<PAGE>
File No. 33-73572
Securities and Exchange Commission
Washington, D.C.
Form N-4
Registration Statement Under the Securities Act of 1933
--------
Pre-Effective Amendment No. / /
----- ---
--------
Post-Effective Amendment No. 2 / X /
----- ---
and/or
Registration Statement Under the Investment Company Act of 1940
Amendment No. 2
-------
(check appropriate box or boxes)
ITT Hartford Life and Annuity Insurance Company
(Formerly ITT Life Insurance Company)
Putnam Capital Manager Trust Separate Account Two
(Exact Name of Registrant)
ITT Hartford Life and Annuity Insurance Company
(Name of Depositor)
Waterford Park
505 Highway, 169 North
Minneapolis, MN 55441
(Address of Depositor's Principal Offices)
Depositor's Telephone Number: (612) 545-2100
Rodney Vessels, Esquire
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 this Registration
Statement.
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485
-------
X on (May 1, 1995) pursuant to paragraph (b)(1)(v) of Rule 485
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60 days after filing pursuant to paragraph (a)(1) of Rule 485
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on May 1, 1995 pursuant to paragraph (a)(1) of Rule 485
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75 days after filing pursuant to paragraph (a)(2) of Rule 485
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on _______ pursuant to paragraph (a)(2) of Rule 485
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<PAGE>
2
Calculation of Registration Fee Under Securities Act of 1933
- --------------------------------------------------------------------------------
Proposed Proposed
Title of Amount Maximum Maximum Amount of
Securities Being Offering Aggregate Registration
Being Requested Registered Price Per Unit Offering Price Fee
- --------------------------------------------------------------------------------
ITT Hartford Life and Pursuant to Regulation 270.24f-2 PAID
Annuity Insurance Company - under the Investment Company Act
Putnam Capital Manager Trust of 1940, Registrant hereby elects to
Separate Account Two Units register an indefinite number of units of
of Interest interest in this Separate Account.
- --------------------------------------------------------------------------------
The Rule 24f-2 Notice for the Registrant's most recent fiscal year will be
filed on or about February 28, 1995.
<PAGE>
3
CROSS REFERENCE SHEET
PURSUANT TO RULE 495(a)
N-4 Item No. Prospectus Heading
------------------------ -----------------------
1. Cover Page Cover Page
2. Definitions Glossary of Special Terms
3. Synopsis or Highlights Summary
4. Condensed Financial Information Statement of Additional
Information
5. General Description of Registrant, The Contract; The Separate
Depositor, and Portfolio Companies Account; The Fixed Account;
The Company; The Funds; General
Matters
6. Deductions Charges Under the Contract
7. General Description of Operation of the Contract
Annuity Contracts Accumulation Period; Death
Benefit; The Contract; The
Separate Account One; General
Matters
8. Annuity Period Annuity Benefits
9. Death Benefit Death Benefit
10. Purchases and Contract Value Operation of the Contract/
Accumulation Period
11. Redemptions Operation of the Contract/
Accumulation Period
12. Taxes Federal Tax Considerations
13. Legal Proceedings General Matters - Legal
Proceedings
14. Table of Contents of the Statement Table of Contents to Statement
of Additional Information of Additional Information
<PAGE>
4
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY--
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT TWO
This Prospectus describes the Putnam Capital Manager Plan, a tax deferred
variable annuity issued by ITT Hartford Life and Annuity Insurance Company ("ITT
Hartford"). Payments for the Contract will be held in a series of ITT Hartford
Life and Annuity Insurance Company - Putnam Capital Manager Trust Separate
Account Two (the "Putnam Separate Account" or the "Separate Account").
Allocations to and transfers to and from the Fixed Account are not permitted in
certain states.
There are currently eleven Sub-Accounts available under the Contract. The
underlying investment portfolios ("Funds") of Putnam Capital Manager Trust
for the Sub-Accounts are PCM Asia Pacific Growth Fund, PCM Diversified Income
Fund, PCM Global Asset Allocation Fund, PCM Global Growth Fund, PCM Growth
and Income Fund, PCM High Yield Fund, PCM Money Market Fund, PCM New
Opportunities Fund, PCM U.S. Government and High Quality Bond Fund, PCM
Utilities Growth and Income Fund and PCM Voyager Fund.
This Prospectus sets forth the information concerning the Separate Account and
the Fixed Account that investors should know before investing. This Prospectus
should be kept for future reference. Additional information about the Separate
Account and the Fixed Account has been filed with the Securities and Exchange
Commission and is available without charge upon request. To obtain the
Statement of Additional Information send a written request to ITT Hartford Life
and Annuity Insurance Company, Attn: Individual Annuity Operations, P.O. Box
5085, Hartford, CT 06102-5085. The Table of Contents for the Statement of
Additional Information may be found on page ____ of this Prospectus. The
Statement of Additional Information is incorporated by reference into this
Prospectus.
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
THIS PROSPECTUS IS ACCOMPANIED BY A CURRENT PROSPECTUS FOR PUTNAM CAPITAL
MANAGER TRUST AND IS VALID ONLY WHEN ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE
TRUST.
- -------------------------------------------------------------------------------
VARIABLE ANNUITY CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED
BY THE FDIC, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; THEY ARE SUBJECT TO
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
- -------------------------------------------------------------------------------
Prospectus Dated: May 1, 1995
-----------
Statement of Additional Information Dated: May 1, 1995
-----------
<PAGE>
5
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
GLOSSARY OF SPECIAL TERMS. . . . . . . . . . . . . . . . . . . . . . .
FEE TABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ACCUMULATION UNIT VALUES . . . . . . . . . . . . . . . . . . . . . . .
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PERFORMANCE RELATED INFORMATION. . . . . . . . . . . . . . . . . . . .
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right to Cancel Period . . . . . . . . . . . . . . . . . . . . .
THE SEPARATE ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . .
THE FIXED ACCOUNT. . . . . . . . . . . . . . . . . . . . . . . . . . .
THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE FUNDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OPERATION OF THE Contract/ACCUMULATION PERIOD. . . . . . . . . . . . .
Premium Payments. . . . . . . . . . . . . . . . . . . . . . . . .
Value of Accumulation Units . . . . . . . . . . . . . . . . . . .
Value of the Fixed Account. . . . . . . . . . . . . . . . . . . .
Value of the Contract . . . . . . . . . . . . . . . . . . . . . .
Transfers Among Sub-Accounts. . . . . . . . . . . . . . . . . . .
Transfers Between the Fixed Account and the Sub-Accounts. . . . .
Redemption/Surrender of a Contract. . . . . . . . . . . . . . . .
DEATH BENEFIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CHARGES UNDER THE CONTRACT . . . . . . . . . . . . . . . . . . . . . .
Contingent Deferred Sales Charges . . . . . . . . . . . . . . . .
During the First Seven Contract Years . . . . . . . . . . . . . .
After the Seventh Contract Year . . . . . . . . . . . . . . . . .
Mortality and Expense Risk Charge . . . . . . . . . . . . . . . .
Administration and Maintenance Fees . . . . . . . . . . . . . . .
<PAGE>
6
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
Premium Taxes . . . . . . . . . . . . . . . . . . . . . . . . . .
ANNUITY BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annuity Options . . . . . . . . . . . . . . . . . . . . . . . . .
The Annuity Unit and Valuation. . . . . . . . . . . . . . . . . .
Determination of Payment Amount . . . . . . . . . . . . . . . . .
FEDERAL TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . .
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxation of ITT Hartford and the Separate Account . . . . . . . .
Taxation of Annuities in General - Non-Tax Qualified Purchasers .
Federal Income Tax Withholding. . . . . . . . . . . . . . . . . .
General Provisions Affecting Qualified Retirement Plans . . . . .
Aggregation of Two or More Annuity Contracts. . . . . . . . . . .
GENERAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Modification. . . . . . . . . . . . . . . . . . . . . . . . . . .
Delay of Payments . . . . . . . . . . . . . . . . . . . . . . . .
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . .
Distribution of the Contracts . . . . . . . . . . . . . . . . . .
Other Contracts Offered . . . . . . . . . . . . . . . . . . . . .
Custodian of Separate Account Assets. . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . .
Legal Counsel . . . . . . . . . . . . . . . . . . . . . . . . . .
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional Information. . . . . . . . . . . . . . . . . . . . . .
APPENDIX I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION . . . . . . .
<PAGE>
7
GLOSSARY OF SPECIAL TERMS
ACCUMULATION UNIT: An accounting unit of measure used to calculate values
before Annuity payments begin.
ANNUAL WITHDRAWAL AMOUNT: The amount which can be withdrawn in any Contract
Year prior to incurring surrender charges.
ANNUITANT: The person or Participant upon whose life the Contract is issued.
ANNUITY: A series of payments for life, or for life with a minimum number of
payments or a determinable sum guaranteed, or for a joint lifetime and
thereafter during the lifetime of the survivor, or for a designated period.
ANNUITY COMMENCEMENT DATE: The date on which Annuity payments are to commence.
For group unallocated Contracts, the date for each Participant is determined by
the Contract Owner in accordance with the terms of the Plan.
ANNUITY UNIT: An accounting unit of measure used to calculate the value of
Annuity payments.
BENEFICIARY: The person(s) who receive Contract Values in the event of the
Annuitant's or Contract Owner's death under certain conditions. Under a group
unallocated Contract, the person named within the Plan documents/enrollment
forms by each Participant entitled to receive benefits as per the terms of the
Contract in case of the death of the Participant.
CODE: The Internal Revenue Code of 1986, as amended.
COMMISSION: Securities and Exchange Commission.
CONTINGENT ANNUITANT: The person so designated by the Contract Owner, who upon
the Annuitant's death, prior to the Annuity Commencement Date, becomes the
Annuitant.
CONTRACT ANNIVERSARY: The anniversary of the Contract Date.
CONTRACT OWNER(S): The owner(s) of the Contract, trustee or other entity,
sometimes herein referred to as "you".
CONTRACT VALUE: The aggregate value of any Sub-Account Accumulation Units held
under the Contract plus the value of the Fixed Account.
CONTRACT YEAR: A period of 12 months commencing with the Contract Date or any
anniversary thereof.
<PAGE>
8
DEATH BENEFIT: The amount payable upon the Death of a Contract Owner,
Annuitant, or Participant in the case of group Contracts before annuity payments
have started.
FIXED ACCOUNT: Part of the General Account of ITT Hartford to which a Contract
Owner may allocate all or a portion of his Premium Payment or Contract Value.
FIXED ANNUITY: An Annuity providing for guaranteed payments which remain fixed
in amount throughout the payment period and which do not vary with the
investment experience of a separate account.
FUNDS: Currently, the portfolios of Putnam Capital Manager Trust described on
page ___ of this Prospectus.
GENERAL ACCOUNT: The General Account of ITT Hartford which consists of all
assets of ITT Hartford Life and Annuity Insurance Company other than those
allocated to the separate accounts of the ITT Hartford Life and Annuity
Insurance Company.
HOME OFFICE OF THE COMPANY: Currently located at 200 Hopmeadow Street,
Simsbury, Connecticut. All correspondence concerning the Contract should be
sent to P.O. Box 5085, Hartford, CT 06102-5085, Attn: Individual Annuity
Operations.
ITT HARTFORD: ITT Hartford Life and Annuity Insurance Company.
MAXIMUM ANNIVERSARY VALUE: A value used in determining the death benefit. It is
based on a series of calculations of Contract Values on Contract Anniversaries,
premium payments and partial surrenders, as described on page ___.
MINIMUM DEATH BENEFIT: The minimum amount payable upon the death of the
Contract Owner/Annuitant or Participant in the case of group Contracts before
annuity payments have commenced.
PARTICIPANT: (For Group Unallocated Contracts Only). Any eligible employee of
an Employer/Contract Owner participating in the Plan.
PLAN: A voluntary Plan of an Employer which qualifies for special tax treatment
under a section of the Internal Revenue Code.
PREMIUM PAYMENT: A payment made to ITT Hartford pursuant to the terms of the
Contract.
PREMIUM TAX: A tax charged by a state or municipality on Premium Payments or
Contract Values.
<PAGE>
9
SEPARATE ACCOUNT: The ITT Hartford separate account entitled "ITT Hartford Life
and Annuity Insurance Company - Putnam Capital Manager Trust Separate Account
Two".
SUB-ACCOUNT: Accounts established within the Separate Account with respect to a
Fund.
TERMINATION VALUE: The Contract Value upon termination of the Contract prior to
the Annuity Commencement Date, less any applicable Premium Taxes, the Annual
Maintenance Fee and any applicable contingent deferred sales charges.
TRUST: Putnam Capital Manager Trust.
UNALLOCATED CONTRACTS: Contracts issued to employers or such other entities as
Contract Owners with no allocation to a specific Participant, as defined herein.
The Plans will be responsible for the individual allocations.
VALUATION DAY: Every day the New York Stock Exchange is open for trading. The
value of the Separate Account is determined at the close of the New York Stock
Exchange (currently 4:00 p.m. Eastern Time) on such days.
VALUATION PERIOD: The period between the close of business on successive
Valuation Days.
VARIABLE ANNUITY: An Annuity providing for payments varying in amount in
accordance with the investment experience of the assets of the Separate Account.
<PAGE>
<TABLE>
<CAPTION>
SUMMARY
Contract Owner Transaction Expense
(All Sub Accounts)
<S> <C>
Sales Load Imposed on Purchases (as a percentage of premium payments) . . . . . . . . . . . . . . . . . . . None
Exchange Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0
Deferred Sales Load (as a percentage of amounts withdrawn)
First Year (1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
Second Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6%
Third Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
Fourth Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
Fifth Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4%
Sixth Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3%
Seventh Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2%
Eighth Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0%
Annual Contract Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $30 (2)
Annual Expenses - Separate Account
(as a percentage of average account value)
Mortality and Expense Risk 1.250%
Administration Fees 0.150%
---------
Total 1.400%
<CAPTION>
Annual Fund Operating Expense
(as a percentage of net assets)
Total Fund
Management Other Operating
Fees Expenses Expenses
-------- -------- --------
<S> <C> <C> <C>
PCM Growth and Income Fund . . . . . . . . . . . . . . . . 0.57% 0.05% 0.62%
PCM High Yield Fund. . . . . . . . . . . . . . . . . . . . 0.66% 0.08% 0.74%
PCM Global Growth Fund . . . . . . . . . . . . . . . . . . 0.60% 0.17% 0.77%
PCM Money Market Fund. . . . . . . . . . . . . . . . . . . 0.42% 0.13% 0.55%
PCM Global Asset Allocation Fund . . . . . . . . . . . . . 0.66% 0.10% 0.76%
PCM U.S. Government and High Quality Bond Fund . . . . . . 0.60% 0.07% 0.67%
PCM Utilities Growth and Income Fund . . . . . . . . . . . 0.60% 0.08% 0.68%
PCM Voyager Fund . . . . . . . . . . . . . . . . . . . . . 0.63% 0.08% 0.71%
PCM Diversified Income Fund. . . . . . . . . . . . . . . . 0.67% 0.13% 0.80%
PCM New Opportunities Fund(3). . . . . . . . . . . . . . . 0.70% 0.01% 0.71%
PCM Asia Pacific Growth Fund . . . . . . . . . . . . . . . 0.79% 0.41% 1.20%
<FN>
(1) Length of time from premium payment.
(2) The annual contract fee is a single $30 charge on a Contract. It is deducted
proportionally from the investment options in use at the time of the charge. In
the Example, the annual contract fee is approximated as a 0.08% annual asset
charge based on the experience of the Contracts.
(3) Annualized expenses.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXAMPLE
If you surrender your contract at If you annuitize at the end of the
the end of the applicable time period: applicable time period:
You would pay the following expenses You would pay the following expenses
on a $1,000 investment, assuming a 5% on a $1,000 investment, assuming a 5%
annual return on assets: annual return on assets:
------ ------- ------- -------- ------ ------ ------- --------
Sub-Account 1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
- ----------- ------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PCM Growth and Income Fund . . . . . . . $82 $116 $154 $245 $21 $66 $113 244
PCM High Yield Fund. . . . . . . . . . . 83 120 160 258 22 69 119 257
PCM Global Growth Fund . . . . . . . . . 83 121 162 261 22 70 121 260
PCM Money Market Fund. . . . . . . . . . 81 114 150 238 20 63 109 237
PCM Global Asset Allocation Fund . . . . 83 121 161 260 22 70 120 259
PCM U.S. Government and High Quality
Bond Fund. . . . . . . . . . . . . . . 82 118 157 250 21 67 116 249
PCM Utilities Growth and Income Fund . . 82 118 157 251 21 67 116 250
PCM Voyager Fund . . . . . . . . . . . . 82 119 159 254 22 68 118 253
PCM Diversified Income Fund. . . . . . . 83 122 163 264 23 71 122 263
PCM New Opportunities Fund . . . . . . . 82 119 169 254 22 68 118 253
PCM Asia Pacific Growth Fund . . . . . . 87 134 184 304 27 83 143 303
If you do not surrender your
contract:
You would pay the following expenses
on a $1,000 investment, assuming a 5%
annual return on assets:
------ ------- ------- --------
Sub-Account 1 year 3 years 5 years 10 years
- ----------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
PCM Growth and Income Fund . . . . . . . $22 $66 $114 $245
PCM High Yield Fund. . . . . . . . . . . 23 70 120 258
PCM Global Growth Fund . . . . . . . . . 23 71 122 261
PCM Money Market Fund. . . . . . . . . . 21 64 110 238
PCM Global Asset Allocation Fund . . . . 23 71 121 260
PCM U.S. Government and High Quality
Bond Fund. . . . . . . . . . . . . . . 22 68 117 250
PCM Utilities Growth and Income Fund . . 22 68 117 251
PCM Voyager Fund . . . . . . . . . . . . 22 69 119 254
PCM Diversified Income Fund. . . . . . . 23 72 123 264
PCM New Opportunities Fund . . . . . . . 22 69 119 254
PCM Asia Pacific Growth Fund . . . . . . 27 84 144 304
The purpose of this table is to assist the contract owner in understanding
various costs and expenses that a contract owner will bear directly or
indirectly. The table reflects expenses of the Separate Account and underlying
Funds. Premium taxes may also be applicable.
This EXAMPLE should not be considered a representation of passed or future
expenses and actual expenses may be greater or less than those shown.
</TABLE>
<PAGE>
10
SUMMARY
WHAT IS THE CONTRACT AND HOW MAY I PURCHASE ONE?
The Contract offered is a tax deferred Variable Annuity Contract (see "Taxation
of Annuities in General," page ___ ). Generally, the Contract is purchased by
completing an application or an order to purchase a Contract and submitting it,
along with the initial Premium Payments, to ITT Hartford for its approval. The
minimum initial Premium Payment is $1,000 with a minimum allocation to any Fund
of $500. Certain plans may make smaller initial and subsequent periodic premium
payments. Subsequent Premium Payments, if made, must be a minimum of $500. A
Contract Owner may, at any time within 10 days of delivery of a Contract sold
hereunder, return the Contract to ITT Hartford at its Home Office and the value
of the Contract (without deduction for any charges normally assessed thereunder)
will be refunded. The Contract Owner bears the investment risk during the
period prior to the Company's receipt of request for cancellation, except for
Contract Owners in Georgia, North Carolina, South Carolina, Washington, West
Virginia, Utah, and other states where required by law who will be refunded the
premiums (see "Right to Cancel Period," page ___ ).
WHO MAY PURCHASE THE CONTRACT?
Any individual, group or trust may purchase the Contracts, including any trustee
or custodian for a retirement plan which qualifies for special Federal tax
treatment under the Internal Revenue Code, including individual retirement
annuities. (See "Federal Tax Considerations" commencing on page ___ and
Appendix I commencing on page ___ .)
WHAT TYPES OF INVESTMENTS ARE AVAILABLE UNDER THE CONTRACT?
The underlying investments for the Contract are shares of Putnam Capital Manager
Trust, an open-end diversified series investment company with multiple
portfolios ("the Funds") as follows: PCM Asia Pacific Growth Fund, PCM
Diversified Income Fund, PCM Global Asset Allocation Fund, PCM Global Growth
Fund, PCM Growth and Income Fund, PCM High Yield Fund, PCM Money Market Fund,
PCM New Opportunities Fund, PCM U.S. Government and High Quality Bond Fund,
PCM Utilities Growth and Income Fund, PCM Voyager Fund, and such other Funds
as shall be offered from time to time, and the Fixed Account, or a combination
of the Funds and the Fixed Account. (See "The Funds" commencing on page ___
and "The Fixed Account" commencing on page ___ .)
<PAGE>
11
WHAT ARE THE CHARGES UNDER THE CONTRACTS?
SALES EXPENSES
There is no deduction for sales expenses from Premium Payments when made.
However, a contingent deferred sales charge may be assessed against Contract
Values when they are surrendered. (See "Contingent Deferred Sales Charges"
commencing on page .)
The length of time from receipt of a Premium Payment to the time of surrender
determines the contingent deferred sales charge. For this purpose, Premium
Payments will be deemed to be surrendered in the order in which they are
received and all surrenders will be first from Premium Payments and then from
other Contract values. The charge is a percentage of the amount withdrawn (not
to exceed the aggregate amount of the Premium Payments made). The charge is as
follows:
Length of Time
Charge from Premium Payment
------ --------------------
(Number of Years)
6% 1
6% 2
5% 3
5% 4
4% 5
3% 6
2% 7
0% 8 or more
No contingent deferred sales charge will be assessed in the event of death of
the Annuitant or Contract Owner, or upon the exercise of the withdrawal
privilege or if Contract Values are applied to an Annuity option provided for
under the Contract (except that a surrender out of Annuity Option Four will be
subject to a contingent deferred sales charge where applicable). (See
"Contingent Deferred Sales Charges" commencing on page ____.)
FREE WITHDRAWAL PRIVILEGE.
Withdrawals of up to 10% per Contract Year, on a noncumulative basis, of the
Premium Payments made to a Contract may be made without the imposition of the
contingent deferred sales charge during the first seven Contract Years. (See
"Contingent Deferred Sales Charges" commencing on page ____.) Certain plans or
programs may have different withdrawal privileges.
<PAGE>
12
MORTALITY AND EXPENSE RISKS
For assuming the mortality and expense risks under the Contract, ITT Hartford
will impose a 1.25% per annum charge against all Contract Values held in the
Sub-Accounts, (see "Mortality and Expense Risk Charge," page ___).
ANNUAL ADMINISTRATION AND MAINTENANCE FEE
The Contract provides for administration and Contract maintenance charges. For
administration, the charge is .15% per annum against all Contract Values held in
the Separate Account. For Contract maintenance, the charge is $30 annually.
(See "Administration and Maintenance Fees," page ___.) Contracts with a
Contract Value of $50,000 or more at time of Contract Anniversary will not be
assessed this fee.
PREMIUM TAXES
A deduction will be made for Premium Taxes for Contracts sold in certain states.
(See "Premium Taxes," page ___.)
CHARGES BY THE FUNDS
The Funds are subject to certain fees, charges and expenses. (See the
Prospectus for the Trust attached hereto.)
CAN I GET MY MONEY IF I NEED IT?
Subject to any applicable charges, the Contract may be surrendered, or portions
of the value of such Contract may be withdrawn, at any time prior to the Annuity
Commencement Date. However, if less than $500 remains in a Contract as a result
of a withdrawal, ITT Hartford may terminate the Contract in its entirety. (See
"Redemption/Surrender of a Contract," page ___.)
DOES THE CONTRACT PAY ANY DEATH BENEFITS?
A Minimum Death Benefit is provided in the event of death of the Annuitant or
Contract Owner or Joint Contract Owner before Annuity payments have commenced.
(See "Death Benefit,"
page ___.)
WHAT ARE THE AVAILABLE ANNUITY OPTIONS UNDER THE CONTRACT?
There are five available Annuity options under the Contract which are described
on page ___. The Annuity Commencement Date may not be deferred beyond the
Annuitant's 90th birthday except in certain states where the Annuity
Commencement Date may not be deferred beyond the Annuitant's 85th birthday.
<PAGE>
ACCUMULATION UNIT VALUES
(For an accumulation unit outstanding throughout the period)
The following information has been examined by Arthur Andersen LLP,
independent public accountants, whose report thereon is included in the
Statement of Additional information, which is incorporated by reference to
this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1994 1993
---- ----
<S> <C> <C>
VOYAGER FUND SUB-ACCOUNT
Accumulation unit value at beginning of period....................... $ 23.530 $ 10.000 (a)
Accumulation unit value at end of period............................. $ 23.445 $ 23.530
Number accumulation units outstanding at end of period (in thousands) 13,732 6,509
GROWTH AND INCOME FUND SUB-ACCOUNT
Accumulation unit value at beginning of period....................... $ 20.390 $ 10.000 (a)
Accumulation unit value at end of period............................. $ 20.178 $ 20.390
Number accumulation units outstanding at end of period (in thousands) 26,790 15,223
GLOBAL ASSET ALLOCATION SUB-ACCOUNT
Accumulation unit value at beginning of period....................... $ 16.988 $ 10.000 (a)
Accumulation unit value at end of period............................. $ 16.335 $ 16.988
Number accumulation units outstanding at end of period (in thousands) 8,665 4,491
HIGH YIELD FUND SUB-ACCOUNT
Accumulation unit value at beginning of period....................... $ 17.890 $ 10.000 (a)
Accumulation unit value at end of period............................. $ 17.476 $ 17.890
Number accumulation units outstanding at end of period (in thousands) 7,152 5,066
U.S. GOVERNMENT AND HIGH QUALITY BOND FUND SUB-ACCOUNT
Accumulation unit value at beginning of period....................... $ 16.277 $ 10.000 (a)
Accumulation unit value at end of period............................. $ 15.533 $ 16.277
Number accumulation units outstanding at end of period (in thousands) 7,585 7,254
MONEY MARKET FUND SUB-ACCOUNT
Accumulation unit value at beginning of period....................... $ 1.294 $ 10.000 (a)
Accumulation unit value at end of period............................. $ 1.325 $ 1.294
Number accumulation units outstanding at end of period (in thousands) 38,819 12,916
GLOBAL GROWTH FUND SUB-ACCOUNT
Accumulation unit value at beginning of period....................... $ 13.432 $ 10.000 (a)
Accumulation unit value at end of period............................. $ 13.119 $ 13.432
Number accumulation units outstanding at end of period (in thousands) 20,285 8,312
UTILITIES GROWTH AND INCOME FUND SUB-ACCOUNT
Accumulation unit value at beginning of period....................... $ 11.876 $ 10.000 (a)
Accumulation unit value at end of period............................. $ 10.889 $ 11.876
Number accumulation units outstanding at end of period (in thousands) 11,859 11,003
DIVERSIFIED INCOME FUND SUB-ACCOUNT
Accumulation unit value at beginning of period....................... $ 10.000 $ 10.000 (a)
Accumulation unit value at end of period............................. $ 9.622 $ 10.188
Number accumulation units outstanding at end of period (in thousands) 8,609 4,428
NEW OPPORTUNITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period....................... $ 10.000 (b)
Accumulation unit value at end of period............................. $ 10.718
Number accumulation units outstanding at end of period (in thousands) 2,699
(a) inception date, September 15, 1993.
(b) inception date, June 20, 1994.
</TABLE>
<PAGE>
13
If a Contract Owner does not elect otherwise, the Contract Value less
applicable premium taxes will be applied on the Annuity Commencement Date under
the second option to provide a life annuity with 120 monthly payments certain.
DOES THE CONTRACT OWNER HAVE ANY VOTING RIGHTS UNDER THE CONTRACT?
Contract Owners will have the right to vote on matters affecting an underlying
Fund to the extent that proxies are solicited by such Fund. If a Contract Owner
does not vote, ITT Hartford shall vote such interests in the same proportion as
shares of the Fund for which instructions have been received by ITT Hartford.
(See "Voting Rights," page ___.)
PERFORMANCE RELATED INFORMATION
The Separate Account may advertise certain performance related information
concerning its Sub-Accounts. Performance information about a Sub-Account is
based on the Sub-Account's past performance only and is no indication of future
performance.
The PCM Asia Pacific Growth Fund, PCM Diversified Income Fund, PCM Global
Asset Allocation Fund, PCM Global Growth Fund, PCM Growth and Income Fund,
PCM High Yield Fund, PCM Money Market Fund, PCM New Opportunities Fund, PCM
U.S. Government and High Quality Bond Fund and PCM Voyager Fund Sub-Accounts
may include total return in advertisements or other sales material.
When a Sub-Account advertises its total return, it will usually be calculated
for one year, five years, and ten years or some other relevant periods if the
Sub-Account has not been in existence for at least ten years. Total return is
measured by comparing the value of an investment in the Sub-Account at the
beginning of the relevant period to the value of the investment at the end of
the period (assuming the deduction of any contingent deferred sales charge which
would be payable if the investment were redeemed at the end of the period).
The PCM Growth and Income Fund, PCM High Yield Fund and PCM U.S. Government and
High Quality Bond Fund Sub-Accounts may advertise yield in addition to total
return. The yield will be computed in the following manner: The net investment
income per unit earned during a recent one month period is divided by the unit
value on the last day of the period. This figure reflects the recurring charges
at the Separate Account level including the Contract Maintenance Fee.
The PCM 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
<PAGE>
14
reinvested in Sub-Account units and thus compounded in the course of a 52-week
period. Yield reflects the recurring charges at the Separate Account level
including the Contract Maintenance Fee.
