale, at fair value.......................... 137 119
Mortgage loans, at outstanding balance........................................ -- 2
Policy loans, at outstanding balance.......................................... 3,754 3,836
Other investments, at cost.................................................... 50 54
---------- ----------
Total investments............................................................. 17,785 17,635
Cash............................................................................ 77 43
Premiums and amounts receivable................................................. 58 137
Reinsurance recoverable......................................................... 6,362 6,259
Accrued investment income....................................................... 359 407
Deferred policy acquisition costs............................................... 2,989 2,760
Deferred income tax............................................................. 466 474
Other assets.................................................................... 308 357
Separate account assets......................................................... 58,970 49,690
---------- ----------
Total assets.................................................................. $ 87,374 $ 77,762
---------- ----------
---------- ----------
Liabilities and Stockholders' Equity
Future policy benefits.......................................................... $ 2,889 $ 2,474
Other policyholder funds........................................................ 21,279 22,134
Other liabilities............................................................... 2,204 1,572
Separate account liabilities.................................................... 58,970 49,690
---------- ----------
Total liabilities............................................................. 85,342 75,870
---------- ----------
Common stock--authorized 1,000 shares, $5,690 par value, issued and outstanding
1,000 shares.................................................................. 6 6
Additional paid-in capital...................................................... 1,045 1,045
Unrealized gain on investments, net of tax...................................... 33 30
Retained earnings............................................................... 948 811
---------- ----------
Total stockholders' equity.................................................... 2,032 1,892
---------- ----------
Total liabilities and stockholders' equity.................................. $ 87,374 $ 77,762
---------- ----------
---------- ----------
</TABLE>
4
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30,
--------------------
1997 1996
--------- ---------
(UNAUDITED)
<S> <C> <C>
Operating Activities:
Net income..................................................................................... $ 137 $ 86
Adjustments to net income:
Net realized capital (gains) losses on sale of investments................................... (4) 1
Net increase in deferred policy acquisition costs............................................ (229) (300)
Net amortization of premium on fixed maturities.............................................. 0 7
Decrease (increase) in deferred income tax benefit........................................... 9 (88)
Decrease in premiums and amounts receivable.................................................. 92 20
Decrease in other assets..................................................................... 50 26
Increase in reinsurance recoverable.......................................................... (251) (264)
Increase in liability for future policy benefits............................................. 415 304
Increase in other liabilities................................................................ 146 150
Decrease (increase) in accrued investment income............................................. 48 (5)
--------- ---------
Cash provided by (used for) operating activities............................................... 413 (63)
--------- ---------
Investing Activities:
Purchases of fixed maturities investments...................................................... (3,801) (2,717)
Sales of fixed maturities investments.......................................................... 2,274 1,348
Maturities and principal paydowns of fixed maturities investments.............................. 1,343 1,469
Net sales (purchases) of other investments..................................................... 110 (120)
Net sales of short-term investments............................................................ 138 232
--------- ---------
Cash provided by investing activities.......................................................... 64 212
--------- ---------
Financing Activities:
Net disbursements for investment and universal life-type contracts charged from policyholder
accounts..................................................................................... (443) (187)
Capital Contribution........................................................................... -- 38
--------- ---------
Cash used for financing activities............................................................. (443) (149)
--------- ---------
Net increase in cash........................................................................... 34 0
Cash at beginning of period.................................................................... 43 46
--------- ---------
Cash at end of period.......................................................................... $ 77 $ 46
--------- ---------
--------- ---------
</TABLE>
5
<PAGE>
Item 2. MANAGEMENT'S NARRATIVE ANALYSIS OF
RESULTS OF OPERATIONS
(in millions)
Quarter and Six Months Ended June 30, 1997 and 1996
SEGMENT RESULTS
<TABLE>
<CAPTION>
SIX
QUARTER MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
------------- ---------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Annuity........................................................... $ 49 $ 37 $ 92 $ 70
Individual Life Insurance......................................... 12 10 23 19
Employee Benefits................................................. 9 6 15 14
Guaranteed Investment Contracts................................... -- (15) -- (30)
Corporate Operation............................................... 4 5 7 13
--- --- ------- ----
Net Income........................................................ $ 74 $ 43 $ 137 $ 86
--- --- ------- ----
--- --- ------- ----
</TABLE>
Net income increased $31, or 72%, and $51, or 59%, for the second quarter
and six months ended June 30, 1997, respectively, over prior year. This increase
is reflective of continued, solid growth in both the Annuity and Individual Life
Insurance segments. Net income in the Annuity segment increased due to higher
fee income on growing account values as well as strong new business sales. Net
income in the Individual Life Insurance segment increased due to cost of
insurance charges and other fee income on a growing block of life insurance
in-force, as well as favorable mortality results. Guaranteed Investment
Contracts reported no net income in the second quarter of 1997 consistent with
management's expectations that net income subsequent to 1996 will be immaterial.
ANNUITY
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues.......................................................................... $ 308 $ 232 $ 588 $ 466
Expenses.......................................................................... 259 195 496 396
--------- --------- --------- ---------
Net Income........................................................................ $ 49 $ 37 $ 92 $ 70
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
Revenues, which are primarily comprised of investment income and management
and maintenance fees, grew $76, or 33%, to $308 in the second quarter of 1997
and $122, or 26%, to $588 for the six months ended June 30, 1997. This growth
resulted from an increase in the average account value, primarily driven by
individual variable annuities, of $14.2 billion, or 35%, to $55.2 billion as of
June 30, 1997 from $41.0 billion as of June 30, 1996. This is a result of
approximately $10 billion in new sales of individual annuities over the last
twelve months and market appreciation. Additionally, new individual annuity
sales were approximately $2.5 billion and $5.1 billion for the second quarter
and six months ended June 30, 1997, respectively, similar to sales of $2.7
billion and $4.9 billion, respectively, for the same periods of 1996. Growth in
the assets under management by this segment also resulted in increased expenses
related to other insurance expenses, amortization of deferred policy acquisition
costs and taxes. Expenses increased $64, or 33%, to $259 in the second quarter
of 1997 and $100, or 25%, to $496 for the six months ended June 30, 1997. Net
income increased $12, or 32%, to $49 in the second quarter of 1997 and $22, or
31%, to $92 for the six months ended June 30, 1997.
6
<PAGE>
INDIVIDUAL LIFE INSURANCE
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues.......................................................................... $ 125 $ 101 $ 236 $ 216
Expenses.......................................................................... 113 91 213 197
--------- --------- --------- ---------
Net Income........................................................................ $ 12 $ 10 $ 23 $ 19
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
Revenues increased $24, or 24%, to $125 in the second quarter of 1997 and
$20, or 9%, to $236 for the six months ended June 30, 1997. In the first quarter
of 1996, a block of business was assumed from Investors Equity which increased
revenues by $9. Excluding this transaction, year to date revenues increased $29,
or 14% over prior year. This growth was driven by increased cost of insurance
charges and other fee income earned on this growing block of business. Life
insurance in-force grew approximately $3.3 billion, or 6%, as of June 30, 1997
over the prior period, primarily due to sales of variable life products.
Expenses in this segment increased $22, or 24%, to $113 and $16, or 8%, in the
second quarter of 1997 and for the six months ended June 30, 1997, respectively,
over the same period last year, consistent with a growing block of business. As
a result, net income increased $2, or 20%, to $12 in the second quarter of 1997
and $4, or 21%, to $23 for the six months ended June 30, 1997.
EMPLOYEE BENEFITS
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- --------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues.......................................................................... $ 142 $ 210 $ 321 $ 753
Expenses.......................................................................... 133 204 306 739
--------- --------- --------- ---------
Net Income........................................................................ $ 9 $ 6 $ 15 $ 14
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
Revenues declined $68, or 32%, to $142 in the second quarter of 1997 and
$432, or 57%, for the six months ended June 30, 1997 over the same period last
year. This decline is mainly related to the passage of the Health Insurance
Portability and Accountability Act of 1996, which effectively eliminated all
future sales of leveraged COLI. Expenses declined $71, or 35%, in the second
quarter of 1997 and $433, or 59%, for the six months ended June 30, 1997, over
the same period last year. Significant declines in benefits, claims and claim
adjustment expenses and policyholder dividends are the result of the decline of
the block of COLI business. As a result, net income increased $3, or 50%, in the
second quarter of 1997 and $1, or 7%, for the six months ended June 30, 1997.
GUARANTEED INVESTMENT CONTRACTS
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- --------------------
1997 1996 1997 1996
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues............................................................................ $ 62 $ 67 $ 134 $ 140
Expenses............................................................................ 62 82 134 170
---------- --------- --------- ---------
Net Income.......................................................................... $ -- $ (15) $ -- $ (30)
---------- --------- --------- ---------
---------- --------- --------- ---------
</TABLE>
This segment had no net income for the three and six months ended June 30,
1997, as compared to losses of $15 and $30 for the same periods last year. These
results are consistent with management's expectations that net income (loss)
from Closed Book GRC in the years subsequent to 1996 will be immaterial based on
the
7
<PAGE>
Company's current projections for the performance of the assets and
liabilities associated with Closed Book GRC due to actions taken in the third
quarter of 1996.
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
HARTFORD LIFE INC. INITIAL PUBLIC OFFERING
On February 10, 1997, HLI, an indirect parent of the Company, filed a
registration statement with the Securities and Exchange Commission, as
amended, relating to an Initial Public Offering ("IPO") of up to 20% of HLI's
Class A common stock. Pursuant to the IPO on May 22, 1997, HLI sold to the
public 26 million shares at $28.25 per share and received net proceeds of
$687. Of the proceeds, $527 was used to retire debt related to HLI's
promissory notes outstanding and the line of credit discussed in the note
below with the remaining $160 contributed to HLI's insurance subsidiaries to
be used for working capital and other general corporate purposes.
The 26 million shares sold from the IPO represent approximately 18.6% of the
equity ownership in HLI and approximately 4.4% of the combined voting power of
HLI's Class A and Class B Common Stock. The Hartford Financial Services Group,
Inc. ("The Hartford"), an indirect parent of HLI, owns all of the 114 million
outstanding shares of Class B Common Stock of HLI, representing 81.4% of the
equity ownership in HLI and approximately 95.6% of the combined voting power of
HLI's Class A and Class B Common Stock. Holders of Class A Common Stock
generally have identical rights to the holders of Class B Common Stock except
that the holders of Class A Common Stock are entitled to one vote per share
while holders of Class B Common Stock are entitled to five votes per share on
all matters submitted to a vote of the HLI stockholders.
HARTFORD LIFE INC. DEBT OFFERING
On February 7, 1997, HLI declared a dividend of $1,184 payable to its direct
parent, Hartford Accident and Indemnity Company ("HA&I"). As a result, HLI
borrowed $1,084 on February 18, 1997, pursuant to a $1,300 line of credit, with
interest payable at the two-month Eurodollar rate plus 15 basis points, which,
together with a promissory note in the amount of $100, was paid as a dividend to
HA&I on February 20, 1997. Of the $1,184 dividend, $893 constituted a repayment
of the portion of HLI's third party indebtedness internally allocated, for
financial reporting purposes, to HLI's insurance subsidiaries (the "Allocated
Advances"). In addition, on April 4, 1997, HLI declared and paid a dividend of
$25 to its parent in the form of a promissory note. Subsequently, $12 of this
note was forgiven in the form of a capital contribution from HA&I.
On February 14, 1997, HLI filed a shelf registration statement for the
issuance and sale of up to $1.0 billion in the aggregate of senior debt
securities, subordinated debt securities and preferred stock. On June 17, 1997,
HLI issued $650 of unsecured redeemable long-term debt in the form of notes and
debentures. Of this amount, $200 was in the form of 6.90% notes due June 15,
2004, $200 of 7.10% notes due June 15, 2007, and $250 of 7.65% debentures due
June 15, 2027. Interest on each of the notes and debentures is payable
semi-annually on June 15 and December 15, of each year, commencing December 15,
1997. HLI also issued $50 of short-term debt in the form of commercial paper. Of
the proceeds from this issuance, $670 was used to retire the remaining balance
on the $1,300 line of credit with the remainder being used for working capital
and other general corporate purposes. Subsequently, HLI reduced the capacity of
the line of credit from $1,300 to $250, which will be primarily used to support
the commercial paper program.
8
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
ITT Hartford Life and Annuity Insurance Company:
We have audited the accompanying statutory-basis balance sheets of ITT Hartford
Life and Annuity Insurance Company (a Connecticut Corporation and wholly owned
subsidiary of Hartford Life Insurance Company) (the Company) as of December 31,
1996 and 1995, and the related statutory-basis statements of income, changes in
capital and surplus, and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
statutory-basis 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.
