<PAGE>
As filed with the Securities and Exchange Commission on April 14, 1998.
File No. 33-56790
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. 8 [X]
-------
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 21 [X]
--------
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT ONE
(Exact Name of Registrant)
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
(Name of Depositor)
P. O. BOX 2999
HARTFORD, CT 06104-2999
(Address of Depositor's Principal Offices)
(860) 843-6733
(Depositor's Telephone Number, Including Area Code)
MARIANNE O'DOHERTY, ESQ.
HARTFORD LIFE INSURANCE COMPANIES
P. O. BOX 2999
HARTFORD, CT 06104-2999
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485
----
X on May 1, 1998 pursuant to paragraph (b) of Rule 485
----
60 days after filing pursuant to paragraph (a)(1) of Rule 485
----
on May 1, 1998 pursuant to paragraph (a)(1) of Rule 485
----
this post-effective amendment designates a new effective date for a
----
previously filed post-effective amendment.
PURSUANT TO RULE 24F-2(a)(1) UNDER THE INVESTMENT COMPANY ACT OF 1940, THE
REGISTRANT HAS REGISTERED AN INDEFINITE AMOUNT OF SECURITIES.
<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)
N-4 Item No. Prospectus Heading
------------ ------------------
1. Cover Page Cover Page
2. Definitions Glossary of Special Terms
3. Synopsis or Highlights Summary
4. Condensed Financial Information Accumulation Unit Values;
Yield Information
5. General Description of Registrant The Contract, Separate Account
One and the Fixed Account;
Hartford Life and Annuity
Insurance Company and the
Funds; Miscellaneous
6. Deductions Charges Under the Contract
7. General Description of Operation of the Contract;
Annuity Contracts Payment of Benefits; The
Contract, Separate Account One
and the Fixed Account
8. Annuity Period Payment of Benefits
9. Death Benefit Payment of Benefits; Operation
of the Contract
10. Purchases and Contract Value Operation of the Contract
11. Redemptions Payment of Benefits
12. Taxes Federal Tax Considerations
13. Legal Proceedings Miscellaneous - Are there any
material legal proceedings
affecting the Separate
Account?
14. Table of Contents to the Statement Table of Contents to the
of Additional Information. Statement of Additional
Information
<PAGE>
15. Cover Page Part B; Statement of
Additional Information
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
22. Annuity Payments Annuity Benefits
23. Financial Statements Financial Statements
24. Financial Statements and Financial Statements and
Exhibits Exhibits
25. Directors and Officers of the Directors and Officers of the
Depositor Depositor
26. Persons Controlled by or Persons Controlled by or
Under Common Control Under Common Control
with the Depositor or Registrant with the Depositor or
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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT ONE
This Prospectus describes The Director, an individual and group tax-deferred
variable annuity Contract designed for retirement planning purposes (the
"Contracts").
The Contracts are issued by Hartford Life and Annuity Insurance Company
("Hartford"). Payments for the Contracts will be held in a series of 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.
Advisers Fund Sub-Account - shares of Class IA of Hartford
Advisers HLS Fund, Inc.
("Hartford Advisers Fund")
Bond Fund Sub-Account - shares of Class IA of Hartford
Bond HLS Fund, Inc. ("Hartford
Bond Fund")
Capital Appreciation Fund Sub-Account - shares of Class IA of Hartford
Capital Appreciation HLS
Fund, Inc. ("Hartford Capital
Appreciation Fund")
Dividend and Growth Fund Sub-Account - shares of Class IA of Hartford
Dividend and Growth HLS Fund,
Inc. ("Hartford Dividend and
Growth Fund")
Index Fund Sub-Account - shares of Class IA of Hartford
Index HLS Fund, Inc. ("Hartford
Index Fund")
International Advisers Fund Sub-Account - shares of Class IA of Hartford
International Advisers HLS
Fund, Inc. ("Hartford
International Advisers Fund")
International Opportunities Fund Sub- - shares of Class IA of Hartford
Account International Opportunities HLS
Fund, Inc. ("Hartford
International Opportunities
Fund")
MidCap Fund Sub-Account - shares of Class IA of Hartford
MidCap HLS Fund, Inc. ("Hartford
MidCap Fund")
Money Market Fund Sub-Account - shares of Class IA of Hartford
Money Market HLS Fund, Inc.
("Hartford Money Market Fund")
Mortgage Securities Fund Sub-Account - shares of Class IA of Hartford
Mortgage Securities HLS Fund,
Inc. ("Hartford Mortgage
Securities Fund")
Small Company Fund Sub-Account - shares of Class IA of Hartford
Small Company Fund, Inc.
("Hartford Small Company Fund")
Stock Fund Sub-Account - shares of Class IA of Hartford
Stock HLS Fund, Inc. ("Hartford
Stock Fund")
This Prospectus sets forth the information concerning the Separate Account and
the Fixed Account, where available, that investors should know before investing.
This Prospectus should be kept for future reference. Additional information
about the Separate Account and the Fixed Account has been filed with the
Securities and Exchange Commission and is available without charge upon request.
To obtain the Statement of Additional Information send a written request to
Hartford Life and Annuity Insurance Company, Attn: Individual Annuity
Operations, P. O. Box 5085, Hartford, CT 06102-5085. The Table of Contents for
the Statement of Additional Information may be found on page 59 of this
Prospectus. The Statement of Additional Information is incorporated by
reference to this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED
BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
Prospectus Dated: May 1, 1998
Statement of Additional Information Dated: May 1, 1998
<PAGE>
2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
GLOSSARY OF SPECIAL TERMS. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
FEE TABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ACCUMULATION UNIT VALUES . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
PERFORMANCE RELATED INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . 22
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
THE CONTRACT, SEPARATE ACCOUNT ONE AND THE FIXED ACCOUNT
What are the Contracts? . . . . . . . . . . . . . . . . . . . . . . . . . 23
Who can buy these Contracts?. . . . . . . . . . . . . . . . . . . . . . . 25
What is the Separate Account and how does it operate? . . . . . . . . . . 25
What is the Fixed Account and how does it operate?. . . . . . . . . . . . 27
May I transfer assets between Sub-Accounts? . . . . . . . . . . . . . . . 29
May I transfer assets between the Fixed Account and the Sub-Accounts? . . 30
OPERATION OF THE CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . 31
How is my Premium Payment credited? . . . . . . . . . . . . . . . . . . . 31
What size Premium Payments must I make? . . . . . . . . . . . . . . . . . 31
What if I am not satisfied with my purchase?. . . . . . . . . . . . . . . 31
May I assign or transfer my Contract? . . . . . . . . . . . . . . . . . . 32
How do I know what my Contract is worth?. . . . . . . . . . . . . . . . . 32
How is the Accumulation Unit value determined?. . . . . . . . . . . . . . 32
How are the underlying Fund shares valued?. . . . . . . . . . . . . . . . 33
<PAGE>
3
How is the value of the Fixed Account determined? . . . . . . . . . . . . 33
PAYMENT OF BENEFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
What would my Beneficiary receive as a death benefit? . . . . . . . . . . 33
How can a Contract be redeemed or surrendered?. . . . . . . . . . . . . . 34
Can payment of a redemption, surrender or death benefit ever
postponed beyond the seven day period?. . . . . . . . . . . . . . . . . . 37
May I surrender once Annuity payments have started? . . . . . . . . . . . 37
What are my Annuity benefits. . . . . . . . . . . . . . . . . . . . . . . 37
How are Annuity payments determined? . . . . . . . . . . . . . . . . . . 39
CHARGES UNDER THE CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . . . . 40
How are the sales charges under the Contracts made? . . . . . . . . . . . 40
Is there ever a time when the sales charges do not apply? . . . . . . . . 41
What do the sales charges cover?. . . . . . . . . . . . . . . . . . . . . 42
What is the mortality and expense risk charge?. . . . . . . . . . . . . . 43
Are there any administrative charges? . . . . . . . . . . . . . . . . . . 44
How much are the deductions for Premium Taxes? . . . . . . . . . . . . . 44
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY AND THE FUNDS. . . . . . . . . . 44
What is Hartford? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
What are the Funds? . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Does Hartford have any interest in the Funds? . . . . . . . . . . . . . . 47
FEDERAL TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 48
What are some of the federal tax consequences which affect these
Contracts?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
<PAGE>
4
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
What are my voting rights?. . . . . . . . . . . . . . . . . . . . . . . . 56
Will other Contracts be participating in the Separate Account?. . . . . . 56
How are the Contracts sold?. . . . . . . . . . . . . . . . . . . . . . . 56
Who is the custodian of the Separate Account's assets?. . . . . . . . . . 57
Are there any material legal proceedings affecting the Separate Account?. 57
Who has passed on the legal matters affecting the Separate Account? . . . 57
Are you relying on any experts as to any portion of this Prospectus?. . . 57
How may I get additional information? . . . . . . . . . . . . . . . . . . 58
APPENDIX I - INFORMATION REGARDING TAX-QUALIFIED PLANS . . . . . . . . . . . . 59
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION . . . . . . . . . . 64
</TABLE>
<PAGE>
5
GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT: An accounting unit of measure used to calculate values
before Annuity payments begin.
ANNUITANT: The person or participant upon whose life the Contract is issued.
ANNUITY: A series of payments for life, or for life with a minimum number of
payments or a determinable sum guaranteed, or for a joint lifetime and
thereafter during the lifetime of the survivor, or for a designated period.
ANNUITY COMMENCEMENT DATE: The date on which Annuity payments are to commence.
Under group unallocated Contracts, the date for each Participant is determined
by the Contract Owner in accordance with the terms of the Plan. It will always
be the fifteenth of a calendar month.
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.
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.
<PAGE>
6
FIXED ACCOUNT 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 40 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: Currently located at 200 Hopmeadow Street, Simsbury, Connecticut
06089, for all variable annuity Contracts. All correspondence concerning this
Contract should be sent to P. O. Box 5085, Hartford, CT 06102-5085, Attn:
Individual Annuity Operations.
HARTFORD: Hartford Life and Annuity Insurance Company.
MINIMUM DEATH BENEFIT - The minimum amount payable upon the death of a Contract
Owner, Annuitant or Participant, in the case of group Contracts prior to age 85
and before annuity payments have commenced.
NON-QUALIFIED CONTRACT: A Contract which is not classified as a tax-qualified
retirement plan using pre-tax dollars 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 which qualifies for special tax treatment
under a Section of 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 qualifies as a tax-qualified retirement
plan using pre-tax dollars under the Code, such as an employer sponsored Section
401(k) on an Individual Retirement Annuity (IRA).
SEPARATE ACCOUNT: The Hartford separate account entitled "Hartford Life and
Annuity Insurance Company Separate Account One."
SPECIFIED CONTRACT ANNIVERSARY: Every seventh Contract Anniversary (I.E., the
7th, 14th, 21st, etc. Contract Anniversaries).
SUB-ACCOUNT: Accounts established within the Separate Account with respect to a
Fund.
<PAGE>
7
TERMINATION VALUE: The Contract Value upon termination of the Contract prior to
the Annuity Commencement Date, less any applicable Premium Taxes, the Annual
Maintenance Fee and any applicable contingent deferred sales charges.
UNALLOCATED CONTRACTS - Contracts issued to employers, or other entity, as
Contract Owner under which no allocation of Contract Values is made for a
specific Participant. The Plans will be responsible for the individual
allocations.
VALUATION DAY: Every day the New York Stock Exchange is open for trading. The
value of the Separate Account is determined at the close of the New York Stock
Exchange (generally 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>
8
FEE TABLE
SUMMARY
CONTRACT OWNER TRANSACTION EXPENSES
(ALL SUB-ACCOUNTS)
<TABLE>
<CAPTION>
<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) . . . . . . . . . . . . . . . . . . . . . . . . . . . 7%
Second Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
Third Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
Fourth Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4%
Fifth Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3%
Sixth Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2%
Seventh Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1%
Eighth Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0%
Annual Contract Fee (2). . . . . . . . . . . . . . . . . . . . . . . . . $25
Annual Expenses-Separate Account
(as a percentage of average account value)
Mortality and Expense Risk . . . . . . . . . . . . . . . . . . . . . 1.250%
</TABLE>
(1) Length of time from premium payment.
(2) The annual contract fee is a single $25 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 Investment Company Act of 1940,
the annual contract fee 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 annual contract fee is deducted only when the
accumulated value is $50,000 or less. In the Example, the annual contract
fee is approximated as a 0.05% annual asset charge based on the experience of
the Contracts.
<PAGE>
9
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% 0.020% 0.510%
Hartford Stock Fund . . . . . . . . . 0.430% 0.020% 0.450%
Hartford Money Market Fund. . . . . . 0.425% 0.015% 0.440%
Hartford Advisers Fund. . . . . . . . 0.610% 0.020% 0.630%
Hartford Capital Appreciation Fund. . 0.620% 0.020% 0.640%
Hartford Mortgage Securities Fund . . 0.425% 0.025% 0.450%
Hartford Index Fund . . . . . . . . . 0.375% 0.015% 0.390%
Hartford International Opportunities
Fund . . . . . . . . . . . . . . . . 0.680% 0.090% 0.770%
Hartford Dividend & Growth Fund . . . 0.660% 0.020% 0.680%
Hartford International Advisers Fund. 0.750% 0.120% 0.870%
Hartford MidCap Fund (1). . . . . . . 0.750% 0.040% 0.790%
Hartford Small Company Fund . . . . . 0.750% 0.020% 0.770%
</TABLE>
(1) 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.
<PAGE>
10
EXAMPLE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
If you surrender your Contract at If you annuitize your Contract at If you do not surrender your Contract,
the end of the applicable time the end of the applicable time you would pay the following expenses on
period, you would pay the period, you would pay the a $1,000 investment, assuming a 5%
following expenses on a $1,000 following expenses on a $1,000 annual return on assets:
investment, assuming a 5% investment, assuming a 5%
annual return on assets: annual return on assets:
- ----------------------------------------------------------------------------------------------------------------------------------
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bond Fund $89 $107 $129 $214 $18 $57 $98 $213 $19 $57 $99 $214
Stock Fund 88 106 126 208 17 55 95 207 18 56 96 208
Money Market Fund 88 105 125 207 17 55 95 206 18 55 95 207
Advisers Fund 90 111 135 227 19 61 104 226 20 61 105 227
Capital Appreciation 90 111 136 228 19 61 105 227 20 61 106 228
Fund
Mortgage Securities 88 106 126 208 17 55 95 207 18 56 96 208
Fund
Index Fund 87 104 122 201 17 53 92 200 17 54 92 201
International 91 116 142 242 21 65 112 241 21 66 112 242
Opportunities Fund
Dividend & Growth 90 113 138 232 20 62 107 232 20 63 108 232
Fund
International Advisers 92 119 148 252 22 68 117 252 22 69 118 252
Fund
MidCap Fund 91 116 N/A N/A 21 66 N/A N/A 21 66 N/A N/A
Small Company Fund 91 116 142 242 21 65 112 241 21 66 112 242
- ----------------------------------------------------------------------------------------------------------------------------------
</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>
11
SUMMARY
A. CONTRACTS OFFERED
Individual and group tax-deferred Variable Annuity Contracts (see "Federal
Tax Considerations -- Taxation of Annuities in General," page 43).
Generally, the Contracts are purchased by completing an application or an
order to purchase a Contract and submitting it, along with the initial
Premium Payment, to Hartford for its approval. A Contract Owner may at any
time, within ten days of delivery of a Contract sold hereunder, return the
Contract to Hartford at its Home Office and the value of the Contract
(without deduction for any charges normally assessed thereunder) will be
refunded. The Contract Owner bears the investment risk during the period
prior to the Company's receipt of request for cancellation except for
Contract Owners in Georgia, North Carolina, South Carolina, Washington,
West Virginia, Utah, and other states where required by law, who will be
refunded the premium (see "How is my Premium Payment credited?" commencing
on page 26).