Total return at the Separate Account level includes all Contract charges: sales
charges, mortality and expense risk charges, and the Contract Maintenance Fee,
and is therefore lower than total return at the Fund level, with no comparable
charges. Likewise, yield at the Separate Account level includes all recurring
charges (except sales charges), and is therefore lower than yield at the Fund
level, with no comparable charges.
INTRODUCTION
This Prospectus has been designed to provide you with the necessary information
to make a decision on purchasing a tax deferred Variable Annuity Contract
offered by ITT Hartford and funded by the Fixed Account and/or a series of the
Putnam Separate Account. Please read the Glossary of Special Terms on pages 2
and 3 prior to reading this Prospectus to familiarize yourself with the terms
being used.
THE CONTRACT
The Putnam Capital Manager Plan is a tax deferred Variable Annuity Contract.
Payments for the Contract will be held in the Fixed Account and/or a series of
the Putnam Separate Account. Initially there are no deductions from your
Premium Payments (except for Premium Taxes, if applicable) so your entire
Premium Payment is put to work in the investment Sub-Account(s) of your choice
or the Fixed Account. Each Sub-Account invests in a different underlying Fund
with its own distinct investment objectives. You pick the Sub-Account(s) with
the investment objectives that meet your needs. You may select one or more
Sub-Accounts and/or the Fixed Account and determine the percentage of your
Premium Payment that is put into a Sub-Account or the Fixed Account. You may
also transfer assets among the Sub-Accounts and the Fixed Account so that your
investment program meets your specific needs over time. There are minimum
requirements for investing in each Sub-Account and the Fixed Account which are
described later in this Prospectus. In addition, there are certain other
limitations on withdrawals and transfers of amounts in the Sub-Accounts and the
Fixed Account as described in this prospectus. See "Charges Under the Contract"
for a description of the charges for redeeming a Contract and other charges made
under the Contract.
Generally, the Contract contains the five optional forms of Annuity described
later in this Prospectus. Options 2, 4 and 5 are available with respect to
Qualified Contracts only if the guaranteed payment period is less than the life
expectancy of the Annuitant at the time the option becomes effective. Such life
expectancy shall be computed on the basis of the mortality table prescribed by
the IRS, or if none is prescribed, the mortality table then in use by ITT
Hartford.
<PAGE>
15
The Contract Owner may select an Annuity Commencement Date and an Annuity option
which may be on a fixed or variable basis, or a combination thereof. The
Annuity Commencement Date may not be deferred beyond the Annuitant's 90th
birthday except in certain states where the Annuity Commencement Date may not be
deferred beyond the Annuitant's 85th birthday.
The Annuity Commencement Date and/or the Annuity option may be changed from time
to time, but any such change must be made at least 30 days prior to the date on
which payments are scheduled to begin. If you do not elect otherwise, payments
will begin at the Annuitant's age 90 under Option 2 with 120 monthly payments
certain (Option 1 for Contracts issued in Texas).
When an Annuity is effected under a Contract, unless otherwise specified,
Contract Values held in the Sub-Accounts will be applied to provide a Variable
Annuity based on the pro rata amount in the various Sub-Accounts. Fixed Account
Contract Values will be applied to provide a Fixed Annuity. Variable Annuity
payments will vary in accordance with the investment performance of the
Sub-Accounts you have selected. The Contract allows the Contract Owner to
change the Sub-Accounts on which variable payments are based after payments have
commenced once every three (3) months. Any Fixed Annuity allocation may not be
changed.
The Contract offered under this Prospectus may be purchased by any individual
("Non-Qualified Contract") or by an individual, trustee or custodian for a
retirement plan qualified under Sections 401(a) or 403(a) of the Internal
Revenue Code; annuity purchase plans adopted by public school systems and
certain tax-exempt organizations according to Section 403(b) of the Internal
Revenue Code; Individual Retirement Annuities adopted according to Section 408
of the Internal Revenue Code; employee pension plans established for employees
by a state, a political subdivision of a state, or an agency or instrumentality
of either a state or a political subdivision of a state, and certain eligible
deferred compensation plans as defined in Section 457 of the Internal Revenue
Code ("Qualified Contracts").
RIGHT TO CANCEL PERIOD
If you are not satisfied with your purchase you may surrender the Contract by
returning it within ten days (or longer in some states) after you receive it. A
written request for cancellation must accompany the Contract. In such event,
ITT Hartford will, without deduction for any charges normally assessed
thereunder, pay you an amount equal to the sum of (i) the difference between the
Premium Payment and the amounts allocated to the Sub-Account(s) and/or the Fixed
Account under the Contract and (ii) the Contract Value on the date of surrender
attributable to the amounts so allocated. You bear the investment risk during
the period prior to the Company's receipt of request for cancellation. ITT
Hartford will refund the premium paid only for individual retirement annuities
(if returned within seven days of receipt) and in those states where required by
law.
<PAGE>
16
THE SEPARATE ACCOUNT
The Separate Account was established on May 20, 1991, in accordance with
authorization by the Board of Directors of ITT Hartford. It is the Separate
Account in which ITT Hartford sets aside and invests the assets attributable to
variable annuity Contracts, including the Contracts sold under this Prospectus.
Although the Separate Account is an integral part of ITT Hartford, it is
registered as a unit investment trust under the Investment Company Act of 1940.
This registration does not, however, involve supervision by the Commission of
the management or the investment practices or policies of the Separate Account
or ITT Hartford. The Separate Account meets the definition of "separate
account" under federal securities law.
Under Connecticut law, the assets of the Separate Account attributable to the
Contracts offered under this Prospectus are held for the benefit of the owners
of, and the persons entitled to payments under, those Contracts. Income, gains,
and losses, whether or not realized, from assets allocated to the Separate
Account, are, in accordance with the Contracts, credited to or charged against
the Separate Account. Also, the assets in the Separate Account are not
chargeable with liabilities arising out of any other business ITT Hartford may
conduct. So Contract Values allocated to the Sub-Accounts will not be affected
by the rate of return of ITT Hartford's General Account, nor by the investment
performance of any of ITT Hartford's other separate accounts. However, the
obligations arising under the Contracts are general obligations of ITT Hartford.
Your investment in the Separate Account is allocated to one or more Sub-Accounts
as per your specifications. Each Sub-Account is invested exclusively in the
shares of one underlying Fund. Net Premium Payments and proceeds of transfers
between Funds are applied to purchase shares in the appropriate Fund at net
asset value determined as of the end of the Valuation Period during which the
payments were received or the transfer made. All distributions from the Funds
are reinvested at net asset value. The value of your investment will therefore
vary in accordance with the net income and the market value of the portfolios of
the underlying Fund(s). During the Variable Annuity payout period, both your
Annuity payments and reserve values will vary in accordance with these factors.
ITT Hartford does not guarantee the investment results of the Funds or any of
the underlying investments. There is no assurance that the value of a Contract
during the years prior to retirement or the aggregate amount of the Variable
Annuity payments will equal the total of Premium Payments made under the
Contract. Since each underlying Fund has different investment objectives and
policies, each is subject to different risks. These risks are more fully
described in the accompanying Trust Prospectus.
ITT Hartford reserves the right, subject to compliance with the law, to
substitute the shares of any other registered investment company for the shares
of any Fund held by the Separate Account. Substitution may occur only if shares
of the Fund(s) become unavailable or if there are changes in applicable law or
<PAGE>
17
interpretations of law. Current law requires notification to you of any such
substitution and approval of the Commission.
The Separate Account may be subject to liabilities arising from a Series of the
Separate Account whose assets are attributable to other variable annuity
Contracts or variable life insurance policies offered by the Separate Account
which are not described in this Prospectus.
THE FIXED ACCOUNT
THAT PORTION OF THE CONTRACT RELATING TO THE FIXED ACCOUNT IS NOT REGISTERED
UNDER THE SECURITIES ACT OF 1933 ("1933 ACT") AND THE FIXED ACCOUNT IS NOT
REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940
("1940 ACT"). ACCORDINGLY, NEITHER THE FIXED ACCOUNT NOR ANY INTERESTS THEREIN
ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT,
AND THE DISCLOSURE REGARDING THE FIXED ACCOUNT HAS NOT BEEN REVIEWED BY THE
STAFF OF THE SECURITIES AND EXCHANGE COMMISSION. THE FOLLOWING DISCLOSURE ABOUT
THE FIXED ACCOUNT MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF
THE FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND COMPLETENESS OF
DISCLOSURE.
Premium Payments and Contract Values allocated to the Fixed Account become a
part of the general assets of ITT Hartford. ITT Hartford invests the assets of
the General Account in accordance with applicable laws governing investments of
Insurance Company General Accounts.
Currently, ITT Hartford guarantees that it will credit interest at a rate of not
less than 3% per year, compounded annually, to amounts allocated to the Fixed
Account under the Contracts. However, ITT Hartford reserves the right to change
the rate according to state insurance law. ITT Hartford may credit interest at
a rate in excess of 3% per year; however, ITT Hartford is not obligated to
credit any interest in excess of 3% per year. There is no specific formula for
the determination of excess interest credits. Some of the factors that the
Company may consider in determining whether to credit excess interest to amounts
allocated to the Fixed Account and amount thereof, are general economic trends,
rates of return currently available and anticipated on the Company's
investments, regulatory and tax requirements and competitive factors. ANY
INTEREST CREDITED TO AMOUNTS ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF 3% PER
YEAR WILL BE DETERMINED IN THE SOLE DISCRETION OF THE COMPANY. THE OWNER
ASSUMES THE RISK THAT INTEREST CREDITED TO FIXED ACCOUNT ALLOCATIONS MAY NOT
EXCEED THE MINIMUM GUARANTEE OF 3% FOR ANY GIVEN YEAR.
<PAGE>
18
THE COMPANY
ITT Hartford Life and Annuity Insurance Company, formerly ITT Hartford Insurance
Corporation, is domiciled in the State of Wisconsin at Suite 2100, 111 East
Wisconsin Avenue, Milwaukee, Wisconsin 53202 and with its principal office at
505 Highway 169 North, Minneapolis, Minnesota 55441; however, its mailing
address is P.O. Box 5085, Hartford Connecticut 06102-5085; Attn: Individual
Annuity Operations.
ITT Hartford was incorporated in January 9, 1956 and commenced business July 1,
1965. It is a stock life insurance company engaged in the business of writing
both individual and group life insurance and annuities in all states including
the District of Columbia, except New York.
ITT Hartford is a wholly owned subsidiary of Hartford Life Insurance Company.
ITT Hartford is ultimately 100% owned by Hartford Fire Company, one of the
largest multiple lines insurance carriers in the United States.
ITT Hartford has an A++ (superior) rating from A.M. Best and
Company, Inc. ITT Hartford has an AA+ rating from Standard & Poor's
and Duff and Phelps highest rating (AAA) on the basis of its claims paying
ability.
These ratings do not apply to the performance of the Separate Account. However,
the Contractual obligations under this variable annuity are the general
corporate obligations of ITT Hartford. These ratings do apply to ITT Hartford's
ability to meet its insurance obligations under the Contract.
THE FUNDS
The underlying investment for the Contracts are shares of Putnam Capital Manager
Trust, an open-end diversified series investment company with multiple
portfolios ("Funds"). The underlying Funds corresponding to each Sub-Account
and their investment objectives are described below. ITT Hartford reserves the
right, subject to compliance with the law, to offer additional funds with
differing investment objectives. The Funds may not be available in all states.
PCM ASIA PACIFIC GROWTH FUND
Seeks capital appreciation by investing primarily in securities of companies
located in Asia and in the Pacific Basin.
PCM DIVERSIFIED INCOME FUND
Seeks high current income consistent with capital preservation by investing in
the following three sectors of the fixed income securities markets: U.S.
government sector, high yield sector, and international sector.
<PAGE>
19
PCM GLOBAL ASSET ALLOCATION FUND
Seeks a high level of long-term total return consistent with preservation of
capital by investing in U.S. equities, international equities, U.S. fixed income
securities, and international fixed income securities.
PCM GLOBAL GROWTH FUND
Seeks capital appreciation through a globally diversified common stock
portfolio.
PCM GROWTH AND INCOME FUND
Seeks capital growth and current income by investing primarily in common stocks
that offer potential for capital growth, current income, or both.
PCM HIGH YIELD FUND
Seeks high current income by investing primarily in high-yielding, lower-rated
fixed income securities (commonly referred to as junk bonds), constituting a
diversified portfolio which is believed not to involve undue risk to income or
principal. Capital growth is a secondary objective when consistent with the
objectives of seeking high current income. (See the Special Considerations for
Investments in High Yield Securities disclosed in the Trust Prospectus.)
PCM MONEY MARKET FUND
Seeks to achieve as high a level of current income as is consistent with
liquidity and preservation of capital by investing in money market securities.
PCM NEW OPPORTUNITIES FUND
Seeks long-term capital appreciation by investing principally in common stocks
of companies in sectors of the economy which may possess above average long-term
growth potential.
PCM U.S. GOVERNMENT AND HIGH QUALITY BOND FUND
Seeks current income consistent with preservation of capital through investment
in securities issued or guaranteed as to principal and interest by the U.S.
Government or by its agencies or instrumentalities and in other debt obligations
rated at least A by Standard & Poor's or Moody's or, if not rated, determined by
Putnam Investment to be of comparable quality.
<PAGE>
20
PCM VOYAGER FUND
Seeks capital appreciation primarily from a portfolio of common stocks which are
believed to have potential for capital appreciation which is significantly
greater than that of market averages.
PCM UTILITIES GROWTH AND INCOME FUND
Seeks capital growth and current income by concentrating its investments in
securities issued by Companies in the public utilities industries.
The PCM Asia Pacific Growth Fund, PCM Diversified Income Fund, PCM Global
Growth Fund, PCM Growth and Income Fund, PCM High Yield Fund, PCM Money
Market Fund, PCM New Opportunities Fund, PCM Utilities Growth and Income
Fund, and PCM Voyager Fund are generally managed in styles similar to other
open-end investment companies which are managed by Putnam Investment and
whose shares are generally offered to the public. These other Putnam funds
may, however, employ different investment practices and may invest in
securities different from those in which their counterpart Funds invest, and
consequently will not have identical portfolios or experience identical
investment results.
The Funds are available only to serve as the underlying investment for variable
annuity and variable life Contracts. A full description of the Funds, their
investment objectives, policies and restrictions, risks, charges and expenses
and other aspects of their operation is contained in the accompanying Trust
prospectus which should be read in conjunction with this prospectus before
investing, and in the Trust Statement of Additional Information which may be
ordered without charge from Putnam Investor Services, Inc.
It is conceivable that in the future it may be disadvantageous for variable
annuity separate accounts and variable life insurance separate accounts to
invest in the Funds simultaneously. Although ITT Hartford and the Funds do not
currently foresee any such disadvantages either to variable annuity Contract
Owners or to variable life insurance Policy Owners, the Trust's Board of
Trustees would monitor events in order to identify any material conflicts
between such Contract Owners and Policy Owners and to determine what action, if
any, should be taken in response thereto. If the Board of Trustees of the Funds
were to conclude that separate funds should be established for variable life and
variable annuity separate accounts, the variable annuity Contract Owners would
not bear any expenses attendant upon establishment of such separate funds.
Putnam Investment Management, Inc. ("Putnam Investment"), One Post Office
Square, Boston, Massachusetts, 02109, serves as the investment manager for the
Funds. Two affiliates, The Putnam Advisory Company, Inc. and Putnam Capital
Management, Inc., manage domestic and foreign institutional accounts and mutual
funds. Putnam Investment and its affiliates are wholly-owned subsidiaries of
<PAGE>
21
Marsh & McLennan Companies, Inc., a publicly owned holding company whose
principal businesses are international insurance brokerage and employee
benefit consulting.
Subject to the general oversight of the Trustees of the Trust, Putnam Investment
manages the Funds' portfolios in accordance with their stated investment
objectives and policies, makes investment decisions for the Funds, places orders
to purchase and sell securities on behalf of the Funds, and administers the
affairs of the Funds. For its services, the Funds pay Putnam Investment a
quarterly fee. See the accompanying Trust prospectus for a more complete
description of Putnam Investment and the respective fees of the Funds.
OPERATION OF THE CONTRACT/ACCUMULATION PERIOD
PREMIUM PAYMENTS
The balance of each initial Premium Payment remaining after the deduction of any
applicable Premium Tax is credited to your Contract within two business days of
receipt of a properly completed application or an order to purchase a Contract
and the initial Premium Payment by ITT Hartford at its Home Office, P.O. Box
5085, Hartford, CT 06102-5085. It will be credited to the Sub-Account(s)
and/or the Fixed Account in accordance with your election. If the application
or other information is incomplete when received, the balance of each initial
Premium Payment, after deduction of any applicable Premium Tax, will be credited
to the Sub-Account(s) or the Fixed Account within five business days of receipt
or the entire Premium Payment will be immediately returned unless you have been
informed of the delay and request that the Premium Payment not be returned.
Subsequent Premium Payments are priced on the Valuation Day received by ITT
Hartford in its Home Office or other designated administrative offices.
The number of Accumulation Units in each Sub-Account to be credited to a
Contract will be determined by dividing the portion of the Premium Payment being
credited to each Sub-Account by the value of an Accumulation Unit in that
Sub-Account on that date.
The minimum initial Premium Payment is $1,000. Subsequent Premium Payments, if
made, must be a minimum of $500. Certain plans may make smaller initial and
subsequent periodic payments. Each Premium Payment may be split among the
various Sub-Accounts and the Fixed Account subject to minimum amounts then in
effect.
VALUE OF ACCUMULATION UNITS
The Accumulation Unit value for each Sub-Account will vary to reflect the
investment experience of the applicable Fund and will be determined on each
Valuation Day by multiplying the Accumulation Unit value of the particular
Sub-Account on the preceding Valuation Day by a "Net Investment Factor" for
<PAGE>
22
that Sub-Account for the Valuation Period then ended. The "Net Investment
Factor" for each of the Sub-Accounts is equal to the net asset value per share
of the corresponding Fund at the end of the Valuation Period (plus the per
share amount of any dividends or capital gains distributed by that Fund if the
ex-dividend date occurs in the Valuation Period then ended) divided by the net
asset value per share of the corresponding Fund at the beginning of the
Valuation Period. You should refer to the Trust prospectus which accompanies
this prospectus for a description of how the assets of each Fund are valued
since each determination has a direct bearing on the Accumulation Unit value
of the Sub-Account and therefore the value of a Contract. The Accumulation
Unit value is affected by the performance of the underlying Fund(s), expenses
and deduction of the charges described in this Prospectus.
The shares of the Fund are valued at net asset value on each Valuation Day. A
description of the valuation methods used in valuing Fund shares may be found in
the accompanying prospectus of the Trust.
VALUE OF THE FIXED ACCOUNT
ITT Hartford will determine the value of the Fixed Account by crediting interest
to amounts allocated to the Fixed Account. The minimum Fixed Account interest
rate is 3%, compounded annually. ITT Hartford may credit a lower minimum
interest rate according to state law. ITT Hartford also may credit interest at
rates greater than the minimum Fixed Account interest rate.
VALUE OF THE CONTRACT
The value of the Sub-Account investments under your Contract at any time prior
to the commencement of Annuity payments can be determined by multiplying the
total number of Accumulation Units credited to your Contract in each Sub-Account
by the then current Accumulation Unit values for the applicable Sub-Account.
The value of the Fixed Account under your Contract will be the amount allocated
to the Fixed Account plus interest credited. You will be advised at least
semi-annually of the number of Accumulation Units credited to each Sub-Account,
the current Accumulation Unit values, the Fixed Account Value, and the total
value of your Contract.
TRANSFERS AMONG SUB-ACCOUNTS
You may transfer the values of your Sub-Account allocations from one or more
Sub-Accounts to another free of charge. Transfers by telephone may be made by
calling (800) 521-0538. Telephone transfers may not be permitted by some states
for their residents who purchase variable annuities. However, ITT Hartford
reserves the right to limit the number of transfers to twelve (12) per Contract
Year, with no two (2) transfers occurring on consecutive Valuation Days.
<PAGE>
23
ITT Hartford may permit the Contract Owner to preauthorize transfers among Sub-
Accounts and between the Sub-Accounts and the Fixed Account under certain
circumstances. The policy of ITT Hartford and its agents and affiliates is
that they will not be responsible for losses resulting from acting upon
telephone requests reasonably believed to be genuine. ITT Hartford will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine; otherwise, ITT Hartford may be liable for any losses due to
unauthorized or fraudulent instructions. The procedures ITT Hartford follows
for transactions initiated by telephone include requirements that callers on
behalf of a Contract Owner identify themselves and the Contract Owner by name
and social security number. All transfer instructions by telephone are tape
recorded.
The right to reallocate Contract Values between the Sub-Accounts is subject to
modification if ITT Hartford determines, in its sole discretion, that the
exercise of that right by one or more Contract Owners is, or would be, to the
disadvantage of other Contract Owners. Any modification could be applied to
transfers to or from some or all of the Sub-Accounts and could include, but not
be limited to, the requirement of a minimum time period between each transfer,
not accepting transfer requests of an agent acting under a power of attorney on
behalf of more than one Contract Owner, or limiting the dollar amount that may
be transferred between the Sub-Accounts and the Fixed Account by a Contract
Owner at any one time. Such restrictions may be applied in any manner
reasonably designed to prevent any use of the transfer right which is considered
by ITT Hartford to be to the disadvantage of other Contract Owners.
Transfers between the Sub-Accounts may be made both before and after Annuity
payments commence (limited to once a quarter) provided that the minimum
allocation to any Sub-Account may not be less than $500. No minimum balance is
presently required in any Sub-Account.
TRANSFERS BETWEEN THE FIXED ACCOUNT AND THE SUB-ACCOUNTS
Subject to the restrictions set forth above, transfers from the Fixed Account
into a Sub-Account may be made at any time during the Contract Year. The
maximum amount which may be transferred from the Fixed Account during any
Contract Year is the greater of 30% of the Fixed Account balance as of the last
Contract Anniversary or the greatest amount of any prior transfer from the Fixed
Account. If ITT Hartford permits preauthorized transfers from the Fixed Account
to the Sub-Accounts, this restriction is inapplicable. However, if any interest
rate is renewed at a rate at least one percentage point less than the previous
rate, the Contract Owner may elect to transfer up to 100% of the funds receiving
the reduced rate within sixty days of notification of the interest rate
decrease. Generally, transfers may not be made from any Sub-Account into the
Fixed Account for the six-month period following any transfer from the Fixed
Account into one or more of the Sub-Accounts. ITT Hartford reserves the right
to defer transfers from the Fixed Account for up to six months from the date of
request.
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24
REDEMPTION/SURRENDER OF A CONTRACT
At any time prior to the Annuity Commencement Date, you have the right, subject
to any IRS provisions applicable thereto, to surrender the value of the Contract
in whole or in part. Under any of the Annuity options excluding Options 4 and
5, no surrenders are permitted after Annuity payments commence. Only full
surrenders are allowed out of Option 4 and any such surrender will be subject to
contingent deferred sales charges, if applicable. Full or partial withdrawals
may be made from Option 5 at any time and contingent deferred sales charges will
not be applied.
FULL SURRENDERS. At any time prior to the Annuity Commencement Date (and after
the Annuity Commencement Date with respect to values applied to Option 4), the
Contract Owner has the right to terminate the Contract. In such event, the
Termination Value of the Contract may be taken in the form of a lump sum cash
settlement. The Termination Value of the Contract is equal to the Contract
Value less any applicable Premium Taxes, the Contract Maintenance Fee, if
applicable, and any applicable contingent deferred sales charges. The
Termination Value may be more or less than the amount of the Premium Payments
made to a Contract.
PARTIAL SURRENDERS. The Contract Owner may make a partial surrender of Contract
Values at any time prior to the Annuity Commencement Date so long as the amount
surrendered is at least equal to the minimum amount rules then in effect.
Additionally, if the remaining Contract Value following a surrender is less than
$500 (and, for Texas Contracts, there were no Premium Payments made during the
preceding two Contract Years), ITT Hartford may terminate the Contract and pay
the Termination Value.
Certain plans or programs may have different withdrawal privileges. ITT
Hartford may permit the Contract Owner to preauthorize partial surrenders
subject to certain limitations then in effect.
THERE ARE CERTAIN RESTRICTIONS ON SECTION 403(B) TAX SHELTERED ANNUITIES. AS OF
DECEMBER 31, 1988, ALL SECTION 403(B) ANNUITIES HAVE LIMITS ON FULL AND PARTIAL
SURRENDERS. CONTRIBUTIONS TO THE CONTRACT MADE AFTER DECEMBER 31, 1988 AND ANY
INCREASES IN CASH VALUE AFTER DECEMBER 31, 1988 MAY NOT BE DISTRIBUTED UNLESS
THE CONTRACT OWNER/EMPLOYEE HAS A) ATTAINED AGE 59 1/2, B) TERMINATED
EMPLOYMENT, C) DIED, D) BECOME DISABLED OR E) EXPERIENCED FINANCIAL HARDSHIP.
DISTRIBUTIONS DUE TO FINANCIAL HARDSHIP OR SEPARATION FROM SERVICE MAY STILL BE
SUBJECT TO A PENALTY TAX OF 10%.
ITT HARTFORD WILL NOT ASSUME ANY RESPONSIBILITY IN DETERMINING WHETHER A
WITHDRAWAL IS PERMISSIBLE, WITH OR WITHOUT TAX PENALTY, IN ANY PARTICULAR
SITUATION; OR IN MONITORING WITHDRAWAL REQUESTS REGARDING PRE OR POST JANUARY 1,
1989 ACCOUNT VALUES.
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25
ANY SUCH FULL OR PARTIAL SURRENDER DESCRIBED ABOVE MAY RESULT IN ADVERSE TAX
CONSEQUENCES TO THE CONTRACT OWNER. THE CONTRACT OWNER, THEREFORE, SHOULD
CONSULT WITH HIS TAX ADVISER BEFORE UNDERTAKING ANY SUCH SURRENDER. (SEE
"FEDERAL TAX CONSIDERATIONS" COMMENCING ON PAGE ___.)
Payment on any request for a full or partial surrender from the Sub-Accounts
and/or the Fixed Account will be made as soon as possible and in any event no
later than seven days after the written request is received by ITT Hartford at
its Home Office, Attn: Individual Annuity Operations, P.O. Box 5085, Hartford,
CT 06102-5085. ITT Hartford may defer payment of any amounts from the Fixed
Account for up to six months from the date of the request for surrender. If
ITT Hartford defers payment for more than 30 days, ITT Hartford will pay
interest of at least 3% per annum on the amount deferred. In requesting a
partial withdrawal you should specify the Fixed Account and/or the
Sub-Account(s) from which the partial withdrawal is to be taken. Otherwise,
such withdrawal and any applicable contingent deferred sales charges will be
effected on a pro rata basis according to the value in the Fixed Account and
each Sub-Account under a Contract. Within this context, the contingent deferred
sales charges are taken from the Premium Payments in the order in which they
were received: from the earliest Premium Payments to the latest Premium
Payments. (See "Contingent Deferred Sales Charges," page ___.)
DEATH BENEFIT
The Contracts provide that in the event the Annuitant dies before the Annuity
Commencement Date, the Contingent Annuitant will become the Annuitant. If the
Annuitant dies before the Annuity Commencement Date and either (a) there is no
designated Contingent Annuitant, (b) the Contingent Annuitant predeceases the
Annuitant, or (c) if any Contract Owner dies before the Annuity Commencement
Date, the Beneficiary as determined under the Contract Control Provisions, will
receive Minimum Death Benefit as determined on the date of receipt of due proof
of death by ITT Hartford in its Home Office. With regard to Joint Contract
Owners, at the first death of a Joint Contract Owner prior to the Annuity
Commencement Date, the Beneficiary will be the surviving Contract Owner
notwithstanding that the beneficiary designation may be different.
GUARANTEED DEATH BENEFIT - Upon death prior to the Annuity Commencement Date of
the Annuitant or Contract Owner, as applicable, the Beneficiary will receive the
greatest of (a) the Contract Value determined as of the day written proof of
death of such person is received by ITT Hartford, or (b) 100% of the total
Premium Payments made to such Contract, reduced by any prior surrenders, or (c)
the Maximum Anniversary Value immediately preceding the date of death, increased
by the dollar amount of any partial surrenders.
The Maximum Anniversary Value is equal to the greatest Anniversary Value
attained from the following:
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26
As of the date of receipt of due proof of death, the Company will calculate an
Anniversary Value for each Contract Anniversary prior to the deceased's attained
age 81. The Anniversary Value is equal to the Contract Value on a Contract
Anniversary, increased by the dollar amount of any premium payment made since
that anniversary and reduced by the dollar amount of any partial surrenders
since that anniversary.
PAYMENT OF DEATH BENEFIT - Death Benefit proceeds will remain invested in the
Separate Account in accordance with the allocation instructions given by the
Certificate Owner until the proceeds are paid or ITT Hartford receives new
instructions from the Beneficiary. The Death Benefit may be taken in one sum,
to be paid within 7 days after the date Due Proof of Death is received, or under
any of the settlement options then being offered by the Company provided,
however, that: (a) in the event of the death of any Contract Owner prior to the
Annuity Commencement Date, the entire interest in the Contract will be
distributed within 5 years after the death of the Contract Owner or, if the
benefit is payable over a period not extending beyond the life expectancy of the
Beneficiary or over the life of the Beneficiary, such distribution must commence
within one year of the date of death, and (b) in the event of the death of any
Contract Owner or Annuitant which occurs on or after the Annuity Commencement
Date, any remaining interest in the Contract will be paid at least as rapidly as
under the method of distribution in effect at the time of death.
