<PAGE>
As filed with the Securities and Exchange Commission September 29, 1998
File No. 333-45303
811-7426
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No._1_ [ X ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 25 [ 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) 843-6731
(Depositor's Telephone Number, Including Area Code)
LESLIE SOLER, ESQ.
HARTFORD LIFE
P.O. BOX 2999
HARTFORD, CT 06104-2999
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the registration statement.
It is proposed that this will become effective:
___ immediately upon filing pursuant to paragraph (b) of Rule 485
_X_ on September 30, 1998 pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on ______________, 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) 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 Hartford, The Separate Account and The Funds
2. Definitions Glossary of Special Terms
3. Synopsis or Highlights Summary
4. Condensed Financial Not Applicable
Information
5. General Description of Hartford, The Separate Account and
Registrant The Funds
6. Deductions Contract Fees and Charges
7. General Description of Description of the Contracts, Separate
Annuity Contracts Account One, and Surrenders
8. Annuity Period Settlement Provisions
9. Death Benefit Death Before the Annuity Commencement Date,
Death On or After the Annuity Commencement
Date, and Distribution Requirements: Prior
to the Annuity Commencement Date
10. Purchases and Description of the Contracts
Contract Value
11. Redemptions Surrenders
12. Taxes Federal Tax Considerations
13. Legal Proceedings Legal Matters, Experts
14. Table of Contents of Table of Contents to
the Statement of Statement of Additional
Additional Information Information
<PAGE>
15. Cover Page Part B; Statement of Additional Information
16. Table of Contents Table of Contents
17. General Information Description of Hartford Life and
and History Annuity Insurance Company
18. Services None
19. Purchase of Securities Distribution of the Contracts
being Offered
20. Underwriters Distribution of the Contracts
21. Calculation of Calculation of Yield and Return
Performance Data
22. Annuity Payments Settlement Provisions
23. Financial Statements Financial Statements
24. Financial Statements Financial Statements and
and Exhibits Exhibits
25. Directors and Officers Directors and Officers of the
of the Depositor Depositor
26. Persons Controlled Persons Controlled by or Under
by or Under Common Common Control with the Registrant or
Control with the Depositor
Depositor or
Registrant
27. Number of Contract Number of Contract Owners
Owners
28. Indemnification Indemnification
29. Principal Underwriters Principal Underwriters
30. Location of Accounts Location of Accounts and Records
and Records
31. Management Services Management Services
32. Undertakings Undertakings
<PAGE>
PART A
<PAGE>
THE DIRECTOR ACCESS
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT ONE
P.O. BOX 5085
HARTFORD, CONNECTICUT 06102-5085
TELEPHONE: 1-800-862-6668 (CONTRACT
OWNERS)
[LOGO] 1-800-862-7155 (REGISTERED REPRESENTATIVES)
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This Prospectus describes an individual and group tax-deferred variable annuity
contract designed for retirement planning purposes (each, a "Contract" and
collectively, the "Contracts").
The Contracts are issued by Hartford Life and Annuity Insurance Company
("Hartford"). Payments for the Contracts will be held in Sub-Accounts of
Hartford Life and Annuity Insurance Company Separate Account One (the "Separate
Account").
The following Sub-Accounts are available under the Contracts. Opposite each
Sub-Account is the name of the underlying investment for that Sub-Account.
<TABLE>
<S> <C> <C>
Advisers Fund Sub-Account -- shares of 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")
Global Leaders Fund Sub-Account -- shares of Class IA of Hartford Global Leaders HLS Fund,
Inc. ("Hartford Global Leaders Fund")
Growth and Income Fund Sub-Account -- shares of Class IA of Hartford Growth and Income HLS Fund,
Inc. ("Hartford Growth and Income Fund")
High Yield Fund Sub-Account -- shares of Class IA of Hartford High Yield HLS Fund, Inc.
("Hartford High Yield 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 Sub-Account -- shares of Class IA of Hartford 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. ("Mortgage Securities Fund")
Small Company Fund Sub-Account -- shares of Class IA of Hartford Small Company HLS Fund,
Inc. ("Hartford Small Company Fund")
Stock Fund Sub-Account -- shares of Class IA of Hartford Stock HLS Fund, Inc.
("Hartford Stock Fund")
</TABLE>
This Prospectus sets forth the basic information concerning the Contract and the
Separate Account that a prospective investor should know before purchasing a
Contract. You should keep this Prospectus for future reference. A Statement of
Additional Information providing additional information about the Contract and
the Separate Account has been filed with the Securities and Exchange Commission
and is incorporated herein by reference. To obtain the Statement of Additional
Information without charge, call (800) 862-6668 or send a written request to
Hartford Life and Annuity Insurance Company, Attn: Individual Annuity Services,
P.O. Box 5085, Hartford, CT 06102-5085. The Table of Contents for the Statement
of Additional Information may be found on page 30 of this Prospectus.
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THIS PROSPECTUS AND OTHER INFORMATION ABOUT THE SEPARATE ACCOUNT REQUIRED TO BE
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION CAN BE FOUND AT THE
COMMISSION'S WEB SITE (HTTP://WWW.SEC.GOV).
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VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED
BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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PROSPECTUS DATED: SEPTEMBER 30, 1998
STATEMENT OF ADDITIONAL INFORMATION DATED: SEPTEMBER 30, 1998
<PAGE>
2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
---------------------------------------------------------------------- ----
<S> <C>
GLOSSARY OF SPECIAL TERMS............................................. 3
FEE TABLE............................................................. 5
SUMMARY............................................................... 7
HARTFORD, THE SEPARATE ACCOUNT AND THE FUNDS.......................... 8
Hartford Life and Annuity Insurance Company......................... 8
Separate Account One................................................ 8
The Funds........................................................... 9
PERFORMANCE RELATED INFORMATION....................................... 11
DESCRIPTION OF THE CONTRACTS.......................................... 11
Contracts Offered................................................... 11
Purchasing a Contract............................................... 12
Right to Examine the Contract....................................... 12
Crediting and Allocating the Premium Payment........................ 12
Contract Value -- Before the Annuity Commencement Date.............. 12
Sub-Account Value Transfers Before and After the Annuity
Commencement Date.................................................. 13
Surrenders.......................................................... 14
Contract Fees and Charges........................................... 15
Death Before the Annuity Commencement Date.......................... 16
Death On or After the Annuity Commencement Date..................... 16
Distribution Requirements: Prior to the Annuity Commencement Date... 17
SETTLEMENT PROVISIONS................................................. 17
Annuity Payment Options............................................. 18
Annuity Proceeds Settlement Option.................................. 18
Annuity Calculation Date and Annuity Commencement Date.............. 19
Income Payment Dates................................................ 19
Variable Annuity Payments........................................... 19
ADDITIONAL CONTRACT INFORMATION....................................... 21
Assignment.......................................................... 21
Misstatement of Age or Sex.......................................... 21
Contract Modification............................................... 21
FEDERAL TAX CONSIDERATIONS............................................ 21
A. General.......................................................... 21
B. Taxation of Hartford and the Separate Account.................... 21
C. Taxation of Annuities -- General Provisions Affecting Purchasers
other than Tax-Qualified
Retirement Plans.................................................. 21
D. Federal Income Tax Withholding................................... 24
E. General Provisions Affecting Tax-Qualified Retirement Plans...... 25
F. Annuity Purchases by Nonresident Aliens and Foreign
Corporations....................................................... 25
OTHER INFORMATION..................................................... 25
Distribution of the Contracts....................................... 25
Legal Matters....................................................... 25
Year 2000........................................................... 25
Experts............................................................. 26
Additional Information.............................................. 26
APPENDIX I -- INFORMATION REGARDING TAX-QUALIFIED PLANS............... 27
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION............. 30
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 3
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GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT: An accounting unit of measure used to calculate the value of
a Sub-Account before Annuity payments begin.
ADMINISTRATIVE OFFICE OF THE COMPANY: Currently located at 200 Hopmeadow Street,
Simsbury, Connecticut 06089. Except for correspondence sent overnight, all
correspondence concerning the Contract should be sent to Hartford Life and
Annuity Insurance Company, Attn: Individual Annuity Services, P.O. Box 5085,
Hartford, CT 06102-5085. Overnight correspondence should be sent to 200
Hopmeadow Street, Simsbury, Connecticut 06089.
ANNUAL MAINTENANCE FEE: An annual $30 charge on a Contract having a Contract
Value of less than $50,000, as determined on the most recent Contract
Anniversary or upon full surrender of the Contract. The charge is deducted
proportionally from the investment options in use at the time of such deduction.
ANNUITANT: The person on whose life the Contract is issued. The Annuitant may
not be changed.
ANNUITY: A contract issued by an insurance company that provides, in exchange
for premium payments, a series of income payments. This Prospectus describes a
deferred Annuity contract in which premium payments accumulate tax-deferred
until a partial or full surrender is taken or until the Annuity Commencement
Date. Annuity payments under the Contract will begin as of the Annuity
Commencement Date in accordance with the Annuity payment option selected.
ANNUITY CALCULATION DATE: The date as of which the first Annuity payment is
calculated. It will be no more than five Valuation Days prior to the Annuity
Commencement Date.
ANNUITY COMMENCEMENT DATE: The date as of which Annuity payments will begin. The
Annuity Commencement Date will not be deferred beyond the Annuitant's age 90 or
the end of Contract Year 10, whichever is later. If the Contract is sold as part
of a Charitable Remainder Trust, the Annuity Commencement Date may be deferred
to the end of the Annuitant's age 100.
ANNUITY UNIT: An accounting unit of measure used to calculate the dollar amount
of Variable Annuity payments.
ANNUITY UNIT FACTOR: The factor applied in computing Annuity Unit values to
neutralize the effect of the Assumed Investment Return.
ASSUMED INVESTMENT RETURN (AIR): The annual rate of return shown on the
specification page of the Contract. This rate is used to determine the degree of
fluctuation in the amount of Variable Annuity payments in response to
fluctuations in the net investment return of selected Sub-Accounts. The AIR
assumes (among other things) that the assets in the Sub-Accounts supporting the
Contract will have a net annual return over the anticipated Annuity payment
period equal to the rate of return selected. If the actual performance in the
net investment return of the selected Sub-Accounts is equal to the AIR, the
payment will be constant. If the actual performance in the net investment return
of the selected Sub-Accounts is greater than the AIR, the Annuity payment will
increase. If the actual performance is less than the AIR, the Annuity payment
amount will be lower.
BENEFICIARY: The person(s) entitled to receive a Death Benefit upon the death of
the Contract Owner or Annuitant, as applicable.
CODE: The Internal Revenue Code of 1986, as amended.
COMMISSION: The Securities and Exchange Commission.
COMMUTED VALUE: The present value of remaining guaranteed Annuity payments under
the Payment for a Period Certain Annuity payment option.
CONTINGENT ANNUITANT: The person a Contract Owner may designate, who if the
Annuitant dies prior to the Annuity Commencement Date, becomes the Annuitant.
CONTRACT: For an Annuity issued to an individual, the Contract is the individual
Annuity and any endorsements or riders. For a group Annuity, the Contract is a
certificate evidencing a participating interest in a group Annuity and any
endorsements or riders. Any reference in this Prospectus to a Contract includes
the certificate.
CONTRACT ANNIVERSARY: The anniversary of the Contract Issue Date.
CONTRACT ISSUE DATE: The date as of which an account is established for the
Contract Owner.
CONTRACT OWNER(S): The owner(s) of the Contract (or a certificate in certain
states), trustee or other entity, sometimes herein referred to as "you" or
"your."
CONTRACT VALUE: The aggregate value of the Sub-Accounts on any Valuation Day.
CONTRACT YEAR: A period of 12 months commencing with the Contract Issue Date or
any anniversary thereof.
DEATH BENEFIT: The amount payable upon the death of a Contract Owner(s) or
Annuitant before Annuity payments have commenced and, under Annuity payment
options Payment for a Period Certain and Life Annuity with a Cash Refund, after
annuity payments have commenced.
DUE PROOF OF DEATH: A certified copy of a death certificate, an order of a court
of competent jurisdiction, a statement from a physician who attended the
deceased or any other proof acceptable to Hartford.
FIXED ANNUITY: An Annuity with payments which remain fixed as to dollar amount
throughout the payment period.
<PAGE>
4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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FUNDS: The Funds described commencing on page 9 of this Prospectus.
GENERAL ACCOUNT: The General Account of Hartford which consists of all assets of
Hartford other than those allocated to the separate accounts of Hartford.
HARTFORD: Hartford Life and Annuity Insurance Company.
INCOME PAYMENT DATE: The date each month, quarter, semi-annual period, or year
as of which Hartford computes the Annuity payments.
JOINT ANNUITANT: Upon annuitization, a person other than the Annuitant on whose
continuation of life Annuity payments may be made. The contract will have a
Joint Annuitant only if the Annuity payment option selected provides for a
survivor. The Joint Annuitant may not be changed.
MAXIMUM ANNIVERSARY VALUE: Value used in determining the Death Benefit prior to
the Annuity Commencement Date. It is based on a series of calculations on
Contract Anniversaries of Contract Values, Premium Payments and partial
surrenders, as described on page 16 of this Prospectus.
NET ASSET VALUE: The value per share of any Fund on any Valuation Day. The
method of computing the Net Asset Value is described in the prospectus for each
Fund.
NET INVESTMENT FACTOR: The Net Investment Factor for each of the Sub-Accounts,
equal to the Net Asset Value 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 of the corresponding Fund at the
beginning of the Valuation Period.
NON-QUALIFIED CONTRACT: A Contract which is not classified as a tax-qualified
retirement plan funded with pre-tax dollars under the Code.
PAYEE: The person or party designated by the Contract Owner to receive Annuity
payments.
PLAN: A voluntary plan of an employer which qualifies for special tax treatment
under a section of the Code.
PREMIUM PAYMENT: A payment made to Hartford pursuant to the terms of the
Contract.
PREMIUM TAX: The amount of tax, if any, charged by a federal, state or other
governmental entity on Premium Payments or Contract Value.
QUALIFIED CONTRACT: A Contract which qualifies as a tax-qualified retirement
plan using pre-tax dollars under the Code, such as an employer-sponsored 401(k)
or an Individual Retirement Annuity (IRA).
SEPARATE ACCOUNT: An account that Hartford established to separate the assets
funding the variable benefits for the class of contracts to which the Contract
belongs from the other assets of Hartford. The Hartford separate account is
entitled "Hartford Life and Annuity Insurance Company -- Separate Account One."
SUB-ACCOUNT: A subdivision established within the Separate Account used to
allocate the Contract Owner's Contract Value to the corresponding Fund.
SUB-ACCOUNT VALUE: On or before the Annuity Calculation Date, the amount is
determined on any day by multiplying the number of Accumulation Units
attributable to the Contract in that Sub-Account by the Accumulation Unit value
for that Sub-Account.
SURRENDER VALUE: Prior to the Annuity Commencement Date, the Surrender Value is
the Contract Value, less any applicable Premium Taxes, and/or the Annual
Maintenance Fee. After the Annuity Commencement Date, the Surrender Value under
the Payment for a Period Certain Annuity payment option is equal to the Commuted
Value.
