<PAGE>
As filed with the Securities and Exchange Commission on April 16, 1999.
File No. 333-66345
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. 1 [X]
-------
Post-Effective Amendment No. [ ]
-------
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 31 [X]
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT ONE
(Exact Name of Registrant)
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
(Name of Depositor)
P. O. Box 2999
Hartford, CT 06104-2999
(Address of Depositor's Principal Offices)
(860) 843-6733
(Depositor's Telephone Number, Including Area Code)
Marianne O'Doherty
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 filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485
--------
on _____________, 1999 pursuant to paragraph (b) of Rule 485
--------
60 days after filing pursuant to paragraph (a)(1) of Rule 485
--------
on _____________, 1999 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.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration shall become effective on such
date as the Commission, acting pursuant to Section 8(a), may determine.
<PAGE>
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(A)
<TABLE>
<CAPTION>
N-4 ITEM NO. PROSPECTUS HEADING
-----------------------------------------------------
<S> <C>
1. Cover Page Hartford Life and Annuity Insurance
Company - Separate Account One
2. Definitions Glossary of Special Terms
3. Synopsis or Highlights Summary
4. Condensed Financial Yield Information
Information
5. General Description of Hartford Life and Annuity Insurance
Registrant Company, The Separate Account, The
Fixed Account, and The Funds
6. Deductions Contract Charges
7. General Description of The Contract, The Separate Account, The
Annuity Contracts Fixed Account, and Surrenders
8. Annuity Period Settlement Provisions
9. Death Benefit Death Benefits
10. Purchases and Contract The Contract, The Contract Offered, and
Value Contract Value
11. Redemptions Surrenders
12. Taxes Federal Tax Considerations
13. Legal Proceedings Legal Matters and Experts
14. Table of Contents of the Table of Contents to
Statement of Additional Statement of Additional
Information Information
15. Cover Page Part B; Statement of Additional
Information
16. Table of Contents Table of Contents
17. General Information Summary
and History
<PAGE>
18. Services None
19. Purchase of Securities Distribution of Contracts
being Offered
20. Underwriters Distribution of 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 by or Persons Controlled by or Under
Under Common Control with Common Control with the Depositor
the Depositor or Registrant or Registrant
27. Number of Contract Owners Number of Contract Owners
28. Indemnification Indemnification
29. Principal Underwriters Principal Underwriters
30. Location of Accounts and Location of Accounts and Records
Records
31. Management Services Management Services
32. Undertakings Undertakings
</TABLE>
<PAGE>
PART A
<PAGE>
THE DIRECTOR EDGE
SEPARATE ACCOUNT ONE
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
P. O. BOX 5085
HARTFORD, CONNECTICUT 06102-5085
Telephone: 1-800-862-6668 (Contract
Owners)
[LOGO] 1-800-862-7155 (Registered Representatives)
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This Prospectus describes information you should know before you purchase The
Director Edge variable annuity. Please read it carefully.
The Director Edge variable annuity is a contract between you and Hartford Life
and Annuity Insurance Company where you agree to make at least one payment to us
and we agree to make a series of annuity payments to you at a later date. This
annuity is a flexible premium, tax-deferred, variable annuity offered to both
individuals and groups. It is:
x Flexible, because you may add premium payments at any time.
x Tax-deferred, which means you don't pay taxes until you take money out or
until we start to make annuity payments to you.
x Variable, because the value of your annuity will fluctuate with the
performance of the underlying funds.
At the time you purchase, you allocate your Net Premium Payment, which is any
purchase payment less the sales charge and any premium taxes, to "sub-accounts".
These are subdivisions of our separate account, an account that keeps your
annuity assets separate from our company assets. The sub-accounts then purchase
shares of mutual funds set up exclusively for variable annuity or variable life
insurance products. These funds are not the same mutual funds that you buy
through your stockbroker or through a retail mutual fund. They may have similar
investment strategies and the same portfolio managers as retail mutual funds.
This annuity offers you funds with investment strategies ranging from
conservative to aggressive and you may pick those funds that meet your
investment goals and risk tolerance. The sub-accounts and the funds are listed
below:
- - Advisers Sub-Account which purchases shares of Class IA of Hartford Advisers
HLS Fund, Inc.
- - Bond Sub-Account which purchases shares of Class IA of Hartford Bond HLS Fund,
Inc.
- - Capital Appreciation Sub-Account which purchases shares of Class IA of
Hartford Capital Appreciation HLS Fund, Inc.
- - Dividend and Growth Sub-Account which purchases shares of Class IA of Hartford
Dividend and Growth HLS Fund, Inc.
- - Global Leaders Sub-Account which purchases shares of Class IA of Hartford
Global Leaders HLS Fund
- - Growth and Income Sub-Account which purchases shares of Class IA of Hartford
Growth and Income Fund
- - High Yield Sub-Account which purchases shares of Class IA of Hartford High
Yield HLS Fund
- - Index Sub-Account which purchases shares of Class IA of Hartford Index HLS
Fund, Inc.
- - International Advisers Sub-Account which purchases shares of Class IA of
Hartford International Advisers HLS Fund, Inc.
- - International Opportunities Sub-Account which purchases shares of Class IA of
Hartford International Opportunities HLS Fund, Inc.
- - MidCap Sub-Account which purchases shares of Class IA of Hartford MidCap HLS
Fund, Inc.
- - Money Market Sub-Account which purchases shares of Class IA of Hartford Money
Market HLS Fund, Inc.
- - Mortgage Securities Sub-Account that purchases shares of Class IA of Hartford
Mortgage Securities HLS Fund, Inc.
- - Small Company Sub-Account which purchases shares of Class IA of Hartford Small
Company HLS Fund, Inc.
- - Stock Sub-Account which purchases of Class IA of Hartford Stock HLS Fund, Inc.
You may also allocate some or all of your Net Premium Payment to one of the
"Fixed Accumulation Features", which pays an interest rate guaranteed for a
certain time period from the time the payment is made. Net Premium Payments put
in a Fixed Accumulation Feature are not segregated from our company assets like
the assets of the separate account.
<PAGE>
If you decide to buy this annuity, you should keep this prospectus for your
records. You can also call us at 1-800-862-6668 to get a Statement of Additional
Information, free of charge. The Statement of Additional Information contains
more information about this annuity and, like this prospectus, is filed with the
Securities and Exchange Commission. We have included the Table of Contents for
the Statement of Additional Information at the end of this Prospectus.
Although we file the Prospectus and the Statement of Additional Information
with the Securities and Exchange Commission, the Commission doesn't approve or
disapprove these securities or determine if the information is truthful or
complete. Anyone who represents that the Securities and Exchange Commission does
these things may be guilty of a criminal offense.
This Prospectus and the Statement of Additional Information can also be obtained
from the Securities and Exchange Commissions' website (HTTP://WWW.SEC.GOV).
This annuity IS NOT:
- A bank deposit or obligation
- Federally insured
- Endorsed by any bank or governmental agency
This annuity may not be available for sale in all states.
- --------------------------------------------------------------------------------
PROSPECTUS DATED: MAY 3, 1999
STATEMENT OF ADDITIONAL INFORMATION DATED: MAY 3, 1999
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 3
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GLOSSARY OF SPECIAL TERMS............................................. 4
FEE TABLE............................................................. 6
SUMMARY............................................................... 9
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY........................... 11
THE SEPARATE ACCOUNT.................................................. 11
THE FUNDS............................................................. 11
PERFORMANCE RELATED INFORMATION....................................... 14
THE FIXED ACCUMULATION FEATURES....................................... 14
THE CONTRACT.......................................................... 16
Contract Value -- Before the Annuity Commencement Date.............. 16
Contract Value Transfers Before and After the Annuity Commencement
Date............................................................... 17
Surrenders.......................................................... 17
Contract Charges.................................................... 19
Death Benefits...................................................... 20
SETTLEMENT PROVISIONS................................................. 22
Annuity Payments.................................................... 23
Other Information................................................... 25
FEDERAL TAX CONSIDERATIONS............................................ 25
A. General.......................................................... 25
B. Taxation of Hartford and the Separate Account.................... 25
C. Taxation of Annuities -- General Provisions Affecting Purchasers
Other Than Qualified Retirement Plans.............................. 25
D. Federal Income Tax Withholding................................... 28
E. General Provisions Affecting Qualified Retirement Plans.......... 28
F. Annuity Purchases By Nonresident Aliens and Foreign
Corporations....................................................... 29
MISCELLANEOUS......................................................... 29
How Contracts Are Sold.............................................. 29
Year 2000........................................................... 29
Legal Matters and Experts........................................... 30
More Information.................................................... 31
APPENDIX I -- INFORMATION REGARDING TAX-QUALIFIED RETIREMENT PLANS.... 32
</TABLE>
<PAGE>
4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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GLOSSARY OF SPECIAL TERMS
ACCOUNT: Any of the Sub-Accounts or Fixed Accumulation Features.
ACCUMULATION UNIT: A unit of measure we use to calculate values before we begin
to make annuity payments to you.
ADMINISTRATIVE OFFICE: Located at 200 Hopmeadow Street, Simsbury, CT 06089. The
mailing address is Post Office Box 5085, Hartford, CT 06104-5085.
ANNIVERSARY VALUE: The value of your contract determined each year on the date
we issued your annuity. Each year we increase your anniversary value by any Net
Premium Payments made to us and reduce your value for any money taken out that
year.
ANNUAL MAINTENANCE FEE: An annual $30 charge for annuities having a value of
less than $50,000 on the most recent Contract Anniversary or when the annuity is
surrendered in full. The charge is deducted proportionately from the funds in
use at the time.
ANNUITANT: The person on whose life the Contract is based. The Annuitant may not
be changed.
ANNUITY CALCULATION DATE: The date we calculate your first annuity payments.
ANNUITY UNIT: A unit of measure we use to calculate the value of the annuity
payments we make to you.
ASSUMED INVESTMENT RETURN ("AIR"): The investment return, either 3%, 5% or 6%,
which we base your variable dollar amount payments on. You select the AIR before
we start to make annuity payments.
BENEFICIARY: The person or persons you designate to receive payment of the death
benefit upon the death of the Contract Owner.
CODE: The Internal Revenue Code of 1986, as amended.
CONTINGENT ANNUITANT: The person you may designate to become the Annuitant if
the original Annuitant dies before we begin making annuity payments.
CONTRACT: An individual Annuity contract and any endorsements or riders. If you
have a group annuity, you will receive a certificate rather than a contract.
CONTRACT ANNIVERSARY: The annual anniversary of the date we issued your annuity.
If your contract anniversary falls on a day that is not a Valuation Day, then
the next Valuation Day will be your Contract Anniversary for that year.
CONTRACT VALUE: The total value of your Annuity that we get by adding up the
value of each of your Sub-Accounts and Fixed Accumulation Features.
CONTRACT YEAR: The 12 months following the date you purchased your annuity and
from any Contract Anniversary.
DOLLAR COST AVERAGING ("DCA"): Systematic transfers from one Account to another.
DCA PROGRAM FIXED ACCUMULATION FEATURES: Fixed Accumulation Features we
establish to use for dollar cost averaging programs. These are part of our
General Account.
DEATH BENEFIT: The amount we pay when the Contract Owner or the Annuitant dies.
FIXED ACCUMULATION FEATURE: This is an account that is part of our General
Account. You may allocate all or a portion of your Net Premium Payments or
transfer of Contract Value to this account.
FUNDS: The Funds described in this Prospectus or any supplements to the
Prospectus.
GENERAL ACCOUNT: Our General Account that includes our company assets and your
annuity assets allocated to any of the Fixed Accumulation Features or DCA
Program Fixed Accumulation Features.
HARTFORD OR WE: Hartford Life and Annuity Insurance Company. Only Hartford is
capitalized in this prospectus.
MAXIMUM ANNIVERSARY VALUE: This is the highest value your annuity reached on any
Contract Anniversary date prior to deceased's 81st birthday, reduced by any
subsequent surrenders and increased by any subsequent additional Net Premium
Payments.
NET PREMIUM PAYMENT: This is your premium payment minus any sales charge or
premium tax, or any other fee that we take prior to allocating payments
according to your instructions.
PAYEE: The person or party designated by you to receive annuity payments.
PREMIUM TAX: A tax charged by a state or municipality on premium payments.
SALE CHARGE: The charge you pay for this annuity when you purchase it and when
you make additional premium payments.
SURRENDER: A complete or partial withdrawal from your annuity.
SURRENDER VALUE: What we pay you if you terminate your annuity before we begin
to make annuity payments.
VALUATION DAY: Every day the New York Stock Exchange is open for trading. The
value of the Separate Account is determined as of the close of the New York
Stock Exchange (generally 4:00 p.m. Eastern Time).
VALUATION PERIOD: The period between the close of business on successive
Valuation Days.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 5
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FEE TABLE
Contract Owner Transaction Expenses
<TABLE>
<S> <C>
Maximum Sales Charge Imposed on Purchases (as a percentage of
premium payments)............................................... 5.5%
Range of Sales Charges Imposed on Purchases (as a percentage of
premium payments):
SALES
PREMIUM PAYMENT CHARGE
------------------------------------------------------------------ -------
Up to $49,999.99.............................................. 5.5%
$50,000 to $99,999.99......................................... 4.5%
$100,000 to $249,999.99....................................... 3.5%
$250,000 to $499,999.99....................................... 2.5%
$500,000 to $999,999.99....................................... 2.0%
$1,000,000 and over........................................... 1.0%
Annual Maintenance Fee (1) $ 30
Separate Account Annual Expenses (As percentage of average
sub-account value)
Mortality and Expense Risk Charge............................. 0.80%
Total Separate Account Annual Expenses........................ 0.80%
</TABLE>
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(1) The Annual Maintenance Fee is a single $30 charge deducted only when the
Contract Value is less than $50,000 on the Contract Anniversary or upon
request for full Surrender. It is deducted proportionally from the
investment options in use at the time of the charge.
The purpose of this table is to assist you in understanding various costs
you will bear directly or indirectly. The table reflects expenses of the
Separate Account and underlying Funds. Premium Taxes, if applicable, have been
taken into account. This EXAMPLE should not be considered a representation of
past or future expenses and actual expenses may be greater or less than those
shown.
Pursuant to requirements of the Investment Company Act of 1940, the Annual
Maintenance Fee has been reflected in the Examples by a method intended to show
the "average" impact of the Annual Maintenance Fee on an investment in the
Separate Account. The Annual Maintenance Fee is deducted only when the
accumulated value is less than $50,000. In the Example, the Annual Maintenance
Fee is approximately a 0.06% annual asset charge based on the experience of the
Contracts.
Annual Fund Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
FEES EXPENSES EXPENSES
-------------- -------- --------------
<S> <C> <C> <C>
Hartford Advisers HLS Fund...................... 0.616% 0.018% 0.634%
Hartford Bond HLS Fund.......................... 0.482% 0.021% 0.503%
Hartford Capital Appreciation HLS Fund.......... 0.623% 0.019% 0.642%
Hartford Dividend and Growth HLS Fund........... 0.641% 0.018% 0.659%
Hartford Global Leaders HLS Fund (1)............ 0.487% 0.120% 0.607%
Hartford Growth and Income HLS Fund............. 0.767% 0.040% 0.807%
Hartford High Yield HLS Fund (1)................ 0.487% 0.035% 0.522%
Hartford Index HLS Fund......................... 0.382% 0.019% 0.401%
Hartford International Advisers HLS Fund........ 0.755% 0.108% 0.863%
Hartford International Opportunities Fund....... 0.681% 0.090% 0.771%
Hartford Money Market HLS Fund.................. 0.433% 0.015% 0.448%
Hartford MidCap HLS Fund........................ 0.759% 0.034% 0.793%
Hartford Mortgage Securities HLS Fund........... 0.432% 0.030% 0.462%
Hartford Small Company HLS Fund................. 0.753% 0.019% 0.772%
Hartford Stock HLS Fund......................... 0.439% 0.018% 0.457%
</TABLE>
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(1) Hartford Global Leaders HLS Fund and Hartford High Yield HLS Fund are new
Funds. Total Operating Expenses are based on annualized estimates of such
expenses to be incurred in the current fiscal year. HL Investment Advisors,
LLC has agreed to waive its fees for these until the assets of the Fund
(excluding assets contributed by companies affiliated with HL Investment
Advisors, LLC) reach $20 million. Before this waiver, the management fees
and total fund operating expenses would be:
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT FEES OTHER EXPENSES OPERATING EXPENSES
--------------- -------------- ------------------
<S> <C> <C> <C>
Hartford Global Leaders HLS Fund... 0.775% 0.120% 0.895%
Hartford High Yield HLS Fund....... 0.775% 0.035% 0.810%
</TABLE>
<PAGE>
6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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EXAMPLE
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
If you Surrender your Contract If you annuitize your Contract If you do not Surrender your
at the end of the applicable at the end of the applicable Contract, you would pay the
time period you would pay the time period you would pay the following expenses on a $1,000
following expenses on a $1,000 following expenses on a $1,000 investment, assuming a 5%
investment, assuming a 5% investment, assuming a 5% annual return on assets:
annual return on assets: annual return on assets:
<CAPTION>
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------- ------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bond......................... $ 73 $ 103 $ 131 $ 215 $ 73 $ 100 $ 130 $ 214 $ 19 $ 58 $ 99 $ 214
Stock........................ 72 101 133 209 17 55 96 209 18 56 97 209
Money Market................. 72 101 132 208 17 55 95 208 18 56 96 208
Advisers..................... 74 107 142 229 19 61 105 228 20 62 106 229
Capital Appreciation......... 74 107 142 229 19 61 106 229 20 62 106 229
Mortgage Securities.......... 72 101 133 210 18 56 96 209 18 56 97 210
Index........................ 72 99 130 203 17 54 93 203 18 54 94 203
International
Opportunities.............. 75 111 149 243 21 65 112 242 21 66 113 243
Dividend & Growth............ 74 107 143 231 20 62 106 230 20 62 107 231
International Advisers....... 76 114 154 253 22 68 117 252 22 69 118 253
MidCap....................... 76 112 150 245 21 66 113 245 22 67 114 245
Small Company................ 75 111 149 243 21 65 112 242 21 66 113 243
Growth and Income............ 76 112 151 247 21 66 114 246 22 67 115 247
High Yield................... 73 109 N/A N/A 18 64 N/A N/A 19 64 N/A N/A
Global Leaders............... 74 112 N/A N/A 19 66 N/A N/A 20 67 N/A N/A
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 7
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SUMMARY
HOW DO I PURCHASE THIS ANNUITY?
You must complete our application or order request and submit it to us for
approval with your first premium payment. Your first premium payment must be at
least $1,000 and subsequent premium payments must be at least $500.
- For a limited time, usually within ten days after you receive your annuity,
you may cancel your annuity without paying a sales charge. You bear the
investment risk for your premium payment prior to our receipt of your
request for cancellation.
WHAT TYPE OF SALES CHARGE WILL I PAY?
You pay a sales charge when you purchase your annuity and when you make
additional premium payments to your annuity. The percent of the sales charge
depends on the size of your premium payment to date. The bigger your premium
payment to date, the less the percentage your sales charge is:
<TABLE>
<CAPTION>
CUMMULATIVE SALES
PREMIUM PAYMENT CHARGE
- ------------------------------ -------
<S> <C>
Up to $49,999.99 5.5%
$50,000 to $99,999.99 4.5%
$100,000 to $249,999.99 3.5%
$250,000 to $499,999.99 2.5%
$500,000 to $999,999.99 2.0%
$1,000,000 and over 1.0%
</TABLE>
If you have other annuities with us, under a program called "Rights of
Accumulation", we might include those assets when determining your sales charge
for this annuity. Ask your financial consultant or call us to see if your other
annuities qualify.
You might be able to lower the sales charge you pay when you purchase your
annuity by signing a Letter of Intent. This is a contract between us where you
decide how much you want to invest in the 13 months from the date you purchase
this annuity. On the date you purchase your annuity, we deduct the sales charge
based on the total amount you plan on investing over the following 13 months.
This usually results in a lower percentage sales charge than if you made one
initial investment and several premium payments later on. Think about the
planned premium payments for your Letter of Intent carefully. If you don't make
all the payments you plan on making, we will recalculate the sales charge for
the amounts we actually received in the 13 month period. If the percentage sales
charge on the actual amount received is more than the percentage sales charge we
actually deducted; we will deduct the outstanding sales charge proportionally
from all your Accounts.
IS THERE AN ANNUAL MAINTENANCE FEE?
Yes. We deduct this $30.00 fee each year on your Contract Anniversary or when
you completely Surrender your annuity, if, on either of those dates, the value
of your annuity is less than $50,000.
WHAT CHARGES WILL I PAY ON AN ANNUAL BASIS?
You pay two different types of charges each year. The first type of charge is
the fee you pay for insurance. This charge is:
A mortality and expense risk charge that is subtracted daily and is equal to
an annual charge of 0.80% of your Contract Value invested in the funds.
The second type of charge is the fee you pay for the funds.
Currently, fund charges range from 0.401% to 0.863% of the average daily
value of the amount you have invested in the funds. See the Annual Operation
Expense Table for more complete information and the Funds' prospectuses attached
to this Prospectus.
CAN I TAKE OUT ANY OF MY MONEY?
You may Surrender all or part of the amounts you have invested at any time
before we start making annuity payments to you.
- You may have to pay tax on the money you take out and, if you take money out
before you are age 59 1/2, you may have to pay an income tax penalty.
WILL HARTFORD PAY A DEATH BENEFIT?
There is a death benefit if you, your joint owner or your Annuitant, die before
we begin to make annuity payments. The death benefit will be calculated as of
the date we receive Due Proof of Death and will be the greater of:
- - The total Premium Payments you have made to us minus any amounts you have
taken out, or
- - The Contract Value of your annuity, or
- - Your maximum anniversary value, which is the highest value your annuity
reached on any Contract Anniversary date prior the deceased's 81st birthday,
reduced by any subsequent surrenders and increased by any subsequent
additional premium payments.
This amount will remain invested in the Sub-Accounts according to your last
instructions and will be subject to market fluctuations.
WHAT ANNUITY PAYMENT OPTIONS ARE AVAILABLE?
When you purchase your annuity, you may choose one of the following annuity
payment options, or receive a lump sum payment:
<PAGE>
8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
LIFE ANNUITY where we make scheduled payments for the rest of the
Annuitant's life.
- Payments under this option stop upon the death of the Annuitant, even if the
Annuitant dies after one payment.
LIFE ANNUITY WITH CASH REFUND where we make payments during the life of the
Annuitant and when the Annuitant dies, we pay the remaining value to the
Beneficiary. The remaining value is calculated by subtracting the annuity
payments already made from the Contract Value at the time we receive Due Proof
of Death.
- This option is only available if you select a variable dollar amount payment
with the 5% AIR or fixed dollar amount annuity payments.
LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN where we make payments for
the life of the Annuitant but you are at least guaranteed payments for a time
period you select which is a minimum of 5 years and a maximum of 100 years minus
your Annuitant's age. If the Annuitant dies before the end of the period
selected, we will continue to make payments until the end of the period
selected.
JOINT AND LAST SURVIVOR ANNUITY where we make payments during the lifetime
of the Annuitant and another designated individual called the Joint Annuitant
and then throughout the remaining lifetime of the survivor.
JOINT AND LAST SURVIVOR LIFE ANNUITY with Payments for a Period Certain
where we make payments during the lifetime of the Annuitant and a Joint
Annuitant, and we guarantee that those payments for a time period you select
which is a minimum of 5 years and a maximum 100 years minus your Annuitant's
age. If both the Annuitant and your Joint Annuitant die before the time we
guarantee to make payments is up, we will pay the remaining value to your
Beneficiary. Payments during the lifetime of the surviving Annuitant can be
lower than the original payments.
- Upon the death of the Annuitant and the Joint Annuitant, we will pay the
value of the remaining payments to your Beneficiary.
PAYMENTS FOR A PERIOD CERTAIN where we agree to make payments for a
specified time between 5 and 30 years. If the Annuitant dies before the end of
the specified time, we pay the Beneficiary the present value of the annuity in
one lump sum or continue making the remaining payments to the Beneficiary.
- If you select this option, YOU MAY SURRENDER YOUR ANNUITY after annuity
payments have started and we will give you the present value of the
remaining payments.
You must begin to take payments before the Annuitant's 90th birthday or the
end of the 10th Contract Year, which ever comes later. If you do not tell us
what payment option you want before that time, we will pay you under the Life
Annuity with a 10 year period certain. You and Hartford can agree to start
payments at a later date if the laws in effect allow us to defer payment and we
agree to allow you to defer. The Annuity Commencement Date in New York may be
different, please consult your Registered Representative or call us.
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, the District of
Columbia and Puerto Rico, except New York. On January 1, 1998, Hartford's name
changed from ITT Hartford Life and Annuity Insurance Company to Hartford Life
and Annuity Insurance Company. We were originally incorporated under the laws of
Wisconsin on January 9, 1956, and subsequently redomiciled to Connecticut. Our
offices are located in Simsbury, Connecticut; however, our mailing address is
P.O. Box 2999, Hartford, CT 06104-2999. We are ultimately controlled by The
Hartford Financial Services Group, Inc., one of the largest financial service
providers in the United States.