Notwithstanding the foregoing, in the event of the Contract Owner's death where
the sole Beneficiary is the spouse of the Contract Owner and the Annuitant or
Contingent Annuitant is living, such spouse may elect, in lieu of receiving the
death benefit, to be treated as the Contract Owner. The proceeds due on the
death may be applied to provide variable payments, fixed payments, or a
combination of variable and fixed payments.
If the Contract is owned by a corporation or other non-individual, the Death
Benefit payable upon the death of the Annuitant prior to the Annuity
Commencement Date will be payable only as one sum or under the same settlement
options and in the same manner as if an individual Contract Owner died on the
date of the Annuitant's death.
There may be postponement in the payment of Death Benefits whenever (a) the New
York Stock Exchange is closed, except for holidays or weekends, or trading on
the New York Stock Exchange is restricted as determined by the Securities and
Exchange Commission; (b) the Securities and Exchange Commission permits
postponement and so orders; or (c) the Securities and Exchange Commission
determines that an emergency exists making valuation of the amounts or disposal
of securities not reasonably practicable.
GROUP UNALLOCATED CONTRACTS - For Group Unallocated Contracts ITT Hartford
requires that detailed accounting of cumulative purchase payments, cumulative
gross surrenders, and current Contract Value attached to each Plan Participant
be submitted on an annual basis by the Contract Owner. Failure to submit
accurate data satisfactory to ITT Hartford will give ITT Hartford the right to
terminate this extension of benefits.
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27
CHARGES UNDER THE CONTRACT
CONTINGENT DEFERRED SALES CHARGES
There is no deduction for sales expenses from Premium Payments when made.
However, a contingent deferred sales charge may be assessed against Contract
Values when they are surrendered.
The length of time from receipt of a Premium Payment to the time of surrender
determines the contingent deferred sales charge. Premium payments will be
deemed to be surrendered in the order in which they were received.
DURING THE FIRST SEVEN CONTRACT YEARS
During the first seven Contract Years, all surrenders will be first from Premium
Payments and then from other Contract Values. If an amount equal to all premium
payments has been surrendered, a contingent deferred sales charge will not be
assessed against the surrender of the remaining Contract Value.
AFTER THE SEVENTH CONTRACT YEAR
After the seventh Contract Year, all surrenders will first be from earnings and
then from premium payments. A contingent deferred sales charge will not be
assessed against the surrender of earnings. If an amount equal to all earnings
has been surrendered, a contingent deferred sales charge will not be assessed
against premium payments received more than seven years prior to surrender, but
will be assessed against premium payments received less than seven years prior
to surrender.
The charge is a percentage of the amount withdrawn (not to exceed the aggregate
amount of the Premium Payments made) and equals:
Charge Length of Time From Premium Payment
------ -----------------------------------
(Number of Years)
6% 1
6% 2
5% 3
5% 4
4% 5
3% 6
2% 7
0% 8 or more
The contingent deferred sales charges are used to cover expenses relating to the
sale and distribution of the Contracts, including commissions paid to any
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28
distribution organization and its sales personnel, the cost of preparing sales
literature and other promotional activities. To the extent that these charges
do not cover such distribution expenses, the expenses will be borne by ITT
Hartford from its general assets, including surplus. The surplus might include
profits resulting from unused mortality and expense risk charges.
During the first seven Contract Years, on a non-cumulative basis, a Contract
Owner may make a partial surrender of Contract Values of up to 10% of the
aggregate Premium Payments made to the Contract (as determined on the date of
the requested withdrawal) without the application of the contingent deferred
sales charge. After the seventh Contract Year, the Contract Owner may make a
partial surrender of 10% of premium payments made during the seven years prior
to the surrender and 100% of the Contract Value less the premium payments made
during the seven years prior to the surrender. The amounts not subject to sales
charges are known as the Annual Withdrawal Amount. The Annual Withdrawal
Amount is the amount which can be withdrawn in any Contract Year prior to
incurring surrender charges. An Extended Withdrawal Privilege rider allows an
Annuitant who attains age 70 1/2 under a Qualified Plan to withdraw an amount in
excess of the Annual Withdrawal Amount to comply with IRS minimum distribution
rules.
The contingent deferred sales charges which cover expenses relating to the sale
and distribution of the Contracts may be reduced for certain sales of the
Contracts under circumstances which may result in savings of such sales and
distribution expenses. Therefore, the contingent deferred sales charges may be
reduced if the Contracts are sold to certain employee and professional groups.
In addition, there may be other circumstances of which ITT Hartford is not
presently aware which could result in reduced sales or distribution expenses.
Reductions in these charges will not be unfairly discriminatory against any
Contract Owner.
ITT Hartford may offer certain employer sponsored savings plans, in its
discretion reduced fees and charges including, but not limited to, the
contingent deferred sales charges, the mortality and expense risk charge and the
maintenance fee for certain sales under circumstances which may result in
savings of certain costs and expenses. Reductions in these fees and charges
will not be unfairly discriminatory against any Contract Owner.
MORTALITY AND EXPENSE RISK CHARGE
Although Variable Annuity payments made under the Contracts will vary in
accordance with the investment performance of the underlying Fund shares held in
the Sub-Account(s), the payments will not be affected by (a) ITT Hartford's
actual mortality experience among Annuitants before or after the Annuity
Commencement Date or (b) ITT Hartford's actual expenses, if greater than the
deductions provided for in the Contracts because of the expense and mortality
undertakings by ITT Hartford.
For assuming these risks under the Contracts, ITT Hartford will make a daily
charge at the rate of 1.25% per annum against all Contract Values held in the
Sub-Accounts during the life of the Contract, including the payout period,
(estimated at .90% for mortality and .35% for expense).
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29
The mortality undertaking provided by ITT Hartford under the Contracts, assuming
the selection of one of the forms of life Annuities, is to make monthly Annuity
payments (determined in accordance with the 1983a Individual Annuity Mortality
Table 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. ITT Hartford also assumes the liability for payment of a
minimum death benefit under the Contract.
The mortality undertakings are based on ITT Hartford's determination of expected
mortality rates among all Annuitants. If actual experience among Annuitants
during the Annuity payment period deviates from ITT Hartford's actuarial
determination of expected mortality rates among Annuitants because, as a group,
their longevity is longer than anticipated, ITT Hartford must provide amounts
from its general funds to fulfill its Contract obligations. In that event, a
loss will fall on ITT Hartford. Also, in the event of the death of an Annuitant
or Contract Owner before the commencement of Annuity payments, whichever is
earlier, ITT Hartford can, in periods of declining value, experience a loss
resulting from the assumption of the mortality risk relative to the minimum
death benefit.
In providing an expense undertaking, ITT Hartford assumes the risk that the
contingent deferred sales charges and the Administration and Maintenance Fees
for maintaining the Contracts prior to the Annuity Commencement Date may be
insufficient to cover the actual cost of providing such items.
ADMINISTRATION AND MAINTENANCE FEES
ITT Hartford will deduct certain fees from Contract Values to reimburse it for
expenses relating to the administration and maintenance of the Contract and the
Fixed Account. For Contract maintenance, ITT Hartford will deduct an annual fee
of $30 on each Contract Anniversary on or before the Annuity Commencement Date.
The deduction will be made pro rata according to the value in each Sub-Account
and the Fixed Account under a Contract. If during a Contract Year the Contract
is surrendered for its full value, ITT Hartford will deduct the Contract
Maintenance Fee at the time of such surrender. For administration, ITT Hartford
makes a daily charge at the rate of .15% per annum against all Contract Values
held in the Separate Account during both the accumulation and annuity phases of
the Contract. There is not necessarily a relationship between the amount of
administrative charge imposed on a given Contract and the amount of expenses
that may be attributable to that Contract; expenses may be more or less than the
charge.
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30
The types of expenses incurred by the Separate Account include, but are not
limited to, expenses of issuing the Contract and expenses for confirmations,
Contract quarterly statements, processing of transfers and surrenders,
responding to Contract Owner inquiries, reconciling and depositing cash
receipts, calculation and monitoring daily Sub-Account unit values, Separate
Account reporting, including semi-annual and annual reports and mailing and
tabulation of shareholder proxy solicitations.
You should refer to the Trust prospectus for a description of deductions and
expenses paid out of the assets of the Trust's portfolios.
PREMIUM TAXES
A deduction is also made for Premium Tax, if applicable, imposed by a state or
other governmental entity. Certain states impose a Premium Tax, currently
ranging up to 3.5%. Some states assess the tax at the time purchase payments
are made; others assess the tax at the time of annuitization. ITT Hartford will
pay Premium Taxes at the time imposed under applicable law. At its sole
discretion, ITT Hartford may deduct Premium Taxes at the time ITT Hartford pays
such taxes to the applicable taxing authorities, at the time the Contract is
surrendered, or at the time the Contract annuitizes.
ANNUITY BENEFITS
You select an Annuity Commencement Date and an Annuity option which may be on a
fixed or variable basis, or a combination thereof. The Annuity Commencement
Date will not be deferred beyond the Annuitant's 90th birthday except for
certain states where deferral past age 85 is not permitted. The Annuity
Commencement Date and/or the Annuity option may be changed from time to time,
but any change must be at least 30 days prior to the date on which Annuity
payments are scheduled to begin. The Contract allows the Contract Owner to
change the Sub-Accounts on which variable payments are based after payments have
commenced once every three (3) months. Any Fixed Annuity allocation may not be
changed.
ANNUITY OPTIONS
The Contract contains the five optional Annuity forms described below. Options
2, 4 and 5 are available to Qualified Contracts only if the guaranteed payment
period is less than the life expectancy of the Annuitant at the time the option
becomes effective. Such life expectancy shall be computed on the basis of the
mortality table prescribed by the IRS, or if none is prescribed, the mortality
table then in use by the ITT Hartford. With respect to Non-Qualified Contracts,
if you do not elect otherwise, payments in most states will automatically begin
at the Annuitant's age 90 (with the exception of states that do not allow
deferral past age 85) under Option 2 with 120 monthly payments certain. For
Qualified Contracts and Contracts issued in Texas, if you do not elect
otherwise, payments will begin automatically at the Annuitant's age 90 under
Option 1 to provide a life Annuity.
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Under any of the Annuity options excluding Options 4 and 5, no surrenders are
permitted after Annuity payments commence. Only full surrenders are allowed out
of Option 4 and any such surrender will be subject to contingent deferred sales
charges, if applicable. Full or partial withdrawals may be made from Option 5
at any time and contingent deferred sales charges will not be applied.
Option 1: Life Annuity
A life Annuity is an Annuity payable during the lifetime of the Annuitant and
terminating with the last payment preceding the death of the Annuitant. This
option offers the largest payment amount of any of the life Annuity options
since there is no guarantee of a minimum number of payments nor a provision for
a death benefit payable to a Beneficiary.
It would be possible under this option for an Annuitant to receive only one
Annuity payment if he died prior to the due date of the second Annuity payment,
two if he died before the date of the third Annuity payment, etc.
Option 2: Life Annuity with 120, 180 or 240 Monthly Payments Certain
This Annuity option is an Annuity payable monthly during the lifetime of an
Annuitant with the provision that payments will be made for a minimum of 120,
180 or 240 months, as elected. If, at the death of the Annuitant, payments have
been made for less than the minimum elected number of months, then the present
value as of the date of the Annuitant's death, of any remaining guaranteed
payments will be paid in one sum to the Beneficiary or Beneficiaries designated
unless other provisions have been made and approved by ITT Hartford.
Option 3: Joint and Last Survivor Annuity
An Annuity payable monthly during the joint lifetime of the Annuitant and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
Based on the options currently offered by ITT Hartford, the Annuitant may elect
that the payment to the survivor be less than the payment made during the joint
lifetime of the Annuitant and a designated second person.
It would be possible under this option for an Annuitant and designated second
person to receive only one payment in the event of the common or simultaneous
death of the parties prior to the due date for the second payment and so on.
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32
Option 4: Payments for a Designated Period
An amount payable monthly for the number of years selected which may be from 5
to 30 years. Under this option, you may, at any time, surrender the Contract
and receive, within seven days, the Termination Value of the Contract as
determined by ITT Hartford.
In the event of the Annuitant's death prior to the end of the designated period,
the present value as of the date of the Annuitant's death, of any remaining
guaranteed payments will be paid in one sum to the Beneficiary or Beneficiaries
designated unless other provisions have been made and approved by ITT Hartford.
Option 4 is an option that does not involve life contingencies and thus no
mortality guarantee. Charges made for the mortality undertaking under the
Contracts thus provide no real benefit to a Contract Owner.
Option 5: Death Benefit Remaining with ITT Hartford
Proceeds from the Death Benefit may be left with ITT Hartford for a period not
to exceed five years from the date of the Contract Owner's death prior to the
Annuity Commencement Date. These proceeds will remain in the Sub-Account(s) to
which they were allocated at the time of death unless the Beneficiary elects to
reallocate them. Full or partial withdrawals may be made at any time. In the
event of withdrawals, the remaining value will equal the Contract Value of the
proceeds left with ITT Hartford, minus any withdrawals.
ITT Hartford may offer other annuity options from time to time.
THE ANNUITY UNIT AND VALUATION
The value of the Annuity Unit for each Sub-Account in the Separate Account for
any day is determined by multiplying the value for the preceding day by the
product of (1) the net investment factor (see "Valuation of Accumulation Units,"
commencing on page ___ ) for the day for which the Annuity Unit value is being
calculated and (2) a factor to neutralize the assumed investment rate of 5.00%
per annum discussed below.
DETERMINATION OF PAYMENT AMOUNT
When Annuity payments are to commence, the value of the Contract is determined
as the sum of the value of the Fixed Account no earlier than the close of
business on the fifth Valuation Day preceding the date the first Annuity payment
is due plus the product of the value of the Accumulation Unit of each
Sub-Account on that same day, and the number of Accumulation Units credited to
each Sub-Account as of the date the Annuity is to commence.
The Contract contains tables indicating the minimum dollar amount of the first
monthly payment under the optional forms of Annuity for each $1,000 of value of
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33
a Sub-Account under a Contract. The first monthly payment varies according to
the form and type of Annuity selected. The Contract contains Annuity tables
derived from the 1983a Individual Annuity Mortality Table with ages set back
one year and with an assumed investment rate ("A.I.R.") of 3% per annum for the
Fixed Annuity and 5% per annum for the Variable Annuity.
The total first monthly Variable Annuity payment is determined by multiplying
the value (expressed in thousands of dollars) of a Sub-Account (less any
applicable Premium Taxes) by the amount of the first monthly payment per $1,000
of value obtained from the tables in the Contracts.
Fixed Annuity payments are determined at annuitization by multiplying the values
allocated to the Fixed Account (less applicable Premium Taxes) by a rate to be
determined by ITT Hartford which is no less than the rate specified in the
Annuity tables in the Contract. The Annuity payment will remain level for the
duration of the Annuity.
The amount of the first monthly Variable Annuity payment, determined as
described above, is divided by the value of an Annuity Unit for the appropriate
Sub-Account no earlier than the close of business on the fifth Valuation Day
preceding the day on which the payment is due in order to determine the number
of Annuity Units represented by the first payment. This number of Annuity Units
remains fixed during the Annuity payment period, and in each subsequent month
the dollar amount of the Variable Annuity payment is determined by multiplying
this fixed number of Annuity Units by the then current Annuity Unit value.
THE A.I.R. ASSUMED IN THE MORTALITY TABLES WOULD PRODUCE LEVEL VARIABLE ANNUITY
PAYMENTS IF THE INVESTMENT RATE REMAINED CONSTANT. IN FACT, PAYMENTS WILL VARY
UP OR DOWN AS THE INVESTMENT RATE VARIES UP OR DOWN FROM THE A.I.R.
The Annuity Unit value used in calculating the amount of the Variable Annuity
payments will be based on an Annuity Unit value determined as of the close of
business on a day no earlier than the fifth Valuation Day preceding the date of
the Annuity payment.
FEDERAL TAX CONSIDERATIONS
What are some of the Federal tax consequences which affect these Contracts?
A. GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING TO
THE ACTUAL STATUS OF THE CONTRACT OWNER INVOLVED AND THE TYPE OF PLAN UNDER
WHICH THE CONTRACT IS PURCHASED, LEGAL AND TAX ADVICE MAY BE NEEDED BY A PERSON,
TRUSTEE OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A CONTRACT DESCRIBED
HEREIN.
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It should be understood that any detailed description of the Federal income tax
consequences regarding the purchase of these Contracts cannot be made in this
Prospectus and that special tax rules may be applicable with respect to certain
purchase situations not discussed herein. In addition, no attempt is made here
to consider any applicable state or other tax laws. For detailed information, a
qualified tax adviser should always be consulted. The discussion here and in
Appendix II, commencing on page ___, is based on ITT Hartford's understanding of
current Federal income tax laws as they are currently interpreted.
B. TAXATION OF ITT HARTFORD AND THE SEPARATE ACCOUNT
The Separate Account is taxed as part of ITT Hartford which is taxed as a life
insurance company in accordance with the Internal Revenue Code (the "Code").
Accordingly, the Separate Account will not be taxed as a "regulated investment
company" under subchapter M of Chapter 1 of the Code. Investment income and any
realized capital gains on the assets of the Separate Account are reinvested and
are taken into account in determining the value of the Accumulation and Annuity
Units (See "Value of Accumulation Units" commencing on page ). 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 Internal Revenue Code governs the taxation of annuities in
general.
1. NON-NATURAL PERSONS, CORPORATIONS, ETC. Section 72 contains provisions
for Contract Owners which are non-natural persons. Non-natural persons
include corporations, trusts, and partnerships. The annual net increase
in the value of the Contract is currently includable in the gross income
of a non-natural person unless the non-natural person holds the Contract
as an agent for a natural person. There is an exception from current
inclusion for certain annuities held 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 not an individual, the primary Annuitant shall
be treated as the Contract Owner for purposes of making distributions
which are required to be made upon the death of the Contract Owner. If
there is a change in the primary Annuitant, such change shall be treated
as the death of the Contract Owner.
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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 3.c. below. As a result, any
such amount received or deemed received (1) shall be includable
in gross income to the extent that such amount does not exceed
any such "income on the contract," and (2) shall not be
includable in gross income to the extent that such amount does
exceed any such "income on the contract." If at the time that
any amount is received or deemed received there is no "income on
the contract" (e.g., because the gross value of the Contract does
not exceed the "investment in the contract" and no aggregation
rule applies), then such amount received or deemed received will
not be includable in gross income, and will simply reduce the
"investment in the contract."
iv. The receipt of any amount as a loan under the Contract or the
assignment or pledge of any portion of the value of the Contract
shall be treated as an amount received for purposes of this
subparagraph a. and the next subparagraph b.
v. In general, the transfer of the Contract, without full and
adequate consideration, will be treated as an amount received for
purposes of this subparagraph a. and the next subparagraph b.
This transfer rule does not apply, however, to certain transfers
of property between spouses or incident to divorce.
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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. ITT
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
3.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.
<PAGE>
37
d. 10% PENALTY TAX -- APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY
PAYMENTS.
i. If any amount is received or deemed received on the Contract
(before or after the Annuity Commencement Date), the Code applies a
penalty tax equal to ten percent of the portion of the amount
includable in gross income, unless an exception applies.
ii. The 10% penalty tax will not apply to the following distributions
(exceptions vary based upon the precise plan involved):
1. Distributions made on or after the date the recipient has
attained the age of 59 1/2.
2. Distributions made on or after the death of the holder or
where the holder is not an individual, the death of the
primary Annuitant.
3. Distributions attributable to a recipient's becoming
disabled.
4. A distribution that is part of a scheduled series of
substantially equal periodic payments for the life (or life
expectancy) of the recipient (or the joint lives or life
expectancies of the recipient and the recipient's
Beneficiary).
5. Distributions of amounts which are allocable to the
"investment in the contract" prior to August 14, 1982 (see
next subparagraph e.).
e. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-FREE
EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS PURCHASED 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.
<PAGE>
38
f. REQUIRED DISTRIBUTIONS IN THE EVENT OF CONTRACT OWNER'S DEATH.
i. If any Contract Owner dies before the Annuity Commencement Date,
the entire interest must be distributed within five years of the
date of death; however, a portion or all of such interest may be
payable to a designated Beneficiary over the life of such
Beneficiary or for a period not extending beyond the life
expectancy of such Beneficiary with payments starting within one
year of the date of death.
ii. If any Contract Owner or Annuitant dies on or after the Annuity
Commencement Date and before the entire interest in the Contract
has been distributed, any remaining portion of such interest will
be distributed at least as rapidly as under the method of
distribution in effect at the time of death.
iii. If a spouse is designated as a Beneficiary at the time of the
Contract Owner's death and there is a surviving Annuitant or
Contingent Annuitant, then such spouse will be treated as the
Contract Owner under subparagraph i. and ii. above.
iv. If the Contract Owner is not an individual, the primary Annuitant
shall be treated as the Contract Owner under subparagraphs i. and
ii. above. If there is a change in the primary Annuitant, such
change shall be treated as the death of the Contract Owner.
3. DIVERSIFICATION REQUIREMENTS.
Section 817 of the Code provides that a variable annuity contract (other
than certain contracts held in connection with a tax-qualified
retirement arrangement) will not be treated as an annuity contract for
any period during which the investments made by the separate account or
underlying fund are not adequately diversified in accordance with
regulations prescribed by the Treasury. If a Contract is not treated as
an annuity contract, the Contract Owner will be subject to income tax on
the annual increases in cash value. The Treasury has issued
diversification regulations which, among other things, require that no
more than 55% of the assets of a mutual fund (such as the ITT Hartford
mutual funds) underlying a variable annuity contract, be invested in any
one investment. In determining whether the diversification standards
are met, each United States Government Agency or instrumentality shall
be treated as a separate issuer.
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
Internal Revenue Code. The application of this provision is summarized below:
<PAGE>
39
1. NON-PERIODIC DISTRIBUTIONS
The portion of a non-periodic distribution which constitutes taxable income
will be subject to Federal income tax withholding unless the recipient elects
not to have taxes withheld. If an election not to have taxes withheld is not
provided, 10% of the taxable distribution will be withheld as Federal income
tax. Election forms will be provided at the time distributions are
requested. If the necessary election forms are not submitted to ITT
Hartford, ITT Hartford will automatically withhold 10% of the taxable
distribution.
2. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN
ONE YEAR)
The portion of a periodic distribution which constitutes taxable income will
be subject to Federal income tax withholding as if the recipient were married
claiming three exemptions. A recipient may elect not to have income taxes
withheld or have income taxes withheld at a different rate by providing a
completed election form. Election forms will be provided at the time
distributions are requested.
E. GENERAL PROVISIONS AFFECTING QUALIFIED RETIREMENT PLANS
The Contract may be used for a number of qualified retirement plans. If the
Contract is being purchased with respect to some form of qualified retirement
plan, please refer to Appendix I commencing on page ___ for information
relative to the types of plans for which it may be used and the general
explanation of the tax features of such plans.
GENERAL MATTERS
ASSIGNMENT
Ownership of a Contract described herein is generally assignable. However, if
the Contracts are issued pursuant to some form of Qualified Retirement Plan, it
is possible that the ownership of the Contracts may not be transferred or
assigned depending on the type of qualified retirement plan involved. An
assignment of a Non-Qualified Contract may subject the assignment proceeds to
income taxes and certain penalty taxes. (See "Taxation of Annuities in General
- - Non-Tax Qualified Purchasers," page ___.)
MODIFICATION
ITT Hartford reserves the right to modify the Contract, but only if such
modification: (i) is necessary to make the Contract or the Separate Account
comply with any law or regulation issued by a governmental agency to which ITT
Hartford is subject; or (ii) is necessary to assure continued qualification of
the Contract under the Code or other federal or state laws relating to
retirement annuities or annuity Contracts; or (iii) is necessary to reflect a
change in the operation of the Separate Account or the Sub-Account(s) or (iv)
provides additional Separate Account options or (v) withdraws Separate Account
<PAGE>
40
options. In the event of any such modification ITT Hartford will provide
notice to the Contract Owner or to the payee(s) during the Annuity period.
ITT Hartford may also make appropriate endorsement in the Contract to reflect
such modification.
DELAY OF PAYMENTS
There may be postponement of a surrender payment or death benefit whenever (a)
the New York Stock Exchange is closed, except for holidays or weekends, or
trading on the New York Stock Exchange is restricted as determined by the
Commission; (b) the Commission permits postponement and so orders; or (c) the
Commission determines that an emergency exists making valuation or disposal of
securities not reasonably practicable.
VOTING RIGHTS
ITT Hartford is the legal owner of all Fund shares held in the Separate Account.
As the owner, ITT Hartford has the right to vote at the Funds' shareholder
meetings. However, to the extent required by federal securities laws or
regulations, ITT Hartford will:
1. Vote all Fund shares attributable to a Contract according to instructions
received from Contract Owner, and
2. Vote shares attributable to a Contract for which no voting instructions are
received in the same proportion as shares for which instructions are received.
If any federal securities laws or regulations, or their present interpretation
change to permit ITT Hartford to vote Fund shares in its own right, ITT Hartford
may elect to do so.
ITT Hartford will notify you of any Fund shareholders' meeting if the shares
held for your account may be voted at such meetings. ITT Hartford will also
send proxy materials and a form of instruction by means of which you can
instruct ITT Hartford with respect to the voting of the Fund shares held for
your account.
In connection with the voting of Fund shares held by it, ITT Hartford will
arrange for the handling and tallying of voting instructions received from
Contract Owners. ITT Hartford as such, shall have no right, except as
hereinafter provided, to vote any Fund shares held by it hereunder which may be
registered in its name or the names of its nominees. ITT Hartford will,
however, vote the Fund shares held by it in accordance with the instructions
received from the Contract Owners for whose accounts the Fund shares are held.
If a Contract Owner desires to attend any meeting at which shares held for the
Contract Owner's benefit may be voted, the Contract Owner may request ITT
Hartford to furnish a proxy or otherwise arrange for the exercise of voting
rights with respect to the Fund shares held for such Contract Owner's account.
In the event that the Contract Owner gives no instructions or leaves the manner
of voting discretionary, ITT Hartford will vote such shares of the appropriate
Fund in the same proportion as shares of that Fund for which instructions have
<PAGE>
41
been received. During the Annuity period under a Contract the number of votes
will decrease as the assets held to Fund Annuity benefits decrease.
DISTRIBUTION OF THE CONTRACTS
Hartford Equity Sales Company, Inc. ("HESCO") currently serves as Principal
Underwriter for the securities issued with respect to the Separate Account.
Hartford Securities Distribution Company, Inc. ("HSD") will replace HESCO as
principal underwriter upon approval by the Commission, the National Association
of Securities Dealers, Inc. ("NASD") and applicable state regulatory
authorities.
Both HESCO and HSD are wholly-owned subsidiaries of Hartford Life Insurance
Company. The principal business address of HESCO and HSD is the same as ITT
Hartford.
The securities will be sold by salespersons of HESCO, and subsequently HSD, who
represent ITT Hartford as insurance and Variable Annuity agents and who are
registered representatives or Broker-Dealers who have entered into distribution
agreements with HESCO, and subsequently HSD.
HESCO is registered with the Commission under the Securities Exchange Act of
1934 as a Broker-Dealer and is a member of the NASD. HSD will be registered
with the Commission under the Securities Exchange Act of 1934 as a Broker-Dealer
and will become a member of the NASD.
Commissions will be paid by ITT Hartford and will not be more than 6% of Premium
Payments.
From time to time, ITT Hartford may pay or permit other promotional incentives,
in cash or credit or other compensation.
OTHER CONTRACTS OFFERED
In addition to the Contracts described in this Prospectus, it is contemplated
that other forms of group or individual Variable Annuities may be sold providing
benefits which vary in accordance with the investment experience of the Separate
Account.
CUSTODIAN OF SEPARATE ACCOUNT ASSETS
The assets of the Separate Account are held by ITT Hartford under a safekeeping
arrangement.
LEGAL PROCEEDINGS
There are no legal proceedings to which the Separate Account is a party or to
which the assets of the Separate Account are subject. ITT Hartford and Putnam
Investment are engaged in various matters of routine litigation which in their
<PAGE>
42
judgments are not of material importance in relation to their respective total
assets.
EXPERTS
The financial statements and schedules included in this prospectus and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with
respect thereto, and are included herein in reliance upon the authority of
said firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
Inquiries will be answered by calling your representative or by writing:
ITT Hartford Life and Annuity Insurance Company
Attn: Individual Annuity Operations
P.O. Box 5085
Hartford, CT 06102-5085
Telephone: (800) 862-6668
<PAGE>
43
APPENDIX I
INFORMATION REGARDING QUALIFIED RETIREMENT PLANS
THE TAX REFORM ACT OF 1986 AND THE TECHNICAL AND MISCELLANEOUS REVENUE ACT OF
1988 HAVE MADE SUBSTANTIAL CHANGES TO QUALIFIED RETIREMENT PLANS. YOU SHOULD
CONSULT YOUR TAX ADVISER TO FULLY ADDRESS ALL CHANGES OCCURRING AS A RESULT OF
THE TAX REFORM ACT AND THE TECHNICAL AND MISCELLANEOUS REVENUE ACT OF 1988 AND
THEIR EFFECT ON QUALIFIED RETIREMENT PLANS.