B. ELIGIBLE PURCHASERS
Any individual, group or trust may purchase the Contract including any
trustee or custodian for a retirement plan which qualifies for special
Federal tax treatment under the Code, including individual retirement
annuities ("Qualified Contracts"). (See "Federal Tax Considerations,"
page 43, and Appendix I, page 54.)
C. MINIMUM PREMIUM PAYMENTS
The minimum initial Premium Payment is $2,000. Thereafter, the minimum
payment is $500 or if you are in the InvestEase Program the minimum
payment is $50. Certain plans or programs may make smaller periodic
premium payments. (See "What size Premium Payments must I make?"
commencing on page 26.)
D. UNDERLYING INVESTMENTS FOR CONTRACTS
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, Hartford Money Market Fund, Hartford MidCap Fund, and such
other funds as shall be offered from time to time, and the Fixed Account,
or a combination of the Funds and the Fixed Account. Qualified Contracts
issued prior to May 1, 1987 may also have shares of Hartford U.S.
Government Money Market Fund
E. CHARGES UNDER THE CONTRACTS
<PAGE>
12
1. SALES EXPENSES
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. (See "Charges
under the Contracts," page 35.)
The length of time from receipt of a Premium Payment to the time of
surrender determines the contingent deferred sales charge. For this
purpose, Premium Payments will be deemed to be surrendered in the
order in which they are received and all surrenders will be first
from Premium Payments and then from other Contract Values. The charge
is a percentage of the amount withdrawn (not to exceed the aggregate
amount of the Premium Payments made) and equals:
<TABLE>
<CAPTION>
CHARGE LENGTH OF TIME FROM PREMIUM PAYMENT
(NUMBER OF YEARS)
<S> <C>
7% 1
6% 2
5% 3
4% 4
3% 5
2% 6
1% 7
0% 8 or more
</TABLE>
No contingent deferred sales charge will be assessed in the event of
death of the Annuitant or Contract Owner, or upon the exercise of the
withdrawal privilege or if Contract Values are applied to an Annuity
option provided for under the Contract (except that a surrender out of
an Annuity Option Four will be subject to a contingent deferred sales
charge where applicable). (See "Is there ever a time when the sales
charges do not apply?" commencing on page 36.)
2. WITHDRAWAL PRIVILEGE
Withdrawals of up to 10% per year, on a non-cumulative basis, of the
Premium Payments made to a Contract may be made without the
imposition of the contingent deferred sales charge. (See "Is there
ever a time when the sales charges do not apply?" commencing on
page 36.)
3. ANNUAL MAINTENANCE FEE
<PAGE>
13
The Contracts provide for an administrative charge in the amount of
$25.00 to be deducted from Contract Values each Contract Year (not
applicable to Contracts with Account Values of $50,000 or more).
(See "Are there any administrative charges?" commencing on page 39.)
4. MORTALITY AND EXPENSE RISKS
For assuming the mortality and expense risks under the Contracts,
Hartford will make a 1.25% per annum charge against all Contract
Values held in the Separate Account, except the Fixed Account.
(See "What is the mortality and expense risk charge?" commencing
on page 38.)
5. PREMIUM TAXES
A deduction will be made for Premium Taxes for Contracts sold in
certain states. (See "How much are the deductions for Premium
Taxes?" commencing on page 39.)
6. CHARGES BY THE FUNDS
The Funds are subject to certain fees, charges and expenses (see
the prospectus for the Funds accompanying this Prospectus).
F. LIQUIDITY
Subject to any applicable charges, the Contracts may be surrendered, or
portions of the value of such Contracts may be withdrawn, at any time prior
to the Annuity Commencement Date. However, if less than $1,000 remains in
a Contract as a result of a withdrawal, Hartford may terminate the Contract
in its entirety. (See "How can a Contract be redeemed or surrendered?"
commencing on page 29.)
G. MINIMUM DEATH BENEFITS
A Minimum Death Benefit is provided in the event of death of the Annuitant
or Contract Owner prior to age 85 and before Annuity payments have
commenced. (See "What would my Beneficiary receive as a death benefit?"
commencing on page 28.)
H. ANNUITY OPTIONS
The Annuity Commencement Date may not be deferred beyond the Annuitant's
90th birthday, except in certain states, where the Annuitant's Commencement
Date may not be deferred beyond the Annuitant's 85th birthday. If a
Contract
<PAGE>
14
Owner does not elect otherwise, the Contract Value (less applicable Premium
Taxes) will be applied on the Annuity Commencement Date under the second
option to provide a life annuity with 120 monthly payments certain. (See
"What are my Annuity benefits?" commencing on page 32.)
I. VOTING RIGHTS OF CONTRACT OWNERS
Contract Owners will have the right to vote on matters affecting the
underlying Fund to the extent that proxies are solicited by such Fund. If
a Contract Owner does not vote, Hartford shall vote such interest in the
same proportion as shares of the Fund for which instructions have been
received by Hartford. (See "What are my voting rights?" commencing on
page 51.)
<PAGE>
15
ACCUMULATION UNIT VALUES
(For an accumulation unit outstanding throughout the period)
The following information has been derived from the audited financial
statements of the separate account, which have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report
with respect thereto, and should be read in conjunction with those statements
which are included in the Statement of Additional Information, which is
incorporated by reference in this Prospectus.
<TABLE>
<CAPTION>
YEAR
ENDED DECEMBER 31, ----
------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
BOND FUND SUB-ACCOUNT (INCEPTION AUGUST 1, 1986)
Accumulation unit value at beginning of period....................... $ 1.992 $1.880 $1.607 $1.694 $1.556
Accumulation unit value at end of period............................. $ 2.114 $1.922 $1.880 $1.607 $1.694
Number accumulation units outstanding at end of period (in thousands) 107,759 76,247 48,354 33,950 23,803
STOCK FUND SUB-ACCOUNT (INCEPTION AUGUST 1, 1986)
Accumulation unit value at beginning of period....................... $ 3.547 $2.887 $2.180 $2.250 $1.993
Accumulation unit value at end of period............................. $ 4.602 $3.547 $2.887 $2.180 $2.250
Number accumulation units outstanding at end of period (in thousands) 440,557 317,416 186,727 110,928 60,421
MONEY MARKET FUND SUB-ACCOUNT (INCEPTION AUGUST 1, 1986)
Accumulation unit value at beginning of period....................... $ 1.587 $1.528 $1.462 $1.424 $1.401
Accumulation unit value at end of period............................. $ 1.650 $1.587 $1.528 $1.462 $1.424
Number accumulation units outstanding at end of period (in thousands) 120,947 110,350 66,468 30,871 14,881
ADVISERS FUND SUB-ACCOUNT (INCEPTION AUGUST 1, 1986)
Accumulation unit value at beginning of period....................... $ 2.905 $2.523 $1.991 $2.072 $1.870
Accumulation unit value at end of period............................. $ 3.572 $2.905 $2.523 $1.991 $2.072
Number accumulation units outstanding at end of period (in thousands) 999,829 784,326 546,105 414,318 244,980
CAPITAL APPRECIATION FUND SUB-ACCOUNT (INCEPTION AUGUST 1, 1986)
Accumulation unit value at beginning of period....................... $ 4.010 $3.364 $2.615 $2.583 $2.165
Accumulation unit value at end of period............................. $ 4.845 $4.010 $3.364 $2.615 $2.583
Number accumulation units outstanding at end of period (in thousands) 461,578 353,466 216,591 116,535 58,945
MORTGAGE SECURITIES FUND SUB-ACCOUNT (INCEPTION AUGUST 1, 1986)
Accumulation unit value at beginning of period....................... $ 1.949 $1.878 $1.637 $1.685 $1.604
Accumulation unit value at end of period............................. $ 2.098 $1.949 $1.878 $1.637 $1.685
Number accumulation units outstanding at end of period (in thousands) 38,292 38,304 31,288 20,674 28,380
INDEX FUND SUB-ACCOUNT (INCEPTION MAY 1, 1987)
Accumulation unit value at beginning of period....................... $ 2.845 $2.359 $1.750 $1.755 $1.629
Accumulation unit value at end of period............................. $ 3.726 $2.845 $2.359 $1.750 $1.755
Number accumulation units outstanding at end of period (in thousands) 117,372 77,074 32,779 12,030 7,491
INTERNATIONAL OPPORTUNITIES FUND SUB-ACCOUNT (INCEPTION JULY 2, 1990)
Accumulation unit value at beginning of period....................... $ 1.482 $1.329 $1.181 $1.220 $0.924
Accumulation unit value at end of period............................. $ 1.469 $1.482 $1.329 $1.181 $1.220
Number accumulation units outstanding at end of period (in thousands) 396,430 326,954 222,606 175,763 66,084
DIVIDEND & GROWTH FUND SUB-ACCOUNT (INCEPTION MARCH 8, 1994)
Accumulation unit value at beginning of period....................... $ 1.650 $1.359 $1.009 $1.000
Accumulation unit value at end of period............................. $ 2.149 $1.650 $1.359 $1.009
Number accumulation units outstanding at end of period (in thousands) 541,076 301,767 101,085 21,973
INTERNATIONAL ADVISERS FUND SUB-ACCOUNT (INCEPTION MARCH 1, 1995)
Accumulation unit value at beginning of period....................... $ 1.266 $1.146 $1.000
Accumulation unit value at end of period............................. $ 1.319 $1.266 $1.146
Number accumulation units outstanding at end of period (in thousands) 109,735 56,743 10,717
SMALL COMPANY FUND SUB-ACCOUNT (INCEPTION AUGUST 9, 1996)
Accumulation unit value at beginning of period....................... $ 1.066 $1.000
<PAGE>
16
Accumulation unit value at end of period............................. $ 1.247 $1.066
Number accumulation units outstanding at end of period (in thousands) 108,104 24,397
MIDCAP FUND SUB-ACCOUNT (INCEPTION JULY 15, 1997)
Accumulation unit value at beginning of period....................... $ 1.000
Accumulation unit value at end of period............................. $ 1.097
Number accumulation units outstanding at end of period (in thousands) 13,437
</TABLE>
<PAGE>
17
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 Advisers Fund, Bond Fund, Capital Appreciation Fund, Dividend and Growth
Fund, Index Fund, International Advisers Fund, International Opportunities Fund,
MidCap Fund, Mortgage Securities Fund, Small Company Fund, Stock Fund, and
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 Bond Fund and 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 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
<PAGE>
18
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-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.
INTRODUCTION
This Prospectus has been designed to provide you with the necessary information
to make a decision on purchasing an individual or group tax-deferred Variable
Annuity Contract offered by Hartford in the Fixed Account and/or a series of
Separate Account One. This Prospectus describes only the elements of the
Contracts pertaining to the Separate Account and the Fixed Account except where
reference to the General Account is specifically made. Please read the
"Glossary of Special Terms," page 5, prior to reading this Prospectus to
familiarize yourself with the terms being used.
THE CONTRACT, SEPARATE ACCOUNT ONE,
AND THE FIXED ACCOUNT
What are the Contracts?
The Contract is an individual or group tax-deferred Variable Annuity
Contract designed for retirement planning purposes. Initially there are no
deductions from your Premium Payments (except for Premium Taxes, if
applicable) so your entire Premium Payment is put to work in the investment
Sub-Account(s) of your choice or the Fixed Account. Currently, there are
eleven Sub-Accounts, each investing in a different underlying Fund with its
own distinct investment objectives. More Sub-Accounts may be made
available by Hartford at a later time. You pick the Sub-Account(s) with
the investment objectives that meet your needs. You may select one or more
Sub-Accounts and/or the Fixed Account and determine the percentage of your
Premium Payment that is put into a Sub-Account or the Fixed Account. You
may also transfer assets among the Sub-Accounts and the Fixed Account so
that your investment program meets your specific needs over time. There
are some limitations on the amounts in each Sub-Account and the Fixed
Account. These limitations are described later in this Prospectus. In
addition, there are certain other limitations on withdrawals and transfers
of amounts in the Sub-Accounts and the Fixed Account, as described in this
Prospectus. (See
<PAGE>
19
"Charges Under the Contracts," page 35, for a description of the charges
for redeeming a Contract and other charges made under the Contract.)
Generally, the Contract contains the five optional Annuity forms described
later in this Prospectus. Options 2, 4 and 5 are available with respect to
Qualified Contracts only if the guaranteed payment period is less than the
life expectancy of the Annuitant at the time the option becomes effective.
Such life expectancy shall be computed on the basis of the mortality table
prescribed by the IRS, or if none is prescribed, the mortality table then
in use by Hartford.
The Contract Owner may 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 may not be deferred beyond the Annuitant's
90th birthday, except in certain states, where the Annuity Commencement
Date may not be deferred beyond the Annuitant's 85th birthday.
The Annuity Commencement Date and/or the Annuity option may be changed from
time to time, but any such change must be made at least 30 days prior to
the date on which Annuity payments are scheduled to begin. If you do not
elect otherwise, payments will begin at the Annuitant's age 90 under Option
2 with 120 monthly payments certain (Option 1 for Texas Contracts).
When an Annuity is effected under a Contract, unless otherwise specified,
Contract Values 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 Account
Annuity. Variable Annuity payments will vary in accordance with the
investment performance of the Sub-Accounts you have selected. You should
consider the question of allocation of Contract Values 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 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 Account Annuity
allocation may not be changed.
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)
<PAGE>
20
during the Annuity period. Hartford may also make appropriate endorsement
in the Contract to reflect such modification.
Who can buy these Contracts?
The individual and group Variable Annuity Contracts offered under this
Prospectus may be purchased by any individual or by a 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").
What is the Separate Account and how does it operate?
The Separate Account was established on May 20, 1991, in accordance with
authorization by the Board of Directors of Hartford. 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. 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.
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. So, Contract Values allocated to the
Sub-Accounts will not be affected by the rate of return of Hartford's
General Account, nor by the investment performance of any of Hartford's
other separate accounts. However, all obligations arising under the
Contracts are general corporate obligations of Hartford.
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. Net Premium Payments and
proceeds of transfers between Sub-Accounts are applied to purchase shares
in the appropriate
<PAGE>
21
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
<PAGE>
22
or portfolios. During the Variable Annuity payout period, both your
Annuity payments and reserve values will vary in accordance with these
factors.
Hartford does not guarantee the investment results of the Sub-Accounts or
any of the underlying investments. There is no assurance that the value of
a Contract during the years prior to retirement or the aggregate amount of
the Variable Annuity payments will equal the total of Premium Payments made
under the Contract. Since each underlying Fund has different investment
objectives, each is subject to different risks. These risks are more fully
described in the accompanying Fund prospectus.
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 held by the Separate Account. Substitution may occur
only if shares of the Fund(s) become unavailable or if there are changes in
applicable law or interpretations of law. Current law requires
notification to you of any such substitution and approval of the
Commission.
The Separate Account may be subject to liabilities arising from a Series of the
Separate Account whose assets are attributable to other variable annuity
Contracts or variable life insurance policies offered by the Separate Account
which are not described in this Prospectus.
What is the Fixed Account and how does it operate?
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.
<PAGE>
23
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; however, Hartford is not
obligated to credit any interest 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. Contract Owners may enroll in a special pre-authorized
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 (Hartford may allow a lower minimum Premium Payment for
qualified plan transfers or rollovers, including IRAs) and
pre-authorize transfers to any of the Sub-Accounts under either the 6
Month Transfer Program or 12 Month Transfer Program. The 6 Month
Transfer Program and the 12 Month Transfer Program will generally have
different credited interest rates. Under the 6 Month Transfer Program,
the interest rate can accrue up to 6 months and all Premium Payments
and accrued interest must be transferred to the selected Sub-Accounts
in 3 to 6 months. Under the 12 Month Transfer Program, the interest
rate can accrue up to 12 months and all Premium Payments and accrued
interest must be transferred to the selected Sub-Accounts in 7 to 12
months. This will be accomplished by monthly transfers for the period
selected and a final transfer of the entire amount remaining in the
Program.
The pre-authorized transfers will begin within 15 days after the initial
Program Premium Payment and complete enrollment instructions are received
by Hartford. 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.