The Company presents its financial statements in conformity with statutory
accounting practices as described in Note 1 of notes to statutory-basis
financial statements. When statutory-basis financial statements are presented
for purposes other than for filing with a regulatory agency, generally accepted
auditing standards require that an auditors' report on them state whether they
are presented in conformity with generally accepted accounting principles. The
accounting practices used by the Company vary from generally accepted accounting
principles as explained and quantified in Note 1. In our opinion, because the
differences in accounting practices as described in Note 1 are material, the
statutory-basis financial statements referred to above do not present fairly, in
accordance with generally accepted accounting principles, the financial position
of the Company as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996.
However, in our opinion, the statutory-basis financial statements referred to
above present fairly, in all material respects, the financial position of the
Company as of December 31, 1996 and 1995, and the results of its operations and
its cash flows for each of the three years in the period ended December 31, 1996
in conformity with statutory accounting practices as described in Note 1.
As discussed in Note 1 of notes to statutory financial statements, during 1994,
the Company changed its valuation method in determining aggregate reserves for
future benefits.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 10, 1997
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATUTORY BASIS STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
----------------------------------
1996 1995 1994
---------- ---------- ----------
($000)
<S> <C> <C> <C>
Revenues
Premiums and Annuity Considerations.... $ 250,244 $ 165,792 $ 442,173
Annuity and Other Fund Deposits........ 1,897,347 1,087,661 608,685
Net Investment Income.................. 98,441 78,787 29,012
Commissions and Expense Allowances on
Reinsurance Ceded..................... 370,637 183,380 154,527
Reserve Adjustment on Reinsurance
Ceded................................. 3,864,395 1,879,785 1,266,926
Other Revenues......................... 161,906 140,796 41,857
---------- ---------- ----------
Total Revenues....................... 6,642,970 3,536,201 2,543,180
---------- ---------- ----------
Benefits and Expenses
Death and Annuity Benefits............. 60,111 53,029 7,948
Surrenders and Other Benefit
Payments.............................. 276,720 221,392 181,749
Commissions and Other Expenses......... 491,720 236,202 186,303
Increase in Reserves for Future
Benefits.............................. 27,351 94,253 416,748
Increase in Liability for Premium and
Other Deposit Funds................... 207,156 460,124 182,934
Net Transfers to Separate Accounts..... 5,492,964 2,414,669 1,541,419
---------- ---------- ----------
Total Benefits and Expenses.......... 6,556,022 3,479,669 2,517,101
---------- ---------- ----------
Net Gain from Operations Before Federal
Income Tax Expense...................... 86,948 56,532 26,079
Federal Income Tax Expense............. 19,360 14,048 24,038
---------- ---------- ----------
Net Gain from Operations................. 67,588 42,484 2,041
Net Realized Capital Gains (Losses).... 407 374 (2)
---------- ---------- ----------
Net Income............................... $ 67,995 $ 42,858 $ 2,039
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATUTORY BASIS BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------
1996 1995
----------- ----------
<S> <C> <C>
($000)
Assets
Bonds........................................... $ 1,268,480 $1,226,489
Common Stocks................................... 44,996 39,776
Policy Loans.................................... 28,853 22,521
Cash and Short-Term Investments................. 176,830 173,304
Other Invested Assets........................... 2,858 13,432
----------- ----------
Total Cash and Invested Assets................ 1,522,017 1,475,522
----------- ----------
Investment Income Due and Accrued............... 14,555 18,021
Premium Balances Receivable..................... 373 402
Receivables from Affiliates..................... 257 8,182
Other Assets.................................... 19,099 25,907
Separate Account Assets......................... 14,619,324 7,324,910
----------- ----------
Total Assets.................................. $16,175,625 $8,852,944
----------- ----------
----------- ----------
Liabilities
Aggregate Reserves for Future Benefits.......... $ 571,970 $ 542,082
Policy and Contract Claims...................... 6,806 8,223
Liability for Premium and Other Deposit Funds... 1,155,143 948,361
Asset Valuation Reserve......................... 7,442 8,010
Payable to Affiliates........................... 10,022 3,682
Other Liabilities............................... (498,195) (220,658)
Separate Account Liabilities.................... 14,619,324 7,324,910
----------- ----------
Total Liabilities............................. 15,872,512 8,614,610
----------- ----------
Capital and Surplus
Common Stock.................................... 2,500 2,500
Gross Paid-In and Contributed Surplus........... 226,043 226,043
Unassigned Funds................................ 74,570 9,791
----------- ----------
Total Capital and Surplus..................... 303,113 238,334
----------- ----------
Total Liabilities and Capital and Surplus....... $16,175,625 $8,852,944
----------- ----------
----------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATUTORY BASIS STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
--------- --------- --------
<S> <C> <C> <C>
($000)
Capital and Surplus -- Beginning of
Year................................... $ 238,334 $ 91,285 $ 88,693
--------- --------- --------
Net Income............................ 67,995 42,858 2,039
Change in Net Unrealized Capital
(Losses) Gains on Common Stocks...... (5,171) 1,709 (133)
Change in Asset Valuation Reserve..... 568 (5,588) (1,356)
Change in Non-Admitted Assets......... 1,387 (1,944) (8,599)
Change in Reserve (Valuation Basis)... -- -- 10,659
Aggregate Write-ins for Surplus....... -- 8,080 (18)
Dividends to Shareholder.............. -- (10,000) --
Paid-In Surplus....................... -- 111,934 --
--------- --------- --------
Change in Capital and Surplus....... 64,779 147,049 2,592
--------- --------- --------
Capital and Surplus -- End of Year...... $ 303,113 $ 238,334 $ 91,285
--------- --------- --------
--------- --------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATUTORY BASIS STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
($000)
Operations
Premiums, Annuity Considerations and
Other Fund Deposits.................. $ 2,147,627 $ 1,253,511 $ 1,050,493
Net Investment Income................. 106,178 78,328 24,519
Other Revenues........................ 4,396,892 2,253,466 1,515,700
----------- ----------- -----------
Total Revenues...................... 6,650,697 3,585,305 2,590,712
----------- ----------- -----------
Benefits Paid......................... 338,998 277,965 181,205
Federal Income Taxes Paid on
Operations........................... 28,857 208,423 20,634
Other Expenses........................ 6,254,139 2,664,385 1,832,905
----------- ----------- -----------
Total Benefits and Expenses......... 6,621,994 3,150,773 2,034,744
----------- ----------- -----------
Net Cash from Operations............ 28,703 434,532 555,968
----------- ----------- -----------
Proceeds from Investments
Bonds................................. 871,019 287,941 87,747
Common Stocks......................... 72,100 52 --
Other................................. 10 28 40
----------- ----------- -----------
Total Investment Proceeds........... 943,129 288,021 87,787
----------- ----------- -----------
Taxes (Paid) Received on Capital (Gains)
Losses................................. (936) (226) 96
Paid-In Surplus......................... -- 111,934 --
Other Cash Provided..................... 41,998 28,199 30,554
----------- ----------- -----------
Total Proceeds...................... 1,012,894 862,460 674,405
----------- ----------- -----------
Cost of Investments Acquired
Bonds................................. 914,523 720,521 595,181
Common Stocks......................... 82,495 35,794 808
Miscellaneous Applications............ 130 2,146 2,523
----------- ----------- -----------
Total Investments Acquired.......... 997,148 758,461 598,512
----------- ----------- -----------
Other Cash Applied
Dividends Paid to Shareholders........ -- 10,000 --
Other................................. 12,220 5,007 24,813
----------- ----------- -----------
Total Other Cash Applied............ 12,220 15,007 24,813
----------- ----------- -----------
Total Applications................ 1,009,368 773,468 623,325
----------- ----------- -----------
Net Change in Cash and Short-Term
Investments............................ 3,526 88,992 51,080
Cash and Short-Term Investments,
Beginning of Year...................... 173,304 84,312 33,232
----------- ----------- -----------
Cash and Short-Term Investments, End of
Year................................... $ 176,830 $ 173,304 $ 84,312
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
- ---------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
ITT Hartford Life and Annuity Insurance Company ("ILA" or "the Company"),
formerly known as ITT Life Insurance Corporation, is a wholly owned subsidiary
of Hartford Life Insurance Company ("HLIC"), which is an indirect subsidiary of
Hartford Life, Inc. ("Hartford Life"), which is ultimately owned by ITT Hartford
Group, Inc. ("The Hartford"), formerly a wholly owned subsidiary of ITT
Corporation ("ITT"). On February 10, 1997, The Hartford announced its plans to
sell up to 20% of Hartford Life to the public. On December 19, 1995, ITT
Corporation distributed all the outstanding shares of The Hartford to ITT
shareholders of record in an action known herein as the "Distribution". As a
result of the Distribution, The Hartford became an independent, publicly traded
company. During 1996, ILA re-domesticated from the State of Wisconsin to the
State of Connecticut.
ILA offers a complete line of ordinary and universal life insurance,
individual annuities and certain supplemental accident and health benefit
coverages.
BASIS OF PRESENTATION
The accompanying ILA statutory-basis financial statements were prepared in
conformity with statutory accounting practices prescribed or permitted by the
National Association of Insurance Commissioners ("NAIC") and the State of
Connecticut Department of Insurance.
The preparation of financial statements in conformity with statutory
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 reported period. Actual
results could differ from those estimates.
Statutory accounting practices and generally accepted accounting principles
("GAAP") differ in certain significant respects. These differences principally
involve:
(1) treatment of policy acquisition costs (commissions, underwriting and
selling expenses, premium taxes, etc.) which are charged to expense when
incurred for statutory purposes rather than on a pro-rata basis over the
expected life of the policy;
(2) recognition of premium revenues, which for statutory purposes are
generally recorded as collected or when due during the premium paying period
of the contract and which for GAAP purposes, generally, for universal life
policies and investment products, are only recorded for policy charges for
the cost of insurance, policy administration and surrender charges assessed
to policy account balances. Also, for GAAP purposes, premiums for
traditional life insurance policies are recognized as revenues when they are
due from policyholders and the retrospective deposit method is used in
accounting for universal life and other types of contracts where the payment
pattern is irregular or surrender charges are a significant source of
profit. The prospective deposit method is used for GAAP purposes where
investment margins are the primary source of profit;
(3) development of liabilities for future policy benefits, which for
statutory purposes predominantly use interest rate and mortality assumptions
prescribed by the NAIC which may vary considerably from interest and
mortality assumptions used for GAAP financial reporting;
(4) providing for income taxes based on current taxable income (tax return)
only for statutory purposes, rather than establishing additional assets or
liabilities for deferred Federal income taxes to recognize the tax effect
related to reporting revenues and expenses in different periods for
financial reporting and tax return purposes;
(5) excluding certain GAAP assets designated as non-admitted assets (e.g.,
past due agents' balances and furniture and equipment) from the balance
sheet for statutory purposes by directly charging surplus;
(6) establishing accruals for post-retirement and post-employment health
care benefits on an option basis, using a twenty year phase-in approach,
whereas GAAP liabilities are required to be recorded;
(7) establishing a formula reserve for realized and unrealized losses due to
default and equity risk associated with certain invested assets (Asset
Valuation Reserve); as well as the deferral and amortization of realized
gains and losses, motivated by changes in interest rates during the period
the asset is held, into income over the remaining life to maturity of the
asset sold (Interest Maintenance Reserve); whereas on a GAAP basis, no such
formula reserve is required and
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
realized gains and losses are recognized in the period the asset is sold;
(8) the reporting of reserves and benefits net of reinsurance ceded, where
risk transfer has taken place; whereas on a GAAP basis, reserves are
reported gross of reinsurance with reserve credits presented as recoverable
assets;
(9) the reporting of fixed maturities at amortized cost, whereas GAAP
requires that fixed maturities be classified as "held-to-maturity",
"available-for-sale" or "trading", based on the Company's intentions with
respect to the ultimate disposition of the security and its ability to
affect those intentions. The Company's fixed maturities were classified on a
GAAP basis as "available-for- sale" and accordingly, those investments were
reflected at fair value with the corresponding impact included as a
component of Stockholder's Equity designated as "Net unrealized capital
(loss)/ gain on investments, net of tax". For statutory reporting purposes,
Net Unrealized Capital Losses (Gains) on Common Stocks represent unrealized
losses (gains) on common stock reported at fair value; and
(10) separate account liabilities are valued on the Commissioner's Annuity
Reserve Valuation Method ("CARVM"), with the surplus generated recorded as a
liability to the general account (and a contra liability on the balance
sheet of the general account), whereas GAAP liabilities are valued at
account value.