A. Contributions
1. Pension, Profit-Sharing and Simplified Employee Pension Plans
Contributions to pension or profit-sharing plans (described in Section
401(a) and 401(k), if applicable, and exempt from taxation under Section
501(a) of the Code), and Simplified Employee Pension Plans (described in
Section 408(k)), which do not exceed certain limitations prescribed in the
Code are fully tax deductible to the employer. Such contributions are not
currently taxable to the covered employees, and increases in the value of
Contracts purchased with such contributions are not subject to taxation
until received by the covered employees or their Beneficiaries in the form
of Annuity payments or other distributions.
2. Tax Deferred Annuity Plans for Public School Teachers and Employers
and Employees of Certain Tax-Exempt Organizations
Contributions to tax deferred annuity plans (described in Section 403(a)
and 403(b) of the Code) by employers are not includable within the
employee's income to the extent those contributions do not exceed the
lesser of $9,500 or the exclusion allowance. Generally, the exclusion
allowance is equal to 20% of the employee's includable compensation for his
most recent full year of employment multiplied by the number of years of
his service, less the aggregate amount contributed by the employer for
annuity contracts which were not included within the gross income of the
employee for any prior taxable year. There are special provisions which
may allow an employee of an educational institution, a hospital or a home
health service agency to elect an overall limitation different from the
limitation described above.
<PAGE>
44
3. Deferred Compensation Plans for Tax-Exempt Organizations and State and
Local Governments
Employees may contribute on a before tax basis to The Deferred Compensation
Plan of their employer in accordance with The Employer's Plan and Section 457
of the Code. Section 457 places limitations on contributions to Deferred
Compensation Plans maintained by a State ("State" means a State, a political
sub-division of a State, and an agency or instrumentality of a State or
political sub-division of a State) or other tax-exempt organization.
Generally, the limitation is 33 1/3% of includable compensation (25% of gross
compensation) or $7,500, whichever is less. The plan may also provide for
additional contributions during the three taxable years ending before normal
retirement age of a Participant for a total of up to $15,000 per year for
such three years.
An employee electing to participate in a plan should understand that his
rights and benefits are governed strictly by the terms of the plan, that he
is in fact a general creditor of the employer under the terms of the plan,
that the employer is legal owner of any Contract issued with respect to the
plan and that the employer as owner of the Contract(s) retains all voting and
redemption rights which may accrue to the Contract(s) issued with respect to
the plan. The participating employee should look to the terms of his plan
for any charges in regard to participating therein other than those disclosed
in this Prospectus.
Certain distributions are required to be made upon the death of a
Participant. These requirements are generally described in Section C.2.f. of
"Federal Tax Considerations" on page___.
4. Individual Retirement Annuities ("IRA's")
Individuals may contribute and deduct the lesser of $2,000 or 100 percent of
their compensation to an IRA. In the case of a spousal IRA, the maximum
deduction is the lesser of $2,250 or 100 percent of compensation. The
deduction for contributions is phased out between $40,000 and $50,000 of
adjusted gross income (AGI) for a married individual (and between $25,000 and
$35,000 for single individuals) if either the individual or his or her spouse
is an active participant in any Section 401(a), 403(a), 403(b) or 408(k) plan
regardless of whether the individual's interest is vested.
To the extent deductible contributions are not allowed, individuals may make
designated non-deductible contributions to an IRA, subject to the above
limits.
B. Distributions
1. Pension and Profit Sharing Plans, Tax Sheltered Annuities, Individual
Retirement Annuities.
Annuity payments made under the Contracts are taxable under Section 72 of
the Code as ordinary income, in the year of receipt, to the extent that
<PAGE>
45
they exceed the "excludable amount." The investment in the contract is the
aggregate amount of the contributions made by or on behalf of an employee
which were included as a part of his taxable income and not deducted. Thus,
annual premiums deducted for an IRA are not included in the investment in the
contract. The employee's investment in the contract is divided by the
expected number of payments to be made under the contract. The amount so
computed constitutes the "excludable amount," which is the amount of each
annuity payment considered a return of investment in each year and, therefore,
not taxable. Once the employee's investment in the contract is recouped, the
full amount of each payment will be fully taxable. If the employee dies
prior to recouping his or her investment in the contract, a deduction is
allowed for the last taxable year. The rules for determining the excludable
amount are contained in Section 72 of the Code.
Generally, distributions or withdrawals prior to age 59 1/2 may be subject to
an additional income tax of 10% of the amount includable in income. This
additional tax does not apply to distributions made after the employee's
death, on account of disability and distributions in the form of a life
annuity and, except in the case of an IRA, certain distributions after
separation from service at or after age 55 and, certain distributions for
eligible medical expenses. A life annuity is defined as a scheduled series
of substantially equal periodic payments for the life or life expectancy of
the Participant (or the joint lives or life expectancies of the Participant
and Beneficiary). The taxation of withdrawals and other distributions varies
depending on the type of distribution and the type of plan from which the
distribution is made. With respect to tax-deferred annuity Contracts under
Section 403(b) contributions to the Contract made after December 31, 1988 and
any increases in cash value, after that date may not be distributed prior to
attaining age 59 1/2, separation from service, death or disability.
Contributions (but not earnings) made after December 31, 1988 may also be
distributed by reason of financial hardship.
Generally, in order to avoid a penalty tax, annuity payments, periodic
payments or annual distributions MUST commence by April 1 of the calendar
year following the year in which the Participant attains age 70 1/2. The
entire interest of the Participant must be distributed beginning no later
than this required beginning date over a period which may not extend beyond a
maximum of the lives or life expectancies of the Participant and a designated
Beneficiary. Each annual distribution must equal or exceed a "minimum
distribution amount" which is determined by dividing the account balance by
the applicable life expectancy. With respect to a section 403(b) plan, this
account balance is based upon earnings and contributions after December 31,
1986. In addition, minimum distribution incidental benefit rules may require
a larger annual distribution based upon dividing the entire account balance
as of the close of business on the last day of the previous calendar year by
a factor promulgated by the Internal Revenue Service which ranges from 26.2
(at age 70) to 1.8 (at age 115). Special rules apply to require that
distributions be made to Beneficiaries after the death of the Participant. A
penalty tax of up to 50% of the amount which should be distributed may be
imposed by the Internal Revenue Service for failure to make such
distribution.
<PAGE>
46
2. Deferred Compensation Plans for Tax-Exempt Organizations and State and
Local Governments
Generally, in order to avoid a penalty tax, annuity payments, periodic
payments or annual distributions must commence by April 1 of the calendar
year following the year in which the Participant attains age 70 1/2. Minimum
distributions under a Section 457 Deferred Compensation Plan may be further
deferred if the Participant remains employed. The entire interest of the
Participant must be distributed beginning no later than this required
beginning date over a period which may not extend beyond a maximum of the
life expectancy of the Participant and a designated Beneficiary. Each annual
distribution must equal or exceed a "minimum distribution amount" which is
determined by dividing the account balance by the applicable life expectancy.
This account balance is generally based upon the account value as of the
close of business on the last day of the previous calendar year. In
addition, minimum distribution incidental benefit rules may require a larger
annual distribution based upon dividing the account balance by a factor
promulgated by the Internal Revenue Service which ranges from 26.2 (at age
70) to 1.8 (at age 115). Special rules apply to require that distributions
be made to Beneficiaries after the death of the Participant. A penalty tax
of up to 50% of the amount which should be distributed may be imposed by the
Internal Revenue Service for failure to make a distribution.
Upon receipt of any monies pursuant to the terms of a Deferred Compensation
Plans for a tax-exempt organization, state or local government under Section
457 of the Code, such monies are taxable to such employee as ordinary income
in the year in which received.
C. 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
Internal Revenue Code. The application of this provision is summarized below:
1. Eligible Rollover Distributions
a. The Unemployment Compensation Amendments Act of 1992 requires
that federal income taxes be withheld from certain distributions from
tax-qualified retirement plans and from tax-sheltered annuities under
Section 403(b). These provisions DO NOT APPLY to distributions from
individual retirement annuities under section 408(b) or from deferred
compensation programs under section 457.
b. If any portion of a distribution is an "eligible rollover
distribution", the law requires that 20% of that amount be withheld.
This amount is sent to the IRS as withheld income taxes. The
following types of payments DO NOT constitute an eligible rollover
<PAGE>
47
distribution (and, therefore, the mandatory withholding rules will
not apply):
- the non-taxable portion of the distribution;
- distributions which are part of a series of equal (or substantially
equal) payments made at least annually for your lifetime (or your
life expectancy), or your lifetime and your Beneficiary's lifetime
(or life expectancies), or for a period of ten years or more.
- required minimum distributions made pursuant to section 401(a)(9)
of the IRC.
c. However, these mandatory withholding requirements do not apply in
the event that all or a portion of any eligible rollover distribution
is paid in a "direct rollover". A direct rollover is the direct
payment of an eligible rollover distribution or portion thereof to an
individual retirement arrangement or annuity (IRA) or to another
qualified employer plan. IF A DIRECT ROLLOVER IS ELECTED, NO INCOME
TAX WILL BE WITHHELD.
d. If any portion of a distribution is not an eligible rollover
distribution but is taxable, the mandatory withholding rules described
above do not apply. In this case, the voluntary withholding rules
described below apply.
2. Non-Eligible Rollover Distributions
a. Non-Periodic Distributions
The portion of a non-periodic distribution which constitutes taxable
income will be subject to Federal income tax withholding unless the
recipient elects not to have taxes withheld. If an election not to
have taxes withheld is not provided, 10% of the taxable distribution
will be withheld as Federal income tax. Election forms will be
provided at the time distributions are requested.
b. 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.
D. Any distribution from plans described in A.3 on page ___ is subject to the
regular wage withholding rules.
<PAGE>
48
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, 1989 and any increases in cash
value after December 31, 1988 may not be distributed to you unless you have:
a. attained age 59 1/2,
b. terminated employment,
c. died, or
d. become disabled.
Distributions of post December 31, 1988 contributions may also be made if you
have experienced a financial hardship.
Also, there may be a 10% penalty tax for distributions made because of financial
hardship or separation from service.
Also, please be aware that your 403(b) Plan may also offer other financial
alternatives other than the Hartford variable annuity. Please refer to your
Plan.
Please complete the following and return to:
Hartford Life Insurance Company
Individual Annuity Operations
P.O. Box 5085
Hartford, CT 06102-5085
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Name of Contract Owner/Participant
Address
City or Plan/School District
Date:
<PAGE>
49
TABLE OF CONTENTS
TO
STATEMENT OF ADDITIONAL INFORMATION
SECTION PAGE
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . .
DESCRIPTION OF ITT HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY. . . . . . . . . . . . . . . . . . . . . . . . . .
SAFEKEEPING OF ASSETS . . . . . . . . . . . . . . . . . . .
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . .
DISTRIBUTION OF CONTRACTS. . . . . . . . . . . . . . . . . .
ANNUITY/PAYOUT PERIOD. . . . . . . . . . . . . . . . . . . .
Annuity Payments. . . . . . . . . . . . . . . . . . . .
The Annuity Unit and Valuation. . . . . . . . . . . . .
Determination of Payment Amount . . . . . . . . . . . .
CALCULATION OF YIELD AND RETURN. . . . . . . . . . . . . . .
PERFORMANCE COMPARISONS. . . . . . . . . . . . . . . . . . .
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . .
1396s
Putnam
<PAGE>
50
- - - - - - - - - - - - - - - - - -
To Obtain a Statement of Additional Information, please complete the form below
and mail to:
Hartford Life Insurance Company
Attn: Individual Annuity Operations
P.O. Box 5085
Hartford, CT 06102-5085
Please send a Statement of Additional Information for the PCM Capital Manager to
me at the following address:
- -----------------------------
Name
- -----------------------------
Address
- -----------------------------
City/State Zip Code
- - - - - - - - - - - - - - - - - -
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT TWO
This Statement of Additional Information is not a Prospectus. The information
contained herein should be read in conjunction with the Prospectus.
To obtain a Prospectus, send a written request to ITT Hartford Life and Annuity
Insurance Company, Attn: Individual Annuity Operations, P.O. Box 5085,
Hartford, CT 06102-5085.
Date of Prospectus: May 1, 1995
Date of Statement of Additional Information: May 1, 1995
Printed in U.S.A.
<PAGE>
- 2 -
TABLE OF CONTENTS
SECTION PAGE
- ------- ----
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . .
DESCRIPTION OF ITT HARTFORD LIFE AND ANNUITY INSURANCE CO. .
SAFEKEEPING OF ASSETS. . . . . . . . . . . . . . . . . . . .
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . .
DISTRIBUTION OF CONTRACTS. . . . . . . . . . . . . . . . . .
ANNUITY/PAYOUT PERIOD. . . . . . . . . . . . . . . . . . . .
Annuity Payments. . . . . . . . . . . . . . . . . . . .
The Annuity Unit and Valuation. . . . . . . . . . . . .
Determination of Payment Amount . . . . . . . . . . . .
CALCULATION OF YIELD AND RETURN. . . . . . . . . . . . . . .
PERFORMANCE COMPARISONS. . . . . . . . . . . . . . . . . . .
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . .
<PAGE>
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INTRODUCTION
The tax deferred variable annuity contracts described in the Prospectus are
designed to provide Annuity benefits to individuals who have established or wish
to establish retirement programs which may or may not qualify for special
Federal income tax treatment. The Annuitant under these contracts may receive
Annuity benefits in accordance with the Annuity option selected and the
retirement program, if any, under which the contracts have been purchased.
Annuity payments under a Contract will begin on a particular future date which
may be selected at any time under the Contract or automatically when the
Annuitant reaches age 90 except in certain states where the the Annuitant must
be age 85. There are several alternative annuity payment options available
under the Contract (see "Optional Forms of Annuity," page ___ of the
Prospectus).
The Premium Payments under a Contract , less any applicable Premium Taxes, will
be applied to the Separate Account and/or the Fixed Account. Accordingly, the
net Premium Payment under the Contract will be applied to purchase interests in
one or more of the following eleven portfolios ("Funds") of Putnam Capital
Manager Trust, an open-end diversified series investment company: PCM Asia
Pacific Growth Fund, PCM Diversified Income Fund, PCM Global Asset Allocation
Fund, PCM Global Growth Fund, PCM Growth and Income Fund, PCM High Yield Fund,
PCM Money Market Fund, PCM New Opportunities Fund, PCM U.S. Government and High
Quality Bond Fund, PCM Utilities Growth and Income Fund and PCM Voyager Fund.
Shares of the Funds are purchased by the Separate Account without the imposition
of any additional sales charge. The value of a Contract depends on the value
of the shares of the Fund held by the Separate Account pursuant to that
Contract. As a result, the Contract Owner bears the investment risk since
market value of the shares may increase or decrease.
The Contracts provide that in the event the Annuitant dies before the selected
Annuity Commencement Date, the Contingent Annuitant will become the Annuitant.
If the Annuitant dies before the Annuity Commencement Date and there is no
designated Contingent Annuitant, or the Contingent Annuitant predeceases the
Annuitant, or if the Contract Owner dies before the Annuity Commencement Date,
the Beneficiary will receive the Contract Value determined on the date of
receipt of due proof of death by ITT Hartford in its Home Office. However, upon
death prior to the Annuity Commencement Date, the Beneficiary will receive the
greater of (a) the Contract Value determined as of the day written proof of
death of such person is received by ITT Hartford, or (b) 100% of the total
Premium Payments made to such Contract , reduced by any prior surrenders, or (c)
the Contract Value on the Specified Contract Anniversary immediately preceding
the date of death, increased by the dollar amount of any Premium Payments made
and reduced by the dollar amount of any partial terminations since the
immediately preceding Specified Contract Anniversary.
<PAGE>
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DESCRIPTION OF ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
ITT Hartford Life and Annuity Insurance Company ("ITT Hartford") formerly ITT
Life Insurance Corporation is domiciled in the state of Wisconsin at Suite 2100,
111 East Wisconsin Avenue, Milwaukee, Wisconsin 53202 and with its principal
office at 505 Highway 169 North, Minneapolis, Minnesota 55441; however, its
mailing address is P.O. Box 5085, Hartford, Co. 06102-5085.
ITT Hartford was incorporated in January 9, 1956 and commenced business July 1,
1965. It is a stock life insurance company engaged in the business of writing
both individual and group life insurance and annuities in all states including
the District of Columbia, except New York.
ITT Hartford is a wholly owned subsidiary of Hartford Life Insurance Company.
ITT Hartford is ultimately 100% owned by Hartford Fire Company, one of the
largest multiple lines insurance carriers in the United States.
ITT Hartford has an A++ (superior) rating from A.M. Best and Company, Inc.
ITT Hartford has an AA+ rating from Standard & Poor's and Duff and Phelps
highest rating (AAA) on the basis of its claims paying ability.
These ratings do not apply to the performance of the Separate Account. However,
the contractual obligations under this variable annuity are the general
corporate obligations of ITT Hartford. These ratings do apply to ITT Hartford's
ability to meet its insurance obligations under the Contract .
SAFEKEEPING OF ASSETS
The assets of the Separate Account are held by ITT Hartford under a safekeeping
arrangement.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, One Financial Plaza, Hartford, Connecticut, independent
public accountants, will perform an annual audit of the Separate Account. The
financial statements included in this Statement of Additional Information have
been audited by Arthur Andersen LLP to the extent and for the periods indicated
in their report and are included herein in reliance upon the report of said firm
as experts in accounting and auditing.
<PAGE>
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DISTRIBUTION OF CONTRACTS
Hartford Equity Sales Company, Inc. ("HESCO") currently serves as Principal
Underwriter for the securities issued with respect to the Separate Account.
Hartford Securities Distribution Company, Inc. ("HSD") will replace HESCO as
principal underwriter upon approval by the Commission, the National Association
of Securities Dealers, Inc. ("NASD") and applicable state regulatory
authorities.
Both HESCO and HSD are wholly-owned subsidiaries of Hartford Life Insurance
Company. The principal business address of HESCO and HSD is the same as ITT
Hartford.
The securities will be sold by salespersons of HESCO, and subsequently HSD, who
represent HL as insurance and Variable Annuity agents and who are registered
representatives or Broker-Dealers who have entered into distribution agreements
with HESCO, and subsequently HSD.
HESCO is registered with Commission under the Securities Exchange Act of 1934 as
a Broker-Dealer and is a member of the NASD. HSD will be registered with the
Commission under the Securities Exchange Act of 1934 as a Broker-Dealer and will
become a member of the NASD.
Commissions will be paid by ITT Hartford and will not be more than 6% of Premium
Payments.
From time to time, ITT Hartford may pay or permit other promotional incentives,
in cash or credit or other compensation.
ANNUITY/PAYOUT PERIOD
ANNUITY PAYMENTS
Variable Annuity payments are determined on the basis of (1) a mortality table
set forth in the Contract s and the type of Annuity payment option selected, and
(2) the investment performance of the investment medium selected. Fixed Annuity
payments are based on the Annuity tables contained in the Contract s, and will
remain level for the duration of the Annuity.
The amount of the Annuity payments will not be affected by adverse mortality
experience or by an increase in expenses in excess of the expense deduction for
which provision has been made (see "Mortality and Expense Risk Charge,"
page ___ of the Prospectus).
For a Variable Annuity, the Annuitant will be paid the value of a fixed number
of Annuity Units each month. The value of such units and the amounts of the
monthly Variable Annuity payments will, however, reflect investment income
occurring after retirement, and thus the Variable Annuity payments will vary
with the investment experience of the Fund shares selected.
<PAGE>
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THE ANNUITY UNIT AND VALUATION
The value of the Annuity Unit for each Sub-Account in the Separate Account for
any day is determined by multiplying the value for the preceding day by the
product of (1) the net investment factor (see "Valuation of Accumulation Units,"
page ___ the Prospectus) for the day for which the Annuity Unit value is being
calculated, and (2) a factor to neutralize the assumed investment rate discussed
below.
ILLUSTRATION OF CALCULATION OF ANNUITY UNIT VALUE
1. Net Investment Factor for period . . . . . . . . . 1.011225
2. Adjustment for 4% Assumed Investment Rate . . . . . .999892
3. 2x1 . . . . . . . . . . . . . . . . . . . . . . . . 1.011116
4. Annuity Unit value, beginning of period . . . . . . .995995
5. Annuity Unit value, end of period (3x4) . . . . . . 1.007066
DETERMINATION OF PAYMENT AMOUNT
When Annuity payments are to commence, the value of the Contract is determined
as the sum of the value of the Fixed Account no earlier than the close of
business on the fifth Valuation Day preceding the date the first Annuity payment
is due plus the product of the value of the Accumulation Unit of each
Sub-Account on that same day, and the number of Accumulation Units credited to
each Sub-Account as of the date the Annuity is to commence.
The Contract contains tables indicating the minimum dollar amount of the first
monthly payment under the optional forms of Annuity for each $1,000 of value of
a Sub-Account under a Contract . The first monthly payment varies according to
the form and type of Annuity selected. The Contracts contains Annuity tables
derived from the 1983a Individual Annuity Mortality Table with ages set back
one year with an assumed investment rate ("A.I.R.") of 3.00% per annum for the
Fixed Annuity and 5.00% per annum for the Variable Annuity. The total first
monthly Variable Annuity payment is determined by multiplying the value
(expressed in thousands of dollars) of a Sub-Account (less any applicable
Premium Taxes) by the amount of the first monthly payment per $1,000 of value
obtained from the tables in the Contracts.
Fixed Annuity payments are determined at annuitization by multiplying the values
allocated to the Fixed Account by a rate to be determined by ITT Hartford which
is no less than the rate specified in the Annuity tables in the Contract . The
Annuity payment will remain level for the duration of the Annuity.
The amount of the first monthly Variable Annuity payment, determined as
described above, is divided by the value of an Annuity Unit for the appropriate
Sub-Account no earlier than the close of business on the fifth Valuation Day
preceding the day on which the payment is due in order to determine the number
of Annuity Units represented by the first payment. This number of Annuity Units
<PAGE>
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remains fixed during the Annuity Period, and in each subsequent month the
dollar amount of the Variable Annuity payment is determined by multiplying this
fixed number of Annuity Units by the then current Annuity Unit value.
The A.I.R. assumed in the mortality tables would produce level Variable Annuity
payments if the investment rate remained constant. In fact, payments will vary
up or down as the investment rate varies up or down from the A.I.R.
The Annuity payments will be made on the fifteenth day of each month following
selection. The Annuity Unit value used in calculating the amount of the
Variable Annuity payments will be based on an Annuity Unit value determined as
of the close of business on a day no earlier than the fifth Valuation Day
preceding the date of the Annuity payment.
1398s
(Putnam Sep. Acct.)
<PAGE>
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CALCULATION OF YIELD AND RETURN
YIELD OF THE PCM MONEY MARKET FUND SUB-ACCOUNT. As summarized in the Prospectus
under the heading "Performance Related Information," the yield of the
Sub-Account for a seven day period (the "base period") will be computed by
determining the "net change in value" of a hypothetical account having a balance
of one unit at the beginning of the period, dividing the net change in account
value by the value of the account at the beginning of the base period to obtain
the base period return, and multiplying the base period return by 365/7 with the
resulting yield figure carried to the nearest hundredth of one percent. Net
changes in value of a hypothetical account will include net investment income of
the account (accrued dividends as declared by the underlying funds, less expense
and Contract charges of the account) for the period, but will not include
realized gains or losses or unrealized appreciation or depreciation on the
underlying fund shares.
The effective yield is calculated by compounding the base period return by
adding 1, raising the sum to a power equal to 365/7 and subtracting 1 from the
result, according to the following formula:
Effective Yield = [(Base Period Return + 1) RAISE TO THE POWER OF 365/7] - 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 yield and effective yield for the sub-account for the seven-day period
ending December 31, 1994 is as follows:
Yield = 4.43%
Effective Yield = 4.53%
The High Yield Fund, U.S. Government and High Quality Bond Fund, and PCM Growth
and Income Fund Sub-Accounts' yields will vary from time to time depending upon
market conditions and, the composition of the underlying funds' portfolios.
Yield should also be considered relative to changes in the value of the
Sub-Accounts' shares and to the relative risks associated with the investment
objectives and policies of the Funds.
UTILITIES GROWTH AND INCOME FUND
Yield calculations of the Sub-Account used for illustration purposes reflect the
interest earned by the Sub-Account, less applicable asset charges assessed
against a Contract Owner's account over the base period. The following is the
method used to determine the yield for the 30-day period ended December 31,
1994.
<PAGE>
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Example:
Current Yield Formula for the Sub-Account 2*[((A-B)/(C*D) + 1) RAISE TO]
THE 6th POWER - 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.
Yield = 3.47%
HIGH YIELD FUND SUB-ACCOUNT
Yield calculations of the Sub-Account used for illustration purposes reflect the
interest earned by the Sub-Account, less applicable asset charges assessed
against a Contract Owner's account over the base period. The following is the
method used to determine the yield for the 30-day period ended December 31,
1994.
Example:
Current Yield Formula for the Sub-Account 2*[((A-B)/(C*D) + 1) RAISE TO ]
THE 6th POWER - 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.
Yield = 9.21%
U.S. GOVERNMENT AND HIGH QUALITY BOND FUND SUB-ACCOUNT
Yield calculations of the Sub-Account used for illustration purposes reflect the
interest earned by the Sub-Account, less applicable asset charges assessed
against a Contract Owner's account over the base period. The following is the
method used to determine the yield for the 30-day period ended December 31,
1994.
<PAGE>
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Example:
Current Yield Formula for the Sub-Account 2*[((A-B)/(C*D) + 1) RAISE TO]
THE 6th POWER - 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.
Yield = 5.93%
GROWTH & INCOME FUND SUB-ACCOUNT
Yield calculations of the Sub-Account used for illustration purposes reflect the
interest earned by the Sub-Account, less applicable asset charges assessed
against a Contract Owner's account over the base period. The following is the
method used to determine the yield for the 30-day period ended December 31,
1994.
Example:
Current Yield Formula for the Sub-Account 2*[((A-B)/(C*D) + 1) RAISE TO]
THE 6th POWER - 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.
Yield = 2.34%
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>
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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.
PERFORMANCE COMPARISONS
YIELD AND TOTAL RETURN. 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. Index performance
is not representative of the performance of the PCM Sub-Account to which it is
compared and is not adjusted for commissions and other costs. Portfolio
holdings of the PCM Sub-Account will differ from those of the index to which it
is compared. Performance comparison indices include the following:
The Consumer Price Index, prepared by the U.S. Bureau of Labor Statistics, is a
commonly used measure of the rate of inflation. The index shows the average
change in the cost of selected consumer goods and services and does not
represent a return on an investment vehicle.
The Dow Jones Industrial Average is an unmanaged list of 30 common stocks
frequently used as a general measure of stock market performance. Its
performance figures reflect changes of market prices and reinvestment of all
distributions.
Lehman Brothers Corporate Bond Index is an unmanaged list of publicly issued,
fixed-rate, non-convertible investment-grade domestic corporate debt securities
frequently used as a general measure of the performance of fixed-income
securities. The average quality of bonds included in the index may be higher
than the average quality of those bonds in which PCM High Yield Fund customarily
invests. The index does not include bonds in certain of the lower rating
classifications in which the Fund may invest. The performance figures the index
reflect changes in market prices and reinvestment of all interest payments.
The Lehman Brothers Government Bond Index (the "SL Government Index") is a
measure of the market value of all public obligations of the U.S. Treasury; all
publicly issued debt of all agencies of the U.S. Government and all
quasi-federal corporations; and all corporate debt guaranteed by the U.S.
Government. Mortgage-backed securities, flower bonds and foreign targeted
issues are not included in the SL Government Index.
The Lehman Brothers 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 index does not include bonds in certain of the lower-rating
classifications in which PCM High Yield Fund invests. Its performance figures
reflect changes in market prices and reinvestment of all interest payments.
<PAGE>
- 12 -
Morgan Stanley Capital International World Index is an unmanaged list of
approximately 1,450 equity securities listed on the stock exchanges of the
United States, Europe, Canada, Australia, New Zealand and the Far East, with all
values expressed in U.S. dollars. Performance figures reflect changes in market
prices and reinvestment of distributions net of withholding taxes. The
securities in the index change over time to maintain representativeness.
The NASDAQ-OTC Industrial Average (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. Its performance figures reflect changes of market prices but do not
reflect reinvestment of cash dividends.
Salomon Brothers Long-Term High-Grade Corporate Bond Index is an unmanaged list
of publicly traded corporate bonds having a rating of at least AA by Standard &
Poors's or Aa by Moody's and is frequently used as general measure of the
performance of fixed-income securities. The average quality of bonds included
in the index may be higher than the average quality of those bonds in which PCM
High Yield customarily invests. The index does not include bonds in certain of
the lower rating classifications in which the Fund may invest. Performance
figures for the index reflect changes of market prices and reinvestment of all
distributions.
The Salomon Brothers 7-10 Year Government Bond Index is an unmanaged list of
U.S. Government and government agency securities with maturities of 7 to 10
years. Performance figures for the index reflect changes of market prices and
reinvestment of all interest payments.
The Standard & Poor's Composite Index of 500 stocks (the "S&P 500") a market
value-weighted and unmanaged index showing 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. Its performance figures reflect changes
of market prices and reinvestment of all regular cash dividends.
The Standard & Poor's 40 Utilities Index is unmanaged list of 40 utility stocks.
The Index assumes reinvestment of all distributions and reflects changes in
market prices but does not take into account brokerage commissions or other
fees. PCM Utilities Growth and Income Fund's telephone and electric utility
<PAGE>
- 13 -
stocks are generally held in the same proportion as the telephone and electric
stocks in the S&P Utilities Index. However, there are some utility stocks held
by the Fund that are not part of the Index.