<PAGE>
24
Any subsequent Premium Payments received by Hartford within the Program
period selected will be allocated to the Sub-Accounts over the remainder of
that Program transfer period, unless otherwise directed by the Contract
Owner.
A Contract Owner may only have one dollar cost averaging program in place
at one time, this means one standard dollar cost averaging plan or one
Dollar Cost Averaging Bonus Program.
Contract Owners may elect to terminate the pre-authorized transfers by
calling or writing Hartford of their intent to cancel their enrollment in
the Program. Upon cancellation of enrollment in the Program, Contract
Owners 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. This
Program may not be available in all states; please contact Hartford to
determine if it is available in your state.
May I transfer assets between Sub-Accounts?
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 12 per Contract Year, with no
two transfers occurring on consecutive Valuation Days. Transfers by
telephone may be made by calling (800) 862-6668. Telephone transfers may
not be permitted by some states for their residents who purchase variable
annuities.
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.
Hartford may permit the Contract Owner to preauthorize transfers among
Sub-Accounts and between Sub-Accounts and the Fixed Account under certain
circumstances. The policy of 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 on behalf of a Contract Owner identify themselves and the Contract
Owner by name and social security number. All transfer instructions by
telephone are tape recorded.
<PAGE>
25
Subject to the exceptions set forth in the following paragraph the right to
reallocate Contract Values between the Sub-Accounts 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 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.
For Contracts issued in the State of New York, the reservation of rights
set forth in the preceding paragraph is limited to (i) requiring up to a
maximum of ten Valuation Days between each transfer: (ii) limiting the
amount to be transferred on any one Valuation Day to no more than $2
million; and (iii) upon 30 days prior written notice, to only accepting
transfer instructions from the Contract Owner and not from the Contract
Owner's representative, agent or person acting under a power of attorney
for the Contract Owner.
Currently, and with respect to Contracts issued in all states, the only
restriction in effect is that 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.
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.
May I transfer assets between the Fixed Account and the Sub-Accounts?
Subject to the restrictions set forth above, 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
<PAGE>
26
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.
OPERATION OF THE CONTRACT
How is my Premium Payment credited?
The balance of each initial Premium Payment remaining after the deduction
of any applicable Premium Tax is credited to your Contract within two
business days of receipt of a properly completed application or an order to
purchase a Contract and the initial Premium Payment by Hartford at its Home
Office. It will be credited to the Sub-Account(s) and/or the Fixed Account
in accordance with your election. If the application or other information
is incomplete when received, the balance of each initial Premium Payment,
after deduction of any applicable Premium Tax, will be credited to the
Sub-Account(s) or the Fixed Account within five business days of receipt.
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.
What size Premium Payments must I make?
The minimum initial Premium Payment is $2,000. Thereafter, the minimum
Premium Payment is $500 or if you are in the InvestEase Program the minimum
payment is $50. 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.
What if I am not satisfied with my purchase?
If you are not satisfied with your purchase you may surrender the Contract
by returning it within ten days (or longer is 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 sum of (i) the
difference between the Premium
<PAGE>
27
Payment and the amounts allocated to the Sub- Account(s) and/or the Fixed
Account under the Contract and (ii) the value of the Contract on the date
of surrender attributable to the amounts so allocated. You bear the
investment risk during the period prior to the Company'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.
May I assign or transfer my Contract?
Ownership of a Contract described herein is generally assignable. However,
if the Contracts are issued pursuant to some form of Qualified Plan, it is
possible that the ownership of the Contracts may not be transferred or
assigned depending on the type of qualified retirement plan involved. An
assignment of a Non-Qualified Contract may subject the assignment proceeds
to income taxes and certain penalty taxes. (See "Federal Tax
Considerations -- Taxation of Annuities in General -- Non-Tax Qualified
Purchasers," page 43.)
How do I know what my Contract is worth?
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.
How is the Accumulation Unit value determined?
The Accumulation Unit value for each Sub-Account will vary to reflect the
investment experience of the applicable Fund and will be determined on each
Valuation Day by multiplying the Accumulation Unit value of the particular
Sub-Account on the preceding Valuation Day by a "Net Investment Factor" for
that Sub-Account for the Valuation Period then ended. The "Net Investment
Factor" for each of the Sub-Accounts is equal to the net asset value per
share of the corresponding Fund at the end of the Valuation Period (plus
the per share amount of any dividends or capital gains distributed by that
Fund if the ex-dividend date occurs in the Valuation Period then ended)
divided by the net asset value per share of the corresponding Fund at the
beginning of the Valuation Period. You should refer to the prospectus for
each of the Funds which accompanies this Prospectus for a description of
how the assets of each Fund are valued since each determination has a
direct bearing on the Accumulation Unit value of the Sub-
<PAGE>
28
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.
How are the underlying Fund shares valued?
The shares of the Fund are valued at net asset value on each Valuation Day.
A complete description of the valuation method used in valuing Fund shares
may be found in the accompanying prospectus for the Funds.
How is the value of the Fixed Account determined?
Hartford will determine the value of the Fixed Account by crediting
interest to amounts allocated to the Fixed Account. The minimum Fixed
Account interest rate is 3%, compounded annually. Hartford may credit a
lower minimum interest rate according to state law. Hartford, also, may
credit interest at rates greater than the minimum Fixed Account interest
rate.
PAYMENT OF BENEFITS
What would my Beneficiary receive as a death benefit?
The Contracts provide that in the event the Annuitant dies before the
selected Annuity Commencement Date, the Contingent Annuitant will become
the Annuitant. If the Annuitant dies before the Annuity Commencement Date
and either (a) there is no designated Contingent Annuitant, (b) the
Contingent Annuitant predeceases the Annuitant, or (c) if any Contract
Owner dies before the Annuity Commencement Date, the Beneficiary as
determined under the Contract Control Provisions, will receive the Minimum
Death Benefit as determined on the date of receipt of due proof of death by
Hartford at 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.
However, if, upon death prior to the Annuity Commencement Date, the
Annuitant or Contract Owner, as applicable, had not attained his 85th
birthday, the Beneficiary will receive the greater 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 any prior surrenders, or (c) the Contract Value
on the Specified Contract Anniversary immediately preceding the date of
death, increased by the dollar amount of any Premium Payments made and
reduced by the dollar amount of any partial terminations since the
immediately preceding Specified Contract Anniversary.
<PAGE>
29
If the deceased, the Annuitant or Contract Owner, as applicable, had
attained age 85, then the Death Benefit will equal the Contract Value.
Death Benefit proceeds will remain invested in the Separate Account in
accordance with the allocation instructions given by the Certificate Owner
until the proceeds are paid or Hartford receives new instructions from the
Beneficiary. The death benefit may be taken in one sum, payable within
seven days after the date Due Proof of Death is received, or under any of
the settlement options then being offered by the Company provided, however,
that: (a) in the event of the death of any Contract Owner prior to the
Annuity Commencement Date, the entire interest in the Contract will be
distributed within five years after the death of the Contract Owner and (b)
in the event of the death of any Contract Owner or Annuitant which occurs
on or after the Annuity Commencement Date, any remaining interest in the
Contract will be paid at least as rapidly as under the method of
distribution in effect at the time of death, or, if the benefit is payable
over a period not extending beyond the life expectancy of the Beneficiary
or over the life of the Beneficiary, such distribution must commence within
one year of the date of death. Notwithstanding the foregoing, in the event
of the Contract Owner's death where the sole Beneficiary is the spouse of
the Contract Owner and the Annuitant or Contingent Annuitant is living,
such spouse may elect, in lieu of receiving the death benefit, to be
treated as the Contract Owner. The proceeds due on the death may be
applied to provide variable payments, fixed payments, or a combination of
variable and fixed payments.
If the Contract is owned by a corporation or other non-individual, the
Death Benefit payable upon the death of the Annuitant prior to the Annuity
Commencement Date will be payable only as one sum or under the same
settlement options and in the same manner as if an individual Contract
Owner died on the date of the Annuitant's death.
For a discussion of the manner in which Annuity payments are determined and
may vary from month to month, see "How are Annuity payments determined?"
commencing on page 34.
How can a Contract be redeemed or surrendered?
At any time prior to the Annuity Commencement Date, you have the right,
subject to any IRS provisions applicable thereto, to surrender the value of
the Contract in whole or in part.
FULL SURRENDERS
At any time prior to the Annuity Commencement Date (and after the Annuity
Commencement Date with respect to values applied to Option 4), the Contract
<PAGE>
30
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.
The Termination Value of the Contract is equal to the Contract Value less
any applicable Premium Taxes, the Annual Maintenance Fee 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 $1,000, Hartford may terminate the Contract and pay the Termination
Value. For Contracts issued in Texas, there is an additional requirement
that the Contract will not be terminated when the remaining Contract Value
after a surrender is less than $1,000 unless there were no Premium Payments
made during the previous two Contract Years.
TELEPHONE SURRENDER PRIVILEGES - Hartford permits partial surrenders by
telephone subject to dollar amount limitations in effect at the time a
Contract Owner requests the surrender. To request partial surrenders by
telephone, a Contract Owner must have completed and returned to Hartford a
Telephone Redemption Program Enrollment Form authorizing telephone
surrenders. If there are joint Contract Owners, both must authorize
Hartford to accept telephone instructions and agree that Hartford may
accept telephone instructions for partial surrenders from either Contract
Owner. Partial surrender requests will not be honored until Hartford
receives all required documents in proper form.
Telephone authorization will remain valid until (a) Hartford receives
written notice of revocation by a Contract Owner, or, in the case of joint
Contract Owners, written notice from either Contract Owner; (b) Hartford
discontinues the privilege; or (c) Hartford has reason to believe that a
Contract Owner has entered into a market timing agreement with an
investment adviser and/or broker/dealer.
Hartford may record any telephone calls to verify data concerning
transactions and may adopt other procedures to confirm that telephone
instructions are genuine. Hartford will not be liable for losses or
expenses arising out of telephone instructions reasonably believed to be
genuine.
In order to obtain that day's unit values on surrender, Hartford must
receive telephone surrender instructions prior to the close of trading on
the New York Stock Exchange (generally 4:00 p.m.).
Hartford may modify, suspend, or terminate telephone transaction privileges
at any time.
<PAGE>
31
Once each Contract Year, on a non-cumulative basis, partial surrenders of
Contract Values of up to 10% of the aggregate Premium Payments made to the
Contract may be made without being subject to the contingent deferred sales
charge. Hartford may permit the Contract Owner to preauthorize partial
surrenders subject to certain limitations then in effect.
THERE ARE CERTAIN RESTRICTIONS ON SECTION 403(B) TAX-SHELTERED ANNUITIES.
AS OF DECEMBER 31, 1988, ALL SECTION 403(B) ANNUITIES HAVE LIMITS ON FULL
AND PARTIAL SURRENDERS. CONTRIBUTIONS TO THE CONTRACT MADE AFTER DECEMBER
31, 1988 AND ANY INCREASES IN CASH VALUE AFTER DECEMBER 31, 1988 MAY NOT BE
DISTRIBUTED UNLESS THE CONTRACT OWNER/EMPLOYEE HAS A) ATTAINED AGE 59 1/2,
B) TERMINATED EMPLOYMENT, C) DIED, D) BECOME DISABLED OR E) EXPERIENCED
FINANCIAL HARDSHIP.
DISTRIBUTIONS DUE TO FINANCIAL HARDSHIP OR SEPARATION FROM SERVICE MAY
STILL BE SUBJECT TO A PENALTY TAX OF 10%.
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 43.)
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 Operations, 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. 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
<PAGE>
32
Sub-Account under a Contract. Within this context, the contingent deferred
sales charges are taken from the Premium Payments in the order in which
they were received: from the earliest Premium Payments to the latest
Premium Payments (see "How are the sales charges under the Contracts made?"
commencing on page 35).
Can payment of a redemption, surrender or death benefit ever be postponed beyond
the seven day period?
Yes. There may be postponement 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.
May I surrender once Annuity payments have started?
No. Surrenders are not permitted after Annuity payments commence EXCEPT
that a full surrender is allowed when payments for a designated period
(Option 4 or 5) are selected as the Annuity option.
What are my Annuity benefits?
You select an Annuity Commencement Date and an Annuity option which may be
on a fixed or variable basis, or a combination thereof. The Annuity
Commencement Date will not be deferred beyond the Annuitant's 90th birthday
except for certain states where deferral past age 85 is not permitted. The
Annuity Commencement Date and/or the Annuity option may be changed from
time to time, but any change must be made 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
<PAGE>
33
monthly payments certain. For Qualified Contracts and Contracts issued in
Texas, if you do not elect otherwise, payments will begin automatically at
the Annuitant's age 90 under Option 1 to provide a life Annuity.
Under any of the Annuity options excluding Options 4 and 5, no surrenders
are permitted after Annuity payments commence. Only full surrenders are
allowed out of Option 4 and any such surrender will be subject to
contingent deferred sales charges, if applicable. Full or partial
withdrawals may be made from Option 5 at any time and contingent deferred
sales charges will not be applied.
OPTION 1: LIFE ANNUITY - A life Annuity is an Annuity payable during the
lifetime of the Annuitant and terminating with the last payment preceding
the death of the Annuitant. This option 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 due date of the third Annuity payment,
etc.
OPTION 2: LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN -
This Annuity option is an Annuity payable monthly during the lifetime of an
Annuitant with the provision that 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.
<PAGE>
34
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.
How are Annuity payments determined?
The value of the Annuity Unit for each Sub-Account in the Separate Account
for any day is determined by multiplying the value for the preceding day by
the product of (1) the net investment factor (see "How is the Accumulation
Unit value determined?" commencing on page 27) for the day for which the
Annuity Unit value is being calculated, and (2) a factor to neutralize the
assumed investment rate of 4.00% per annum discussed below.
When Annuity payments are to commence, the value of the Contract is
determined as the sum of the value of the Fixed Account no earlier than the
close of business on the fifth Valuation Day preceding the date the first
Annuity payment is due plus the product of the value of the Accumulation
Unit of each Sub-Account on that same day, and the number of Accumulation
Units credited to each Sub-Account as of the date the Annuity is to
commence.
The Contract contains tables indicating the minimum dollar amount of the
first monthly payment under the optional forms of Annuity for each $1,000
of value of a Sub-Account under a Contract. The first monthly payment
varies according to the form and type of Annuity selected. The Contract
contains Annuity tables derived from the 1983a Individual Annuity Mortality
Table with ages set back one year and with an assumed investment rate
("A.I.R.") of 4% 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
<PAGE>
35
Premium Taxes) by the amount of the first monthly payment per $1,000 of
value obtained from the tables in the Contracts.
Fixed Account Annuity payments are determined at annuitization by
multiplying the values allocated to the Fixed Account (less applicable
Premium Taxes) by a rate to be determined by Hartford which is no less than
the rate specified in the Annuity tables in the Contract. The Annuity
payment will remain level for the duration of the Annuity.
The amount of the first monthly Variable Annuity payment, determined as
described above, is divided by the value of an Annuity Unit for the
appropriate Sub-Account no earlier than the close of business on the fifth
Valuation Day preceding the day on which the payment is due in order to
determine the number of Annuity Units represented by the first payment.
This number of Annuity Units remains fixed during the Annuity 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.
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.
The Annuity payments will be made on the fifteenth day of each month
following selection. The Annuity Unit value used in calculating the amount
of the Variable Annuity payments will be based on an Annuity Unit value
determined as of the close of business on a day no earlier than the fifth
Valuation Day preceding the date of the Annuity payment.
CHARGES UNDER THE CONTRACTS
How are the sales charges under the Contracts made?
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.
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 at page 36 below under the sub-heading "Is there ever a time
when the sales charges do not apply?") 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.
Upon receiving a request for a full surrender of a Contract, Hartford
currently assesses any applicable contingent
<PAGE>
36
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.