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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 5
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FEE TABLE
SUMMARY
Contract Owner Transaction Expenses
(All Sub-Accounts)
<TABLE>
<CAPTION>
CONTRACT CONTRACT
YEARS YEARS
1-7 8+
--------- ---------
<S> <C> <C>
Sales Load Imposed on Purchases (as a percentage of premium
payments)....................................................... None None
Exchange Fee...................................................... $0 $0
Deferred Sales Load (as a percentage of amounts withdrawn)........ None None
Annual Maintenance Fee (1)........................................ $30 $30
Annual Expenses -- Separate Account (as percentage of average
account value)
Mortality and Expense Risk (2)................................ 1.50% 1.25%
Administration Fees........................................... 0% 0%
Other Account Fees............................................ 0% 0%
Total....................................................... 1.50% 1.25%
</TABLE>
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(1) The Annual Maintenance Fee is a single $30 charge on a Contract deducted
only when the accumulated value is less than $50,000. It is deducted
proportionally from the investment options in use at the time of the charge.
(2) After the seventh Contract Year or upon the Annuity Commencement Date,
whichever is earlier, the mortality and expense risk charge will be reduced
to 1.25% per annum, applied against the Contract Values held in the Separate
Account.
Annual Fund Operating Expenses
(as percentage of average annual net assets)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OPERATING
FEES EXPENSES
(WITH OTHER (WITH
WAIVERS) EXPENSES WAIVERS)
---------- -------- ----------
<S> <C> <C> <C>
Hartford Advisers Fund.......................... 0.635% 0.020% 0.655%
Hartford Bond Fund.............................. 0.515% 0.020% 0.535%
Hartford Capital Appreciation Fund.............. 0.645% 0.020% 0.665%
Hartford Dividend and Growth Fund............... 0.685% 0.020% 0.705%
Hartford Global Leaders Fund (1)................ 0.200% 0.200% 0.400%
Hartford Growth and Income Fund (1)............. 0.200% 0.150% 0.350%
Hartford High Yield Fund (1).................... 0.200% 0.150% 0.350%
Hartford Index Fund............................. 0.400% 0.015% 0.415%
Hartford International Advisers Fund............ 0.775% 0.120% 0.895%
Hartford International Opportunities Fund....... 0.705% 0.090% 0.795%
Hartford Money Market Fund...................... 0.450% 0.015% 0.465%
Hartford MidCap Fund............................ 0.775% 0.040% 0.815%
Hartford Mortgage Securities Fund............... 0.450% 0.025% 0.475%
Hartford Small Company Fund..................... 0.775% 0.020% 0.795%
Hartford Stock Fund............................. 0.455% 0.020% 0.475%
</TABLE>
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(1) Hartford Growth and Income Fund, Hartford Global Leaders Fund and Hartford
High Yield Fund are new funds. "Total Fund Operating Expenses" are based on
annualized estimates of such expenses to be incurred in the current fiscal
year. HL Investment Advisors, Inc. has agreed to waive its fees for these
until the assets of the Funds (excluding assets contributed by companies
affiliated with HL Investment Advisors, Inc.) reach $20 million. Absent this
waiver, the "Management Fee" and "Total Fund Operating Expenses" would be:
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT FEES OPERATING EXPENSES
---------------- ------------------
<S> <C> <C>
Hartford Growth and Income Fund....................................................... 0.750% 0.900%
Hartford Global Leaders Fund.......................................................... 0.750% 0.950%
Hartford High Yield Fund.............................................................. 0.750% 0.900%
</TABLE>
<PAGE>
6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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The purpose of the tables is to assist the Contract Owner in understanding
the various costs and expenses that a Contract Owner will bear directly or
indirectly. The table reflects expenses of the Separate Account and the current
management fees, other expenses and total expenses for each Fund. Premium Taxes,
ranging from 0% to 4%, may also be applicable. For a more complete description
of the various costs and expenses, see "Contract Fees and Charges," page 15 and
the prospectus for the Funds which accompanies this Prospectus.
EXAMPLE
<TABLE>
<CAPTION>
If you surrender your contract If you annuitize your Contract
at the end of the applicable at the end of the applicable
time period: You would pay the time period, you would pay the
following expenses on a $1,000 following expenses on a $1,000
investment, assuming a 5% investment, assuming a 5%
annual return on assets: annual return on assets:
SUB-ACCOUNT 1 YR. 3 YRS. 5 YRS. 10 YRS. 1 YR. 3 YRS. 5 YRS. 10 YRS.
------ ------- ------- -------- ------ ------- ------- --------
Advisers Fund................ $ 23 $ 70 $ 120 $ 248 $ 22 $ 69 $ 119 $ 247
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bond Fund.................... 21 66 114 235 21 66 113 234
Capital Appreciation Fund.... 23 70 120 249 22 70 120 248
Dividend and Growth Fund..... 23 72 122 253 23 71 122 252
Global Leaders Fund.......... 20 72 N/A N/A 19 71 N/A N/A
Growth and Income Fund....... 20 70 N/A N/A 19 69 N/A N/A
High Yield Fund.............. 20 70 N/A N/A 19 69 N/A N/A
Index Fund................... 20 63 107 222 20 62 107 221
International Advisers
Fund....................... 25 77 132 273 25 77 132 272
International Opportunities
Fund....................... 24 74 127 262 24 74 126 261
MidCap Fund.................. 24 75 N/A N/A 24 74 N/A N/A
Money Market Fund............ 21 64 110 228 20 63 109 227
Mortgage Securities Fund..... 21 64 111 229 20 64 110 228
Small Company Fund........... 24 74 127 262 24 74 126 261
Stock Fund................... 21 64 111 229 20 64 110 228
</TABLE>
Pursuant to requirements of the Investment Company Act of 1940, as amended
(the "1940 Act"), the Annual Maintenance Fee has been reflected in the EXAMPLE
by a method intended to show the "average" impact of the fee on an investment in
the Separate Account. The Annual Maintenance Fee is deducted only when the
Contract Value is less than $50,000. In the EXAMPLE, the Annual Maintenance Fee
is approximated as a 0.06% annual asset charge based on the experience of the
Contracts.
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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 7
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SUMMARY
GENERAL DESCRIPTION
The Contract is an individual and group tax-deferred variable annuity
contract designed for retirement planning purposes. This Prospectus is designed
to provide prospective Contract Owners with information necessary to decide
whether or not to purchase a Contract. This summary provides a concise
description of the more significant aspects of the Contract. Further detail is
provided in this Prospectus, the related Statement of Additional Information,
the Contract, and the prospectus for the Funds. For further information, contact
Hartford at the Administrative Office of the Company or your registered
representative.
PURCHASING A CONTRACT
The Contracts are available for purchase by individuals and groups on both a
non-qualified and qualified basis. The maximum issue age for the Contract is 85
years old. (See "Description of the Contracts," page 11.) A prospective Contract
Owner may purchase a Contract by completing and submitting an application or an
order request along with the initial Premium Payment to Hartford for its
approval. Generally, the minimum initial Premium Payment is $20,000. Thereafter,
the minimum Premium Payment is $500. Certain plans may make smaller periodic
payments. There is no deduction for sales expenses from Premium Payments when
made. A deduction will be made for state Premium Taxes for Contracts sold in
certain states. (See "Contract Fees and Charges," page 15.)
Subject to certain minimum allocation requirements that may be in effect
from time to time, the initial Premium Payment is allocated to each Sub-Account
as specified on the application or order request. All percentage allocations
must be in whole numbers (e.g., 1%).
RIGHT TO EXAMINE THE CONTRACT
Contract Owners may cancel the Contract during the cancellation period and
receive a refund equal to the Contract Value plus any applicable Premium Taxes.
The cancellation period is a ten-day period of time beginning when the Contract
is received by a Contract Owner. Some states require a longer cancellation
period or return of the Premium Payment. (See "Right to Examine the Contract,"
page 12.)
TRANSFERS
The investment options underlying the Contracts are the Hartford Advisers
Fund, Hartford Bond Fund, Hartford Capital Appreciation Fund, Hartford Dividend
and Growth Fund, Hartford Global Leaders Fund, Hartford Growth and Income Fund,
Hartford High Yield Fund, Hartford Index Fund, Hartford International Advisers
Fund, Hartford International Opportunities Fund, Hartford MidCap Fund, Hartford
Money Market Fund, Hartford Mortgage Securities Fund, Hartford Small Company
Fund, Hartford Stock Fund, and such other funds as shall be offered from time to
time (the "Funds"). (See "The Funds," page 9.) With certain limitations,
Contract Owners may allocate their Premium Payments and Contract Values to one
or a combination of Sub-Accounts which invest in these investment options, and
may transfer among the corresponding Sub-Accounts. (See "Sub-Account Value
Transfers Before and After the Annuity Commencement Date," page 13.)
SURRENDERS
The Contracts may be surrendered, or portions of the value of the Contracts
may be surrendered, at any time prior to the Annuity Commencement Date without
charge. (See "Surrenders," page 14.) The Contract may also be surrendered after
the Annuity Commencement Date under the Payment for a Period Certain Annuity
payment option. Surrenders may have adverse federal income tax consequences
including the possibility of being subject to a penalty tax. (See "Federal Tax
Considerations," page 21.)
DEATH BENEFITS
The Contract provides for a minimum Death Benefit in the event of the death
of the Annuitant or Contract Owner before the Annuity Commencement Date and,
under some Annuity payment options, after the Annuity Commencement Date. (See
"Death Before the Annuity Commencement Date" and "Death On or After the Annuity
Commencement Date," page 16.)
CONTRACT FEES AND CHARGES
The following fees and charges are assessed under the Contracts:
ANNUAL MAINTENANCE FEE -- An Annual Maintenance Fee in the amount of $30 is
deducted from Contract Values each Contract Year (not applicable to Contracts
with Contract Values of $50,000 or more, as determined on the most recent
Contract Anniversary). (See "Contract Fees and Charges," page 15.)
MORTALITY AND EXPENSE RISK CHARGE -- Hartford applies a 1.50% per annum
mortality and expense risk charge against all Contract Values held in the
Separate Account for Contract Years 1-7. After Contract Year 7 or after the
Annuity Commencement Date, whichever is earlier, the mortality and expense risk
charge will decrease to 1.25% per annum of the Contract Values held in the
Separate Account. (See "Contract Fees and Charges," page 15.)
<PAGE>
8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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PREMIUM TAX CHARGE -- On any Contract subject to a Premium Tax, Hartford may
deduct the tax on a pro-rata basis from the Sub-Accounts at the time Hartford
pays the tax to the applicable government authorities, at the time the Contract
is surrendered, at the time Death Benefits are paid or on the Annuity
Commencement Date. (See "Contract Fees and Charges," page 15).
EXPENSES OF THE FUNDS -- The investment experience of each Sub-Account
reflects the investment experience of the Fund whose shares it holds. The
investment experience of each Fund, in turn, reflects its fees and other
operating expenses. (See "Annual Fund Operating Expenses," page 5 of this
Prospectus and the prospectus for the Funds attached hereto).
ANNUITY PAYMENT OPTIONS
The following Annuity payment options are available under the Contract on
either a fixed or variable basis: Life Annuity; Life Annuity with a Cash Refund;
Life Annuity with Payments For a Period Certain; Joint and Last Survivor Life
Annuity; Joint and Last Survivor Life Annuity with Payments for a Period
Certain; and Payment for a Period Certain. In the absence of an Annuity payment
option election, and depending on state law, the Contract Value (less applicable
Premium Taxes) will be applied on the Annuity Commencement Date to provide a
Fixed Annuity with payments guaranteed for 10 years. (See "Settlement
Provisions," page 17.)
In addition, the Annuity Proceeds Settlement Option is offered to a
Beneficiary who elects to leave the Death Benefit in the Sub-Accounts.
HARTFORD, THE SEPARATE
ACCOUNT AND THE FUNDS
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, the company changed its
name 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>
EFFECTIVE
DATE
RATING AGENCY OF RATING RATING BASIS OF RATING
- ----------------- ------------- ----------- -------------------------
<S> <C> <C> <C>
A.M. Best and Financial soundness and
Company, Inc..... 9/9/97 A+ operating performance.
Standard & Insurer financial
Poor's........... 1/23/98 AA strength
Duff & Phelps.... 1/23/98 AA+ Claims paying ability
</TABLE>
SEPARATE ACCOUNT ONE
The Separate Account was established on May 20, 1991. It is the Separate
Account in which Hartford sets aside and invests the assets attributable to
variable annuity Contracts, including the Contracts sold under this Prospectus.
Separate Account assets are held by Hartford under a safekeeping arrangement.
Although the Separate Account is an integral part of Hartford, it is registered
as a unit investment trust under the 1940 Act. This registration does not,
however, involve Commission supervision of the management or the investment
practices or policies of the Separate Account or Hartford. The Separate Account
meets the definition of "separate account" under federal securities law.
Your investment in the Separate Account is allocated to one or more
Sub-Accounts as per your specifications. Each Sub-Account is invested
exclusively in the assets of one underlying Fund. Hartford reserves the right,
subject to compliance with the law, to substitute the shares of any other
registered investment company for the shares of any Fund already purchased or to
be purchased in the future by the Separate Account provided that the
substitution has been approved by the Commission.
Premium Payments, less any applicable Premium Taxes, and proceeds of
transfers between Sub-Accounts are applied to purchase shares in the appropriate
Fund at Net Asset Value determined as of the end of the Valuation Period during
which the payments were received or the transfer made. All distributions from
the Fund are reinvested at Net Asset Value. The value of your investment will
therefore vary in accordance with the net income and fluctuation in the
individual investments within the underlying Fund portfolio or portfolios.
During the Variable Annuity payout period, both your Annuity payments and
reserve values will vary in accordance with these factors.
Under Connecticut law, the assets of the Separate Account attributable to
the Contracts offered under this Prospectus are held for the benefit of the
owners of, and the persons entitled to payments under, those Contracts. Income,
gains, and losses, whether or not realized, from assets allocated to the
Separate Account, are, in accordance with the Contracts, credited to or charged
against the Separate Account. Also, the assets in the Separate Account are not
chargeable with liabilities arising out of any other business Hartford may
conduct. Contract Values allocated to the Separate Account is not affected by
the rate of return of
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 9
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Hartford's General Account, nor by the investment performance of any of
Hartford's other separate accounts. The Separate Account may be subject to
liabilities arising from a Sub-Account of the Separate Account whose assets are
attributable to other variable Annuity contracts or variable life insurance
policies offered by the Separate Account which are not described in this
Prospectus. However, all obligations arising under the Contracts are general
corporate obligations of Hartford.
Hartford does not guarantee the investment results of the Separate Accounts
or any of the underlying Funds. There is no assurance that the value of a
Contract during the years prior to retirement or the aggregate amount of the
variable Annuity payments will equal the total of Premium Payments made under
the Contract. Since each underlying Fund has different investment objectives,
each is subject to different risks. These risks are more fully described in the
accompanying Funds' prospectus.