HARTFORD'S RATINGS
<TABLE>
<CAPTION>
EFFECTIVE DATE
RATING AGENCY OF RATING RATING BASIS OF RATING
- ----------------------------------- -------------- ------ -----------------------------------
<S> <C> <C> <C>
A.M. Best and Company, Inc......... 1/1/99 A+ Financial performance
Standard & Poor's.................. 6/1/98 AA Insurer financial strength
Duff & Phelps...................... 12/21/98 AA+ Claims paying ability
</TABLE>
THE SEPARATE ACCOUNT
The Separate Account is where we set aside and invest the assets of some of
our annuity contracts, including this Contract. The Separate Account was
established on May 20, 1991 and is registered as a unit investment trust under
the Investment Company Act of 1940. This registration does not involve
supervision by the Commission of the management or the investment practices of
the Separate Account or Hartford. The Separate Account meets the definition of
"separate account" under federal securities law. This Separate Account holds
only assets for variable annuity contracts. The Separate Account:
- - Holds assets for the benefit of you and other Contract Owners, and the persons
entitled to the payments described in the Contract.
- - Is not subject to the liabilities arising out of any other business Hartford
may conduct.
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 9
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- - Is not affected by the rate of return of Hartford's General Account or by the
investment performance of any of Hartford's other separate accounts.
- - May be subject to liabilities from a Sub-Account of the Separate Account which
holds assets of other variable annuity contracts offered by the Separate
Account which are not described in this Prospectus.
- - Is credited with income and gains, and takes losses, whether or not realized,
from the assets it holds.
We do not guarantee the investment results of the Separate Account. There is
no assurance that the value of your Annuity will equal the total of the payments
you make to us.
THE FUNDS
All of the Funds are sponsored and administered by Hartford Life Insurance
Company. HL Investment Advisors, LLC ("HL Advisors") serves as the investment
adviser to each of the Funds. Wellington Management Company, LLP ("Wellington
Management") and The Hartford Investment Management Company ("HIMCO") serve as
sub-investment advisors and provide day to day investment services.
Each Fund, except for the Hartford Global Leaders HLS Fund, the Hartford
Growth and Income HLS Fund and the Hartford High Yield HLS Fund, is a separate
Maryland corporation registered with the Securities and Exchange Commission as
an open-end management investment company. The Hartford Global Leaders HLS Fund,
the Hartford Growth and Income HLS Fund and the Hartford High Yield HLS Fund are
diversified series of Hartford Series Fund, Inc., a Maryland corporation, also
registered with the Securities and Exchange Commission as an open-end management
investment company. The shares of each Fund have been divided into Class IA and
Class IB. Only Class IA shares are available in this Annuity.
We do not guarantee the investment results of any of the underlying Funds.
Since each underlying Fund has different investment objectives, each is subject
to different risks. These risks and the Funds' expenses are more fully described
in the accompanying Funds' prospectus and Statement of Additional Information,
which may be ordered from us. The Funds' prospectus should be read in
conjunction with this Prospectus before investing.
The Funds may not be available in all states.
The investment goals of each of the Funds are as follows:
HARTFORD ADVISERS HLS FUND -- Seeks maximum long-term total rate of return
by investing in common stocks and other equity securities, bonds and other debt
securities, and money market instruments. Sub-advised by Wellington Management.
HARTFORD BOND HLS FUND -- Seeks maximum current income consistent with
preservation of capital by investing primarily in investment grade fixed-income
securities. Up to 20% of the total assets of this Fund may be invested in debt
securities rated in the highest category below investment grade ("Ba" by Moody's
Investor Services, Inc. or "BB" by Standard & Poor's) or, if unrated, are
determined to be of comparable quality by the Fund's investment adviser.
Securities rated below investment grade are commonly referred to as "high
yield-high risk securities" or "junk bonds." For more information concerning the
risks associated with investing in such securities, please refer to the section
in the accompanying prospectus for the Funds entitled "Hartford Bond HLS Fund,
Inc." Sub-advised by HIMCO.
HARTFORD CAPITAL APPRECIATION HLS FUND -- Seeks growth of capital by
investing in equity securities selected solely on the basis of potential for
capital appreciation. Sub-advised by Wellington Management.
HARTFORD DIVIDEND AND GROWTH HLS FUND -- Seeks a high level of current
income consistent with growth of capital by investing primarily in dividend
paying equity securities. Sub-advised by Wellington Management.
HARTFORD GLOBAL LEADERS HLS FUND -- Seeks growth of capital by investing
primarily in equity securities issued by U.S. and non-U.S. high quality growth
companies worldwide that, in the opinion of Wellington Management, are leaders
within their respective industries as indicated by an established market
presence and strong competitive position on a global, regional or country basis.
Sub-advised by Wellington Management.
HARTFORD GROWTH AND INCOME HLS FUND -- Seeks growth of capital and current
income by investing primarily in equity securities with earnings growth
potential and steady or rising dividends. Sub-advised by Wellington Management.
HARTFORD HIGH YIELD HLS FUND -- Seeks high current income by investing in
non-investment grade fixed-income securities. Growth of capital is a secondary
objective. Securities rated below investment grade are commonly referred to as
"high yield-high risk securities" or "junk bonds." For more information
concerning the risks associated with investing in such securities, please refer
to the section in the accompanying prospectus for the Funds entitled "Hartford
High Yield HLS Fund." Sub-advised by HIMCO.
HARTFORD INDEX HLS FUND -- Seeks to provide investment results that
approximate the price and yield performance of publicly traded common stocks in
the
<PAGE>
10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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aggregate, as represented by the Standard & Poor's 500 Composite Stock Price
Index.* Sub-advised by HIMCO.
HARTFORD INTERNATIONAL ADVISERS HLS FUND -- Seeks maximum long-term total
return by investing in a portfolio of equity, debt and money market securities.
Securities in which the Fund invests primarily will be denominated in non-U.S.
currencies and will be traded in non-U.S. markets. Sub-advised by Wellington
Management.
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND -- Seeks growth of capital by
investing primarily in equity securities issued by non-U.S. companies.
Sub-advised by Wellington Management.
HARTFORD MIDCAP HLS FUND -- Seeks to achieve long-term capital growth
through capital appreciation by investing primarily in equity securities of
companies with market capitalizations within the range represented by the
Standard & Poor's MidCap 400 Index. Sub-advised by Wellington Management.
HARTFORD MORTGAGE SECURITIES HLS 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. Sub-advised by HIMCO.
HARTFORD SMALL COMPANY HLS FUND -- Seeks growth of capital by investing
primarily in equity securities within the range represented by the Russell 2000
Index selected on the basis of potential for capital appreciation. Sub-advised
by Wellington Management.
HARTFORD STOCK HLS FUND -- Seeks long-term growth by investing primarily in
equity securities. Sub-advised by Wellington Management.
HARTFORD MONEY MARKET HLS FUND -- Seeks maximum current income consistent
with liquidity and preservation of capital. Sub-advised by HIMCO.
MIXED AND SHARED FUNDING -- Shares of the Funds are sold to our other
separate accounts and our insurance company affiliates or other unaffiliated
insurance companies to serve as the underlying investment for both variable
annuity contracts and variable life insurance contracts, a practice known as
"mixed and shared funding." As a result, there is a possibility that a material
conflict may arise between the interests of Contract Owners, and of owners of
other contracts whose contract values are allocated to one or more of these
other separate accounts investing in any one of the Funds. In the event of any
such material conflicts, we will consider what action may be appropriate,
including removing the Fund from the Separate Account or replacing the Fund with
another Fund. There are certain risks associated with mixed and shared funding,
as disclosed in the Funds' prospectus.
VOTING RIGHTS -- We are the legal owners of all Fund shares held in the
Separate Account and we have the right to vote at the Fund's shareholder
meetings. To the extent required by federal securities laws or regulations, we
will:
- - Notify you of any Fund shareholders' meeting if the shares held for your
Contract may be voted.
- - Send proxy materials and a form of instructions that you can use to tell us
how to vote the Fund shares held for your Contract.
- - Arrange for the handling and tallying of proxies received from Contract
Owners.
- - Vote all Fund shares attributable to your Contract according to instructions
received from you, and
- - Vote all Fund shares for which no voting instructions are received in the same
proportion as shares for which instructions have been received.
If any federal securities laws or regulations, or their present
interpretation, change to permit us to vote Fund shares on our own, we may
decide to do so. You may attend any Shareholder Meeting at which shares held for
your Contract may be voted. After we begin to make Annuity Payouts to you, the
number of votes you have will decrease.
SUBSTITUTIONS, ADDITIONS, OR DELETIONS OF FUNDS -- We reserve the right,
subject to any applicable law, to make certain changes to the Funds offered
under Your Contract. We may, in our sole discretion, establish new Funds. New
Funds will be will be made available to existing Contract Owners as we
determined appropriate. We may also close one or more Funds to additional
Payments or transfers from existing Sub-Accounts.
We reserve the right to eliminate the shares of any of the Funds for any
reason and to substitute shares of another registered investment company for the
shares of any Fund already purchased or to be purchased in the future by the
Separate Account. To the extent required by the 1940 Act, substitutions of
shares attributable to your interest in a Fund will not be made until we have
the approval of the Commission and we have notified you of the change.
In the event of any substitution or change, We may, by appropriate
endorsement, make such changes in the Contract as may be necessary or
appropriate to reflect such substitution or change. If we decide that it is in
the best interest of the Contracts Owners, the Separate Account may be operated
as a management company under the 1940 Act or any other form permitted by law,
may be de-registered
"STANDARD & POOR'S," "S&P-REGISTERED TRADEMARK-," "S&P
500-REGISTERED TRADEMARK-," "STANDARD & POOR'S 500," AND "500" ARE TRADEMARKS OF
THE MCGRAW-HILL COMPANIES, INC. AND HAVE BEEN LICENSED FOR USE BY HARTFORD. THE
INDEX FUND IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR'S AND
STANDARD & POOR'S MAKES NO REPRESENTATION REGARDING THE ADVISABILITY OF
INVESTING IN THE INDEX FUND.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 11
- --------------------------------------------------------------------------------
under the 1940 Act in the event such registration is no longer required, or may
be combined with one or more other separate accounts.
PERFORMANCE RELATED INFORMATION
The Separate Account may advertise certain performance-related information
concerning the Sub-Accounts. Performance information about a Sub-Account is
based on the Sub-Account's past performance only and is no indication of future
performance.
When a Sub-Account advertises its STANDARDIZED TOTAL RETURN, it will usually
be calculated for one year, five years, and ten years or some other relevant
periods if the Sub-Account has not been in existence for at least ten years.
Total return is measured by comparing the value of an investment in the
Sub-Account at the beginning of the relevant period to the value of the
investment at the end of the period.
The Separate Account may also advertise NON-STANDARD TOTAL RETURNS THAT
PRE-DATE THE INCEPTION DATE OF THE SEPARATE ACCOUNT. These non-standardized
total returns are calculated by assuming that the Sub-Accounts have been in
existence for the same periods as the underlying Funds and by taking deductions
for charges equal to those currently assessed against the Sub-Accounts. These
non-standardized returns must be accompanied by standardized total returns.
If applicable, the Sub-Accounts may advertise YIELD IN ADDITION TO TOTAL
RETURN. The yield will be computed in the following manner: The net investment
income per unit earned during a recent one month period, divided by the unit
value on the last day of the period. This figure reflects the recurring charges
at the Separate Account level including the Annual Maintenance Fee.
The Money Market Fund Sub-Account may ADVERTISE YIELD AND EFFECTIVE YIELD.
The yield of a Sub-Account is based upon the income earned by the Sub-Account
over a seven-day period and then annualized, i.e. the income earned in the
period is assumed to be earned every seven days over a 52-week period and stated
as a percentage of the investment. Effective yield is calculated similarly but
when annualized, the income earned by the investment is assumed to be reinvested
in Sub-Account units and thus compounded in the course of a 52-week period.
Yield and effective yield reflect the recurring charges at the Separate Account
level including the Annual Maintenance Fee.
The Separate Account may also disclose yield for periods prior to the date
the Separate Account commenced operations. For periods prior to the date the
Separate Account commenced operations, performance information for the
Sub-Accounts will be calculated based on the performance of the underlying Funds
and the assumption that the Sub-Accounts were in existence for the same periods
as those of the underlying Funds, with a level of charges equal to those
currently assessed against the Sub-Accounts. No yield disclosure for periods
prior to the date of the Separate Account will be used without the yield
disclosure for periods as of the date of the inception of the Separate Account.
We may provide information on various topics to Contract Owners and
prospective Contract Owners in advertising, sales literature or other materials.
These topics may include the relationship between sectors of the economy and the
economy as a whole and its effect on various securities markets, investment
strategies and techniques (such as value investing, dollar cost averaging and
asset allocation), the advantages and disadvantages of investing in tax-deferred
and taxable instruments, customer profiles and hypothetical purchase scenarios,
financial management and tax and retirement planning, and other investment
alternatives, including comparisons between the Contracts and the
characteristics of and market for such alternatives.
THE FIXED ACCUMULATION FEATURES
IMPORTANT INFORMATION YOU SHOULD KNOW: THIS PORTION OF THE CONTRACT RELATING
TO THE FIXED ACCUMULATION FEATURES IS NOT REGISTERED UNDER THE SECURITIES ACT OF
1933 ("1933 ACT") AND THE FIXED ACCUMULATION FEATURES ARE NOT REGISTERED AS
INVESTMENT COMPANIES UNDER THE INVESTMENT COMPANY ACT OF 1940 ("1940 ACT"). NONE
OF THE FIXED ACCUMULATION FEATURES OR ANY OF THEIR INTERESTS ARE SUBJECT TO THE
PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT, AND THE STAFF OF THE
SECURITIES AND EXCHANGE COMMISSION HAS NOT REVIEWED THE DISCLOSURE REGARDING THE
FIXED ACCUMULATION FEATURES. THE FOLLOWING DISCLOSURE ABOUT THE FIXED
ACCUMULATION FEATURES MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS
OF THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND COMPLETENESS OF
DISCLOSURE.
Payments and Contract Values allocated to a Fixed Accumulation Feature
become a part of our general assets. We invest the assets of the General Account
in accordance with applicable law governing the investments of insurance company
General Accounts. We have more than one Fixed Accumulation Feature. The standard
Fixed Accumulation Feature (the "Fixed Accumulation Feature") and then a number
of DCA Program Fixed Accumulation Features, which we collectively refer to as
the "Fixed Accumulation Features".
Currently, we guarantee that we will credit interest at a rate of not less
than 3% per year, compounded annually, to amounts you allocate to the Fixed
Accumulation Feature. We reserve the right to change the rate subject only to
applicable state insurance law. We may credit interest at a
<PAGE>
12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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rate in excess of 3% per year. We will periodically publish the Fixed
Accumulation Feature interest rates currently in effect. There is no specific
formula for the determination of interest rates. Some of the factors that we may
consider in determining whether to credit excess interest; are general economic
trends, rates of return currently available and anticipated on our investments,
regulatory and tax requirements and competitive factors. We will account for any
deductions, surrenders or transfers from the Fixed Accumulation Feature on a
"first-in", "first-out" basis". For contracts issued in the state of New York,
Fixed Accumulation Feature interest rates may vary from other states.
IMPORTANT: ANY INTEREST CREDITED TO AMOUNTS YOU ALLOCATE TO THE FIXED
ACCUMULATION FEATURE IN EXCESS OF 3% PER YEAR WILL BE DETERMINED AT OUR SOLE
DISCRETION. YOU ASSUME THE RISK THAT INTEREST CREDITED TO THE FIXED ACCUMULATION
FEATURE MAY NOT EXCEED THE MINIMUM GUARANTEE OF 3% FOR ANY GIVEN YEAR.
From time to time, we may credit increased interest rates to Contract Owners
under certain programs established at our sole discretion.
DOLLAR COST AVERAGING PROGRAMS -- These programs will use designated DCA
Program Fixed Accumulation Features. Currently, Contract Owners may enroll in a
special pre-authorized transfer program known as our Dollar Cost Averaging Plus
Program (the "Program"). Under this Program, Contract Owners who enroll may
allocate a minimum of $5,000 of their Payment into the appropriate DCA Program
Fixed Accumulation Feature (we may allow a lower minimum Premium Payment for
qualified plan transfers or rollovers, including IRAs) and pre-authorize
transfers to any of the Sub-Accounts under either the 6 Month Transfer Program
or 12 Month Transfer Program. The 6-Month Transfer Program and the 12-Month
Transfer Program will generally have different credited interest rates. Under
the 6-Month Transfer Program, the interest rate can accrue up to 6 months and
all Payments and accrued interest must be transferred from the DCA Program Fixed
Accumulation Feature in use to the selected Sub-Accounts in 3 to 6 months. Under
the 12-Month Transfer Program, the interest rate can accrue up to 12 months and
all Payments and accrued interest must be transferred to the selected
Sub-Accounts in 7 to 12 months. This will be accomplished by monthly transfers
for the period selected and a final transfer of the entire amount remaining in
the Program.
The pre-authorized transfers will begin within 15 days after we receive the
initial Program Payment and complete enrollment instructions. If We do not
receive complete Program enrollment instructions within 15 days of receipt of
the initial Program Payment, the Program will be voided and the entire balance
in the Program will be transferred to the Accounts designated by you. If you do
not designate an Account, we will transfer any remaining amounts to the Fixed
Accumulation Feature and you will receive the Fixed Accumulation Feature's
current effective interest rate. Any subsequent Payments we receive within the
Program period selected will be allocated to the Sub-Accounts over the remainder
of that Program transfer period, unless otherwise directed by You.
You may only have one dollar cost averaging program in place at one time,
this means one standard dollar cost averaging plan or one Dollar Cost Averaging
Plus Program.
You may elect to terminate the pre-authorized transfers by calling or
writing us of your intent to cancel enrollment in the Program. Upon cancellation
of enrollment in the Program, You will no longer receive the increased interest
rate and unless we receive instructions to the contrary, the amounts remaining
in the DCA Program Fixed Accumulation Feature may be transferred to the Fixed
Accumulation Feature and accrue the interest rate currently in effect.
We reserve the right to discontinue, modify or amend the Program or any
other interest rate program established by Hartford. Any change to the Program
will not affect Contract Owners currently enrolled in the Program. This Program
may not be available in all states; please contact us to determine if it is
available in your state.
THE CONTRACT
THE CONTRACT OFFERED -- The Contracts are individual or group tax-deferred
variable annuity contracts. They are designed for retirement planning purposes
and may be purchased by any individual, group or trust, including; (a) any
trustee or custodian for a retirement plan qualified under Sections 401(a) or
403(a) of the Internal Revenue Code; (b) annuity purchase plans adopted by
public school systems and certain tax-exempt organizations according to Section
403(b) of the Code; (c) Individual Retirement Annuities adopted according to
Section 408 of the Code; (d) 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 (e) 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 $1,000. The minimum subsequent premium payment is
$500. Certain plans may be allowed to make smaller periodic premium payments.
Unless we give our prior approval, we will not accept a Premium Payment in
excess of $1,000,000. Each Net Premium Payment, which is your premium payment
after the deduction of the Sales Charge and/or Premium Taxes, may be split among
the
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 13
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various Sub-Accounts subject to minimum amounts then in effect. We will send You
a confirmation notice upon receipt and acceptance of Your 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. You must send a WRITTEN REQUEST for
cancellation along with the Contract. We will, without deduction for any charges
normally assessed thereunder, pay you an amount equal to the Contract Value plus
any applicable Sales Charge or applicable Premium Tax on the date we receive
your request for cancellation. YOU BEAR THE INVESTMENT RISK DURING THE PERIOD
PRIOR TO OUR RECEIPT OF YOUR REQUEST FOR CANCELLATION. We will refund the
premium paid only for Individual Retirement Annuities, if returned within seven
days of receipt, and in those states where required by law.
CREDITING AND VALUATION -- Your Net Premium Payment, which is the balance
remaining after the deduction of any applicable Sales Charge and/or Premium Tax,
is credited to your Contract within two business days of receipt by us at our
Administrative Office of a properly completed application or an order to
purchase a Contract and the premium payment. The Payment will be credited to the
Sub-Account(s) and/or the Fixed Accumulation Features according to the
instructions we receive from you.
If your application or other information is incomplete when received, your
Payment will be credited to the Sub-Account(s) or the Fixed Accumulation
Features within five business days of receipt of complete information. If the
Payment is not credited within five business days, it will be immediately
returned to you unless you have been informed of the delay and tell us not to
return it.
Subsequent Premium Payments are priced on the Valuation Day we receive it in
our Administrative Office, provided we receive it before the New York Stock
Exchange closes. Unless otherwise specified, We will allocate any subsequent
Payments to Sub-Accounts or Fixed Accumulation Features according to your most
recent instructions.
CONTRACT VALUE -- BEFORE THE ANNUITY
COMMENCEMENT DATE
Your Contract Value reflects interest rate credited any amounts allocated to
the Fixed Accumulation Features and the investment performance of the
Sub-Accounts where you have Payments allocated.
SUB-ACCOUNT VALUES -- Your Sub-Account Values on the date we issue your
Contract is the amount of your Net Premium Payment allocated to any Sub-Account.
After that, we determine your Sub-Account value by determining the Accumulation
Unit value for each Sub-Account, and then multiplying that value by the number
of those units. 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 number of Accumulation Units credited to a
Sub-Account you have is determined by dividing the dollar amount you allocated
to that Sub-Account by the value of one Accumulation Unit for that Sub-Account.
A Payment or portion of a Payment allocated to or Contract Values transferred to
a Sub-Account increase the number of Accumulation Units of that Sub-Account
credited to the Contract. And, Surrenders, transfers out of a Sub-Account, the
death of the 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 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.
ACCUMULATION UNIT VALUE -- The Accumulation Unit value for each Sub-Account
was arbitrarily set initially at $1 when the Sub-Account began operations. After
that, 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 (see the definition below) for the Valuation Day
for which the Accumulation Unit value is being calculated.
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 that Fund);
(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.
<PAGE>
14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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CONTRACT VALUE TRANSFERS BEFORE AND AFTER
THE ANNUITY COMMENCEMENT DATE
You may transfer the your Contract Values from one or more Accounts to
another Account free of charge. WE RESERVE 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 You or by your
attorney-in-fact pursuant to a power of attorney by calling us at (800) 862-6668
or by the agent of record by calling (800) 862-7155. Telephone transfers may not
be permitted by some states. There may be limitations on transfers to and from
the Fixed Accumulation Features that are described in your Contract. Some states
may allow us to limit the dollar amount transferred.
We, or our agents and affiliates will not be responsible for losses
resulting from acting upon telephone requests reasonably believed to be genuine.
We will employ reasonable procedures to confirm that instructions communicated
by telephone are genuine. The procedure we follow for transactions initiated by
telephone include requirements that callers provide certain information for
identification purposes. All transfer instructions by telephone are tape-
recorded.
We may permit You to preauthorize transfers among Accounts and between
Sub-Accounts under certain circumstances. Transfers between the 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 YOUR RESPONSIBILITY TO VERIFY THE ACCURACY OF ALL CONFIRMATIONS OF
TRANSFERS AND TO PROMPTLY ADVISE US IN OUR ADMINISTRATIVE OFFICES OF ANY
INACCURACIES WITHIN 30 DAYS OF THE DATE YOU RECEIVE YOUR CONFIRMATION.
The right to reallocate Contract Values is subject to modification if we
determine, in our 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
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
You at any one time. SUCH RESTRICTIONS MAY BE APPLIED IN ANY MANNER REASONABLY
DESIGNED TO PREVENT ANY USE OF THE TRANSFER RIGHT WHICH WE CONSIDER TO BE TO THE
DISADVANTAGE OF OTHER CONTRACT OWNERS.
For Contracts issued in THE STATE OF NEW YORK, FLORIDA, MARYLAND OR OREGON,
the reservation of rights set forth in the preceding paragraph is limited to:
(i) requiring up to a maximum of 10 Valuation Days between each transfer; (ii)
limiting the amount to be transferred on any one Valuation Day to no more than
$2 million; and (iii) upon 30 days prior written notice, to only accepting
transfer instructions from You and not from Your representative, agent or person
acting under a power of attorney for You.
Currently, and with respect to Contracts issued in all states, the only
restriction in effect is that we 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 us.
These restrictions do not include any transfers through our DCA Plus or DCA
Programs.
SURRENDERS
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")
FULL SURRENDERS PRIOR TO THE ANNUITY COMMENCEMENT DATE -- At any time prior
to the Annuity Commencement Date, You have 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.
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 Payments made to a Contract.
PARTIAL SURRENDERS PRIOR TO THE ANNUITY COMMENCEMENT DATE -- You may make a
partial surrender of your Contract Value at any time prior to the Annuity
Commencement Date so long as the amount Surrendered is at least equal to our
minimum amount rules then in effect. Additionally, if the remaining Contract
Value following a Surrender is less than $500, we 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 Payments made during the previous 2 Contract Years.
WHEN REQUESTING A PARTIAL SURRENDER, YOU SHOULD SPECIFY THE 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.
We may permit You to preauthorize partial surrenders subject to certain
limitations then in effect. You may request
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 15
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a partial surrender by telephone provided certain requirements are met. We
permit partial surrenders by telephone subject to dollar amount limitations in
effect at the time You request the surrender. TO REQUEST PARTIAL SURRENDERS BY
TELEPHONE, YOU MUST HAVE COMPLETED AND RETURNED TO US A TELEPHONE REDEMPTION
PROGRAM ENROLLMENT FORM AUTHORIZING TELEPHONE SURRENDERS. If there are joint
Contract Owners, both must authorize us to accept telephone instructions and
agree that We may accept telephone instructions for partial surrenders from
either Contract Owner. Partial surrender requests will not be honored until we
receive all required documents in proper form.