The length of time from receipt of a Premium Payment to the time of
surrender determines the contingent deferred sales charge. For this
purpose, Premium Payments will be deemed to be surrendered in the order in
which they are received and all surrenders will be first from Premium
Payments and then from other Contract Values. The charge is a percentage
of the amount withdrawn (not to exceed the aggregate amount of the Premium
Payments made) and equals:
<TABLE>
<CAPTION>
Charge Length of Time from Premium Payment
------ -----------------------------------
(Number of Years)
<S> <C>
7% 1
6% 2
5% 3
4% 4
3% 5
2% 6
1% 7
0% 8 or more
</TABLE>
No contingent deferred sales charge will be assessed in the event of death
of the Annuitant or Contract Owner, or if Contract Values are applied to an
Annuity option provided for under the Contract (except that a surrender out
of Option 4 will be subject to a contingent deferred sales charge if
applicable) or upon the exercise of the withdrawal privilege. (See "Is
there ever a time when the sales charges do not apply?" commencing on page
36.)
In the case of a redemption in which you request a certain dollar amount be
withdrawn, the sales charge is deducted from the amount withdrawn and the
balance is paid to you. Example: You request a total withdrawal of $1,000
and the applicable sales load is 5%. Your Sub-Account(s) and/or the Fixed
Account will be reduced by $1,000 and you will receive $950 (I.E., the
$1,000 total withdrawal less the 5% sales charge). This is the method
applicable on a full surrender of your Contract. In the case of a partial
redemption in which you request to receive a specified amount, the sales
charge will be calculated on the total amount that must be withdrawn from
your Sub-Account(s) and/or the Fixed Account in order to provide you with
the amount requested. Example: You request to receive $1,000 and the
applicable sales charge is 5%. Your Sub-Account(s) and/or the Fixed
Account will be reduced by $1,052.63 (I.E., a total withdrawal of $1,052.63
which results in a $52.63 sales charge ($1,052.63 x 5%) and a net amount
paid to you of $1,000 as requested).
Is there ever a time when the sales charges do not apply?
<PAGE>
37
Yes. During any Contract Year, 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 described above (the "Annual Withdrawal Amount").
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 as set forth above.
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 provided for under the Contract,
except that in the case of a surrender out of Annuity Option 4 contingent
deferred sales charges will be assessed, if applicable.
Hartford may offer certain employer sponsored savings plans, 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 under circumstances which may
result in savings of certain costs and expenses. Reductions in these fees
and charges will not unfairly discriminate against any Contract Owner.
CONFINEMENT IN A HOSPITAL, LONG TERM CARE FACILITY OR NURSING HOME -
Hartford will waive any Sales Charge applicable to a partial or full
surrender 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 this 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 within 91 calendar days of the last day of
confinement.
This waiver may not be available in all states. Please contact your
registered representative or Hartford to determine availability.
What do the sales charges cover?
<PAGE>
38
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.
What is the 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 Separate Account during the life of the Contract (estimated at .90% for
mortality and .35% for expense), except for the Fixed Account.
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 payments (determined in accordance with the 1983a
Individual Mortality Annuity 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. In that event, a loss will fall on Hartford. Also, in the
event of the death of an Annuitant or Contract Owner prior to age 85 or
before the commencement of Annuity payments, whichever is earlier, Hartford
can, in periods of declining value, experience a loss resulting from the
assumption of the mortality risk relative to the minimum 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.
<PAGE>
39
Are there any administrative charges?
Each year, on each Contract Anniversary on or before the Annuity
Commencement Date, Hartford will deduct an Annual Maintenance Fee 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 $25.00 per Contract Year. The
deduction will be made pro rata according to the value in each Sub-Account
and the Fixed Account under a Contract. Hartford reserves the right to
waive the Annual Maintenance Fee under other conditions.
How much are the deductions for 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.
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY AND THE FUNDS
What is Hartford?
Hartford Life and Annuity Insurance Company 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 and the District of Columbia,
except New York. Effective on January 1, 1998, Hartford's name changed from ITT
Hartford Life and Annuity Insurance Company 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>
RATING AGENCY EFFECTIVE RATING BASIS OF RATING
DATE OF
RATING
<PAGE>
40
<S> <C> <C> <C>
A.M. Best and Company, 9/9/97 A+ Financial soundness and
operating performance.
Standard & Poor*s 1/23/98 AA Claims paying ability
Duff & Phelps 1/23/98 AA+ Claims paying ability
</TABLE>
What are 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 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 Hartford Money Market Fund.
A full description of the Funds, their investment policies and restrictions,
risks, charges and expenses and all other aspects of their operation is
contained in the accompanying Funds' prospectus, which should be read in
conjunction with this Prospectus before investing, and in the Funds' Statement
of Additional Information which may be ordered from 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
Seeks maximum long-term total rate of return by investing in common
stocks and other equity securities, bonds and other debt securities, and money
market instruments.
HARTFORD BOND FUND
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
<PAGE>
41
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
Seeks growth of capital by investing in equity securities selected solely
on the basis of potential for capital appreciation.
HARTFORD DIVIDEND AND GROWTH FUND
Seeks a high level of current income consistent with growth of capital and
reasonable investment risk.
HARTFORD INDEX FUND
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
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
Seeks growth of capital by investing primarily in equity securities issued
by non-U.S. companies.
HARTFORD MIDCAP FUND
Seeks to achieve long-term capital growth through capital appreciation by
investing primarily in equity securities.
HARTFORD MORTGAGE SECURITIES FUND
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
<PAGE>
42
Seeks growth of capital by investing primarily in equity securities
selected on the basis of potential for capital appreciation.
HARTFORD STOCK FUND
Seeks long-term growth by investing primarily in equity securities.
HARTFORD MONEY MARKET FUND
Seeks maximum current income consistent with liquidity and preservation of
capital.
*"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.
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 Policy owners, the Funds' Board of
Directors intends to monitor events in order to identify any material conflicts
between such Contract Owners and Policy owners 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.
Does Hartford have any interest in the Funds?
Hartford has no interest in the Funds.
<PAGE>
43
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
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 54, 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"
commencing on page 15). 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, limited liability companies and
partnerships. The annual net
<PAGE>
44
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 are
additional exceptions from current inclusion for (i) certain annuities
held by structured settlement companies, (ii) certain annuities held
by an employer with respect to a terminated qualified retirement plan
and (iii) 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
<PAGE>
45
gross value of the Contract does not exceed the "investment
in the contract" and no aggregation rule applies), then such
amount received or deemed received will not be includable in
gross income, and will simply reduce the "investment in the
contract."
iv. The receipt of any amount as a loan under the Contract or
the assignment or pledge of any portion of the value of the
Contract shall be treated as an amount received for purposes
of this subparagraph a. and the next subparagraph b.
v. In general, the transfer of the Contract, without full and
adequate consideration, will be treated as an amount
received for purposes of this subparagraph a. and the next
subparagraph b. This transfer rule does not apply, however,
to certain transfers of property between spouses or incident
to divorce.
b. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE. Annuity payments
made periodically after the Annuity Commencement Date are
includable in gross income to the extent the payments exceed the
amount determined by the application of the ratio of the
"investment in the contract" to the total amount of the payments
to be made after the Annuity Commencement Date (the "exclusion
ratio").
i. When the total of amounts excluded from income by
application of the exclusion ratio is equal to the
investment in the contract as of the Annuity Commencement
Date, any additional payments (including surrenders) will be
entirely includable in gross income.
ii. If the annuity payments cease by reason of the death of the
Annuitant and, as of the date of death, the amount of
annuity payments excluded from gross income by the exclusion
ratio does not exceed the investment in the contract as of
the Annuity Commencement Date, then the remaining portion of
unrecovered investment shall be allowed as a deduction for
the last taxable year of the Annuitant.
iii. Generally, nonperiodic amounts received or deemed received
after the Annuity Commencement Date are not entitled to any
exclusion ratio and shall be fully includable in gross
income. However, upon a full surrender after such date,
only the excess of the amount received (after any surrender
charge) over the remaining "investment in the contract"
shall be includable in gross income (except to the extent
that the aggregation rule referred to in the next
subparagraph c. may apply).
c. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS. Contracts issued
after October 21, 1988 by the same insurer (or affiliated
insurer) to the same
<PAGE>
46
Contract Owner within the same calendar year (other than certain
contracts held in connection with a tax-qualified retirement
arrangement) will be treated as one annuity Contract for the
purpose of determining the taxation of distributions prior to the
Annuity Commencement Date. An annuity contract received in a
tax-free exchange for another annuity contract or life insurance
contract may be treated as a new Contract for this purpose.
Hartford believes that for any annuity subject to such
aggregation, the values under the Contracts and the investment in
the contracts will be added together to determine the taxation
under subparagraph 2.a., above, of amounts received or deemed
received prior to the Annuity Commencement Date. Withdrawals
will first be treated as withdrawals of income until all of the
income from all such Contracts is withdrawn. As of the date of
this Prospectus, there are no regulations interpreting this
provision.
d. 10% PENALTY TAX -- APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY
PAYMENTS.
i. If any amount is received or deemed received on the Contract
(before or after the Annuity Commencement Date), the Code
applies a penalty tax equal to ten percent of the portion
of the amount includable in gross income, unless an
exception applies.
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
<PAGE>
47
PRIOR TO AUGUST 14, 1982. If the Contract was obtained by
a tax-free exchange of a life insurance or annuity Contract
purchased prior to August 14, 1982, then any amount received
or deemed received prior to the Annuity Commencement Date
shall be deemed to come (1) first from the amount of the
"investment in the contract" prior to August 14, 1982
("pre-8/14/82 investment") carried over from the prior
Contract, (2) then from the portion of the "income on the
contract" (carried over to, as well as accumulating in, the
successor Contract) that is attributable to such pre-8/14/82
investment, (3) then from the remaining "income on the
contract" and (4) last from the remaining "investment in the
contract." As a result, to the extent that such amount
received or deemed received does not exceed such pre-8/14/82
investment, such amount is not includable in gross income.,
In addition, to the extent that such amount received or
deemed received does not exceed the sum of (a) such
pre-8/14/82 investment and (b) the "income on the contract"
attributable thereto, such amount is not subject to the 10%
penalty tax. In all other respects, amounts received or
deemed received from such post-exchange Contracts are
generally subject to the rules described in this
subparagraph 3.
f. REQUIRED DISTRIBUTIONS
i. Death of Contract Owner or Primary Annuitant
Subject to the alternative election or spouse
beneficiary provisions in ii or iii below:
1. If any Contract Owner dies on or after the
Annuity Commencement Date and before the
entire interest in the Contract has been
distributed, the remaining portion of such
interest shall be distributed at least as
rapidly as under the method of distribution
being used as of the date of such death;
2. If any Contract Owner dies before the Annuity
Commencement Date, the entire interest in the
Contract will be distributed within 5 years
after such death; and
3. If the Contract Owner is not an individual,
then for purposes of 1. or 2. above, the
primary annuitant under the Contract shall be
treated as the Contract Owner, and any change
in the primary annuitant shall be treated as
the death of the Contract Owner. The primary
annuitant is the individual, the events in
the life of whom are of primary importance in
affecting the timing or amount of the payout
under the Contract.
ii. Alternative Election to Satisfy Distribution
Requirements
<PAGE>
48
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
<PAGE>
49
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.
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, will 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
did not provide guidance regarding investor control, and as
of the date of this prospectus, no other such guidance has
been issued. Further, Hartford 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
<PAGE>
50
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. A
recipient may elect not to have income taxes withheld or
have income taxes withheld at a different rate by providing
a completed election form. Election forms will be provided
at the time distributions are requested.
E. GENERAL PROVISIONS AFFECTING QUALIFIED RETIREMENT PLANS
The Contract may be used for a number of qualified retirement plans.
If the Contract is being purchased with respect to some form of
qualified retirement plan, please refer to Appendix I commencing on
page 54 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 adviser regarding U.S., state, and
foreign taxation with respect to an annuity purchase.
<PAGE>
51
MISCELLANEOUS
What are my voting rights?
Hartford is the legal owner of all Fund shares held in the Separate
Account. As the owner, HL has the right to vote at the Funds' shareholder
meetings. However, to the extent required by federal securities laws or
regulations, 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 portion 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.
Hartford will notify you of any Fund shareholders' meeting if the shares
held for your account may be voted at such meetings. Hartford will also
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.
Will other Contracts be participating in the Separate Account?
In addition to the Contracts described in this Prospectus, it is
contemplated that other forms of group or individual Variable Annuities may
be sold providing benefits which vary in accordance with the investment
experience of the Separate Account.
How are the Contracts sold?
<PAGE>
52
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 that of Hartford.
The securities will be sold by salesperson of HSD who represent Hartford as
insurance and variable annuity agents and who are registered
representatives of Broker-Dealers who have entered into distribution
agreements with HSD.
HSD is registered with the Commission under the Securities Exchange Act of
1934 as a Broker-Dealer and is a member of the National Association of
Securities Dealers, Inc.
Commissions will be paid by Hartford and will not be more than 6% of
Premium Payments.
From time to time, Hartford may pay or permit other promotional incentives,
in cash or credit or other compensation.
Broker-dealers or financial institutions are compensated according to a
schedule set forth by HSD and any applicable rules or regulations for
variable insurance compensation. Compensation is generally based on premium
payments made by policyholders or contract owners. This compensation is
usually paid from the sales charges described in this Prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or
other services provided. HSD, its affiliates or Hartford may also make
compensation arrangements with certain broker-dealers or financial
institutions based on total sales by the broker-dealer or financial
institution of insurance products. These payments, which may be different
for different broker-dealers or financial institutions, will be made by
HSD, its affiliates or Hartford out of their own assets and will not effect
the amounts paid by the policyholders or contract owners to purchase, hold
or surrender variable insurance products.
Who is the custodian of the Separate Account's assets?
The assets of the Separate Account are held by Hartford under a safekeeping
arrangement.
Are there any material legal proceedings affecting the Separate Account?
There are no material legal proceedings pending to which the Separate
Account is a party.
Who has passed on the legal matters affecting the Separate Account?
Counsel with respect to federal laws and regulations applicable to the
issue and sale of the Contracts and with respect to Connecticut law is
Lynda Godkin, Senior Vice President, General Counsel and Corporate
Secretary, Hartford Life and Annuity Insurance Company, P. O. Box 2999,
Hartford, CT 06104-2999.
Are you relying on any experts as to any portion of this Prospectus?
The audited financial statements 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 the report
on the statutory-basis financial statements of Hartford Life and Annuity
Insurance
<PAGE>
53
Company (formerly 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, and are not presented in accordance with generally
accepted accounting principles. The principal business address of Arthur
Andersen LLP is One Financial Plaza, Hartford, Connecticut 06103.
How may I get additional information?
Inquiries will be answered by calling your representative or by writing:
Hartford Life and Annuity Insurance Company
Attn: Individual Annuity Operations
P. O. Box 5085
Hartford, CT 06102-5085
Telephone: (800) 862-6668
<PAGE>
54
APPENDIX I
INFORMATION REGARDING TAX-QUALIFIED 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 applicable limits, distributions prior to age 59 1/2 (subject to
certain exceptions), distributions which do not conform to applicable
commencement and minimum distribution rules, and certain other transactions with
respect to tax-qualified plans. Therefore, this summary does not attempt to
provide more than general information about the tax rules associated with use of
a Contract by a tax-qualified retirement plan. Contract owners, plan
participants and beneficiaries are cautioned that the rights and benefits of any
person to benefits may be controlled by the terms and conditions of the
tax-qualified retirement plan itself, regardless of the terms and conditions of
a Contract, but that Hartford is not bound by the terms and conditions of such
plans to the extent such terms conflict with a Contract, unless Hartford
specifically consents to be bound. Additionally, some tax-qualified retirement
plans are subject to distribution and other requirements which are not
incorporated into Hartford's administrative procedures. Contract 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 advisors 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 to participate and the time when distributions must
commence. Employers intending to use these contracts in connection with
tax-qualified pension or profit-sharing 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, as specified in
Section 501(c)(3) of the Code, to purchase annuity contracts, and, subject
to certain limitations, to exclude such contributions from gross income.