THE FUNDS
All of the Funds are sponsored by Hartford and are incorporated under the
laws of the State of Maryland. HL Investment Advisors, Inc. ("HL Investment")
serves as the investment adviser to each of the Funds. In addition, HL
Investment has entered into investment service agreements with Wellington
Management Company, LLP. ("Wellington Management") and The Hartford Investment
Management Company ("HIMCO").
Wellington Management is investment sub-adviser for the Hartford Advisers
Fund, Hartford Capital Appreciation Fund, Hartford Dividend and Growth Fund,
Hartford Global Leaders Fund, Hartford Growth and Income Fund, Hartford
International Advisers Fund, Hartford International Opportunities Fund, Hartford
MidCap Fund, Hartford Small Company Fund, and Hartford Stock Fund. HIMCO is
investment sub-adviser for the Hartford Bond Fund, Hartford High Yield 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 Funds' prospectus and Statement of Additional Information,
which may be ordered from Hartford free of charge. The Funds' prospectus should
be read in conjunction with this Prospectus before investing. The Funds may not
be available in all states.
The investment objective of each Fund is as follows:
HARTFORD ADVISERS FUND
Seeks maximum long term total rate of return consistent with prudent
investment risk by investing in common stock and other equity securities, bonds
and other debt securities, and money market instruments. The investment adviser
will vary the investments of the Fund among equity and debt securities and money
market instruments depending upon its analysis of market trends. Total rate of
return consists of current income, including dividends, interest and discount
accruals and capital appreciation.
HARTFORD 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 or "BB" by S&P) or, if unrated, are determined
to be of comparable quality by the Fund's investment adviser. Securities rated
below investment grade are commonly referred to as "high yield-high risk
securities" or "junk bonds." For more information concerning the risks
associated with investing in such securities, please refer to the section in the
accompanying prospectus for the Funds entitled "Hartford Bond Fund, Inc. --
Investment Policies."
HARTFORD CAPITAL APPRECIATION FUND
Seeks growth of capital by investing in equity securities and securities
convertible into equity securities selected solely on the basis of potential for
capital appreciation; income, if any, is an incidental consideration.
HARTFORD DIVIDEND AND GROWTH FUND
Seeks a high level of current income consistent with growth of capital and
reasonable investment risk.
HARTFORD GLOBAL LEADERS
Seeks growth of capital by investing primarily in equity securities issued
by U.S. companies and non-U.S. companies.
HARTFORD GROWTH AND INCOME FUND
Seeks growth of capital and current income by investing primarily in equity
securities with earnings growth potential and steady or rising dividends.
HARTFORD HIGH YIELD FUND
Seeks high current income by investing in non-investment grade fixed-income
securities. Growth of capital is a secondary objective.
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,
* "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 INDEX FUND IS NOT SPONSORED, ENDORSED, SOLD OR
PROMOTED BY STANDARD & POOR'S ("S&P") AND S&P MAKES NO REPRESENTATION
REGARDING THE ADVISABILITY OF INVESTING IN THE INDEX FUND.
<PAGE>
10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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debt and money securities. Securities in which the Fund invests primarily will
be denominated in non-U.S. currencies and will be traded by non-U.S. markets.
HARTFORD INTERNATIONAL OPPORTUNITIES FUND
Seeks growth of capital by investing primarily in equity securities.
HARTFORD MIDCAP FUND
Seeks long-term capital growth through capital appreciation by investing
primarily in equity securities.
HARTFORD MONEY MARKET FUND
Seeks maximum current income consistent with liquidity and preservation of
capital.
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
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 of capital by investing primarily in equity-type
securities.
VOTING RIGHTS -- Hartford is the legal owner of all Fund shares held in the
Separate Account. As the owner, Hartford has the right to vote at the Fund's
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 all Fund shares attributable to a Contract for which no voting
instructions are received in the same proportion as shares for which
instructions are received.
If any federal securities laws or regulations, or their present
interpretation, change to permit Hartford to vote Fund shares in its own right,
Hartford may elect to do so.
Hartford will notify you of any Fund shareholders' meeting if the shares
held for your account may be voted at such meetings. Hartford will send proxy
materials and a form of instruction by means of which you can instruct Hartford
with respect to the voting of the Fund shares held for your account.
In connection with the voting of Fund shares held by it, Hartford will
arrange for the handling and tallying of proxies received from Contract Owners.
Hartford as such, shall have no right, except as described below provided, to
vote any Fund shares held by it under the Contract which may be registered in
its name or the names of its nominees. Hartford will, however, vote the Fund
shares held by it in accordance with the instructions received from the Contract
Owners for whose accounts the Fund shares are held. If a Contract Owner desires
to attend any meeting at which shares held for the Contract Owner's benefit may
be voted, the Contract Owner may request Hartford to furnish a proxy or
otherwise arrange for the exercise of voting rights with respect to the Fund
shares held for such Contract Owner's account. Hartford will vote shares for
which no instructions have been given and shares which are not attributable to
Contract Owners (i.e. shares owned by Hartford) in the same proportion as it
votes shares of that Fund for which it has received instructions. During the
Annuity period under a Contract, the number of votes will decrease as the assets
held to fund Annuity benefits decrease.
The Funds are available only to serve as the underlying investment vehicles
for variable annuity and variable life insurance contracts, including the
Contracts described in this Prospectus, issued by Hartford. It is conceivable
that in the future it may be disadvantageous for variable annuity separate
accounts and variable life insurance separate accounts to invest in the Funds
simultaneously. Although Hartford and the Funds do not currently foresee any
such disadvantages either to variable annuity contract owners or to variable
life insurance 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
expense related to the establishment of such separate funds.
SUBSTITUTIONS, ADDITIONS, OR DELETIONS OF INVESTMENTS -- Hartford retains
the right, subject to any applicable law, to make certain changes to the
investment options offered under the Contract. Hartford reserves the right to
eliminate the shares of any of the Funds and to substitute shares of another
registered investment company for the shares of any Fund already purchased or to
be purchased in the future by the Separate Account, if the shares of the Funds
are no longer available for investment, or, if in Hartford's judgment,
investment in any Fund would be inappropriate in view of the purposes of the
Separate Account. To the extent required by the 1940 Act, substitutions of
shares attributable to a Contract Owner's interest in a Fund will not be made
until Commission approval has been obtained and the Contract Owner has been
notified of the change.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 11
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New Funds may be established at the discretion of Hartford. Any new Fund
will be made available to existing Contract Owners on a basis to be determined
by Hartford. Hartford may also close one or more Funds to additional Premium
Payments or transfers from existing Sub-Accounts.
In the event of any substitution or change, Hartford may, by appropriate
endorsement, make such changes in the Contract as may be necessary or
appropriate to reflect such substitution or change. Furthermore, if deemed to be
in the best interest of persons having voting rights in the Contracts, the
Separate Account may be operated as a management company under the 1940 Act or
any other form permitted by law, may be de-registered under the 1940 Act in the
event such registration is no longer required, or may be combined with one or
more other separate accounts.
PERFORMANCE RELATED
INFORMATION
The Separate Account may advertise certain performance related information
concerning 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.
All of the Sub-Accounts may include total return in advertisements or other
sales material.
When a Sub-Account advertises its standardized total return, it will be
calculated to a date not earlier than the effective date of the Separate
Account. This figure will usually be calculated for one year, five years, and
ten years or some other relevant period if the Separate Account has not been in
existence for one, five or 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.
In addition to the standardized total return, the Sub-Account may advertise
non-standardized total returns. This figure will usually be calculated for one
year, 5 years, and 10 years or other relevant period if the Separate Account has
not been in existence for one, five or ten years. This non-standardized total
return is measured in the same manner as the standardized total return described
above, except that the Annual Maintenance Fee is not deducted. Therefore, this
non-standardized total return for a Sub-Account is higher than standardized
total return for a Sub-Account.
The Separate Account may also advertise non-standard total returns which
pre-date the inception date of the Separate Account. These non-standardized
total returns are calculated by assuming that the Sub-Accounts have been in
existence for the same periods as the underlying Funds and by taking deductions
for charges equal to those currently assessed against the Sub-Accounts. These
non-standardized returns must be accompanied by standardized total returns.
The Bond Fund, Mortgage Securities Fund and High Yield 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 the Money Market Fund Sub-Account is based upon the income earned
by the Sub-Account over a 7-day period and then annualized, i.e., the income
earned in the period is assumed to be earned every 7 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, performance information for the Sub-Accounts will be
calculated based on the performance of the underlying Funds and the assumption
that the Sub-Accounts were in existence for the same periods as those of the
underlying Funds, with a level of charges equal to those currently assessed
against the Sub-Accounts.
Hartford may provide information on various topics to Contract Owners and
prospective Contract Owners in advertising, sales literature or other materials.
These topics may include the relationship between sectors of the economy and the
economy as a whole and its effect on various securities markets, investment
strategies and techniques (such as value investing, dollar cost averaging and
asset allocation), the advantages and disadvantages of investing in tax-
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.
DESCRIPTION OF THE CONTRACTS
CONTRACTS OFFERED
The Contracts are individual or group tax-deferred Variable Annuity
Contracts designed for retirement planning purposes and may be purchased by any
individual, group or trust, including any trustee or custodian for a
<PAGE>
12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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retirement plan qualified under Sections 401(a) or 403(a) of the Internal
Revenue Code; annuity purchase plans adopted by public school systems and
certain tax-exempt organizations according to Section 403(b) of the 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").
PURCHASING A CONTRACT
A prospective Contract Owner may purchase a Contract by completing and
submitting an application or an order request along with an initial Premium
Payment to the Administrative Office of the Company. The maximum age for
Annuitants on the Contract Issue Date is 85. Generally, the minimum Premium
Payment is $20,000. Thereafter, the minimum Premium Payment is $500. Certain
plans may be allowed to make smaller periodic payments. Unless Hartford gives
its prior approval, it will not accept a Premium Payment in excess of
$1,000,000. Each Premium Payment may be split among the various Sub-Accounts
subject to minimum amounts then in effect. Hartford will send Contract Owners a
confirmation notice upon receipt and acceptance of the Contract Owner's Premium
Payment.
RIGHT TO EXAMINE THE CONTRACT
If you are not satisfied with your purchase, you may cancel the Contract by
returning it within 10 days (or longer in some states) after you receive it. A
written request for cancellation must accompany the Contract. In such event,
Hartford will, without deduction for any charges normally assessed thereunder,
pay you an amount equal to the Contract Value plus any applicable Premium Tax on
the date of receipt of the request for cancellation. You bear the investment
risk during the period prior to Hartford's receipt of request for cancellation.
Hartford will refund the premium paid only for Individual Retirement Annuities
(if returned within seven days of receipt) and in those states where required by
law.
CREDITING AND ALLOCATING
THE PREMIUM PAYMENT
The initial Premium Payment, less any applicable Premium Tax, will be
credited to your Contract within 2 business days of receipt of the initial
Premium Payment and a properly completed application or an order to purchase a
Contract by Hartford at the Administrative Office of the Company. It will be
credited to the Sub-Account(s) in accordance with your election. If the
application, order request, or other required information is incomplete when
received, Hartford reserves the right to retain the Premium Payment for up to
five business days while it attempts to complete the information. If the
information cannot be made complete within 5 business days, the applicant will
be informed of the reasons for the delay and the Premium Payment will be
returned unless the applicant specifically consents to Hartford retaining the
Premium Payment until the information is made complete. The Premium Payment will
then be allocated within two business days after receipt of the complete
information.
Subsequent Premium Payments received by Hartford in the Administrative
Office of the Company, or other designated administrative offices are priced on
the Valuation Day prior to the close of the New York Stock Exchange (generally
4:00 p.m. E.T.). Unless otherwise specified, Hartford will allocate any
subsequent Premium Payment to Sub-Accounts in accordance with the most recent
premium allocation instructions received by Hartford.
CONTRACT VALUE -- BEFORE THE ANNUITY
COMMENCEMENT DATE
SUB-ACCOUNT VALUE -- The Contract Value is the sum of all Sub-Account Values
and therefore reflects the investment performance of the Sub-Accounts to which
it is allocated. The Sub-Account Value for any Sub-Account as of the Contract
Issue Date is equal to the amount of the Premium Payment allocated to that
Sub-Account. The Sub-Account Value for a Contract is determined on any given day
by the multiplying the number of Accumulation Units attributable to the Contract
in that Sub-Account by the Accumulation Unit value for that Sub-Account.
Therefore, on any Valuation Day the Contract Owner's Sub-Account Value reflects
any variation of the interest income, dividends, net capital gains or losses,
realized or unrealized, and any amounts transferred into or out of that
Sub-Account.
ACCUMULATION UNITS -- The portions of the Premium Payments allocated to a
Sub-Account or amounts of Contract Value transferred to a Sub-Account are
converted into Accumulation Units. For any Contract, the number of Accumulation
Units credited to a Sub-Account is determined by dividing the dollar amount
directed to the Sub-Account by the value of the Accumulation Unit for that Sub-
Account for the Valuation Day as of which the portion of the Premium Payment or
transferred Contract Value is invested in the Sub-Account. Transferred Contract
Value is invested in a Sub-Account as of the end of the Valuation Period during
which the transfer request was received. Therefore, a Premium Payment or portion
of a Premium Payment allocated to or amounts transferred to a Sub-Account under
a Contract increase the number of Accumulation Units of that Sub-Account
credited to the Contract.
Surrenders, transfers out of a Sub-Account, the death of any Contract Owner
or the Annuitant before the Annuity Commencement Date, and the application of
Contract Value less Premium Tax to an Annuity payment option on
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 13
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the Annuity Calculation Date all result in a decrease in the number of
Accumulation Units of one or more Sub-Accounts. Accumulation Units are valued as
of the end of the Valuation Period.
The Accumulation Unit value for each Sub-Account was arbitrarily set
initially at $1 when the Sub-Account began operations. Thereafter, the
Accumulation Unit value for each Sub-Account will equal (a) the Accumulation
Unit value at the end of the preceding Valuation Day multiplied by (b) the Net
Investment Factor for the Valuation Day for which the Accumulation Unit value is
being calculated. (See "Net Investment Factor," below.)
The Sub-Account Value as of each Valuation Day is then determined by
multiplying: (a) the number of Accumulation Units in the Sub-Account by (b) the
Accumulation Unit value for that Sub-Account as of that Valuation Day.
You will be advised, at least semiannually, of the number of Accumulation
Units credited to each Sub-Account, the current Accumulation Unit values, and
the total value of your Contract.
THE NET INVESTMENT FACTOR (BEFORE AND AFTER THE ANNUITY COMMENCEMENT DATE)
- -- The Net Investment Factor is an index applied to measure the investment
performance of a Sub-Account from one Valuation Period to the next. For each
Sub-Account, the Net Investment Factor reflects the investment performance of
the Fund in which that Sub-Account invests and the charges assessed against that
Sub-Account for a Valuation Period. The Net Investment Factor is calculated by
dividing (a) by (b) and subtracting (c) from the result, where:
(a) is the Net Asset Value of the Fund held in that Sub-Account, determined at
the end of the current Valuation Period (plus the per share amount of any
dividends or capital gains distributions made by the Fund in that
Sub-Account);
(b) is the Net Asset Value of the Fund held in the Sub-Account, determined at
the beginning of the Valuation Period;
(c) is a daily factor representing the mortality and expense risk charge and any
applicable administration charge deducted from the Sub-Account, adjusted for
the number of days in the Valuation Period.