As of and for the years ended December 31, 1996, 1995 and 1994, the
significant differences between statutory and GAAP basis net income and capital
and surplus for the Company are summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
GAAP Net Income................ $ 41,202 $ 38,821 $ 23,295
Amortization and deferral of
policy acquisition costs...... (341,572) (174,341) (117,863)
Change in unearned revenue
reserve....................... 55,504 32,300 24,494
Deferred taxes................. 2,090 2,801 (9,267)
Separate accounts.............. 306,978 146,635 75,941
Other, net..................... 3,793 (3,358) 5,439
----------- ----------- -----------
Statutory Net Income........... $ 67,995 $ 42,858 $ 2,039
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
GAAP Capital and Surplus....... $ 503,887 $ 455,541 $ 199,785
Deferred policy acquisition
costs......................... (938,114) (596,542) (422,201)
Unearned revenue reserve....... 130,148 74,644 42,344
Deferred taxes................. 12,823 1,493 13,257
Separate accounts.............. 640,101 333,123 186,488
Asset valuation reserve........ (7,442) (8,010) (2,422)
Unrealized gain (loss) on
bonds......................... 5,112 (1,696) 21,918
Adjustment relating to Lyndon
contribution (see Note 3)..... (41,277) (41,277) --
Other, net..................... (2,125) 21,058 52,116
----------- ----------- -----------
Statutory Capital and
Surplus....................... $ 303,113 $ 238,334 $ 91,285
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
AGGREGATE RESERVES AND LIABILITIES FOR PREMIUM AND OTHER DEPOSIT FUNDS
Aggregate reserves for payment of future life, health and annuity benefits
were computed in accordance with actuarial standards. Reserves for life
insurance policies are generally based on the 1958 and 1980 Commissioner's
Standard Ordinary Mortality Tables and various valuation rates ranging from 2.5%
to 5%. Accumulation and on-benefit annuity reserves are based principally on
individual annuity tables at various rates ranging from 2.5% to 8.75% and using
CARVM. Accident and health reserves are established using a two year preliminary
term method and morbidity tables based on Company experience.
ILA has established separate accounts to segregate the assets and
liabilities of certain annuity contracts that must be segregated from the
Company's general assets under the terms of the contracts. The assets consist
primarily of marketable securities reported at market value. Premiums, benefits
and expenses of these contracts are reported in the Statutory Basis Statements
of Income.
During 1994, the Company changed the valuation method on aggregate reserves
for future benefits resulting in a $10.7 million increase in surplus. The new
valuation method is in accordance with presently accepted actuarial standards.
INVESTMENTS
Investments in bonds are carried at amortized cost. Bonds which are deemed
ineligible to be held at amortized cost by the NAIC Securities Valuation Office
("SVO")are carried at the appropriate SVO published value. When a permanent
reduction in the value of publicly traded securities occurs, the decrease is
reported as a realized loss and the carrying value is adjusted accordingly.
Common stocks are carried at market value with the difference from cost
reflected in surplus. Other invested assets are generally recorded at fair
value.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
Changes in net unrealized capital (losses)/gains on common stocks are
reported as (reductions)/additions of surplus. The Asset Valuation Reserve
("AVR") is designed to provide a standardized reserving process for realized and
unrealized losses due to default and equity risks associated with invested
assets. The reserve decreased by $568 in 1996 and increased by $5,588 and $1,356
in 1995 and 1994, respectively. Additionally, the Interest Maintenance Reserve
("IMR") captures net realized capital gains and losses, net of applicable income
taxes, resulting from changes in interest rates and amortizes these gains or
losses into income over the remaining life of the mortgage loan or bond sold.
Realized capital gains and losses, net of taxes not included in IMR are reported
in the Statutory Basis Statements of Income. Realized investment gains and
losses are determined on a specific identification basis. The amount of net
capital gains reclassified from the IMR was $1,413 and $39 in 1996 and 1995,
respectively, and the amount of net capital losses was $67 in 1994. The amount
of income amortized was $392, $256 and $114 in 1996, 1995 and 1994,
respectively.
OTHER LIABILITIES
The amount reflected in other liabilities includes a receivable from the
separate accounts of $640 million and $333 million as of December 31, 1996 and
1995, respectively. The balances are classified in accordance with NAIC
accounting practices.
- ---------------------------------------------------
2. INVESTMENTS
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Interest income from
bonds.................... $ 89,940 $ 76,100 $ 28,335
Interest income from
policy loans............. 1,846 1,504 454
Interest and dividends
from other investments... 7,864 2,288 1,069
--------- --------- ---------
Gross investment income... 99,650 79,892 29,858
Less: investment
expenses................. 1,209 1,105 846
--------- --------- ---------
Net investment income..... $ 98,441 $ 78,787 $ 29,012
--------- --------- ---------
--------- --------- ---------
</TABLE>
(B) COMPONENTS OF NET UNREALIZED CAPITAL (LOSSES) GAINS ON COMMON STOCKS
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Gross unrealized capital gains
at end of year............... $ 713 $ 1,724 $ 75
Gross unrealized capital
losses at end of year........ (4,160) -- (60)
--------- --------- ---------
Net unrealized capital
(losses) gains............... (3,447) 1,724 15
Balance at beginning of
year......................... 1,724 15 148
--------- --------- ---------
Change in net unrealized
capital (losses) gains on
common stocks................ $ (5,171) $ 1,709 $ (133)
--------- --------- ---------
--------- --------- ---------
</TABLE>
(C) COMPONENTS OF NET UNREALIZED CAPITAL (LOSSES) GAINS ON BONDS AND SHORT-TERM
INVESTMENTS
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Gross unrealized
capital gains at end
of year............... $ 11,821 $ 22,251 $ 986
Gross unrealized
capital losses at end
of year............... (3,842) (1,374) (34,718)
---------- ---------- ----------
Net unrealized capital
gains (losses) after
tax................... 7,979 20,877 (33,732)
Balance at beginning of
year.................. 20,877 (33,732) 5,232
---------- ---------- ----------
Change in net
unrealized capital
(losses) gains on
bonds and short-term
investments........... $ (12,898) $ 54,609 $ (38,964)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
(D) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Bonds and short-term
investments.................... $ 2,756 $ 156 $ (101)
Common stocks................... 0 52 0
Real estate and other........... 0 0 34
--------- --------- ---------
Realized capital gains
(losses)....................... 2,756 208 (67)
Capital gains taxes (benefit)... 936 (205) 2
--------- --------- ---------
Net realized capital gains
(losses) after tax............. 1,820 413 (69)
Less: IMR capital gains
(losses)....................... 1,413 39 (67)
--------- --------- ---------
Net realized capital gains
(losses)....................... $ 407 $ 374 $ (2)
--------- --------- ---------
--------- --------- ---------
</TABLE>
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
(E) OFF-BALANCE SHEET INVESTMENTS
The Company had no significant financial instruments with off-balance sheet
risk as of December 31, 1996 and 1995.
(F) CONCENTRATION OF CREDIT RISK
Excluding U.S. government and government agency investments, the Company is
not exposed to any significant concentration of credit risk.
(G) BONDS, SHORT-TERM AND COMMON STOCK INVESTMENTS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
------------------------------------------------
GROSS UNREALIZED
AMORTIZED -------------------- FAIR
COST GAINS LOSSES VALUE
------------ --------- --------- ------------
<S> <C> <C> <C> <C>
U.S. government and government agencies and authorities:
(Guaranteed and sponsored)............................................. $ 58,761 $ 6 $ (195) $ 58,572
(Guaranteed and sponsored) -- asset-backed............................. 78,237 1,477 (609) 79,105
States, municipalities and political subdivisions........................ 25,958 163 (2) 26,119
International governments................................................ 7,447 205 -- 7,652
Public utilities......................................................... 70,116 396 (424) 70,088
All other corporate...................................................... 410,530 6,357 (1,355) 415,532
All other corporate -- asset-backed...................................... 485,953 2,654 (1,081) 487,526
Short-term investments................................................... 148,094 -- (66) 148,028
Certificates of deposit.................................................. 83,378 563 (110) 83,831
Parents, subsidiaries and affiliates..................................... 48,100 -- -- 48,100
------------ --------- --------- ------------
Total bonds and short-term investments................................. $ 1,416,574 $ 11,821 $ (3,842) $ 1,424,553
------------ --------- --------- ------------
------------ --------- --------- ------------
Common stock -- unaffiliated............................................. $ 13,064 $ 713 $ 0 $ 13,777
Common stock -- affiliated............................................... 35,379 0 4,160 31,219
------------ --------- --------- ------------
Total common stocks...................................................... $ 48,443 $ 713 $ 4,160 $ 44,996
------------ --------- --------- ------------
------------ --------- --------- ------------
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1995
----------------------------------------------------
GROSS UNREALIZED
AMORTIZED ------------------------ FAIR
COST GAINS LOSSES VALUE
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
U.S. government and government agencies and authorities:
(Guaranteed and sponsored)........................................... $ 44,268 $ 14 $ (248) $ 44,034
(Guaranteed and sponsored) -- asset-backed........................... 176,160 4,644 (682) 180,122
States, municipalities and political subdivisions...................... 16,948 38 (6) 16,980
International governments.............................................. 5,402 441 -- 5,843
Public utilities....................................................... 108,083 1,652 (90) 109,645
All other corporate.................................................... 374,058 8,145 (248) 381,955
All other corporate -- asset-backed.................................... 410,197 5,841 (89) 415,949
Short-term investments................................................. 139,011 18 -- 139,029
Certificates of deposit................................................ 91,373 1,458 (11) 92,820
------------ ----------- ----------- ------------
Total bonds and short-term investments............................... $ 1,365,500 $ 22,251 $ (1,374) $ 1,386,377
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
Common stock -- unaffiliated........................................... $ 2,668 $ 555 $ -- $ 3,223
Common stock -- affiliated............................................. 35,384 1,169 -- 36,553
------------ ----------- ----------- ------------
Total common stocks.................................................. $ 38,052 $ 1,724 $ -- $ 39,776
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
</TABLE>
The amortized cost and estimated market value of bonds and short-term
investments at December 31, 1996 by management's anticipated maturity are shown
below. Asset-backed securities are distributed to maturity year based on ILA's
estimate of the rate of future prepayments of principal
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
over the remaining life of the securities. Expected maturities differ from
contractual maturities reflecting borrowers' rights to call or prepay their
obligations.
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
MATURITY COST VALUE
- ------------------------------ ------------ ------------
<S> <C> <C>
Due in one year or less....... $ 478,095 $ 478,852
Due after one year through
five years................... 622,805 623,105
Due after five years through
ten years.................... 259,479 265,681
Due after ten years........... 56,195 56,915
------------ ------------
Total....................... $ 1,416,574 $ 1,424,553
</TABLE>
Proceeds from sales of investments in bonds and short-term investments
during 1996, 1995 and 1994 were $668,078, $313,961 and $117,912, respectively,
resulting in gross realized gains of $3,675, $1,419 and $518, respectively, and
gross realized losses of $919, $1,263 and $619, respectively, before transfers
to IMR. The Company had realized gains of $52 during 1995 from a capital gain
distribution.
(H) FAIR VALUE OF FINANCIAL INSTRUMENTS
BALANCE SHEET ITEMS (IN MILLIONS):
<TABLE>
<CAPTION>
1996 1995
---------------------- ----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Assets
Bonds and short-term
investments......... $ 1,417 $ 1,425 $ 1,366 $ 1,386
Common stocks........ 45 45 40 40
Policy loans......... 29 29 23 23
Other invested
assets.............. 3 3 13 13
Liabilities
Liabilities on
investment
contracts........... $ 1,245 $ 1,191 $ 1,031 $ 981
</TABLE>
The carrying amounts for policy loans approximates fair value. The
liabilities are determined by forecasting future cash flows and discounting the
forecasted cash flows at current market rates.
- ---------------------------------------------------
3. RELATED PARTY TRANSACTIONS
Transactions between the Company and its affiliates within The Hartford
relate principally to tax settlements, reinsurance, service fees, capital
contributions and payments of dividends.
On June 30, 1995, the assets of Lyndon Insurance Company were contributed to
ILA. As a result, ILA received approximately $365 million in bonds and short-
term investments, common stocks and cash, $28 million in policy reserves, $187
million of current tax liability, $26 million in IMR, $8 million in AVR (offset
by an aggregate write-in to surplus), and $4 million of other liabilities. The
assets in excess of liabilities of $112 million were recorded as an increase to
paid-in surplus.
For additional information, see Note 5.
- ---------------------------------------------------
4. FEDERAL INCOME TAXES
The Company 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 to file separate federal, state and local
income tax returns.
As long as The Hartford continues to beneficially own, directly or
indirectly, 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 consolidated group of which The Hartford is
the common parent. It is the current intention of The Hartford and its
subsidiaries to continue to file a single consolidated Federal income tax
return. The Company will continue to remit (receive from) The Hartford a current
income tax provision (benefit) computed in accordance with such tax sharing
agreement. Federal income taxes paid by the Company were $29,792, $215,921 and
$20,538 in 1996, 1995 and 1994, respectively. The effective tax rate was 22%,
25% and 92% in 1996, 1995 and 1994, respectively. The following schedule
provides a reconciliation of the tax provision at the U.S. Federal Statutory
rate to Federal income tax expense (in millions).