The manner in which total return and yield will be calculated for public use is
described above. The following table summarizes the calculation of total return
and yield for each Sub-Account, where applicable, through December 31, 1994.
Putnam/ITT Hartford
<PAGE>
PUTNAM-Money Market Sub-Account
The following is an example of this yield calculation for the Sub-Account based
on a seven day period ending December 31,1994.
Assumption:
Value of a hypothetical pre-existing account
with exactly one unit at the beginning of the
period: . . . . . . . . . . . . . . . . . . . . . . . . $1.323999
Value of the same account (excluding capital
changes) at the end of the seven day period . . . . . . $1.325124
Calculation:
Ending account value. . . . . . . . . . . . . . . . . . $1.325124
Less beginning account value. . . . . . . . . . . . . . 1.323999
Net change in account value . . . . . . . . . . . . . . $0.001125
Base period return:
(adjusted change/beginning account value)
$0.001125/ $1.323999 $0.000850
Current yield = $0.000850 *(365/7) =. . . . . . . . . . . . 4.43%
Effective yield = (1 + 0.000850)TO THE POWER OF 365/7 - 1 = . . . 4.53%
<PAGE>
Putnam Utilities Growth and Income Fund - Sub-Account - HL
The following is an example of this yield calculation for the Sub-Account
based on a one month period ending December 31,1994.
Formula:
YIELD = 2[(A-B + 1) TO THE POWER OF 6-1]
---
CD
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.
Calculation: 2[(A-B/CD + 1)TO THE POWER OF 6-1]
INTEREST INCOME a = 1,010,000
EXPENSES b = 288,600
AVERAGE UNITS c = 23,090,365
UNIT VALUE d = $10.889305
UIT YIELD = 3.47%
<PAGE>
Putnam High Yield Fund - Sub-Account - HL
The following is an example of this yield calculation for the Sub-Account
based on a one month period ending December 31,1994.
Formula:
YIELD = 2[(A-B + 1)TO THE POWER OF 6-1]
---
CD
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.
Calculation: 2[(A-B/CD + 1)TO THE POWER OF 6-1]
INTEREST INCOME a = 1,730,000
EXPENSES b = 220,947
AVERAGE UNITS c = 11,461,548
UNIT VALUE d = $17.476456
UIT YIELD = 9.21%
<PAGE>
Putnam U.S. Government and High Quality Bond Fund - Sub-Account - HL
The following is an example of this yield calculation for the Sub-Account
based on a one month period ending December 31,1994.
Formula:
YIELD = 2[(A-B + 1) RAISED TO THE POWER OF 6-1]
---
CD
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.
Calculation: 2[(A-B/CD + 1)TO THE POWER OF 6-1]
INTEREST INCOME a = 3,140,000
EXPENSES b = 599,039
AVERAGE UNITS c = 33,315,951
UNIT VALUE d = $15.532869
UIT YIELD = 5.93%
<PAGE>
Putnam Growth & Income Fund - Sub-Account - HL
The following is an example of this yield calculation for the Sub-Account
based on a one month period ending December 31,1994.
Formula:
YIELD = 2[(A-B + 1)TO THE POWER OF 6-1]
---
CD
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.
Calculation: 2[(A-B/CD + 1)TO THE POWER OF 6-1]
INTEREST INCOME a = 4,160,000
EXPENSES b = 1,538,158
AVERAGE UNITS c = 67,015,929
UNIT VALUE d = $20.177784
UIT YIELD = 2.34%
<PAGE>
AVERAGE ANNUAL TOTAL RETURN as of December 31, 1994
<TABLE>
<CAPTION>
Putnam IV PERIODS ENDED
- -------------------------------------------------------------------------------------------
Sub-Account Inception
Date 1 YEAR 5 YEAR INCEPTION
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PCM Growth and Income Fund 02/01/88 -9.98% 3.93% 8.30%
PCM High Yield Fund 02/01/88 -11.17% 8.17% 5.39%
PCM Money Market Fund 02/01/88 -6.61% -0.32% 1.06%
PCM Global Asset Allocation Fund 02/01/88 -12.62% 2.75% 4.54%
PCM U.S. Government and High Quality Bond Fund 02/01/88 -13.30% 3.00% 3.70%
PCM Voyager Fund 02/01/88 -9.34% 9.00% 10.66%
PCM Global Growth Fund 05/01/90 -11.20% N/A 2.07%
PCM Utilities Growth and Income Fund 05/01/92 -16.81% N/A -1.73%
PCM Diversified Income Fund 09/15/93 -14.23% N/A -9.86%
PCM New Opportunities Fund 06/20/94 N/A N/A -1.82%
</TABLE>
NOTE: Average annual total return assumes a hypothetical initial payment of
$1,000. At the end of each period, a total surrender is assumed. Maintenance
fees and contingent deferred sales loads, if applicable, are deducted to
determine ending redeemable value of the original payment. Then, the ending
redeemable value is divided by the original investment to calculate total
return.
<PAGE>
ILA PUTNAM YIELD CALCULATION
INPUTS:
Period ending = December 31, 1994.
Fund name = PUTNAM-Money Market Sub-Account
Avg. account size = $36,000
12/23/94 unit value = 1.323978
12/30/94 unit value = 1.325124
Maintenance fee = $30
CALCULATIONS:
Avg. Investment
- -------------------- 27,190.784 = beginning # of units
beginning unit value
beginning # units
* ending unit value $36,031.16 = account value
annualized maint.fee 0.58
(fee * 7/365)
account value
- -maint.fee $36,030.59 = adjusted account value
-------------
$36,000.00
/begin.investment 0.0008495916 = change in account value
change in account value
* 365/7 4.43% = current yield
(1 + change in acct.value)RAISED TO THE POWER OF 365/7-1 4.53% =effective yield
Beginning
Adjust. unit value 1.323999
<PAGE>
To ITT Hartford Life & Annuity Insurance Company Putnam Capital Manager Trust
Separate Account Two and to the Owneres of Units of Interest therein:
We have audited the accompanying statement of assets and liabilities of ITT
Hartford Life & Annuity Insurance Company Putnam Capital Manager Trust Separate
Account Two as of December 31, 1994, and the related statement of operations for
the year then ended and the statements of changes in net assets for the year
then ended and for the period from inception, June 14, 1993, to December 31,
1993. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ITT Hartford Life & Annuity
Insurance Company Putnam Capital Manager Trust Separate Account Two as of
December 31, 1994, and the results of its operations for the year then ended
and the changes in its net assets for the year then ended and for the period
from inception, June 14, 1993, to December 31, 1993, in conformity wtih
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Harford, Connecticut
February 15, 1995
32
<PAGE>
<TABLE>
<CAPTION>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT TWO--ITT HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS & LIABILITIES
- ------------------------------------------------------------------------------------------------------------------------------
December 31, 1994 Voyager Global Growth Global Asset High Yield
Fund Growth and Income Allocation Fund
Sub-Account Fund Fund Fund Sub-Account
Sub-Account Sub-Account Sub-Account
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments
- ------------------------------------------------------------------------------------------------------------------------------
PCM VOYAGER FUND
Shares 14,507,312
Cost $313,463,183
- ------------------------------------------------------------------------------------------------------------------------------
Market Value $322,062,317 $ 0 $ 0 $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------------------
PCM GLOBAL GROWTH FUND
Shares 19,751,665
Cost $263,077,836
- ------------------------------------------------------------------------------------------------------------------------------
Market Value 0 266,252,450 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
PCM GROWTH AND INCOME FUND
Shares 32,894,870
Cost $555,021,250
- ------------------------------------------------------------------------------------------------------------------------------
Market Value 0 0 540,791,658 0 0
- ------------------------------------------------------------------------------------------------------------------------------
PCM GLOBAL ASSET ALLOCATION
FUND
Shares 10,740,289
Cost $147,881,742
- ------------------------------------------------------------------------------------------------------------------------------
Market Value 0 0 0 141,664,407 0
- ------------------------------------------------------------------------------------------------------------------------------
PCM HIGH YIELD FUND
Shares 10,908,327
Cost $131,191,559
- ------------------------------------------------------------------------------------------------------------------------------
Market Value 0 0 0 0 125,009,430
- ------------------------------------------------------------------------------------------------------------------------------
PCM U.S. GOVERNMENT AND
HIGH QUALITY FUND
Shares 9,647,788
Cost $129,464,353
- ------------------------------------------------------------------------------------------------------------------------------
Market Value 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
PCM NEW OPPORTUNITIES FUND
Shares 2,673,709
Cost $27,792,380
- ------------------------------------------------------------------------------------------------------------------------------
Market Value 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
PCM MONEY MARKET FUND
Shares 51,440,543
Cost $51,440,543
- ------------------------------------------------------------------------------------------------------------------------------
Market Value 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
PCM UTILITIES GROWTH &
INCOME FUND
Shares 12,093,833
Cost $142,905,815
- ------------------------------------------------------------------------------------------------------------------------------
Market Value 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
PCM DIVERSIFIED INCOME FUND
Shares 8,504,192
Cost $85,661,958
- ------------------------------------------------------------------------------------------------------------------------------
Market Value 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Due from ITT Hartford Life and
Annuity Insurance Company 266,105 278,834 54,499 22,828 35,079
- ------------------------------------------------------------------------------------------------------------------------------
Receivable from fund shares sold 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $322,328,422 $266,531,284 $ 540,846,157 $141,687,235 $125,044,509
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Due to ITT Hartford Life and
Annuity Insurance Company 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Payable for fund shares purchased 264,011 278,803 56,667 22,927 35,153
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES $ 264,011 $ 278,803 $ 56,667 $ 22,927 $ 35,153
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE ANNUITY
CONTRACT LIABILITIES) $322,064,411 $266,252,481 $ 540,789,490 $141,664,308 $125,009,356
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
<PAGE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
December 31, 1994 U.S. New Money Utilities Diversified
Government Opportunities Market Growth and Income Fund
and High Fund Fund Income Fund Sub-Account
Quality Sub-Account Sub-Account Sub-Account
Bond Fund
Sub-Account
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments
- ------------------------------------------------------------------------------------------------------------------------------
PCM VOYAGER FUND
Shares 14,507,312
Cost $313,463,183
- ------------------------------------------------------------------------------------------------------------------------------
Market Value $ 0 $ 0 $ 0 $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------------------
PCM GLOBAL GROWTH FUND
Shares 19,751,665
Cost $263,077,836
- ------------------------------------------------------------------------------------------------------------------------------
Market Value 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
PCM GROWTH AND INCOME FUND
Shares 32,894,870
Cost $555,021,250
- ------------------------------------------------------------------------------------------------------------------------------
Market Value 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
PCM GLOBAL ASSET ALLOCATION
FUND
Shares 10,740,289
Cost $147,881,742
- ------------------------------------------------------------------------------------------------------------------------------
Market Value 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
PCM HIGH YIELD FUND
Shares 10,908,327
Cost $131,191,559
- ------------------------------------------------------------------------------------------------------------------------------
Market Value 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
PCM U.S. GOVERNMENT AND
HIGH QUALITY FUND
Shares 9,647,788
Cost $129,464,353
- ------------------------------------------------------------------------------------------------------------------------------
Market Value 117,895,973 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
PCM NEW OPPORTUNITIES FUND
Shares 2,673,709
Cost $27,792,380
- ------------------------------------------------------------------------------------------------------------------------------
Market Value 0 28,929,535 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
PCM MONEY MARKET FUND
Shares 51,440,543
Cost $ 51,440,543
- ------------------------------------------------------------------------------------------------------------------------------
Market Value 0 0 51,440,543 0 0
- ------------------------------------------------------------------------------------------------------------------------------
PCM UTILITIES GROWTH &
INCOME FUND
Shares 12,093,833
Cost $142,905,815
- ------------------------------------------------------------------------------------------------------------------------------
Market Value 0 0 0 129,162,137 0
- ------------------------------------------------------------------------------------------------------------------------------
PCM DIVERSIFIED INCOME FUND
Shares 8,504,192
Cost $85,661,958
- ------------------------------------------------------------------------------------------------------------------------------
Market Value 0 0 0 0 82,830,830
- ------------------------------------------------------------------------------------------------------------------------------
Due from ITT Hartford Life and
Annuity Insurance Company 31,339 81,931 1,127,309 0 56,054
- ------------------------------------------------------------------------------------------------------------------------------
Receivable from fund shares sold 0 0 0 56,143 0
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $117,927,312 $29,011,466 $ 52,567,852 $129,218,280 $ 82,886,884
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Due to ITT Hartford Life and
Annuity Insurance Company 0 0 0 58,080 0
- ------------------------------------------------------------------------------------------------------------------------------
Payable for fund shares purchased 31,312 82,026 1,127,352 0 56,023
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES $ 31,312 $ 82,026 $ 1,127,352 $ 58,080 $ 56,023
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE ANNUITY
CONTRACT LIABILITIES) $117,896,000 $ 28,929,440 $ 51,440,500 $129,160,200 $ 82,830,861
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
33
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT TWO--ITT HARTFORD LIFE & ANNUITY
INSURANCE COMPANY
STATEMENT OF ASSETS & LIABILITIES (CONTINUED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
December 31, 1994 Units Unit Contract
Owned by Price Liability
Participants
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred annuity contracts in the accumulation period:
Individual Sub-Accounts:
- -----------------------------------------------------------------------------------------------------------------------------------
Voyager Fund Sub-Account 13,732,090 23.444549 $321,942,647
- -----------------------------------------------------------------------------------------------------------------------------------
Global Growth Fund Sub-Account 20,284,996 13.118640 266,111,563
- -----------------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund Sub-Account 26,789,912 20.177784 540,561,050
- -----------------------------------------------------------------------------------------------------------------------------------
Global Asset Allocation Fund Sub-Account 8,664,584 16.334545 141,532,030
- -----------------------------------------------------------------------------------------------------------------------------------
High Yield Fund Sub-Account 7,152,340 17.476456 124,997,560
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Government and High Quality Bond Fund Sub-Account 7,585,196 15.532869 117,819,857
- -----------------------------------------------------------------------------------------------------------------------------------
New Opportunities Fund Sub-Account 2,699,033 10.718448 28,929,440
- -----------------------------------------------------------------------------------------------------------------------------------
Money Market Fund Sub-Account 38,819,386 1.325124 51,440,500
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities Growth and Income Sub-Account 11,858,993 10.889305 129,136,194
- -----------------------------------------------------------------------------------------------------------------------------------
Diversified Income Fund Sub-Account 8,608,855 9.621589 82,830,861
- -----------------------------------------------------------------------------------------------------------------------------------
Total Accumulation Period: $1,805,301,702
- -----------------------------------------------------------------------------------------------------------------------------------
Annuity contracts in the annuity period:
Individual Sub-Accounts
- -----------------------------------------------------------------------------------------------------------------------------------
Voyager Fund Sub-Account 5,194 23.444549 121,764
- -----------------------------------------------------------------------------------------------------------------------------------
Global Growth Fund Sub-Account 10,742 13.118640 140,918
- -----------------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund Sub-Account 11,321 20.177784 228,440
- -----------------------------------------------------------------------------------------------------------------------------------
Global Asset Allocation Fund Sub-Account 8,098 16.334545 132,278
- ------------------------------------------------------------------------------------------------------------------------------------
High Yield Fund Sub-Account 675 17.476456 11,796
- -----------------------------------------------------------------------------------------------------------------------------------
U.S. Government and High Quality Bond Fund Sub-Account 4,902 15.532869 76,143
- -----------------------------------------------------------------------------------------------------------------------------------
Utilities Growth and Income Sub-Account 2,205 10.889305 24,006
- -----------------------------------------------------------------------------------------------------------------------------------
Total Annuity Period $ 735,345
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
GRAND TOTAL: $1,806,037,047
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
34
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT TWO--ITT HARTFORD LIFE & ANNUITY
INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
- ----------------------------------------------------------------------------------------------------------------------------------
For the Voyager Global Growth Global Asset High Yield
Year Fund Growth and Income Allocation Fund
Ended Sub-Account Fund Fund Fund Sub-Account
December 31, Sub-Account Sub-Account Sub-Account
1994
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment
income:
Dividends $ 3,631,806 $ 840,433 $ 21,057,094 $ 5,472,834 $ 8,017,927
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses:
- ----------------------------------------------------------------------------------------------------------------------------------
Mortality and
expense
undertakings (3,259,378) (2,852,397) (6,090,892) (1,647,209) (1,590,573)
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment
income (loss) 372,428 (2,011,964) 14,966,202 3,825,625 6,427,354
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized
and unrealized
gain (loss)
on investments:
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized
gain (loss) on
security
transactions (191,228) (18,513) (10,345) (6,505) (97,959)
- ----------------------------------------------------------------------------------------------------------------------------------
Net unrealized
appreciation
(depreciation)
of investments
during the
period 3,078,450 (4,229,598) (20,548,899) (8,352,436) (9,120,235)
- ----------------------------------------------------------------------------------------------------------------------------------
Net
gains(losses)
on
investments 2,887,222 (4,248,111) (20,559,244) (8,358,941) (9,218,194)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease)
in net assets
resulting
from
operations $3,259,650 $(6,260,057) $(5,593,042) $(4,533,316) $(2,790,840)
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
For the U.S. New Money Utilities Diversified
Year Government Opportunities Market Growth and Income Fund
Ended and High Fund Fund Income Fund Sub-Account
December 31, Quality Sub-Account* Sub-Account Sub-Account
1994 Bond Fund
Sub-Account
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment
income:
Dividends $ 8,020,188 $ 0 $ 1,639,892 $ 5,381,111 $ 368,605
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses
- ------------------------------------------------------------------------------------------------------------------------------------
Mortality and
expense
undertakings (1,654,223) (97,733) (583,258) (1,811,695) (990,825)
- ----------------------------------------------------------------------------------------------------------------------------------
Net investment
income (loss) 6,365,965 (97,733) 1,056,634 3,569,416 (622,220)
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized
and
unrealized
gain(loss)
on investments:
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized
gain(loss) on
security
transactions (72,020) (14,613) 0 (92,356) (2,731)
- ----------------------------------------------------------------------------------------------------------------------------------
Net unrealized
appreciation
(depreciation)
of investments
during the
period (11,964,074) 1,137,155 0 (14,771,976) (3,325,550)
- ----------------------------------------------------------------------------------------------------------------------------------
Net
gains (losses)
on investments (12,036,094) (1,122,542) 0 (14,864,332) (3,328,281)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease)
in net assets
resulting
from operations $(5,670,129) $1,024,809 $1,056,634 $(11,294,916) $(3,950,501)
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
*From inception May 2, 1994 to December 31, 1994
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
35
<PAGE>
<TABLE>
<CAPTION>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT TWO--ITT HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
- ----------------------------------------------------------------------------------------------------------------------------------
For the Year Voyager Global Growth Global Asset High Yield
Ended Fund Growth and Income Allocation Fund
December 31, Sub-Account Fund Fund Fund Sub-Account
1994 Sub-Account Sub-Account Sub-Account
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operations:
Net Investment
income
(loss) $ 372,428 $ (2,011,964) $14,966,202 $ 3,825,625 $ 6,427,354
- ----------------------------------------------------------------------------------------------------------------------------------
Net realized
gain (loss)
on security
transactions (191,228) (18,513) (10,345) (6,505) (97,959)
- ----------------------------------------------------------------------------------------------------------------------------------
Net unrealized
appreciation
(depreciation)
of investments
during the
period 3,078,450 (4,229,598) (20,548,899) (8,352,436) (9,120,235)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) in
net assets
resulting
from
operations 3,259,650 (6,260,075) (5,593,042) (4,533,316) (2,790,840)
- ----------------------------------------------------------------------------------------------------------------------------------
Unit
transactions:
Purchases 132,782,780 122,326,486 205,817,932 60,974,360 52,225,263
- ----------------------------------------------------------------------------------------------------------------------------------
Net transfers 39,108,109 44,716,940 46,569,749 13,009,830 (8,933,259)
- ----------------------------------------------------------------------------------------------------------------------------------
Surrenders (6,359,020) (6,322,979) (16,638,317) (4,218,504) (6,124,706)
- ----------------------------------------------------------------------------------------------------------------------------------
Net annuity
transactions 83,164 96,555 88,430 94,422 12,744
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) in
net assets
resulting
from unit
transactions 165,615,033 160,817,002 235,837,794 69,860,108 37,180,042
- ----------------------------------------------------------------------------------------------------------------------------------
Total increase
(decrease) in
net assets 168,874,683 154,556,927 230,244,752 65,326,792 34,389,202
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets:
Beginning of
period 153,189,728 111,695,554 310,544,738 76,337,516 90,620,154
- ----------------------------------------------------------------------------------------------------------------------------------
End of
period $322,064,411 $266,252,481 $ 540,789,490 $141,664,308 $125,009,356
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
For the U.S. New Money Utilities Diversified
Year Government Opportunities Market Growth and Income Fund
Ended and High Fund Fund Income Fund Sub-Account
December 31, Quality Sub-Account Sub-Account Sub-Account
1994 Bond Fund
Sub-Account
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operations:
Net
Investment
income (loss) 6,365,965 $ ( 97,733) 1,056,634 $ 3,569,416 (622,220)
- -----------------------------------------------------------------------------------------------------------------------------------
Net realized
gain (loss)
on security
transactions (72,020) (14,613) 0 (92,356) (2,731)
- ----------------------------------------------------------------------------------------------------------------------------------
Net unrealized
appreciation
(depreciation)
of investments
during the
period (11,964,074) 1,137,155 0 (14,771,976) (3,325,550)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) in
net assets
resulting
from operations (5,670,129) 1,024,809 1,056,634 (11,294,916) (3,950,501)
- ----------------------------------------------------------------------------------------------------------------------------------
Unit
transactions
Purchases 36,900,682 16,321,767 52,564,931 33,210,440 58,617,588
- ----------------------------------------------------------------------------------------------------------------------------------
Net transfers (24,394,027) 11,838,985 (15,645,418) (18,170,247) (4,473,953)
- ----------------------------------------------------------------------------------------------------------------------------------
Surrenders (7,087,988) (256,121) (3,250,665) (5,278,183) (2,449,556)
- ----------------------------------------------------------------------------------------------------------------------------------
Net annuity
transactions 77,551 0 0 5,696 0
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) in
net assets
resulting
from unit
transactions 5,496,218 27,904,631 33,668,848 9,767,706 51,694,079
- ----------------------------------------------------------------------------------------------------------------------------------
Total increase
(decrease) in
net assets (173,911) 28,929,440 34,725,482 (1,527,210) 47,743,578
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets
Beginning of
period 118,069,911 0 16,715,018 130,687,410 35,087,283
- ----------------------------------------------------------------------------------------------------------------------------------
End of
period $117,896,000 $28,929,440 $51,440,500 $129,160,200 $82,830,861
- ----------------------------------------------------------------------------------------------------------------------------------
<FN>
*From inception May 2, 1994 to December 31, 1994
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
36
<PAGE>
<TABLE>
<CAPTION>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT TWO--ITT HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------
For the Year Voyager Global Growth Global Asset High Yield
Ended Fund Growth and Income Allocation Fund
December 31, Sub-Account Fund Fund Fund Sub-Account
1993 Sub-Account Sub-Account Sub-Account
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operations:
Net
investment
income (loss) $ (361,729) $ (252,158) $ (843,350) $ (198,886) $ (235,460)
- ------------------------------------------------------------------------------------------------------------------------------
Net realized
gain (loss)
on security
transactions (602) (22) (245) 7 1,313
- ------------------------------------------------------------------------------------------------------------------------------
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period 5,520,684 7,404,213 6,319,307 2,135,101 2,938,106
- ------------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease)
in net assets
resulting
from
operations 5,158,353 7,152,033 5,475,712 1,936,222 2,703,959
- ------------------------------------------------------------------------------------------------------------------------------
Unit
transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Purchases 61,991,152 59,964,514 135,656,137 43,405,984 40,946,109
- ------------------------------------------------------------------------------------------------------------------------------
Net
transfers 87,386,944 45,256,252 171,770,259 31,565,974 47,345,671
- ------------------------------------------------------------------------------------------------------------------------------
Surrenders (1,380,229) (719,729) (2,496,019) (610,415) (375,585)
- ------------------------------------------------------------------------------------------------------------------------------
Net annuity
transactions 33,508 42,484 138,649 39,751 0
- ------------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease)
in net assets
resulting
from unit
transactions 148,031,375 104,543,521 305,069,026 74,401,294 87,916,195
- ------------------------------------------------------------------------------------------------------------------------------
Total increase
(decrease)
in net assets 153,189,728 111,695,554 310,544,738 76,337,516 90,620,154
- ------------------------------------------------------------------------------------------------------------------------------
Net assets:
- ------------------------------------------------------------------------------------------------------------------------------
Beginning of
period 0 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
END OF
PERIOD $153,189,728 $111,695,554 $310,544,738 $76,337,516 $90,620,154
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------
For the Year Ended U.S. Government Money Utilities Diversified
Ended and High Market Growth and Income Fund
December 31, Quality Fund Income Fund Sub-Account
1993 Bond Fund Sub-Account Sub-Account
Sub-Account
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations:
Net
investment
income (loss) $ (336,296) $ 63,903 $ (360,325) $ (57,266)
- ------------------------------------------------------------------------------------------------------------------------------
Net realized
gain (loss)
on security
transactions (219) 0 442 104
- ------------------------------------------------------------------------------------------------------------------------------
Net
unrealized
appreciation
(depreciation)
of
investments
during the
period 395,693 0 1,028,297 494,420
- ------------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease)
in net assets
resulting
from
operations 59,178 63,903 668,414 437,258
- ------------------------------------------------------------------------------------------------------------------------------
Unit
transactions:
- ------------------------------------------------------------------------------------------------------------------------------
Purchases 55,083,327 22,515,440 61,172,539 28,920,146
- ------------------------------------------------------------------------------------------------------------------------------
Net
transfers 63,623,524 (5,492,469) 70,363,758 5,793,146
- ------------------------------------------------------------------------------------------------------------------------------
Surrenders (696,118) (371,856) (1,538,293) (63,267)
- ------------------------------------------------------------------------------------------------------------------------------
Net annuity
transactions 0 0 20,992 0
- ------------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease)
in net assets
resulting
from unit
transactions 118,010,733 16,651,115 130,018,996 34,650,025
- ------------------------------------------------------------------------------------------------------------------------------
Total increase
(decrease)
in net assets 118,069,911 16,715,018 130,687,410 35,087,283
- ------------------------------------------------------------------------------------------------------------------------------
Net assets
- ------------------------------------------------------------------------------------------------------------------------------
Beginning of
period 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
END OF
PERIOD $118,069,911 $16,715,018 $130,687,410 $35,087,283
- ------------------------------------------------------------------------------------------------------------------------------
<FN>
*From Inception, September 15, 1993 to December 31, 1993
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
37
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT TWO--ITT HARTFORD LIFE & ANNUITY
INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
1. ORGANIZATION:
Putnam Capital Manager Trust Separate Account Two (the Account) is a separate
investment account within ITT Hartford Life & Annuity Insurance Company (the
Company) and is registered with the Securities and Exchange Commission (SEC) as
a unit investment trust under the Investment Company Act of 1940, as amended.
Both the Company and the Account are subject to supervision and regulation by
the Department of Insurance of the State of Connecticut. The Account commenced
operations on June 14, 1993.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the Account,
which are in accordance with generally accepted accounting principles in the
investment company industry:
A) SECURITY TRANSACTIONS Security transactions are recorded on the trade date
(date the order to buy or sell is executed). Cost of investments sold is
determined on the basis of identified cost. Dividend and capital gains income
are accrued as of the ex-dividend date.
B) SECURITY VALUATION The investment in shares of the Funds is valued at the
closing net asset value per share as determined by the appropriate Fund as of
December 31, 1994.
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.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
A) MORTALITY AND EXPENSE UNDERTAKINGS The Company, as issuer of variable annuity
contracts, provides the mortality and expense undertakings and, with respect to
the Account, receives a maximum annual fee of 1.25% of the Account's average
daily net assets. The Company also provides administrative services and receives
an annual fee of 0.15% of the Account's average daily net assets.
B) DEDUCTION OF ANNUAL MAINTENANCE FEE Annual maintenance fees are deducted
through termination of units of interest from applicable contract owners'
accounts, in accordance with the terms of the contracts.
38
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY-BASIS FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1994 AND 1993
TOGETHER WITH
AUDITORS' REPORT
<PAGE>
[ARTHUR ANDERSEN LLP LETTERHEAD]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
ITT Hartford Life and Annuity Insurance Company:
We have audited the accompanying statutory-basis balance sheets of ITT Hartford
Life and Annuity Insurance Company (Wisconsin corporation and wholly-owned
subsidiary of Hartford Life Insurance Company) (the Company) as of December 31,
1994 and 1993, and the related statutory-basis statements of income, changes in
capital and surplus and cash flows for each of the three years in the period
ended December 31, 1994. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
statutory-basis financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The Company presents its financial statements in conformity with statutory
accounting practices as described in Note 1. When statutory-basis financial
statements are presented for purposes other than for filing with a regulatory
agency, generally accepted auditing standards require that an auditor's report
on them state whether they are presented in conformity with generally accepted
accounting principles. The accounting practices used by the Company vary from
generally accepted accounting principles as explained and quantified in Note 1.