Telephone authorization will remain valid until (a) we receive written
notice of revocation by You, or, in the case of joint Contract Owners, written
notice from either Contract Owner; (b) we discontinue the privilege; or (c) we
have reason to believe that You have entered into a market timing agreement with
an investment adviser and/or broker/ dealer.
We may record any telephone calls to verify data concerning transactions and
may adopt other procedures to confirm that telephone instructions are genuine.
We 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, We must receive
telephone surrender instructions prior to the close of trading on the New York
Stock Exchange (generally 4:00 p.m.).
WE MAY MODIFY, SUSPEND, OR TERMINATE TELEPHONE TRANSACTION PRIVILEGES AT ANY
TIME.
SURRENDERS AFTER THE ANNUITY COMMENCEMENT DATE -- You may fully Surrender
your Contract on or after the Annuity Commencement Date if you elect the Payment
For a Period Certain Settlement Option. We pay you the Commuted Value that is
equal to the value of the remaining payments we are scheduled to make. The
Commuted Value is determined as of the date we receive your written request for
Surrender at our Administrative Office.
PARTIAL SURRENDERS ARE PERMITTED AFTER THE ANNUITY COMMENCEMENT DATE IF YOU
ELECT THE PAYMENTS FOR A PERIOD CERTAIN SETTLEMENT OPTION, BUT CHECK WITH YOUR
TAX ADVISOR BECAUSE THERE MAY BE ADVERSE TAX CONSEQUENCES.
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 we receive the request at our
Administrative Office.
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.
IMPORTANT TAX INFORMATION: THERE ARE CERTAIN RESTRICTIONS ON SECTION 403(b)
TAX-SHELTERED ANNUITIES. AS OF DECEMBER 31, 1988, ALL SECTION 403(b) ANNUITIES
HAVE LIMITS ON FULL AND PARTIAL SURRENDERS. CONTRIBUTIONS TO THE CONTRACT MADE
AFTER DECEMBER 31, 1988 AND ANY INCREASES IN CASH VALUE AFTER DECEMBER 31, 1988
MAY NOT BE DISTRIBUTED UNLESS THE CONTRACT OWNER/EMPLOYEE HAS A) ATTAINED AGE
59 1/2, B) SEPARATED FROM SERVICE, C) DIED, D) BECOME DISABLED OR E) EXPERIENCED
FINANCIAL HARDSHIP (CASH VALUE INCREASES MAY NOT BE DISTRIBUTED 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%. WE 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 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 A TAX ADVISER BEFORE UNDERTAKING ANY SUCH SURRENDER. (SEE "FEDERAL
TAX CONSIDERATIONS")
CONTRACT CHARGES
SALES CHARGES -- The purpose of the Sales Charge is to cover expenses
relating to the sale and distribution of the Contracts, including commissions
paid to distributing organizations and their sales personnel, the cost of
preparing sales literature and other promotional activities. If the Sales Charge
is not sufficient to cover sales and distribution expenses, We pay them from our
general assets, including surplus. Surplus might include profits resulting from
unused mortality and expense risk charges.
You pay a Sales Charge when you purchase your annuity and when you make
additional premium payments to your annuity. The amount of the Sales Charge
depends on the size of your premium payment. The bigger your premium payment,
the less your Sales Charge is:
<TABLE>
<CAPTION>
CUMULATIVE SALES
PREMIUM PAYMENT CHARGE
- ------------------------------ -------
<S> <C>
Up to $49,999.99 5.5%
$50,000 to $99,999.99 4.5%
$100,000 to $249,999.99 3.5%
$250,000 to $499,999.99 2.5%
$500,000 to $999,999.99 2.0%
$1,000,000 and over 1.0%
</TABLE>
If you have other annuities with us, under a program called "Rights of
Accumulation", we might include those assets when determining your sales charge
for this annuity.
<PAGE>
16 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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Ask your financial consultant or call us to see if your other annuities qualify.
You might be able to lower the Sales Charge you pay when you purchase your
annuity by signing a LETTER OF INTENT. This is a contract between us where you
decide how much you want to invest in the 13 months from the date you purchase
this annuity. On the date you purchase your annuity, we deduct the sales charge
based on the total amount you plan on investing over the following 13 months.
This usually results in a lower sales charge than if you made one initial
investment and several premium payments later on. Think about the planned
premium payments for your Letter of Intent carefully. If you don't make all the
premium payments you plan on making, we will recalculate the sales charge for
the amounts we received in the 13 month period. If it turns out you owe us
additional money, will deduct this amount proportionally from your Accounts.
MORTALITY AND EXPENSE RISK CHARGE -- For assuming risks under the Contract,
We deduct a daily charge at the rate of 0.80% per annum against all Contract
Values held in the Sub-Accounts during the life of the Contract. 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) our actual mortality
experience among Annuitants before or after the Annuity Commencement Date or (b)
our actual expenses, if greater than the deductions provided for in the
Contracts because of the expense and mortality undertakings by us.
There are two types of mortality risks: those made during the accumulation
or deferral phase and those made during the annuity payout phase. The mortality
risk we take in the accumulation phase is that we may experience a loss
resulting from the assumption of the mortality risk relative to the death
benefit in event of the death of an Annuitant or Contract Owner before
commencement of Annuity payments, in periods of declining value. The mortality
risk we take during the annuity payout phase is to make monthly Annuity payments
(determined in accordance with the 1983a Individual Annuity Mortality Table and
other provisions contained in the Contract) to Annuitants regardless of how long
an Annuitant may live, and regardless of how long all Annuitants as a group may
live. We also assumes the liability for payment of a minimum death benefit under
the Contract. These mortality undertakings are based on our determination of
expected mortality rates among all Annuitants. If actual experience among
Annuitants during the Annuity payment period deviates from our actuarial
determination of expected mortality rates among Annuitants because, as a group,
their longevity is longer than anticipated, we must provide amounts from our
general funds to fulfill our contractual obligations. We will bear the loss in
such a situation.
During the accumulation phase, we also provide 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, we will deduct an Annual Maintenance Fee,
if applicable, from Contract Values to reimburse us for expenses relating to the
maintenance of the Contract, the Fixed Accumulation Features, and the
Sub-Accounts. If during a Contract Year the Contract is surrendered for its full
value, we will deduct the Annual Maintenance Fee at the time of such surrender.
The fee is a flat fee that will be due in the full amount regardless of the time
of the Contract Year that Contract Values are surrendered. The Annual
Maintenance Fee is $30.00 per Contract Year for Contracts with less than $50,000
Contract Value on the Contract Anniversary. Fees will be deducted on a pro rata
basis according to the value in each Sub-Account and the Fixed Accumulation
Features under a Contract.
WAIVERS OF THE ANNUAL MAINTENANCE FEE -- Annual Maintenance Fees are waived
for Contracts with Contract Value equal to or greater than $50,000. In addition,
we will waive one Annual Maintenance Fee for Contract Owners who own one or more
Contracts with a combined Contract Value of $50,000 up to $100,000. If You have
multiple contracts with a combined Contract Value of $100,000 or greater, we
will waive the Annual Maintenance Fee on all Contracts. However, we reserve the
right to limit the number of Annual Maintenance Fee waivers to a total of six
Contracts. We reserve the right to waive the Annual Maintenance Fee under other
conditions.
PREMIUM TAXES -- Charges are also deducted for Premium Tax, if applicable,
imposed by state or other governmental entity. Certain states impose a Premium
Tax, currently ranging up to 3.5%. Some states assess the tax at the time
purchase payments are made; others assess the tax at the time of annuitization.
We will pay Premium Taxes at the time imposed under applicable law. At our sole
discretion, we may deduct Premium Taxes at the time we pay such taxes to the
applicable taxing authorities, at the time the Contract is surrendered, at the
time a death benefit is paid, or at the time the Contract annuitizes.
CHARGES AGAINST THE FUNDS -- The Separate Account purchases shares of the
Funds at net asset value. The net asset value of the Fund shares reflects
investment advisory fees and administrative expenses already deducted from the
assets of the Funds. These charges are described in the Funds' prospectuses
accompanying this prospectus.
EXCEPTIONS TO CHARGES UNDER THE CONTRACT -- We may offer, at our discretion,
reduced fees and charges including, but not limited to, Sales Charges, the
mortality and expense
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 17
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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 BENEFITS
DEATH BEFORE THE ANNUITY COMMENCEMENT DATE
DETERMINATION OF THE BENEFICIARY -- If the Contract Owner or the Annuitant
dies before the Annuity Commencement Date, we will pay a Death Benefit to the
Beneficiary.
- - 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.
DETERMINATION OF THE DEATH BENEFIT -- If the deceased had not reached his or
her 81st birthday, the Death Benefit is the greatest of:
(a) The Contract Value, or
(b) 100% of the total 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 determined from the following: we will calculate a Contract Anniversary
value for each Contract Anniversary prior to the deceased reaching his or her
81st birthday. The Contract Anniversary value is equal to the Contract Value on
a Contract Anniversary, increased by the dollar amount of any Net Premium
Payments made since that anniversary and reduced by the dollar amount of any
partial surrenders since that anniversary.
IF THE DECEASED REACHED HIS OR HER 81ST BIRTHDAY, then the Death Benefit is
the greatest of:
(a) The Contract Value, or
(b) 100% of the total Payments made to such Contract, reduced by any prior
surrenders, or
(c) The Maximum Anniversary Value prior to the deceased's 81st birthday, reduced
by any prior surrenders and increased by Net Premium Payments.
CALCULATION OF THE DEATH BENEFIT -- 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 we receive
written notification of Due Proof of Death. THE DEATH BENEFIT REMAINS INVESTED
IN THE SEPARATE ACCOUNT ACCORDING TO YOUR LAST INSTRUCTIONS UNTIL THE PROCEEDS
ARE PAID OR WE RECEIVE NEW SETTLEMENT INSTRUCTIONS FROM THE BENEFICIARY. DURING
THE TIME PERIOD BETWEEN OUR RECEIPT OF WRITTEN NOTIFICATION OF DUE PROOF OF
DEATH AND OUR RECEIPT OF THE COMPLETE SETTLEMENT INSTRUCTIONS, THE CALCULATED
DEATH BENEFIT WILL BE SUBJECT TO MARKET FLUCTUATIONS. UPON RECEIPT OF COMPLETE
SETTLEMENT INSTRUCTIONS, WE WILL CALCULATE THE PAYABLE AMOUNT.
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 us from the
Payee.
DEATH ON OR AFTER THE ANNUITY COMMENCEMENT DATE
If, on or after the Annuity Commencement Date, the Contract Owner dies and the
Annuitant is living, the Beneficiary becomes the Contract Owner. If the
Annuitant dies and the Contract Owner is living, the Contract Owner becomes the
Beneficiary.
If the Annuitant dies on or after the Annuity Commencement Date, we will
make the payments described below to the Beneficiary under the following Annuity
payment options:
x Life Annuity with Cash Refund
x Life Annuity with Payments for a Period Certain
x Joint and Last Survivor Annuity
x Joint and Last Survivor Life Annuity with Payments for a Period Certain and
x Life Annuity with Payments for a Period Certain.
THE ANNUITY PROCEEDS SETTLEMENT OPTION -- Proceeds from the Death Benefit
may be left with us for at least 5 years from the date of the Contract Owner's
death if the death occurs prior to the Annuity Commencement Date. These proceeds
will remain in the Sub-Account(s) to which they
<PAGE>
18 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 a
complete Surrender, the remaining value will equal the Contract Value of the
proceeds left with us, minus any partial Surrenders. This option may not be
available under certain Contracts issued in connection with Qualified Plans.
SETTLEMENT PROVISIONS
You select an Annuity Commencement Date which will not be deferred beyond
the Valuation Day immediately following the later of the Annuitant's 90th
birthday or the end of the tenth Contract Year. You may elect a later Annuity
Commencement Date if we allow and subject to the laws and regulations then in
effect. If the Contract is sold as part of a Charitable Remainder Trust, the
Annuity Commencement Date may be deferred to the Annuitant's 100th birthday. The
Annuity Commencement Date and may be changed from time to time, BUT ANY CHANGE
MUST BE WITHIN 30 DAYS PRIOR TO THE DATE ON WHICH ANNUITY PAYMENTS ARE SCHEDULED
TO BEGIN.
You also elect in writing an annuity payment option, which may be any of the
options described below or any annuity payment option then being offered by us.
The annuity payment option may not be changed on or after the Annuity
Commencement Date.
The Contract contains the six annuity payment options described below and
the Annuity Proceeds Settlement Option. Annuity payment options Life Annuity
with Payments for a Period Certain, Joint and Last Survivor Life Annuity with
Payments for a Period Certain and Payments for a Period Certain 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. The Annuity Proceeds Settlement Option is available to Qualified
Contracts only if the guaranteed payment period is less than the life expectancy
of the Beneficiary at the time the option becomes effective. Such life
expectancies are computed on the basis of the mortality table prescribed by the
IRS, or if none is prescribed, the mortality table then in use by us.
With respect to Non-Qualified Contracts, if you do not elect otherwise,
fixed dollar amount annuity payments will automatically begin on the Annuity
Commencement Date under the annuity payment option Life Annuity with Payments
for a Period Certain with a 10 year Period Certain. For Qualified Contracts and
Contracts issued in Texas, if you do not elect otherwise, fixed dollar amount
annuity payments will begin automatically on the Annuity Commencement Date,
under the Life Annuity payment option.
ANNUITY PAYMENT OPTIONS
OPTION 1 -- LIFE ANNUITY where we make Annuity payments for as long as the
Annuitant lives.
- Payments under this option STOP UPON THE DEATH OF THE ANNUITANT, even if the
Annuitant dies after one payment.
OPTION 2 -- LIFE ANNUITY WITH CASH REFUND where we make payments during the
life of the Annuitant and when the Annuitant dies, we pay the remaining value to
the Beneficiary. The remaining value is calculated by subtracting the annuity
payments already made and any applicable Premium Taxes from the Contract Value
at the time we receive Due Proof of Death.
- This option is only available if you select payments using a VARIABLE DOLLAR
AMOUNT PAYMENT OPTION WITH THE 5% AIR OR FIXED DOLLAR AMOUNT ANNUITY
PAYMENTS.
OPTION 3 -- LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN where we make
payments to you for the life of the Annuitant but you are at least guaranteed
payments for a time period you select which is a minimum of 5 years and a
maximum of 100 years minus your Annuitant's age. If the Annuitant dies before
the end of the period selected, we will continue to make payments until the end
of the period selected.
OPTION 4 -- JOINT AND LAST SURVIVOR ANNUITY where we make payments during
the lifetime of the Annuitant and another designated individual called the Joint
Annuitant and then throughout the remaining lifetime of the survivor.
OPTION 5 -- JOINT AND LAST SURVIVOR LIFE ANNUITY WITH PAYMENTS FOR A PERIOD
CERTAIN where we make payments during the lifetime of you and a Joint Annuitant,
and we guarantee that those payments for a time period you select which is not
less than 5 years and no more than 100 years minus your Annuitant's age. If both
you and your Joint Annuitant die before the time we guarantee to make payments
is up, we will pay the remaining value to your Beneficiary.
- Upon the death of the Annuitant and Joint Annuity we will give your
Beneficiary the present value of the remaining payments.
OPTION 6 -- PAYMENTS FOR A PERIOD CERTAIN where we agree to make payments
for a specified time between 5 and 30 years. If the Annuitant dies before the
end of the specified time, we pay the Beneficiary the present value of the
annuity in one lump sum or continue making the remaining payments to the
Beneficiary.
- If you select this option and select to have your payments made through a
variable annuity option, YOU MAY SURRENDER YOUR ANNUITY after payments have
started and we will give you the ANNUITY PROCEEDS SETTLEMENT OPTION.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 19
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WE MAY OFFER OTHER ANNUITY PAYMENT OPTIONS FROM TIME TO TIME.
ANNUITY PAYMENTS
When your decide to begin to take payments, we calculate your Contract Value
minus any Premium Tax which we must pay and, unless you instruct us otherwise,
we apply that amount to a variable annuity with the same Sub-Account values. You
may however, choose to have your Contract Value applied to a fixed annuity
instead.
IMPORTANT: YOU SHOULD CONSIDER THE QUESTION OF ALLOCATION OF CONTRACT VALUES
(LESS APPLICABLE PREMIUM TAXES) AMONG SUB-ACCOUNTS AND THE FIXED ACCUMULATION
FEATURES TO MAKE CERTAIN THAT ANNUITY PAYMENTS ARE BASED ON THE INVESTMENT
ALTERNATIVE BEST SUITED TO YOUR NEEDS FOR RETIREMENT.
ANNUITY PAYMENTS -- 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, we has the right to change the frequency
of payment to intervals so that payments will at least be $50. For contract
issued in the STATE OF NEW YORK Contracts, the minimum monthly Annuity payment
is $20. If any amount due is less than the minimum amount per year, we make such
other settlement as may be equitable to the Payee.
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
You. Available payment frequencies include monthly, quarterly, semi-annual and
annual. The payment frequency may be changed within 30 days prior to the
anniversary of your Annuity Commencement Date.
ANNUITY COMMENCEMENT DATE -- You select the Annuity Commencement Date in
your application or order request. The Annuity Calculation Date will be no more
than five Valuation Days before the Annuity Commencement Date.
ANNUITY CALCULATION DATE -- On the Annuity Calculation Date, Your Contract
Value less any applicable Premium Tax is applied to purchase Annuity Units of
the Sub-Accounts selected by You. The first Annuity payment is computed using
the value of these 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 You. They are also shown on the specification page
of your Contract. You may choose from monthly, quarterly, semi-annual and annual
payments. The Annuity payment frequency may not be changed once selected by You.
IN THE EVENT THAT YOU DO 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 we pay to your 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 You. 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 result of each Sub-Account calculation.
The total subsequent Variable Annuity payments equal the sum of the amounts
attributable to each Sub-Account.
When an Income Payment Date falls on a day that is not a Valuation Day, the
Income Payment is computed as of the
<PAGE>
20 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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prior 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 payment 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:
(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 You. 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%.
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:
- - If You select 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.
- - If You select 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.
- - If You select 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 AIR. IN FACT, PAYMENTS WILL VARY UP
OR DOWN AS THE INVESTMENT RATE VARIES UP OR DOWN FROM THE AIR.
EXCHANGE (TRANSFER) OF ANNUITY UNITS -- After the Annuity Calculation Date,
You 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.
FIXED DOLLAR 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.
OTHER INFORMATION
ASSIGNMENT -- Ownership of this Contract is generally assignable. However,
if the Contracts are issued pursuant to
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 21
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some form of Qualified Plan, it is possible that the ownership of the Contracts
may not be transferred or assigned depending on the type of tax-qualified
retirement plan involved. An assignment of a Non-Qualified Contract may subject
the Contract values or assignment proceeds to income taxes and certain penalty
taxes.
CONTRACT MODIFICATION -- The Annuitant may not be changed; however, the
Contingent Annuitant may be changed at any time prior to the Annuity
Commencement Date by sending us written notice. We may modify the Contract, but
no modification will effect the amount or term of any Contract unless a
modification is required to conform the Contract to applicable Federal or State
law. No modification will effect the method by which Contract Values are
determined.
FEDERAL TAX CONSIDERATIONS
What are some of the federal tax consequences which affect these Contracts?
A. GENERAL
Since federal tax law is complex, the tax consequences of purchasing this
contract will vary depending on your situation. You may need tax or legal advice
to help you determine whether purchasing this contract is right for you.
Our general discussion of the tax treatment of this contract is based on our
understanding of federal income tax laws as they are currently interpreted. A
detailed description of all federal income tax consequences regarding the
purchase of this contract cannot be made in the prospectus. We also do not
discuss state, municipal or other tax laws that may apply to this contract. For
detailed information, you should consult with a qualified tax adviser familiar
with your situation.
B. TAXATION OF HARTFORD AND
THE SEPARATE ACCOUNT
The Separate Account is taxed as part of Hartford which is taxed as a life
insurance company in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Separate Account will not be taxed as a
"regulated investment company" under subchapter M of Chapter 1 of the Code.
Investment income and any realized capital gains on the assets of the Separate
Account are reinvested and are taken into account in determining the value of
the Accumulation and Annuity Units (See "Value of Accumulation Units"). As a
result, such investment income and realized capital gains are automatically
applied to increase reserves under the Contract.
No taxes are due on interest, dividends and short-term or long-term capital
gains earned by the Separate Account with respect to Qualified or Non-Qualified
Contracts.
C. TAXATION OF ANNUITIES -- GENERAL
PROVISIONS AFFECTING PURCHASERS OTHER THAN QUALIFIED RETIREMENT PLANS
Section 72 of the Code governs the taxation of annuities in general.
1. NON-NATURAL PERSONS, CORPORATIONS, ETC.
Code Section 72 contains provisions for contract owners which are not
natural persons. Non-natural persons include corporations, trusts, limited
liability companies, partnerships and other types of legal entities. The tax
rules for contracts owned by non-natural persons are different from the rules
for contracts owned by individuals. For example, the annual net increase in the
value of the contract is currently includible in the gross income of a non-
natural person, unless the non-natural person holds the contract as an agent for
a natural person. There are additional exceptions from current inclusion for:
- - certain annuities held by structured settlement companies,
- - certain annuities held by an employer with respect to a terminated qualified
retirement plan and
- - certain immediate annuities.
A non-natural person which is a tax-exempt entity for federal tax purposes
will not be subject to income tax as a result of this provision.
If the contract owner is a non-natural person, the primary annuitant is
treated as the contract owner in applying mandatory distribution rules. These
rules require that certain distributions be made upon the death of the contract
owner. A change in the primary annuitant is also treated as the death of the
contract owner.
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 21
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2. OTHER CONTRACT OWNERS (NATURAL PERSONS).
A Contract Owner is not taxed on increases in the value of the Contract
until an amount is received or deemed received, e.g., in the form of a lump sum
payment (full or partial value of a Contract) or as Annuity payments under the
settlement option elected.
The provisions of Section 72 of the Code concerning distributions are
summarized briefly below. Also summarized are special rules affecting
distributions from Contracts obtained in a tax-free exchange for other annuity
contracts or life insurance contracts which were purchased prior to August 14,
1982.
A. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
i. Total premium payments less amounts received which were not includable in
gross income equal the "investment in the contract" under Section 72 of the
Code.
ii. To the extent that the value of the Contract (ignoring any surrender
charges except on a full surrender) exceeds the "investment in the
contract," such excess constitutes the "income on the contract."
iii. Any amount received or deemed received prior to the Annuity Commencement
Date (e.g., upon a partial surrender) is deemed to come first from any
such "income on the contract" and then from "investment in the contract,"
and for these purposes such "income on the contract" shall be computed by
reference to any aggregation rule in subparagraph 2.c. below. As a result,
any such amount received or deemed received (1) shall be includable in
gross income to the extent that such amount does not exceed any such
"income on the contract," and (2) shall not be includable in gross income
to the extent that such amount does exceed any such "income on the
contract." If at the time that any amount is received or deemed received
there is no "income on the contract" (e.g., because the gross value of the
Contract does not exceed the "investment in the contract" and no
aggregation rule applies), then such amount received or deemed received
will not be includable in gross income, and will simply reduce the
"investment in the contract."
iv. The receipt of any amount as a loan under the Contract or the assignment or
pledge of any portion of the value of the Contract shall be treated as an
amount received for purposes of this subparagraph a. and the next
subparagraph b.
v. In general, the transfer of the Contract, without full and adequate
consideration, will be treated as an amount received for purposes of this
subparagraph a. and the next subparagraph b. This transfer rule does not
apply, however, to certain transfers of property between spouses or incident
to divorce.
B. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE.
Annuity payments made periodically after the Annuity Commencement Date are
includable in gross income to the extent the payments exceed the amount
determined by the application of the ratio of the "investment in the contract"
to the total amount of the payments to be made after the Annuity Commencement
Date (the "exclusion ratio").
i. When the total of amounts excluded from income by application of the
exclusion ratio is equal to the investment in the contract as of the Annuity
Commencement Date, any additional payments (including surrenders) will be
entirely includable in gross income.
ii. If the annuity payments cease by reason of the death of the Annuitant and,
as of the date of death, the amount of annuity payments excluded from gross
income by the exclusion ratio does not exceed the investment in the
contract as of the Annuity Commencement Date, then the remaining portion of
unrecovered investment shall be allowed as a deduction for the last taxable
year of the Annuitant.
iii. Generally, nonperiodic amounts received or deemed received after the
Annuity Commencement Date are not entitled to any exclusion ratio and
shall be fully includable in gross income. However, upon a full surrender
after such date, only the excess of the amount received (after any
surrender charge) over the remaining "investment in the contract" shall be
includable in gross income (except to the extent that the aggregation rule
referred to in the next subparagraph c. may apply).
C. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS.
Contracts issued after October 21, 1988 by the same insurer (or affiliated
insurer) to the same Contract Owner within the same calendar year (other than
certain contracts held in connection with a tax-qualified retirement
arrangement) will be treated as one annuity Contract for the purpose of
determining the taxation of distributions prior to the Annuity Commencement
Date. An annuity contract received in a tax-free exchange for another annuity
contract or life insurance contract may be treated as a new Contract for this
purpose. Hartford believes that for any annuity subject to such aggregation, the
values under the Contracts and the investment in the contracts will be added
together to determine the taxation under subparagraph 2.a., above, of amounts
received or deemed received prior to the Annuity Commencement Date. Withdrawals
will first be treated as withdrawals of income until all of the income from all
such Contracts is withdrawn. As of the date of this Prospectus, there are no
regulations interpreting this provision.