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- -----
<S> <C> <C> <C>
Tax provision at U.S. Federal statutory rate..... $ 30 $ 20 $ 9
Tax deferred acquisition costs................... 27 8 8
Statutory to tax reserve differences............. -- 3 5
Unrealized (gain)/loss on separate accounts...... (21) (13) 2
Investments and other............................ (17) (4) --
--------- --------- ---
Federal income tax expense....................... $ 19 $ 14 $ 24
--------- --------- ---
--------- --------- ---
</TABLE>
- ---------------------------------------------------
5. CAPITAL AND SURPLUS AND SHAREHOLDER
DIVIDEND RESTRICTIONS
The maximum amount of dividends which can be paid, without prior approval,
by State of Connecticut insurance companies to shareholders is subject to
restrictions relating to statutory surplus. Dividends are paid as determined by
the Board of Directors and are not cumulative. No dividends were paid in 1996 or
1994. ILA paid dividends of $10 million to its parent, HLIC, in 1995. As a
result of the Distribution by ITT, the assets of ITT Lyndon Insurance
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
Company (Lyndon) were contributed to ILA in June 1995. Substantially all the
business was removed from Lyndon prior to the contribution. The amount of assets
which exceeded liabilities at the contribution date ($112 million) was included
in paid-in surplus.
- ---------------------------------------------------
6. PENSION PLANS AND OTHER POST-RETIREMENT
AND POST-EMPLOYMENT BENEFITS
The Company's employees are included in The Hartford's non-contributory
defined benefit pension plans. These plans provide pension benefits that are
based on years of service and the employee's compensation during the last ten
years of employment. The Company's funding policy is to contribute annually an
amount between the minimum funding requirements set forth in the Employee
Retirement Income Security Act of 1974 and the maximum amount that can be
deducted for Federal income tax purposes. Generally, pension costs are funded
through the purchase of HLIC's group pension contracts. Pension expense was
$358, $1,034, and $1,211 in 1996, 1995 and 1994, respectively. Liabilities for
the plan are held by The Hartford.
The Company also participates in The Hartford's Investment and Savings Plan,
which includes a deferred compensation option under IRC section 401(k) and an
ESOP allocation under IRC section 404(k). The liabilities for these plans are
included in the financial statements of The Hartford. The cost to ILA was not
material in 1996, 1995 and 1994.
The Company's employees are included in The Hartford's contributory defined
health care and life insurance benefit plans. These plans provide health care
and life insurance benefits for retired employees. Substantially all employees
may become eligible for those benefits if they reach normal or early retirement
age while still working for the Company. 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. Amounts allocated by
The Hartford for post-retirement health care and life insurance benefits expense
(not including provisions for accrual of post-retirement benefit obligations)
are immaterial. The assumed rate of future increases in the per capita cost of
health care (the health care trend rate) was 9.3% for 1996, decreasing ratably
to 6% in the year 2001. Increasing the health care trend rates by one percent
per year would have an immaterial impact on the accumulated post-retirement
benefit obligation and the annual expense. The cost to ILA was not material in
1996, 1995 and 1994.
Post-employment benefits are primarily comprised of obligations to provide
medical and life insurance to employees on long-term disability. Post-employment
benefit expense was not material in 1996, 1995 and 1994.
- ---------------------------------------------------
7. REINSURANCE
The Company cedes insurance to non-affiliated insurers in order to limit its
maximum loss. Such transfer does not relieve ILA of its primary liability. ILA
also assumes insurance from other insurers.
Life insurance net retained premiums were comprised of the following:
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Direct premiums................... $ 226,612 $ 159,918 $ 133,180
Premiums assumed.................. 33,817 13,299 960
Premiums ceded.................... (10,185) (7,425) 308,033
---------- ---------- ----------
Premiums and annuity
considerations................... $ 250,244 $ 165,792 $ 442,173
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The Company ceded to a third party, on a modified coinsurance basis, 80% of
the variable annuity business written in 1994. The ceded business includes both
general and separate account liabilities. As a result of the agreement, in
December 1994, ILA transferred approximately $1,352 million in assets and
liabilities. The financial impact of the cession was an increase of
approximately $15 million to net income and surplus in 1994.
In November 1994, the Company ceded, on a modified coinsurance basis, 30% of
the separate account variable annuity business distributed by Paine Webber to
Paine Webber Life Insurance Company ("PWLIC"). As a result of the agreement, ILA
transferred approximately $24 million in assets and liabilities to PWLIC. The
financial impact of the cession was an increase of approximately $765 to net
income and surplus in 1994.
In October 1994, the agreement, effective December 1990, which required ILA
to coinsure 90% of all existing and new business, excluding variable annuity
business, written by the Company to HLIC, was terminated. As a result of the
termination, ILA received approximately $430 million in assets and liabilities
from HLIC. The impact of the transaction was a decrease of approximately $15
million to net income and surplus in 1994.
In November 1993, ILA acquired, through an assumption reinsurance
transaction, substantially all of the individual fixed and variable annuity
business of Hartford Life and Accident, an affiliate. As a result of this
transaction, the assets and liabilities of the Company increased approximately
$1 billion, substantially all of which was transferred to the separate accounts
of the Company. The remaining assets and liabilities (approximately $41 million)
were transferred in October 1995. The impact of these transactions on net income
and surplus was not significant.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
- ---------------------------------------------------
8. SEPARATE ACCOUNTS
The Company maintains separate account assets and liabilities totaling $14.6
billion and $7.3 billion at December 31, 1996 and 1995, respectively. Separate
account assets are reported at fair value and separate account liabilities are
determined in accordance with CARVM, which approximates the market value less
applicable surrender charges. Separate account assets are segregated from other
investments, the policyholder assumes the investment risk, and the investment
income and gains and losses accrue directly to the policyholder. Separate
account management fees, net of minimum guarantees, were $144 million, $72
million and $42 million in 1996, 1995 and 1994, respectively, and are recorded
as a component of other revenues on the Statutory Basis Statements of Income.
- ---------------------------------------------------
9. COMMITMENTS AND CONTINGENCIES
As of December 31, 1996 and 1995, the Company had no material contingent
liabilities, nor had the Company committed any surplus funds for any contingent
liabilities or arrangements. The Company is involved in various legal actions
which have arisen in the normal course of its business. In the opinion of
management, the ultimate liability with respect to such lawsuits as well as
other contingencies is not considered to be material in relation to the results
of operations and financial position of the Company.
Under insurance guaranty laws in most states, insurers doing business
therein can be assessed up to prescribed limits for policyholder losses incurred
by insolvent companies. The amount of any future assessments on ILA under these
laws cannot be reasonably estimated. Most of the laws do provide, however, that
an assessment may be excused or deferred if it would threaten an insurer's own
financial strength. Additionally, guaranty fund assessments are used to reduce
state premium taxes paid by the Company in certain states. ILA paid guaranty
fund assessments of $1,262, $1,684 and $583 in 1996, 1995 and 1994,
respectively. ILA incurred guaranteed fund expense of $548, $0 and $0 in 1996,
1995 and 1994, respectively.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT ONE
<PAGE>
SEPARATE ACCOUNT ONE
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ -------------- ------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 169,597,479
Cost $ 171,072,401
Market Value......... $171,819,546 -- -- --
Hartford Stock Fund,
Inc.
Shares 340,811,887
Cost $1,212,317,223
Market Value......... -- $1,632,821,232 -- --
HVA Money Market Fund,
Inc.
Shares 208,764,060
Cost $ 208,764,060
Market Value......... -- -- $208,764,060 --
Hartford Advisers Fund,
Inc.
Shares 1,249,920,406
Cost $2,363,912,080
Market Value......... -- -- -- $2,985,772,369
Hartford Capital
Appreciation Fund,
Inc.
Shares 443,731,641
Cost $1,498,272,654
Market Value......... -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 70,370,601
Cost $ 75,561,702
Market Value......... -- -- -- --
Hartford Index Fund,
Inc.
Shares 125,680,716
Cost $ 265,220,982
Market Value......... -- -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares 415,886,551
Cost $ 521,698,731
Market Value......... -- -- -- --
Hartford Dividend and
Growth Fund, Inc.
Shares 459,905,475
Cost $ 652,405,452
Market Value......... -- -- -- --
Hartford International
Advisers Fund, Inc.
Shares 95,201,173
Cost $ 109,003,281
Market Value......... -- -- -- --
Hartford Small Company
Fund, Inc.
Shares 54,871,903
Cost $ 58,558,137
Market Value......... -- -- -- --
Due from ITT Hartford
Life and Annuity
Insurance Company.... 396,157 2,870,405 -- 4,862,727
Receivable from fund
shares sold.......... -- -- 694,529 --
------------ -------------- ------------- --------------
Total Assets........... 172,215,703 1,635,691,637 209,458,589 2,990,635,096
------------ -------------- ------------- --------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company.... -- -- 696,130 --
Payable for fund shares
purchased............ 396,236 2,869,063 -- 4,862,064
------------ -------------- ------------- --------------
Total Liabilities...... 396,236 2,869,063 696,130 4,862,064
------------ -------------- ------------- --------------
Net Assets (variable
annuity contract
liabilities)......... $171,819,467 $1,632,822,574 $208,762,459 $2,985,773,032
------------ -------------- ------------- --------------
------------ -------------- ------------- --------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by
Participants......... 86,535,618 379,292,652 129,009,907 890,709,525
Unit Price............. $ 1.981198 $ 4.302210 $ 1.617289 $ 3.349354
ANNUITY CONTRACTS IN THE
ANNUITY PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by
Participants......... 189,418 238,467 71,821 737,910
Unit Price............. $ 1.981198 $ 4.302210 $ 1.617289 $ 3.349354
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
60
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND INTERNATIONAL
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ------------- ------------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 169,597,479
Cost $ 171,072,401
Market Value......... -- -- -- -- -- --
Hartford Stock Fund,
Inc.
Shares 340,811,887
Cost $1,212,317,223
Market Value......... -- -- -- -- -- --
HVA Money Market Fund,
Inc.
Shares 208,764,060
Cost $ 208,764,060
Market Value......... -- -- -- -- -- --
Hartford Advisers Fund,
Inc.
Shares 1,249,920,406
Cost $2,363,912,080
Market Value......... -- -- -- -- -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares 443,731,641
Cost $1,498,272,654
Market Value......... $1,838,183,171 -- -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 70,370,601
Cost $ 75,561,702
Market Value......... -- $75,272,124 -- -- -- --
Hartford Index Fund,
Inc.
Shares 125,680,716
Cost $ 265,220,982
Market Value......... -- -- $ 330,543,426 -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares 415,886,551
Cost $ 521,698,731
Market Value......... -- -- -- $596,582,187 -- --
Hartford Dividend and
Growth Fund, Inc.
Shares 459,905,475
Cost $ 652,405,452
Market Value......... -- -- -- -- $821,963,762 --
Hartford International
Advisers Fund, Inc.
Shares 95,201,173
Cost $ 109,003,281
Market Value......... -- -- -- -- -- $114,448,852
Hartford Small Company
Fund, Inc.
Shares 54,871,903
Cost $ 58,558,137
Market Value......... -- -- -- -- -- --
Due from ITT Hartford
Life and Annuity
Insurance Company.... 2,148,459 93,265 1,069,846 1,106,444 3,001,743 370,555
Receivable from fund
shares sold.......... -- -- -- -- -- --
----------------- --------------- ------------- ------------------ ------------- -------------
Total Assets........... 1,840,331,630 75,365,389 331,613,272 597,688,631 824,965,505 114,819,407
----------------- --------------- ------------- ------------------ ------------- -------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company.... -- -- -- -- -- --
Payable for fund shares
purchased............ 2,012,675 93,754 1,064,965 1,106,291 3,001,100 370,576
----------------- --------------- ------------- ------------------ ------------- -------------
Total Liabilities...... 2,012,675 93,754 1,064,965 1,106,291 3,001,100 370,576
----------------- --------------- ------------- ------------------ ------------- -------------
Net Assets (variable
annuity contract
liabilities)......... $1,838,318,955 $75,271,635 $ 330,548,307 $596,582,340 $821,964,405 $114,448,831
----------------- --------------- ------------- ------------------ ------------- -------------
----------------- --------------- ------------- ------------------ ------------- -------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by
Participants......... 402,450,436 37,523,547 97,224,198 367,020,792 419,136,061 84,254,747
Unit Price............. $ 4.565863 $ 2.005984 $ 3.399356 $ 1.624565 $ 1.960310 $ 1.358144
ANNUITY CONTRACTS IN THE
ANNUITY PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by
Participants......... 172,015 -- 14,310 205,105 167,215 13,807
Unit Price............. $ 4.565863 $ -- $ 3.399356 $ 1.624565 $ 1.960310 $ 1.358144
<CAPTION>
SMALL
COMPANY FUND
SUB-ACCOUNT
-------------
<S> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Stock Fund,
Inc.
Shares
Cost
Market Value......... --
HVA Money Market Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Advisers Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Capital
Appreciation Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Mortgage
Securities Fund, Inc.
Shares
Cost
Market Value......... --
Hartford Index Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford International
Opportunities Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Dividend and
Growth Fund, Inc.
Shares
Cost
Market Value......... --
Hartford International
Advisers Fund, Inc.