In our opinion, because the differences in accounting practices as described in
Note 1 are material, the statutory-basis financial statements referred to above
do not present fairly, in accordance with generally accepted accounting
principles, the financial position of the Company as of December 31, 1994 and
1993, and the results of its operations and its cash flows for each of the three
years in the period ended December 31, 1994.
<PAGE>
-2-
However, in our opinion, the statutory-basis financial statements referred to
above present fairly, in all material respects, the financial position of the
Company as of December 31, 1994 and 1993, and the results of its operations and
its cash flows for each of the three years in the period ended December 31, 1994
in conformity with statutory accounting practices as described in Note 1.
Hartford, Connecticut
January 30, 1995
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY BALANCE SHEETS
($000)
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1994 1993
---------- ----------
<S> <C> <C>
ASSETS
Bonds $ 798,501 $ 294,338
Common Stocks 2,275 1,599
Policy Loans 20,145 1,859
Cash & Short-Term Investments 84,312 33,232
Other Invested Assets 2,519 458
---------- ----------
Total Cash & Invested Assets 907,752 331,486
---------- ----------
Investment Income Due & Accrued 12,757 4,426
Premium Balances Receivable 467 46
Receivables from Affiliates 2,861 4,320
Other Assets 13,749 17,254
Separate Account Assets 3,588,077 2,053,775
---------- ----------
Total Assets $ 4,525,663 $ 2,411,307
---------- ----------
---------- ----------
LIABILITIES
Aggregate Reserves for Future Benefits $ 447,284 $ 41,195
Policy & Contract Claims 9,902 740
Liability for Premium & Other Deposit Funds 479,202 284,159
Asset Valuation Reserve 2,422 1,066
Payable to Affiliates 7,840 13,618
Other Liabilities (100,349) (71,939)
Separate Account Liabilities 3,588,077 2,053,775
---------- ----------
Total Liabilities 4,434,378 2,322,614
---------- ----------
---------- ----------
CAPITAL AND SURPLUS
Common Stock 2,500 2,500
Gross Paid-In & Contributed Surplus 114,109 114,109
Unassigned Funds (25,324) (27,916)
---------- ----------
Total Capital and Surplus 91,285 88,693
---------- ----------
TOTAL LIABILITIES AND CAPITAL AND SURPLUS $ 4,525,663 $ 2,411,307
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF INCOME
($000)
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
REVENUES
Premiums & Annuity Considerations $ 442,173 $ 14,281 $ 9,974
Annuity & Other Fund Deposits 608,685 1,986,140 1,292
Net Investment Income 29,012 7,970 5,666
Commissions & Expense Allowances on Reinsurance Ceded 154,527 60,700 50,209
Reserve Adjustment on Reinsurance Ceded 1,266,926 0 0
Other Revenues 41,857 369,598 (231)
---------- ---------- ----------
Total Revenues 2,543,180 2,438,689 66,910
---------- ---------- ----------
BENEFITS AND EXPENSES
Death and Annuity Benefits 7,948 3,192 2,822
Surrenders and Other Benefit Payments 181,749 4,955 1,836
Commissions and Other Expenses 186,303 132,169 57,360
Increase in Reserves for Future Benefits 416,748 5,120 3,765
Increase in Liability for Premium
and Other Deposit Funds 182,934 281,024 887
Net transfers to Separate Accounts 1,541,419 2,013,183 0
---------- ---------- ----------
Total Benefits and Expenses 2,517,101 2,439,643 66,670
---------- ---------- ----------
NET GAIN (LOSS) FROM OPERATIONS
BEFORE FEDERAL INCOME TAXES 26,079 (954) 240
Federal Income Taxes 24,038 11,270 1,561
---------- ---------- ----------
NET GAIN (LOSS) FROM OPERATIONS 2,041 (12,224) (1,321)
Net Realized Capital Gains (2) 877 120
---------- ---------- ----------
NET INCOME (LOSS) $ 2,039 $ (11,347) $ (1,201)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
($000)
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
CAPITAL & SURPLUS - BEGINNING OF YEAR $ 88,693 $ 30,027 $ 41,227
--------- --------- ---------
Net Income (Loss) 2,039 (11,347) (1,201)
Net Unrealized Gains (Losses) on Investments (133) (1,198) 527
Change in Asset Valuation Reserve (1,356) 135 (655)
Change in Non-Admitted Assets (8,599) 1,076 (7,671)
Change in Reserve (valuation basis) 10,659 0 0
Aggregate write-ins for surplus (18) 0 0
Dividends to Stockholder 0 0 (2,200)
Paid In Capital 0 70,000 0
--------- --------- ---------
Change in Capital and Surplus 2,592 58,666 (11,200)
--------- --------- ---------
CAPITAL & SURPLUS - END OF YEAR $ 91,285 $ 88,693 $ 30,027
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CASH FLOW
($000)
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------
1994 1993 1992
--------- ---------- ----------
<S> <C> <C> <C>
OPERATIONS
Premiums, Annuity Considerations & Fund Deposits $ 1,050,493 $ 2,000,492 $ 11,262
Investment Income 24,519 5,594 5,578
Other Income 1,515,700 434,851 53,635
--------- ---------- ----------
Total Income 2,590,712 2,440,937 70,475
--------- ---------- ----------
Benefits Paid 181,205 8,215 4,789
Federal Income Taxes Paid on Operations 20,634 9,666 44
Other Expenses 1,832,905 2,231,477 57,383
--------- ---------- ----------
Total Benefits & Expenses 2,034,744 2,249,358 62,216
--------- ---------- ----------
NET CASH FROM OPERATIONS 555,968 191,579 8,259
--------- ---------- ----------
PROCEEDS FROM INVESTMENTS
Bonds 87,747 88,334 71,668
Common Stocks 0 0 102
Other 40 23,638 88
--------- ---------- ----------
NET INVESTMENT PROCEEDS 87,787 111,972 71,858
--------- ---------- ----------
Tax on Capital Gains (96) 376 (119)
Paid In Surplus 0 70,000 0
Other Cash Provided 30,554 0 6,028
--------- ---------- ----------
TOTAL PROCEEDS 674,405 373,175 86,264
--------- ---------- ----------
COST OF INVESTMENTS ACQUIRED
Bonds 595,181 314,933 80,174
Common Stocks 808 567 625
Miscellaneous Applications 2,523 0 0
--------- ---------- ----------
TOTAL INVESTMENTS ACQUIRED 598,512 315,500 80,799
--------- ---------- ----------
OTHER CASH APPLIED
Dividends Paid to Stockholder 0 0 2,200
Other 24,813 24,626 13,725
--------- ---------- ----------
TOTAL OTHER CASH APPLIED 24,813 24,626 15,925
--------- ---------- ----------
TOTAL APPLICATIONS 623,325 340,126 96,724
--------- ---------- ----------
NET CHANGE IN CASH & SHORT-TERM INVESTMENTS 51,080 33,049 (10,460)
CASH & SHORT-TERM INVESTMENTS, BEGINNING OF YEAR 33,232 183 10,643
--------- ---------- ----------
CASH & SHORT-TERM INVESTMENTS, END OF YEAR $ 84,312 $ 33,232 $ 183
--------- ---------- ----------
--------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION
ITT Hartford Life and Annuity Insurance Company (ILA or the Company),
formerly known as ITT Life Insurance Corporation, is a wholly owned
subsidiary of Hartford Life Insurance Company (HLIC), which is an
indirect subsidiary of the ITT Hartford Insurance Group, Inc. (ITT
Hartford), a wholly owned subsidiary of ITT Corporation (ITT).
ILA offers a complete line of ordinary and universal life insurance,
individual annuities and certain supplemental accident and health benefit
coverages.
BASIS OF PRESENTATION
The accompanying ILA statutory basis financial statements were prepared in
conformity with statutory accounting practices prescribed or permitted by
the National Association of Insurance Commissioners (NAIC) and the
Insurance Department of the State of Wisconsin.
Statutory accounting practices and generally accepted accounting principles
(GAAP) differ in certain significant respects. These differences
principally involve:
(1) treatment of policy acquisition costs (commissions, underwriting
and selling expenses, premium taxes, etc.) which are charged to
expense when incurred for statutory purposes rather than on a pro-rata
basis over the expected life of the policy;
(2) recognition of premium revenues, which for statutory purposes are
generally recorded as collected or when due during the premium paying
period of the contract. For GAAP purposes, revenues for universal life
policies and investment products consist of policy charges for the
cost of insurance, policy administration and surrender charges
assessed to policy account balances. Premiums for traditional life
insurance policies are recognized as revenues when they are due from
policyholders. 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 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 National Association of Insurance
Commissioners (NAIC) which may vary considerably from interest and
mortality used for GAAP financial reporting;
(4) providing for income taxes based on current taxable income 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 statement and tax reporting purposes;
(5) excluding certain assets designated as non-admitted assets (past
due agent's balances, furniture and equipment, etc.) from the balance
sheet for statutory purposes by directly charging surplus;
(6) establishing accruals for post-retirement and post-employment
health care benefits on an optional basis, immediate recognition or a
twenty year phase-in approach, whereas GAAP liabilities were
established at date of adoption. For statutory reporting purposes the
Company established accruals utilizing the twenty year phase-in
approach;
<PAGE>
-2-
(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, resulting from changes in interest rates
during the period the asset is held, into income over the remaining
life 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. On a GAAP basis reserves are
reported gross of reinsurance with reserve credits presented as
recoverable assets.
(9) the reporting of fixed maturities at amortized cost, where 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 effect those intentions. The Company's fixed maturities
were classified on a GAAP basis as "available-for-sale" and
accordingly, these investments were reflected at fair value with the
corresponding impact included as a component of Stockholder's Equity
designated as "Unrealized Loss on Securities, Net of Tax"
As of December 31, 1994, 1993 and 1992, the significant differences between
statutory and GAAP basis net income and capital and surplus for the Company are
summarized as follows:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
GAAP Net Income: $ 23,295 $ 6,071 $ 7,034
Deferred acquisition costs (117,863) (147,700) (17,434)
Benefit reserve adjustment 30,912 14,059 (1,833)
Deferred taxes (9,267) (7,123) 769
Separate accounts 75,941 110,547 0
Coinsurance 3,472 11,578 8,005
Other, net (4,451) 1,221 2,258
--------- --------- ---------
Statutory Net Income (Loss) $ 2,039 $ (11,347) $ (1,201)
--------- --------- ---------
--------- --------- ---------
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
GAAP Capital and Surplus $ 199,785 $ 198,408 $ 122,504
Deferred acquisition costs (422,201) (304,338) (156,638)
Benefit reserve adjustment 85,191 43,621 29,562
Deferred taxes 13,257 13,706 20,829
Separate accounts 18,488 110,547 0
Asset valuation reserve (2,422) (1,066) (1,201)
Coinsurance 0 22,642 9,442
Unrealized (Gain) Loss on Bonds 21,918 0 0
Other, net 9,269 5,173 5,529
-------- -------- --------
Statutory Capital and Surplus $ 91,285 $ 88,693 $ 30,027
-------- -------- --------
-------- -------- --------
</TABLE>
<PAGE>
-3-
AGGREGATE RESERVES AND LIABILITIES FOR PREMIUM AND OTHER DEPOSIT FUNDS:
Aggregate reserves for payment of future life, health and annuity benefits
were computed in accordance with presently accepted actuarial standards.
Reserves for life insurance policies are generally based on the 1958 and
1980 Commissioner's Standard Ordinary Mortality Tables at various rates
ranging from 2.5% to 5.5%. Accumulation and on-benefit annuity reserves are
based principally on Individual Annuity tables at various rates ranging from
2.5% to 8.75% and using the Commissioner's Annuity Reserve Valuation Method
(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 Statement of Income.
During 1994, the Company changed the valuation method on life policies and
contracts resulting in a $10.9 million increase in surplus. The new
valuation method is in accordance with presently accepted actuarial
standards.
INVESTMENTS:
Investments in bonds are carried at amortized cost. Bonds which are deemed
ineligible to be held at amortized cost by the National Association of
Insurance Commissioners (NAIC) Securities Valuation Office (SVO) are carried
at the appropriate SVO published value. When apermanent reduction in the
value of publicly traded securities occurs, the decrease is reported as a
realized loss and the carrying value is adjusted accordingly. Common stocks
are carried at market value with the difference from cost reflected in
surplus. Other invested assets are generally recorded at fair value.
Changes in unrealized capital gains and losses on common stock are reported
as additions to or reductions of surplus. The Asset Valuation Reserve,
which replaced the Mandatory Securities Valuation Reserve used in 1991, is
designed to provide a standardized reserve process for realized and
unrealized losses due to the default and equity risks associated with
invested assets. The reserve increased by $1,356 in 1994, decreased by $135
in 1993 and increased by $655 in 1992. Additionally, the Interest
Maintenance Reserve (IMR) captures net realized capital gains and losses,
net of applicable income taxes, resulting from changes in interest rates and
amortizes these gains or losses into income over the remaining life of the
mortgage loan or bond sold. Realized capital gains and losses not included
in IMR are reported in the Statement of Income net of taxes. Realized
investment gains and losses are determined on a specific identification
basis. The amount of net capital losses reclassified from the IMR was $67
and $264 in 1994 and 1993, respectively and the amount of the net capital
gains transferred to the IMR was $348 in 1992. The amount of income
amortized was $114 in 1994, $178 in 1993 and $114 in 1992.
OTHER LIABILITIES:
The amount reflected in other liabilities includes a receivable from the
separate accounts of $186.5 million and $98.2 million in 1994 and 1993,
respectively. The balances are classified in accordance with NAIC
accounting practices.
2. INVESTMENTS
(a) COMPONENTS OF NET INVESTMENT INCOME:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Interest income from fixed maturity securities $ 29,493 $ 7,975 $ 5,985
Interest income from policy loans 454 124 115
Interest and dividends from other investments (89) 47 31
--------- --------- ---------
Gross investment income 29,858 8,146 6,131
Less: investment expenses 846 176 465
--------- --------- ---------
Net investment income $ 29,012 $ 7,970 $ 5,666
--------- --------- ---------
--------- --------- ---------
</TABLE>
<PAGE>
-4-
(b) UNREALIZED GAINS (LOSSES) ON STOCK:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Gross unrealized gains $ 75 $ 148 $ 93
Gross unrealized losses (60) 0 0
-------- -------- --------
Net unrealized gains 15 148 93
Balance at beginning of year 148 93 111
-------- -------- --------
Change in net unrealized gains on common stock $ (133) $ 55 $ (18)
-------- -------- --------
-------- -------- --------
</TABLE>
(c) UNREALIZED GAINS (LOSSES) ON BONDS AND SHORT-TERM INVESTMENTS:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Gross unrealized gains $ 986 $ 5,916 $ 2,430
Gross unrealized losses (34,718) (684) (143)
------- ------- -------
Net unrealized (losses) gains after tax (33,732) 5,232 2,287
Balance at beginning of year 5,232 2,287 2,760
------- ------- -------
Change in net unrealized (losses) gains on
bonds and short-term investments $ (38,964) $ 2,945 $ (473)
------- ------- -------
------- ------- -------
</TABLE>
<TABLE>
<CAPTION>
(d) COMPONENTS OF NET REALIZED GAINS:
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Bonds $ (101) $ (316) $ 665
Stocks 0 0 4
Real estate and other 34 1,316 88
------- ------- -------
Realized (losses) gains (67) 1,000 757
Capital gains taxes 2 386 289
------- ------- -------
Net realized gains (69) 614 468
Less: IMR Capital Gains (Losses) (67) (263) 348
------- ------- -------
Capital Gains Net of IMR $ (2) $ 877 $ 120
------- ------- -------
------- ------- -------
</TABLE>
<PAGE>
-5-
(e) OFF-BALANCE SHEET INVESTMENTS
The Company had no significant financial instruments with off-balance sheet
risk as of December 31, 1994, 1993 and 1992.
(f) CONCENTRATION OF CREDIT RISK:
Excluding U.S. government and government agency investments, the Company is
not exposed to any significant concentration of credit risk.
(g) BONDS, SHORT-TERM AND UNAFFILIATED STOCK INVESTMENTS:
<TABLE>
<CAPTION>
1994
------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ---------- ---------- ----------
U.S. government and government agencies and
authorities:
<S> <C> <C> <C> <C>
- guaranteed and sponsored $175,925 $0 $(12,059) $163,866
- guaranteed and sponsored - asset backed 142,318 382 (4,911) 137,789
States, municipalities and political subdivisions 10,409 0 (603) 9,806
International governments 2,248 0 (69) 2,179
Public utilities 29,509 31 (1,271) 28,269
All other corporate 257,301 246 (9,452) 248,095
All other corporate - asset backed 112,390 327 (4,066) 108,651
Short-term investments 56,365 0 0 56,365
Certificates of deposit 68,401 0 (2,287) 66,114
--------- -------- --------- ----------
Total $854,866 $986 $(34,718) $821,134
--------- -------- --------- ----------
--------- -------- --------- ----------
<CAPTION>
1994
------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Common Stock $2,260 $75 $(60) $2,275
--------- -------- --------- ----------
--------- -------- --------- ----------
</TABLE>
<PAGE>
-6-
(G) BONDS, SHORT-TERM AND UNAFFILIATED STOCK INVESTMENTS: (CONTINUED)
<TABLE>
<CAPTION>
1993
------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. government and government agencies and authorities:
- guaranteed and sponsored $88,485 $157 $(290) $88,352
- guaranteed and sponsored - asset backed 103,264 4,019 (346) 106,937
States, municipalities and political subdivisions 410 0 0 410
International governments 0 0 0 0
Public utilities 7,545 201 0 7,746
All other corporate 76,397 1,504 (16) 77,885
All other corporate - asset backed 15,237 35 (20) 15,252
Short-term investments 8,176 0 0 8,176
Certificates of deposit 3,000 0 (12) 2,988
--------- -------- --------- ---------
Total $302,514 $5,916 $(684) $307,746
--------- -------- --------- ---------
--------- -------- --------- ---------
<CAPTION>
1993
------------------------------------------------
Gross Gross
Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Common Stock $1,452 $148 $0 $1,600
--------- -------- --------- ---------
--------- -------- --------- ---------
</TABLE>
The amortized cost and estimated market value of bonds and short-term
investments at December 31, 1994 by management's anticipated maturity are
shown below. Asset backed securities are distributed to maturity year
based on ILA's estimate of the rate of future prepayments of principal over
the remaining life of the securities. Expected maturities differ from
contractual maturities reflecting borrowers' rights to call or prepay their
obligations.
<TABLE>
<CAPTION>
Estimated
Amortized Fair
Maturity Cost Value
-------- --------- ---------
<S> <C> <C>
Due in one year or less $130,299 $128,300
Due after one year through five years 606,859 579,771
Due after five years through ten years 110,444 104,107
Due after ten years 7,264 8,957
--------- ---------
Total $854,866 $821,135
--------- ---------
--------- ---------
</TABLE>
<PAGE>
-7-
Proceeds from sales of investments in bonds and short-term investments
during 1994, 1993 and 1992 were $117,912, $333,023 and $219,356 resulting
in gross realized gains of $518, $937 and $968 and gross realized losses of
$624, $1,255 and $269 before transfers to IMR. The Company has no realized
gains for common stock.
(h) FAIR VALUE OF INVESTMENT-RELATED FINANCIAL INSTRUMENTS NOT DISCLOSED
ELSEWHERE:
BALANCE SHEET ITEMS: (IN MILLIONS)
<TABLE>
<CAPTION>
1994 1993
----------------- -------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ------- -------- --------
<S> <C> <C> <C> <C>
ASSETS
Policy loans $20 $20 $2 $2
LIABILITIES
Liabilities on investment contracts $534 $526 $289 $287
</TABLE>
The carrying amounts for policy loans approximates fair value. The
liabilities are determined by forecasting future cash flows discounted at
current market rates.
3. RELATED PARTY TRANSACTIONS:
Transactions between the Company and its affiliates within ITT Hartford
relate principally to tax settlements, reinsurance, service fees, capital
contributions and payments of dividends.
For additional information, see Footnote 5,6 and 7.
4. FEDERAL INCOME TAXES:
The Company is included in the consolidated Federal income tax return of
ITT Hartford which is ultimately included in the income tax return of ITT.
Allocation of taxes is based primarily upon separate company tax return
calculations with current credit for net losses used in consolidation
except that increases resulting from consolidation are allocated in
proportion to separate return amounts. Intercompany Federal income tax
balances are generally settled quarterly with Hartford Fire. Federal income
taxes paid by the Company were $20,538, $10,042 and $(75) in 1994, 1993 and
1992, respectively.
5. CAPITAL AND SURPLUS AND SHAREHOLDER DIVIDEND RESTRICTIONS:
The maximum amount of dividends which can be paid, without prior approval,
by State of Wisconsin insurance companies to shareholders is subject to
restrictions relating to statutory surplus. Dividends are paid as
determined by the Board of Directors and are not cumulative. Dividends of
$2,200 were paid by ILA to its parent, HLIC, in 1992. There were dividends
paid by ILA to its parent, HLIC, in 1994 and 1993.
6. PENSION PLANS AND OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS:
The Company's employees are included in ITT's non-contributory defined
benefit pension plans. These plans provide pension benefits that are based
on years of service and the employee's compensation during the last ten
years of employment. The Company's funding policy is to contribute
annually an amount between the minimum funding requirements set forth in
the Employee Retirement Income Security Act of 1974 and the maximum amount
that can be deducted for Federal income tax purposes. Generally, pension
costs are funded through the purchase of HLIC's group pension contracts.
Pension expense was $1,211, $765 and $734 in 1994, 1993 and 1992,
respectively. Liabilities for the plan are held by ITT.
The Company also participates in ITT's Investment and Savings Plan, which
includes a deferred compensation option under IRC section 401(k) and an
ESOP allocation under IRC section 404(k). The liabilities for these plans
are included in the financial statements of ITT Corporation.
<PAGE>
-8-
6. PENSION PLANS AND OTHER POST RETIREMENT BENEFITS: (CONTINUED)
The Company's employees are included in Hartford Fire's contributory
defined health care and life insurance benefit plans. These plans provide
health care and life insurance benefits for retired employees.
Substantially all employees may become eligible for those benefits if they
reach normal or early retirement age while still working for the Company.
The Company has prefunded a portion of the health care and life insurance
obligations through trust funds where such prefunding can be accomplished
on a tax effective basis. Post-retirement health care and life insurance
benefits expense (not including provisions for accrual of post-retirement
benefit obligations), allocated by Hartford Fire, was $54, $34 and $113 for
1994, 1993 and 1992, respectively.
The assumed rate of future increases in the per capita cost of health care
(the health care trend rate) was 11% for 1994, decreasing ratably to 6% in
the year 2001. Increasing the health care trend rates by one percent per
year would have an immaterial impact on the accumulated post-retirement
benefit obligation and the annual expense.
Post-employment benefits are primarily comprised of obligations to provide
medical and life insurance to employees on long term disability.
Post-employment benefits expense was not considered material in 1994, 1993
and 1992.
7. REINSURANCE
In December 1994 the Company ceded, on a modified coinsurance basis, 80% of
the variable annuity business written in 1994 to ITT Lyndon Life Insurance
Company, an affiliate. The ceded business includes both general and
separate account liabilities. As a result of the agreement ILA transferred
approximately $1,352 million in assets and liabilities to ITT Lyndon Life
Insurance Company. The financial impact of the cession was an increase of
approximately $15 million to net income and surplus.
In November 1994 the Company ceded, on a modified coinsurance basis, 30%
of the separate account variable annuity business distributed by Paine
Webber to Paine Webber Life Insurance Company (PWLIC). As a result of the
agreement ILA transferred approximately $24 million in assets and
liabilities to PWLIC. The financial impact of the cession was an increase
of approximately $765 thousand to net income and surplus.
In October 1994, the agreement, effective December 1990, which required
ILA to coinsure 90% of all existing and new business, excluding variable
annuity business. written by the Company to HLIC, was terminated. As a
result of the termination, ILA received approximately $430 million in
assets and liabilities from HLIC. The income statement impact of the
transaction was a decrease of approximately $15 million to net income and
surplus.
In November 1993, ILA acquired, through an assumption reinsurance
transaction, substantially all of the individual fixed and variable annuity
business of HLA. As a result of this transaction, the assets and
liabilities of the company increased approximately $1 billion. The impact
on consolidated net income was not significant.
8. COMMITMENTS AND CONTINGENCIES:
The Company has no material contingent liabilities, nor has the Company
committed any surplus funds for any contingent liabilities or arrangements.
The Company is involved in various legal actions which have arisen in the
course normal of its business. In the opinion of management, the
ultimate liability with respect to such lawsuits as well as other
contingencies is not considered to be material in relation to the results
of operations and financial position of the Company.
9. SUBSEQUENT EVENTS:
None.
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) All financial statements are included in Part A and Part B of the
Registration Statement.
(b) (1) A copy of the resolution authorizing the Separate Account is
filed herewith.
(2) Not applicable. ITT Hartford maintains custody of all assets.
(3) Principal Underwriter Agreement between ITT Hartford Life and
Annuity Insurance Company and Hartford Equity Sales Company,
Inc. is filed herewith.
Form of DEALER AGREEMENT is filed herewith.
(4) A copy of the Individual Flexible Premium Variable Annuity
Contract was is filed herewith.
(5) The Form of Application is filed herewith.
(6) (a) Certificate of Incorporation of ITT Hartford Life and
Annuity Insurance Company is filed herewith.
(b) Bylaws of ITT Hartford Life and Annuity Insurance Company
is filed herewith.
(7) Not applicable.
(8) Not applicable.
(9) Not applicable.
(10) Consent of Arthur Andersen LLP is filed herewith.
<PAGE>
- 2 -
Item 25. Directors and Officers of the Depositor
Joan M. Andrew Vice President
Paul J. Boldischar, Jr. Senior Vice President
Francis I. Condon, Jr. Vice President
Peter W. Cummins Vice President
Ann M. deRaismes Vice President
James R. Dooley Vice President
Bruce D. Gardner General Counsel & Secretary
Joseph H. Gareau Executive Vice President & Chief Investment
Officer
Donald J. Gillette Vice President
Lynda Godkin Assistant General Counsel & Secretary
Lois W. Grady Vice President
David A. Hall Senior Vice President & Actuary
Joseph Kanarek Vice President
LaVern L. Kohlhof Vice President & Secretary
Thomas M. Marra Senior Vice President & Actuary
James G. Masica Vice President & Chief Actuary
Steven L. Matthiesen Vice President
David T. Schrandt Vice President, Treasurer & Controller
Lowndes A. Smith President & Chief Executive Officer
Lizabeth H. Zlatkus Vice President
Donald J. Znamierowski Vice President
<PAGE>
- 3-
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
Item 26. Persons Controlled By or Under Common Control with the Depositor or
Registrant
Exhibit 26 is filed herein with this Registration Statement.
(To be filed by amendment).
Item 27. Number of Contract Owners
As of December 31, 1994 there were ___ Contract Owners.
Item 28. Indemnification - The directors and officers of ITT Hartford and HESCO
are covered under a directors and officers liability insurance policy
issued to ITT Corporation 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.
The Registrant hereby undertakes that 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, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
- 4 -
Item 29. Principal Underwriters
(a) HESCO acts as principal underwriter for the following investment
companies:
Hartford Life Insurance Company - DC Variable Account I
Hartford Life Insurance Company - Separate Account Two (DC Variable
Account II)
Hartford Life Insurance Company - Separate Account Two (Variable
Account "A")
Hartford Life Insurance Company - Separate Account Two (NQ Variable
Account)
Hartford Life Insurance Company - Separate Account Two (QP Variable
Account)
Hartford Life Insurance Company - Separate Account One
Hartford Life Insurance Company - Separate Account Two (Director)
Hartford Life Insurance Company - Putnam Capital Manager Trust
Separate Account
Hartford Money Market Fund, Inc.
Hartford Life Insurance Company - Separate Account Three
ITT Hartford Life and Annuity Insurance Company - Separate Account
Three
Hartford Life Insurance Company - Separate Account Five
ITT Hartford Life and Annuity Insurance Company - Separate Account
Five
ITT Hartford Life and Annuity Insurance Company - Separate Account Six
Hartford Life Insurance Company Separate Account VL I
<PAGE>
- 5 -
(b) Directors and Officers of HESCO
Name and Principal Positions and Offices
Business Address With Underwriter
---------------- ---------------------
Donald E. Waggaman, Jr. Treasurer
Bruce D. Gardner Secretary
George R. Jay Controller
Lowndes A. Smith President
Item 30. Location of Accounts and Records
Accounts and records are maintained by:
ITT Hartford Life and Annuity Insurance Company, 505 N. Highway 169,
Minneapolis, Minnesota 55441-0000
Item 31. Management Services
None
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.
<PAGE>
- 6 -
The Registrant is relying on the no-action letter issued by the Division of
Investment Management to American Counsel of Life Insurance, Ref. No. IP-6-88,
November 28, 1988. The Registrant has complied with the four provisions of the
no-action letter.
6380s/0154s
(ITT-Director)
<PAGE>
<TABLE>
<CAPTION>
EXPLANATION OF TOTAL RETURN CALCULATION
- ------------------------------------------------------------------------------------------------------------------------
Putnam IV ------------ One Year ------------
- ------------------------------------------------------------------------------------------------------------------------
INITIAL NUMBER OF UNIT GROSS REAR ANNUAL ENDING
Sub-Account PAYMENT UNITS PER x VALUE = SURRENDER LESS END LESS POLICY = REDEMPTION
INITIAL PMT. @ 12/31/94 VALUE (-) LOAD (-) FEES VALUE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Growth & Income $1,000 49.042771 $20.177784 $989.57 $59.37 $30 $900.20
TOTAL RETURN FORMULA:
n
----------------
T =
ERV -1
------
P
1
-----------------
T = $900.20 -1 = -9.98%
-------- ------------
$1,000.00 ------------
WHERE: P= a hypothetical initial payment (of $1,000) invested on 12/31/93.