Generally, such contributions may not exceed the lesser of $10,000
(indexed) or 20% of an employee=s "includable compensation" for such
employee=s most recent full year of employment, subject to other
adjustments. Special provisions under the Code may allow some employees to
elect a different overall limitation.
<PAGE>
55
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 may not be distributed).
Generally, the above restrictions do not apply to distributions
attributable to cash values or other amounts held under a Section
403(b) contract as of December 31, 1988.
C. Deferred Compensation Plans Under Section 457 Employees and independent
contractors performing services for eligible employers may have
contributions made to an Eligible Deferred Compensation Plan of their
employer in accordance with the employer's plan and Section 457 of the
Code. Section 457 places limitations on contributions to Eligible Deferred
Compensation Plans maintained by a State or other tax-exempt organization.
For these purposes, the term "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 , for
1998, $8,000 (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, 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 Eligible
governmental 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 of a trust does not apply to amounts
under an Eligible
<PAGE>
56
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 taxable 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.
The Contracts may be offered as SIMPLE IRAs in connection with a
SIMPLE IRA plan of an employer. 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 your employer*s SIMPLE
IRA plan. Amounts cannot be rolled over to a SIMPLE IRA from a
qualified plan or a regular IRA. Hartford is a non-designated
financial institution.
Beginning in 1998, the Contracts may be offered as ROTH IRAs under Section
408A of the Code. Contributions to a ROTH IRA are not deductible. Subject
to special limitations, a regular IRA may be converted into a ROTH IRA or a
distribution from a regular IRA may be rolled over to a ROTH IRA. However,
a conversion or a rollover from a regular IRA to a ROTH IRA is not
excludable from gross income. If certain conditions are met, qualified
distributions from a ROTH IRA are tax-free.
E. Federal Tax Penalties and Withholding 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 tax-qualified plan
before the Participant attains age 59 1/2 are generally subject to
an additional penalty tax equal to 10% of the taxable portion of
the distribution. The 10% penalty does
<PAGE>
57
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, a 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 homebuyer 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 discussed 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
generally must 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 beginning date for an
individual who is a five (5) percent owner (as defined in the
Code), or who is the owner of an IRA, is April 1 of the calendar
year following the calendar year in which the individual attains
age 70 1/2. The entire interest of the Participant must be
distributed beginning no later than the required beginning date
over 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
<PAGE>
58
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. 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 10 or more years or for
the life or life expectancy of the participant (or the joint lives or
life expectancies of the participant and beneficiary) are generally
subject to federal income tax withholding as if the recipient were
married claiming three exemptions. The recipient of periodic
distributions may generally elect not to have withholding apply or to
have income taxes withheld at a different rate by providing a
completed election form.
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:
a) the non-taxable portion of the distribution;
b) required minimum distributions; or
c) direct transfer distributions.
Direct transfer distributions are direct payments to an IRA or to
another eligible retirement plan under Code section 401(a)(31).
<PAGE>
59
TABLE OF CONTENTS
TO
STATEMENT OF ADDITIONAL INFORMATION
SECTION
Description of 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>
This form must be completed for all tax-sheltered annuities.
SECTION 403(b)(11) ACKNOWLEDGMENT FORM
The Hartford variable annuity Contract which you have recently purchased is
subject to certain restrictions imposed by the Tax Reform Act of 1986.
Contributions to the Contract after December 31, 1988 and any increases in cash
value after December 31, 1988 may not be distributed to you unless you have:
a. attained age 59 1/2
b. terminated employment
c. died, or
d. become disabled.
Distributions of post December 31, 1988 contributions may also be made if you
have experienced a financial hardship.
Also, there may be a 10% penalty tax for distributions made because of financial
hardship or separation from service.
Also, please be aware that your 403(b) Plan may also offer other financial
alternatives other than the Hartford variable annuity. Please refer to your
Plan.
Please complete the following and return to:
Hartford Life and Annuity Insurance Company
Attn: Individual Annuity Operations
P. O. Box 5085
Hartford, CT 06102-5085
- -----------------------------------------------
Name of Contract Owner/Participant:
Address:
City or Plan/School District:
Date:
Contract No:
Signature:
<PAGE>
To Obtain a Statement of Additional Information, please complete the form below
and mail to:
Hartford Life and Annuity Insurance Company
Attn: Individual Annuity Operations
P. O. Box 5085
Hartford, CT 06102-5085
Please send a Statement of Additional Information for the Director to me at the
following address:
- ----------------------------------------------------
Name
- ----------------------------------------------------
Address
- ----------------------------------------------------
City/State Zip Code
---------------------------
<PAGE>
- 1 -
PART B
<PAGE>
- 2 -
PART B
STATEMENT OF ADDITIONAL INFORMATION
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT ONE
THE DIRECTOR VARIABLE ANNUITY
This Statement of Additional Information is not a Prospectus. The information
contained herein should be read in conjunction with the Prospectus.
To obtain a Prospectus, send a written request to Hartford Life and Annuity
Insurance Company, Attn: Individual Annuity Operations, P.O. Box 5085, Hartford,
Connecticut 06102-5085.
Date of Prospectus: May 1, 1998
Date of Statement of Additional Information: May 1, 1998
33-56790
<PAGE>
- 3 -
TABLE OF CONTENTS
SECTION PAGE NO.
DESCRIPTION OF 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>
- 4 -
DESCRIPTION OF HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
Hartford Life and Annuity Insurance Company 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 and the District of Columbia,
except New York. Effective on January 1, 1998, Hartford's name changed from ITT
Hartford Life and Annuity Insurance Company 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
RATING AGENCY EFFECTIVE RATING BASIS OF RATING
DATE OF
RATING
- --------------------------------------------------------------------------------
A.M. Best and Company, Inc. 9/9/97 A+ Financial soundness and
operating performance.
- --------------------------------------------------------------------------------
Standard & Poor's 1/23/98 AA Claims paying ability
- --------------------------------------------------------------------------------
Duff & Phelps 1/23/98 AA+ Claims paying ability
- --------------------------------------------------------------------------------
INDEPENDENT PUBLIC ACCOUNTANTS
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 the report on the statutory-basis financial
statements of Hartford Life and Annuity Insurance Company (formerly 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, and are not presented in
accordance with generally accepted accounting principles. The principal
business address of Arthur Andersen LLP is One Financial Plaza, Hartford,
Connecticut 06103.
DISTRIBUTION OF CONTRACTS
Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account and
will offer the Contracts on a
<PAGE>
- 5 -
continuous basis.
HSD is a wholly-owned subsidiary of Hartford Life Insurance Company. 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").
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 ae maintained of all purchases and
redemptions of Fund shares held in each of the Sub-Accounts.
CALCULATION OF YIELD AND RETURN
YIELD OF THE MONEY MARKET FUND. As summarized in the Prospectus under the
heading "Performance Related Information," the yield of the 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 share at the beginning of the
period, dividing the net change in account value by the value of the account at
the beginning of the base period to obtain the base period return, and
multiplying the base period return by 365/7 with the resulting yield figure
carried to the nearest hundredth of one percent. Net changes in value of a
hypothetical account will include net investment income of the account (accrued
daily dividends as declared by the underlying funds, less daily expense charges
of the account) for the period, but will not include realized gains or losses or
unrealized appreciation or depreciation on the underlying fund shares.
The 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.
YIELDS OF BOND FUND AND 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
<PAGE>
- 6 -
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 Bond
Fund and 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 Bond Fund and Hartford Mortgage
Securities Fund.
The yield reflects recurring charges on the Separate Account level, including
the annual policy fee.
At any time in the future, yields and total return may be higher or lower than
past yields and there can be no assurance that any historical results will
continue.
The method of calculating yields described above for these Sub-Accounts differs
from the method used by the Sub-Accounts prior to May 1, 1988. The denominator
of the fraction used to calculate yield was previously the average unit value
for the period calculated. That denominator will hereafter be the unit value of
the Sub-Accounts on the last trading day of the period calculated.
CALCULATION OF TOTAL RETURN. As summarized in the Prospectus under the heading
"Performance Related Information", total return is a measure of the change in
value of an investment in a Sub-Account over the period covered. the formula
for total return used herein includes three steps: (1) calculating the value of
the hypothetical initial investment of $1,000 as of the end of the period by
multiplying the total number of units owned at the end of the period by the unit
value per unit on the last trading day of the period by the unit value per unit
on the last trading day of the period; (2) assuming redemption at the end of the
period and deducting any applicable contingent deferred sales charge and (3)
dividing this account value for the hypothetical investor by the initial $1,000
investment and annualizing the result for periods of less than one year. Total
return will be calculated for one year, five years and ten years or some other
relevant periods if a Sub-Account has not been in existence for at least ten
years.
PERFORMANCE COMPARISONS
YIELD AND TOTAL RETURN. Each Sub-Account may from time to time include its
total return in advertisements or in information furnished to present to
prospective shareholders. Each Sub-Account may from time to time include its
yield and total return in advertisements or information furnished to present to
prospective shareholders. Each Sub-Account may from time to time include in
advertisements its total return (and yield in the case of certain Sub-Accounts)
the ranking of those performance figures relative to such figures for groups of
other annuities analyzed by Lipper Analytical Services as having the same
investment objectives.
The total return and yield may also be used to compare the performance of the
Sub-Accounts
<PAGE>
- 7 -
against certain widely acknowledged outside standards or indices for stock and
bond market performance. The Standard & Poor's Composite Index of 500 Stocks
(the "S&P 500") is a market value-weighted and unmanaged index showing the
changes in the aggregate market value of 500 stocks relative to the base period
1941-43. The S&P 500 is composed almost entirely of common stocks of companies
listed on the New York Stock Exchange, although the common stocks of a few
companies listed on the American Stock Exchange or traded over-the-counter are
included. The 500 companies represented include 400 industrial, 60
transportation and 40 financial services concerns. The S&P 500 represents about
80% of the market value of all issues traded on the New York Stock Exchange.
The NASDAQ-OTC Price Index (The "NASDAQ Index") is a market value-weighted and
unmanaged index showing the changes in the aggregate market value of
approximately 3,500 stocks relative to the base measure of 100.00 on February 5,
1971. The NASDAQ Index is composed entirely of common stocks of companies
traded over-the-counter and often through the National Association of Securities
Dealers Automated Quotations ("NASDAQ") system. Only those over-the-counter
stocks having only one market maker or traded on exchanges are excluded.
The Shearson Lehman Government Bond Index (the "SL Government Index") is a
measure of the market value of all public obligations of the U.S. Treasury; all
publicly issued debt of all agencies of the U.S. Government and all
quasi-federal corporations; and all corporate debt guaranteed by the U.S.
Government. Mortgage-backed securities, flower bonds and foreign targeted
issues are not included in the SL Government Index.
The Shearson Lehman Government/Corporate Bond Index (the "SL
Government/Corporate Index") is a measure of the market value of approximately
5,300 bonds with a face value currently in excess of $1.3 trillion. To be
included in the SL Government/Corporate Index, an issue must have amounts
outstanding in excess of $1 million, have at least one year to maturity and be
rated "Baa" or higher ("investment grade") by a nationally recognized rating
agency.
<PAGE>
- --------------------------------------------------------------------------------
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, 1997, 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, 1997, 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 16, 1998
<PAGE>
This page intentionally left blank.
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT ONE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1997
<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 217,551,092
Cost $ 221,691,144
Market Value............................. $228,375,129 -- -- --
Hartford Stock Fund, Inc.
Shares 396,147,047
Cost $1,491,417,347
Market Value............................. -- $2,029,590,860 -- --
HVA Money Market Fund, Inc.
Shares 199,835,317
Cost $ 199,835,317
Market Value............................. -- -- $199,835,317 --
Hartford Advisers Fund, Inc.
Shares 1,415,150,900
Cost $2,778,139,694
Market Value............................. -- -- -- $3,575,726,877
Hartford Capital Appreciation Fund, Inc.
Shares 507,465,622
Cost $1,785,263,721
Market Value............................. -- -- -- --
Hartford Mortgage Securities Fund, Inc.
Shares 74,125,274
Cost $ 79,718,184
Market Value............................. -- -- -- --
Hartford Index Fund, Inc.
Shares 152,035,329
Cost $ 339,334,949
Market Value............................. -- -- -- --
Hartford International Opportunities Fund,
Inc.
Shares 450,125,879
Cost $ 569,737,621
Market Value............................. -- -- -- --
Hartford Dividend and Growth Fund, Inc.
Shares 595,932,484
Cost $ 910,144,241
Market Value............................. -- -- -- --
Hartford International Advisers Fund, Inc.
Shares 123,244,687
Cost $ 142,711,367
Market Value............................. -- -- -- --
Hartford Small Company
Shares 112,112,739
Cost $ 132,155,930
Market Value............................. -- -- -- --
Hartford MidCap Fund
Shares 12,961,072
Cost $ 14,098,467
Market Value............................. -- -- -- --
Due from ITT Hartford Life and Annuity
Insurance Company......................... 636,020 1,508,268 -- 2,506,884
Receivable from fund shares sold........... -- -- 152,504 --
------------ -------------- ------------ --------------
Total Assets............................... 229,011,149 2,031,099,128 199,987,821 3,578,233,761
------------ -------------- ------------ --------------
LIABILITIES:
Due to ITT Hartford Life and Annuity
Insurance Company......................... -- -- 154,247 --
Payable for fund shares purchased.......... 635,827 1,511,603 -- 2,507,219
------------ -------------- ------------ --------------
Total Liabilities.......................... 635,827 1,511,603 154,247 2,507,219
------------ -------------- ------------ --------------
Net Assets (variable annuity contract
liabilities).............................. $228,375,322 $2,029,587,525 $199,833,574 $3,575,726,542
------------ -------------- ------------ --------------
------------ -------------- ------------ --------------
DEFERRED ANNUITY CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by Participants................ 107,758,556 440,556,573 120,947,391 999,829,112
Unit Price................................. $ 2.113753 $ 4.601624 $ 1.650311 $ 3.572368
ANNUITY CONTRACTS IN THE ANNUITY PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by Participants................ 284,022 502,394 141,042 1,111,033
Unit Price................................. $ 2.113753 $ 4.601624 $ 1.650311 $ 3.572368
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ------------ ------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund, Inc.
Shares 217,551,092
Cost $ 221,691,144
Market Value............................. -- -- -- --
Hartford Stock Fund, Inc.
Shares 396,147,047
Cost $1,491,417,347
Market Value............................. -- -- -- --
HVA Money Market Fund, Inc.
Shares 199,835,317
Cost $ 199,835,317
Market Value............................. -- -- -- --
Hartford Advisers Fund, Inc.
Shares 1,415,150,900
Cost $2,778,139,694
Market Value............................. -- -- -- --
Hartford Capital Appreciation Fund, Inc.
Shares 507,465,622
Cost $1,785,263,721
Market Value............................. $2,237,779,780 -- -- --
Hartford Mortgage Securities Fund, Inc.
Shares 74,125,274
Cost $ 79,718,184
Market Value............................. -- $80,335,564 -- --
Hartford Index Fund, Inc.
Shares 152,035,329
Cost $ 339,334,949
Market Value............................. -- -- $437,513,434 --
Hartford International Opportunities Fund,
Inc.
Shares 450,125,879
Cost $ 569,737,621
Market Value............................. -- -- -- $582,668,595
Hartford Dividend and Growth Fund, Inc.
Shares 595,932,484
Cost $ 910,144,241
Market Value............................. -- -- -- --
Hartford International Advisers Fund, Inc.