SUB-ACCOUNT VALUE TRANSFERS BEFORE AND AFTER
THE ANNUITY COMMENCEMENT DATE
You may transfer your Sub-Account Values from one or more Sub-Accounts to
another Sub-Account free of charge. However, Hartford reserves the right to
limit the number of transfers to 12 per Contract Year, with no 2 transfers
occurring on consecutive Valuation Days. Transfers by telephone may be made by a
Contract Owner or by the attorney-in-fact pursuant to a power of attorney by
calling Hartford at (800) 862-6668 or by the agent of record by calling (800)
862-7155. Telephone transfers may not be permitted by some states.
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. The procedures
Hartford follows for transactions initiated by telephone include requirements
that callers provide certain information for identification purposes. All
transfer instructions by telephone are tape recorded.
Hartford may permit the Contract Owner to preauthorize transfers among
Sub-Accounts and between Sub-Accounts under certain circumstances. Transfers
between the Sub-Accounts may be made both before and after the Annuity
Commencement Date. Generally, the minimum allocation to any Sub-Account may not
be less than $500. All percentage (%) allocations must be in whole numbers
(e.g., 1%). No minimum balance is presently required in any Sub-Account.
It is the responsibility of the Contract Owner to verify the accuracy of all
confirmations of transfers and to promptly advise Hartford of any inaccuracies
within 30 days of receipt of the confirmation.
Subject to the exceptions set forth in the following paragraph, the right to
reallocate Contract Values is subject to modification if Hartford determines, in
its sole opinion, that the exercise of that right by one or more Contract Owners
is, or would be, to the disadvantage of other Contract Owners. Any modification
could be applied to transfers to or from some or all of the Sub-Accounts and
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 by a Contract
Owner at any one time. Such restrictions may be applied in any manner reasonably
designed to prevent any use of the transfer right which is considered by
Hartford to be to the disadvantage of other Contract Owners.
Currently, and with respect to Contracts issued in all states, the only
restriction in effect is that Hartford will not accept instructions from agents
acting under a power of attorney of multiple Contract Owners whose accounts
aggregate more than $2 million, unless the agent has entered into a third party
transfer services agreement with Hartford.
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14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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SURRENDERS
FULL SURRENDERS PRIOR TO THE ANNUITY COMMENCEMENT DATE -- At any time prior
to the Annuity Commencement Date, the Contract Owner has the right to fully
surrender the Contract. In such event, the Surrender Value of the Contract may
be taken in the form of a lump sum cash settlement. With the exception of
Annuity payment options 6 and 7, no surrenders are permitted after the Annuity
Commencement Date.
The Surrender Value of the Contract is equal to the Contract Value less any
Premium Taxes, and the Annual Maintenance Fee, if applicable. The Surrender
Value may be more or less than the amount of the Premium Payments made to a
Contract.
PARTIAL SURRENDERS PRIOR TO THE ANNUITY COMMENCEMENT DATE -- 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
Hartford's minimum amount rules then in effect. Additionally, if the remaining
Contract Value following a surrender is less than $500, Hartford may terminate
the Contract and pay the Surrender Value. For Contracts issued in Texas, the
Contract will not be terminated when the remaining Contract Value after a
surrender is less than $500 unless there were no Premium Payments made during
the previous 2 Contract Years.
When requesting a partial surrender, you should specify the Sub-Account(s)
from which the partial surrender will be taken. Otherwise, the surrender will be
effected on a pro rata basis according to the value in each Sub-Account.
Hartford may permit the Contract Owner to preauthorize partial surrenders
subject to certain limitations then in effect.
SURRENDERS AFTER THE ANNUITY COMMENCEMENT DATE -- A Contract Owner may fully
surrender the Contract on or after the Annuity Commencement Date if the Payment
For a Period Certain Annuity payment option or if the Annuity Proceeds
Settlement Option is in effect. Under the Payments For a Period Certain option,
Hartford pays the Contract Owner the Commuted Value upon surrender. This
surrender charge is computed as of the date Hartford receives the written
request for surrender at the Administrative Office of the Company. No partial
surrenders are permitted after the Annuity Commencement Date.
A Contract Owner may request in writing a partial and full surrender of the
Contract. Partial surrenders may be requested by telephone provided certain
requirements are met. (See "Telephone Surrender Privileges," below.)
CONTRACT OWNERS SHOULD CONSULT THEIR TAX ADVISER REGARDING THE TAX
CONSEQUENCES OF A SURRENDER -- A surrender made before age 59 1/2 may result in
adverse tax consequences, including the imposition of a penalty tax of 10% of
the taxable portion of the Surrender Value. See "Federal Tax Considerations,"
page 21.)
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.
PAYMENT OF SURRENDER AMOUNTS -- Payment of 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 the Administrative Office of the Company.
There may be postponement in the payment of Surrender Amounts whenever (a)
the New York Stock Exchange is closed; (b) trading on the New York Stock
Exchange is restricted as determined by the Commission; (c) the Commission
permits postponement and so orders; or (d) the Commission determines that an
emergency exists making valuation of the amounts or disposal of securities not
reasonably practicable.
CERTAIN QUALIFIED CONTRACT SURRENDERS -- THERE ARE CERTAIN RESTRICTIONS ON
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 15
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SECTION 403(b) TAX SHELTERED ANNUITIES. AS OF DECEMBER 31, 1988, ALL SECTION
403(b) ANNUITIES HAVE LIMITS ON FULL AND PARTIAL SURRENDERS. CONTRIBUTIONS TO
THE CONTRACT MADE AFTER DECEMBER 31, 1988 AND ANY INCREASES IN CASH VALUE AFTER
DECEMBER 31, 1988 MAY NOT BE DISTRIBUTED UNLESS THE CONTRACT OWNER/ EMPLOYEE HAS
A) ATTAINED AGE 59 1/2, B) SEPARATED FROM SERVICE, C) DIED, D) BECOME DISABLED
OR E) EXPERIENCED FINANCIAL HARDSHIP (CASH VALUE INCREASES MAY NOT BE
DISTRIBUTED FOR HARDSHIPS PRIOR TO AGE 59 1/2).
DISTRIBUTIONS PRIOR TO AGE 59 1/2 DUE TO FINANCIAL HARDSHIP OR SEPARATION
FROM SERVICE MAY STILL BE SUBJECT TO A PENALTY TAX OF 10%.
HARTFORD WILL NOT ASSUME ANY RESPONSIBILITY FOR 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 CONTRACT 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 OR HER TAX ADVISER BEFORE UNDERTAKING ANY SUCH SURRENDER. (SEE
"FEDERAL TAX CONSIDERATIONS," PAGE 21.)
CONTRACT FEES AND CHARGES
MORTALITY AND EXPENSE RISK CHARGE -- Although Variable Annuity payments made
under the Contracts will vary in accordance with the investment performance of
the underlying Fund shares held in the Sub-Account(s), the payments will not be
affected by (a) Hartford's actual mortality experience 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.
During Contract Years 1-7, Hartford will, for assuming these risks under the
Contracts, make a daily charge at the rate of 1.50% per annum against all
Contract Values (estimated at .95% for mortality and .55% for expense). After
Contract Year 7 or upon the Annuity Commencement Date, whichever is earlier,
Hartford will make a daily charge of 1.25% per annum (estimated at .90% for
mortality and .35% for expense) against all Sub-Account Values.
The mortality undertaking 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 Annuity Mortality
Table projected to the year 2000 using Projection Scale G and other provisions
contained in the Contract) to Annuitants regardless of how long an Annuitant may
live, and regardless of how long all Annuitants as a group may live. Hartford
also assumes the liability for payment of a minimum Death Benefit under the
Contract.
The mortality undertakings are based on Hartford's determination of expected
mortality rates among all Annuitants. If actual experience among Annuitants
during the Annuity payment period deviates from Hartford's actuarial
determination of expected mortality rates among Annuitants because, as a group,
their longevity is longer than anticipated, Hartford must provide amounts from
its general funds to fulfill its Contract obligations. Hartford will bear the
loss in such a situation. Also, in the event of the death of an Annuitant or
Contract Owner before the Annuity Commencement Date, whichever is earlier,
Hartford can, in periods of declining value, experience a loss resulting from
the assumption of the mortality risk relative to the guaranteed Death Benefit.
In providing an expense undertaking, Hartford assumes the risk that the
Annual Maintenance Fee for maintaining the Contracts prior to the Annuity
Commencement Date may be insufficient to cover the actual cost of providing such
items.
ANNUAL MAINTENANCE FEE -- Each year, on each Contract Anniversary on or
before the Annuity Commencement Date, Hartford will deduct an Annual Maintenance
Fee, if applicable, from Contract Values to reimburse it for expenses relating
to the maintenance of the Contract and the Sub-Account(s) thereunder. The Annual
Maintenance Fee is $30 per Contract Year for Contracts with less than $50,000
Contract Value on the Contract Anniversary. If, during a Contract Year, the
Contract is surrendered for its full value, Hartford will deduct the Annual
Maintenance Fee, if applicable, 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 deduction will be made pro rata
according to the value in each Sub-Account under a Contract.
The types of expenses covered by the Annual Maintenance Fee include, but are
not limited to, expenses of issuing the Contract and expenses for confirmations,
Contract quarterly statements, processing of transfers and surrenders,
responding to Contract Owner inquiries, reconciling and depositing cash
receipts, calculation and monitoring daily Sub-Account unit values, Separate
Account reporting, including semiannual and annual reports and mailing and
tabulation of shareholder proxy solicitations.
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16 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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Hartford reserves the right to waive the Annual Maintenance Fee under
certain conditions.
PREMIUM TAXES -- A deduction is also made for Premium Tax, if applicable,
imposed by a federal, state or other governmental entity. Certain states impose
a Premium Tax, currently ranging up to 4%. Some states assess the tax at the
time Premium 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 government authorities, at the
time the Contract is surrendered, at the time the Death Benefit is paid, or on
the Annuity Commencement Date.
EXCEPTIONS TO CHARGES UNDER THE CONTRACT -- Hartford may offer, in its
discretion, reduced fees and charges including, but not limited to, the
mortality and expense risk charge and the Annual Maintenance Fee for certain
sales (including employer sponsored savings plans) under circumstances which may
result in savings of certain costs and expenses. Reductions in these fees and
charges will not be unfairly discriminatory against any Contract Owner.
DEATH BEFORE THE ANNUITY
COMMENCEMENT DATE
If the Contract Owner or the Annuitant dies before the Annuity Commencement
Date, Hartford will pay a Death Benefit.
If the deceased had not attained age 81, the Death Benefit is the greatest
of:
(a) the Contract Value, or
(b) 100% of the total Premium Payments made to such Contract, reduced by any
prior surrenders, or
(c) the Maximum Anniversary Value immediately preceding the date of death.
The Maximum Anniversary Value is equal to the greatest Contract Anniversary
value attained from the following: Hartford will calculate a Contract
Anniversary value for each Contract Anniversary prior to the deceased's attained
age 81. The Contract Anniversary value is equal to the Contract Value on a
Contract Anniversary, increased by the dollar amount of any Premium Payments
made since that anniversary and reduced by the dollar amount of any partial
surrenders since that anniversary.
If the deceased had attained age 81, then the Death Benefit is the greatest
of:
(a) the Contract Value, or
(b) 100% of the total Premium Payments made to such Contract, reduced by any
prior surrenders, or
(c) the Maximum Anniversary Value at the deceased's attained age 80, reduced by
any prior surrenders and increased by premiums paid.
If the Contract Owner or Annuitant dies before the Annuity Commencement Date
and a Death Benefit is payable to the Beneficiary, the Death Benefit will be
calculated as of the date Hartford receives written notification of Due Proof of
Death. Any Annuity payments made or after the date of death, but before receipt
of written notification of Due Proof of Death will be recovered by Hartford from
the Payee.
The calculated Death Benefit will remain invested in the Separate Account in
accordance with the last allocation instructions given by the Contract Owner
until the proceeds are paid or Hartford receives new settlement instructions
from the Beneficiary. During the time period between Hartford's receipt of
written notification of Due Proof of Death and Hartford's receipt of the
complete settlement instructions, the calculated Death Benefit will remain
invested in the Sub-Account(s) previously elected by the Contract Owner and will
be subject to market fluctuations.
IF THE CONTRACT OWNER DIES before the Annuity Commencement Date, any
surviving joint Contract Owner becomes the Beneficiary. If there is no surviving
joint Contract Owner, the designated Beneficiary will be the Beneficiary. If the
Contract Owner's spouse is the sole Beneficiary and the Annuitant is living, the
spouse may elect, in lieu of receiving the Contract Value, to be treated as the
Contract Owner. If no Beneficiary designation is in effect or if the Beneficiary
has predeceased the Contract Owner, the Contract Owner's estate will be the
Beneficiary.
IF THE ANNUITANT DIES before the Annuity Commencement Date, the Contingent
Annuitant will become the Annuitant. If either (a) there is no Contingent
Annuitant, (b) the Contingent Annuitant predeceases the Annuitant, or (c) if any
sole Contract Owner dies before the Annuity Commencement Date, the Beneficiary,
as determined under the Contract control provisions, will receive the Death
Benefit. However, if the Annuitant dies prior to the Annuity Commencement Date
and the Contract Owner is living, the Contract Owner shall be the Beneficiary.
In that case, the rights of any designated Beneficiary shall be void.
DEATH ON OR AFTER THE ANNUITY
COMMENCEMENT DATE
If the Annuitant dies on or after the Annuity Commencement Date, Hartford
will pay the Death Benefit under the following Annuity payment options: Life
Annuity with Cash Refund and Life Annuity with Payment for a Period Certain.
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 17
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PAYMENT FOR A PERIOD CERTAIN -- The Death Benefit on or after the Annuity
Commencement Date, under the Payment for a Period Certain Annuity payment option
is as follows:
IF THE ANNUITANT DIES on or after the Annuity Commencement Date, the
Beneficiary will have the option of having payments continue to the Beneficiary
for the remainder of the period or taking the Death Benefit in one sum. If the
Beneficiary opts to take the Death Benefit in one sum, the Death Benefit will
equal the Commuted Value.
IF A CONTRACT OWNER WHO IS NOT THE ANNUITANT DIES on or after the Annuity
Commencement Date, any surviving joint Contract Owner becomes the sole Contract
Owner. If there is no surviving Contract Owner, the Beneficiary becomes the new
Contract Owner. If any Contract Owner dies, the remaining Annuity payments will
be distributed at least as rapidly as under the method of distribution being
used as of the date of such death.
LIFE ANNUITY WITH CASH REFUND -- The Death Benefit on or after the Annuity
Commencement Date, under the Life Annuity with Cash Refund Annuity payment
option equals the Contract Value less Premium Tax used to purchase Annuity Units
on the Annuity Calculation Date minus the sum of all Annuity payments made.