Shares
Cost
Market Value......... --
Hartford Small Company
Fund, Inc.
Shares
Cost
Market Value......... $64,501,099
Due from ITT Hartford
Life and Annuity
Insurance Company.... 347,255
Receivable from fund
shares sold.......... --
-------------
Total Assets........... 64,848,354
-------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company.... --
Payable for fund shares
purchased............ 347,137
-------------
Total Liabilities...... 347,137
-------------
Net Assets (variable
annuity contract
liabilities)......... $64,501,217
-------------
-------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by
Participants......... 55,084,064
Unit Price............. $ 1.170679
ANNUITY CONTRACTS IN THE
ANNUITY PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by
Participants......... 13,206
Unit Price............. $ 1.170679
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
61
<PAGE>
SEPARATE ACCOUNT ONE
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 3,497,173 $ 4,479,878 $4,925,387 $ 20,086,271
EXPENSES:
Mortality and expense
undertakings......... (977,210) (8,358,966) (1,200,166) (16,048,915)
------------- ------------- ------------- -------------
Net investment income
(loss).............. 2,519,963 (3,879,088) 3,725,221 4,037,356
------------- ------------- ------------- -------------
CAPITAL GAINS INCOME..... -- 62,602,913 -- 107,409,178
------------- ------------- ------------- -------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions......... 1,519 18,508 -- 173
Net unrealized
appreciation
(depreciation) of
investments during
the period........... 2,424,784 207,767,595 -- 264,488,985
------------- ------------- ------------- -------------
Net gain (losses) on
investments......... 2,426,303 207,786,103 -- 264,489,158
------------- ------------- ------------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... $ 4,946,266 $ 266,509,928 $3,725,221 $ 375,935,692
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
62
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- --------------- --------------------- ------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 3,307,799 $1,643,058 $ 1,263,527 $ 507,647 $ 4,455,953
EXPENSES:
Mortality and expense
undertakings......... (9,709,864) (462,004) (1,673,333) (3,241,830) (3,953,507)
----------------- --------------- --------------- --------------------- ------------------
Net investment income
(loss).............. (6,402,065) 1,181,054 (409,806) (2,734,183) 502,446
----------------- --------------- --------------- --------------------- ------------------
CAPITAL GAINS INCOME..... 112,339,947 -- 19,616,096 37,513,752 15,828,765
----------------- --------------- --------------- --------------------- ------------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions......... (58,490) 938 196,049 (8,740) --
Net unrealized
appreciation
(depreciation) of
investments during
the period........... 111,309,571 979,424 29,500,250 16,719,314 98,277,900
----------------- --------------- --------------- --------------------- ------------------
Net gain (losses) on
investments......... 111,251,081 980,362 29,696,299 16,710,574 98,277,900
----------------- --------------- --------------- --------------------- ------------------
Net increase
(decrease) in net
assets resulting
from operations..... $217,188,963 $2,161,416 $ 48,902,589 $51,490,143 $ 114,609,111
----------------- --------------- --------------- --------------------- ------------------
----------------- --------------- --------------- --------------------- ------------------
<CAPTION>
INTERNATIONAL SMALL
ADVISERS FUND COMPANY FUND
SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $3,867,653 $ 459
EXPENSES:
Mortality and expense
undertakings......... (560,537) (258,824)
--------------- ------------
Net investment income
(loss).............. 3,307,116 (258,365)
--------------- ------------
CAPITAL GAINS INCOME..... 262,472 170,800
--------------- ------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions......... 1,781 (1,400)
Net unrealized
appreciation
(depreciation) of
investments during
the period........... 3,753,567 5,732,153
--------------- ------------
Net gain (losses) on
investments......... 3,755,348 5,730,753
--------------- ------------
Net increase
(decrease) in net
assets resulting
from operations..... $7,324,936 $5,643,188
--------------- ------------
--------------- ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
63
<PAGE>
SEPARATE ACCOUNT ONE
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)............... $ 2,519,963 $ (3,879,088) $ 3,725,221 $ 4,037,356
Capital gains income... -- 62,602,913 -- 107,409,178
Net realized gain
(loss) on security
transactions......... 1,519 18,508 -- 173
Net unrealized
appreciation
(depreciation) of
investments during
the period........... 2,424,784 207,767,595 -- 264,488,985
------------- --------------- ------------- ---------------
Net increase (decrease)
in net assets
resulting from
operations........... 4,946,266 266,509,928 3,725,221 375,935,692
------------- --------------- ------------- ---------------
UNIT TRANSACTIONS:
Purchases.............. 21,194,767 203,271,643 90,326,057 316,999,819
Net transfers.......... 2,784,983 57,422,474 (44,364,405) 64,062,105
Surrenders............. (4,036,183) (21,032,643) (16,110,606) (52,096,178)
Net annuity
transactions......... 367,423 300,071 (3,230) 376,426
------------- --------------- ------------- ---------------
Total increase
(decrease) in net
assets resulting from
unit transactions.... 20,310,990 239,961,545 29,847,816 329,342,172
------------- --------------- ------------- ---------------
Total increase
(decrease) in net
assets............... 25,257,256 506,471,473 33,573,037 705,277,864
NET ASSETS:
Beginning of period.... 146,562,211 1,126,351,101 175,189,422 2,280,495,168
------------- --------------- ------------- ---------------
End of period.......... $ 171,819,467 $ 1,632,822,574 $ 208,762,459 $ 2,985,773,032
------------- --------------- ------------- ---------------
------------- --------------- ------------- ---------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- --------------- ------------- ---------------
OPERATIONS:
Net investment income
(loss)............... $ 6,179,469 $ 2,739,156 $ 5,458,975 $ 30,356,891
Capital gains income... -- 23,889,792 -- 32,217,082
Net realized gain
(loss) on security
transactions......... (12,579) 125,474 -- 5,867
Net unrealized
appreciation
(depreciation) of
investments during
the period........... (2,390,902) 143,331,264 -- 201,866,663
------------- --------------- ------------- ---------------
Net increase (decrease)
in net assets
resulting from
operations........... 3,775,988 170,085,686 5,458,975 264,446,503
------------- --------------- ------------- ---------------
UNIT TRANSACTIONS:
Purchases.............. 50,521,787 328,658,597 170,409,309 548,125,217
Net transfers.......... 6,860,514 111,488,442 (87,853,221) 158,897,610
Surrenders............. (5,504,050) (23,567,485) (14,470,700) (70,519,197)
Net annuity
transactions......... 1,807 394,242 8,095 766,829
------------- --------------- ------------- ---------------
Net increase (decrease)
in net assets
resulting from unit
transactions......... 51,880,058 416,973,796 68,093,483 637,270,459
------------- --------------- ------------- ---------------
Total increase
(decrease) in net
assets............... 55,656,046 587,059,482 73,552,458 901,716,962
NET ASSETS:
Beginning of period.... 90,906,165 539,291,619 101,636,964 1,378,778,206
------------- --------------- ------------- ---------------
End of period.......... $ 146,562,211 $ 1,126,351,101 $ 175,189,422 $ 2,280,495,168
------------- --------------- ------------- ---------------
------------- --------------- ------------- ---------------
</TABLE>
* From inception, August 9, 1996, to December 31, 1996.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
64
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND INTERNATIONAL
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ------------- ------------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)............... $ (6,402,065) $ 1,181,054 $ (409,806) $ (2,734,183) $ 502,446 $ 3,307,116
Capital gains income... 112,339,947 -- 19,616,096 37,513,752 15,828,765 262,472
Net realized gain
(loss) on security
transactions......... (58,490) 938 196,049 (8,740) -- 1,781
Net unrealized
appreciation
(depreciation) of
investments during
the period........... 111,309,571 979,424 29,500,250 16,719,314 98,277,900 3,753,567
----------------- --------------- ------------- ------------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from
operations........... 217,188,963 2,161,416 48,902,589 51,490,143 114,609,111 7,324,936
----------------- --------------- ------------- ------------------ ------------- -------------
UNIT TRANSACTIONS:
Purchases.............. 200,477,792 6,453,475 51,695,403 51,163,419 159,362,739 26,432,266
Net transfers.......... 27,475,280 (4,334,910) 14,509,831 16,868,400 60,144,165 10,268,826
Surrenders............. (24,971,635) (3,647,277) (3,890,946) (7,918,423) (10,369,536) (1,412,229)
Net annuity
transactions......... 71,404 -- 29,182 13,483 127,420 17,973
----------------- --------------- ------------- ------------------ ------------- -------------
Total increase
(decrease) in net
assets resulting from
unit transactions.... 203,052,841 (1,528,712) 62,343,470 60,126,879 209,264,788 35,306,836
----------------- --------------- ------------- ------------------ ------------- -------------
Total increase
(decrease) in net
assets............... 420,241,804 632,704 111,246,059 111,617,022 323,873,899 42,631,772
NET ASSETS:
Beginning of period.... 1,418,077,151 74,638,931 219,302,248 484,965,318 498,090,506 71,817,059
----------------- --------------- ------------- ------------------ ------------- -------------
End of period.......... $1,838,318,955 $75,271,635 $ 330,548,307 $596,582,340 $821,964,405 $114,448,831
----------------- --------------- ------------- ------------------ ------------- -------------
----------------- --------------- ------------- ------------------ ------------- -------------
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND INTERNATIONAL
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ------------- ------------------ ------------- -------------
OPERATIONS:
Net investment income
(loss)............... $ (5,913,744) $ 3,346,436 $ 1,224,839 $ 2,771,532 $ 3,729,650 $ 1,500,255
Capital gains income... 50,334,274 -- 1,690,389 8,880,986 3,429,737 1,446,895
Net realized gain
(loss) on security
transactions......... (93,060) 11,668 238,066 7,755 (2,773) (563)
Net unrealized
appreciation
(depreciation) of
investments during
the period........... 142,164,193 (882,583) 25,487,376 31,201,375 53,771,055 1,479,032
----------------- --------------- ------------- ------------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from
operations........... 186,491,663 2,475,521 28,640,670 42,861,648 60,927,669 4,425,619
----------------- --------------- ------------- ------------------ ------------- -------------
UNIT TRANSACTIONS:
Purchases.............. 403,482,054 13,476,913 83,760,185 110,673,155 205,512,019 37,280,366
Net transfers.......... 129,133,556 2,655,230 33,248,800 47,078,167 101,413,217 19,003,957
Surrenders............. (30,210,654) (2,722,173) (3,699,700) (11,782,890) (7,316,597) (1,178,598)
Net annuity
transactions......... 288,203 -- 203 81,416 146,210 31
----------------- --------------- ------------- ------------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions......... 502,693,159 13,409,970 113,309,488 146,049,848 299,754,849 55,105,756
----------------- --------------- ------------- ------------------ ------------- -------------
Total increase
(decrease) in net
assets............... 689,184,822 15,885,491 141,950,158 188,911,496 360,682,518 59,531,375
NET ASSETS:
Beginning of period.... 728,892,329 58,753,440 77,352,090 296,053,822 137,407,988 12,285,684
----------------- --------------- ------------- ------------------ ------------- -------------
End of period.......... $1,418,077,151 $74,638,931 $ 219,302,248 $484,965,318 $498,090,506 $71,817,059
----------------- --------------- ------------- ------------------ ------------- -------------
----------------- --------------- ------------- ------------------ ------------- -------------
<CAPTION>
SMALL
COMPANY FUND
SUB-ACCOUNT
-------------
<S> <C>
OPERATIONS:
Net investment income
(loss)............... $ (258,365)
Capital gains income... 170,800
Net realized gain
(loss) on security
transactions......... (1,400)
Net unrealized
appreciation
(depreciation) of
investments during
the period........... 5,732,153
-------------
Net increase (decrease)
in net assets
resulting from
operations........... 5,643,188
-------------
UNIT TRANSACTIONS:
Purchases.............. 22,247,058
Net transfers.......... 11,049,448
Surrenders............. (468,629)
Net annuity
transactions......... 14,623
-------------
Total increase
(decrease) in net
assets resulting from
unit transactions.... 32,842,500
-------------
Total increase
(decrease) in net
assets............... 38,485,688
NET ASSETS:
Beginning of period.... 26,015,529
-------------
End of period.......... $64,501,217
-------------
-------------
SMALL
COMPANY FUND
SUB-ACCOUNT*
-------------
OPERATIONS:
Net investment income
(loss)............... $ (33,591)
Capital gains income... --
Net realized gain
(loss) on security
transactions......... 1,014
Net unrealized
appreciation
(depreciation) of
investments during
the period........... 210,808
-------------
Net increase (decrease)
in net assets
resulting from
operations........... 178,231
-------------
UNIT TRANSACTIONS:
Purchases.............. 14,704,067
Net transfers.......... 11,169,302
Surrenders............. (36,071)
Net annuity
transactions......... --
-------------
Net increase (decrease)
in net assets
resulting from unit
transactions......... 25,837,298
-------------
Total increase
(decrease) in net
assets............... 26,015,529
NET ASSETS:
Beginning of period.... --
-------------
End of period.......... $26,015,529
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
65
<PAGE>
SEPARATE ACCOUNT ONE
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997 (UNAUDITED)
1. ORGANIZATION:
Separate Account One (the Account) is a separate investment account with ITT
Hartford Life & Annuity 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 contract owners of the Company in various
mutual funds (the Funds) as directed by the contract owners.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments
sold is determined on the basis of identified cost. Dividend and capital
gains income are accrued as of the ex-dividend date. Capital gains
income represents dividends from the Funds which are characterized as
capital gains under tax regulations.
b) SECURITY VALUATION--The investment in shares of the Funds are valued at
the closing net asset value per share as determined by the appropriate
Fund as of June 30, 1997.
c) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as
an insurance company under the Internal Revenue Code. Under current law,
no federal income taxes are payable with respect to the operations of
the Account.
d) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the financial statements and
the reported amounts of income and expenses during the period. Operating
results in the future could vary from the amounts derived from
management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
a) MORTALITY AND EXPENSE UNDERTAKINGS--The Company, as issuer of variable
annuity contracts, provides the mortality and expense undertakings and,
with respect to the Account, receives a maximum annual fee of 1.25% of
the Account's average daily net assets.
b) DEDUCTION OF ANNUAL MAINTENANCE FEE--Annual maintenance fees are
deducted through termination of units of interest from applicable
contract owners' accounts, in accordance with the terms of the
contracts.