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22 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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D. 10% PENALTY TAX -- APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY
PAYMENTS.
i. If any amount is received or deemed received on the Contract (before or
after the Annuity Commencement Date), the Code applies a penalty tax equal
to ten percent of the portion of the amount includable in gross income,
unless an exception applies.
ii. The 10% penalty tax will not apply to the following distributions
(exceptions vary based upon the precise plan involved):
1. Distributions made on or after the date the recipient has attained the
age of 59 1/2.
2. Distributions made on or after the death of the holder or where the
holder is not an individual, the death of the primary annuitant.
3. Distributions attributable to a recipient's becoming disabled.
4. A distribution that is part of a scheduled series of substantially equal
periodic payments (not less frequently than annually) for the life (or
life expectancy) of the recipient (or the joint lives or life
expectancies of the recipient and the recipient's designated
Beneficiary).
5. Distributions of amounts which are allocable to the "investment in the
contract" prior to August 14, 1982 (see next subparagraph e.).
E. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-FREE
EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS PURCHASED PRIOR TO
AUGUST 14, 1982.
If the Contract was obtained by a tax-free exchange of a life insurance or
annuity Contract purchased prior to August 14, 1982, then any amount received or
deemed received prior to the Annuity Commencement Date shall be deemed to come
(1) first from the amount of the "investment in the contract" prior to August
14, 1982 ("pre-8/14/82 investment") carried over from the prior Contract, (2)
then from the portion of the "income on the contract" (carried over to, as well
as accumulating in, the successor Contract) that is attributable to such
pre-8/14/82 investment, (3) then from the remaining "income on the contract" and
(4) last from the remaining "investment in the contract." As a result, to the
extent that such amount received or deemed received does not exceed such
pre-8/14/82 investment, such amount is not includable in gross income., In
addition, to the extent that such amount received or deemed received does not
exceed the sum of (a) such pre-8/14/82 investment and (b) the "income on the
contract" attributable thereto, such amount is not subject to the 10% penalty
tax. In all other respects, amounts received or deemed received from such post-
exchange Contracts are generally subject to the rules described in this
subparagraph 3.
F. REQUIRED DISTRIBUTIONS.
i. Death of Contract Owner or Primary Annuitant
Subject to the alternative election or spouse beneficiary provisions in ii
or iii below:
1. If any Contract Owner dies on or after the Annuity Commencement Date and
before the entire interest in the Contract has been distributed, the
remaining portion of such interest shall be distributed at least as
rapidly as under the method of distribution being used as of the date of
such death;
2. If any Contract Owner dies before the Annuity Commencement Date, the
entire interest in the Contract will be distributed within 5 years after
such death; and
3. If the Contract Owner is not an individual, then for purposes of 1. or
2. above, the primary annuitant under the Contract shall be treated as
the Contract Owner, and any change in the primary annuitant shall be
treated as the death of the Contract Owner. The primary annuitant is the
individual, the events in the life of whom are of primary importance in
affecting the timing or amount of the payout under the Contract.
ii. Alternative Election to Satisfy Distribution Requirements
If any portion of the interest of a Contract Owner described in i. above is
payable to or for the benefit of a designated beneficiary, such beneficiary
may elect to have the portion distributed over a period that does not
extend beyond the life or life expectancy of the beneficiary. The election
must be made and payments must begin within a year of the death.
iii. Spouse Beneficiary
If any portion of the interest of a Contract Owner is payable to or for the
benefit of his or her spouse, and the Annuitant or Contingent Annuitant is
living, such spouse shall be treated as the Contract Owner of such portion
for purposes of section i. above. This spousal continuation shall apply only
once for this contract.
3. DIVERSIFICATION REQUIREMENTS.
The Code requires that investments supporting your contract be adequately
diversified. Code Section 817 provides that a variable annuity contract will not
be treated as an annuity contract for any period during which the investments
made by the separate account or underlying fund are not adequately diversified.
If a contract is not treated as an annuity contract, the contract owner will be
subject to income tax on annual increases in cash value.
The Treasury Department's diversification regulations require, among other
things, that:
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 23
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- - no more than 55% of the value of the total assets of the segregated asset
account underlying a variable contract is represented by any one investment,
- - no more than 70% is represented by any two investments,
- - no more than 80% is represented by any three investments and
- - no more than 90% is represented by any four investments.
In determining whether the diversification standards are met, all securities
of the same issuer, all interests in the same real property project, and all
interests in the same commodity are each treated as a single investment. In the
case of government securities, each government agency or instrumentality is
treated as a separate issuer.
A separate account must be in compliance with the diversification standards
on the last day of each calendar quarter or within 30 days after the quarter
ends. If an insurance company inadvertently fails to meet the diversification
requirements, the company may still comply within a reasonable period and avoid
the taxation of contract income on an ongoing basis. However, either the company
or the contract owner must agree to pay the tax due for the period during which
the diversification requirements were not met.
We monitor the diversification of investments in the separate accounts and
test for diversification as required by the Code. We intend to administer all
contracts subject to the diversification requirements in a manner that will
maintain adequate diversification.
4. OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT.
In order for a variable annuity contract to qualify for tax deferral, assets
in the separate accounts supporting the contract must be considered to be owned
by the insurance company and not by the contract owner. It is unclear under what
circumstances an investor is considered to have enough control over the assets
in the separate account to be considered the owner of the assets for tax
purposes.
The IRS has issued several rulings discussing investor control. These
rulings say that certain incidents of ownership by the contract owner, such as
the ability to select and control investments in a separate account, will cause
the contract owner to be treated as the owner of the assets for tax purposes.
In its explanation of the diversification regulations, the Treasury
Department recognized that the temporary regulations "do not provide guidance
concerning the circumstances in which investor control of the investments of a
segregated asset account may cause the investor, rather than the insurance
company, to be treated as the owner of the assets in the account." The
explanation further indicates that "the temporary regulations provide that in
appropriate cases a segregated asset account may include multiple sub-accounts,
but do not specify the extent to which policyholders may direct their
investments to particular sub-accounts without being treated as the owners of
the underlying assets. Guidance on this and other issues will be provided in
regulations or revenue rulings under Section 817(d), relating to the definition
of variable contract."
The final regulations issued under Section 817 did not provide guidance
regarding investor control, and as of the date of this prospectus, guidance has
yet to be issued. We do not know if additional guidance will be issued. If
guidance is issued, we do not know if it will have a retroactive effect.
Due to the lack of specific guidance on investor control, there is some
uncertainty about when a contract owner is considered the owner of the assets
for tax purposes. We reserve the right to modify the contract, as necessary, to
prevent you from being considered the owner of assets in the separate account.
D. FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient will
be subject to federal income tax withholding, pursuant to Section 3405 of the
Code. The application of this provision is summarized below:
1. NON-PERIODIC DISTRIBUTIONS.
The portion of a non-periodic distribution which constitutes taxable income
will be subject to federal income tax withholding unless the recipient elects
not to have taxes withheld. If there is no election to waive withholding, 10% of
the taxable distribution will be withheld as federal income tax. Election forms
will be provided at the time distributions are requested. If the necessary
election forms are not submitted to Hartford, Hartford will automatically
withhold 10% of the taxable distribution.
2. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN ONE
YEAR).
The portion of a periodic distribution which constitutes taxable income will
be subject to federal income tax withholding as if the recipient were married
claiming three exemptions. A recipient may elect not to have income taxes
withheld or have income taxes withheld at a different rate by providing a
completed election form. Election forms will be provided at the time
distributions are requested.
E. GENERAL PROVISIONS AFFECTING
QUALIFIED RETIREMENT PLANS
The Contract may be used for a number of qualified retirement plans. If the
Contract is being purchased with respect to some form of qualified retirement
plan, please refer to Appendix I for information relative to the types of
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24 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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plans for which it may be used and the general explanation of the tax features
of such plans.
F. ANNUITY PURCHASES BY NONRESIDENT
ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal
income tax consequences to annuity purchasers that are U.S. citizens or
residents. Purchasers that are not U.S. citizens or residents will generally be
subject to U.S. federal income tax and withholding on annuity distributions at a
30% rate, unless a lower treaty rate applies. In addition, purchasers may be
subject to state premium tax, other state and/or municipal taxes, and taxes that
may be imposed by the purchaser's country of citizenship or residence.
Prospective purchasers are advised to consult with a qualified tax adviser
regarding U.S., state, and foreign taxation with respect to an annuity purchase.
MISCELLANEOUS
HOW CONTRACTS ARE SOLD
Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account. HSD
is an affiliate of Hartford. Both HSD and Hartford are ultimately controlled by
The Hartford Financial Services Group, Inc. The principal business address of
HSD is the same as that of Hartford.
The securities will be sold by 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 Commission under the Securities Exchange Act of
1934 as a Broker-Dealer and is a member of the National Association of
Securities Dealers, Inc.
Commissions will be paid by Hartford and will not be more than 6% of Premium
Payments. From time to time, Hartford may pay or permit other promotional
incentives, in cash or credit or other compensation.
Broker-dealers or financial institutions are compensated according to a
schedule set forth by HSD and any applicable rules or regulations for variable
insurance compensation. Compensation is generally based on premium payments made
by policyholders or contract owners. This compensation is usually paid from the
sales charges described in this Prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HSD, its affiliates or Hartford may also make compensation
arrangements with certain broker-dealers or financial institutions based on
total sales by the broker-dealer or financial institution of insurance products.
These payments, which may be different for different broker-dealers or financial
institutions, will be made by HSD, its affiliates or Hartford out of their own
assets and will not effect the amounts paid by the policyholders or contract
owners to purchase, hold or surrender variable insurance products.
The Contract may be sold directly to certain individuals under certain
circumstances that do not involve payment of any sales compensation to a
registered representative. In such case, Hartford will waive the sales charge.
This in no way affects present or future charges, rights, benefits or current
values of other Contract Owners. The following class of individuals are eligible
for this feature: (1) current or retired officers, directors, trustees and
employees (and their families) of the ultimate parent and affiliates of
Hartford; and (2) employees and registered representatives (and their families)
of registered broker-dealers (or financial institutions affiliated therewith)
that have a sales agreement with Hartford and its principal underwriter to sell
the Contracts.
YEAR 2000
IN GENERAL -- The Year 2000 issue relates to the ability or inability of
computer hardware, software and other information technology (IT) systems, as
well as non-IT systems, such as equipment and machinery with imbedded chips and
microprocessors, to properly process information and data containing or related
to dates beginning with the year 2000 and beyond. The Year 2000 issue exists
because, historically, many IT and non-IT systems that are in use today were
developed years ago when a year was identified using a two-digit date field
rather than a four-digit date field. As information and data containing or
related to the century date are introduced to date sensitive systems, these
systems may recognize the year 2000 as "1900", or not at all, which may result
in systems processing information incorrectly. This, in turn, may significantly
and adversely affect the integrity and reliability of information databases of
IT systems, may cause the malfunctioning of certain non-IT systems, and may
result in a wide variety of adverse consequences to a company. In addition, Year
2000 problems that occur with third parties with which a company does business,
such as suppliers, computer vendors, distributors and others, may also adversely
affect any given company.
The integrity and reliability of Hartford's IT systems, as well as the
reliability of its non-IT systems, are integral aspects of Hartford's business.
Hartford issues insurance policies, annuities, mutual funds and other financial
products to individual and business customers, nearly all of which contain date
sensitive data, such as policy expiration dates, birth dates and premium payment
dates. In addition, various IT systems support communications and other systems
that integrate Hartford's various business segments
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 25
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and field offices. Hartford also has business relationships with numerous third
parties that affect virtually all aspects of Hartford's business, including,
without limitation, suppliers, computer hardware and software vendors, insurance
agents and brokers, securities broker-dealers and other distributors of
financial products, many of which provide date sensitive data to Hartford, and
whose operations are important to Hartford's business.
INTERNAL YEAR 2000 EFFORTS AND TIMETABLE -- Beginning in 1990, Hartford
began working on making its IT systems Year 2000 ready, either through
installing new programs or replacing systems. Since January 1998, Hartford's
Year 2000 efforts have focused on the remaining Year 2000 issues related to IT
and non-IT systems in all of Hartford's business segments. These Year 2000
efforts include the following five main initiatives: (1) identifying and
assessing Year 2000 issues; (2) taking actions to remediate IT and non-IT
systems so that they are Year 2000 ready; (3) testing IT and non-IT systems for
Year 2000 readiness; (4) deploying such remediated and tested systems back into
their respective production environments; and (5) conducting internal and
external integrated testing of such systems. As of December 31, 1998, Hartford
substantially completed initiatives (1) through (4) of its internal Year 2000
efforts. Hartford has begun initiative (5) and management currently anticipates
that such activity will continue into the fourth quarter of 1999.
THIRD PARTY YEAR 2000 EFFORTS AND TIMETABLE -- Hartford's Year 2000 efforts
include assessing the potential impact on Hartford of third parties' Year 2000
readiness. Hartford's third party Year 2000 efforts include the following three
main initiatives: (1) identifying third parties which have significant business
relationships with Hartford, including, without limitation, insurance agents,
brokers, third party administrators, banks and other distributors and servicers
of financial products, and inquiring of such third parties regarding their Year
2000 readiness; (2) evaluating such third parties' responses to Hartford's
inquiries; and (3) based on the evaluation of third party responses (or a third
party's failure to respond) and the significance of the business relationship,
conducting additional activities with respect to third parties as determined to
be necessary in each case. These activities may include conducting additional
inquiries, more in-depth evaluations of Year 2000 readiness and plans, and
integrated IT systems testing. Hartford has completed the first third party
initiative and, as of early 1999, had substantially completed evaluating third
party responses received. Hartford has begun conducting the additional
activities described in initiative (3) and management currently anticipates that
it will continue to do so through the end of 1999. However, notwithstanding
these third party Year 2000 efforts, Hartford does not have control over these
third parties and, as a result, Hartford cannot currently determine to what
extent future operating results may be adversely affected by the failure of
these third parties to adequately address their Year 2000 issues.
YEAR 2000 COSTS -- The costs of Hartford's Year 2000 program that were
incurred through the year ended December 31, 1997 were not material to
Hartford's financial condition or results of operations. The after-tax costs of
Hartford's Year 2000 efforts for the year ended December 31, 1998 were
approximately $3 million. Management currently estimates that after-tax costs
related to the Year 2000 program to be incurred in 1999 will be less than $10
million. These costs are being expensed as incurred.
RISKS AND CONTINGENCY PLANS -- If significant Year 2000 problems arise,
including problems arising with third parties, failures of IT and non-IT systems
could occur, which in turn could result in substantial interruptions in
Hartford's business. In addition, Hartford's investing activities are an
important aspect of its business and Hartford may be exposed to the risk that
issuers of investments held by it will be adversely impacted by Year 2000
issues. Given the uncertain nature of Year 2000 problems that may arise,
especially those related to the readiness of third parties discussed above,
management cannot determine at this time whether the consequences of Year 2000
related problems that could arise will have a material impact on Hartford's
financial condition or results of operations.
Hartford is in the process of developing certain contingency plans so that
if, despite its Year 2000 efforts, Year 2000 problems ultimately arise, the
impact of such problems may be avoided or minimized. These contingency plans are
being developed based on, among other things, known or reasonably anticipated
circumstances and potential vulnerabilities. The contingency planning also
includes assessing the dependency of Hartford's business on third parties and
their Year 2000 readiness. Hartford currently anticipates that internal and
external contingency plans will be substantially complete by the end of the
second quarter of 1999. However, in many contexts, Year 2000 issues are dynamic,
and ongoing assessments of business functions, vulnerabilities and risks must be
made. As such, new contingency plans may be needed in the future and/or existing
plans may need to be modified as circumstances warrant.
LEGAL MATTERS AND EXPERTS
There are no material legal proceedings pending to which the Separate
Account is a party.
Counsel with respect to federal laws and regulations applicable to the issue
and sale of the Contracts and with respect to Connecticut law is Lynda Godkin,
Senior Vice President, General Counsel and Corporate Secretary, Hartford Life
and Annuity Insurance Company, P.O. Box 2999, Hartford, Connecticut 06104-2999.
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
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26 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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 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.
MORE INFORMATION
You may call your Representative if you have any questions or write or call
us at the address below:
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)
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 27
- --------------------------------------------------------------------------------
APPENDIX I -- INFORMATION REGARDING
TAX-QUALIFIED RETIREMENT PLANS
This summary does not attempt to provide more than general information about
the federal income tax rules associated with use of a Contract by a
tax-qualified retirement plan. Because of the complexity of the federal tax
rules, owners, participants and beneficiaries are encouraged to consult their
own tax advisors as to specific tax consequences.
The federal tax rules applicable to owners of Contracts under tax-qualified
retirement plans vary according to the type of plan as well as the terms and
conditions of the plan itself. Contract owners, plan participants and
beneficiaries are cautioned that the rights and benefits of any person may be
controlled by the terms and conditions of the tax-qualified retirement plan
itself, regardless of the terms and conditions of a Contract. We are not bound
by the terms and conditions of such plans to the extent such terms conflict with
a Contract, unless we specifically consent to be bound.
Some tax-qualified retirement plans are subject to distribution and other
requirements that are not incorporated into our administrative procedures.
Contract owners, participants and beneficiaries are responsible for determining
that contributions, distributions and other transactions comply with applicable
law. Tax penalties may apply to transactions with respect to tax-qualified
retirement plans if applicable federal income tax rules and restrictions are not
carefully observed.
We do not currently offer the Contracts in connection with all of the types
of tax-qualified retirement plans discussed below and may not offer the
Contracts for all types of tax-qualified retirement plans in the future.
1. TAX-QUALIFIED PENSION OR PROFIT-SHARING PLANS -- Eligible employers can
establish certain tax-qualified pension and profit-sharing plans under section
401 of the Code. Rules under section 401(k) of the Code govern certain "cash or
deferred arrangements" under such plans. Rules under section 408(k) govern
"simplified employee pensions". Tax-qualified pension and profit-sharing plans
are subject to limitations on the amount that may be contributed, the persons
who may be eligible to participate and the time when distributions must
commence. Employers intending to use the Contracts in connection with
tax-qualified pension or profit-sharing plans should seek competent tax and
other legal advice.
2. TAX SHELTERED ANNUITIES UNDER SECTION 403(b) -- Public schools and
certain types of charitable, educational and scientific organizations, as
specified in section 501(c)(3) of the Code, can purchase tax-sheltered annuity
contracts for their employees. Tax-deferred contributions can be made to
tax-sheltered annuity contracts under section 403(b) of the Code, subject to
certain limitations. Generally, such contributions may not exceed the lesser of
$10,000 (indexed) or 20% of the employee's "includable compensation" for such
employee's most recent full year of employment, subject to other adjustments.
Special provisions under the Code may allow some employees to elect a different
overall limitation.
Tax-sheltered annuity programs under section 403(b) are subject to a
PROHIBITION AGAINST DISTRIBUTIONS FROM THE CONTRACT ATTRIBUTABLE TO
CONTRIBUTIONS MADE PURSUANT TO A SALARY REDUCTION AGREEMENT, unless such
distribution is made:
- - after the participating employee attains age 59 1/2;
- - upon separation from service;
- - upon death or disability; or
- - in the case of hardship (and in the case of hardship, any income attributable
to such contributions may not be distributed).
Generally, the above restrictions do not apply to distributions attributable
to cash values or other amounts held under a section 403(b) contract as of
December 31, 1988.
3. DEFERRED COMPENSATION PLANS UNDER SECTION 457 -- A governmental employer
or a tax-exempt employer other than a governmental unit can establish a Deferred
Compensation Plan under section 457 of the Code. For these purposes, a
"governmental employer" is a State, a political subdivision of a State, or an
agency or an instrumentality of a State or political subdivision of a State.
Employees and independent contractors performing services for a governmental or
tax-exempt employer can elect to have contributions made to a Deferred
Compensation Plan of their employer in accordance with the employer's plan and
section 457 of the Code.
Deferred Compensation Plans that meet the requirements of section 457(b) of
the Code are called "eligible" Deferred Compensation Plans. Section 457(b)
limits the amount of contributions that can be made to an eligible Deferred
Compensation Plan on behalf of a participant. Generally, the limitation on
contributions is 33 1/3% of a participant's includable compensation (typically
25% of gross compensation) or, for 1999, $8,000 (indexed), whichever is less.
The plan may provide for additional "catch-up" contributions during the three
taxable years ending before the year in which the participant attains normal
retirement age.
<PAGE>
28 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
All of the assets and income of an eligible Deferred Compensation Plan
established by a governmental employer after August 20, 1996, must be held in
trust for the exclusive benefit of participants and their beneficiaries. For
this purpose, custodial accounts and certain annuity contracts are treated as
trusts. Eligible Deferred Compensation Plans that were in existence on August
20, 1996 may be amended to satisfy the trust and exclusive benefit requirements
any time prior to January 1, 1999, and must be amended not later than that date
to continue to receive favorable tax treatment. The requirement of a trust does
not apply to amounts under a Deferred Compensation Plan of a tax-exempt
(non-governmental) employer. In addition, the requirement of a trust does not
apply to amounts under a Deferred Compensation Plan of a governmental employer
if the Deferred Compensation Plan is not an eligible plan within the meaning of
section 457(b) of the Code. In the absence of such a trust, amounts under the
plan will be subject to the claims of the employer's general creditors.
In general, distributions from an eligible Deferred Compensation Plan are
prohibited under section 457 of the Code unless made after the participating
employee:
- - attains age 70 1/2,
- - separates from service,
- - dies, or
- - suffers an unforeseeable financial emergency as defined in the Code.
Under present federal tax law, amounts accumulated in a Deferred
Compensation Plan under section 457 of the Code cannot be transferred or rolled
over on a tax-deferred basis except for certain transfers to other Deferred
Compensation Plans under section 457 in limited cases.
4. INDIVIDUAL RETIREMENT ANNUITIES ("IRAS") UNDER SECTION 408
TRADITIONAL IRAS -- Eligible individuals can establish individual retirement
programs under section 408 of the Code through the purchase of an IRA. Section
408 imposes limits with respect to IRAs, including limits on the amount that may
be contributed to an IRA, the amount of such contributions that may be deducted
from taxable income, the persons who may be eligible to contribute to an IRA,
and the time when distributions commence from an IRA. Distributions from certain
tax-qualified retirement plans may be "rolled-over" to an IRA on a tax-deferred
basis.
SIMPLE IRAS -- Eligible employees may establish SIMPLE IRAs in connection
with a SIMPLE IRA plan of an employer under section 408(p) of the Code. Special
rollover rules apply to SIMPLE IRAs. Amounts can be rolled over from one SIMPLE
IRA to another SIMPLE IRA. However, amounts can be rolled over from a SIMPLE IRA
to a Traditional IRA only after two years have expired since the employee first
commenced participation in the employer's SIMPLE IRA plan. Amounts cannot be
rolled over to a SIMPLE IRA from a qualified plan or a Traditional IRA. Hartford
is a non-designated financial institution for purposes of the SIMPLE IRA rules.
ROTH IRAS -- Eligible individuals may establish Roth IRAs under section 408A
of the Code. Contributions to a Roth IRA are not deductible. Subject to special
limitations, a Traditional IRA may be converted into a Roth IRA or a
distribution from a Traditional IRA may be rolled over to a Roth IRA. However, a
conversion or a rollover from a Traditional IRA to a Roth IRA is not excludable
from gross income. If certain conditions are met, qualified distributions from a
Roth IRA are tax-free.
5. FEDERAL TAX PENALTIES AND WITHHOLDING -- Distributions from tax-qualified
retirement plans are generally taxed as ordinary income under section 72 of the
Code. Under these rules, a portion of each distribution may be excludable from
income. The excludable amount is the portion of the distribution that bears the
same ratio as the after-tax contributions bear to the expected return.
(a) PENALTY TAX ON EARLY DISTRIBUTIONS Section 72(t) of the Code imposes an
additional penalty tax equal to 10% of the taxable portion of a distribution
from certain tax-qualified retirement plans. However, the 10% penalty tax
does not apply to a distributions that is:
- - Made on or after the date on which the employee reaches age 59 1/2;
- - Made to a beneficiary (or to the estate of the employee) on or after the death
of the employee;
- - Attributable to the employee's becoming disabled (as defined in the Code);
- - Part of a series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the employee or the
joint lives (or joint life expectancies) of the employee and his or her
designated beneficiary;
- - Except in the case of an IRA, made to an employee after separation from
service after reaching age 55; or
- - Not greater than the amount allowable as a deduction to the employee for
eligible medical expenses during the taxable year.
In addition, the 10% penalty tax does not apply to a distribution from an
IRA that is:
- - Made after separation from employment to an unemployed IRA owner for health
insurance premiums, if certain conditions are met;
- - Not in excess of the amount of certain qualifying higher education expenses,
as defined by section 72(t)(7) of the Code; or
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 29
- --------------------------------------------------------------------------------
- - A qualified first-time homebuyer distribution meeting the requirements
specified at section 72(t)(8) of the Code.
If you are a participant in a SIMPLE IRA plan, you should be aware that the
10% penalty tax is increased to 25% with respect to non-exempt early
distributions made from your SIMPLE IRA during the first two years following the
date you first commenced participation in any SIMPLE IRA plan of your employer.
(b) MINIMUM DISTRIBUTION PENALTY TAX If the amount distributed is less than the
minimum required distribution for the year, the Participant is subject to a
50% penalty tax on the amount that was not properly distributed.
An individual's interest in a tax-qualified retirement plan generally must
be distributed, or begin to be distributed, not later than the Required
Beginning Date. Generally, the Required Beginning Date is April 1 of the
calendar year following the later of:
- - the calendar year in which the individual attains age 70 1/2; or
- - the calendar year in which the individual retires from service with the
employer sponsoring the plan.