DISTRIBUTION REQUIREMENTS: PRIOR TO THE
ANNUITY COMMENCEMENT DATE
The Death Benefit will be distributed based on the Contract Owner's or
Annuitant's date of death and the Beneficiary's election:
(a) in a single lump sum, within 5 years from the death
(b) under an Annuity payment option provided that:
(1) Annuity payments begin within one year of the date of death, and
(2) Annuity payments are made in substantially equal installments over the
life of the Beneficiary, or
(3) Annuity payments are made in substantially equal installments over a
period not greater than the life expectancy of the Beneficiary;
(c) if the sole Beneficiary is the spouse of the deceased Contract Owner, he or
she may by written notice within one year of the Contract Owner's death,
elect to continue the Contract as the new Contract Owner. If the spouse so
elects, all of his or her rights as Beneficiary cease and if the deceased
Contract Owner was also the sole Annuitant and appointed no Contingent
Annuitant, he or she will become the Annuitant (for qualified plans, see
"Appendix I," page 27); or
(d) if the Contract Owner is not an individual, then the "primary Annuitant"
shall be treated as the Contract Owner under (a) and (b) above. For this
purpose, the "primary Annuitant" means 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.
The Death Benefit will only be paid after Hartford has received Due Proof of
Death.
There may be postponement in the payment of Death Benefits whenever (a) the
New York Stock Exchange is closed, including for holidays and 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.
SETTLEMENT PROVISIONS
You select an Annuity Commencement Date and an Annuity payment option which
may be on a fixed or variable basis, or a combination thereof. The Annuity
Commencement Date will not be deferred beyond the end of Annuitant's age 90 or
the end of Contract Year 10, whichever is later. (If the Contract is sold as
part of a Charitable Remainder Trust, the Annuity Commencement Date may be
deferred to the end of the Annuitant's age 100.) The Annuity Commencement Date
and/or the Annuity payment option may be changed from time to time, but any
change must be at least 30 days prior to the date on which Annuity payments are
scheduled to begin.
The Contract contains the 6 Annuity payment options described below and
Option 7, the Annuity Proceeds Settlement Option. Annuity payment options 3, 5,
6 and Annuity Proceeds Settlement Option 7 are each 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, Fixed Annuity
payments will automatically begin on the Annuity Commencement Date under Annuity
payment option 3 with Annuity payments guaranteed for 10 years. For Qualified
Contracts and Contracts issued in Texas, if you do not elect otherwise, Fixed
Annuity payments will begin automatically on the Annuity Commencement Date,
under option 1 to provide a life Annuity.
With the exception of Annuity payment option 6, no surrenders are permitted
after Annuity payments commence.
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18 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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ANNUITY PAYMENT OPTIONS
OPTION 1 -- Life Annuity -- Hartford makes Annuity payments for as long as
the Annuitant lives. Under this option, a Payee would receive only one Annuity
payment if the Annuitant dies after the first such payment, two Annuity payments
if the Annuitant dies after the second payment, etc.
OPTION 2 -- Life Annuity with a Cash Refund -- Hartford makes Variable
Annuity payments as long as the Annuitant lives. If the Annuitant dies and the
sum of all Annuity payments made are less than the Contract Value less Premium
Tax used to purchase Annuity Units on the Annuity Calculation Date, the
Beneficiary is entitled to a Death Benefit. The Death Benefit equals the
Contract Value less Premium Tax on the Annuity Calculation Date minus the sum of
all Annuity payments made. This option is only available when for Variable
Annuity payment using the 5% A.I.R.
OPTION 3 -- Life Annuity with Payments for a Period Certain -- Hartford
makes Annuity payments for as long as the Annuitant lives. At the time this
option is selected, the Contract Owner must select a specific number of years (a
minimum of 5 years and maximum of 100 minus the Annuitant's age). If the
Annuitant dies before the specified number of years has passed, the Beneficiary
will have the option of either having the payments continue to the Beneficiary
for the remainder of the period or receiving the present value of the remaining
payments in one sum. Some restrictions apply to Qualified Contracts with regards
to the specified number of years for which payments are guaranteed. (See first
paragraph under "Settlement Provisions," page 17.)
OPTION 4 -- Joint and Last Survivor Life Annuity -- Hartford makes Annuity
payments while the Annuitant and Joint Annuitant are living. After the death of
either Annuitant, payments continue for as long as the other Annuitant lives.
Under this option, a Payee would receive only one Annuity payment if the
Annuitant and Joint Annuitant die after the first such payment, etc. At the time
of purchase the Contract Owner must elect to have Annuity payments after the
death of the first Annuitant made in amounts equal to 100%, 66.67% or 50% of the
amount that would otherwise be paid.
OPTION 5 -- Joint and Last Survivor Life Annuity with Payments for a Period
Certain -- Hartford makes Annuity payments to the Payee while the Annuitant and
Joint Annuitant are living. After the death of either Annuitant, Annuity
payments continue to the Payee for as long as the Joint Annuitant lives. At the
time of purchase, the Contract Owner must elect to have Annuity payments after
the death of the first Annuitant made in amounts equal to 100%, 66.67% or 50% of
the amount that would otherwise be paid. At the time this Option is selected,
the Contract Owner must select a specific number of years (a minimum of five
years and maximum of 100 minus the younger Annuitant's age). If the Annuitant
and Joint Annuitant die before the specified number of years has passed, the
Beneficiary will have the option of either having the payments continue to the
Beneficiary for the remainder of the period or receiving the present value of
the remaining payments in one sum. Some restrictions apply to Qualified
Contracts with regards to the specified number of years for which payments are
guaranteed. (See first paragraph under "Settlement Provisions," page 17.)
OPTION 6 -- Payments for a Period Certain -- Hartford makes Annuity payments
for the number of years (a minimum of 5 years and maximum of 100 minus the
Annuitants age) selected by the Contract Owner. If the Annuitant dies before the
specified number of years has passed, Annuity payments to the Beneficiary will
continue until the specified number of years has elapsed. After the death of the
Annuitant, the Beneficiary will have the option of either having the payments
continue to the Beneficiary for the remainder of the period or receiving the
present value of the remaining payments in one sum. Some restrictions apply to
Qualified Contracts with regards to the specified number of years for which
payments are guaranteed. (See first paragraph under "Settlement Provisions,"
page 17.)
ANNUITY PROCEEDS SETTLEMENT OPTION
OPTION 7 -- Annuity Proceeds Settlement Option -- Proceeds from the Death
Benefit may be left with Hartford for a period not to exceed 5 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
surrenders may be made at any time. In the event of surrenders, the remaining
value will equal the Contract Value of the proceeds left with Hartford, minus
any surrenders. This option may not be available under certain Contracts issued
in connection with Qualified Plans.
Hartford may offer other Annuity payment options from time to time.
VARIABLE AND FIXED ANNUITY PAYMENTS -- When an Annuity is effected under a
Contract, unless otherwise specified, Contract Values (less applicable Premium
Taxes) held in the Sub-Accounts will be applied to provide a Variable Annuity
based on the pro rata amount in the various Sub-Accounts. YOU SHOULD CONSIDER
THE QUESTION OF ALLOCATION OF CONTRACT VALUES (LESS APPLICABLE PREMIUM TAXES)
AMONG SUB-ACCOUNTS OF THE SEPARATE ACCOUNT AND THE GENERAL ACCOUNT OF HARTFORD
TO MAKE CERTAIN THAT ANNUITY PAYMENTS ARE BASED ON THE INVESTMENT ALTERNATIVE
BEST SUITED TO YOUR NEEDS FOR RETIREMENT.
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 19
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The minimum Annuity payment is $50. No election may be made which results in
a first payment of less than $50. If at any time Annuity payments are or become
less than $50, Hartford has the right to change the frequency of payment to
intervals that will result in payments of at least $50.
When Annuity payments are to commence, the value of the Contract is
determined as the sum of 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.
All Annuity payments under any option will occur the same day of the month
as the Annuity Commencement Date, based on the payment frequency selected by the
Contract Owner. Available payment frequencies include monthly, quarterly,
semi-annual and annual. The payment frequency may not be charged after payout
has begun.
ANNUITY CALCULATION DATE AND ANNUITY
COMMENCEMENT DATE
The Contract Owner selects the Annuity Commencement Date in the application
or order request. The Annuity Calculation Date will be no more than five
Valuation Days before the Annuity Commencement Date. The Contract Value less any
applicable Premium Tax is applied to purchase Annuity Units of the Sub-Accounts
selected by the Contract Owner as of the Annuity Calculation Date. The first
Annuity payment is computed using the value of such Annuity Units as of the
Annuity Calculation Date.
INCOME PAYMENT DATES
All Annuity payments after the first Annuity payment are computed and
payable as of the Income Payment Dates. These dates are the same day of the
month as the Annuity Commencement Date based on the Annuity payment frequency
selected by the Contract Owner and shown on the specification page of the
Contract. Available Annuity payment frequencies includes monthly, quarterly,
semi-annual and annual. The Annuity payment frequency may not be changed once
selected by the Contract Owner.
In the event that the Contract Owner does not select a payment frequency,
Annuity payments will be made monthly.
VARIABLE ANNUITY PAYMENTS
THE FIRST VARIABLE ANNUITY PAYMENT -- Variable Annuity payments are periodic
payments from Hartford to the designated Payee, the amount of which varies from
one Income Payment Date to the next as a function of the net investment
performance of the Sub-Accounts selected by the Contract Owner to support such
Annuity payments. The dollar amount of the first Variable Annuity payment
depends on the Annuity payment option chosen, the age of the Annuitant, the
gender of the Annuitant (if applicable), the amount of Contract Value applied to
purchase the Annuity payments, and the applicable annuity purchase rates based
on the 1983a Individual Annuity Mortality table using projection scale G
projected to the year 2000 and an AIR of not less than 3.0%.
The dollar amount of the first Variable Annuity payment attributable to each
Sub-Account is determined by dividing the dollar amount of the Contract Value
less applicable Premium Tax applied to that Sub-Account on the Annuity
Calculation Date by $1,000 and multiplying the result by the payment factor in
the Contract for the selected Annuity payment option. The dollar value of the
first Variable Annuity payment is the sum of the first Variable Annuity payments
attributable to each Sub-Account.
ANNUITY UNITS -- The number of Annuity Units attributable to a Sub-Account
is derived by dividing the first Variable Annuity payment attributable to that
Sub-Account by the Annuity Unit value for that Sub-Account for the Valuation
Period ending on the Annuity Calculation Date or during which the Annuity
Calculation Date falls if the Valuation Period does not end on such date. The
number of Annuity Units attributable to each Sub-Account under a Contract
remains fixed unless there is a transfer of Annuity Units between Sub-Accounts.
SUBSEQUENT VARIABLE ANNUITY PAYMENTS -- The dollar amount of each subsequent
Variable Annuity payment attributable to each Sub-Account is calculated on the
Income Payment Date. It is determined by multiplying (a) by (b) and adding (c),
where:
(a) is the number of Annuity Units of each Sub-Account credited under the
Contract
(b) is the Annuity Unit value (described below) for that Sub-Account; and
(c) is the results of each Sub-Account calculation.
The total subsequent Variable Annuity payments equal the sum of the amounts
attributable to each Sub-Account.
Notwithstanding the foregoing, when an Income Payment Date would fall on a
day that is not a Valuation Day, the Income Payment is computed as of the next
Valuation Day. If the date of the month elected does not occur in a given month,
i.e., the 29th, 30th, or 31st of a month, the payments will be computed as of
the last Valuation Day of the month.
The Annuity Unit value of each Sub-Account for any Valuation Period is equal
to (a) multiplied by (b) multiplied by (c) where:
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20 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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(a) is the Net Investment Factor for the Valuation Period for which the Annuity
Unit value is being calculated;
(b) is the Annuity Unit value for the preceding Valuation Period; and
(c) is the Annuity Unit Factor.
The Annuity Unit Factor neutralizes the AIR percentage (3%, 5%, or 6%). The
daily Annuity Unit Factor corresponding to the AIR percentages of 3%, 5%, and 6%
are 0.999919, 0.999866, and 0.999840, respectively.
THE ASSUMED INVESTMENT RETURN (AIR) -- The Annuity Unit value will increase
or decrease from one Income Payment Date to the next in direct proportion to the
net investment return of the Sub-Account or Sub-Accounts supporting the Variable
Annuity payments, less an adjustment to neutralize the selected AIR. Dividing
what would otherwise be the Annuity Unit value by the AIR factor is necessary in
order to adjust the change in the Annuity Unit value (resulting from the Net
Investment Factor) so that the Annuity Unit value only changes to the extent
that the Net Investment Factor represents a rate of return greater than or less
than the AIR selected by the Contract Owner. Without this adjustment, the Net
Investment Factor would decrease the Annuity Unit value to the extent that such
value represented an annualized rate of return of less than 0.0% and increase
the Annuity Unit value to the extent that such value represented an annualized
rate of return of greater than 0.0%.
Subject to state approval, the Contract permits Contract Owners to select
one of three AIRs: 3%, 5% or 6%. A higher AIR will result in a higher initial
payment, a more slowly rising series of subsequent payments when actual
investment performance (minus any deductions and expenses) exceeds the AIR, and
a more rapid drop in subsequent payments when actual investment performance
(minus any deductions and expenses) is less than the AIR. The following examples
may help clarify the impact of selecting one AIR over another:
1. If a Contract Owner selects a 3% AIR and if the net investment return of the
Sub-Account for an Annuity payment period is equal to the pro-rated portion
of the 3% AIR, the Variable Annuity payment attributable to that Sub-Account
for that period will equal the Annuity payment for the prior period. To the
extent that such net investment return exceeds an annualized rate of return
of 3% for a payment period, the Annuity payment for that period will be
greater than the Annuity payment for the prior period and to the extent that
such return for a period falls short of an annualized rate of 3%, the
Annuity payment for that period will be less than the Annuity payment for
the prior period.
2. If a Contract Owner selects a 5% AIR and if the net investment return of the
Sub-Account for an Annuity payment period is equal to the pro-rated portion
of the 5% AIR, the Variable Annuity payment attributable to that Sub-Account
for that period will equal the Annuity payment for the prior period. To the
extent that such net investment return exceeds an annualized rate of return
of 5% for a payment period, the Annuity payment for that period will be
greater than the Annuity payment for the prior period and to the extent that
such return for a period falls short of an annualized rate of 5%, the
Annuity payment for that period will be less than the Annuity payment for
the prior period.
3. If a Contract Owner selects a 6% AIR and if the net investment return of the
Sub-Account for an Annuity payment period is equal to the pro-rated portion
of the 6% AIR, the Variable Annuity payment attributable to that Sub-Account
for that period will equal the Annuity payment for the prior period. To the
extent that such net investment return exceeds an annualized rate of return
of 6% for a payment period, the Annuity payment for that period will be
greater than the Annuity Payment for the prior period and to the extent that
such return for a period falls short of an annualized rate of 6%, the
Annuity payment for that period will be less than the Annuity payment for
the prior period.
LEVEL VARIABLE ANNUITY PAYMENTS WOULD BE PRODUCED IF THE INVESTMENT RATE
RETURNS 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.