66
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To ITT Hartford Life and Annuity Insurance Company
Separate Account One and to the
Owners of Units of Interest Therein:
We have audited the accompanying statement of assets and liabilities of ITT
Hartford Life and Annuity Insurance Company Separate Account One (the Account)
as of December 31, 1996, and the related statement of operations for the year
then ended and statements of changes in net assets for each of the two years in
the period then ended. 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 ITT Hartford Life and Annuity
Insurance Company Separate Account One as of December 31, 1996, the results of
its operations for the year then ended and the changes in its net assets for
each of the two years in the period then ended in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 14, 1997
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Separate Account One
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ -------------- ------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 146,680,858
Cost $ 148,239,686
Market Value......... $146,562,046 -- -- --
Hartford Stock Fund,
Inc.
Shares 271,887,690
Cost $ 913,615,438
Market Value......... -- $1,126,351,852 -- --
HVA Money Market Fund,
Inc.
Shares 175,190,619
Cost $ 175,190,619
Market Value......... -- -- $ 175,190,619 --
Hartford Advisers Fund,
Inc.
Shares 1,051,147,592
Cost $1,923,124,930
Market Value......... -- -- -- $2,280,496,234
Hartford Capital
Appreciation Fund,
Inc.
Shares 362,247,751
Cost $1,189,356,294
Market Value......... -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 70,696,564
Cost $ 75,908,313
Market Value......... -- -- -- --
Hartford Index Fund,
Inc.
Shares 92,073,741
Cost $ 183,476,281
Market Value......... -- -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares 344,709,798
Cost $ 426,801,178
Market Value......... -- -- -- --
Hartford Dividend and
Growth Fund, Inc.
Shares 321,883,841
Cost $ 426,809,084
Market Value......... -- -- -- --
Hartford International
Advisers Fund, Inc.
Shares 61,562,041
Cost $ 70,125,043
Market Value......... -- -- -- --
Hartford Small Company
Fund, Inc.
Shares 24,332,525
Cost $ 25,804,555
Market Value......... -- -- -- --
Due from ITT Hartford
Life and Annuity
Insurance Company..... 231,542 1,132,655 2,178,434 1,927,732
Receivable from fund
shares sold........... -- -- -- --
------------ -------------- ------------- --------------
Total Assets........... 146,793,588 1,127,484,507 177,369,053 2,282,423,966
------------ -------------- ------------- --------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... -- -- -- --
Payable for fund shares
purchased............. 231,377 1,133,406 2,179,631 1,928,798
------------ -------------- ------------- --------------
Total Liabilities...... 231,377 1,133,406 2,179,631 1,928,798
------------ -------------- ------------- --------------
Net Assets (variable
annuity contract
liabilities).......... $146,562,211 $1,126,351,101 $ 175,189,422 $2,280,495,168
------------ -------------- ------------- --------------
------------ -------------- ------------- --------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by
Participants.......... 76,247,196 317,415,842 110,350,169 784,325,850
Unit Price............. $ 1.922173 $ 3.546656 $ 1.586516 $ 2.905301
ANNUITY CONTRACTS IN THE
ANNUITY PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by
Participants.......... 993 165,311 73,818 616,973
Unit Price............. $ 1.922173 $ 3.546656 $ 1.586516 $ 2.905301
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND INTERNATIONAL
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ------------- ------------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 146,680,858
Cost $ 148,239,686
Market Value......... -- -- -- -- -- --
Hartford Stock Fund,
Inc.
Shares 271,887,690
Cost $ 913,615,438
Market Value......... -- -- -- -- -- --
HVA Money Market Fund,
Inc.
Shares 175,190,619
Cost $ 175,190,619
Market Value......... -- -- -- -- -- --
Hartford Advisers Fund,
Inc.
Shares 1,051,147,592
Cost $1,923,124,930
Market Value......... -- -- -- -- -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares 362,247,751
Cost $1,189,356,294
Market Value......... $1,417,957,241 -- -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 70,696,564
Cost $ 75,908,313
Market Value......... -- $74,639,312 -- -- -- --
Hartford Index Fund,
Inc.
Shares 92,073,741
Cost $ 183,476,281
Market Value......... -- -- $ 219,298,474 -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares 344,709,798
Cost $ 426,801,178
Market Value......... -- -- -- $484,965,320 -- --
Hartford Dividend and
Growth Fund, Inc.
Shares 321,883,841
Cost $ 426,809,084
Market Value......... -- -- -- -- $498,089,494 --
Hartford International
Advisers Fund, Inc.
Shares 61,562,041
Cost $ 70,125,043
Market Value......... -- -- -- -- -- $71,817,046
Hartford Small Company
Fund, Inc.
Shares 24,332,525
Cost $ 25,804,555
Market Value......... -- -- -- -- -- --
Due from ITT Hartford
Life and Annuity
Insurance Company..... 1,472,703 -- 22,023 69,084 823,408 --
Receivable from fund
shares sold........... -- 211,277 -- -- -- 8,352
----------------- --------------- ------------- ------------------ ------------- -------------
Total Assets........... 1,419,429,944 74,850,589 219,320,497 485,034,404 498,912,902 71,825,398
----------------- --------------- ------------- ------------------ ------------- -------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... -- 211,658 -- -- -- 8,339
Payable for fund shares
purchased............. 1,352,793 -- 18,249 69,086 822,396 --
----------------- --------------- ------------- ------------------ ------------- -------------
Total Liabilities...... 1,352,793 211,658 18,249 69,086 822,396 8,339
----------------- --------------- ------------- ------------------ ------------- -------------
Net Assets (variable
annuity contract
liabilities).......... $1,418,077,151 $74,638,931 $ 219,302,248 $484,965,318 $498,090,506 $71,817,059
----------------- --------------- ------------- ------------------ ------------- -------------
----------------- --------------- ------------- ------------------ ------------- -------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by
Participants.......... 353,465,926 38,304,268 77,074,176 326,953,712 301,766,912 56,742,550
Unit Price............. $ 4.010163 $ 1.948580 $ 2.845170 $ 1.482397 $ 1.650056 $ 1.265665
ANNUITY CONTRACTS IN THE
ANNUITY PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by
Participants.......... 154,899 -- 4,609 195,708 95,876 --
Unit Price............. $ 4.010163 $ -- $ 2.845170 $ 1.482397 $ 1.650056 $ --
<CAPTION>
SMALL
COMPANY FUND
SUB-ACCOUNT
-------------
<S> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Stock Fund,
Inc.
Shares
Cost
Market Value......... --
HVA Money Market Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Advisers Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Capital
Appreciation Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Mortgage
Securities Fund, Inc.
Shares
Cost
Market Value......... --
Hartford Index Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford International
Opportunities Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Dividend and
Growth Fund, Inc.
Shares
Cost
Market Value......... --
Hartford International
Advisers Fund, Inc.
Shares
Cost
Market Value......... --
Hartford Small Company
Fund, Inc.
Shares
Cost
Market Value......... $26,015,363
Due from ITT Hartford
Life and Annuity
Insurance Company..... 258,025
Receivable from fund
shares sold........... --
-------------
Total Assets........... 26,273,388
-------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... --
Payable for fund shares
purchased............. 257,859
-------------
Total Liabilities...... 257,859
-------------
Net Assets (variable
annuity contract
liabilities).......... $26,015,529
-------------
-------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by
Participants.......... 24,396,916
Unit Price............. $ 1.066345
ANNUITY CONTRACTS IN THE
ANNUITY PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by
Participants.......... --
Unit Price............. $ --
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT ONE
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 7,667,536 $ 12,967,705 $ 7,255,862 $ 53,001,953
EXPENSES:
Mortality and expense
undertakings.......... (1,488,067) (10,228,549) (1,796,887) (22,645,062)
-------------- ------------- ------------- -------------
Net investment income
(loss).............. 6,179,469 2,739,156 5,458,975 30,356,891
-------------- ------------- ------------- -------------
CAPITAL GAINS INCOME..... -- 23,889,792 -- 32,217,082
-------------- ------------- ------------- -------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (12,579) 125,474 -- 5,867
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (2,390,902) 143,331,264 -- 201,866,663
-------------- ------------- ------------- -------------
Net realized and
unrealized gain
(loss) on
investments......... (2,403,481) 143,456,738 -- 201,872,530
-------------- ------------- ------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ $ 3,775,988 $ 170,085,686 $ 5,458,975 $ 264,446,503
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
</TABLE>
* From inception, August 9, 1996, to December 31, 1996.
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- --------------- --------------------- -----------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 7,386,029 $4,153,578 $ 3,067,328 $ 7,701,529 $ 7,499,405
EXPENSES:
Mortality and expense
undertakings.......... (13,299,773) (807,142) (1,842,489) (4,929,997) (3,769,755)
----------------- --------------- --------------- --------------------- -----------------
Net investment income
(loss).............. (5,913,744) 3,346,436 1,224,839 2,771,532 3,729,650
----------------- --------------- --------------- --------------------- -----------------
CAPITAL GAINS INCOME..... 50,334,274 -- 1,690,389 8,880,986 3,429,737
----------------- --------------- --------------- --------------------- -----------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (93,060) 11,668 238,066 7,755 (2,773)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 142,164,193 (882,583) 25,487,376 31,201,375 53,771,055
----------------- --------------- --------------- --------------------- -----------------
Net realized and
unrealized gain
(loss) on
investments......... 142,071,133 (870,915) 25,725,442 31,209,130 53,768,282
----------------- --------------- --------------- --------------------- -----------------
Net increase (decrease)
in net assets
resulting from
operations............ $186,491,663 $2,475,521 $ 28,640,670 $42,861,648 $ 60,927,669
----------------- --------------- --------------- --------------------- -----------------
----------------- --------------- --------------- --------------------- -----------------
<CAPTION>
INTERNATIONAL SMALL
ADVISERS FUND COMPANY FUND
SUB-ACCOUNT SUB-ACCOUNT*
--------------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $2,027,740 $ 19,636
EXPENSES:
Mortality and expense
undertakings.......... (527,485) (53,227)
--------------- ------------
Net investment income
(loss).............. 1,500,255 (33,591)
--------------- ------------
CAPITAL GAINS INCOME..... 1,446,895 --
--------------- ------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (563) 1,014
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 1,479,032 210,808
--------------- ------------
Net realized and
unrealized gain
(loss) on
investments......... 1,478,469 211,822
--------------- ------------
Net increase (decrease)
in net assets
resulting from
operations............ $4,425,619 $178,231
--------------- ------------
--------------- ------------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Separate Account One
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 6,179,469 $ 2,739,156 $ 5,458,975 $ 30,356,891
Capital gains income... -- 23,889,792 -- 32,217,082
Net realized gain
(loss) on security
transactions.......... (12,579) 125,474 -- 5,867
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (2,390,902) 143,331,264 -- 201,866,663
------------- --------------- ------------- ---------------
Net increase (decrease)
in net assets
resulting from
operations............ 3,775,988 170,085,686 5,458,975 264,446,503
------------- --------------- ------------- ---------------
UNIT TRANSACTIONS:
Purchases.............. 50,521,787 328,658,597 170,409,309 548,125,217
Net transfers.......... 6,860,514 111,488,442 (87,853,221) 158,897,610
Surrenders............. (5,504,050) (23,567,485) (14,470,700) (70,519,197)
Net annuity
transactions.......... 1,807 394,242 8,095 766,829
------------- --------------- ------------- ---------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 51,880,058 416,973,796 68,093,483 637,270,459
------------- --------------- ------------- ---------------
Total increase
(decrease) in net
assets................ 55,656,046 587,059,482 73,552,458 901,716,962
NET ASSETS:
Beginning of period.... 90,906,165 539,291,619 101,636,964 1,378,778,206
------------- --------------- ------------- ---------------
End of period.......... $ 146,562,211 $ 1,126,351,101 $ 175,189,422 $ 2,280,495,168
------------- --------------- ------------- ---------------
------------- --------------- ------------- ---------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- --------------- ------------- ---------------
OPERATIONS:
Net investment income
(loss)................ $ 3,623,445 $ 3,565,344 $ 2,459,135 $ 24,292,959
Capital gains income... -- 10,042,632 -- 10,002,290
Net realized gain
(loss) on security
transactions.......... (1,975) (399) -- (7,267)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 6,900,317 83,219,709 -- 206,272,399
------------- --------------- ------------- ---------------
Net increase (decrease)
in net assets
resulting from
operations............ 10,521,787 96,827,286 2,459,135 240,560,381
------------- --------------- ------------- ---------------
UNIT TRANSACTIONS:
Purchases.............. 25,372,374 158,137,004 80,712,314 270,288,399
Net transfers.......... 4,295,703 52,451,790 (20,394,095) 82,728,374
Surrenders............. (3,251,644) (10,089,748) (6,391,220) (40,365,223)
Net annuity
transactions.......... -- 21,071 103,096 437,471
------------- --------------- ------------- ---------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 26,416,433 200,520,117 54,030,095 313,089,021
------------- --------------- ------------- ---------------
Total increase
(decrease) in net
assets................ 36,938,220 297,347,403 56,489,230 553,649,402
NET ASSETS:
Beginning of period.... 53,967,945 241,944,216 45,147,734 825,128,804
------------- --------------- ------------- ---------------
End of period.......... $ 90,906,165 $ 539,291,619 $ 101,636,964 $ 1,378,778,206
------------- --------------- ------------- ---------------
------------- --------------- ------------- ---------------
</TABLE>
* From inception, August 9, 1996, to December 31, 1996.