The Required Beginning Date for an individual who is a five (5) percent
owner (as defined in the Code), or who is the owner of an IRA, is April 1 of the
calendar year following the calendar year in which the individual attains age
70 1/2.
The entire interest of the Participant must be distributed beginning no
later than the Required Beginning Date over:
- - the life of the Participant or the lives of the Participant and the
Participant's designated beneficiary, or
- - over a period not extending beyond the life expectancy of the Participant or
the joint life expectancy of the Participant and the Participant's designated
beneficiary.
Each annual distribution must equal or exceed a "minimum distribution
amount" which is determined by dividing the account balance by the applicable
life expectancy. This account balance is generally based upon the account value
as of the close of business on the last day of the previous calendar year. In
addition, minimum distribution incidental benefit rules may require a larger
annual distribution.
If an individual dies before reaching his or her Required Beginning Date,
the individual's entire interest must generally be distributed within five years
of the individual's death. However, this rule will be deemed satisfied, if
distributions begin before the close of the calendar year following the
individual's death to a designated beneficiary and distribution is over the life
of such designated beneficiary (or over a period not extending beyond the life
expectancy of the beneficiary). If the beneficiary is the individual's surviving
spouse, distributions may be delayed until the individual would have attained
age 70 1/2.
If an individual dies after reaching his or her Required Beginning Date or
after distributions have commenced, the individual's interest must generally be
distributed at least as rapidly as under the method of distribution in effect at
the time of the individual's death.
(c) WITHHOLDING In general, regular wage withholding rules apply to
distributions from IRAs and plans described in section 457 of the Code.
Periodic distributions from other tax-qualified retirement plans that are
made for a specified period of 10 or more years or for the life or life
expectancy of the participant (or the joint lives or life expectancies of
the participant and beneficiary) are generally subject to federal income tax
withholding as if the recipient were married claiming three exemptions. The
recipient of periodic distributions may generally elect not to have
withholding apply or to have income taxes withheld at a different rate by
providing a completed election form.
Mandatory federal income tax withholding at a flat rate of 20% will
generally apply to other distributions from such other tax-qualified retirement
plans unless such distributions are:
- - the non-taxable portion of the distribution;
- - required minimum distributions; or
- - direct transfer distributions.
Direct transfer distributions are direct payments to an IRA or to another
eligible retirement plan under Code section 401(a)(31).
Certain states require withholding of state taxes when federal income tax is
withheld.
<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 Director Edge 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 Edge
Variable Annuity 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 EDGE
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: May 3, 1999
Date of Statement of Additional Information: May 3, 1999
333-66345
<PAGE>
-2-
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
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............................................ 5
Performance Comparisons.................................................... 10
Financial Statements ......................................................
</TABLE>
<PAGE>
-3-
DESCRIPTION OF HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
Hartford Life and Annuity Insurance Company is a stock life insurance company
engaged in the business of writing life insurance and annuities, both
individual and group, in all states of the United States, the District of
Columbia and Puerto Rico, except New York. On January 1, 1998, Hartford's
name changed from ITT Hartford Life and Annuity Insurance Company to Hartford
Life and Annuity Insurance Company. We were originally incorporated under the
laws of Wisconsin on January 9, 1956, and subsequently redomiciled to
Connecticut. Our offices are located in Simsbury, Connecticut; however, our
mailing address is P.O. Box 2999, Hartford, CT 06104-2999. We are ultimately
controlled by The Hartford Financial Services Group, Inc., one of the largest
financial service providers in the United States.
HARTFORD'S RATINGS
<TABLE>
<CAPTION>
- ------------------------------------------- ---------------------- -------------- ------------------------------------
Rating Agency Effective Rating Basis of Rating
Date of Rating
- ------------------------------------------- ---------------------- -------------- ------------------------------------
<S> <C> <C> <C>
A.M. Best and Company, Inc. 1/1/99 A+ Financial performance
- ------------------------------------------- ---------------------- -------------- ------------------------------------
Standard & Poor's 6/1/98 AA Insurer financial strength
- ------------------------------------------- ---------------------- -------------- ------------------------------------
Duff & Phelps 12/21/98 AA+ Claims paying ability
- ------------------------------------------- ---------------------- -------------- ------------------------------------
</TABLE>
SAFEKEEPING OF ASSETS
Title to the assets of the Separate Account is held by Hartford. The assets
are kept physically segregated and are held separate and apart from
Hartford's general corporate assets. Records are maintained of all purchases
and redemptions of Fund shares held in each of the Sub-Accounts.
INDEPENDENT PUBLIC ACCOUNTANTS
The audited financial statements 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 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.
<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.
HSD is an affiliate of Hartford. Both HSD and Hartford are ultimately
controlled by the Hartford Financial Services Group, Inc. The principal
business address of HSD is the same as that of Hartford.
The securities will be sold by 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 Commission under the Securities Exchange Act of
1934 as a Broker-Dealer and is a member of the National Association of
Securities Dealers, Inc.
Commissions will be paid by Hartford and will not be more than 6% of Premium
Payments. From time to time, Hartford may pay or permit other promotional
incentives, in cash or credit or other compensation.
Broker-dealers or financial institutions are compensated according to a
schedule set forth by HSD and any applicable rules or regulations for
variable insurance compensation. Compensation is generally based on premium
payments made by policyholders or contract owners. This compensation is
usually paid from the sales charges described in the prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HSD, its affiliates or Hartford may also make compensation
arrangements with certain broker-dealers or financial institutions based on
total sales by the broker-dealer or financial institution of insurance
products. These payments, which may be different for different broker-dealers
or financial institutions, will be made by HSD, its affiliates or Hartford
out of their own assets and will not effect the amounts paid by the
policyholders or contract owners to purchase, hold or surrender variable
insurance products.
The Contract may be sold directly to certain individuals under certain
circumstances that do not involve payment of any sales compensation to a
registered representative. In such case, Hartford will credit the Contract
with an additional 5.0% of the premium payment. This additional percentage of
premium payment in no way affects present or future charges, rights, benefits
or current values of other Contract Owners. The following class of
individuals are eligible for this feature: (1) current or retired officers,
directors, trustees and employees (and their families) of the ultimate parent
and affiliates of Hartford; and (2) employees and registered representatives
(and their families) of registered broker-dealers (or financial institutions
affiliated therewith) that have a sales agreement with Hartford and its
principal underwriter to sell the Contracts.
<PAGE>
-5-
Hartford currently pays HSD underwriting commissions for its role as
Principal Underwriter of all variable annuities associated with this Separate
Account. For the past three years, the aggregate dollar amount of
underwriting commissions paid to HSD in its role as Principal
Underwriter has been: 1998: $107,925,386, 1997: $134,304,585 and 1996:
$118,242,027. HSD has retained none of these commissions.
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 365/7 and subtracting 1 from
the result, according to the following formula:
365/7
Effective Yield = [(Base Period Return + 1) ] - 1
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.
<PAGE>
-6-
The yield and effective yield for the seven day period ending December 31,
1998 for the Money Market Fund Sub-Account was as follows ($30 Annual
Maintenance Fee):
- --------------- ---------------- ---------------------------------
SUB-ACCOUNT YIELD EFFECTIVE YIELD
- --------------- ---------------- ---------------------------------
Money Market* 3.97% 4.05%
- --------------- ---------------- ---------------------------------
* Yield and effective yield for the seven day period ending December 31, 1998.
YIELDS. As summarized in the prospectus under the heading "Performance
Related Information," yields of the applicable Sub-Accounts will be computed
by annualizing a recent month's net investment income, divided by a Fund
share's net asset value on the last trading day of that month. Net changes in
the value of a hypothetical account will assume the change in the underlying
mutual fund's "net asset value per share" for the same period in addition to
the daily expense charge assessed, at the sub-account level for the
respective period. The 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 underlying Fund.
THE YIELD REFLECTS RECURRING CHARGES ON THE SEPARATE ACCOUNT LEVEL, INCLUDING
THE ANNUAL MAINTENANCE FEE.
Yield calculations of the Sub-Accounts used for illustration purposes reflect
the interest earned by the Sub-Accounts, less applicable asset charges
assessed against a Contract Owner's account over the base period. Yield
quotations based on a 30 day period were computed by dividing the dividends
and interest earned during the period by the maximum offering price per unit
on the last day of the period, according to the following formula:
Example:
6
Current Yield Formula for the Sub-Account 2[((A-B)/(CD) + 1) - 1]
Where A = Dividends and interest earned during the period.
B = Expenses accrued for the period (net of reimbursements).
C = The average daily number of units outstanding during the
period that were entitled to receive dividends.
D = The maximum offering price per unit on the last day of the
period.
At any time in the future, yields and total return may be higher or lower
than past yields and there can be no assurance that any historical results
will continue.
<PAGE>
-7-
The method of calculating yields described above for these Sub-Accounts
differs from the method used by the Sub-Accounts prior to May 1, 1988. The
denominator of the fraction used to calculate yield was previously the
average unit value for the period calculated. That denominator will hereafter
be the unit value of the Sub-Accounts on the last trading day of the period
calculated.
- --------------------------------- ---------------
SUB-ACCOUNT YIELD
- --------------------------------- ---------------
Bond** 5.08%
- --------------------------------- ---------------
High Yield** 8.04%
- --------------------------------- ---------------
Mortgage Securities** 5.31%
- --------------------------------- ---------------
** Yield quotation based on a 30 day period ended December 31, 1998.
CALCULATION OF TOTAL RETURN. As summarized in the prospectus under the
heading "Performance Related Information," total return is a measure of the
change in value of an investment in a Sub-Account over the period covered.
The formula for total return used herein includes three steps: (1)
calculating the value of the hypothetical initial investment of $1,000 as of
the end of the period by multiplying the total number of units owned at the
end of the period by the unit value per unit on the last trading day of the
period; (2) assuming redemption at the end of the period and deducting any
applicable contingent deferred sales charge and (3) dividing this account
value for the hypothetical investor by the initial $1,000 investment and
annualizing the result for periods of less than one year. Total return will
be calculated for one year, five years and ten years or some other relevant
periods if a Sub-Account has not been in existence for at least ten years.
<PAGE>
-8-
The following are the standardized average annual total return quotations for
the Sub-Accounts for the fiscal year ended December 31, 1998.
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FOR YEAR ENDED DECEMBER 31, 1998
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
SUB-ACCOUNT S/A 1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION
DATE
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Advisers 5/20/91 13.86% 12.69% N/A 11.07%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Bond 5/20/91 -1.61% 2.13% N/A 3.93%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Capital Appreciation 5/20/91 5.26% 13.05% N/A 15.89%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Dividend & Growth 3/8/94 6.14% N/A N/A 17.28%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Global Leaders 9/30/98 N/A N/A N/A 21.37%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Growth and Income 5/29/98 N/A N/A N/A 8.97%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
High Yield 9/30/98 N/A N/A N/A -5.32%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Index 5/20/91 17.05% 18.47% N/A 14.68%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
International Advisers 3/1/95 3.26% N/A N/A 6.73%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
International Opportunities 5/20/91 3.08% 2.36% N/A 4.70%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
MidCap 7/30/97 15.66% N/A N/A 24.05%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Money Market 5/20/91 -4.31% 0.00% N/A -0.23%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Mortgage Securities 5/20/91 -2.95% 1.84% N/A 2.76%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Small Company 8/9/96 1.68% N/A N/A 8.55%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Stock 5/20/91 22.13% 18.48% N/A 15.09%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
</TABLE>
<PAGE>
-9-
In addition to the standardized total return, the Sub-Account may advertise a
non-standardized total return. This figure will usually be calculated for one
year, five years, and ten years or other periods. Non-standardized total
return is measured in the same manner as the standardized total return
described above, except that the contingent deferred sales charge and the
Annual Maintenance Fee are not deducted and the time periods used to
calculate return as based on the inception date of the underlying Funds.
Therefore, non-standardized total return for a Sub-Account is higher than
standardized total return for a Sub-Account.
The following are the non-standardized annualized total return quotations for
the Sub-Accounts for the fiscal year ended December 31, 1998.
<TABLE>
<CAPTION>
NON-STANDARDIZED ANNUALIZED TOTAL RETURN THAT PRE-DATE THE INCEPTION DATE OF THE SEPARATE ACCOUNT
FOR YEAR ENDED DECEMBER 31, 1998
- -------------------------------- -------------- -------------- --------------- ---------------- ------------------
SUB-ACCOUNT FUND 1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION
DATE
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
Advisers 3/31/83 23.66% 16.76% 14.17% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Bond 8/31/77 7.29% 6.39% 7.99% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Capital Appreciation 4/2/84 14.56% 16.95% 17.61% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Dividend & Growth 3/8/94 15.49% N/A N/A 21.19%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Global Leaders 9/30/98 N/A N/A N/A 31.61%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Growth and Income 5/29/98 N/A N/A N/A 18.49%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
High Yield 9/30/98 N/A N/A N/A 3.37%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Index 5/1/87 27.04% 22.39% 17.42% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
International Advisers 3/1/95 12.44% N/A N/A 11.18%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
International Opportunities 7/2/90 12.26% 6.60% N/A 6.48%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
MidCap 7/30/97 25.57% N/A N/A 25.36%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Money Market 6/30/80 4.43% 4.26% 4.68% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Mortgage Securities 1/1/85 5.87% 6.07% 7.41% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Small Company 8/9/96 10.77% N/A N/A 14.72%
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
Stock 8/31/77 32.41% 22.48% 17.54% N/A
- --------------------------------- -------------- -------------- --------------- ---------------- ------------------
</TABLE>
<PAGE>
-10-
PERFORMANCE COMPARISONS
YIELD AND TOTAL RETURN. Each Sub-Account may from time to time include its
total return in advertisements or in information furnished to present or
prospective shareholders. Each Sub-Account may from time to time include its
yield and total return in advertisements or information furnished to present
or prospective shareholders. Each Sub-Account may from time to time include
in advertisements its total return (and yield in the case of certain
Sub-Accounts) the ranking of those performance figures relative to such
figures for groups of other annuities analyzed by Lipper Analytical Services
and Morningstar, Inc. as having the same investment objectives.
The total return and yield may also be used to compare the performance of the
Sub-Accounts against certain widely acknowledged outside standards or indices
for stock and bond market performance. The Standard & Poor's Composite Index
of 500 Stocks (the "S&P 500") is a market value-weighted and unmanaged index
showing the changes in the aggregate market value of 500 stocks relative to
the base period 1941-43. The S&P 500 is composed almost entirely of common
stocks of companies listed on the New York Stock Exchange, although the
common stocks of a few companies listed on the American Stock Exchange or
traded over-the-counter are included. The 500 companies represented include
400 industrial, 60 transportation and 40 financial services concerns. The S&P
500 represents about 80% of the market value of all issues traded on the New
York Stock Exchange.
The NASDAQ-OTC Composite Price Index (The "NASDAQ Index") is a market
value-weighted and unmanaged index showing the changes in the aggregate
market value of approximately 3,500 stocks relative to the base measure of
100.00 on February 5, 1971. The NASDAQ Index is composed entirely of common
stocks of companies traded over-the-counter and often through the National
Association of Securities Dealers Automated Quotations ("NASDAQ") system.
Only those over-the-counter stocks having only one market maker or traded on
exchanges are excluded.
The Morgan Stanley Capital International EAFE Index (the "EAFE Index") is an
unmanaged index, which includes over 1,000 companies representing the stock
markets of Europe, Australia, New Zealand, and the Far East. The EAFE Index
is weighted by market capitalization, and therefore, it has a heavy
representation in countries with large stock markets, such as Japan.
The Shearson Lehman Government Bond Index (the "SL Government Index") is a
measure of the market value of all public obligations of the U.S. Treasury;
all publicly issued debt of all agencies of the U.S. Government and all
quasi-federal corporations; 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.
<PAGE>
-11-
The Shearson Lehman Government/Corporate Bond Index (the "SL
Government/Corporate Index") is a measure of the market value of
approximately 5,300 bonds with a face value currently in excess of $1.3
trillion. To be included in the SL Government/Corporate Index, an issue must
have amounts outstanding in excess of $1 million, have at least one year to
maturity and be rated "Baa" or higher ("investment grade") by a nationally
recognized rating agency.
The Composite Index for Hartford Advisers Fund is comprised of the S&P 500
(55%), the Lehman Government/Corporate Bond Index (35%), both mentioned
above, and 90 Day U.S. Treasury Bills (10%).
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-1
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT ONE AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statements of assets and liabilities of
Hartford Life and Annuity Insurance Company Separate Account One (Bond Fund,
Stock Fund, Money Market Fund, Advisers Fund, Capital Appreciation Fund,
Mortgage Securities Fund, Index Fund, International Opportunities Fund, Dividend
and Growth Fund, International Advisers Fund, Small Company Fund, MidCap Fund,
Mentor Capital Growth Fund, Mentor Perpetual International Fund, Mentor Growth
Fund, Global Leaders Fund, High Yield Fund, and Growth and Income Fund)
(collectively, the Account) as of December 31, 1998, and the related statements
of operations and the statements of changes in net assets for the periods
presented. These financial statements are the responsibility of the Account's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Account as of December 31,
1998, and the results of their operations and the changes in their net assets
for the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 16, 1999 ARTHUR ANDERSEN LLP
<PAGE>
SA-2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT ONE
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS & LIABILITIES
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
BOND FUND STOCK FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------
<S> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS
Fund, Inc. - Class
IA
Shares 380,558,700
Cost $399,499,923
Market Value....... $411,256,468 --
Hartford Stock HLS
Fund, Inc. - Class
IA
Shares 513,943,883
Cost $2,170,908,704
Market Value....... -- $3,372,328,102
Hartford Money Market
HLS Fund, Inc. -
Class IA
Shares 345,742,205
Cost $345,742,205
Market Value....... -- --
Hartford Advisers HLS
Fund, Inc. - Class
IA
Shares 1,862,478,644
Cost $4,012,019,599
Market Value....... -- --
Hartford Capital
Appreciation HLS
Fund, Inc. - Class
IA
Shares 602,284,430
Cost $2,212,701,469
Market Value....... -- --
Hartford Mortgage
Securities HLS Fund,
Inc. - Class IA
Shares 100,460,881
Cost $109,029,070
Market Value....... -- --
Hartford Index HLS
Fund, Inc. - Class
IA
Shares 213,539,249
Cost $534,739,672
Market Value....... -- --
Hartford
International
Opportunities HLS
Fund, Inc. - Class
IA
Shares 486,127,383
Cost $617,788,895
Market Value....... -- --
Hartford Dividend and
Growth HLS Fund,
Inc. - Class IA
Shares 844,442,536
Cost $1,419,647,238
Market Value....... -- --
Hartford
International
Advisers HLS Fund,
Inc. - Class IA
Shares 174,208,203
Cost $199,416,162
Market Value....... -- --
Due from Hartford Life
and Annuity Insurance
Company............... 362,859 2,624,788
Receivable from fund
shares sold........... -- --
------------ --------------
Total Assets........... 411,619,327 3,374,952,890
------------ --------------
LIABILITIES:
Due to Hartford Life
and Annuity Insurance
Company............... -- --
Payable for fund shares
purchased............. 362,819 2,622,542
------------ --------------
Total Liabilities...... 362,819 2,622,542
------------ --------------
Net Assets (variable
annuity contract
liabilities).......... $411,256,508 $3,372,330,348
------------ --------------
------------ --------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-3
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY CAPITAL MORTGAGE
MARKET FUND ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ -------------- ------------------ ---------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS
Fund, Inc. - Class
IA
Shares 380,558,700
Cost $399,499,923
Market Value....... -- -- -- -- --
Hartford Stock HLS
Fund, Inc. - Class
IA
Shares 513,943,883
Cost $2,170,908,704
Market Value....... -- -- -- -- --
Hartford Money Market
HLS Fund, Inc. -
Class IA
Shares 345,742,205
Cost $345,742,205
Market Value....... $345,742,206 -- -- -- --
Hartford Advisers HLS
Fund, Inc. - Class
IA
Shares 1,862,478,644
Cost $4,012,019,599
Market Value....... -- $5,559,969,961 -- -- --
Hartford Capital
Appreciation HLS
Fund, Inc. - Class
IA
Shares 602,284,430
Cost $2,212,701,469
Market Value....... -- -- $2,866,320,390 -- --
Hartford Mortgage
Securities HLS Fund,
Inc. - Class IA
Shares 100,460,881
Cost $109,029,070
Market Value....... -- -- -- $108,955,151 --
Hartford Index HLS
Fund, Inc. - Class
IA
Shares 213,539,249
Cost $534,739,672
Market Value....... -- -- -- -- $ 762,431,637
Hartford
International
Opportunities HLS
Fund, Inc. - Class
IA
Shares 486,127,383
Cost $617,788,895
Market Value....... -- -- -- -- --
Hartford Dividend and
Growth HLS Fund,
Inc. - Class IA
Shares 844,442,536
Cost $1,419,647,238
Market Value....... -- -- -- -- --
Hartford
International
Advisers HLS Fund,
Inc. - Class IA
Shares 174,208,203
Cost $199,416,162
Market Value....... -- -- -- -- --
Due from Hartford Life
and Annuity Insurance
Company............... 421,944 1,806,477 69,123 88,820 252,179
Receivable from fund
shares sold........... 14,552 -- 133,219 29 --
------------ -------------- ------------------ ---------------- --------------
Total Assets........... 346,178,702 5,561,776,438 2,866,522,732 109,044,000 762,683,816
------------ -------------- ------------------ ---------------- --------------
LIABILITIES:
Due to Hartford Life
and Annuity Insurance
Company............... 14,580 -- -- 32 --
Payable for fund shares
purchased............. 424,367 1,803,197 30,681 89,714 247,739
------------ -------------- ------------------ ---------------- --------------
Total Liabilities...... 438,947 1,803,197 30,681 89,746 247,739
------------ -------------- ------------------ ---------------- --------------
Net Assets (variable
annuity contract
liabilities).......... $345,739,755 $5,559,973,241 $2,866,492,051 $108,954,254 $ 762,436,077
------------ -------------- ------------------ ---------------- --------------
------------ -------------- ------------------ ---------------- --------------
<CAPTION>
INTERNATIONAL DIVIDEND AND INTERNATIONAL
OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------- ----------------- --------------
<S> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS
Fund, Inc. - Class
IA
Shares 380,558,700
Cost $399,499,923
Market Value....... -- -- --
Hartford Stock HLS
Fund, Inc. - Class
IA
Shares 513,943,883
Cost $2,170,908,704
Market Value....... -- -- --
Hartford Money Market
HLS Fund, Inc. -
Class IA
Shares 345,742,205
Cost $345,742,205
Market Value....... -- -- --
Hartford Advisers HLS
Fund, Inc. - Class
IA
Shares 1,862,478,644
Cost $4,012,019,599
Market Value....... -- -- --
Hartford Capital
Appreciation HLS
Fund, Inc. - Class
IA
Shares 602,284,430
Cost $2,212,701,469
Market Value....... -- -- --
Hartford Mortgage
Securities HLS Fund,
Inc. - Class IA
Shares 100,460,881
Cost $109,029,070
Market Value....... -- -- --
Hartford Index HLS
Fund, Inc. - Class
IA
Shares 213,539,249
Cost $534,739,672
Market Value....... -- -- --
Hartford
International
Opportunities HLS
Fund, Inc. - Class
IA
Shares 486,127,383
Cost $617,788,895
Market Value....... $658,633,088 -- --
Hartford Dividend and
Growth HLS Fund,
Inc. - Class IA
Shares 844,442,536
Cost $1,419,647,238
Market Value....... -- $ 1,824,406,277 --
Hartford
International
Advisers HLS Fund,
Inc. - Class IA
Shares 174,208,203
Cost $199,416,162
Market Value....... -- -- $201,156,297
Due from Hartford Life
and Annuity Insurance
Company............... 7,840 39,963 4,583
Receivable from fund
shares sold........... -- 263,090 35,519
------------------- ----------------- --------------
Total Assets........... 658,640,928 1,824,709,330 201,196,399
------------------- ----------------- --------------
LIABILITIES:
Due to Hartford Life
and Annuity Insurance
Company............... 123,419 262,396 35,607
Payable for fund shares
purchased............. 66,757 39,882 4,585
------------------- ----------------- --------------
Total Liabilities...... 190,176 302,278 40,192
------------------- ----------------- --------------
Net Assets (variable
annuity contract
liabilities).......... $658,450,752 $ 1,824,407,052 $201,156,207
------------------- ----------------- --------------
------------------- ----------------- --------------
</TABLE>
<PAGE>
SA-4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT ONE
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS & LIABILITIES -- (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
SMALL MIDCAP
COMPANY FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ -----------
<S> <C> <C>
ASSETS:
Investments:
Hartford Small
Company HLS Fund,
Inc. - Class IA
Shares 163,196,148
Cost $195,190,859
Market Value....... $215,600,879 --
Hartford MidCap HLS
Fund, Inc. - Class
IA
Shares 63,119,036
Cost $76,952,597
Market Value....... -- $90,844,451
Mentor VIP Capital
Growth Fund, Inc.
Shares 108,276
Cost $1,352,216
Market Value....... -- --
Mentor VIP Perpetual
International Fund,
Inc.
Shares 72,306
Cost $965,503
Market Value....... -- --
Mentor VIP Growth
Fund, Inc.