EXCHANGE ("TRANSFER") OF ANNUITY UNITS -- After the Annuity Calculation
Date, the Contract Owner may exchange (i.e., "transfer") the dollar value of a
designated number of Annuity Units of a particular Sub-Account for an equivalent
dollar amount of Annuity Units of another Sub-Account. On the date of the
transfer, the dollar amount of a Variable Annuity payment generated from the
Annuity Units of either Sub-Account would be the same. Transfers are executed as
of the day Hartford receives a written request for a transfer. For guidelines
refer to "Sub-Account Value Transfers Before and After the Annuity Commencement
Date," page 13.
FIXED ANNUITY -- Fixed Annuity payments are determined at annuitization by
multiplying the Contract Value (less applicable Premium Taxes) by a rate to be
determined by Hartford which is no less than the rate specified in the Fixed
Annuity option tables in the Contract. The Annuity payment will remain level for
the duration of the Annuity. Any Fixed Annuity allocation may not be changed.
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 21
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ADDITIONAL CONTRACT INFORMATION
ASSIGNMENT
Ownership of a Contract described herein is generally assignable. However,
if the Contracts are issued pursuant to some form of Qualified Plan, it is
possible that the ownership of the Contracts may not be transferred or assigned
depending on the type of qualified retirement plan involved. An assignment of a
Non-Qualified Contract may be deemed a distribution which subjects the
assignment proceeds to income taxes and certain penalty taxes.
MISSTATEMENT OF AGE OR SEX
If the Annuitant's stated age and/or sex in the Contract are incorrect,
Hartford will change the benefits payable to those which the Premium Payments
would have purchased for the correct age and sex. Sex is not a factor when
Annuity Benefits are based on unisex annuity payment rate tables. If Annuity
payments were made based on incorrect age or sex, we will increase or reduce a
later Annuity payment or payments to adjust for the error. Any adjustment will
include interest, at a rate of 4% per year, from the date of wrong payment to
the date the adjustment is made.
CONTRACT MODIFICATION
Hartford reserves the right to modify the Contract, but only if such
modification: (a) 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 (b) 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 (c) is necessary to reflect a
change in the operation of the Separate Account or the Sub-Account(s) or (d)
provides additional Separate Account options or (e) withdraws Separate Account
options. In the event of any such modification Hartford will provide notice to
the Contract Owner or to the payee(s) during the Annuity period. Hartford may
also make appropriate endorsement to the Contract to reflect such modification.
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 27, 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 "Contract Value -- Before the Annuity
Commencement Date" commencing on page 12). As a result, such investment income
and realized capital gains are automatically applied to increase reserves under
the Contract.
No taxes are due on interest, dividends and short-term or long-term capital
gains earned by the Separate Account with respect to Qualified or Non-Qualified
Contracts.
C. TAXATION OF ANNUITIES -- GENERAL
PROVISIONS AFFECTING PURCHASERS OTHER
THAN QUALIFIED RETIREMENT PLANS
Section 72 of the Code governs the taxation of annuities in general.
1. NON-NATURAL PERSONS, CORPORATIONS, ETC.
Section 72 contains provisions for Contract Owners which are non-natural
persons. Non-natural persons include corporations, trusts, and partnerships. The
annual
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22 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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net increase in the value of the Contract is currently includable in the gross
income of a non-natural person unless the non-natural person holds the Contract
as an agent for a natural person. There is an exception from current inclusion
for certain annuities held in tax-qualified retirement arrangements, certain
annuities held by structured settlement companies, certain annuities held by an
employer with respect to a terminated tax-qualified retirement plan and certain
immediate annuities. A non-natural person which is a tax-exempt entity for
federal tax purposes will not be subject to income tax as a result of this
provision.
If the Contract Owner is not an individual, the primary Annuitant shall be
treated as the Contract Owner for purposes of making distributions which are
required to be made upon the death of the Contract Owner. If there is a change
in the primary Annuitant, such change shall be treated as the death of the
Contract Owner.
2. OTHER CERTIFICATE OWNERS (NATURAL PERSONS).
A Contract Owner is not taxed on increases in the value of the Contract
until an amount is received or deemed received, e.g., in the form of a lump sum
payment (full or partial value of a Contract) or as Annuity payments under the
settlement option elected.
The provisions of Section 72 of the Code concerning distributions are
summarized briefly below. Also summarized are special rules affecting
distributions from Contracts obtained in a tax-free exchange for other annuity
contracts or life insurance contracts which were purchased prior to August 14,
1982.
A. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
i. Total premium payments less amounts received which were not includable in
gross income equal the "investment in the contract" under Section 72 of the
Code.
ii. To the extent that the value of the Contract (ignoring any surrender
charges except on a full surrender) exceeds the "investment in the
contract," such excess constitutes the "income on the contract."
iii. Any amount received or deemed received prior to the Annuity Commencement
Date (e.g., upon a partial surrender) is deemed to come first from any
such "income on the contract" and then from "investment in the contract,"
and for these purposes such "income on the contract" shall be computed by
reference to any aggregation rule in subparagraph 2.c. below. As a result,
any such amount received or deemed received (1) shall be includable in
gross income to the extent that such amount does not exceed any such
"income on the contract," and (2) shall not be includable in gross income
to the extent that such amount does exceed any such "income on the
contract." If at the time that any amount is received or deemed received
there is no "income on the contract" (e.g., because the gross value of the
Contract does not exceed the "investment in the contract" and no
aggregation rule applies), then such amount received or deemed received
will not be includable in gross income, and will simply reduce the
"investment in the contract."
iv. The receipt of any amount as a loan under the Contract or the assignment or
pledge of any portion of the value of the Certificate shall be treated as
an amount received for purposes of this subparagraph a. and the next
subparagraph b.
v. In general, the transfer of the Contract, without full and adequate
consideration, will be treated as an amount received for purposes of this
subparagraph a. and the next subparagraph b. This transfer rule does not
apply, however, to certain transfers of property between spouses or incident
to divorce.
B. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT
DATE.
Annuity payments made periodically after the Annuity Commencement Date are
includable in gross income to the extent the payments exceed the amount
determined by the application of the ratio of the "investment in the contract"
to the total amount of the payments to be made after the Annuity Commencement
Date (the "exclusion ratio").
i. When the total of amounts excluded from income by application of the
exclusion ratio is equal to the investment in the contract as of the Annuity
Commencement Date, any additional payments (including surrenders) will be
entirely includable in gross income.
ii. If the annuity payments cease by reason of the death of the Annuitant and,
as of the date of death, the amount of annuity payments excluded from gross
income by the exclusion ratio does not exceed the investment in the
contract as of the Annuity Commencement Date, then the remaining portion of
unrecovered investment shall be allowed as a deduction for the last taxable
year of the Annuitant.
iii. Generally, nonperiodic amounts received or deemed received after the
Annuity Commencement Date are not entitled to any exclusion ratio and
shall be fully includable in gross income. However, upon a full surrender
after such date, only the excess of the amount received (after any
surrender charge) over the remaining "investment in the contract" shall be
includable in gross income (except to the extent that the aggregation rule
referred to in the next subparagraph c. may apply).
C. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS.
Contracts issued after October 21, 1988 by the same insurer (or affiliated
insurer) to the same Contract Owner within the same calendar year (other than
certain contracts
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 23
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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 premature
distribution 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 Contract Owner 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 Contract Owner'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 Contract
Owner (or the joint lives or life expectancies of the Contract Owner and
the Contract Owner's Beneficiary).
5. Distributions of amounts which are allocable to the "investment in the
contract" prior to August 14, 1982 (see next subparagraph e.).
E. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED
THROUGH A TAX-FREE EXCHANGE OF OTHER ANNUITY OR
LIFE INSURANCE CONTRACTS PURCHASED PRIOR TO
AUGUST 14, 1982.
If the Contract was obtained by a tax-free exchange of a life insurance or
annuity contract purchased prior to August 14, 1982, then any amount received or
deemed received prior to the Annuity Commencement Date shall be deemed to come
(1) first from the amount of the "investment in the contract" prior to August
14, 1982 ("pre-8/14/82 investment") carried over from the prior Contract, (2)
then from the portion of the "income on the contract" (carried over to, as well
as accumulating in, the successor Contract) that is attributable to such
pre-8/14/82 investment, (3) then from the remaining "income on the contract" and
(4) last from the remaining "investment in the contract." As a result, to the
extent that such amount received or deemed received does not exceed such
pre-8/14/82 investment, such amount is not includable in gross income., In
addition, to the extent that such amount received or deemed received does not
exceed the sum of (a) such pre-8/14/82 investment and (b) the "income on the
contract" attributable thereto, such amount is not subject to the 10% penalty
tax. In all other respects, amounts received or deemed received from such post-
exchange Contracts are generally subject to the rules described in this
subparagraph 3.
F. REQUIRED DISTRIBUTIONS.
i. Death of Certificate Owner or Primary Annuitant
Subject to the alternative election or spouse beneficiary provisions in ii or
iii below:
1. If any Contract Owner dies on or after the Annuity Commencement Date and
before the entire interest in the Contract has been distributed, the
remaining portion of such interest shall be distributed at least as
rapidly as under the method of distribution being used as of the date of
such death;
2. If any Contract Owner dies before the Annuity Commencement Date, the
entire interest in the Contract will be distributed within 5 years after
such death; and
3. If the Contract Owner is not an individual, then for purposes of 1. or
2. above, the primary annuitant under the Contract shall be treated as
the Contract Owner, and any change in the primary annuitant shall be
treated as the death of the Contract Owner. The primary annuitant is the
individual, the events in the life of whom are of primary importance in
affecting the timing or amount of the payout under the Contract.
ii. Alternative Election to Satisfy Distribution Requirements
If any portion of the interest of a Contract Owner described in i. above is
payable to or for the benefit of a designated beneficiary, such beneficiary
may elect to have the portion distributed over a period that does not
extend beyond the life or life expectancy of the beneficiary. The election
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
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24 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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the Annuitant or Contingent Annuitant is living, such spouse shall be
treated as the Contract Owner of such portion for purposes of section i.
above.
3. DIVERSIFICATION REQUIREMENTS.
Section 817 of the Code provides that a variable annuity contract will not
be treated as an annuity contract for any period during which the investments
made by the separate account or underlying fund are not adequately diversified
in accordance with regulations prescribed by the Treasury Department. If a
Contract is not treated as an annuity contract, the Contract Owner will be
subject to income tax on the annual increases in cash value.
The Treasury Department has issued diversification regulations which
generally require, among other things, that no more than 55% of the value of the
total assets of the segregated asset account underlying a variable contract is
represented by any one investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three investments, and no
more than 90% is represented by any four investments. In determining whether the
diversification standards are met, all securities of the same issuer, all
interests in the same real property project, and all interests in the same
commodity are each treated as a single investment. In addition, in the case of
government securities, each government agency or instrumentality shall be
treated as a separate issuer.
A separate account must be in compliance with the diversification standards
on the last day of each calendar quarter or within 30 days after the quarter
ends. If an insurance company inadvertently fails to meet the diversification
requirements, the company may comply within a reasonable period and avoid the
taxation of contract income on an ongoing basis. However, either the company or
the Contract Owner must agree to pay the tax due for the period during which the
diversification requirements were not met.
Hartford monitors the diversification of investments in the separate
accounts and tests for diversification as required by the Code. Hartford intends
to administer all contracts subject to the diversification requirements in a
manner that will maintain adequate diversification.
4. OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT.
In order for a variable annuity contract to qualify for tax deferral, assets
in the segregated asset accounts supporting the variable contract must be
considered to be owned by the insurance company and not by the variable contract
owner for tax purposes. The Internal Revenue Service ("IRS") has issued several
rulings which discuss investor control. The IRS has ruled that certain incidents
of ownership by the contract owner, such as the ability to select and control
investments in a separate account, could cause the contract owner to be treated
as the owner of the assets for tax purposes.
Further, in the explanation to the temporary Section 817 diversification
regulations, the Treasury Department noted that the temporary regulations "do
not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset account may cause the investor, rather
than the insurance company, to be treated as the owner of the assets in the
account." The explanation further indicates that "the temporary regulations
provide that in appropriate cases a segregated asset account may include
multiple sub-accounts, but do not specify the extent to which policyholders may
direct their investments to particular sub-accounts without being treated as the
owners of the underlying assets. Guidance on this and other issues will be
provided in regulations or revenue rulings under Section 817(d), relating to the
definition of variable contract." The final regulations issued under Section 817
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 taxes withheld. If an election not to have taxes withheld is not
provided, 10% of the taxable distribution will be withheld as federal income
tax. Election forms will be provided at the time distributions are requested. If
the necessary election forms are not submitted to Hartford, Hartford will
automatically withhold 10% of the taxable distribution.
2. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A
PERIOD GREATER THAN ONE YEAR).
The portion of a periodic distribution which constitutes taxable income will
be subject to federal income tax withholding as if the recipient were married
claiming three exemptions unless the recipient elects otherwise. A recipient may
elect not to have income taxes withheld or to have income taxes withheld at a
different rate by providing a
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 25
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completed election form. Election forms will be provided at the time
distributions are requested.
E. GENERAL PROVISIONS AFFECTING
TAX-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 27 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.
OTHER INFORMATION
DISTRIBUTION OF THE CONTRACTS
Hartford Securities Distribution Company, Inc. ("HSD") serves as principal
underwriter for the securities issued with respect to the Separate Account. HSD
is an affiliate of Hartford. Hartford's parent company indirectly owns 100% of
HSD. The principal business address of HSD is the same as that of Hartford.
The securities will be sold by salespersons of HSD who represent Hartford as
insurance and by variable annuity agents 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 1% of Premium
Payments. Trail commissions of 1% annually will be paid on a quarterly basis
beginning after the first Contract Year. 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 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.
The securities may also be sold directly to employees of Hartford and
Hartford Fire Insurance Company, an affiliate of Hartford, without compensation
to HSD salespersons. The securities will be credited with an additional 5% of
the employee's Premium Payment by Hartford. This additional percentage of
Premium Payment in no way affects present or future charges, rights, benefits or
current Contract Values of other Contract Owners.
LEGAL MATTERS
There are no material legal proceedings to which the Separate Account is a
party.
Counsel with respect to federal laws and regulations applicable to the issue
and sale of the Contracts and with respect to Connecticut law is Lynda Godkin,
General Counsel, Hartford Life, P.O. Box 2999, Hartford, Connecticut 06104-2999.
YEAR 2000
The Year 2000 issue relates to the ability or inability of computer systems
to properly process information and data containing or related to dates
beginning with the year 2000 and beyond. The Year 2000 issue exists because,
historically, many computer systems that are in use today were developed years
ago when a year was identified using a two-digit field rather than a four-digit
field. As information and data containing or related to the century date are
introduced to computer hardware, software and other systems, date sensitive
systems may recognize the year 2000 as 1900, or not at all, which may result in
computer systems processing information incorrectly. This, in turn, may
significantly and adversely affect the integrity and reliability of information
databases and may result in a wide variety of adverse consequences to a company.