** From inception, March 1, 1995, to December 31, 1995.
The accompanying notes are an integral part of these financial statements.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND INTERNATIONAL
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ------------- ------------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ (5,913,744) $ 3,346,436 $ 1,224,839 $ 2,771,532 $ 3,729,650 $ 1,500,255
Capital gains income... 50,334,274 -- 1,690,389 8,880,986 3,429,737 1,446,895
Net realized gain
(loss) on security
transactions.......... (93,060) 11,668 238,066 7,755 (2,773) (563)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 142,164,193 (882,583) 25,487,376 31,201,375 53,771,055 1,479,032
----------------- --------------- ------------- ------------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 186,491,663 2,475,521 28,640,670 42,861,648 60,927,669 4,425,619
----------------- --------------- ------------- ------------------ ------------- -------------
UNIT TRANSACTIONS:
Purchases.............. 403,482,054 13,476,913 83,760,185 110,673,155 205,512,019 37,280,366
Net transfers.......... 129,133,556 2,655,230 33,248,800 47,078,167 101,413,217 19,003,957
Surrenders............. (30,210,654) (2,722,173) (3,699,700) (11,782,890) (7,316,597) (1,178,598)
Net annuity
transactions.......... 288,203 -- 203 81,416 146,210 31
----------------- --------------- ------------- ------------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 502,693,159 13,409,970 113,309,488 146,049,848 299,754,849 55,105,756
----------------- --------------- ------------- ------------------ ------------- -------------
Total increase
(decrease) in net
assets................ 689,184,822 15,885,491 141,950,158 188,911,496 360,682,518 59,531,375
NET ASSETS:
Beginning of period.... 728,892,329 58,753,440 77,352,090 296,053,822 137,407,988 12,285,684
----------------- --------------- ------------- ------------------ ------------- -------------
End of period.......... $1,418,077,151 $74,638,931 $ 219,302,248 $484,965,318 $498,090,506 $71,817,059
----------------- --------------- ------------- ------------------ ------------- -------------
----------------- --------------- ------------- ------------------ ------------- -------------
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND INTERNATIONAL
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT**
----------------- --------------- ------------- ------------------ ------------- -------------
OPERATIONS:
Net investment income
(loss)................ $ (1,415,627) $ 2,738,167 $ 502,406 $ 860,408 $ 1,039,600 $ 242,325
Capital gains income... 17,026,540 -- 8,809 1,900,624 -- --
Net realized gain
(loss) on security
transactions.......... (36,921) 8,806 (2,982) 18,072 (3,380) 560
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 92,059,097 4,247,716 10,397,357 26,882,909 17,906,285 212,972
----------------- --------------- ------------- ------------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 107,633,089 6,994,689 10,905,590 29,662,013 18,942,505 455,857
----------------- --------------- ------------- ------------------ ------------- -------------
UNIT TRANSACTIONS:
Purchases.............. 245,731,245 8,572,589 31,929,411 55,473,427 67,833,419 8,715,018
Net transfers.......... 82,630,293 (2,398,278) 14,672,676 9,777,060 30,210,279 3,144,229
Surrenders............. (12,124,223) (2,985,486) (1,214,487) (6,662,350) (1,756,293) (29,420)
Net annuity
transactions.......... 225,634 -- 9,937 147,629 -- --
----------------- --------------- ------------- ------------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 316,462,949 3,188,825 45,397,537 58,735,766 96,287,405 11,829,827
----------------- --------------- ------------- ------------------ ------------- -------------
Total increase
(decrease) in net
assets................ 424,096,038 10,183,514 56,303,127 88,397,779 115,229,910 12,285,684
NET ASSETS:
Beginning of period.... 304,796,291 48,569,926 21,048,963 207,656,043 22,178,078 --
----------------- --------------- ------------- ------------------ ------------- -------------
End of period.......... $ 728,892,329 $58,753,440 $ 77,352,090 $296,053,822 $137,407,988 $12,285,684
----------------- --------------- ------------- ------------------ ------------- -------------
----------------- --------------- ------------- ------------------ ------------- -------------
<CAPTION>
SMALL
COMPANY FUND
SUB-ACCOUNT*
-------------
<S> <C>
OPERATIONS:
Net investment income
(loss)................ $ (33,591)
Capital gains income... --
Net realized gain
(loss) on security
transactions.......... 1,014
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 210,808
-------------
Net increase (decrease)
in net assets
resulting from
operations............ 178,231
-------------
UNIT TRANSACTIONS:
Purchases.............. 14,704,067
Net transfers.......... 11,169,302
Surrenders............. (36,071)
Net annuity
transactions.......... --
-------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 25,837,298
-------------
Total increase
(decrease) in net
assets................ 26,015,529
NET ASSETS:
Beginning of period.... --
-------------
End of period.......... $26,015,529
-------------
-------------
OPERATIONS:
Net investment income
(loss)................
Capital gains income...
Net realized gain
(loss) on security
transactions..........
Net unrealized
appreciation
(depreciation) of
investments during the
period................
Net increase (decrease)
in net assets
resulting from
operations............
UNIT TRANSACTIONS:
Purchases..............
Net transfers..........
Surrenders.............
Net annuity
transactions..........
Net increase (decrease)
in net assets
resulting from unit
transactions..........
Total increase
(decrease) in net
assets................
NET ASSETS:
Beginning of period....
End of period..........
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT ONE
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
- ---------------------------------------------------
1. ORGANIZATION:
Separate Account One (the Account) is a separate investment account within
ITT Hartford Life and Annuity Insurance Company (the Company) and is registered
with the Securities and Exchange Commission (SEC) as a unit investment trust
under the Investment Company Act of 1940, as amended. Both the Company and the
Account are subject to supervision and regulation by the Department of Insurance
of the State of Connecticut and the SEC. The Account invests deposits by
variable annuity contractholders of the Company in various mutual funds (the
Funds) as directed by the contractholders.
- ---------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting principles
in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments
sold is determined on the basis of identified cost. Dividends and
capital gains income are 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 investment 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, 1996.
c) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as
an insurance company under the Internal Revenue Code. Under current law,
no federal income taxes are payable with respect to the operations of
the Account.
d) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the financial statements and
the reported amounts of income and expenses during the period. Operating
results in the future could vary from the amounts derived from
management's estimates.
- ---------------------------------------------------
3.ADMINISTRATION OF THE ACCOUNT AND
RELATED CHARGES:
a) MORTALITY AND EXPENSE UNDERTAKINGS--The Company, as issuer of variable
annuity contracts, provides the mortality and expense undertakings and,
with respect to the Account, receives a maximum annual fee of 1.25% of
the Account's average daily net assets.
b) DEDUCTION OF ANNUAL MAINTENANCE FEE--Annual maintenance fees are
deducted through termination of units of interest from applicable
contractholders' accounts, in accordance with the terms of the
contracts.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) All financial statements are included in Part A and Part B of the
Registration Statement.
(b) (1) Resolution of the Board of Directors of ITT Hartford Life
and Annuity 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.
(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. 33-73568, dated May 1, 1995.
(2) Incorporated by reference to Post-Effective Amendment
No. 3, to the Registration Statement File No. 33-73568,
dated April 29, 1996.
<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
<TABLE>
<CAPTION>
NAME, AGE POSITION WITH HARTFORD
- -------------------------------------------------------------------------------------
<S> <C>
Wendell J. Bossen Vice President
Gregory A. Boyko Senior Vice President, Chief Financial Officer, and
Treasurer, Director*
Peter W. Cummins Senior Vice President
Ann M. deRaismes Senior Vice President
James R. Dooley Vice President
Timothy M. Fitch Vice President
J. Richard Garrett Vice President and Assistant Treasurer
Donald J. Gillette Vice President
William A. Godfrey, III Senior Vice President
Lynda Godkin Senior Vice President, General Counsel, and Corporate
Secretary, Director*
Lois W. Grady Vice President
Christopher Graham Vice President
David A. Hall Vice President and Actuary
Stephen T. Joyce Vice President
Robert A. Kerzner Vice President
William B. Malchodi, Jr. Vice President and Director of Taxes
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
NAME, AGE POSITION WITH HARTFORD
- -------------------------------------------------------------------------------------
<S> <C>
Thomas M. Marra Executive Vice President and Director, Individual Life
and Annuity Division, Director*
Steven L. Matthiesen Vice President
Michael C. O'Halloran Vice President
Craig D. Raymond Senior Vice President and Chief Actuary
David T. Schrandt Vice President
Lowndes A. Smith President and Chief Executive Officer, Director*
Walter C. Welsh Senior Vice President
David M. Znamierowski Senior Vice President
</TABLE>
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
*Denotes Board of Directors.
Item 26. Persons Controlled By or Under Common Control with the Depositor or
Registrant
Filed herewith as Exhibit 16.
Item 27. Number of Contract Owners
As of September 30, 1997, there were 139,669 Contract Owners.
Item 28. Indemnification
Under Section 33-772 of the Connecticut General Statutes, unless
limited by its certificate of incorporation, the Registrant must
indemnify a director who was wholly successful, on the merits or
otherwise, in the defense of any proceeding to which he was a party
because he is or was a director of the corporation against reasonable
expenses incurred by him in connection with the proceeding.
The Registrant may indemnify an individual made a party to a
proceeding because he is or was a director against liability incurred
in the proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of
the Registrant, and, with respect to any criminal proceeding, had no
reason to believe his conduct was unlawful. Conn. Gen. Stat. Section
33-771(a).
-3-
<PAGE>
Additionally, pursuant to Conn. Gen. Stat. Section 33-776,
the Registrant may indemnify officers and employees or agents for
liability incurred and for any expenses to which they becomes subject
by reason of being or having been an 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 any expenses to which he becomes subject by reason
of his being or having been a director or officer of the company 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 company, and with respect to
criminal proceedings, had no reason to believe his conduct was
unlawful.
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 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 (the "Act") may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the
foregoing provisions, 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.
-4-
<PAGE>
Item 29. Principal Underwriters
(a) HSD acts as principal underwriter for the following investment
companies:
Hartford Life Insurance Company - Separate Account One
Hartford Life Insurance Company - Separate Account Two
Hartford Life Insurance Company - Separate Account Two (DC Variable
Account I)
Hartford Life Insurance Company - Separate Account Two (DC Variable
Account II)
Hartford Life Insurance Company - Separate Account Two (QP Variable
Account)
Hartford Life Insurance Company - Separate Account Two (Variable
Account "A")
Hartford Life Insurance Company - Separate Account Two (NQ Variable
Account)
Hartford Life Insurance Company - Putnam Capital Manager Trust
Separate Account
Hartford Life Insurance Company - Separate Account Three
Hartford Life Insurance Company - Separate Account Five
ITT Hartford Life and Annuity Insurance Company - Separate Account One
ITT Hartford Life and Annuity Insurance Company - Putnam Capital
Manager Trust Separate Account Two
ITT Hartford Life and Annuity Insurance Company - Separate Account
Three
ITT Hartford Life and Annuity Insurance Company - Separate Account
Five
ITT Hartford Life and Annuity Insurance Company - Separate Account Six
American Maturity Life Insurance Company - Separate Account AMLVA
(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
John P. Ginnetti Executive Vice President, Director
Thomas M. Marra Executive Vice President, Director
Peter W. Cummins Senior Vice President
Lynda Godkin Senior Vice President, General Counsel
and Corporate Secretary
Donald E. Waggaman, Jr. Treasurer
George R. Jay Controller
Paul E. Olson Supervising Registered Principal
James Cubanski Assistant Secretary
Stephen T. Joyce Assistant Secretary
Glen J. Kvadus Assistant Secretary
Edward M. Ryan, Jr. Assistant Secretary
-5-
<PAGE>
Unless otherwise indicated, the principal business address
of each the above individuals is P. O. Box 2999, Hartford, Connecticut
06104-2999.