T= average annual total return assuming reinvestment of monthly dividend
distributions and annual capital gains distributions.
n= number of years
ERV= ending redeemable value
<FN>
Note: Total return includes deductions for separate account charges, contingent deferred sales charges
of up to 6% (of original investment), and annual maintenance fees of $30.
(For this example, the year one load is 6% of the initial payment.)
</TABLE>
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets all the requirements for
effectiveness of this Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and duly caused this Registration Statement to be signed
on its behalf, in the City of Hartford, and State of Connecticut on this 1st
day of May, 1995.
ITT HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY - PUTNAM CAPITAL MANAGER TRUST
SEPARATE ACCOUNT TWO
(Registrant)
*By: *By: /s/ Rodney J. Vessels
-------------------------------------- --------------------------
Thomas M. Marra, Senior Vice President Rodney J. Vessels
Attorney-in-Fact
HARTFORD LIFE INSURANCE COMPANY
(Depositor)
*By:
--------------------------------------
Thomas M. Marra, Senior 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.
Bruce D. Gardner, General Counsel
Corporate Secretary, Director *
Joseph H. Gareau, Executive Vice
President and Chief Investment
Officer, Director *
Joseph Kanarek, Vice President *By: /s/ Rodney J. Vessels
Director * -------------------------
Rodney J. Vessels
Thomas M. Marra, Senior Vice Attorney-in-Fact
President, Director *
Lowndes A. Smith, President, Dated: May 1, 1995
Chief Operating Officer, ------------------------
Director *
Lizabeth H. Zlatkus, Vice President
Director *
Donald J. Znamierowski, Vice President
Comptroller, Director *
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
CONSENT OF DIRECTORS
The undersigned, being all of the Directors of ITT Hartford Life and Annuity
Insurance Company ("Company"), do hereby consent to the following
resolution, such action to have the same force and effect as if taken at a
meeting duly called and held for such purpose.
SEPARATE ACCOUNT TWO
RESOLVED, that the establishment of the "Putnam Capital Manager Trust
Separate Account Two" by the Company in accordance with state insurance laws
and the issuance of variable annuity insurance contracts with reserves for
such contracts being segregated in such separate account effective March 1,
1993 is hereby ratified.
FURTHER RESOLVED, that on behalf of said Separate Account, the officers of
the Company are hereby authorized to:
(1) Designate or redesignate the account as such Officers deem appropriate;
(2) Comply with applicable state and federal laws and regulations
applicable to the establishment and operation of the Account;
(3) Establish, from time to time, the terms and conditions pursuant to
which interests in the Account will be sold; and
(4) Establish all procedures, standards and arrangements necessary or
appropriate for the operation of the Account.
APPLICATION FOR EXEMPTIVE RELIEF FOR SEPARATE ACCOUNT ONE AND
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT TWO
RESOLVED, that the Company be, and hereby is, authorized to submit an
Application for an Application for an Order of Exemption and any amendments
thereto, to the Securities and Exchange Commission pursuant to Section 6(c)
of the Investment Company Act of 1940 exempting the Company from certain
provisions of the Act, which may include among others, Section 11(a), 17(b)
and (d), to the extent necessary to permit the assumption reinsurance of
certain variable annuity contracts of Hartford Life and Accident Insurance
Company and its two separate accounts, Hartford Life and Accident Insurance
Company Separate Account One and Hartford Life and Accident Insurance
Company Putnam Capital Manager Trust Separate Account One, by ITT Hartford
Life and Annuity Insurance Company and ITT Life Insurance Corporation
Separate Account One and ITT Life Insurance Corporation Putnam Capital
Manager Trust Separate Account Two.
FURTHER RESOLVED, that the Company hereby authorizes the appropriate
officers to execute and file all necessary papers and documents including,
but not limited to, applications for exemption and any modifications and
amendments thereto, with the Securities and Exchange Commission, in order to
effectuate the assumption reinsurance of said variable annuity contracts.
/s/ DONALD R. FRAHM /s/ JAMES T. FRENCH
----------------------------------- ---------------------------------
Donald R. Frahm James T. French
/s/ BRUCE D. GARDNER /s/ JOHN P. GINNETTI
----------------------------------- ---------------------------------
Bruce D. Gardner John P. Ginnetti
/s/ LARRY K. LANCE /s/ DAVID J. MCDONALD
----------------------------------- ---------------------------------
Larry K. Lance David J. McDonald
/s/ LOWNDES A. SMITH /s/ DONALD J. ZNAMIEROWSKI
----------------------------------- ---------------------------------
Lowndes A. Smith Donald J. Znamierowski
Dated: July 15, 1993
<PAGE>
Exhibit (b)(3)
PRINCIPAL UNDERWRITER AGREEMENT SPECIMEN
THIS AGREEMENT, dated as of the day of , 1992, made by and between
ITT LIFE INSURANCE CORPORATION ("ITT" or the "Sponsor"), a corporation organized
and existing under the laws of the State of Connecticut, and HARTFORD EQUITY
SALES COMPANY, INC. ("HESCO"), a corporation organized and existing under the
laws of the State of Connecticut.
WITNESSETH:
WHEREAS, the Board of Directors of ITT Life has made provision for the
establishment of a separate account within ITT Life in accordance with the
laws of the State of Connecticut, which separate account was organized and
is established and registered as a unit trust type investment company with
the Securities and Exchange Commission under the Investment Company Act of
1940, as amended, and which is designated ITT Life Insurance Corporation
Separate Account Two (referred to as the "Unit Trust"); and
WHEREAS, HESCO offers to the public a certain Individual Flexible Premium
Annuity Insurance Contracts contract (the "Contract") issued by ITT Life
with respect to the Unit Trust and units of interest thereunder which are
registered under the Securities Act of 1933, as amended; and
WHEREAS, HESCO has previously agreed to act as distributor in connection
with offers and sales of the Contract under the terms and conditions set
forth in this Distribution Agreement.
NOW THEREFORE, in consideration of the mutual agreements made herein, the
Sponsor and HESCO agree as follows:
I.
HESCO'S DUTIES
1. HESCO, as principal underwriter for the Contact, will use its best efforts
to effect offers and sales of the Contract through broker-dealers that are
members of the National Association of Securities Dealers, Inc. and whose
registered representatives are duly licensed as insurance agents of ITT
Life. HESCO is responsible for compliance with all applicable requirements
of the Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended, and the Investment Company Act of 1940, as amended, and
the rules and regulations thereunder, and all other applicable laws, rules
and regulations relating to the sales and distribution of the Contract, the
need for which arises out of its duties as principal underwriter of said
Contract and relating to the creation of the Unit Trust.
<PAGE>
-2-
2. HESCO agrees that it will not use any prospectus, sales literature, or any
other printed matter or material or offer for sale or sell the Contract if
any of the foregoing in any way represent the duties, obligations, or
liabilities of ITT Life as being greater than, or different from, such
duties, obligations and liabilities as are set forth in this Agreement, as
it may be amended from time to time.
3. HESCO agrees that it will utilize the then currently effective prospectus
relating to the Unit Trust's Contracts in connection with its selling
efforts.
As to the other types of sales materials, HESCO agrees that it will use
only sales materials which conform to the requirements of federal and state
insurance laws and regulations and which have been filed, where necessary,
with the appropriate regulatory authorities.
4. HESCO agrees that it or its duly designated agent shall maintain records of
the name and address of, and the securities issued by the Unit Trust and
held by, every holder of any security issued pursuant to this Agreement, as
required by the Section 26(a)(4) of the Investment Company Act of 1940, as
amended.
5. HESCO's services pursuant to this Agreement shall not be deemed to be
exclusive, and it may render similar services and act as an underwriter,
distributor, or dealer for other investment companies in the offering of
their shares.
6. In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of its obligations and duties hereunder on the part of
HESCO, HESCO shall not be subject to liability to the Unit Trust or to any
Contract Owner or party in interest under a Contract for any act or
omission in the course, or connected with, rendering services hereunder.
II.
1. The Unit Trust reserves the right at any time to suspend or limit the
public offering of the Contracts upon thirty days' written notice to HESCO,
except where the notice period may be shortened because of legal action
taken by any regulatory agency.
2. The Unit Trust agrees to advise HESCO immediately:
a. Of any request by the Securities and Exchange Commission for amendment
of its Securities Act registration statement or for additional
information;
b. Of the issuance by the Securities and Exchange Commission of any stop
order suspending the effectiveness of the Securities Act
<PAGE>
-3-
registration statement relating to units of interest issued with
respect to the Unit Trust or of the initiation of any proceedings for
that purpose;
c. Of the happening of any material event, if known, which makes untrue
any statement in said Securities Act registration statement or which
requires change therein in order to make any statement therein not
misleading.
HLIC will furnish to HESCO such information with respect to the Unit Trust
and the Contracts in such form and signed by such of its officers and
directors as HESCO may reasonably request and will warrant that the
statements therein contained when so signed will be true and correct. ITT
Life will also furnish, from time to time, such additional information
regarding the Unit Trust's financial condition as HESCO may reasonably
request.
III.
COMPENSATION
For providing the principal underwriting functions on behalf of the Unit Trust,
HESCO shall be entitled to receive compensation as agreed upon from time to time
by ITT Life and HESCO.
IV.
RESIGNATION AND REMOVAL OF
PRINCIPAL UNDERWRITER
HESCO may resign as Principal Underwriter hereunder, upon 120 days' prior
written notice to ITT Life. However, such resignation shall not become effective
until either the Unit Trust has been completely liquidated and the proceeds of
the liquidation distributed through ITT Life to the Contract Owners or a
successor Principal Underwriter has been designated and has accepted its duties.
V.
MISCELLANEOUS
1. This Agreement may not be assigned by any of the parties hereto without the
written consent of the other party.
2. All notices and other communications provided for hereunder shall be in
writing and shall be delivered by hand or mailed first class, postage
prepaid, addressed as follows:
<PAGE>
-4-
a. If to ITT Life - ITT Life Insurance Corporation,
505 Highway 169 North, Minneapolis, Minnesota 55441
b. If to HESCO - Hartford Equity Sales Company, Inc., Hartford Plaza,
Hartford, Connecticut 06115 or to such other address as HESCO or the
Sponsor shall designate by written notice to the other.
3. This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original and all of which shall be deemed one
instrument, and an executed copy of this Agreement and all amendments
hereto shall be kept on file by the Sponsor and shall be open to inspection
at any time during the business hours of the Sponsor.
4. This Agreement shall inure to the benefit of and be binding upon the
successor of the parties hereto.
5. This Agreement shall be construed and governed by and according to the laws
of the State of Connecticut.
6. This Agreement may be amended from time to time by the mutual agreement and
consent of the parties hereto.
7. a. This Agreement shall become effective on , 1992, and shall
continue in effect for a period of two years from that date and,
unless sooner terminated in accordance with 7(b) below, shall continue
in effect from year to year thereafter provided that its continuance
is specifically approved at least annually by a majority of the
members of the Board of Directors of ITT Life.
b. This Agreement (1) may be terminated at any time, without the payment
of any penalty, either by a vote of a majority of the members of the
Board of Directors of ITT Life on sixty days prior written notice to
HESCO; (2) shall immediately terminate in the event of its assignment
and (3) may be terminated by HESCO on sixty days prior written notice
to ITT Life, but such termination will not be effective until ITT Life
shall have contracted with one or more persons to act as principal
underwriter of the Contacts. HESCO hereby agrees that it will continue
to act as principal underwriter until its successor or successors
assume such undertaking.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
(SEAL) ITT LIFE INSURANCE CORPORATION
Attest:
By
- -------------------------------- ---------------------------------
(SEAL) HARTFORD EQUITY SALES COMPANY,
INC.
Attest:
By
- -------------------------------- ---------------------------------
634s/0154s
<PAGE>
[ITT LOGO]
SALES AGREEMENT
1.0 APPOINTMENT
1.1 The Hartford insurance company(ies) named in the Sales Agreement
Specifications Page and, with respect to SEC Registered contracts,
Hartford Equity Sales Company, Inc., as Principal Underwriter,
(hereinafter collectively referred to as "Company") hereby appoint the
named individual(s) or organization(s) as "Agent" of Company for the
solicitation and procurement of applications for insurance contracts
(hereinafter referred to as "Contracts") in the line(s) of business
set forth in the Sales Agreement Specifications Page, in all states in
which Company is authorized to do business and in which Agent is
properly licensed and appointed, without exclusive representation.
2.0 AUTHORITY
2.1 Agent has the power or authority to represent Company only to the
extent expressly granted in this Agreement and no further power or
authority is implied.
2.2 Nothing contained herein is intended to create a relationship of
employer and employee between Company and Agent. Agent and, if
applicable, any sub-agents appointed by Agent, shall be independent
contractors as to Company and free to exercise their own judgment as
to the time, place and means of performing all acts hereunder, but
they shall conform to all regulations of Company not unreasonably
interfering with freedom of action or judgment.
2.3 This Agreement terminates all previous Agency agreements, if any,
between Company and Agent. However, the execution of this Agreement
shall not affect any obligations which have already accrued under any
prior agreement.
2.4 Agent does not have the authority to collect premiums for each line of
business, other than initial premiums, unless specifically set forth
in the applicable commission schedule.
2.5 If Agent is a Class I through Class XX Agent, Agent is authorized to
procure and solicit applications for Contracts through sub-agents
which Agent may appoint with the approval of Company. No agreement
between Agent and any sub-agent shall impose any liability or
obligation upon Company unless Company is a party thereto in writing.
All sub-agents shall be duly licensed under the applicable insurance
laws to sell annuity, life and health insurance contracts by the
proper authorities in the jurisdictions in which Agent proposes to
offer such Contracts. The sub-agents shall indicate in each
application for a Contract that it has been solicited on behalf of
Agent.
2.5.1 Agent shall supervise any sub-agents appointed by Agent to
solicit sales of the Contracts and Agent shall be responsible
for all acts and omissions of each sub-agent within the scope
of his agency appointment at all times. Agent shall exercise
all responsibilities required by the applicable federal and
state law and regulations. Company shall not have any
responsibility for the supervision of any sub-agents of Agent.
2.5.2 Company may, by written notice to Agent, refuse to permit any
sub-agent to solicit applications for the sale of any of the
Contracts hereunder and may, by such notice, require Agent to
cause any such sub-agent to cease any such solicitation or
sales, and Company may require Agent to cancel the appointment
of any sub-agent with Company.
-1-
<PAGE>
2.6 If Agent is assigned a different Agent Class for different Lines of
Business (i.e. Class I Agent for Variable Annuities and a Class V
Agent for Individual Life, Annuity and Health Insurance), the
provisions of this Agreement, which specifically relate only to a
particular Class of Agent shall only apply to Agent in transacting
that Line of Business for which Agent is so classified, if any.
3.0 SEC REGISTERED CONTRACTS
3.1 If Agent is a Class I through Class XX Agent and an NASD registered
Broker-Dealer, Agent agrees that, with respect to SEC Registered
Contracts, Agent has full responsibility for the training and
supervision of all persons, including sub-agents of Agent, associated
with Agent who are engaged directly or indirectly in the offer or sale
of such Contracts and that all such persons shall be subject to the
control of Agent with respect to such persons' activities in
connection with the Contracts. Agent will cause the sub-agents to be
trained in the sale of the Contracts and will cause such sub-agents to
be registered representatives of Agent before such sub-agents engage
in the offer or sale of the Contracts. Agent shall cause Agent's sub-
agents' qualifications to be certified to the satisfaction of Company
and shall notify Company if any sub-agents cease to be registered
representatives of Agent.
3.1.1 Agent will fully comply with the requirements of the National
Association of Securities Dealers, Inc. and of the Securities
Exchange Act of 1934 and all other applicable federal or state
laws and will establish such rules and procedures as may be
necessary to cause diligent supervision of the securities
activities of the sub-agents. Upon request by Company, Agent
shall furnish any records necessary to establish such diligent
supervision.
3.1.2 Before a sub-agent is permitted to solicit and procure
applications for the Contracts, Agent and the sub-agent shall
have entered into an agreement pursuant to which the sub-agent
will be appointed a sub-agent and a registered representative
of Agent and in which the sub-agent will agree that his
selling activities relating to the Contracts will be under the
supervision and control of Agent, and the sub-agent's right to
continue to sell such Contracts is subject to his continued
compliance with such agreement.
3.1.3 In the event a sub-agent fails or refuses to submit to
supervision of Agent in accordance with this Agreement, or
otherwise fails to meet the rules and standards imposed by
Agent, Agent shall immediately notify such sub-agent that he
is no longer authorized to sell the Contracts, and Agent shall
take whatever additional action may be necessary to terminate
the sales activities of such sub-agent relating to the
Contracts including immediate notification of Company of such
termination.
3.2 If Agent is not an NASD Registered Broker/Dealer but is a member of an
affiliated group of legal entities one of which is an NASD Registered
Broker/Dealer ("Broker/Dealer") and a party to this Agreement, Agent
agrees that, with respect to SEC Registered contracts, the sub-agents
of Agent shall be registered representatives of such Broker/Dealer.
3.2.1 As appropriate, any reference in this Agreement to Agent shall
apply equally to such Broker/Dealer.
3.2.2 Each Agent which is not a Broker/Dealer hereby directs Company
to pay any compensation due, pursuant to Paragraph 4, to the
Broker/Dealer.
3.2.3 If Agent is not a Broker/Dealer but is a member of an
affillated group of leagal entities one of which is a
Broker/Dealer and a party to this Agreement Agent and
Broker/Dealer agree that, with respect to SEC Registered
Contracts, Agent and Broker/Dealer have responsibility
for the training and supervision of all registered
representiatives of Broker/Dealer and who are sub-agents
of Agent and who are engaged directly orIndirectly in the offer
or sale of such SEC Registered Contracts and that all such
representatives shall be subject to the control of Agent and
Broker/Dealer with respect to their activities in connection
with the SEC Registered Contracts.
-2-
<PAGE>
3.3 If Agent is neither an NASD Registered Broker-Dealer nor a member of
an affiliated group of legal entities one of which is a Broker/Dealer,
Agent and any sub-agents shall be registered representatives of
Hartford Equity Sales Company, Inc.
3.4 All other provisions of this Agreement apply to the sale of SEC
Registered Contracts.
4.0 COMPENSATION
4.1 Company will pay Agent as full compensation hereunder, commissions
and/or service fees on premiums paid to Company on account of
Contracts issued upon applications procured pursuant to this Agreement
and while this Agreement is in effect.
4.1.1 Commission and/or service fees will be paid in the amounts and
for the periods of time as set forth in the Commission
Schedules included in this Agreement or subsequently made a
part hereof, and which are in effect at the time such
Contracts are sold.
4.1.2 The Commission Schedules included in this Agreement are
subject to change by Company at any time, but only upon
written notice to Agent. No such change shall affect any
Contracts issued upon applications received by Company at
Company's Home Office prior to the effective date of such
change.
4.1.3 Any Commission Schedule included in this Agreement or
subsequently made a part hereof may provide other or
additional conditions regarding compensation and if so, will
be controlling to the extent of the other or additional
conditions.
4.2 Compensation will be earned by Agent only for those applications
accepted by Company, and only after receipt by Company at Company's
Home Office in Hartford, Connecticut, of the required premium and
compliance by Agent with any outstanding delivery requirements.
4.2.1 No compensation will be earned or paid on premiums (other than
premiums on health insurance contracts) waived by Company
pursuant to any "waiver of premium" provision.
4.2.2 Should Company for any reason return any premium on a policy
issued hereunder, Agent agrees to repay Company the total
amount of any compensation which may have been paid thereon
within thirty (30) business days of notice of such refund.
4.3 Any compensation otherwise payable to Agent in accordance with this
Section 4.0 shall be reduced by the amount, if any, of such
compensation paid directly, at the direction of Agent, by Company to
any person and appointed by Company and Agent or, in connection with
group policies, the amounts paid by Company to a resident licensed
agent in a state which requires the countersignature by, or the
effectuating of the insurance through, a resident licensed agent.
4.4 In the event of termination of this Agreement for one or more of the
reasons specified in Subparagraphs 7.2.2 or 7.2.3 below, no further
commissions or other compensation shall thereafter be payable.
4.5 In the event of termination in accordance with 7.1 below if in any
calendar year following such termination the aggregate commission
payable hereunder for all life and health policies (not SEC regulated
contracts) total less than $100.00, no further commissions shall be
payable hereunder, other reverences to vesting to the contrary not
withstanding. This rule is not applicable to any SEC registered
equity product.
4.6 With respect to registered Contracts, if Agent is disqualified for
continued registration with the NASD, Company shall not be obligated
to pay any compensation, the payment of which would represent a
violation of NASD rules.
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<PAGE>
In such event, Company shall hold any commission otherwise due on any
Contract in force in "escrow" from the date of such disqualification
until the termination of any litigation or administrative proceedings
relating to such disqualification, provided Agent commences an appeal
to the NASD within 180 days following the disqualification notice and
actively pursues such appeal. Should Agent's registration in the NASD
be reinstated, all compensation due or becoming due Agent during the
period of disqualification shall be immediately paid, provided this
does not violate any NASD rules or regulations in effect at said time.
5.0 GENERAL PROVISIONS
5.1 Agent shall cooperate with Company in the investigation and
settlement of all claims against Agent and/or Company relating to the
solicitation or sale of Contracts under this Agreement. Agent shall
promptly forward to Company any notice of claim or other relevant
information which may come into Agent's possession.
5.2 Agent shall keep full and accurate records of the business transacted
by Agent under this Agreement and shall forward to Company such
reports of said business as Company may prescribe. Company shall have
the right to examine said records at reasonable times. All rate books,
manuals, forms, supplies and any other properties furnished by Company
and in the possession of Agent shall be returned to Company on
termination of this Agreement.
5.3 Agent shall bear all of Agent's expenses incurred in the performance
of this Agreement.
5.4 Agent shall have a duty to obtain applications for Company and, where
appropriate, to conserve and renew coverage placed with Company.
5.5 All applications for the purchase of Contracts shall be subject to
acceptance by Company. Company reserves the right to prescribe
conditions, rules and regulations for the offer and acceptance of its
Contracts, which may be changed from time to time and which shall be
forwarded to Agent.
5.6 Company reserves the right to modify, change or discontinue the
offering of any form of Contract at any time.
5.7 No waiver or modification of this Agreement will be effective unless
it be in writing and signed by a duly authorized officer of Company
and Agent or a duly authorized officer of Agent.
5.8 The failure of Company to enforce any provisions of this Agreement
shall not constitute a waiver of any such provision. The past waiver
of a provision by Company shall not constitute a course of conduct or
a waiver in the future of that same provision.
5.9 In the event any legal process or notice is served on Agent in a suit
or proceeding against Company, Agent shall forward forthwith such
process or notice to Company at its Home Office in Hartford,
Connecticut, by certified mail.
5.10 Agent shall not use any advertising material, prospectus, proposal, or
representation either in general or in relation to a Contract of
Company unless furnished by Company or until the consent of Company
shall have been first secured. Agent shall not issue or recirculate
any illustration, circular, statement or memorandum of any sort,
misrepresenting the terms, benefits or advantages of any Contract
issued by Company, or make any misleading statement as to dividends or
other benefits to be received thereon, or as to the financial position
of Company.
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<PAGE>
5.10.1 In regard to SEC Registered Contracts, Agent agrees not to
make written or oral representations except such as are
contained in current prospectuses and authorized supplementary
sales literature made available by Company. In respect to such
products Agent also agrees to comply with the Securities and
Exchange Commission Statement of Policy and the regulations
thereunder of the National Association of Securities Dealers,
Inc.
5.11 Agent shall indemnify and save Company harmless from any loss or
expense on account of any unauthorized act or transaction by Agent, or
persons employed or appointed by Agent, or any claim by a sub-agent of
Agent for compensation due or to become due on account of such sub-
agent's sale of Contracts.
5.11.1 Agent expressly authorizes Company to charge against all
compensation due or to become due to Agent under this
Agreement any monies paid or liabilities incurred by Company
under this Paragraph 5.11.
5.12 Agent shall not offer or pay any rebate of premium or make any offer
of any other inducement not specified in the Contracts to any person
to insure with Company. Agent shall not make any misrepresentation or
incomplete comparison for the purpose of inducing a policyholder in
any other company to lapse, forfeit or surrender its insurance
therein.
5.13 No assignment of this Agreement, or commissions payable hereunder,
shall be valid unless authorized in writing by Company. Every
assignment shall be subject to any indebtedness and obligation of
Agent that may be due or become due to Company and any applicable
state insurance regulations pertaining to such assignments.
5.14 Company may at any time deduct, from any monies due under this
Agreement, every indebtedness or obligation of Agent to Company.
5.14.1 On termination of this Agreement, any outstanding indebtedness
to Company shall become immediately due and payable.
6.0 LIMITATION OF AUTHORITY
6.1 Agent is not authorized, and is expressly forbidden on behalf of
Company, to incur any indebtedness or liability, or to make, alter or
discharge agreements, or to waive forfeitures, extend the time of
payment of any premium, waive payment in cash, or to receive any money
due or to become due Company, except as specifically provided in this
Agreement.
6.2 No individual Contract providing life, health or disability insurance
coverage shall be delivered if a sub-agent or Agent has knowledge that
the health of the proposed insured has changed since the application
was taken or unless the first premium has been fully paid and delivery
made by the delivery date specified by Company or, if no delivery date
is specified, within sixty (60) days from the date said Contract is
mailed from Company's Home Office.
6.2.1 Any Contract not delivered, in accordance with this Paragraph
6.2, shall be returned to Company immediately.
7.0 TERMINATION
7.1 This entire Agreement may be terminated by either party by giving
thirty (30) days' notice in writing to the other party.
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<PAGE>
7.1.1 Such notice of termination shall be mailed to the last known
address of Agent appearing on Company's records, or in the
event of termination by Agent, to the Home Office of Company
at P.O. Box 2999, Hartford, Connecticut 06104-2999.
7.1.2 Such notice shall be an effective notice of termination of
this Agreement as of the time the notice is deposited in the
United States mail or the time of actual receipt of such
notice if delivered by means other than mail.
7.2 This Agreement shall automatically terminate without notice upon the
occurrence of any of the events set forth below:
7.2.1 Upon the bankruptcy or dissolution of Agent provided, however,
that if there is more than one Agent, the Agreement shall
automatically terminate only with respect to the bankrupt or
dissolved Agent.
7.2.2 When and if Agent commits fraud or gross negligence in the
performance of any duties imposed upon Agent by this Agreement
or wrongfully withholds or misappropriates, for Agent's own
use, funds of Company, its policyholders or applicants.
7.2.3 When and if Agent materially breaches this Agreement or
materially violates the insurance or Federal or State
securities laws of a state in which Agent transacts business.
7.2.4 When and if Agent fails to obtain renewal of a necessary
license in any jurisdiction, but only as to that jurisdiction.
7.2.5 When and if Agent is disqualified for continued membership
with the NASD or registration with the Securities and Exchange
Commission, but only as to SEC registered Contracts.
7.3 The provisions of Sections 4.0 and 6.0 shall survive the termination
of this Agreement, as appropriate.
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<PAGE>
Exhibit (b)(4)
INDIVIDUAL FLEXIBLE PREMIUM
VARIABLE ANNUITY CONTRACT
ITT Hartford Life and Annuity Insurance Company
P.O. Box 2999
Hartford, Connecticut 06104-2999
(a stock life insurance company, herein called the Company)
Unless otherwise directed by the Contract Owner, the Company agrees to pay the
named Annuitant, on the Annuity Commencement Date, if the Annuitant and Contract
Owner are then living, the first of a series of annuity payments the frequency,
period and dollar amounts of which shall be determined on the basis as set forth
herein, in accordance with the Annuity Option selected.
This contract is issued in consideration of the payment of the initial premium
payment.
This contract is subject to the laws of the jurisdiction where it is delivered.
The Contract Specifications on Page 3 and the conditions and provisions on this
and the following pages are part of the contract.
RIGHT TO EXAMINE CONTRACT
We want you to be satisfied with the contract you have purchased. We urge you to
closely examine its provisions. If for any reason you are not satisfied with
your purchase you may surrender the contract by returning the contract within
ten days after you receive it. A written request for cancellation must accompany
the contract. In such event, we will pay to the Contract Owner an amount equal
to the sum of (i) the difference between the premiums paid and the amounts
allocated to any Account under the contract and (ii) the Contract Value on the
date of surrender. The Contract Owner bears only the investment risk during the
period prior to the Company's receipt of request for cancellation.
Signed for the Company
/s/ Bruce D. Gardner /s/ Lowndes A. Smith
--------------------------- ---------------------------
Bruce D. Gardner, SECRETARY Lowndes A. Smith, PRESIDENT
Premium Payments are flexible as described herein.
Nonparticipating
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON INVESTMENT
EXPERIENCE OF A SUB-ACCOUNT, ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED
DOLLAR AMOUNT. DETAILS OF THE VARIABLE PROVISIONS ARE DESCRIBED UNDER VALUATION
PROVISIONS, PAGES 9 AND 10.