In addition, Year 2000 problems that
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26 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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occur with third parties with which a company does business, such as suppliers,
computer vendors and others, may also adversely affect any given company.
As an insurance and financial services company, Hartford has thousands of
individual and business customers that have purchased or invested in insurance
policies, annuities, mutual funds and other financial products. Nearly all of
these policies and products contain date sensitive data, such as policy
expiration dates, birth dates, premium payments dates and the like. In addition,
Hartford has business relationships with numerous third parties that affect
virtually all aspects of its business, including, without limitation, suppliers,
computer hardware and software vendors, insurance agents and brokers, securities
broker-dealers and other distributors of financial products.
Beginning in 1990, Hartford began working on making its computer systems
Year 2000 ready, either by installing new programs or by replacing systems. In
January 1998, Hartford commenced a company-wide program to further identify,
assess and remediate the impact of Year 2000 problems in all of Hartford's
business segments. Hartford currently anticipates that this internal program
will be substantially completed by the end of 1998, and testing of computer
systems will continue through 1999.
In addition, as part of its Year 2000 program, Hartford is identifying third
parties with which it has significant business relations in order to attempt to
assess any potential impact on Hartford as a result of such third-party Year
2000 issues and remediation plans. Hartford currently anticipates that it will
substantially complete this evaluation by the end of 1998, and will conduct
systems testing with certain third parties through 1999. Hartford does not have
control over these third parties and, as a result, Hartford cannot currently
determine to what extent future operating results may be adversely affected by
the failure of these third parties to successfully address their Year 2000
issues. Hartford will continue to assess Year 2000 risk exposures related to its
own operations and its third-party relationships and is in the process of
developing business contingency plans.
The costs of addressing the Year 2000 issue that have been incurred through
the six months ended June 30, 1998 have not been material to Hartford's
financial condition or results of operations. Hartford will continue to incur
costs related to its Year 2000 efforts and does not anticipate that the costs to
be incurred will be material to its financial condition or results of
operations.
EXPERTS
The audited financial statements included in this registration statement
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
Reference is made to said report on the statutory financial statements of
Hartford Life and Annuity Insurance Company (formerly ITT Hartford Life and
Annuity Insurance Company) which states the statutory 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.
ADDITIONAL INFORMATION
Inquiries will be answered by calling your representative or by writing:
Hartford Life and Annuity Insurance Company
Attn: Individual Annuity Services
P.O. Box 5085
Hartford, Connecticut 06102-5085
Telephone: (800) 862-6668 (Contract Owners)
(800) 862-7155 (Registered Representatives)
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APPENDIX I
INFORMATION REGARDING TAX-QUALIFIED RETIREMENT PLANS
The tax rules applicable to tax-qualified contract owners, including
restrictions on contributions and distributions, taxation of distributions and
tax penalties, vary according to the type of plan as well as the terms and
conditions of the plan itself. Various tax penalties may apply to contributions
in excess of specified limits, to distributions in excess of specified limits,
to distributions which do not satisfy certain requirements and to certain other
transactions with respect to qualified plans. Accordingly, this summary provides
only general information about the tax rules associated with use of the Contract
by a qualified plan. Contract owners, plan participants and beneficiaries are
cautioned that the rights and benefits of any person to benefits are controlled
by the terms and conditions of the plan regardless of the terms and conditions
of the Contract. Some qualified plans are subject to distribution and other
requirements, which are not incorporated into Hartford's administrative
procedures. Owners, participants and beneficiaries are responsible for
determining that contributions, distributions and other transactions comply with
applicable law. Because of the complexity of these rules, owners, participants
and beneficiaries are encouraged to consult their own tax 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 and the time when distributions must commence. Employers
intending to use these contracts in connection with such plans should seek
competent tax and other legal advice.
B. TAX SHELTERED ANNUITIES
UNDER SECTION 403(b)
Section 403(b) of the Code permits public school employees and employees of
certain types of charitable, educational and scientific organizations specified
in Section 501(c)(3) of the Code to purchase annuity contracts, and, subject to
certain limitations, exclude such contributions from gross income. Generally,
such contributions may not exceed the lesser of $10,000 (indexed) or 20% of the
employees "includable compensation" for his most recent full year of employment,
subject to other adjustments. Special provisions may allow some employees to
elect a different overall limitation.
Tax-sheltered annuity programs under Section 403(b) are subject to a
PROHIBITION AGAINST DISTRIBUTIONS FROM THE CONTRACT ATTRIBUTABLE TO
CONTRIBUTIONS MADE PURSUANT TO A SALARY REDUCTION AGREEMENT unless such
distribution is made:
(1) after the participating employee attains age 59 1/2;
(2) upon separation from service;
(3) upon death or disability; or
(4) in the case of hardship (and, in the case of hardship, any income
attributable to such contributions 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 the Deferred Compensation Plan of their
employer in accordance with the employer's plan and Section 457 of the Code.
Section 457 places limitations on contributions to Eligible Deferred
Compensation Plans maintained by a State ("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) or other tax-exempt organization. Generally,
the limitation is 33 1/3% of includable compensation (typically 25% of gross
compensation) or $7,500 (indexed), whichever is less. Such a plan may also
provide for additional "catch-up" deferrals during the three taxable years
ending before a participant attains normal retirement age.
An employee electing to participate in an Eligible Deferred Compensation
Plan should understand that his or her rights and benefits are governed strictly
by the terms of the plan and that the employer is the legal owner of any
contract issued with respect to the plan. The employer, as owner of the
contract(s), retains all voting and redemption rights which may accrue to the
contract(s) issued with respect to the plan. The participating employee should
look to the terms of his or her plan for any charges in regard to participating
therein other than those disclosed in this Prospectus. Participants should also
be aware that effective August 20, 1996, the Small Business Job Protection Act
of
<PAGE>
28 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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
governmental Eligible Deferred Compensation Plans already in existence on August
20, 1996, and provide that such plans need not establish a trust before January
1, 1999. However, this requirement of a trust does not apply to amounts under an
Eligible Deferred Compensation Plan of a tax-exempt (non-governmental)
organization and such amounts will be subject to the claims of such tax-exempt
employer's general creditors.
In general, distributions from an Eligible Deferred Compensation Plan are
prohibited under Section 457 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.
IRAs generally may not invest in life insurance contracts. However, an
annuity that is used as an IRA may provide a death benefit that equals the
greater of the premiums paid and the annuity's cash value. The Contract offers
an enhanced Death Benefit that may exceed the greater of the Contract Value and
total Premium Payments less prior surrenders. For Contracts issued in most
states, Hartford has obtained approval from the Internal Revenue Service to use
the Contract as an IRA.
Special rollover rules apply to SIMPLE IRAs. Amounts can be rolled over from
one SIMPLE IRA to another SIMPLE IRA. However, amounts can be rolled over from a
SIMPLE IRA to a regular IRA only after two years have expired since the
participant first commenced participation in the SIMPLE IRA. Amounts cannot be
rolled over to a SIMPLE IRA from a qualified plan or a regular IRA. Hartford is
a non designated financial institution.
Effective after December 31, 1997, the Contract can be offered as ROTH IRAs
under Section 408A of the Code. Contributions to a ROTH IRA are not deductible.
Subject to special limitations, a distribution from a regular IRA may be rolled
over to a ROTH IRA. However, a rollover to a ROTH IRA is not excludable from
gross income. If certain specified conditions are met, qualified distributions
from a ROTH IRA are tax-free.
E. TAX PENALTIES
Distributions from retirement plans are generally taxed under Section 72 of
the Code. Under these rules, a portion of each distribution may be excludable
from income. The excludable amount is the portion of the distribution which
bears the same ratio as the after-tax contributions bear to the expected return.
1. PREMATURE DISTRIBUTION
Distributions from an IRA or a qualified plan before an participant attains
age 59 1/2 are generally subject to an additional tax equal to 10% of the
taxable portion of the distribution. The 10% penalty does not apply to
distributions made after the employee's death, on account of disability, for
eligible medical expenses and distributions in the form of a life annuity and,
except in the case of an IRA, certain distributions after separation from
service after age 55. For these purposes, 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 described above is increased to 25% with respect to non-exempt
premature distributions made from your SIMPLE IRA during the first two years
following the date you first commenced participation in any SIMPLE IRA plan of
your employer.
2. MINIMUM DISTRIBUTION TAX
If the amount distributed is less than the minimum required distribution for
the year, the participant is subject to a 50% tax on the amount that was not
properly distributed.
An individual's interest in a tax-qualified retirement plan must generally
be distributed, or begin to be distributed, not later than April 1 of the
calendar year following the later of (i) the calendar year in which the
individual
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 29
- --------------------------------------------------------------------------------
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 this required beginning date over a period which may not extend
beyond a maximum of the life expectancy of the participant and a designated
Beneficiary. Each annual distribution must equal or exceed a "minimum
distribution amount" which is determined by dividing the account balance by the
applicable life expectancy. This account balance is generally based upon the
account value as of the close of business on the last day of the previous
calendar year. In addition, minimum distribution incidental benefit rules may
require a larger annual distribution.
If an individual dies before reaching his or her required beginning date,
the individual's entire interest must generally be distributed within five years
of the individual's death. However, this rule will be deemed satisfied, if
distributions begin before the close of the calendar year following the
individual's death to a designated Beneficiary (or over a period not extending
beyond the life expectancy of the beneficiary). If the Beneficiary is the
individual's surviving spouse, distributions may be delayed until the individual
would have attained age 70 1/2.
If an individual dies after reaching his or her required beginning date or
after distributions have commenced, the individual's interest must generally be
distributed at least as rapidly as under the method of distribution in effect at
the time of the individual's death.
3. 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 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>
30 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
TO
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
SECTION PAGE
------------------------------------------------------------------------ ----
<S> <C>
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....................................................
</TABLE>
<PAGE>
This form must be completed for all tax sheltered annuities.
SECTION 403(b)(11) ACKNOWLEDGMENT FORM
The Hartford variable annuity Contract which you have recently purchased is
subject to certain restrictions imposed by the Tax Reform Act of 1986.
Contributions to the Contract after December 31, 1988 and any increases in cash
value after December 31, 1988 may not be distributed to you unless you have:
a. attained age 59 1/2,
b. separated from service,
c. died, or
d. become disabled.
Distributions of post December 31, 1988 contributions, excluding any income
thereon, may also be made if you have experienced a financial hardship.
Also, there may be a 10% penalty tax for distributions made prior to age 59 1/2
because of financial hardship or separation from service.
Also, please be aware that your 403(b) Plan may also offer other financial
alternatives other than the Hartford variable annuity. Please refer to your
Plan.
Please complete the following and return to:
Hartford Life and Annuity Insurance Company
Individual Annuity Services
P.O. Box 5085
Hartford, CT 06102-5085
Name of Contract Owner/Participant
- -------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City or Plan/School District
- --------------------------------------------------------------------------------
Date:
- --------------------------------------------------------------------------------
Contract No:
- --------------------------------------------------------------------------------
Signature:
- --------------------------------------------------------------------------------
<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 Services
P.O. Box 5085
Hartford, CT 06102-5085
Please send a Statement of Additional Information for The Director Access to
me at the following address:
- ----------------------------------------------------
Name
- ------------------------------------------------------------
Address
- ------------------------------------------------------------
City/State Zip
Code
<PAGE>
PART B
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT ONE
THE DIRECTOR ACCESS
This Statement of Additional Information is not a prospectus. The information
contained herein should be read in conjunction with the Prospectus.
To obtain a Prospectus, send a written request to Hartford Life and Annuity
Insurance Company Attn: Individual Annuity Services, P.O. Box 5085, Hartford,
CT 06102-5085.
Date of Prospectus: September 30, 1998
Date of Statement of Additional Information: September 30, 1998
<PAGE>
2
TABLE OF CONTENTS
SECTION PAGE
DESCRIPTION OF HARTFORD LIFE AND ANNUITY INSURANCE COMPANY . . . . . . 3
SAFEKEEPING OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . 3
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . 3
DISTRIBUTION OF CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . 4
CALCULATION OF YIELD AND RETURN. . . . . . . . . . . . . . . . . . . . 4
PERFORMANCE COMPARISONS. . . . . . . . . . . . . . . . . . . . . . . . 8
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
3
DESCRIPTION OF HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
Hartford Life and Annuity Insurance Company ("Hartford") is a stock life
insurance company engaged in the business of writing life insurance and
annuities, both individual and group, in all states of the United States and
the District of Columbia, except New York. Effective January 1, 1998,
Hartford's name changed 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, 9/9/97 A+ Financial soundness and
Inc. operating performance.
Standard & Poor's 7/2/97 AA Insurer financial strength
Duff & Phelps 2/24/97 AA+ Claims paying ability
SAFEKEEPING OF ASSETS
Title to the assets of the Separate Account is held by Hartford. The assets are
kept physically segregated and are held separate and apart from Hartford's
general corporate assets. Records are maintained of all purchases and
redemptions of Fund shares held in each of the Sub-Accounts.
INDEPENDENT PUBLIC ACCOUNTANTS
The audited financial statements included in this 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 financial statements of
Hartford Life & Annuity Insurance Company (formerly ITT Hartford Life &
Annuity Insurance Company) which states the statutory 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.
<PAGE>
4
DISTRIBUTION OF CONTRACTS
Hartford Securities Distribution Company, Inc. ("HSD") serves as principal
underwriter for the securities issued with respect to the Separate Account
and will offer the Contracts on a continuous basis.
HSD is a wholly-owned subsidiary of Hartford. The principal business address
of HSD is the same as that of Hartford.
The securities will be sold by salespersons of HSD, who represent Hartford as
insurance and Variable Annuity agents and who are registered representatives
of Broker-Dealers who have entered into distribution agreements with HSD.
HSD is registered with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 as a Broker-Dealer and is a member of the
National Association of Securities Dealers, Inc. ("NASD").
CALCULATION OF YIELD AND RETURN
YIELD OF THE MONEY MARKET FUND SUB-ACCOUNT. 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 accumulation unit of
the Sub-Account at the beginning of the period, subtracting a hypothetical
charge reflecting deductions from Contract Owner accounts, and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base period return, and then multiplying the base period return by
(365/7) with the resulting yield figure carried to the nearest hundredth of
one percent. Net changes in value of a hypothetical account will include net
investment income of the account (accrued daily dividends as declared by the
underlying funds, less daily expense charges of the account) for the period,
but will not include realized gains or losses or unrealized appreciation or
depreciation on the underlying fund shares.
The effective yield is calculated by compounding the base period return by
adding 1, raising the sum to a power equal to 365 divided by 7 and
subtracting 1 from the result, according to the following formula:
Effective Yield = [(Base Period Return + 1) 365/7] - 1
<PAGE>
5
The yield and effective yield for the seven day period ending December 31,
1997 for the Money Market Fund Sub-Account is as follows:
($30 Annual Maintenance Fee)
Yield: 3.87%
Effective Yield: 3.94%
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 MAINTENANCE FEE.