Shares 51,628
Cost $535,226
Market Value....... -- --
Hartford Global
Leader HLS Fund -
Class IA
Shares 933,527
Cost $1,147,333
Market Value....... -- --
Hartford High Yield
HLS Fund - Class IA
Shares 2,383,733
Cost $2,409,651
Market Value....... -- --
Hartford Growth and
Income HLS Fund -
Class IA
Shares 12,854,583
Cost $13,338,246
Market Value....... -- --
Due from Hartford Life
and Annuity Insurance
Company............... 82,389 158,156
Receivable from fund
shares sold........... -- 30
------------ -----------
Total Assets........... 215,683,268 91,002,637
------------ -----------
LIABILITIES:
Due to Hartford Life
and Annuity Insurance
Company............... -- 33
Payable for fund shares
purchased............. 81,459 157,877
------------ -----------
Total Liabilities...... 81,459 157,910
------------ -----------
Net Assets (variable
annuity contract
liabilities).......... $215,601,809 $90,844,727
------------ -----------
------------ -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-5
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MENTOR VIP CAPITAL MENTOR VIP PERPETUAL MENTOR VIP GLOBAL HIGH GROWTH AND
GROWTH FUND INTERNATIONAL FUND GROWTH FUND LEADERS FUND YIELD FUND INCOME FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------- --------------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Small
Company HLS Fund,
Inc. - Class IA
Shares 163,196,148
Cost $195,190,859
Market Value....... -- -- -- -- -- --
Hartford MidCap HLS
Fund, Inc. - Class
IA
Shares 63,119,036
Cost $76,952,597
Market Value....... -- -- -- -- -- --
Mentor VIP Capital
Growth Fund, Inc.
Shares 108,276
Cost $1,352,216
Market Value....... $1,470,384 -- -- -- -- --
Mentor VIP Perpetual
International Fund,
Inc.
Shares 72,306
Cost $965,503
Market Value....... -- $1,013,010 -- -- -- --
Mentor VIP Growth
Fund, Inc.
Shares 51,628
Cost $535,226
Market Value....... -- -- $ 591,659 -- -- --
Hartford Global
Leader HLS Fund -
Class IA
Shares 933,527
Cost $1,147,333
Market Value....... -- -- -- $1,199,752 -- --
Hartford High Yield
HLS Fund - Class IA
Shares 2,383,733
Cost $2,409,651
Market Value....... -- -- -- -- $2,423,652 --
Hartford Growth and
Income HLS Fund -
Class IA
Shares 12,854,583
Cost $13,338,246
Market Value....... -- -- -- -- -- $15,245,046
Due from Hartford Life
and Annuity Insurance
Company............... -- -- -- 3,970 17,616 213,335
Receivable from fund
shares sold........... 50 35 20 1 4 52
------------------- ----------- ------------ ------------- ------------ ------------
Total Assets........... 1,470,434 1,013,045 591,679 1,203,723 2,441,272 15,458,433
------------------- ----------- ------------ ------------- ------------ ------------
LIABILITIES:
Due to Hartford Life
and Annuity Insurance
Company............... 66 58 7 -- 3 57
Payable for fund shares
purchased............. -- -- -- 3,960 17,615 213,428
------------------- ----------- ------------ ------------- ------------ ------------
Total Liabilities...... 66 58 7 3,960 17,618 213,485
------------------- ----------- ------------ ------------- ------------ ------------
Net Assets (variable
annuity contract
liabilities).......... $1,470,368 $1,012,987 $ 591,672 $1,199,763 $2,423,654 $15,244,948
------------------- ----------- ------------ ------------- ------------ ------------
------------------- ----------- ------------ ------------- ------------ ------------
</TABLE>
<PAGE>
SA-6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT ONE
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS & LIABILITIES -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------- --------- ---------------
<S> <C> <C> <C>
DEFERRED ANNUITY CONTRACTS IN THE
ACCUMULATION PERIOD:
GROUP SUB-ACCOUNTS:
Bond Fund Sub-Account............ 180,119,797 $2.257591 $ 406,636,833
Bond Fund Sub-Account............ 3,237,265 1.030760 3,336,843
High Yield Sub-Account........... 2,254,839 1.034881 2,333,490
High Yield Sub-Account........... 87,179 1.034245 90,164
Stock Fund Sub-Account........... 553,087,499 6.065754 3,354,892,709
Stock Fund Sub-Account........... 7,571,146 1.036705 7,849,045
Money Market Fund Sub-Account.... 195,488,799 1.715714 335,402,871
Money Market Fund Sub-Account.... 9,217,359 1.016497 9,369,418
Advisers Fund Sub-Account........ 1,258,364,667 4.397886 5,534,144,353
Advisers Fund Sub-Account........ 15,480,493 1.035292 16,026,830
Capital Appreciation Fund
Sub-Account..................... 517,384,327 5.525767 2,858,945,241
Capital Appreciation Fund
Sub-Account..................... 3,000,204 0.984021 2,952,264
Mortgage Securities Fund
Sub-Account..................... 48,850,074 2.210954 108,005,267
Mortgage Securities Fund
Sub-Account..................... 695,958 1.022348 711,511
Growth and Income Sub-Account.... 11,822,488 1.181798 13,971,792
Growth and Income Sub-Account.... 1,167,734 1.090279 1,273,156
Index Fund Sub-Account........... 160,585,731 4.712432 756,749,336
Index Fund Sub-Account........... 3,777,102 1.044934 3,946,821
Global Leaders Fund
Sub-Account..................... 898,417 1.314731 1,181,177
Global Leaders Fund
Sub-Account..................... 14,146 1.313892 18,586
International Opportunities Fund
Sub-Account..................... 400,335,712 1.641190 657,026,967
International Opportunities Fund
Sub-Account..................... 657,015 0.924280 607,266
Dividend and Growth Fund
Sub-Account..................... 735,536,976 2.470981 1,817,497,892
Dividend and Growth Fund
Sub-Account..................... 4,239,504 1.008274 4,274,583
International Advisers Fund
Sub-Account..................... 135,919,042 1.476317 200,659,594
International Advisers Fund
Sub-Account..................... 373,140 0.971290 362,427
Small Company Fund Sub-Account... 156,179,000 1.374218 214,623,993
Small Company Fund Sub-Account... 672,638 0.975191 655,950
MidCap Fund Sub-Account.......... 65,617,196 1.371074 89,966,032
MidCap Fund Sub-Account.......... 732,350 1.016840 744,684
Mentor Capital Growth
Sub-Account..................... 1,367,467 1.075249 1,470,368
Mentor Perpetual International
Sub-Account..................... 913,254 1.109206 1,012,987
Mentor Growth Sub-Account........ 652,130 0.907292 591,672
---------------
SUB-TOTAL GROUP SUB-ACCOUNTS..... 16,407,332,122
---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-7
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------- --------- ---------------
<S> <C> <C> <C>
ANNUITY CONTRACTS IN THE ANNUITY
PERIOD:
GROUP SUB-ACCOUNTS:
Bond Fund Sub-Account............ 568,230 $2.257591 $ 1,282,832
Stock Fund Sub-Account........... 1,580,775 6.065754 9,588,594
Money Market Fund Sub-Account.... 563,885 1.715714 967,466
Advisers Fund Sub-Account........ 2,228,811 4.397886 9,802,058
Capital Appreciation Fund
Sub-Account..................... 831,477 5.525767 4,594,546
Mortgage Securities Fund
Sub-Account..................... 107,409 2.210954 237,476
Index Fund Sub-Account........... 369,219 4.712432 1,739,920
International Opportunities Fund
Sub-Account..................... 497,516 1.641190 816,519
Dividend and Growth Fund
Sub-Account..................... 1,066,207 2.470981 2,634,577
International Advisers Fund
Sub-Account..................... 90,892 1.476317 134,186
Small Company Fund Sub-Account... 234,218 1.374218 321,866
MidCap Fund Sub-Account.......... 97,742 1.371074 134,011
---------------
SUB-TOTAL GROUP SUB-ACCOUNTS..... 32,254,051
---------------
GRAND TOTAL........................ $16,439,586,173
---------------
---------------
</TABLE>
<PAGE>
SA-8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT ONE
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
BOND FUND STOCK FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $19,422,738 $ 25,422,449
EXPENSES:
Mortality and expense
undertakings.......... (3,957,943) (33,114,279)
----------- ------------
Net investment income
(loss).............. 15,464,795 (7,691,830)
----------- ------------
CAPITAL GAINS INCOME..... -- 76,061,613
----------- ------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (5,587) (1,418,674)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 5,072,560 663,245,884
----------- ------------
Net gain (loss) on
investments......... 5,066,973 661,827,210
----------- ------------
Net increase
(decrease) in net
assets resulting
from operations..... $20,531,768 $730,196,993
----------- ------------
----------- ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-9
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY CAPITAL MORTGAGE
MARKET FUND ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- -------------- ------------------ ---------------- --------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $12,949,636 $ 109,628,714 $ 15,232,567 $ 6,660,262 $ 6,171,446
EXPENSES:
Mortality and expense
undertakings.......... (3,174,374) (56,235,664) (31,598,370) (1,164,598) (7,331,927)
----------- -------------- ------------------ ---------------- --------------
Net investment income
(loss).............. 9,775,262 53,393,050 (16,365,803) 5,495,664 (1,160,481)
----------- -------------- ------------------ ---------------- --------------
CAPITAL GAINS INCOME..... -- 130,454,479 150,932,848 -- 11,566,682
----------- -------------- ------------------ ---------------- --------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... -- (287,760) (3,541,507) 1,531 (301,028)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 750,363,179 201,102,863 (691,300) 129,513,479
----------- -------------- ------------------ ---------------- --------------
Net gain (loss) on
investments......... -- 750,075,419 197,561,356 (689,769) 129,212,451
----------- -------------- ------------------ ---------------- --------------
Net increase
(decrease) in net
assets resulting
from operations..... $ 9,775,262 $ 933,922,948 $332,128,401 $ 4,805,895 $ 139,618,652
----------- -------------- ------------------ ---------------- --------------
----------- -------------- ------------------ ---------------- --------------
<CAPTION>
INTERNATIONAL DIVIDEND AND INTERNATIONAL
OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------- ---------------- --------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 8,596,873 $ 28,727,201 $16,822,117
EXPENSES:
Mortality and expense
undertakings.......... (7,928,386) (18,910,940) (2,193,698)
------------------- ---------------- --------------
Net investment income
(loss).............. 668,487 9,816,261 14,628,419
------------------- ---------------- --------------
CAPITAL GAINS INCOME..... 39,050,857 44,842,140 4,004,303
------------------- ---------------- --------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (1,485,356) (541,832) 13,013
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 27,913,220 151,447,604 (335,247)
------------------- ---------------- --------------
Net gain (loss) on
investments......... 26,427,864 150,905,772 (322,234)
------------------- ---------------- --------------
Net increase
(decrease) in net
assets resulting
from operations..... $66,147,208 $ 205,564,173 $18,310,488
------------------- ---------------- --------------
------------------- ---------------- --------------
</TABLE>
<PAGE>
SA-10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT ONE
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
SMALL MIDCAP
COMPANY FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends................ $ -- $ 574
EXPENSES:
Mortality and expense
undertakings.......... (2,126,815) (603,398)
------------- ------------
Net investment income
(loss).............. (2,126,815) (602,824)
------------- ------------
CAPITAL GAINS INCOME..... 2,433,792 --
------------- ------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (74,920) (2,834)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 17,782,782 13,252,169
------------- ------------
Net gain (loss) on
investments......... 17,707,862 13,249,335
------------- ------------
Net increase
(decrease) in net
assets resulting
from operations..... $18,014,839 $ 12,646,511
------------- ------------
------------- ------------
</TABLE>
* From inception, June 1, 1998 to December 31, 1998.
** From inception, September 30, 1998 to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-11
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MENTOR MENTOR PERPETUAL MENTOR GLOBAL HIGH GROWTH AND
CAPITAL GROWTH INTERNATIONAL GROWTH LEADERS FUND YIELD FUND INCOME FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT** SUB-ACCOUNT** SUB-ACCOUNT*
--------------- ----------------- ------------ -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends................ $-- $-- $-- $ 1,405 $44,172 $ 56,708
EXPENSES:
Mortality and expense
undertakings.......... (3,951) (3,170) (2,316) (1,277) (4,493) (43,229)
--------------- ------- ------------ ------- ------- -------------
Net investment income
(loss).............. (3,951) (3,170) (2,316) 128 39,679 13,479
--------------- ------- ------------ ------- ------- -------------
CAPITAL GAINS INCOME..... -- -- -- 29,044 -- --
--------------- ------- ------------ ------- ------- -------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 55 38 2 (3,023) (1,553) 140
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 118,168 47,507 56,433 52,419 14,002 1,906,801
--------------- ------- ------------ ------- ------- -------------
Net gain (loss) on
investments......... 118,223 47,545 56,435 49,396 12,449 1,906,941
--------------- ------- ------------ ------- ------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... $114,272 $44,375 $54,119 $78,568 $52,128 $1,920,420
--------------- ------- ------------ ------- ------- -------------
--------------- ------- ------------ ------- ------- -------------
</TABLE>
* From inception, June 1, 1998 to December 31, 1998.
** From inception, September 30, 1998 to December 31, 1998.
<PAGE>
SA-12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT ONE
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
BOND FUND STOCK FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 15,464,795 $ (7,691,830)
Capital gains income... -- 76,061,613
Net realized gain
(loss) on security
transactions.......... (5,587) (1,418,674)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 5,072,560 663,245,884
------------ --------------
Net increase (decrease)
in net assets
resulting from
operations............ 20,531,768 730,196,993
------------ --------------
UNIT TRANSACTIONS:
Purchases.............. 58,804,116 385,880,357
Net transfers.......... 123,611,549 325,699,308
Surrenders for benefit
payments and fees..... (20,698,247) (105,089,407)
Net annuity
transactions.......... 632,000 6,055,572
------------ --------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 162,349,418 612,545,830
------------ --------------
Net increase (decrease)
in net assets......... 182,881,186 1,342,742,823
NET ASSETS:
Beginning of period.... 228,375,322 2,029,587,525
------------ --------------
End of period.......... $411,256,508 $3,372,330,348
------------ --------------
------------ --------------
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
BOND FUND STOCK FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 9,223,325 $ (2,373,240)
Capital gains income... -- 62,602,913
Net realized gain
(loss) on security
transactions.......... 9,814 84,100
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 8,361,624 325,437,100
------------ --------------
Net increase (decrease)
in net assets
resulting from
operations............ 17,594,763 385,750,873
------------ --------------
UNIT TRANSACTIONS:
Purchases.............. 48,533,601 430,730,097
Net transfers.......... 24,454,452 137,640,435
Surrenders for benefit
payments and fees..... (9,332,737) (52,393,369)
Net annuity
transactions.......... 563,032 1,508,388
------------ --------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 64,218,348 517,485,551
------------ --------------
Net increase in net
assets................ 81,813,111 903,236,424
NET ASSETS:
Beginning of period.... 146,562,211 1,126,351,101
------------ --------------
End of period.......... $228,375,322 $2,029,587,525
------------ --------------
------------ --------------
</TABLE>
* From inception, December 22, 1997 to December 31, 1997.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-13
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY CAPITAL MORTGAGE
MARKET FUND ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ -------------- ------------------ ---------------- --------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 9,775,262 $ 53,393,050 $ (16,365,803) $ 5,495,664 $ (1,160,481)
Capital gains income... -- 130,454,479 150,932,848 -- 11,566,682
Net realized gain
(loss) on security
transactions.......... -- (287,760) (3,541,507) 1,531 (301,028)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 750,363,179 201,102,863 (691,300) 129,513,479
------------ -------------- ------------------ ---------------- --------------
Net increase (decrease)
in net assets
resulting from
operations............ 9,775,262 933,922,948 332,128,401 4,805,895 139,618,652
------------ -------------- ------------------ ---------------- --------------
UNIT TRANSACTIONS:
Purchases.............. 75,815,780 600,914,213 285,756,586 9,674,424 107,850,968
Net transfers.......... 120,297,377 671,280,081 116,427,127 20,420,247 98,345,205
Surrenders for benefit
payments and fees..... (60,700,173) (226,423,137) (108,713,408) (6,506,845) (22,295,418)
Net annuity
transactions.......... 717,935 4,552,594 2,969,562 225,614 1,399,655
------------ -------------- ------------------ ---------------- --------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 136,130,919 1,050,323,751 296,439,867 23,813,440 185,300,410
------------ -------------- ------------------ ---------------- --------------
Net increase (decrease)
in net assets......... 145,906,181 1,984,246,699 628,568,268 28,619,335 324,919,062
NET ASSETS:
Beginning of period.... 199,833,574 3,575,726,542 2,237,923,783 80,334,919 437,517,015
------------ -------------- ------------------ ---------------- --------------
End of period.......... $345,739,755 $5,559,973,241 $2,866,492,051 $108,954,254 $ 762,436,077
------------ -------------- ------------------ ---------------- --------------
------------ -------------- ------------------ ---------------- --------------
<CAPTION>
INTERNATIONAL DIVIDEND AND INTERNATIONAL
OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------- ----------------- --------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 668,487 $ 9,816,261 $ 14,628,419
Capital gains income... 39,050,857 44,842,140 4,004,303
Net realized gain
(loss) on security
transactions.......... (1,485,356) (541,832) 13,013
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 27,913,220 151,447,604 (335,247)
------------------- ----------------- --------------
Net increase (decrease)
in net assets
resulting from
operations............ 66,147,208 205,564,173 18,310,488
------------------- ----------------- --------------
UNIT TRANSACTIONS:
Purchases.............. 39,589,829 264,852,722 23,124,347
Net transfers.......... (4,225,169) 249,782,849 22,048,417
Surrenders for benefit
payments and fees..... (26,163,417) (61,426,410) (7,181,403)
Net annuity
transactions.......... 434,251 2,178,448 67,952
------------------- ----------------- --------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 9,635,494 455,387,609 38,059,313
------------------- ----------------- --------------
Net increase (decrease)
in net assets......... 75,782,702 660,951,782 56,369,801
NET ASSETS:
Beginning of period.... 582,668,050 1,163,455,270 144,786,406
------------------- ----------------- --------------
End of period.......... $658,450,752 $ 1,824,407,052 $201,156,207
------------------- ----------------- --------------
------------------- ----------------- --------------
</TABLE>
<TABLE>
<CAPTION>
MONEY CAPITAL MORTGAGE
MARKET FUND ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ -------------- ------------------ ---------------- --------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 7,922,137 $ 35,054,512 $ (12,623,739) $ 3,680,098 $ 645,552
Capital gains income... -- 107,409,178 112,339,947 -- 19,616,096
Net realized gain
(loss) on security
transactions.......... -- 1,305 (119,550) 58,290 185,916
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 440,215,879 223,915,112 1,886,382 62,356,292
------------ -------------- ------------------ ---------------- --------------
Net increase (decrease)
in net assets
resulting from
operations............ 7,922,137 582,680,874 323,511,770 5,624,770 82,803,856
------------ -------------- ------------------ ---------------- --------------
UNIT TRANSACTIONS:
Purchases.............. 154,121,029 650,294,881 444,618,125 11,734,160 106,908,193
Net transfers.......... (105,053,239) 185,059,734 111,621,605 (5,624,261) 38,286,952
Surrenders for benefit
payments and fees..... (32,455,810) (124,493,708) (60,594,326) (6,044,100) (9,935,604)
Net annuity
transactions.......... 110,035 1,689,593 689,458 5,419 151,370
------------ -------------- ------------------ ---------------- --------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 16,722,015 712,550,500 496,334,862 71,218 135,410,911
------------ -------------- ------------------ ---------------- --------------
Net increase in net
assets................ 24,644,152 1,295,231,374 819,846,632 5,695,988 218,214,767
NET ASSETS:
Beginning of period.... 175,189,422 2,280,495,168 1,418,077,151 74,638,931 219,302,248
------------ -------------- ------------------ ---------------- --------------
End of period.......... $199,833,574 $3,575,726,542 $2,237,923,783 $80,334,919 $ 437,517,015
------------ -------------- ------------------ ---------------- --------------
------------ -------------- ------------------ ---------------- --------------
<CAPTION>
INTERNATIONAL DIVIDEND AND INTERNATIONAL
OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------- ----------------- --------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ (1,712,982) $ 5,721,921 $ 2,472,525
Capital gains income... 37,513,752 15,828,765 262,472
Net realized gain
(loss) on security
transactions.......... (68,174) (12,819) 3,758
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (45,233,169) 182,031,024 383,378
------------------- ----------------- --------------
Net increase (decrease)
in net assets
resulting from
operations............ (9,500,573) 203,568,891 3,122,133
------------------- ----------------- --------------
UNIT TRANSACTIONS:
Purchases.............. 103,316,180 344,818,126 53,015,752
Net transfers.......... 21,889,359 142,586,883 20,439,056
Surrenders for benefit
payments and fees..... (18,041,766) (25,953,097) (3,671,030)
Net annuity
transactions.......... 39,532 343,961 63,436
------------------- ----------------- --------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 107,203,305 461,795,873 69,847,214
------------------- ----------------- --------------
Net increase in net
assets................ 97,702,732 665,364,764 72,969,347
NET ASSETS:
Beginning of period.... 484,965,318 498,090,506 71,817,059
------------------- ----------------- --------------
End of period.......... $582,668,050 $ 1,163,455,270 $144,786,406
------------------- ----------------- --------------
------------------- ----------------- --------------
</TABLE>
* From inception, December 22, 1997 to December 31, 1997.
<PAGE>
SA-14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT ONE
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
SMALL MIDCAP
COMPANY FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ -----------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $(2,126,815 ) $ (602,824)
Capital gains income... 2,433,792 --
Net realized gain
(loss) on security
transactions.......... (74,920 ) (2,834)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 17,782,782 13,252,169
------------ -----------
Net increase (decrease)
in net assets
resulting from
operations............ 18,014,839 12,646,511
------------ -----------
UNIT TRANSACTIONS:
Purchases.............. 37,657,549 28,291,639
Net transfers.......... 31,192,792 36,483,561
Surrenders for benefit
payments and fees..... (6,343,764 ) (1,424,845)
Net annuity
transactions.......... 298,211 109,553
------------ -----------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 62,804,788 63,459,908
------------ -----------
Net increase (decrease)
in net assets......... 80,819,627 76,106,419
NET ASSETS:
Beginning of period.... 134,782,182 14,738,308
------------ -----------
End of period.......... $215,601,809 $90,844,727
------------ -----------
------------ -----------
</TABLE>
* From inception, June 1, 1998 to December 31, 1998.
** From inception, September 30, 1998 to December 31, 1998.
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
SMALL MIDCAP
COMPANY FUND FUND
SUB-ACCOUNT SUB-ACCOUNT*
------------ -------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ (841,931 ) $ (16,949)
Capital gains income.................. 6,247,370 --
Net realized gain (loss) on security
transactions......................... (1,756 ) 414
Net unrealized appreciation
(depreciation) of investments during
the period........................... 2,416,430 639,685
------------ -------------
Net increase (decrease) in net assets
resulting from operations............ 7,820,113 623,150
------------ -------------
UNIT TRANSACTIONS:
Purchases............................. 59,848,160 7,620,550
Net transfers......................... 42,807,593 6,536,068
Surrenders for benefit payments and
fees................................. (1,723,390 ) (41,460)
Net annuity transactions.............. 14,177 --
------------ -------------
Net increase (decrease) in net assets
resulting from unit transactions..... 100,946,540 14,115,158
------------ -------------
Net increase in net assets............ 108,766,653 14,738,308
NET ASSETS:
Beginning of period................... 26,015,529 --
------------ -------------
End of period......................... $134,782,182 $14,738,308
------------ -------------
------------ -------------
* From inception, December 22, 1997 to
December 31, 1997.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY SA-15
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MENTOR MENTOR PERPETUAL MENTOR GLOBAL HIGH GROWTH AND
CAPITAL GROWTH INTERNATIONAL GROWTH LEADERS FUND YIELD FUND INCOME FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT** SUB-ACCOUNT** SUB-ACCOUNT*
--------------- ----------------- ------------ -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ (3,951) $ (3,170) $ (2,316) $ 128 $ 39,679 $ 13,479
Capital gains income... -- -- -- 29,044 -- --
Net realized gain
(loss) on security
transactions.......... 55 38 2 (3,023) (1,553) 140
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 118,168 47,507 56,433 52,419 14,002 1,906,801
--------------- ----------------- ------------ -------------- -------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 114,272 44,375 54,119 78,568 52,128 1,920,420
--------------- ----------------- ------------ -------------- -------------- -------------
UNIT TRANSACTIONS:
Purchases.............. 92,146 38,705 39,810 463,522 815,158 5,482,553
Net transfers.......... 1,266,689 937,906 497,486 657,728 1,561,354 7,951,308
Surrenders for benefit
payments and fees..... (2,739) (7,999) 257 (55) (4,986) (109,333)
Net annuity
transactions.......... -- -- -- -- -- --
--------------- ----------------- ------------ -------------- -------------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,356,096 968,612 537,553 1,121,195 2,371,526 13,324,528
--------------- ----------------- ------------ -------------- -------------- -------------
Net increase (decrease)
in net assets......... 1,470,368 1,012,987 591,672 1,199,763 2,423,654 15,244,948
NET ASSETS:
Beginning of period.... -- -- -- -- -- --
--------------- ----------------- ------------ -------------- -------------- -------------
End of period.......... $1,470,368 $1,012,987 $591,672 $1,199,763 $2,423,654 $15,244,948
--------------- ----------------- ------------ -------------- -------------- -------------
--------------- ----------------- ------------ -------------- -------------- -------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
OPERATIONS:
Net investment income (loss)
Capital gains income
Net realized gain (loss) on security
transactions
Net unrealized appreciation
(depreciation) of investments during
the period
Net increase (decrease) in net assets
resulting from operations
UNIT TRANSACTIONS:
Purchases
Net transfers
Surrenders for benefit payments and
fees
Net annuity transactions
Net increase (decrease) in net assets
resulting from unit transactions
Net increase in net assets
NET ASSETS:
Beginning of period
End of period
* From inception, December 22, 1997 to
December 31, 1997.