Item 30. Location of Accounts and Records
All of the accounts, books, records or other documents
required to be kept by Section 31(a) of the Investment Company Act of
1940 and rules thereunder are maintained by Hartford at 200 Hopmeadow
Street, Simsbury, Connecticut 06089.
Item 31. Management Services
All management contracts are discussed in Part A and Part B
of this Registration Statement.
Item 32. Undertakings
(a) The Registrant hereby undertakes to file a
post-effective amendment to this Registration Statement as
frequently as is necessary to ensure that the audited financial
statements in the Registration Statement are never more than 16
months old so long as payments under the variable annuity
Contracts may be accepted.
(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. Registrant has
complied with conditions one through four of the no-action letter.
-6-
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Registration Statement to be signed on
its behalf, in the City of Hartford, and State of Connecticut on this 10th
day of October, 1997.
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT ONE
(Registrant)
*By: /s/ Thomas M. Marra *By: /s/ Leslie T. Soler
------------------------------ ---------------------------
Thomas M. Marra, Executive Leslie T. Soler
Vice President and Director, Attorney-in-Fact
Individual Life and Annuity
Division, Director*
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
(Depositor)
*By: /s/ Thomas M. Marra
----------------------------------
Thomas M. Marra, Executive
Vice President and Director,
Individual Life and Annuity
Division, Director*
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons and in the capacities and
on the dates indicated.
Gregory A. Boyko, Senior Vice President,
Chief Financial Officer, and Treasurer,
Director *
Lynda Godkin, Senior Vice President,
General Counsel, and Corporate Secretary, BY: /s/ Leslie T. Soler
--------------------
Director * Leslie T. Soler
Thomas M. Marra, Executive Vice Attorney-in-Fact
President and Director, Individual Life and Dated: October 10, 1997
Annuity Division, Director*
Lowndes A. Smith, President and
Chief Executive Officer, Director *
<PAGE>
EXHIBIT INDEX
(6)(a) Articles of Incorporation of Hartford.
(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>
FIRST AMENDMENT TO AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION BY ACTIONS OF THE
BOARD OF DIRECTORS AND THE SOLE SHAREHOLDER
1. The name of the Corporation is ITT Hartford Life and Annuity Insurance
Company (the "Company").
2. The Amended and Restated Certificate of Incorporation of the Company
(the "Certificate of Incorporation") is further amended by the following
resolution:
RESOLVED, that the Certificate of Incorporation be further amended by
deleting Section 1 in its entirety and replacing it with the following,
such amendment to become effective at January 1, 1998. All other
sections of the Certificate of Incorporation shall remain unchanged
and continue in full force and effect:
Section 1. Effective January 1, 1998, the name of
the Company
is HARTFORD LIFE AND ANNUITY INSURANCE COMPANY.
3. The above resolution was adopted by each of the Company's Board of
Directors and its sole shareholder. The number of shares of the Company's
common capital stock entitled to vote thereon was 3,000 and the vote
required for adoption was 2,000 shares. The vote favoring adoption was
3,000 shares, which was the greatest vote required to pass the resolution.
Dated at Simsbury, Connecticut this 30 day of June, 1997.
We hereby declare, under penalty of false statement, that the statements made in
the foregoing Certificate are true.
HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
/s/Thomas M. Marra
---------------------------------------
Thomas M. Marra, Executive Vice President
/s/Lynda Godkin
-----------------------------------------
Lynda Godkin, Senior Vice President,
General Counsel and Corporate Secretary
<PAGE>
EXHIBIT 6(a)
FILING #0001681641 PG 04 OF 05 VOL B-00105
FILED 12/31/1996 10:00 AM PAGE 00897
SECRETARY OF STATE
CONNECTICUT SECRETARY OF THE STATE
CERTIFICATE AMENDING
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
BY ACTIONS OF THE BOARD OF DIRECTORS AND THE SOLE SHAREHOLDER
1. The name of the Corporation is ITT HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY.
2. The Amended and Restated Certificate of Incorporation is amended by the
following resolution of each of the Board of Directors and the Sole
Shareholder:
RESOLVED, that the Amended and Restated Certificate of
Incorporation of the Company, as supplemented and amended to
date, is hereby amended by striking out Section 9 in its entirety
and adding the following Sections 9 and 10. All other sections
of the Amended and Restated Certificate of Incorporation shall
remain unchanged and continue in full force and effect.
"Section 9. The Board of Directors may, at any time, appoint
from among its own members such committees as it
may deem necessary for the proper conduct of the
business of the Company. The Board of Directors
shall be unrestricted as to the powers it may
confer upon such committees."
"Section 10. So much of the charter of said corporation, as
amended, as is inconsistent herewith is repealed,
provided that such repeal shall not invalidate or
otherwise affect any action taken pursuant to the
charter of the corporation, in accordance with its
terms, prior to the effective date of such
repeal."
3. The above resolutions were passed by the Board of Directors and the Sole
Shareholder of the Corporation. The number of shares of the Corporation's
common capital stock entitled to vote thereon was 3,000 and the vote
required for adoption was 2,000 shares. The vote favoring adoption was
3,000 shares, which was the greatest vote required to pass the resolution.
<PAGE>
2
Dated at Simsbury, Connecticut this 30th day of December, 1996.
We hereby declare, under penalty of false statement, that the statements made in
the foregoing Certificate are true.
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
/s/Thomas M. Marra
------------------------------------
Thomas M. Marra, Executive Vice
President and Director - Individual
Life and Annuity Division
/s/Lynda Godkin
------------------------------------
Lynda Godkin, General Counsel and
Corporate Secretary
<PAGE>
CERTIFICATE AMENDING AND RESTATING
THE CERTIFICATE OF INCORPORATION BY
ACTION OF THE BOARD OF DIRECTORS AND SHAREHOLDERS
The name of the Corporation is ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY.
2. The Certificate of Incorporation is amended and restated by the following
resolution of the Board of Directors and Shareholder of the Corporation.
RESOLVED, that the Certificate of Incorporation of the Corporation, as
supplemented and amended to date, is further amended and restated to read
as follows:
Section 1. The name of the Corporation is ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY.
Section 2. The address of the Registered Office of the Corporation is
Hartford Plaza, Hartford, Connecticut 06104-2999.
Section 3. The Corporation is a body politic and corporate and shall
have all the powers granted by the general statutes, as now
enacted or hereinafter amended, to corporations formed under
the Stock Corporation Act.
Section 4. The Corporation shall have the purposes and powers to write
any and all forms of insurance which any other corporation
now or hereafter chartered in Connecticut and empowered to
do an insurance business may now or hereafter lawfully do;
to accept and to cede reinsurance; to issue policies and
contracts for any kind or combination of kinds of insurance;
to issue policies or contracts either with or without
participation in profits; to acquire and hold any or all of
the shares or other securities of any insurance corporation
or any other kind of corporation; and to engage in any
lawful act or activity for which corporations may be formed
under the Stock Corporation Act. The corporation is
authorized to exercise the powers herein granted in any
state, territory or jurisdiction of the United States or
in any foreign country.
Section 5. The Corporation shall obtain a license from the insurance
commissioner prior to the commencement of business and
shall be subject to all general statutes applicable to
insurance companies.
Section 6. The aggregate number of shares which the corporation shall
have authority to issue is 3,000 shares consisting of one
class only, designated as Common Shares, of the par value
of $1,250.
Section 7. No shareholder shall, because of his ownership of shares,
have a preemptive or other right to purchase, subscribe for,
or take any part of any shares or any
<PAGE>
2
part of the notes, debentures, bonds, or other securities
convertible into or carrying options or warrants to purchase
shares of this corporation issued, optioned, or sold by it
after its incorporation.
Section 8. The minimum amount of stated capital with which the
corporation shall commence business is One Thousand
Dollars ($1,000.00).
Section 9. So much of the charter of said corporation is amended, as is
inconsistent herewith is repealed, provided such repeal shall
not invalidate or otherwise affect any action taken pursuant
to the charter of the corporation, in accordance with its
terms, prior to the effective date of such repeal.
3. The above resolution was passed by the Board of Directors and the
Shareholder of the Corporation. The number of shares entitled to vote
thereon was 3,000 and the vote required for adoption was 2,000 shares.
The vote favoring adoption was 3,000 which was the greatest vote needed to
pass the resolution.
Dated at Simsbury, Connecticut this 30th day of April, 1996.
We hereby declare, under the penalties of false statement, that the
statements made in the foregoing Certificate are true.
ITT HARTFORD LIFE AND
ANNUITY INSURANCE COMPANY
/s/ Lowndes A. Smith
---------------------------------
Lowndes A. Smith, President
/s/ Lynda Godkin
----------------------------------
Lynda Godkin, General Counsel
and Corporate Secretary
<PAGE>
October 9, 1997 LYNDA GODKIN
Senior Vice President, General Counsel &
Corporate Secretary
Board of Directors
ITT Hartford Life and Annuity Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
RE: ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT ONE
FILE NO. 33- 73568
Dear Sir/Madam:
I have acted as General Counsel to ITT Hartford Life and Annuity Insurance
Company (the "Company"), a Connecticut insurance company, and ITT Hartford
Life and Annuity Insurance Company Separate Account One (the "Account") in
Connecticut with the registration of an indefinite amount of securities in
the form of flexible premium variable annuity insurance 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 to 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
October 9, 1997
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>
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this
Registration Statement File No. 33-73568 for ITT Hartford Life and Annuity
Insurance Company Separate Account One on Form N-4.
/s/ Arthur Andersen LLP
Hartford, Connecticut
October 14, 1997
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
POWER OF ATTORNEY
Gregory A. Boyko
Lynda Godkin
Thomas M. Marra
Lowndes A. Smith
do hereby jointly and severally authorize Lynda Godkin, Marianne O'Doherty,
and Leslie T. Soler to sign as their agent, any Registration Statement,
pre-effective amendment, post-effective amendment and any application for
exemptive relief of the ITT Hartford Life and Annuity Insurance Company under
the Securities Act of 1933 and/or the Investment Company Act of 1940.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for
the purpose herein set forth.
/s/ Gregory A. Boyko Dated: October 9, 1997
- --------------------------- ---------------
Gregory A. Boyko
/s/ Lynda Godkin Dated: October 9, 1997
- --------------------------- ----------------
Lynda Godkin
/s/ Thomas M. Marra Dated: October 9, 1997
- --------------------------- ----------------
Thomas M. Marra
/s/ Lowndes A. Smith Dated: October 1, 1997
- --------------------------- ----------------
Lowndes A. Smith
<PAGE>
<TABLE>
<CAPTION>
THE HARTFORD
The Hartford Financial Services Group, Inc.
(Delaware)
- ------------------------------------------------------------------------------------------------------------------------------
<C> <S>
Nutmeg Insurance Company The Hartford Investment
(Connecticut) Management Company
(Delaware)
Hartford Fire Insurance Company
(Connecticut)
Hartford Accident and Indemnity Company
(Connecticut)
Hartford Life, Inc.
(Delaware)
Hartford Life and Accident Insurance Company
(Connecticut)
- -----------------------------------------------------------------------------------------------------------------------------
Alpine Life Hartford Financial Hartford Life American Maturity ITT Hartford Canada
Insurance Company Services Life Insurance Company Life Insurance Holdings, Inc.
(New Jersey) Insurance Co. (Connecticut) Company (Canada)
(Connecticut) (Connecticut)
ITT Hartford Life
Insurance Company
of Canada
(Canada)
- -------------------------------------------------------------------------------------------------------------------------------
ITT Hartford Life and Annuity ITT Hartford International Hartford Financial Services
Insurance Company Life Reassurance Corporation Corporation
(Connecticut) (Connecticut) (Delaware)
ITT Hartford Life, Ltd.
(Bermuda)
- ------------------------------------------------------------------------------------------------------------------------------
MS Fund HL Funding HL Investment Hartford Hartford Securities ITT Comp. Emp.
America, Inc. Company, Inc. Advisors, Inc. Equity Sales Distribution Benefits Service
(Delaware) (Connecticut) (Connecticut) Company, Inc. Company, Inc. Company
(Connecticut) (Connecticut) (Connecticut)
Hartford Investment
Financial Services
Company
(Delaware)
</TABLE>