YIELDS OF BOND FUND, HIGH YIELD 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 hypothetical account will assume the change in the underlying
fund's "net asset value per share" for the same period in addition to the
daily expense charge assessed at the sub-account level for the respective
period. The Bond Fund, High Yield 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 Hartford Bond Fund, Hartford High Yield Fund
and Hartford Mortgage Securities Fund.
THE YIELD REFLECTS RECURRING CHARGES ON THE SEPARATE ACCOUNT LEVEL, INCLUDING
THE ANNUAL MAINTENANCE FEE.
Yield calculations of the Bond Fund and Mortgage Securities Sub-Accounts used
for illustration purposes reflect the interest earned by the Sub-Accounts,
less applicable asset based charges assessed under the Contract over the base
period. Yield quotations based on a 30 day period ended December 31, 1997
were computed by dividing the dividends and interests earned during the
period by the maximum offering price per unit on the last day of the period,
according to the following formula:
Example:
Current Yield Formula for the Sub-Account 2[((A-B)/(CD) + 1)6 - 1]
Where A = Dividends and interest earned during the period.
B = Expenses accrued for the period (net of reimbursements).
C = The average daily number of units outstanding during the period
that were entitled to receive dividends.
D = The maximum offering price per unit on the last day of the period.
<PAGE>
6
HARTFORD BOND FUND
Yield = 4.77%
HARTFORD MORTGAGE SECURITIES FUND
Yield = 5.03%
The yield is not yet available for the Hartford High Yield Fund because the
Fund is new. At any time in the future, yields and total return may be higher
or lower than past yields and there can be no assurance that any historical
results will continue.
CALCULATION OF TOTAL RETURN. As summarized in the Prospectus under the heading
"Performance Related Information," total return is a measure of the change in
value of an investment in a Sub-Account over the period covered. The formula
for total return used herein includes three steps: (1) calculating the value of
the hypothetical initial investment of $1,000 as of the end of the period by
multiplying the total number of units owned at the end of the period by the unit
value per unit on the last trading day of the period; (2) assuming redemption at
the end of the period and deducting any applicable contingent deferred sales
charge and (3) dividing this account value for the hypothetical investor by the
initial $1,000 investment and annualizing the result for periods of less than
one year. Total return will be calculated for one year, five years and ten
years or some other relevant periods if a Sub-Account has not been in existence
for at least ten years.
The following are the standardized average annual total return quotations for
the Sub-Accounts for the 1, 5, and 10 year periods ended December 31, 1997.
(These returns assume a mortality and risk expense charge of 1.50% and an
Annual Maintenance Fee of $30.) No information will be provided for Global
Leaders Fund, Growth and Income Fund, and High Yield Fund Sub-Accounts
because as of December 31, 1997, the Sub-Accounts had not commenced
operations.
<TABLE>
<CAPTION>
Since
Sub-Accounts Inception 1 Year 5 Year
-------------------------------------------------------------------------------------
<S> <C> <C> <C>
Advisers Fund 9.64% 19.65% 10.85%
Bond Fund 5.41% 6.69% 3.17%
Capital Appreciation Fund 14.48% 17.52% 14.75%
Dividend and Growth Fund 19.20% 26.92% N/A
Index Fund 10.38% 27.63% 15.06%
International Advisers Fund 7.10% 0.95% N/A
International Opportunities Fund 1.82% -4.15% 7.04%
Money Market Fund 4.05% 0.88% 0.06%
MidCap Fund 9.96% N/A N/A
Mortgage Securities Fund 5.33% 4.39% 2.30%
Small Company Fund 12.92% 14.10% N/A
Stock Fund 12.23% 26.42% 15.33%
</TABLE>
<PAGE>
7
In addition to the standardized total return, the Sub-Account may advertise a
non-standardized total return. This figure will usually be calculated for
one year, five years, and ten years or other periods. Non-standardized total
return is measured in the same manner as the standardized total return
described above, except that the Annual Maintenance Fee is not deducted.
Therefore, non-standardized total return for a Sub-Account is higher than
standardized total return for a Sub-Account.
The following are the non-standardized annualized total return quotations for
the Sub-Accounts for the 1, 5, and 10 year periods ended December 31, 1997.
(These returns assume a mortality and risk expense charge of 1.50% and an
Annual Maintenance Fee of $30.) No information will be provided for Global
Leaders Fund, Growth and Income Fund and High Yield Fund Sub-Accounts because
as of December 31, 1997, the Sub-Accounts had not commenced operations.
<TABLE>
<CAPTION>
Since
Sub-Accounts Inception 1 Year 5 Year 10 Year
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Advisers Fund 11.53% 22.65% 13.54% 12.38%
Bond Fund 7.46% 9.69% 6.06% 7.19%
Capital Appreciation Fund 15.97% 20.52% 17.18% 17.83%
Dividend and Growth Fund 21.87% 29.92% N/A N/A
Index Fund 12.83% 30.63% 17.70% 15.47%
International Advisers Fund 9.97% 3.95% N/A N/A
International Opportunities Fund 4.99% -1.15% 9.45% N/A
Money Market Fund 6.05% 3.88% 3.09% 4.17%
MidCap Fund 12.96% N/A N/A N/A
Mortgage Securities Fund 7.44% 7.39% 5.25% 6.83%
Small Company Fund 17.14% 17.10% N/A N/A
Stock Fund 13.61% 29.42% 17.92% 15.39%
</TABLE>
<PAGE>
8
PERFORMANCE COMPARISONS
YIELD AND TOTAL RETURN. Each Sub-Account may from time to time include its
total return in advertisements or in information furnished to present or
prospective shareholders. Each Sub-Account may from time to time include its
yield and total return in advertisements or information furnished to present
or prospective shareholders. Each Sub-Account may from time to time include
in advertisements its total return (and yield in the case of certain
Sub-Accounts) the ranking of those performance figures relative to such
figures for groups of other annuities analyzed by Lipper Analytical Services
and Morningstar, Inc. as having the same investment objectives.
The total return and yield may also be used to compare the performance of the
Sub-Accounts against certain widely acknowledged outside standards or indices
for stock and bond market performance. The Standard & Poor's Composite Index
of 500 Stocks (the "S&P 500") is a market value-weighted and unmanaged index
showing the changes in the aggregate market value of 500 stocks relative to
the base period 1941-43. The S&P 500 is composed almost entirely of common
stocks of companies listed on the New York Stock Exchange, although the
common stocks of a few companies listed on the American Stock Exchange or
traded over-the-counter are included. The 500 companies represented include
about 400 industrial, 60 transportation and 40 financial services concerns.
The S&P 500 represents about 80% of the market value of all issues traded on
the New York Stock Exchange.
The NASDAQ-OTC Composite Price Index (The "NASDAQ Index") is a market
value-weighted and unmanaged index showing the changes in the aggregate
market value of approximately 3,500 stocks relative to the base measure of
100.00 on February 5, 1971. The NASDAQ Index is composed entirely of common
stocks of companies traded over-the-counter and often through the National
Association of Securities Dealers Automated Quotations ("NASDAQ") system.
Only those over-the-counter stocks having only one market maker or traded on
exchanges are excluded.
The Morgan Stanley Capital International EAFE Index (the "EAFE Index") is an
unmanaged index, which includes over 1,000 companies representing the stock
markets of Europe, Australia, New Zealand, and the Far East. The EAFE Index
is weighted by market capitalization, and therefore, it has a heavy
representation in countries with large stock markets, such as Japan.
The Shearson Lehman Government Bond Index (the "SL Government Index") is a
measure of the market value of all public obligations of the U.S. Treasury;
all publicly issued debt of all agencies of the U.S. Government and all
quasi-federal corporations; and all corporate debt guaranteed by the U.S.
Government. Mortgage-backed securities, flower bonds and foreign targeted
issues are not included in the SL Government Index.
The Shearson Lehman Government/Corporate Bond Index (the "SL
Government/Corporate Index") is a measure of the market value of
approximately 5,300 bonds with a face value currently in excess of $1.3
trillion. To be included in the SL Government/Corporate Index, an
<PAGE>
9
issue must have amounts outstanding in excess of $1 million, have at least
one year to maturity and be rated "Baa" or higher ("investment grade") by a
nationally recognized rating agency.
The Composite Index for Hartford Advisers Fund is comprised of the S&P 500
(55%), the Lehman Government/Corporate Bond Index (35%), both mentioned
above, and 90 Day U.S. Treasury Bills (10%).
<PAGE>
- --------------------------------------------------------------------------------
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 Hartford Life and
Annuity Insurance Company ("Hartford") authorizing the
establishment of the Separate Account.(1)
(2) Not applicable.
(3) (a) Principal Underwriter Agreement.(2)
(3) (b) Form of Dealer Agreement.(2)
(4) Form of Individual Flexible Premium Variable Annuity
Contract.(1)
(5) Form of Application.(1)
(6) (a) Certificate of Incorporation of Hartford. (3)
(6) (b) Bylaws of Hartford.(2)
(7) Not applicable.
(8) Not applicable.
(9) Opinion and Consent of Lynda Godkin, Senior Vice President,
General Counsel, and Corporate Secretary.
(10) Consent of Arthur Andersen LLP, Independent Public
Accountants.
(11) No financial statements are omitted.
(12) Not applicable.
- -------------------------------
(1) Incorporated by reference to Post-Effective Amendment No. 5, to
the Registration Statement File No. 33-56790, dated May 1, 1995.
(2) Incorporated by reference to Post Effective Amendment No. 6, to
the Registration Statement File No. 33-56790, dated
May 1, 1996.
(3) Incorporated by reference to the Initial Filing, to the
Registration Statement File No. 333-45303, dated January 1,
1998.
<PAGE>
(13) Not applicable.
(14) Not applicable.
(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, Director*
Peter W. Cummins Senior Vice President
Ann M. de Raismes Senior Vice President
James R. Dooley Vice President
Timothy M. Fitch Vice President
David T. Foy Senior Vice President and Treasurer
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*
Steven L. Matthiesen Vice President
Michael C. O'Halloran Vice President
<PAGE>
- --------------------------------------------------------------------------------
NAME, AGE POSITION WITH HARTFORD
- --------------------------------------------------------------------------------
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*
Walter C. Welsh Senior Vice President
Raymond P. Welnicki Senior Vice President
Lizabeth H. Zlatkus Senior Vice President
David M. Znamierowski Senior Vice President, Director*
- --------------------------------------------------------------------------------
<PAGE>
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 June 30, 1998, there were 239,854 Contract Owners.
Item 28. Indemnification
Under Section 33-772 of the Connecticut General Statutes,
unless limited by its certificate of incorporation, the
Registrant must indemnify a director who was wholly successful,
on the merits or otherwise, in the defense of any proceeding to
which he was a party because he is or was a director of the
corporation against reasonable expenses incurred by him in
connection with the proceeding.
The Registrant may indemnify an individual made a party to a
proceeding because he is or was a director against liability
incurred in the proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the
best interests of the Registrant, and, with respect to any
criminal proceeding, had no reason to believe his conduct was
unlawful. Conn. Gen. Stat. Section 33-771(a). 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 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.
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)
<PAGE>
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
ITT Hartford Life and Annuity Insurance Company - Putnam
Capital Manager Trust Separate Account Two
ITT Hartford Life and Annuity Insurance Company - Separate
Account Three
ITT Hartford Life and Annuity Insurance Company - Separate
Account Five
ITT Hartford Life and Annuity Insurance Company - Separate
Account Six
American Maturity Life Insurance Company - Separate Account AMLVA
(b) Directors and Officers of HSD
Name and Principal Business Address
Positions and Offices With Underwriter
- --------------------- -----------------
Lowndes A. Smith President and Chief Executive Officer,
Director
John P. Ginnetti Executive Vice President, Director
Thomas M. Marra Executive Vice President, Director
Peter W. Cummins Senior Vice President
Lynda Godkin Senior Vice President, General Counsel
and Corporate Secretary
Donald E. Waggaman, Jr. Treasurer
George R. Jay Controller
Paul E. Olson Supervising Registered Principal
James Cubanski Assistant Secretary
Stephen T. Joyce Assistant Secretary
Glen J. Kvadus Assistant Secretary
Edward M. Ryan, Jr. Assistant Secretary
Unless otherwise indicated, the principal business address of
each the above individuals is P.O. Box 2999, Hartford, CT 06104-2999.
Item 30. Location of Accounts and Records
All of the accounts, books, records or other documents required
to be kept by Section 31(a) of the Investment Company Act of 1940
and rules thereunder, are maintained by Hartford at
200 Hopmeadow Street, Simsbury, Connecticut 06089.
Item 31. Management Services
All management contracts are discussed in Part A and Part B of this
Registration Statement.
<PAGE>
Item 32. Undertakings
(a) The Registrant hereby undertakes to file a post-effective
amendment to this Registration Statement as frequently as is
necessary to ensure that the audited financial statements in
the Registration Statement are never more than 16 months old
so long as payments under the variable annuity Contracts may
be accepted.
(b) The Registrant hereby undertakes to include either (1) as part
of any application to purchase a Contract offered by the
Prospectus, a space that an applicant can check to request a
Statement of Additional Information, or (2) a post card or
similar written communication affixed to or included in the
Prospectus that the applicant can remove to send for a
Statement of Additional Information.
(c) The Registrant hereby undertakes to deliver any Statement of
Additional Information and any financial statements required
to be made available under this Form promptly upon written or
oral request.
(d) Hartford hereby represents that the aggregate fees and charges
under the Contract are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the
risks assumed by Hartford.
The Registrant is relying on the no-action letter issued by the
Division of Investment Management to American Counsel of Life
Insurance, Ref. No. IP-6-88, November 28, 1988. The Registrant
has complied with conditions one through four of the no-action
letter.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Registration Statement to be signed on
its behalf, in the City of Hartford, and State of Connecticut on this 15th
day of September, 1998.
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT ONE
(Registrant)
*By: /s/ Thomas M. Marra *By: /s/ Leslie T. Soler
-------------------- -------------------
Thomas M. Marra, Executive Vice President Leslie T. Soler
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 capacities and
on the dates indicated.
Gregory A. Boyko, Senior Vice President,
Director* *By: /s/ Leslie T. Soler
--------------------
Lynda Godkin, Senior Vice President, General Leslie T. Soler
Counsel and Corporate Secretary, Director* Attorney-in-Fact
Dated: September 15, 1998
Thomas M. Marra, Executive Vice
President, Director*
Lowndes A. Smith, President and
Chief Executive Officer, Director*
David M. Znamierowski, Senior Vice President
Director*
<PAGE>
EXHIBIT INDEX
(9) Opinion and Consent of Lynda Godkin, Senior Vice President,
General Counsel, and Corporate Secretary
(10) Consent of Arthur Andersen LLP, Independent Public
Accountants
(15) Copy of Power of Attorney
(16) Organizational Chart
<PAGE>
EXHIBIT 9
[LOGO]
HARTFORD LIFE
September 15, 1998 Lynda Godkin, Senior Vice President
General Counsel & Corporate 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
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
September 15, 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 reference to our Firm) included in or made a part of this
Registration Statement File No. 333-45303 for Hartford Life and Annuity
Insurance Company Separate Account One on Form N-4.
/s/ Arthur Andersen LLP
Hartford, Connecticut
September 28, 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>