</TABLE>
<PAGE>
SA-16 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT ONE
- --------------------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. ORGANIZATION:
Separate Account One (the Account) is a separate investment account within
Hartford Life & Annuity Insurance Company (the Company) and is registered
with the Securities and Exchange Commission (SEC) as a unit investment trust
under the Investment Company Act of 1940, as amended. Both the Company and
the Account are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut and the SEC. The Account invests
deposits by variable annuity 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 is accrued as of the ex-dividend date. Capital gains income
represents those dividends from the Funds which are characterized as
capital gains under tax regulations.
b) SECURITY VALUATION--The investments in shares of the Funds are valued at
the closing net asset value per share as determined by the appropriate
Fund as of December 31, 1998.
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:
Deduction and Charges -- Certain amounts are deducted from the Contracts on
a monthly basis, as described below:
a) MORTALITY AND EXPENSE RISK CHARGES--The Company will make deductions at a
maximum annual rate of 1.50% of the Contract's value for the mortality
and expense risks which the Company undertakes.
b) TAX EXPENSE CHARGE--If applicable, the Company will make deductions at a
maximum rate of 4.0% of the Contract's value to meet premium tax
requirements. An additional tax charge based on a percentage of the
Contract's value may be assessed to partial withdrawals or surrenders.
These expenses are included in surrenders for benefit payments and fees
in the accompanying statements of changes in net assets.
c) ANNUAL MAINTENANCE FEE--An annual maintenance fee in the amount of $30
may be deducted from the Contract's value each contract year. However,
this fee is not applicable to contracts with values of $50,000 or more,
as determined on the most recent contract anniversary. These expenses are
included in surrenders for benefit payments and fees in the accompanying
statements of changes in net assets.
______________________________________ 58 ______________________________________
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-1
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Hartford Life and Annuity Insurance Company:
We have audited the accompanying statutory balance sheets of Hartford Life and
Annuity Insurance Company (a Connecticut Corporation and wholly owned subsidiary
of Hartford Life Insurance Company) (the Company) as of December 31, 1998 and
1997, and the related statutory statements of operations, changes in capital and
surplus, and cash flows for each of the three years in the period ended December
31, 1998. 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 of the effects of the matter discussed in the preceding
paragraph, the statutory financial statements referred to above do not present
fairly, in conformity with generally accepted accounting principles, the
financial position of the Company as of December 31, 1998 and 1997, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1998.
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, 1998 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998 in
conformity with statutory accounting practices as described in Note 1.
/s/ Arthur Andersen LLP
Hartford, Connecticut
January 26, 1999
<PAGE>
F-2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
BALANCE SHEETS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------
1998 1997
----------- -----------
<S> <C> <C>
Assets
Bonds........................................... $ 1,453,792 $ 1,501,311
Common stocks................................... 40,650 64,408
Mortgage loans.................................. 59,548 85,103
Policy loans.................................... 47,212 36,533
Cash and short-term investments................. 469,955 309,432
Other invested assets........................... 2,188 20,942
----------- -----------
Total cash and invested assets................ 2,073,345 2,017,729
Investment income due and accrued............... 20,126 15,878
Premium balances receivable..................... 333 389
Receivables from affiliates..................... -- 1,269
Other assets.................................... 45,358 22,788
Separate account assets......................... 32,876,278 23,208,728
----------- -----------
Total Assets.................................. $35,015,440 $25,266,781
----------- -----------
----------- -----------
Liabilities
Aggregate reserves for future benefits.......... $ 579,140 $ 605,183
Policy and contract claims...................... 5,667 5,672
Liability for premium and other deposit funds... 2,011,672 1,795,149
Asset valuation reserve......................... 21,782 13,670
Payable to affiliates........................... 19,271 20,972
Other liabilities............................... (974,882) (754,393)
Separate account liabilities.................... 32,876,278 23,208,728
----------- -----------
Total liabilities............................. 34,538,928 24,894,981
----------- -----------
Capital and Surplus
Common stock.................................... 2,500 2,500
Gross paid-in and contributed surplus........... 226,043 226,043
Unassigned funds................................ 247,969 143,257
----------- -----------
Total capital and surplus..................... 476,512 371,800
----------- -----------
Total liabilities, capital and surplus............ $35,015,440 $25,266,781
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-3
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Revenues
Premiums and annuity considerations............. $ 469,343 $ 296,645 $ 250,244
Annuity and other fund deposits................. 2,051,251 1,981,246 1,897,347
Net investment income........................... 129,982 102,285 98,441
Commissions and expense allowances on
reinsurance ceded.............................. 444,241 396,921 370,637
Reserve adjustment on reinsurance ceded......... 3,185,590 3,672,076 3,864,395
Other revenues.................................. 458,190 288,632 161,906
----------- ----------- -----------
Total revenues................................ 6,738,597 6,737,805 6,642,970
----------- ----------- -----------
Benefits and expenses
Death and annuity benefits...................... 43,390 66,176 60,194
Disability and other benefit payments........... 6,114 7,316 6,555
Surrenders...................................... 739,663 454,417 270,165
Commissions and other expenses.................. 666,515 564,077 491,637
Increase (Decrease) in aggregate reserves for
future benefits................................ (26,043) 33,213 27,351
Increase in liability for premium and other
deposit funds.................................. 216,523 640,006 207,156
Net transfers to separate accounts.............. 4,956,007 4,914,980 5,492,964
----------- ----------- -----------
Total benefits and expenses................... 6,602,169 6,680,185 6,556,022
----------- ----------- -----------
Net gain from operations
Before federal income tax (benefit) expense..... 136,428 57,620 86,948
Federal income tax (benefit) expense............ 35,887 (14,878) 19,360
----------- ----------- -----------
Net gain from operations.......................... 100,541 72,498 67,588
Net realized capital gains, after tax........... 2,085 1,544 407
----------- ----------- -----------
Net income........................................ $ 102,626 $ 74,042 $ 67,995
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
<PAGE>
F-4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Common stock,
Beginning and end of year....................... $ 2,500 $ 2,500 $ 2,500
----------- ----------- -----------
Gross paid-in and contributed surplus,
Beginning and end of year....................... $ 226,043 $ 226,043 $ 226,043
----------- ----------- -----------
Unassigned funds
Balance, beginning of year...................... $ 143,257 $ 74,570 $ 9,791
Net income...................................... 102,626 74,042 67,995
Change in net unrealized capital gains (losses)
on common stocks and other invested assets..... 1,688 2,186 (5,171)
Change in asset valuation reserve............... (8,112) (6,228) 568
Change in non-admitted assets................... (1,277) (1,313) 1,387
Credit on reinsurance ceded..................... 9,787 -- --
----------- ----------- -----------
Balance, end of year............................ $ 247,969 $ 143,257 $ 74,570
----------- ----------- -----------
Capital and surplus,
End of year..................................... $ 476,512 $ 371,800 $ 303,113
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-5
- --------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
(STATUTORY BASIS)
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Operations
Premiums and annuity considerations............. $ 2,520,655 $ 2,277,874 $ 2,147,627
Investment income............................... 127,425 101,991 106,178
Other income.................................... 4,092,964 4,381,718 4,396,892
----------- ----------- -----------
Total income.................................. 6,741,044 6,761,583 6,650,697
----------- ----------- -----------
Benefits paid................................... 790,051 529,733 338,998
Federal income taxes (received) paid on
operations..................................... 25,780 (14,499) 28,857
Other expenses.................................. 5,859,063 5,754,725 6,254,139
----------- ----------- -----------
Total benefits and expenses................... 6,674,894 6,269,959 6,621,994
----------- ----------- -----------
Net cash from operations...................... 66,150 491,624 28,703
----------- ----------- -----------
Proceeds from investments
Bonds........................................... 633,926 614,413 871,019
Common stocks................................... 34,010 11,481 72,100
Mortgage loans.................................. 85,275 -- --
Other........................................... 127 152 10
----------- ----------- -----------
Net investment proceeds....................... 753,338 626,046 943,129
----------- ----------- -----------
Taxes paid on capital gains..................... -- -- 936
Other cash provided............................. 1,269 -- 41,998
----------- ----------- -----------
Total proceeds................................ 820,757 1,117,670 1,012,894
----------- ----------- -----------
Cost of investments acquired
Bonds........................................... 586,913 848,267 914,523
Common stocks................................... 7,012 28,302 82,495
Mortgage loans.................................. 59,702 85,103 --
Other........................................... 1,168 18,548 130
----------- ----------- -----------
Total investments acquired.................... 654,795 980,220 997,148
----------- ----------- -----------
Other cash applied
Other........................................... 5,439 4,848 12,220
----------- ----------- -----------
Total other cash applied...................... 5,439 4,848 12,220
----------- ----------- -----------
Total applications............................ 660,234 985,068 1,009,368
----------- ----------- -----------
Net change in cash and short-term investments..... 160,523 132,602 3,526
Cash and short-term investments, beginning of
year............................................. 309,432 176,830 173,304
----------- ----------- -----------
Cash and short-term investments, end of year...... $ 469,955 $ 309,432 $ 176,830
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of
these statutory basis financial statements.
<PAGE>
F-6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION
Hartford Life and Annuity Insurance Company ("ILA" or "the Company"),
formerly known as ITT Hartford Life and Annuity Insurance Company, 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 basis financial statements were prepared in
conformity with statutory accounting practices prescribed or permitted by the
National Association of Insurance Commissioners ("NAIC"), the State of
Connecticut Department of Insurance and the State of Wisconsin for the 1996
period, as applicable. Certain prior year amounts and balances have been
reclassified to conform with current year presentation.
Current prescribed statutory accounting practices include accounting
publications of the National Association of Insurance Commissioners ("NAIC"), as
well as state laws, regulations and general administrative rules. Permitted
statutory accounting practices encompass accounting practices approved by State
Insurance Departments. The Company does not follow any permitted statutory
accounting practices that have a material effect on statutory surplus, statutory
net income or risk-based capital.
Final approval of the NAIC's proposed "Comprehensive Guide" on statutory
accounting principles was distributed in 1998. The requirements are effective
January 1, 2001, and are not expected to have a material impact on statutory
surplus of the Company.
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
include those used in 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 for GAAP purposes;
(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;
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-7
- --------------------------------------------------------------------------------
(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.,
negative Interest Maintenance Reserve, 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 currently, or using a twenty year phase-in approach, whereas GAAP
liabilities are recorded upon adoption of the applicable standard;
(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;
as well as, the accounting for retroactive reinsurance which is immediately
charged to surplus for statutory accounting purposes whereas GAAP precludes
immediate gain recognition unless the ceding enterprise's liability to its
policyholders is extinguished; as well as reinsurance ceded that fails to
meet GAAP risk transfer guidelines would result in deposit accounting for
GAAP where as for statutory, reserves ceded and assumed would be reflected
in the statutory basis statements of operations;
(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, the significant differences
between Statutory and GAAP basis net income and capital and surplus for the
Company are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
GAAP Net Income.................... $ 74,525 $ 58,050 $ 41,202
Amortization and deferral of policy
acquisition costs, net............ (331,882) (345,657) (341,571)
Change in unearned revenue
reserve........................... 22,131 4,641 55,504
Deferred taxes..................... 2,476 47,092 2,090
Separate accounts.................. 259,287 282,818 306,978
Asset impairments and
write-downs....................... 17,250 -- --
Benefit reserve adjustment......... 32,759 24,666 (1,013)
Deposit accounting for Lyndon
reinsurance (Note 3).............. 24,627 -- --
Other, net......................... 1,453 2,432 4,805
------------ ------------ ------------
Statutory Net Income............... $ 102,626 $ 74,042 $ 67,995
------------ ------------ ------------
------------ ------------ ------------
GAAP Capital and Surplus........... $ 648,097 $ 570,469 $ 503,887
Deferred policy acquisition
costs............................. (1,615,653) (1,283,771) (938,114)
Unearned revenue reserve........... 156,920 134,789 130,148
Deferred taxes..................... 68,936 64,522 12,823
Separate accounts.................. 1,183,642 924,355 640,101
Asset impairments and
write-downs....................... 17,250 -- --
Unrealized gains on bonds.......... (26,119) (21,451) (7,978)
Benefit reserve adjustment......... 65,029 16,378 7,035
Asset valuation reserve............ (21,782) (13,670) (7,442)
Adjustment relating to Lyndon
contribution (Note 3)............. -- (23,671) (36,126)
Other, net......................... 192 3,850 (1,221)
------------ ------------ ------------
Statutory Capital and Surplus...... $ 476,512 $ 371,800 $ 303,113
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
As more fully described in Note 3, Lyndon Insurance Company (Lyndon) was
contributed to the Company on June 30, 1995. The GAAP net assets contributed
exceeded the statutory basis net assets by $41,277 as of December 31, 1995,
relating primarily to statutory reserves for future
<PAGE>
F-8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
benefits, GAAP deposit accounting receivables and deferred tax liabilities. In
1998, the majority of the former Lyndon's assumed business was recaptured by the
unaffiliated direct writer.
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 basis statements
of operations.
INVESTMENTS
Investments in bonds are carried at amortized cost. Bonds that 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.
Short-term investments consist of money market funds and are stated at cost,
which approximates fair value. 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 Company uses a variety of derivative financial instruments as part of an
overall risk management strategy. These instruments, including interest rate and
foreign currency swaps, caps, and floors are used as a means of hedging exposure
to price, foreign currency and/or interest rate risk on planned investment
purchases or existing assets and liabilities. The Company does not hold or issue
derivative financial instruments for trading purposes. Derivatives must be
designated at inception as a hedge measured for effectiveness both at inception
and on an ongoing basis. The Company's correlation threshold for hedge
designation is 80% to 120%. If correlation, which is assessed monthly and
measured based on a rolling three month average, falls outside the 80% to 120%
range, hedge accounting will be terminated.
Interest rate swaps involve the periodic exchange of payments without the
exchange of underlying principal or notional amounts. Net receipts or payments
are accrued and recognized over the life of the swap agreement as an adjustment
to net investment income. Should the swap be terminated the gains or losses are
adjusted into the basis of the asset or liability and amortized over the
remaining life. Should the hedged asset be sold or liability terminated without
terminating the swap position, any swap gains or losses are immediately
recognized in net investment income. Interest rate swaps purchased in
anticipation of an asset purchase ("anticipatory transaction") are recognized
consistent with the underlying asset components such that the settlement
component is recognized in the statutory basis statements of operations while
the change in market value is recognized as an unrealized gain or loss. Foreign
currency swaps are similar to interest rate swaps except there is an initial
exchange of principal in two currencies and an agreement to re-exchange the
currencies at a future date, at an agreed upon exchange rate.
Premiums paid on purchased floor or cap agreements and the premium received
on issued cap or floor agreements (used for risk management) are adjusted into
the basis of the applicable asset and amortized over the asset life. Gains or
losses on termination of such positions are adjusted into the basis of the asset
or liability and amortized over the remaining asset life. Net payments are
recognized as an adjustment to income or basis adjusted and amortized depending
on the specific hedge strategy.
Derivatives used to create a synthetic asset must meet synthetic accounting
criteria, including designation at inception and consistency of terms between
the synthetic and the instrument being replicated. Consistent with industry
practice, synthetic instruments are accounted for like the financial instrument
they are intended to replicate. Derivatives which fail to meet risk management
criteria subsequent to acquisition, are accounted for at fair market value with
the impact reflected in the statutory basis statements of operations.
Open forward commitment contracts are marked to market through surplus. Such
contracts are accounted for at settlement by recording the purchase of specified
securities at the previously committed price. Gains or losses resulting from
termination of the forward commitment contracts before the delivery of the
securities are recognized immediately in the statutory basis statements of
operations as a component of Net Realized Capital Gains, after tax.
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 $8,112 and $6,228
in 1998 and 1997, respectively and decreased $(568) in 1996. Additionally, the
Interest Maintenance Reserve ("IMR") captures net realized capital gains and
losses, net
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-9
- --------------------------------------------------------------------------------
of applicable income taxes, resulting from changes in interest rates and
amortizes these gains or losses into income over the life of the mortgage loan
or bond sold. The IMR balance as of December 31, 1998 and December 31, 1997 was
$452 and $(193), respectively and is reflected in Other Liabilities and as a
component of non-admitted assets in Unassigned Funds for each of the years then
ended. For the years ended December 31, 1998, 1997 and 1996, amortization of IMR
is included in Other Revenues and was $(207), $(85) and $(392), respectively.
Realized capital gains and losses, net of taxes not included in IMR are reported
in the statutory basis statements of operations. Realized investment gains and
losses are determined on a specific identification basis.
OTHER LIABILITIES
The amount reflected in other liabilities includes a receivable from the
separate accounts of $1,187 million and $923 million as of December 31, 1998 and
1997, respectively. The balances are classified in accordance with NAIC
prescribed practices.
MORTGAGE LOANS
Mortgage loans, which are carried at cost and approximate fair value,
include investments in assets backed by mortgage loan pools.
2. INVESTMENTS:
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ---------
<S> <C> <C> <C>
Interest income from bonds and
short-term investments.......... $ 123,370 $ 100,475 $ 89,940
Interest income from policy
loans........................... 3,133 1,958 1,846
Interest and dividends from other
investments..................... 4,482 1,005 7,864
---------- ---------- ---------
Gross investment income.......... 130,985 103,438 99,650
Less: investment expenses........ 1,003 1,153 1,209
---------- ---------- ---------
Net investment income............ $ 129,982 $ 102,285 $ 98,441
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
(B) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON COMMON STOCKS
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Gross unrealized capital gains.. $ 2,204 $ 537 $ 713
Gross unrealized capital
losses......................... (1,871) (1,820) (4,160)
--------- --------- ---------
Net unrealized capital
(losses)/gains................. 333 (1,283) (3,447)
Balance, beginning of year...... (1,283) (3,447) 1,724
--------- --------- ---------
Change in net unrealized capital
gains (losses) on Common
stocks......................... $ 1,616 $ 2,164 $ (5,171)
--------- --------- ---------
--------- --------- ---------
</TABLE>
(C) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON BONDS AND SHORT-TERM
INVESTMENTS
<TABLE>
<CAPTION>
1998 1997 1996
---------- --------- ----------
<S> <C> <C> <C>
Gross unrealized capital
gains........................ $ 10,905 $ 23,357 $ 11,821
Gross unrealized capital
losses....................... (833) (1,906) (3,842)
---------- --------- ----------
Net unrealized capital
gains........................ 10,072 21,451 7,979
Balance, beginning of year.... 21,451 7,979 20,877
---------- --------- ----------
Change in net unrealized
capital gains on bonds and
short-term investments....... $ (11,379) $ 13,472 $ (12,898)
---------- --------- ----------
---------- --------- ----------
</TABLE>
(D) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Bonds and short-term investments.... $ 1,314 $ (120) $ 2,756
Common stocks....................... 1,624 -- --
Real estate and other............... (1) 114 --
--------- --------- ---------
Realized capital (losses) gains..... 2,937 (6) 2,756
Capital gains (benefit) tax......... -- (831) 936
--------- --------- ---------
Net realized capital gains.......... 2,937 825 1,820
Amounts transferred to IMR.......... 852 (719) 1,413
--------- --------- ---------
Net realized capital gains.......... $ 2,085 $ 1,544 $ 407
--------- --------- ---------
--------- --------- ---------
</TABLE>
(E) OFF-BALANCE SHEET INVESTMENTS
The Company had no significant financial instruments with off-balance sheet
risk as of December 31, 1998.
(F) CONCENTRATION OF CREDIT RISK
The Company has invested in securities of a single issuer, Bankers Trust
Corporation, in an amount greater than 10% of the Company's statutory capital
and surplus. The statement value of this investment was $105,221 as of December
31, 1998. The NAIC ratings on these holdings were 1z and 2. Excluding this and
U.S. government and government agency investments, the Company had no other
significant concentrations of credit risk as of December 31, 1998.
<PAGE>
F-10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
(G) BONDS, SHORT-TERM INVESTMENTS AND COMMON STOCKS
<TABLE>
<CAPTION>
1998
------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. government and government agencies and authorities:
-- Guaranteed and sponsored.................................... $ 4,982 $ 35 $ (2) $ 5,015
-- Guaranteed and sponsored -- asset-backed.................... 75,615 -- -- 75,615
States, municipalities and political subdivisions................ 10,402 415 -- 10,817
International governments........................................ 7,466 568 -- 8,034
Public utilities................................................. 94,475 1,330 (39) 95,766
All other corporate.............................................. 607,679 8,473 (792) 615,360
All other corporate -- asset-backed.............................. 505,900 -- -- 505,900
Short-term investments........................................... 343,783 -- -- 343,783
Certificates of deposit.......................................... 130,216 84 -- 130,300
Parents, subsidiaries and affiliates............................. 117,057 -- -- 117,057
---------- ---------- ---------- ----------
Total bonds and short-term investments........................... $1,897,575 $10,905 $(833) $1,907,647
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Common stock -- unaffiliated................................. $ 4,933 $ 290 $ (50) $ 5,173
Common stock -- affiliated................................... 35,384 1,914 (1,821) 35,477
--------- ---------- ---------- ----------
Total common stocks.......................................... $40,317 $2,204 $(1,871) $40,650
--------- ---------- ---------- ----------
--------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
1997
------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR 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 -- 26,733
International governments........................................ 7,609 500 -- 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 -- -- 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 ESTIMATED
COST GAINS LOSSES FAIR VALUE
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Common stock -- unaffiliated................................. $30,307 $537 $ -- $30,844
Common stock -- affiliated................................... 35,384 -- (1,820) 33,564
--------- ----- ---------- ----------
Total common stocks.......................................... $65,691 $537 $(1,820) $64,408
--------- ----- ---------- ----------
--------- ----- ---------- ----------
</TABLE>
The amortized cost and estimated fair value of bonds and short-term
investments as of December 31, 1998 by estimated maturity year are shown below.
Asset-backed securities, including mortgage backed securities and
collaterialized mortgage obligations, are distributed to maturity year based on
ILA's estimates of the rate of future prepayments of principal over the
remaining lives of the securities. Expected maturities differ from contractual
maturities due to call or repayment provisions.
<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
MATURITY COST FAIR VALUE
- ----------------------------------- ------------ ------------
<S> <C> <C>
One year or less................... $ 788,845 $ 792,826
Over one year through five years... 689,025 692,811
Over five years through ten
years............................. 308,661 310,357
Over ten years..................... 111,044 111,653
------------ ------------
Total.............................. $ 1,897,575 $ 1,907,647
------------ ------------
------------ ------------
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-11
- --------------------------------------------------------------------------------
Proceeds from sales and maturities of investments in bonds and short-term
investments during 1998, 1997 and 1996 were $1,354,563, $1,435,820 and
$1,139,073, respectively, resulting in gross realized gains of $1,705, $964 and
$3,675, respectively, and gross realized losses of $391, $1,084 and $919,
respectively, before transfers to IMR.
(H) FAIR VALUE OF FINANCIAL INSTRUMENTS BALANCE SHEET ITEMS (IN MILLIONS):
<TABLE>
<CAPTION>
1998 1997
-------------------------- --------------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Bonds and short-term
investments..................... $ 1,898 $ 1,908 $ 1,779 $ 1,800
Common stocks.................... 41 41 64 64
Policy loans..................... 47 47 37 37
Mortgage loans................... 60 60 85 85
Other invested assets............ 2 2 21 21
LIABILITIES
Liabilities on investment
contracts....................... $ 2,053 $ 2,129 $ 1,911 $ 1,835
</TABLE>
The estimated fair value of bonds and short-term investments was determined
by the Company primarily using NAIC market values. The carrying amounts for
policy loans approximates fair value. The fair value of mortgage loans was
determined by discounting future expected cash flows using interest rates
currently being offered for similar loans. The fair value of liabilities on
investment contracts is determined by forecasting future cash flows and
discounting the forecasted cash flows at current market interest rates.
3. AGGREGATE RESERVES FOR FUTURE BENEFITS
The Company's existing reserves consist of life, health, annuity and
supplementary contracts. The Company cedes and assumes insurance to and from
non-affiliated insurers in order to limit its maximum loss. Such transfers do
not relieve the Company or the unaffiliated reinsured of their primary
liabilities. The Company cedes to RGA Reinsurance Company and its affiliate
Employers Reassurance Corporation, on a modified coinsurance basis, 80% of the
variable annuity business written since 1994 and 100% of the variable life and
variable universal life excess sales load refund obligation effective 1998.
There were no material reinsurance recoverables from reinsurers outstanding as
of, and for the years ended, December 31, 1998 and 1997.