Shares 123,244,687
Cost $ 142,711,367
Market Value............................. -- -- -- --
Hartford Small Company
Shares 112,112,739
Cost $ 132,155,930
Market Value............................. -- -- -- --
Hartford MidCap Fund
Shares 12,961,072
Cost $ 14,098,467
Market Value............................. -- -- -- --
Due from ITT Hartford Life and Annuity
Insurance Company......................... -- 101,883 392,373 --
Receivable from fund shares sold........... 292,471 -- -- 8,115
----------------- --------------- ------------ ------------------
Total Assets............................... 2,238,072,251 80,437,447 437,905,807 582,676,710
----------------- --------------- ------------ ------------------
LIABILITIES:
Due to ITT Hartford Life and Annuity
Insurance Company......................... 148,468 -- -- 8,660
Payable for fund shares purchased.......... -- 102,528 388,792 --
----------------- --------------- ------------ ------------------
Total Liabilities.......................... 148,468 102,528 388,792 8,660
----------------- --------------- ------------ ------------------
Net Assets (variable annuity contract
liabilities).............................. $2,237,923,783 $80,334,919 $437,517,015 $582,668,050
----------------- --------------- ------------ ------------------
----------------- --------------- ------------ ------------------
DEFERRED ANNUITY CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by Participants................ 461,577,845 38,291,725 117,372,132 396,429,681
Unit Price................................. $ 4.845288 $ 2.097829 $ 3.726058 $ 1.468965
ANNUITY CONTRACTS IN THE ANNUITY PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by Participants................ 298,474 2,588 48,749 222,417
Unit Price................................. $ 4.845288 $ 2.097829 $ 3.726058 $ 1.468965
<CAPTION>
DIVIDEND AND INTERNATIONAL SMALL MIDCAP
GROWTH FUND ADVISERS FUND COMPANY FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund, Inc.
Shares 217,551,092
Cost $ 221,691,144
Market Value............................. -- -- -- --
Hartford Stock Fund, Inc.
Shares 396,147,047
Cost $1,491,417,347
Market Value............................. -- -- -- --
HVA Money Market Fund, Inc.
Shares 199,835,317
Cost $ 199,835,317
Market Value............................. -- -- -- --
Hartford Advisers Fund, Inc.
Shares 1,415,150,900
Cost $2,778,139,694
Market Value............................. -- -- -- --
Hartford Capital Appreciation Fund, Inc.
Shares 507,465,622
Cost $1,785,263,721
Market Value............................. -- -- -- --
Hartford Mortgage Securities Fund, Inc.
Shares 74,125,274
Cost $ 79,718,184
Market Value............................. -- -- -- --
Hartford Index Fund, Inc.
Shares 152,035,329
Cost $ 339,334,949
Market Value............................. -- -- -- --
Hartford International Opportunities Fund,
Inc.
Shares 450,125,879
Cost $ 569,737,621
Market Value............................. -- -- -- --
Hartford Dividend and Growth Fund, Inc.
Shares 595,932,484
Cost $ 910,144,241
Market Value............................. $1,163,455,674 -- -- --
Hartford International Advisers Fund, Inc.
Shares 123,244,687
Cost $ 142,711,367
Market Value............................. -- $144,786,749 -- --
Hartford Small Company
Shares 112,112,739
Cost $ 132,155,930
Market Value............................. -- -- $134,783,169 --
Hartford MidCap Fund
Shares 12,961,072
Cost $ 14,098,467
Market Value............................. -- -- -- $14,738,151
Due from ITT Hartford Life and Annuity
Insurance Company......................... 2,905,020 -- 204,951 95,103
Receivable from fund shares sold........... -- 25,098 -- --
-------------- ------------- ------------- -----------
Total Assets............................... 1,166,360,694 144,811,847 134,988,120 14,833,254
-------------- ------------- ------------- -----------
LIABILITIES:
Due to ITT Hartford Life and Annuity
Insurance Company......................... -- 25,441 -- --
Payable for fund shares purchased.......... 2,905,424 -- 205,938 94,946
-------------- ------------- ------------- -----------
Total Liabilities.......................... 2,905,424 25,441 205,938 94,946
-------------- ------------- ------------- -----------
Net Assets (variable annuity contract
liabilities).............................. $1,163,455,270 $144,786,406 $134,782,182 $14,738,308
-------------- ------------- ------------- -----------
-------------- ------------- ------------- -----------
DEFERRED ANNUITY CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by Participants................ 541,076,428 109,734,605 108,104,289 13,437,161
Unit Price................................. $ 2.149172 $ 1.318862 $ 1.246631 $ 1.096832
ANNUITY CONTRACTS IN THE ANNUITY PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by Participants................ 274,041 46,710 12,853 --
Unit Price................................. $ 2.149172 $ 1.318862 $ 1.246631 $ --
</TABLE>
<PAGE>
SEPARATE ACCOUNT ONE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
DECEMBER 31, 1997
<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.................................. $11,445,297 $ 17,644,351 $10,430,718 $ 71,905,491
EXPENSES:
Mortality and expense undertakings......... (2,221,972) (20,017,591) (2,508,581) (36,850,979)
----------- ------------ ----------- -------------
Net investment income (loss)............. 9,223,325 (2,373,240) 7,922,137 35,054,512
----------- ------------ ----------- -------------
CAPITAL GAINS INCOME......................... -- 62,602,913 -- 107,409,178
----------- ------------ ----------- -------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on security
transactions.............................. 9,814 84,100 -- 1,305
Net unrealized appreciation (depreciation)
of investments during the period.......... 8,361,624 325,437,100 -- 440,215,879
----------- ------------ ----------- -------------
Net gain (loss) on investments........... 8,371,438 325,521,200 -- 440,217,184
----------- ------------ ----------- -------------
Net increase (decrease) in net assets
resulting from operations............... $17,594,763 $385,750,873 $ 7,922,137 $ 582,680,874
----------- ------------ ----------- -------------
----------- ------------ ----------- -------------
</TABLE>
* From inception, July 15, 1997 to December 31, 1997.
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.................................. $ 10,461,911 $4,630,685 $ 4,775,090 $ 5,347,323
EXPENSES:
Mortality and expense undertakings......... (23,085,650) (950,587) (4,129,538) (7,060,305)
----------------- --------------- ----------- ------------------
Net investment income (loss)............. (12,623,739) 3,680,098 645,552 (1,712,982)
----------------- --------------- ----------- ------------------
CAPITAL GAINS INCOME......................... 112,339,947 -- 19,616,096 37,513,752
----------------- --------------- ----------- ------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on security
transactions.............................. (119,550) 58,290 185,916 (68,174)
Net unrealized appreciation (depreciation)
of investments during the period.......... 223,915,112 1,886,382 62,356,292 (45,233,169)
----------------- --------------- ----------- ------------------
Net gain (loss) on investments........... 223,795,562 1,944,672 62,542,208 (45,301,343)
----------------- --------------- ----------- ------------------
Net increase (decrease) in net assets
resulting from operations............... $323,511,770 $5,624,770 $82,803,856 $ (9,500,573)
----------------- --------------- ----------- ------------------
----------------- --------------- ----------- ------------------
<CAPTION>
DIVIDEND AND INTERNATIONAL SMALL MIDCAP
GROWTH FUND ADVISERS FUND COMPANY FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT*
-------------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.................................. $ 15,926,807 $ 3,867,653 $ 61,352 $ 13,070
EXPENSES:
Mortality and expense undertakings......... (10,204,886) (1,395,128) (903,283) (30,019)
-------------- ------------- ------------- -----------
Net investment income (loss)............. 5,721,921 2,472,525 (841,931) (16,949)
-------------- ------------- ------------- -----------
CAPITAL GAINS INCOME......................... 15,828,765 262,472 6,247,370 --
-------------- ------------- ------------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on security
transactions.............................. (12,819) 3,758 (1,756) 414
Net unrealized appreciation (depreciation)
of investments during the period.......... 182,031,024 383,378 2,416,430 639,685
-------------- ------------- ------------- -----------
Net gain (loss) on investments........... 182,018,205 387,136 2,414,674 640,099
-------------- ------------- ------------- -----------
Net increase (decrease) in net assets
resulting from operations............... $ 203,568,891 $ 3,122,133 $ 7,820,113 $623,150
-------------- ------------- ------------- -----------
-------------- ------------- ------------- -----------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT ONE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
DECEMBER 31, 1997
<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)............... $ 9,223,325 $ (2,373,240) $ 7,922,137 $ 35,054,512
Capital gains income....................... -- 62,602,913 -- 107,409,178
Net realized gain (loss) on security
transactions.............................. 9,814 84,100 -- 1,305
Net unrealized appreciation (depreciation)
of investments during the period.......... 8,361,624 325,437,100 -- 440,215,879
------------ -------------- ------------ --------------
Net increase (decrease) in net assets
resulting from operations................. 17,594,763 385,750,873 7,922,137 582,680,874
------------ -------------- ------------ --------------
UNIT TRANSACTIONS:
Purchases.................................. 48,533,601 430,730,097 154,121,029 650,294,881
Net transfers.............................. 24,454,452 137,640,435 (105,053,239) 185,059,734
Surrenders................................. (9,332,737) (52,393,369) (32,455,810) (124,493,708)
Net annuity transactions................... 563,032 1,508,388 110,035 1,689,593
------------ -------------- ------------ --------------
Net increase in net assets resulting from
unit transactions......................... 64,218,348 517,485,551 16,722,015 712,550,500
------------ -------------- ------------ --------------
Total increase in net assets............... 81,813,111 903,236,424 24,644,152 1,295,231,374
NET ASSETS:
Beginning of period........................ 146,562,211 1,126,351,101 175,189,422 2,280,495,168
------------ -------------- ------------ --------------
End of period.............................. $228,375,322 $2,029,587,525 $199,833,574 $3,575,726,542
------------ -------------- ------------ --------------
------------ -------------- ------------ --------------
* From inception, July 15, 1997
to December 31, 1997.
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 (depreciation) appreciation
of investments during the period.......... (2,390,902) 143,331,264 -- 201,866,663
----------- ------------- ----------- -------------
Net increase 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 in net assets resulting from
unit transactions......................... 51,880,058 416,973,796 68,093,483 637,270,459
----------- ------------- ----------- -------------
Total increase 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.
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ------------ ------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............... $ (12,623,739) $ 3,680,098 $ 645,552 $ (1,712,982)
Capital gains income....................... 112,339,947 -- 19,616,096 37,513,752
Net realized gain (loss) on security
transactions.............................. (119,550) 58,290 185,916 (68,174)
Net unrealized appreciation (depreciation)
of investments during the period.......... 223,915,112 1,886,382 62,356,292 (45,233,169)
----------------- --------------- ------------ ------------------
Net increase (decrease) in net assets
resulting from operations................. 323,511,770 5,624,770 82,803,856 (9,500,573)
----------------- --------------- ------------ ------------------
UNIT TRANSACTIONS:
Purchases.................................. 444,618,125 11,734,160 106,908,193 103,316,180
Net transfers.............................. 111,621,605 (5,624,261) 38,286,952 21,889,359
Surrenders................................. (60,594,326) (6,044,100) (9,935,604) (18,041,766)
Net annuity transactions................... 689,458 5,419 151,370 39,532
----------------- --------------- ------------ ------------------
Net increase in net assets resulting from
unit transactions......................... 496,334,862 71,218 135,410,911 107,203,305
----------------- --------------- ------------ ------------------
Total increase in net assets............... 819,846,632 5,695,988 218,214,767 97,702,732
NET ASSETS:
Beginning of period........................ 1,418,077,151 74,638,931 219,302,248 484,965,318
----------------- --------------- ------------ ------------------
End of period.............................. $2,237,923,783 $80,334,919 $437,517,015 $582,668,050
----------------- --------------- ------------ ------------------
----------------- --------------- ------------ ------------------
* From inception, July 15, 1997
to December 31, 1997.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
CAPITAL MORTGAGE INTERNATIONAL
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND
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
Capital gains income....................... 50,334,274 -- 1,690,389 8,880,986
Net realized gain (loss) on security
transactions.............................. (93,060) 11,668 238,066 7,755
Net unrealized (depreciation) appreciation
of investments during the period.......... 142,164,193 (882,583) 25,487,376 31,201,375
------------- ---------- ----------- -----------
Net increase in net assets resulting from
operations . 186,491,663 2,475,521 28,640,670 42,861,648
------------- ---------- ----------- -----------
UNIT TRANSACTIONS:
Purchases.................................. 403,482,054 13,476,913 83,760,185 110,673,155
Net transfers.............................. 129,133,556 2,655,230 33,248,800 47,078,167
Surrenders................................. (30,210,654) (2,722,173) (3,699,700) (11,782,890)
Net annuity transactions................... 288,203 -- 203 81,416
------------- ---------- ----------- -----------
Net increase in net assets resulting from
unit transactions......................... 502,693,159 13,409,970 113,309,488 146,049,848
------------- ---------- ----------- -----------
Total increase in net assets............... 689,184,822 15,885,491 141,950,158 188,911,496
NET ASSETS:
Beginning of period........................ 728,892,329 58,753,440 77,352,090 296,053,822
------------- ---------- ----------- -----------
End of period.............................. $1,418,077,151 $74,638,931 $219,302,248 $484,965,318
------------- ---------- ----------- -----------
------------- ---------- ----------- -----------
<CAPTION>
DIVIDEND AND INTERNATIONAL SMALL MIDCAP
GROWTH FUND ADVISERS FUND COMPANY FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT*
-------------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............... $ 5,721,921 $ 2,472,525 $ (841,931) $ (16,949 )
Capital gains income....................... 15,828,765 262,472 6,247,370 --
Net realized gain (loss) on security
transactions.............................. (12,819) 3,758 (1,756) 414
Net unrealized appreciation (depreciation)
of investments during the period.......... 182,031,024 383,378 2,416,430 639,685
-------------- ------------- ------------- -----------
Net increase (decrease) in net assets
resulting from operations................. 203,568,891 3,122,133 7,820,113 623,150
-------------- ------------- ------------- -----------
UNIT TRANSACTIONS:
Purchases.................................. 344,818,126 53,015,752 59,848,160 7,620,550
Net transfers.............................. 142,586,883 20,439,056 42,807,593 6,536,068
Surrenders................................. (25,953,097) (3,671,030) (1,723,390) (41,460 )
Net annuity transactions................... 343,961 63,436 14,177 --
-------------- ------------- ------------- -----------
Net increase in net assets resulting from
unit transactions......................... 461,795,873 69,847,214 100,946,540 14,115,158
-------------- ------------- ------------- -----------
Total increase in net assets............... 665,364,764 72,969,347 108,766,653 14,738,308
NET ASSETS:
Beginning of period........................ 498,090,506 71,817,059 26,015,529 --
-------------- ------------- ------------- -----------
End of period.............................. $1,163,455,270 $ 144,786,406 $134,782,182 $14,738,308
-------------- ------------- ------------- -----------
-------------- ------------- ------------- -----------
* From inception, July 15, 1997
to December 31, 1997.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
DIVIDEND AND INTERNATIONAL SMALL
GROWTH FUND ADVISERS FUND COMPANY FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT**
------------- ----------- -----------
OPERATIONS:
Net investment income (loss)............... $ 3,729,650 $ 1,500,255 $ (33,591)
Capital gains income....................... 3,429,737 1,446,895 --
Net realized gain (loss) on security
transactions.............................. (2,773) (563) 1,014
Net unrealized (depreciation) appreciation
of investments during the period.......... 53,771,055 1,479,032 210,808
------------- ----------- -----------
Net increase in net assets resulting from
operations . 60,927,669 4,425,619 178,231
------------- ----------- -----------
UNIT TRANSACTIONS:
Purchases.................................. 205,512,019 37,280,366 14,704,067
Net transfers.............................. 101,413,217 19,003,957 11,169,302
Surrenders................................. (7,316,597) (1,178,598) (36,071)
Net annuity transactions................... 146,210 31 --
------------- ----------- -----------
Net increase in net assets resulting from
unit transactions......................... 299,754,849 55,105,756 25,837,298
------------- ----------- -----------
Total increase in net assets............... 360,682,518 59,531,375 26,015,529
NET ASSETS:
Beginning of period........................ 137,407,988 12,285,684 --
------------- ----------- -----------
End of period.............................. $ 498,090,506 $ 71,817,059 $ 26,015,529
------------- ----------- -----------
------------- ----------- -----------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT ONE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
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. 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 December 31, 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.