A summary of reinsurance information as of and for the years ended December
31, follows:
<TABLE>
<CAPTION>
1998 DIRECT ASSUMED CEDED NET
- ----------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Premium and Annuity
Considerations.................... $ 483,328 $ 24,954 $ (38,939) $ 469,343
Death, Annuity, Disability and
Other Benefits.................... $ 64,331 $ 1,574 $ (16,401) $ 49,504
Surrenders......................... $ 739,663 $ -- $ -- $ 739,663
Aggregate Reserves for Future
Benefits.......................... $ 713,425 $ -- $ (134,285) $ 579,140
Policy and Contract Claims......... $ 5,895 $ 85 $ (313) $ 5,667
<CAPTION>
1997 DIRECT ASSUMED CEDED NET
- ----------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Premium and Annuity
Considerations.................... $ 266,427 $ 51,630 $ (21,412) $ 296,645
Death, Annuity, Disability and
Other Benefits.................... $ 79,779 $ 839 $ (7,126) $ 73,492
Surrenders......................... $ 454,417 $ -- $ -- $ 454,417
Aggregate Reserves for Future
Benefits.......................... $ 651,820 $ -- $ (46,637) $ 605,183
Policy and Contract Claims......... $ 5,861 $ 157 $ (346) $ 5,672
<CAPTION>
1996 DIRECT ASSUMED CEDED NET
- ----------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Premium and Annuity
Considerations.................... $ 226,612 $ 33,817 $ (10,185) $ 250,244
Death, Annuity, Disability and
Other Benefits.................... $ 34,950 $ 35,138 $ (3,339) $ 66,749
Surrenders......................... $ 270,165 $ -- $ -- $ 270,165
</TABLE>
In connection with the distribution described in Note 1, on June 30, 1995,
the assets of Lyndon were contributed to the Company. The statutory basis assets
in excess of statutory basis liabilities was approximately $112 million and was
reflected as an increase in Gross Paid-In and Contributed Surplus at December
31, 1995. In 1998, the majority of former Lyndon's assumed business was
recaptured by the unaffiliated direct writer. A ceding commission of $25,622 and
change in reserve of $26,404 for the year ended December 31, 1998, is reflected
in Other Revenue and Increase/(Decrease) in Aggregate Reserves for Future
Benefits in the statutory basis statements of operations, respectively.
<PAGE>
F-12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
Analysis of Annuity Actuarial Reserves and Deposit Liabilities by Withdrawal
Characteristics as of December 31, 1998 (including general and separate account
liabilities) are as follows:
<TABLE>
<CAPTION>
% OF
SUBJECT TO DISCRETIONARY WITHDRAWAL: AMOUNT TOTAL
- --------------------------------------- ------------- ---------
<S> <C> <C>
With market value adjustment........... $ 4,563 0.0%
At book value less current surrender
charge of 5% or more.................. 1,378,056 4.1%
At market value........................ 31,087,511 93.8%
------------- ---------
Total with adjustment or at market
value................................. 32,470,130 97.9%
At book value without adjustment
(minimal or no charge or
adjustment)........................... 665,159 2.0%
Not subject to discretionary
withdrawal............................ 19,739 0.1%
------------- ---------
Reinsurance ceded...................... 33,155,028
Total, net......................... $ 33,155,028
-------------
-------------
</TABLE>
4. RELATED PARTY TRANSACTIONS:
Transactions between the Company and its affiliates within The Hartford
relate principally to tax settlements, reinsurance, rental and service fees,
capital contributions and payments of dividends. The Company has also invested
in bonds of its affiliates, Hartford Financial Services Corporation and HL
Investment Advisors, Inc., and common stock of its subsidiary, ITT Hartford
Life, LTD.
5. 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 filing separate Federal, state and local
income tax returns.
As long as The Hartford continues to own at least 80% of the combined voting
power and 80% of the value of the outstanding capital stock of 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 intention of The Hartford and
its non-life subsidiaries to file a single consolidated Federal income tax
return. The life insurance companies will file a separate consolidated Federal
income tax return. Federal income taxes (received) paid by the Company for
operations and capital gains were $25,780, $(14,499) and $29,793 in 1998, 1997
and 1996, respectively. The effective tax rate was 26%, (26)% and 22% in 1998,
1997 and 1996, respectively.
The Company is currently under audit by the Internal Revenue Service (IRS)
for the three year tax period ending 1995. The audit is not yet complete. As of
December 31, 1998, the Company does not currently expect any material
adjustments to arise from this audit.
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>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Tax provision at U.S. Federal statutory
rate..................................... $ 48 $ 20 $ 30
Tax deferred acquisition costs............ 25 25 27
Statutory to tax reserve differences...... 8 1 --
Unrealized gain on separate accounts...... (41) (44) (21)
Investments and other..................... (4) (17) (17)
--------- --------- ---------
Federal income tax (benefit) expense...... $ 36 $ (15) $ 19
--------- --------- ---------
--------- --------- ---------
</TABLE>
6.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 generally
restricted to the greater of 10% of surplus as of the preceding December 31st or
the net gain from operations for the previous year. Dividends are paid as
determined by the Board of Directors and are not cumulative. No dividends were
paid in 1998, 1997 and 1996. The amount available for dividend in 1999 is
$100,541.
7. PENSION PLANS AND OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS:
HLI'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. HLI's funding policy is to contribute annually an amount between the
minimum funding requirements set forth in the Employee Retirement Income
Security Act of 1974, as amended, and the maximum amount that can be deducted
for U.S. Federal income tax purposes. Generally, pension costs are funded
through the purchase of affiliated group pension contracts. The cost to HLI was
approximately $9,000 in 1998 and $7,000 in both 1997 and 1996.
HLI also provides, through The Hartford, certain health care and life
insurance benefits for eligible retired employees. A substantial portion of
HLI's employees may become eligible for these benefits upon retirement. HLI's
contribution for health care benefits will depend on the retiree's date of
retirement and years of service. In addition, the plan has a defined dollar cap
which limits average company contributions. HLI has prefunded a portion of the
health care and life insurance obligations through trust funds where such
prefunding can be accomplished on a tax effective basis. Postretirement health
care and life insurance
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY F-13
- --------------------------------------------------------------------------------
benefits expense, allocated by The Hartford, was immaterial to the results of
operations for 1998, 1997 and 1996.
The assumed rate in the per capita cost of health care (the health care
trend rate) was 7.8% for 1998, decreasing ratably to 5.0% in the year 2003.
Increasing the health care trend rates by one percent per year would have an
immaterial impact on the accumulated postretirement benefit obligation and the
annual expense. To the extent that the actual experience differs from the
inherent assumptions, the effect will be amortized over the average future
service of covered employees.
8. SEPARATE ACCOUNTS:
The Company maintains separate account assets and liabilities totaling $32.9
billion and $23.2 billion as of December 31, 1998 and 1997, 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
$360 million, $252 million and $144 million in 1998, 1997 and 1996,
respectively, and are recorded as a component of other revenues on the statutory
basis statements of operations.
9. COMMITMENTS AND CONTINGENCIES:
As of December 31, 1998, 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 pending and threatened litigation in
the normal course of its business in which claims for monetary and punitive
damages have been asserted. Although there can be no assurances, at the present
time the Company does not anticipate that the ultimate liability arising from
such pending or threatened litigation, after consideration of provisions made
for potential losses and costs of defense, will have a material adverse effect
on the statutory capital and surplus of the Company.
As discussed in Note 5, issues may potentially be raised by the IRS in
future audits of open years. Management does not believe that possible audit
adjustments will have a material effect on the statutory capital and surplus of
the Company.
Under insurance guaranty fund laws in each state, insurers licensed to do
business 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 $1,043, $1,544 and $1,262 in 1998, 1997 and
1996, respectively. ILA incurred guaranteed fund expense of $548 in 1998, 1997
and 1996.
<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.(1)
(7) Not applicable.
(8) Not applicable.
(9) Opinion and Consent of Lynda Godkin, Senior Vice President,
General Counsel and Corporate Secretary.
- -------------------------------------------
(1) Incorporated by reference to Post-Effective Amendment No. 2, to the
Registration Statement File No. 33-73568, dated May 1, 1995.
(2) Incorporated by reference to Post-Effective Amendment No. 3, to the
Registration Statement File No. 33-73568, dated April 29, 1996.
(3) Incorporated by reference to Post-Effective Amendment No. 11, to the
Registration Statement File No. 33-73568, filed June 1, 1998.
<PAGE>
(10) Consent of Arthur Andersen LLP, Independent Public Accountants.
(11) No financial statements are omitted.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) Copy of Power of Attorney.
(16) Organizational Chart.
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
NAME, AGE POSITION WITH HARTFORD
- ------------------------------------------------------------------------------
<S> <C>
Wendell J. Bossen Vice President
- ------------------------------------------------------------------------------
Gregory A. Boyko Senior Vice President, Director*
- ------------------------------------------------------------------------------
Peter W. Cummins Senior Vice President
- ------------------------------------------------------------------------------
Timothy M. Fitch Vice President & Actuary
- ------------------------------------------------------------------------------
Mary Jane B. Fortin Vice President & Chief Accounting Officer
- ------------------------------------------------------------------------------
David T. Foy Senior Vice President & Treasurer
- ------------------------------------------------------------------------------
Lynda Godkin Senior Vice President, General Counsel, and
Corporate Secretary, Director*
- ------------------------------------------------------------------------------
Lois W. Grady Senior Vice President
- ------------------------------------------------------------------------------
Stephen T. Joyce Vice President
- ------------------------------------------------------------------------------
Michael D. Keeler Vice President
- ------------------------------------------------------------------------------
Robert A. Kerzner Senior Vice President
- ------------------------------------------------------------------------------
Thomas M. Marra Executive Vice President, Director*
- ------------------------------------------------------------------------------
Steven L. Matthiesen Vice President
- ------------------------------------------------------------------------------
Craig R. Raymond Senior Vice President and Chief Actuary
- ------------------------------------------------------------------------------
Lowndes A. Smith President and Chief Executive Officer,
Director*
- ------------------------------------------------------------------------------
David M. Znamierowski Senior Vice President, Director*
- ------------------------------------------------------------------------------
</TABLE>
Unless otherwise indicated, the principal business address of each of the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
*Denotes Board of Directors.
<PAGE>
Item 26. Persons Controlled By or Under Common Control with the Depositor or
Registrant.
Filed herewith as Exhibit 16.
Item 27. Number of Contract Owners
As of March 31, 1999, there were 274,088 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 become subject by reason of being or having been
employees or officers of the Registrant. Connecticut law does not
prescribe standards for the indemnification of officers, employees
and agents and expressly states that their indemnification may be
broader than the right of indemnification granted to directors.
The foregoing statements are specifically made subject to the
detailed provisions of Section 33-770 et seq.
Notwithstanding the fact that Connecticut law obligates the
Registrant to indemnify only a director that was successful on the
merits in a suit, under Article 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
<PAGE>
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)
<PAGE>
Hartford Life Insurance Company - Separate Account Two (QP Variable
Account)
Hartford Life Insurance Company - Separate Account Two (Variable
Account "A")
Hartford Life Insurance Company - Separate Account Two (NQ Variable
Account)
Hartford Life Insurance Company - Putnam Capital Manager Trust
Separate Account
Hartford Life Insurance Company - Separate Account Three
Hartford Life Insurance Company - Separate Account Five
Hartford Life Insurance Company - Separate Account Seven
Hartford Life and Annuity Insurance Company - Separate Account
One
Hartford Life and Annuity Insurance Company - Putnam Capital Manager
Trust Separate Account Two
Hartford Life and Annuity Insurance Company - Separate Account Three
Hartford Life and Annuity Insurance Company - Separate Account Five
Hartford Life and Annuity Insurance Company - Separate Account Six
Alpine Life Insurance Company - Separate Account One
Alpine Life Insurance Company - Separate Account Two
American Maturity Life Insurance Company - Separate Account AMLVA
Royal Life Insurance Company - Separate Account One
Royal Life Insurance Company - Separate Account Twp
(b) Directors and Officers of HSD
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address With Underwriter
------------------ ---------------------
<S> <C>
Lowndes A. Smith President and Chief Executive Officer, Director
Thomas M. Marra Executive Vice President, Director
Robert A. Kerzner Executive Vice President
Lynda Godkin Senior Vice President, General Counsel and Corporate
Secretary, Director
Peter W. Cummins Senior Vice President
David T. Foy Treasurer
George R. Jay Controller
</TABLE>
Unless otherwise indicated, the principal business address of each of
the above individuals is P. O. Box 2999, Hartford, Connecticut
06104-2999.
Item 30. Location of Accounts and Records
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.
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 has caused this Registration Statement to be signed on its behalf,
in the Town of Simsbury, and State of Connecticut on this 9th day of April,
1999.
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT ONE
(Registrant)
*By: Thomas M. Marra *By: /s/ Marianne O'Doherty
----------------------------------------- ----------------------
Thomas M. Marra, Executive Vice President Marianne O'Doherty
Attorney-in-Fact
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
(Depositor)
*By: 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 *
Lynda Godkin, Senior Vice President,
General Counsel, and Corporate Secretary, By: /s/ Marianne O'Doherty
Director * ----------------------
Thomas M. Marra, Executive Vice Marianne O'Doherty
President, Director* Attorney-in-Fact
Lowndes A. Smith, President and
Chief Executive Officer, Director * Dated: April 9, 1999
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) Power of Attorney.
(16) Organizational Chart.
<PAGE>
EXHIBIT 9
[LOGO]
[HARTFORD LIFE]
April 9, 1999 LYNDA GODKIN
Senior Vice President, General Counsel &
Corporate Secretary
Board of Directors
Hartford Life and Annuity Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
RE: HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT ONE
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
Connecticut with the registration of an indefinite amount of securities in
the form of flexible premium variable annuity insurance contracts (the
"Contracts") with the Securities and Exchange Commission under the Securities
Act of 1933, as amended. I have examined such documents (including the
Form N-4 Registration Statement) and reviewed such questions of law as I
considered necessary and appropriate, and on the basis of such examination
and review, it is my opinion that:
1. The Company is a corporation duly organized and validly existing as a
stock life insurance company under the laws of the State of Connecticut
and is duly authorized by the Insurance Department of the State of
Connecticut to issue the Contacts.
2. The Account is a duly authorized and existing separate account established
pursuant to the provisions of Section 38a-433 of the Connecticut Statutes.
3. To the extent so provided under the Contracts, that portion of the assets
of the Account equal to the reserves and other contract liabilities with
respect to the Account will not be chargeable with liabilities arising out
of any other business that the Company may conduct.
4. The Contracts, when issued as contemplated by the Form N-4 registration
statement, will constitute legal, validly issued and binding obligations
of the Company.
I hereby consent to the filing of this opinion as an exhibit to the Form N-4
Registration Statement for the Contracts and the Account.
Sincerely yours,
/s/ Lynda Godkin
Lynda Godkin
<PAGE>
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of
this Registration Statement File No. 333-66345 for Hartford Life and Annuity
Insurance Company Separate Account One on Form N-4.
Hartford, Connecticut /s/ Arthur Andersen LLP
April 12, 1999
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
POWER OF ATTORNEY
-----------------
Gregory A. Boyko
David T. Foy
Lynda Godkin
Thomas M. Marra
Lowndes A. Smith
David M. Znamierowski
do hereby jointly and severally authorize Lynda Godkin, Christine Repasy,
Marianne O'Doherty, Thomas S. Clark and Brian Lord to sign as their agent,
any Registration Statement, pre-effective amendment, post-effective amendment
and any application for exemptive relief of the Hartford Life and Annuity
Insurance Company under the Securities Act of 1933 and/or the Investment
Company Act of 1940, and do hereby ratify any such signatures heretofore made
by such persons.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for
the purpose herein set forth.
/s/ Gregory A. Boyko Dated as of January 15, 1999
- ------------------------------
Gregory A. Boyko
/s/ David T. Foy Dated as of January 15, 1999
- ------------------------------
David T. Foy
/s/ Lynda Godkin Dated as of January 15, 1999
- ------------------------------
Lynda Godkin
/s/ Thomas M. Marra Dated as of January 15, 1999
- ------------------------------
Thomas M. Marra
/s/ Lowndes A. Smith Dated as of January 15, 1999
- ------------------------------
Lowndes A. Smith
/s/ David M. Znamierowski Dated as of January 15, 1999
- ------------------------------
David M. Znamierowski
<PAGE>
ORGANIZATIONAL CHART
<TABLE>
<CAPTION>
<S> <C>
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(DELAWARE)
|
---------------------------------------------
NUTMEG INSURANCE COMPANY |
(CONNECTICUT) THE HARTFORD INVESTMENT
| MANAGEMENT COMPANY
HARTFORD FIRE INSURANCE COMPANY (DELAWARE)
(CONNECTICUT) |
| |
HARTFORD ACCIDENT AND INDEMNITY COMPANY HARTFORD INVESTMENT
(CONNECTICUT) SERVICES, INC.
| (CONNECTICUT)
HARTFORD LIFE, INC.
(DELAWARE)
|
HARTFORD LIFE & ACCIDENT INSURANCE COMPANY
(CONNECTICUT)
|
|
|
-------------------------------------------------------------------------------------------------------------------------
| | | | | | | | |
ITT HARTFORD LIFE | | | | | | HLIC PLANCO
INTERNATIONAL LTD. | | | | | | CANADA FINANCIAL
(CONNECTICUT) | | | | | | HOLDINGS, INC. SERVICES,
| | | | | | | (CANADA) INCORPORATED
| | | | | | | | (PENNSYLVANIA)
| | | | | | | | |
| | ALPINE LIFE HARTFORD FINANCIAL HARTFORD LIFE HARTFORD AMERICAN | |
| | INSURANCE SERVICES LIFE INSURANCE COMPANY FINANCIAL MATURITY LIFE | |
| | COMPANY INSURANCE CO. (CONNECTICUT) SERVICES, LLC INSURANCE COMPANY | |
| | (CONNECTICUT) (CONNECTICUT) | (DELAWARE) (CONNECTICUT) | PLANCO, INC.
| | | | | | (PENNSYLVANIA)
| | ------------------------------------- | AML FINANCIAL, INC. |
HARTFORD CALMA | | | | | (CONNECTICUT) |
COMPANY | ROYAL LIFE HARTFORD HARTFORD | HARTFORD
(FLORIDA) | INSURANCE INTERNATIONAL LIFE AND | LIFE INSURANCE
| COMPANY LIFE REASSURANCE ANNUITY INSURANCE | COMPANY
| OF AMERICA CORP. COMPANY | OF CANADA
|(CONNECTICUT) (CONNECTICUT) (CONNECTICUT) | (CANADA)
| | |
| | |
| ITT HARTFORD |
| LIFE, LTD. |
| (BERMUDA) |
| |
| |
----------| ---------------------------------------------------------------------------------------------
| | | | | |
INTERNATIONAL MS FUND HL INVESTMENT HARTFORD HARTFORD SECURITIES HARTFORD COMP. EMP.
CORPORATE AMERICA 1993-K ADVISORS, LLC EQUITY SALES DISTRIBUTION BENEFITS SERVICE
MARKETING GROUP, INC. SPE, INC. (CONNECTICUT) COMPANY, INC. COMPANY, INC. COMPANY
(CONNECTICUT) (DELAWARE) | (CONNECTICUT) (CONNECTICUT) (CONNECTICUT)
| |
| |
THE EVERGREEN HARTFORD INVESTMENT
GROUP, INC. FINANCIAL SERVICES
(NEW YORK) COMPANY
(DELAWARE)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(DELAWARE)
|
NUTMEG INSURANCE COMPANY
(CONNECTICUT)
|
HARTFORD FIRE INSURANCE COMPANY
(CONNECTICUT)
|
----------------------------------------------------------------------------------------------------------------------------
| | |
| | ITT HARTFORD LIFE
| | -------INTERNATIONAL LTD.
| | | (CONNECTICUT)
| | | |
| | | ITT HARTFORD
| | | ----SUDAMERICANA
| | | | HOLDING S.A.
| | | | (ARGENTINA)
| | | |------------------------------------------------------
| | | | | |
| | | | HARTFORD GALICIA INSTITUTO DE
| | | | SEGUROS VIDA COMPANIA SALTA COMPANIA DE
| | | |--------DE VIDA DE SEGUROS S.A. SEGUROS DE VIDA S.A.
| | | | (URUGUAY) (ARGENTINA) (ARGENTINA)
| | | |
| | ICATU | | ITT HARTFORD
| | HARTFORD | |-----SEGUROS DE VIDA
| | SEGUROS S.A.----------| | (ARGENTINA)
| | (BRAZIL) | |
| | | | |
| | | | | ITT HARTFORD
| | -- ----------| | |------SEGUROS DE
| | | | | | RETIRO S.A.
| | | | | | (ARGENTINA)
|-----------|----------------|---------------|---|--------------------------------------------------------------------------
| | | | | |
| | | ICATU HARTFORD | | CONSULTORA DE CAPITALES
| | | FUNDO DE PENSAO | | S.A. SOCIEDAD GERENTE
| | | (BRAZIL) | |----DE FONDOS COMUNES
| | | | | | DE ENVERSION
| | | | | | (ARGENTINA)
| | | ICATU HARTFORD | |
| | | CAPITALIZACAO S.A. | | CLARIDAD
| | | (BRAZIL) | | ADMINISTRADORA DE
| | | | | |---FONDOS DE JUBILACIONES
| | | BRAZILCAP | | Y PENSIONES S.A.
| | | CAPITALIZACAO S.A. | | (ARGENTINA)
| | | (BRAZIL) | |
| | | | |
| | -------------------------- | |
| |--------------- | | |
| | | | |
HARTFORD FIRE HARTFORD FIRE | | |------- SEGPOOL S.A.
INTERNATIONAL------------INTERNATIONAL, LTD. | | | (ARGENTINA)
(GERMANY) GMBH (CONNECTICUT) | | |
(WEST GERMANY) | | |
| | |
ICATU HARTFORD | | | THESIS S.A.
ADMINISTRACAO | | |-------- (ARGENTINA)
DE BENEFICIOS LTDA-- | | |
(BRAZIL) | |
| |
----------------- |
| |
CAB |--------- U.O.R., S.A.
CORPORATION (ARGENTINA)
(BRITISH VIRGIN ISLANDS)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(DELAWARE)
|
NUTMEG INSURANCE COMPANY
(CONNECTICUT)
|
HARTFORD FIRE INSURANCE COMPANY
(CONNECTICUT)
|
- --------------------------------------------------------------------------------------------------------------------------------|
| |
THE HARTFORD INTERNATIONAL |
|-----------------------------------------------------------------------FINANCIAL SERVICES GROUP, INC. |
| | | (DELAWARE) |
| | | ----------------------|----------------- |
| | | | | | | |
ZWOLSCHE | | ITT HARTFORD LONDON AND | HARTFORD |
ALGEMEENE N.V. | | INTERNATIONAL, LTD. EDINBURGH | EUROPE, INC. |
(NETHERLANDS) | | (U.K.) INSURANCE GROUP, LTD.| (DELAWARE) |
| | | (U.K.) | |
| | | | | |
| | | ------------- | |
| | | | | |
| ITT ASSURANCES HARTFORD INTERNATIONAL | LONDON AND --ITT ERCOS |
| S.A. INSURANCE CO., N.V. |--- EDINBURGH DE SEGUROS Y |
| ZWOLSCHE ALGEMEENE (FRANCE) (BELGIUM) | INSURANCE CO., LTD. REASEGUROS S.A.|
|----SCHADEVERZEKERING | | (U.K.) (SPAIN) |
--------| N.V.----------------------------------- | | | |
| | (NETHERLANDS) | | | | |
Z.A. | | | | EXCESS INSURANCE |
- --VERZEKERINGEN | | | | COMPANY LTD. |
| N.V. | ZWOLSCHE ALGEMEENE | | | (U.K.) |
| (BELGIUM) |------HERVERZEKERING B.V. | | | |
| | -----| (NETHERLANDS) | | | LONDON AND |
| | | | | | |--- EDINBURGH LIFE |
| Z.A. LUX S.A. | | | | ASSURANCE CO., LTD. |
| (LUXEMBURG) | ZWOLSCHE ALGEMEENE | | | (U.K.) |
| |--LEVENS-VERZEKERING N.V.------------ | | | |
| | (NETHERLANDS) | | | | |
- ----------------|------------------------------------|------------|------|--------------|---------------------------------------|
| | | | | | |
| -------- | | | | |
| | | | | | | |
| ZWOLSCHE | ZWOLSCHE ALGEMEENE ZWOLSCHE ALGEMEENE | | | |
| ALGEMEENE |-----HYPOTHEKEN N.V. BELEGGINGEN III B.V. | | | |
| EUROPA B.V. | (NETHERLANDS) (NETHERLANDS) | | | |
| (NETHERLANDS) | ---------- | | |
- --------| | | | | |
| EXPLOITATIEMAAT- BELEGGINGSMAAT- | | |
|----- SCHAPPIJ SCHAPPIJ | | |
| BUIZERDLAAN B.V. BUIZERDLAAN B.V. | | |
| (NETHERLANDS) (NETHERLANDS) | | |
| | | |
| | | -----
| HOLLAND | |-------------------------- |
|---- BELEGGINGSGROEP B.V. | | | |
(NETHERLANDS) | |----------------- | |
| -------| | | |
| | | | | |
| | | | | |
F.A. KNIGHT | MACALISTER & LONDON AND | HARTFORD FIRE
& SON N.V. | DUNDAS, LTD. EDINBURGH | INTERNATIONAL
(BELGIUM) | (SCOTLAND) TRUSTEES, LTD. | SERVICIOS
| (U.K.) | (SPAIN)
------------------------- -----------
| | |
FENCOURT QUOTEL LONDON AND
PRINTERS, LTD. INSURANCE EDINBURGH
(U.K.) SYSTEMS, LTD. SERVICES, LTD.
(U.K.) (U.K.)
|
EUROSURE
INSURANCE
MARKETING, LTD.
(U.K.)
</TABLE>