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of ITT Hartford Life
and Annuity Insurance Company:
We have audited the accompanying statutory 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,
1997 and 1996, and the related statutory statements of income, changes in
capital and surplus, and cash flows for each of the three years in the period
ended December 31, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
statutory 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 financial
statements. When statutory 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 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, 1997 and 1996, and the
results of its operations and its cash flows for each of three years in the
period ended December 31, 1997.
However, in our opinion, the statutory financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of December 31, 1997 and 1996, and the results of operations and its cash
flows for each of the three years in the period ended December 31, 1997 in
conformity with statutory accounting practices as described in Note 1.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 27, 1998
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
---------- ---------- ----------
($000)
<S> <C> <C> <C>
Revenues
Premiums and annuity considerations............. $ 296,645 $ 250,244 $ 165,792
Annuity and other fund deposits................. 1,981,246 1,897,347 1,087,661
Net investment income........................... 102,285 98,441 78,787
Commissions and expense allowances on
reinsurance ceded.............................. 396,921 370,637 183,380
Reserve adjustment on reinsurance ceded......... 3,672,076 3,864,395 1,879,785
Other revenues.................................. 288,632 161,906 140,796
---------- ---------- ----------
Total Revenues................................ 6,737,805 6,642,970 3,536,201
---------- ---------- ----------
Benefits and Expenses
Death and annuity benefits...................... 66,013 60,111 53,029
Surrenders and other benefit payments........... 461,733 276,720 221,392
Commissions and other expenses.................. 564,240 491,720 236,202
Increase in aggregate reserves for future
benefits....................................... 33,213 27,351 94,253
Increase in liability for premium and other
deposit funds.................................. 640,006 207,156 460,124
Net transfers to Separate Accounts.............. 4,914,980 5,492,964 2,414,669
---------- ---------- ----------
Total Benefits and Expenses................... 6,680,185 6,556,022 3,479,669
---------- ---------- ----------
Net Gain from Operations Before Federal Income
Taxes............................................ 57,620 86,948 56,532
Federal income tax (benefit) expense............ (14,878) 19,360 14,048
---------- ---------- ----------
Net Gain from Operations.......................... 72,498 67,588 42,484
Net realized capital gains, after tax........... 1,544 407 374
---------- ---------- ----------
Net Income........................................ $ 74,042 $ 67,995 $ 42,858
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------
1997 1996
----------- -----------
($000)
<S> <C> <C>
Assets
Bonds........................................... $ 1,501,311 $ 1,268,480
Common stocks................................... 64,408 44,996
Mortgage loans.................................. 85,103 0
Policy loans.................................... 36,533 28,853
Cash and short-term investments................. 309,432 176,830
Other invested assets........................... 20,942 2,858
----------- -----------
Total cash and invested assets................ 2,017,729 1,522,017
----------- -----------
Investment income due and accrued............... 15,878 14,555
Premium balances receivable..................... 389 373
Receivables from affiliates..................... 1,269 257
Other assets.................................... 22,788 19,099
Separate Account assets......................... 23,208,728 14,619,324
----------- -----------
Total Assets.................................. $25,266,781 $16,175,625
----------- -----------
----------- -----------
Liabilities
Aggregate reserves for future benefits.......... $ 605,183 $ 571,970
Policy and contract claims...................... 5,672 6,806
Liability for premium and other deposit funds... 1,795,149 1,155,143
Asset valuation reserve......................... 13,670 7,442
Payable to affiliates........................... 20,972 10,022
Other liabilities............................... (754,393) (498,195)
Separate Account liabilities.................... 23,208,728 14,619,324
----------- -----------
Total liabilities............................. 24,894,981 15,872,512
----------- -----------
Capital and Surplus
Common stock.................................... 2,500 2,500
Gross paid-in and contributed surplus........... 226,043 226,043
Unassigned funds................................ 143,257 74,570
----------- -----------
Total capital and surplus..................... 371,800 303,113
----------- -----------
Total liabilities, capital and surplus.......... $25,266,781 $16,175,625
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1997 1996 1995
--------- --------- ---------
($000)
<S> <C> <C> <C>
Capital and surplus -- beginning of year $ 303,113 $ 238,334 $ 91,285
--------- --------- ---------
Net income...................................... 74,042 67,995 42,858
Change in net unrealized capital gains (losses)
on common stocks and other invested assets..... 2,186 (5,171) 1,709
Change in asset valuation reserve............... (6,228) 568 (5,588)
Change in non-admitted assets................... (1,313) 1,387 (1,944)
Aggregate write-ins for surplus (See Note 3).... 0 0 8,080
Dividends to shareholder........................ 0 0 (10,000)
Paid-in surplus................................. 0 0 111,934
--------- --------- ---------
Change in capital and surplus................... 68,687 64,779 147,049
--------- --------- ---------
Capital and surplus -- end of year.............. $ 371,800 $ 303,113 $ 238,334
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995
----------- ----------- -----------
($000)
<S> <C> <C> <C>
Operations
Premiums, annuity considerations and fund
deposits....................................... $ 2,277,874 $ 2,147,627 $ 1,253,511
Investment income............................... 101,991 106,178 78,328
Other income.................................... 4,381,718 4,396,892 2,253,466
----------- ----------- -----------
Total income.................................. 6,761,583 6,650,697 3,585,305
----------- ----------- -----------
Benefits Paid................................... 529,733 338,998 277,965
Federal income taxes (received) paid on
operations..................................... (14,499) 28,857 208,423
Other expenses.................................. 5,754,725 6,254,139 2,664,385
----------- ----------- -----------
Total benefits and expenses..................... 6,269,959 6,621,994 3,150,773
----------- ----------- -----------
Net cash from operations........................ 491,624 28,703 434,532
----------- ----------- -----------
Proceeds from Investments
Bonds........................................... 614,413 871,019 287,941
Common stocks................................... 11,481 72,100 52
Other........................................... 152 10 28
----------- ----------- -----------
Net investment proceeds....................... 626,046 943,129 288,021
----------- ----------- -----------
Taxes Paid on Capital Gains....................... 0 936 226
Paid-In Surplus................................... 0 0 111,934
Other Cash Provided............................. 0 41,998 28,199
----------- ----------- -----------
Total Proceeds................................ 1,117,670 1,012,894 862,460
----------- ----------- -----------
Cost of Investments Acquired
Bonds........................................... 848,267 914,523 720,521
Common stocks................................... 28,302 82,495 35,794
Mortgage loans.................................. 85,103 0 0
Miscellaneous applications...................... 18,548 130 2,146
----------- ----------- -----------
Total Investments Acquired.................... 980,220 997,148 758,461
----------- ----------- -----------
Other Cash Applied
Dividends paid to stockholders.................. 0 0 10,000
Other........................................... 4,848 12,220 5,007
----------- ----------- -----------
Total other cash applied...................... 4,848 12,220 15,007
----------- ----------- -----------
Total applications.......................... 985,068 1,009,368 773,468
----------- ----------- -----------
Net Change in Cash and Short-Term Investments..... 132,602 3,526 88,992
Cash and Short-Term Investments, Beginning of
Year........................................... 176,830 173,304 84,312
----------- ----------- -----------
Cash and Short-Term Investments, End of Year.... $ 309,432 $ 176,830 $ 173,304
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these statutory financial
statements.
<PAGE>
- --------------------------------------------------------------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO STATUTORY FINANCIAL STATEMENTS
DECEMBER 31, 1997
(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. ("HLI"), which is majority owned by The Hartford Financial
Services Group, Inc. ("The Hartford"), formerly a wholly owned subsidiary of ITT
Corporation ("ITT"). On February 10, 1997, HLI filed a registration statement,
as amended, with the Securities and Exchange Commission relating to the initial
public offering of HLI Class A Common Stock (the "Offering"). Pursuant to the
Offering on May 22, 1997, HLI sold to the public 26 million shares, representing
18.6% of the equity ownership of HLI. 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 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. The most significant estimates are
for determining the liability for aggregate reserves for future benefits and the
liability for premium and other deposit funds. Although some variability is
inherent in these estimates, management believes the amounts provided are
adequate.
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, for universal life policies and
investment products, generally, 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 recorded upon adoption of the applicable standard;
<PAGE>
- --------------------------------------------------------------------------------
(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 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 bonds were classified on a GAAP basis
as "available-for-sale" and accordingly, those investments and common stocks
were reflected at fair value with the corresponding impact included as a
component of Stockholder's Equity designated as "Net unrealized capital
gains (losses) on securities net of tax". For statutory reporting purposes,
Change in Net Unrealized Capital Gains (Losses) on Common Stocks and Other
Invested Assets includes the change in unrealized gains (losses) 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, 1997, 1996 and 1995, the
significant differences between statutory and GAAP basis net income and capital
and surplus for the Company are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------ ---------- ----------
<S> <C> <C> <C>
GAAP Net Income............... $ 58,050 $ 41,202 $ 38,821
Amortization and
deferral of policy
acquisition costs............ (345,658) (341,572) (174,341)
Change in unearned revenue
reserve...................... 4,641 55,504 32,300
Deferred taxes................ 47,113 2,090 2,801
Separate accounts............. 282,818 306,978 146,635
Other, net.................... 27,078 3,793 (3,358)
------------ ---------- ----------
Statutory Net Income.......... $ 74,042 $ 67,995 $ 42,858
------------ ---------- ----------
------------ ---------- ----------
<CAPTION>
1997 1996 1995
------------ ---------- ----------
<S> <C> <C> <C>
GAAP Capital and
Surplus...................... $ 570,469 $ 503,887 $ 455,541
Deferred policy acquisition
costs........................ (1,283,771) (938,114) (596,542)
Unearned revenue reserve...... 134,789 130,148 74,644
Deferred taxes................ 64,522 12,823 1,493
Separate accounts............. 923,040 640,101 333,123
Asset valuation reserve....... (13,670) (7,442) (8,010)
Unrealized gains (losses) on
bonds........................ 13,943 5,112 (1,696)
Adjustment relating to Lyndon
contribution (see Note 3).... (41,277) (41,277) (41,277)
Other, net.................... 3,755 (2,125) 21,058
------------ ---------- ----------
Statutory Capital and
Surplus...................... $ 371,800 $ 303,113 $ 238,334
------------ ---------- ----------
------------ ---------- ----------
</TABLE>
AGGREGATE RESERVES FOR FUTURE BENEFITS AND LIABILITY 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 6%. 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 Statements of
Income.
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 fair value with the current year change in the
difference from cost reflected in surplus. Other invested assets are generally
recorded at fair value.
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 increased by $6,228 in 1997,
decreased by $568 in 1996 and increased by $5,588 in 1995. Additionally, the
Interest Maintenance Reserve
<PAGE>
- --------------------------------------------------------------------------------
("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 Statements of Income. Realized investment gains and losses are
determined on a specific identification basis. The amount of net capital losses
reclassified from the IMR was $719 in 1997 and the amount of net capital gains
reclassified was $1,413 and $39 in 1996 and 1995, respectively. The amount of
income amortized was $85, $392 and $256 in 1997, 1996 and 1995, respectively.
OTHER LIABILITIES
The amount reflected in other liabilities includes a receivable from the
separate accounts of $923 million and $640 million as of December 31, 1997 and
1996, respectively. The balances are classified in accordance with NAIC
accounting practices.
MORTGAGE LOANS
Mortgage loans, carried at cost, which approximates fair value, include
investments in assets backed by mortgage loan pools.
2. INVESTMENTS:
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- --------
<S> <C> <C> <C>
Interest income from bonds and
short-term investments....... $100,475 $89,940 $ 76,100
Interest income from policy
loans........................ 1,958 1,846 1,504
Interest and dividends from
other investments............ 1,005 7,864 2,288
-------- ------- --------
Gross investment income....... 103,438 99,650 79,892
Less: investment expenses..... 1,153 1,209 1,105
-------- ------- --------
Net investment income......... $102,285 $98,441 $ 78,787
-------- ------- --------
-------- ------- --------
</TABLE>
(B) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON COMMON STOCKS
<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- --------
<S> <C> <C> <C>
Gross unrealized capital gains at
end of year........................ $ 537 $ 713 $ 1,724
Gross unrealized capital losses at
end of year........................ (1,820) (4,160) 0
-------- ------- --------
Net unrealized capital (losses)
gains.............................. (1,283) (3,447) 1,724
Balance at beginning of year........ (3,447) 1,724 15
-------- ------- --------
Change in net unrealized capital
gains (losses) on common stocks.... $ 2,164 $(5,171) $ 1,709
-------- ------- --------
-------- ------- --------
</TABLE>
(C) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON BONDS AND SHORT-TERM
INVESTMENTS
<TABLE>
<CAPTION>
1997 1996 1995
------- -------- --------
<S> <C> <C> <C>
Gross unrealized capital gains at
end of year........................ $23,357 $ 11,821 $ 22,251
Gross unrealized capital losses at
end of year........................ (1,906) (3,842) (1,374)
------- -------- --------
Net unrealized capital gains........ 21,451 7,979 20,877
Balance at beginning of year........ 7,979 20,877 33,732
------- -------- --------
Change in net unrealized capital
gains (losses) on bonds and
short-term investments............. $13,472 $(12,898) $ 54,609
------- -------- --------
------- -------- --------
</TABLE>
(D) COMPONENTS OF NET REALIZED CAPITAL GAINS
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- ------
<S> <C> <C> <C>
Bonds and short-term investments......... $ (120) $ 2,756 $ 56
Common stocks............................ 0 0 52
Real estate and other.................... 114 0 0
------- ------- ------
Realized capital (losses) gains.......... (6) 2,756 208
Capital gains (benefit) tax.............. (831) 936 (205)
------- ------- ------
Net realized capital gains, after tax.... 825 1,820 413
Less: IMR capital (losses) gains......... (719) 1,413 39
------- ------- ------
Net realized capital gains............... $ 1,544 $ 407 $ 374
------- ------- ------
------- ------- ------
</TABLE>
(E) OFF-BALANCE SHEET INVESTMENTS
The Company had no significant financial instruments with off-balance sheet
risk as of December 31, 1997 and 1996.
(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.
<PAGE>
- --------------------------------------------------------------------------------
(G) BONDS, SHORT-TERM INVESTMENTS AND COMMON STOCKS
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. government and government agencies and
authorities:
Guaranteed and sponsored................... $ 11,114 $ 55 $ (51) $ 11,118
Guaranteed and sponsored -- asset-backed... 55,506 1,056 (269) 56,293
States, municipalities and political
subdivisions................................ 26,404 329 0 26,733
International governments.................... 7,609 500 0 8,109
Public utilities............................. 73,024 754 (132) 73,646
All other corporate.......................... 517,715 14,110 (704) 531,121
All other corporate -- asset-backed.......... 630,069 5,005 (739) 634,335
Short-term investments....................... 277,330 33 (8) 277,355
Certificates of deposit...................... 93,770 1,515 (3) 95,282
Parents, subsidiaries and affiliates......... 86,100 0 0 86,100
----------- ---------- ---------- -----------
Total bonds and short-term investments....... $ 1,778,641 $23,357 $(1,906) $ 1,800,092
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Common stock -- unaffiliated................. $ 30,307 $ 537 $ 0 $ 30,844
Common stock -- affiliated................... 35,384 0 (1,820) 33,564
----------- ---------- ---------- -----------
Total common stocks.......................... $ 65,691 $ 537 $(1,820) $ 64,408
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
1997 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 0 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 0 (66) 148,028
Certificates of deposit...................... 83,378 563 (110) 83,831
Parents, subsidiaries and affiliates......... 48,100 0 0 48,100
----------- ---------- ---------- -----------
Total bonds and short-term investments....... $ 1,416,574 $11,821 $(3,842) $ 1,424,553
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
1997 COST GAINS LOSSES VALUE
- --------------------------------------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
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>
The amortized cost and estimated fair value of bonds and short-term
investments at December 31, 1997 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>
- --------------------------------------------------------------------------------
over the remaining life of the securities. Expected maturities differ from
contractual maturities reflecting borrowers' rights to call or prepay their
obligations.
<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
MATURITY COST FAIR VALUE
- --------------------------------------------- ---------- -----------
<S> <C> <C>
Due in one year or less...................... $ 424,518 $ 696,203
Due after one year through five years........ 586,980 708,365
Due after five years through ten years....... 451,963 295,896
Due after ten years.......................... 315,180 99,628
---------- -----------
Total...................................... $1,778,641 $ 1,800,092
---------- -----------
---------- -----------
</TABLE>
Proceeds from sales of investments in bonds and short-term investments
during 1997, 1996 and 1995 were $367,626, $668,078 and $313,961, respectively,
resulting in gross realized gains of $964, $3,675 and $1,419, respectively, and
gross realized losses of $1,084, $919 and $1,263, 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>
1997 1996
------------------ ------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
-------- ------- -------- -------
<S> <C> <C> <C> <C>
ASSETS
Bonds and short-term investments........... $1,778 $ 1,800 $1,417 $ 1,425
Common stocks.............................. 64 64 45 45
Policy loans............................... 37 37 29 29
Mortgage loans............................. 85 85 0 0
Other invested assets...................... 21 21 3 3
LIABILITIES
Liabilities on investment contracts........ $1,911 $ 1,835 $1,245 $ 1,191
</TABLE>
The carrying amounts for policy loans approximates fair value. The fair
value of liabilities on investment contracts 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. The Company has also invested in bonds
of its subsidiaries, Hartford Financial Services Corporation and HL Investment
Advisors, Inc., and common stock of its subsidiary, ITT Hartford Life, LTD.
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 HLI, 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 (received) paid by the Company were $(14,499), $29,792 and
$215,921 in 1997, 1996 and 1995, respectively. The effective tax rate was (26)%,
22% and 25% in 1997, 1996 and 1995, respectively. The following schedule
provides a reconciliation of the tax provision at the U.S. Federal Statutory
rate to Federal income tax (benefit) expense (in millions).
<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Tax provision at U.S. Federal statutory
rate........................................ $ 20 $ 30 $ 20
Tax deferred acquisition costs............... 25 27 8
Statutory to tax reserve differences......... 1 0 3
Unrealized gain on separate accounts......... (44) (21) (13)
Investments and other........................ (17) (17) (4)
----- ----- -----
Federal income tax (benefit) expense......... $ (15) $ 19 $ 14
----- ----- -----
----- ----- -----
</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 1997 or
1996. 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 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
<PAGE>
- --------------------------------------------------------------------------------
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
$265, $358, and $1,034 in 1997, 1996 and 1995, 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 1997, 1996 and 1995.
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 8.5% for 1997, 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
1997, 1996 and 1995.
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 1997, 1996 and 1995.
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>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Direct premiums................... $266,427 $226,612 $159,918
Premiums assumed.................. 51,630 33,817 13,299
Premiums ceded.................... (21,412) (10,185) (7,425)
-------- -------- --------
Premiums and annuity
considerations................... $296,645 $250,244 $165,792
-------- -------- --------
-------- -------- --------
</TABLE>
The Company cedes to RGA Reinsurance Company, on a modified coinsurance
basis, 80% of the variable annuity business written since 1994.
8. SEPARATE ACCOUNTS:
The Company maintains separate account assets and liabilities totaling $23.2
billion and $14.6 billion at December 31, 1997 and 1996, 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 $252 million, $144
million and $72 million in 1997, 1996 and 1995, respectively, and are recorded
as a component of other revenues on the Statutory Statements of Income.
9. COMMITMENTS AND CONTINGENCIES:
As of December 31, 1997 and 1996, 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 $1,544, $1,262 and $1,684 in 1997, 1996 and 1995,
respectively. ILA incurred guaranteed fund expense of $548 in 1997 and 1996 and
$0 in 1995.
<PAGE>
PART C
<PAGE>
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) All financial statements are included in Part A and Part B of the
Registration Statement.
(b) (1) Resolution of the Board of Directors of the Hartford Life and
Annuity Insurance Company ("Hartford") authorizing the
establishment of the Separate Account.(1)
(2) Not applicable.
(3) (a) Principal Underwriter Agreement.(2)
(b) Form of Dealer Agreement.(2)
(4) Form of Individual Flexible Premium Variable Annuity Contract.(1)
(5) Form of Application.(2)
(6) (a) Certificate of Incorporation of Hartford.
(6) (b) Bylaws of Hartford.(2)
(7) Not applicable.
(8) Form of Share Purchase Agreement by the Registrant and Woodward
Variable Annuity Fund.(1)
(9) Opinion and Consent of Lynda Godkin, Senior Vice President,
General Counsel & Corporate Secretary.
(10) Consent of Arthur Andersen LLP, Independent Public Accountants.
(11) No financial statements are omitted.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
- ------------------------------
(1) Incorporated by reference to Post-Effective Amendment No. 1, to the
Registration Statement File No. 33-86330, dated May 1, 1995.
(2) Incorporated by reference to Post-Effective Amendment No. 2, to the
Registration Statement File No. 33-86330, dated May 1, 1996.
<PAGE>
(15) Copy of Power of Attorney.
(16) Organizational Chart.
Item 25. Directors and Officers of the Depositor
------------------------------------------------------------------------------
NAME, AGE POSITION WITH HARTFORD
------------------------------------------------------------------------------
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
------------------------------------------------------------------------------
David T. Foy Vice President
------------------------------------------------------------------------------
J. Richard Garrett Vice President and Assistant Treasurer
------------------------------------------------------------------------------
Donald J. Gillette Vice President
------------------------------------------------------------------------------
John P. Ginnetti Executive Vice President
------------------------------------------------------------------------------
William A. Godfrey, III Senior Vice President
------------------------------------------------------------------------------
Lynda Godkin Senior Vice President, General Counsel, and
Corporate Secretary, Director*
------------------------------------------------------------------------------
Lois W. Grady Senior Vice President
------------------------------------------------------------------------------
Christopher Graham Vice President
------------------------------------------------------------------------------
Mark E. Hunt Vice President
------------------------------------------------------------------------------
Stephen T. Joyce Vice President
------------------------------------------------------------------------------
Michael D. Keeler Vice President
------------------------------------------------------------------------------
Robert A. Kerzner Senior Vice President
------------------------------------------------------------------------------
David N. Levenson Vice President
------------------------------------------------------------------------------
William B. Malchodi, Jr. Vice President
------------------------------------------------------------------------------
Thomas M. Marra Executive Vice President and Director,
Individual Life and Annuity Division, Director*
------------------------------------------------------------------------------
<PAGE>
-3-
------------------------------------------------------------------------------
NAME, AGE POSITION WITH HARTFORD
------------------------------------------------------------------------------
Steven L. Matthiesen Vice President
------------------------------------------------------------------------------
C. Michael O'Halloran Vice President
------------------------------------------------------------------------------
Daniel E. O'Sullivan 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*
------------------------------------------------------------------------------
Raymond P. Welnicki Senior Vice President
------------------------------------------------------------------------------
Walter C. Welsh Senior Vice President
------------------------------------------------------------------------------
Lizabeth H. Zlatkus Senior Vice President
------------------------------------------------------------------------------
David M. Znamierowski Senior Vice President, Director*
------------------------------------------------------------------------------
Unless otherwise indicated, the principal business address of each the
above individuals is P.O. Box 2999, Hartford, CT 06104-2999.
*Denotes date of election to 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 February 28, 1998 there were 38,864 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.
<PAGE>
-4-
Gen. Stat. Section 33-771(a). 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 VIII, Section 2 of the Registrant's bylaws, the Registrant must
indemnify both directors and officers of the Registrant who are parties or
threatened to be parties to a legal proceeding by reason of his being or having
been a director or officer of the Registrant for any expenses 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. Unless otherwise mandated by a
court, no indemnification shall be made if such officer or director is adjudged
to be liable for negligence or misconduct in the performance of his duty to the
Registrant.
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.
<PAGE>
-5-
Item 29. Principal Underwriters
(a) HSD acts as principal underwriter for the following investment
companies:
Hartford Life Insurance Company - Separate Account One
Hartford Life Insurance Company - Separate Account Two
Hartford Life Insurance Company - Separate Account Two (DC Variable
Account I)
Hartford Life Insurance Company - Separate Account Two (DC Variable
Account II)
Hartford Life Insurance Company - Separate Account Two (QP Variable
Account)
Hartford Life Insurance Company - Separate Account Two (Variable
Account "A")
Hartford Life Insurance Company - Separate Account Two (NQ Variable
Account)
Hartford Life Insurance Company - Putnam Capital Manager Trust
Separate Account
Hartford Life Insurance Company - Separate Account Three
Hartford Life Insurance Company - Separate Account Five
Hartford Life and Annuity Insurance Company - Separate Account One
Hartford Life and Annuity Insurance Company - Putnam Capital Manager
Trust
Separate Account Two
Hartford Life and Annuity Insurance Company - Separate Account Three
Hartford Life and Annuity Insurance Company - Separate Account Five
Hartford Life and Annuity Insurance Company - Separate Account Six
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 Financial Officer,
Director
John P. Ginnetti Executive Vice President, Director
Thomas M. Marra Executive Vice President, Director
Lynda Godkin Senior Vice President, General Counsel &
Corporate Secretary
Peter W. Cummins Senior Vice President
Donald E. Waggaman, Jr. Treasurer
George R. Jay Controller
Unless otherwise indicated, the principal business address of each of the
above individuals is P. O. Box 2999, Hartford, Connecticut 06104-2999.
Item 30. Location of Accounts and Records
<PAGE>
-6-
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.
<PAGE>
-7-
(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 Contracts are reasonable in relation to the services rendered, the
expenses expected to be incurred, and the risks assumed by Hartford.
The Registrant is relying on the no-action letter issued by the
Division of Investment Management to American Council of Life
Insurance, Ref. No. IP-6-88, November 28, 1988. The Registrant has
complied with the provisions one through four of the no-action letter.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets all the requirements for
effectiveness of this Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and duly caused this Registration Statement to be signed
on its behalf, in the City of Simsbury, and State of Connecticut on this 10th
day of April, 1998.
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT ONE
(Registrant)
*By: /s/ Thomas M. Marra *By: /s/ Lynda Godkin
---------------------------------------- --------------------
Thomas M. Marra, Executive Vice President Lynda Godkin
Attorney-in-Fact
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
(Depositor)
*By: /s/ Thomas M. Marra
-----------------------------------------
Thomas M. Marra, Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons and in the capacity and on
the date indicated.
Gregory A. Boyko, Senior Vice President,
Chief Financial Officer and Treasurer, Director*
Lynda Godkin, Senior Vice President, *By: /s/ Lynda Godkin
General Counsel and Corporate Secretary --------------------
Thomas M. Marra, Executive Vice Lynda Godkin
President, Director* Attorney-In-Fact
Lowndes A. Smith, President &
Chief Operating Officer, Dated: April 10, 1998
Director*
David M. Znamierowski, Senior Vice
President, Director*
<PAGE>
EXHIBIT INDEX
(6)(a) Certificate of Incorporation of Hartford
(9) Opinion and Consent of Lynda Godkin, General Counsel
(10) Consent of Arthur Andersen LLP, Independent Public Accountants
(15) Copy of Power of Attorney
(16) Organizational Chart
<PAGE>
EXHIBIT 6(a)
FILING #0001734855 PG 03 OF OS VOL B-00133
FILED 07/11/1997 11:32 AM PAGE 03683
SECRETARY OF THE STATE
CONNECTICUT SECRETARY OF THE STATE
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>
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>
EXHIBIT 9
THE [LOGO]
HARTFORD
April 10, 1998 Lynda Godkin
General Counsel & Secretary
Law Department
Board of Directors
Hartford Life and Annuity Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
RE: SEPARATE ACCOUNT ONE
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
FILE NO. 33-56790
Dear Sir/Madam:
I have acted as General Counsel to Hartford Life and Annuity Insurance Company
(the "Company"), a Connecticut insurance company, and Hartford Life and Annuity
Insurance Company Separate Account One (the "Account") in connection with the
registration of an indefinite amount of securities in the form of tax-deferred
variable annuity contracts (the "Contracts") with the Securities and Exchange
Commission under the Securities Act of 1933, as amended. I have examined such
documents (including the Form N-4 Registration Statement) and reviewed such
questions of law as I considered necessary and appropriate, and on the basis of
such examination and review, it is my opinion that:
1. The Company is a corporation duly organized and validly existing as a stock
life insurance company under the laws of the State of Connecticut and is
duly authorized by the Insurance Department of the State of Connecticut to
issue the Contracts.
2. The Account is a duly authorized and validly existing separate account
established pursuant to the provisions of Section 38a-433 of the
Connecticut Statutes.
3. To the extent so provided under the Contracts, that portion of the assets
of the Account equal to the reserves and other contract liabilities with
respect to the Account will not be chargeable with liabilities arising out
of any other business that the Company may conduct.
<PAGE>
Board of Directors
Hartford Life and Annuity Insurance Company
April 10, 1998
Page 2
4. The Contracts, when issued as contemplated by the Form N-4 Registration
Statement, will constitute legal, validly issued and binding obligations of
the Company.
I hereby consent to the filing of this opinion as an exhibit to the Form N-4
Registration Statement for the Contracts and the Account.
Sincerely,
/s/ Lynda Godkin
Lynda Godkin
<PAGE>
EXHIBIT 10
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
Registration Statement File No. 33-56790 for Hartford Life and Annuity
Insurance Company Separate Account One on Form N-4.
/s/ Arthur Andersen LLP
Hartford, Connecticut
April 13, 1998
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
POWER OF ATTORNEY
Gregory A. Boyko
Lynda Godkin
Thomas M. Marra
Lowndes A. Smith
David M. Znamierowski
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 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 as of March 16, 1998
- ------------------------------ --------------------------
Gregory A. Boyko
/s/ Lynda Godkin Dated as of March 16, 1998
- ------------------------------ --------------------------
Lynda Godkin
/s/ Thomas M. Marra Dated as of March 16, 1998
- ------------------------------ --------------------------
Thomas M. Marra
/s/ Lowndes A. Smith Dated as of March 16, 1998
- ------------------------------ --------------------------
Lowndes A. Smith
/s/ David M. Znamierowski Dated as of March 16, 1998
- ------------------------------ --------------------------
David M. Znamierowski
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
THE HARTFORD
The Hartford Financial Services Group, Inc.
(Delaware)
|
- -------------------------------------------------------------------------------------------------------------
Nutmeg Insurance Company The Hartford Investment
(Connecticut) Management Company
| (Delaware)
Hartford Fire Insurance Company |
(Connecticut) Hartford Investment
| Services, Inc.
Hartford Accident and Indemnity Company (Connecticut)
(Connecticut)
|
Hartford Life, Inc.
(Delaware)
|
Hartford Life and Accident Insurance Company
(Connecticut)
|
|
|
- -------------------------------------------------------------------------------------------------------------
Alpine Life Hartford Financial Hartford Life American Maturity ITT Hartford Canada
Insurance Services Life Insurance Company Life Insurance Holdings, Inc.
Company Insurance Co. (Connecticut) Company (Canada)
(New Jersey) (Connecticut) | (Connecticut) |
| | |
| AML Financial, Inc. |
| (Connecticut) Hartford Life
| Insurance Company
| of Canada
| (Canada)
|
|
- -------------------------------------------------------------------------------------------------------------
Hartford Life and Annuity ITT Hartford International Hartford Financial Services Royal Life
Insurance Company Life Reassurance Corporation Corporation Insurance
(Connecticut) (Connecticut) (Delaware) Company of
| | America
| | (Connecticut)
| |
ITT Hartford Life, Ltd. |
(Bermuda) |
|
|
- -------------------------------------------------------------------------------------------------------------
MS Fund HL Funding HL Investment Hartford Hartford Securities Hartford-Comp. Emp.
America Company, Inc. Advisors, Inc. Equity Sales Distribution Benefit Service
1993-K, Inc. (Connecticut) (Connecticut) Company, Inc. Company, Inc. Company
(Delaware) | (Connecticut) (Connecticut) (Connecticut)
|
Hartford Investment
Financial Services
Company
(Delaware)
</TABLE>