[ITT HARTFORD LOGO]
<PAGE>
TABLE OF CONTENTS
Page
Contract Specifications 3
Definition of Certain Terms 4
Premium Payments Provision 5
Contract Control Provisions 6
General Provisions 7
Valuation Provisions 9
Termination Provisions 10
Settlement Provisions 12
Annuity Tables 15
Page 2
<PAGE>
CONTRACT SPECIFICATIONS
CONTRACT NUMBER [SPECIMEN] CONTRACT DATE [FEBRUARY 8, 19xx]
NAME OF ANNUITANT [JAMES SCOTT] DATE OF ISSUE [FEBRUARY 8, 19xx]
AGE OF ANNUITANT [35] ANNUITY COMMENCEMENT
DATE [JANUARY 1, 202x]
SEX OF ANNUITANT [MALE] INITIAL PREMIUM PAYMENT [$20,000]
MINIMUM SUBSEQUENT
PAYMENT 500
MINIMUM FIXED ACCOUNT
INTEREST RATE 3%
CONTINGENT
ANNUITANT [PAUL SCOTT]
DESIGNATED
BENEFICIARY [ANN SCOTT] CONTRACT OWNER [SAME]
(IF OTHER THAN ANNUITANT)
- --------------------------------------------------------------------------------
DESCRIPTION OF BENEFITS
INDIVIDUAL FLEXIBLE VARIABLE ANNUITY CONTRACT
ANNUAL WITHDRAWAL AMOUNT: CONTRACT YEARS 1-7
10% OF PREMIUM PAYMENTS
AFTER CONTRACT YEAR 7
THE GREATER OF:
100% OF THE CONTRACT VALUE REDUCED BY THE
TOTAL OF ANY PREMIUM PAYMENTS MADE DURING
THE 7 YEARS PRIOR TO WITHDRAWAL; OR
10% OF PREMIUM PAYMENTS MADE DURING THE 7
YEARS PRIOR TO WITHDRAWAL.
ANNUAL CONTRACT MAINTENANCE FEE: $0 IF THE CONTRACT VALUE IS $50,000 OR MORE
ON THE CONTRACT ANNIVERSARY.
$30 IF THE CONTRACT VALUE IS LESS THAN
$50,000 ON THE CONTRACT ANNIVERSARY.
MORTALITY AND EXPENSE RISK CHARGE: 1.25% PER ANNUM OF THE AVERAGE DAILY
CONTRACT VALUE.
ADMINISTRATION CHARGE: .15% PER ANNUM OF THE AVERAGE DAILY CONTRACT
VALUE. THIS CHARGE WILL NOT BE ASSESSED
AGAINST FIXED ACCOUNT VALUES.
Page 3
<PAGE>
CONTINGENT DEFERRED SALES CHARGES:
SUBJECT TO THE ANNUAL WITHDRAWAL AMOUNT, SURRENDERS OF CONTRACT VALUES
ATTRIBUTABLE TO PREMIUM PAYMENTS MAY BE SUBJECT TO A CONTINGENT DEFERRED SALES
CHARGE ("CHARGE"). THE LENGTH OF TIME FROM RECEIPT OF THE PREMIUM PAYMENT TO THE
TIME OF SURRENDER DETERMINES THE CHARGES.
DURING THE FIRST SEVEN CONTRACT YEARS, ALL SURRENDERS WILL BE FIRST FROM PREMIUM
PAYMENTS AND THEN FROM EARNINGS. IF AN AMOUNT EQUAL TO ALL PREMIUM PAYMENTS HAS
BEEN SURRENDERED, A CHARGE WILL NOT BE ASSESSED AGAINST THE SURRENDER OF THE
REMAINING CONTRACT VALUE.
AFTER THE SEVENTH CONTRACT YEAR, ALL SURRENDERS WILL FIRST BE FROM EARNINGS AND
THEN FROM PREMIUM PAYMENTS. A CHARGE WILL NOT BE ASSESSED AGAINST THE SURRENDER
OF EARNINGS. IF AN AMOUNT EQUAL TO ALL EARNINGS HAS BEEN SURRENDERED, A CHARGE
WILL NOT BE ASSESSED AGAINST PREMIUM PAYMENTS RECEIVED MORE THAN SEVEN YEARS
PRIOR TO SURRENDER, BUT WILL BE ASSESSED AGAINST PREMIUM PAYMENTS RECEIVED LESS
THAN SEVEN YEARS PRIOR TO SURRENDER. FOR THIS PURPOSE, PREMIUM PAYMENTS WILL BE
DEEMED TO BE SURRENDERED IN THE ORDER IN WHICH THEY WERE RECEIVED.
THE CHARGE IS A PERCENTAGE OF THE AMOUNT SURRENDERED (NOT TO EXCEED THE
AGGREGATE AMOUNT OF THE PREMIUM PAYMENTS MADE) AND EQUALS:
LENGTH OF TIME FROM PREMIUM PAYMENT
CHARGE (NUMBER OF YEARS)
6% 1
6% 2
5% 3
5% 4
4% 5
3% 6
2% 7
0% 8 AND THEREAFTER
NO CONTINGENT DEFERRED SALES CHARGES WILL BE ASSESSED IN THE EVENT THE CONTRACT
TERMINATES DUE TO THE DEATH OF THE ANNUITANT OR CONTRACT OWNER (AS APPLICABLE),
OR IF CONTRACT VALUES ARE APPLIED TO AN ANNUITY OPTION PROVIDED FOR UNDER THIS
CONTRACT (PROVIDED HOWEVER, ANY SURRENDER OUT OF OPTION 4 WILL BE SUBJECT TO
CONTINGENT DEFERRED SALES CHARGES, IF APPLICABLE) OR UPON THE EXERCISE OF THE
ANNUAL WITHDRAWAL AMOUNT.
Page 3 (Continued)
<PAGE>
FUND OPTIONS
THE INITIAL PREMIUM PAYMENT WILL BE ALLOCATED AS SPECIFIED IN YOUR APPLICATION.
THE SAME ALLOCATION WILL BE MADE FOR SUBSEQUENT PREMIUM PAYMENTS UNLESS YOU
CHANGE THE ALLOCATION OR, AT THE TIME OF A PREMIUM PAYMENT, YOU INSTRUCT US TO
ALLOCATE THAT PAYMENT DIFFERENTLY.
SEPARATE ACCOUNT: PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT TWO
SUB-ACCOUNT BASED ON:
PCM VOYAGER FUND PCM VOYAGER FUND
PCM GLOBAL GROWTH FUND PCM GLOBAL GROWTH FUND
PCM GLOBAL ASSET ALLOCATION FUND PCM GLOBAL ASSET ALLOCATION FUND
PCM GROWTH & INCOME FUND PCM GROWTH & INCOME FUND
PCM UTILITIES GROWTH & INCOME FUND PCM UTILITIES GROWTH & INCOME FUND
PCM HIGH YIELD FUND PCM HIGH YIELD FUND
PCM DIVERSIFIED INCOME FUND PCM DIVERSIFIED INCOME FUND
PCM U.S. GOVERNMENT & HIGH PCM U.S. GOVERNMENT &
QUALITY BOND FUND HIGH QUALITY BOND FUND
PCM MONEY MARKET FUND PCM MONEY MARKET FUND
OR OTHER FUNDS AS MAY BE MADE AVAILABLE FROM TIME TO TIME.
Page 3 (Continued)
<PAGE>
DEFINITION OF ACCOUNT - Any of the Sub-Accounts or the Fixed Account.
CERTAIN TERMS
ACCUMULATION UNIT - An accounting unit of measure used to
calculate the value of a Sub-Account of this contract before
annuity payments begin.
ADMINISTRATIVE OFFICE OF THE COMPANY - Currently located at
200 Hopmeadow St., Simsbury, Ct. All correspondence concerning
this contract should be sent to our mailing address at P.O.
Box 2999, Attn: Individual Annuity Operations, Hartford, CT
06104-2999.
ANNUAL WITHDRAWAL AMOUNT - The amount that can be withdrawn in
any Contract Year prior to incurring surrender charges.
ANNUITANT - The person on whose life this contract is issued.
ANNUITY COMMENCEMENT DATE - The date on which annuity payments
are to begin as described under Settlement Provisions in this
contract.
ANNUITY UNIT - An accounting unit of measure used to calculate
the amount of annuity payments under the variable annuity
option.
BENEFICIARY - The person entitled to receive benefits as per
the terms of the contract in case of the death of the Contract
Owner or Annuitant, as applicable.
COMPANY - The ITT Hartford Life and Annuity Insurance Company.
CONTINGENT ANNUITANT - The person so designated by the
Contract Owner who, upon the Annuitant's death, prior to the
Annuity Commencement Date, becomes the Annuitant.
CONTRACT ANNIVERSARY - An anniversary of the Contract Date.
Similarly, Contract Years are measured from the Contract Date.
The Contract Date is shown on Page 3.
CONTRACT MAINTENANCE FEE - An amount which is deducted from
the value of the contract at the end of the Contract Year or
on the date of surrender of this contract, if earlier.
CONTRACT OWNER - The owner(s) of the contract.
CONTRACT VALUE - The value of the Sub-Accounts plus the value
of the Fixed Account on any day.
DATE OF ISSUE - The date on which an Account is established
for the Contract Owner by the Company.
DOLLAR COST AVERAGING - Contract Owner initiated systematic
transfers from one or more Accounts to any other available
Sub-Accounts.
DUE PROOF OF DEATH - A certified copy of the death
certificate, an order of a court of competent jurisdiction, a
statement from a physician who attended the deceased, or any
other proof acceptable to the Company.
FIXED ACCOUNT - Part of the Company's General Account to which
all or a portion of the Contract Value may be allocated.
Page 4
<PAGE>
DEFINITION OF FUND(S) - Currently the Funds specified on Page 3 or any other
CERTAIN TERMS Fund(s) that may be added by the Company.
(CONTINUED)
GENERAL ACCOUNT - All assets of the Company other than those
allocated to the Separate Accounts of the Company.
MAXIMUM ANNIVERSARY VALUE - A value used in determining the
death benefit. It is based on a series of calculations of
Account Values on Contract Anniversaries, premium payments and
partial surrenders.
As of the date of death, the Company will calculate an
Anniversary Value for each Contract Anniversary prior to the
deceased's attained age 81. The Anniversary Value is equal to
the Account Value on a Contract Anniversary, increased by the
dollar amount of any premium payments made since that
anniversary and reduced by the dollar amount of any partial
surrenders since that anniversary. The Maximum Anniversary
Value is equal to the greatest Anniversary Value attained from
this series of calculations.
PREMIUM TAX - The amount of tax, if any, charged by a federal,
state or municipal entity on premium payments or Contract
Values.
SEPARATE ACCOUNT - An Account established by the Company to
separate the assets funding the variable benefits for the
class of contracts to which this contract belongs from the
other assets of the Company. The assets in the Separate
Account are not chargeable with liabilities arising out of any
other business the Company may conduct. The Separate Account
and the Funds, which are the underlying securities of the
Separate Account, are listed on the Contract Specifications on
Page 3 of this contract.
SUB-ACCOUNT - The subdivisions of the Separate Account which
are used to determine how the Contract Owner's Account is
allocated between the Funds.
TERMINATION VALUE - The value of the contract upon
termination, as described in the section of the contract
captioned "Termination Provisions."
VALUATION DAY - Every day the New York Stock Exchange is open
for trading.
PREMIUM PREMIUM PAYMENTS
PAYMENTS
Premium payments are payable at the Administrative Office of
the Company. Payments may be made by check payable to
ITT Hartford Life and Annuity Insurance Company or by any
other method which the Company deems acceptable.
The Initial Premium Payment is shown on Page 3. This is a
flexible premium annuity. Additional payments may be accepted
by the Company. The additional payments must be at least equal
to the minimum subsequent premium payment shown on Page 3.
ALLOCATION OF PREMIUM PAYMENTS
The Contract Owner shall specify that portion of any premium
payment to be allocated to each Account, provided, however,
that the minimum allocation to any Account may not be less
than the Company's minimum amount then in effect.
Page 5
<PAGE>
PREMIUM The Contract Owner may transfer Contract Values held in the
PAYMENTS Accounts into other Accounts; however, the Company reserves
(CONTINUED) the right to limit the number of transfers to no more
frequently than 12 per Contract Year with no two transfers
being made on consecutive Valuation Days. Subject to the
following two paragraphs, any such limitations will apply to
all Contract Owners.
The right to reallocate Contract Values between the Accounts
is subject to modification if the Company determines, in its
sole opinion, that the exercise of that right by one or more
Contract Owners is, or would be, to the disadvantage of other
Contract Owners. Any modification could be applied to
transfers to or from some or all of the 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 Accounts by a
Contract Owner at any one time. Such restrictions may be
applied in any manner reasonably designed to prevent any use
of the transfer right which is considered by the Company to be
to the disadvantage of other Contract Owners.
The maximum amount transferable from the Fixed Account during
any Contract Year is the greater of 30% of the Fixed Account
balance as of the last Contract Anniversary or the greatest of
any prior transfer from the Fixed Account. This limitation
does not apply to Dollar Cost Averaging. However, if any
interest rate is renewed at a rate at least one percentage
point less than the previous rate, the Contract Owner may
elect to transfer up to 100% of the Funds receiving that
reduced rate within 60 days of notification of the interest
rate decrease. Transfers may not be made from the Sub-Accounts
into the Fixed Account for the six-month period following any
transfer from the Fixed Account into the other Sub-Accounts.
The Company reserves the right to defer transfers from the
Fixed Account for up to six months from the date of request.
CONTRACT ANNUITANT, CONTINGENT ANNUITANT, CONTRACT OWNER
CONTROL
PROVISIONS The Annuitant may not be changed.
The designations of Contract Owner and Contingent Annuitant
will remain in effect until changed by the Contract Owner.
Changes in the designation of the Contract Owner may be made
during the lifetime of the Annuitant by written notice to the
Company. Changes in the designation of Contingent Annuitant
may be made at any time prior to the Annuity Commencement Date
by written notice to the Company. Notwithstanding the
foregoing, if no Contingent Annuitant has been named and the
Contract Owner/Annuitant's spouse is the Beneficiary, it will
be assumed that the Contract Owner/Annuitant's spouse is the
Contingent Annuitant.
The Contract Owner has the sole power to exercise all the
rights, options and privileges granted by this contract or
permitted by the Company and to agree with the Company to any
change in or amendment to the contract. The rights of the
Contract Owner shall be subject to the rights of any assignee
of record with the Company and of any irrevocably designated
Beneficiary. In the case of joint Contract Owners, each
Contract Owner alone may exercise all rights, options and
privileges, except with respect to the Termination and Partial
Surrender/Annual Withdrawal Amount Provisions and change of
ownership.
Page 6
<PAGE>
CONTRACT BENEFICIARY
CONTROL
PROVISIONS The Designated Beneficiary will remain in effect until
(Continued) changed by the Contract Owner. Changes in the Designated
Beneficiary may be made during the lifetime of the
Annuitant by written notice to the Administrative Office of
the Company. If the Designated Beneficiary has been designated
irrevocably, however, such designation cannot be changed or
revoked without such Beneficiary's written consent. Upon
receipt of such notice and written consent, if required, at
the Administrative Office of the Company, the new designation
will take effect as of the date the notice is signed, whether
or not the Annuitant or Contract Owner is alive at the time of
receipt of such notice. The change will be subject to any
payments made or other action taken by the Company before the
receipt of the notice.
In the event of the death of the Annuitant when there is no
surviving Contingent Annuitant, the Beneficiary will be as
follows. If the death of the Annuitant occurs prior to the
Annuity Commencement Date, the Beneficiary shall be the
surviving Contract Owner, or joint Contract Owners, if
applicable, notwithstanding that the Designated Beneficiary
may be different. Otherwise, the Beneficiary will be the
Designated Beneficiary then in effect. If the Annuitant is the
sole Contract Owner and there is no Designated Beneficiary in
effect, the Annuitant's estate will be the Beneficiary.
In the event of the death of a Contract Owner prior to the
Annuity Commencement Date, the Beneficiary will be as follows.
If the owner was the sole Contract Owner, the Beneficiary
shall be the Designated Beneficiary then in effect. If no
Beneficiary designation is in effect or if the Designated
Beneficiary has predeceased the Contract Owner, the Contract
Owner's estate shall be the Beneficiary. At the first death of
a joint Contract Owner prior to the Annuity Commencement Date,
the Beneficiary shall be the surviving Contract Owner
notwithstanding that the Designated Beneficiary may be
different.
GENERAL THE CONTRACT
PROVISIONS
This contract constitutes the entire contract.
MODIFICATION
No modification of this contract shall be made except over the
signature of the President, a Vice President, a Secretary or
an Assistant Secretary of the Company.
The Company reserves the right to modify the contract, but
only if such modification: (i) is necessary to make the
contract or the Separate Account comply with any law or
regulation issued by a governmental agency to which the
Company is subject; (ii) is necessary to assure continued
qualification of the contract under the Internal Revenue Code
or other federal or state laws relating to retirement
annuities or annuity contracts; (iii) is necessary to reflect
a change in the operation of the Separate Account or the Sub-
Account(s); (iv) provides additional Account options; or (v)
withdraws Account options. In the event of any such
modification, the Company will provide notice to the Contract
Owner, or to the payee(s) during the annuity period. The
Company may also make appropriate endorsement in the Contract
to reflect such modification.
Page 7
<PAGE>
GENERAL MINIMUM VALUE STATEMENT
PROVISIONS
(CONTINUED) Any Termination Values, death benefits or settlement
provisions available under this contract equal or exceed those
required by the state in which the contract is delivered.
NON-PARTICIPATION
This contract does not share in the surplus earnings of the
Company. That portion of the assets of the Separate Account
equal to the reserves and other contract liabilities of the
Separate Account shall not be chargeable with liabilities
arising out of any other business the Company may conduct.
MISSTATEMENT OF AGE AND SEX
If the age or sex of the Annuitant has been misstated, the
amount of the annuity payable by the Company shall be that
provided by that portion of the amounts allocated to effect
such annuity on the basis of the corrected information without
changing the date of the first payment of such annuity. Any
underpayments by the Company shall be made up immediately and
any overpayments shall be charged against future amounts
becoming payable.
If the age of the Annuitant or Contract Owner has been
misstated, the amount of any death benefit payable shall be
determined based upon the correct age of the Annuitant or
Contract Owner.
INCONTESTABILITY
We cannot contest this Contract.
REPORTS TO THE CONTRACT OWNER
There shall be furnished to each Contract Owner copies of any
shareholder reports of the Funds and of any other notices,
reports or documents required by law to be delivered to
Contract Owners. Annually, a statement of the Contract Value
is sent to the Contract Owner.
VOTING RIGHTS
The Company shall notify the Contract Owner of any Fund
shareholder's meetings at which the shares held for the
Contract Owner's Account may be voted and shall also send
proxy materials and a form of instruction by means of which
the Contract Owner can instruct the Company with respect to
the voting of the shares held for the Contract Owner's
Account. In connection with the voting of Fund shares held by
it, the Company shall arrange for the handling and tallying of
proxies received from Contract Owners. The Company will vote
the Fund shares held by it in accordance with the instructions
received from the Contract Owners having the right to give
voting instructions. If a Contract Owner desires to attend any
meeting which shares held for the Contract Owner's benefit may
be voted, the Contract Owner may request the Company to
furnish a proxy or otherwise arrange for the exercise of
voting rights with respect to the Fund shares held for such
Contract Owner's Account.
Page 8
<PAGE>
GENERAL In the event that the Contract Owner gives no
PROVISIONS instructions or leaves the manner of voting
(CONTINUED) discretionary, the Company will vote such shares of the
appropriate Fund in the same proportion as shares of that Fund
for which instructions have been received. Also, the Company
will vote the Fund Shares in this proportionate manner which
are held by the Company for its own Account. During the
annuity period under a contract the number of votes will
decrease as the assets held to fund annuity benefits decrease.
SUBSTITUTION
The Company reserves the right to substitute the shares of any
other registered investment company for the shares of any Fund
already purchased or to be purchased in the future by the
Separate Account provided that the substitution has been
approved by the Securities and Exchange Commission.
CHANGE IN THE OPERATION OF THE SEPARATE ACCOUNT
At the Company's election and subject to any necessary vote by
persons having the right to give instructions with respect to
the voting of the Fund shares held by the Sub-Accounts, the
Variable Account may be operated as a management company under
the Investment Company Act of 1940 or it may be deregistered
under the Investment Company Act of 1940 in the event
registration is no longer required. Deregistration of the
Variable Account requires an order by the Securities and
Exchange Commission.
PROOF OF SURVIVAL
The payment of any annuity benefit will be subject to evidence
that the Annuitant is alive on the date such payment is
otherwise due.
VALUATION NET PREMIUM PAYMENTS
PROVISIONS
The net premium payment is equal to the premium payment minus
any applicable Premium Taxes. The net premium payment is
applied to provide Fixed Account values or Sub-Account
Accumulation Units with respect to the Sub-Account(s) selected
by the Contract Owner.
The number of Accumulation Units credited to each Sub-Account
is determined by dividing the net premium payment allocated to
a Sub-Account by the dollar value of one Accumulation Unit for
such Sub-Account, next computed after the receipt of a premium
payment by the Company. The number of Accumulation Units so
determined will not be affected by any subsequent change in
the value of such Accumulation Units. The Accumulation Unit
value in any Sub-Account may increase or decrease from day to
day as described below.
The Company will determine the value of the Fixed Account by
crediting interest to amounts allocated to the Fixed Account.
The minimum Fixed Account interest rate is the rate shown on
Page 3, compounded annually. The Company, at its discretion,
may credit interest rates greater than the minimum Fixed
Account interest rate.
Page 9
<PAGE>
VALUATION NET INVESTMENT FACTOR
PROVISIONS
(CONTINUED) The net investment factor for each of the Sub-Accounts is
equal to the net asset value per share of the corresponding
Fund at the end of the valuation period (plus the per share
amount of any unpaid dividends or capital gains by that Fund)
divided by the net asset value per share of the corresponding
Fund at the beginning of the valuation period and subtracting
from that amount the mortality and expense risk charge and the
administration charge shown on Page 3. The General Account net
investment factor is guaranteed to be equal to the Minimum
Fixed Account Interest Rate shown on Page 3.
ACCUMULATION UNIT VALUE
The Accumulation Unit Value for each Sub-Account will vary to
reflect the investment experience of the applicable Fund and
will be determined on each Valuation Day by multiplying the
Accumulation Unit Value of the particular Sub-Account on the
preceding Valuation Day by the net investment factor for that
Sub-Account for the valuation period then ended. The value of
the Sub-Account on each Valuation Day is then determined by
multiplying the number of Accumulation Units in that Sub-
Account by the Accumulation Unit Value on that Valuation Day.
ANNUITY UNIT VALUE
The value of an Annuity Unit for each Sub-Account of the
Separate Account will vary to reflect the investment
experience of the applicable Funds and will be determined by
multiplying the value of the Annuity Unit for that Sub-Account
on the preceding day by the product of (a) the net investment
factor for that Sub-Account for the day for which the Annuity
Unit value is being calculated, and (b) 0.999866, which is a
factor that neutralizes an assumed interest rate of 5%.
CONTRACT MAINTENANCE FEE
During each year that this contract is in force prior to the
Annuity Commencement Date, a fee will be deducted from the
contract at the end of the Contract Year or on the date of
surrender of this contract, if earlier. The fee will be
charged against the Contract Value by reducing the Fixed
Account value and, with respect to the Sub-Accounts, the
number of Accumulation Units held on that date on a pro-rata
basis with respect to each active Account.
The number of Accumulation Units deducted from the Sub-Account
is determined by dividing the pro-rata portion of the Contract
Maintenance Fee applicable to that Sub-Account, by the value
of an Accumulation Unit for the Sub-Account at the end of the
Contract Year, or on the date of surrender, as applicable.
TERMINATION TERMINATION PRIOR TO THE ANNUITY COMMENCEMENT DATE
PROVISIONS
FULL SURRENDER
At any time prior to the Annuity Commencement Date, the
Contract Owner has the right to terminate the contract by
submitting a written request to the Administrative Office of
the Company. In such event, the Termination Value of the
contract may be taken in the form of a cash settlement.
Page 10
<PAGE>
TERMINATION The Termination Value of the contract is equal
PROVISIONS to the Contract Value less:
(CONTINUED)
(a) any applicable Premium Taxes not previously deducted;
(b) the Contract Maintenance Fee as specified on Page 3; and
(c) any applicable contingent deferred sales charges as
specified on Page 3.
The Termination Value provided by the contract is not less
than the minimum values required by the insurance laws of the
state in which this contract is issued.
PARTIAL SURRENDERS/ANNUAL WITHDRAWAL AMOUNT
The Contract Owner may request, in writing, a partial
surrender of Contract Values at any time prior to the Annuity
Commencement Date provided the Contract Value remaining after
the surrender is at least equal to the Company's minimum
amount rules then in effect. If the remaining Contract Value
following such surrender is less than the Company's minimum
amount rules, the Company will terminate the contract and pay
the Termination Value.
The contingent deferred sales charge will be assessed against
any Contract Values surrendered as described on Page 3.
However, on a noncumulative basis, the Contract Owner may make
partial surrenders during any Contract Year, up to the Annual
Withdrawal Amount shown on Page 3 and the contingent deferred
sales charge will not be assessed against such amounts.
Surrender of Contract Values in excess of the Withdrawal
Amount and additional surrenders made in any Contract Year
will be subject to the contingent deferred sales charge, as
described on Page 3, if applicable.
For Federal tax purposes, any surrenders will be deemed to be
first from earnings, to the extent that they exist, and then
from the premium payments.
TERMINATION AFTER THE ANNUITY COMMENCEMENT DATE
This contract may not be surrendered for its Termination Value
after the commencement of annuity payments, except with
respect to Options Four and Five.
PAYMENT ON SURRENDER - DEFERRAL OF PAYMENT
Payment on any request for surrender will be made as soon as
possible and, with respect to the Contract Values in the Sub-
Accounts, no later than seven days after the written request
is received by the Company. However, such payment may be
subject to postponement:
(a) for any period during which the New York Stock Exchange
is closed or during which trading on the New York Stock
Exchange is restricted;
(b) for any period during which an emergency exists as a
result of which (i) disposal of the securities held in
the Sub-Accounts is not reasonably practicable, or (ii)
it is not reasonably practicable for the value of the net
assets of the Separate Account to be fairly determined;
and
(c) for such other periods as the Securities and Exchange
Commission may, by order, permit for the protection of
the Contract Owners. The conditions under which trading
shall be deemed to be restricted or any emergency shall
be deemed to exist shall be determined by rules and
regulations of the Securities and Exchange Commission.
Page 11
<PAGE>
TERMINATION The Company may defer payment of any amounts
PROVISIONS from the Fixed Account for up to six months
(CONTINUED) from the date of the request to surrender. If the Company
defers payment for more than 30 days, the Company will pay
interest of at least 3% per annum on the amount deferred.
DEATH BENEFIT
If the Annuitant dies before the Annuity Commencement Date and
there is no designated Contingent Annuitant surviving, or if
the Contract Owner dies before the Annuity Commencement Date,
the Death Benefit will be payable as determined under the
Contract Control Provisions. The Death Benefit is calculated
as of the date the Company receives written notification of
Due Proof of Death at the Administrative Office of the
Company.
The Death Benefit will be the greatest of:
(a) The Contract Value on the date of receipt of Due Proof of
Death at the Administrative Office of the Company; or
(b) The Maximum Anniversary Value as described on Page 5 of
this Contract; or
(c) 100% of all premium payments made under the Contract,
reduced by the dollar amount of any partial surrenders
since the Date of Issue.
The Death Benefit may be taken in one sum or under any of the
settlement options then being offered by the Company provided,
however, that, in the event of a Contract Owner's death, any
settlement option must provide that any amount payable as a
death benefit will commence upon notification of Due Proof of
Death and be completed within five years of the date of death
or, if the benefit is payable over a period not extending
beyond the life expectancy of the Beneficiary or over the life
of the Beneficiary, such distribution must commence within one
year of the date of death. Notwithstanding the foregoing, in
the event of the Contract Owner's death where the sole
Beneficiary is the spouse of the Contract Owner and the
Annuitant or Contingent Annuitant is living, such spouse may
elect, in lieu of receiving the death benefit, to be treated
as the Contract Owner.
SETTLEMENT When payment is taken in one sum, payment will be made within
PROVISIONS 7 days after the date Due Proof of Death is received, except
when the Company is permitted to defer such payment under the
Investment Company Act of 1940.
ANNUITY COMMENCEMENT DATE
The Annuity Commencement Date is shown on Page 3. This date
may be changed by the Contract Owner with 30 days advance
written notification, and may be the fifteenth day of any month
before or including the month of the Annuitant's 90th
birthday. In the event the Contingent Annuitant becomes the
Annuitant and in the absence of a written election to the
contrary, the Annuity Commencement Date will be the fifteenth
day of the month coincident with or next following the
Annuitant's 90th birthday.
Page 12
<PAGE>
SETTLEMENT ELECTION OF ANNUITY OPTION
PROVISIONS
(CONTINUED) The Contract Owner may elect to have the Termination Value,
without deduction for any contingent deferred sales charge,
applied on the Annuity Commencement Date under any one of the
annuity options described below except the fifth option or
under any of the settlement options then being offered by the
Company. The Termination Value is determined on the basis of
the Accumulation Unit value of each Sub-Account and the value
of the Fixed Account no later than the fifth Valuation Day
preceding the date annuity payments are to commence.
DATE OF PAYMENT
The first payment under any option shall be made on the
fifteenth day of the month immediately following approval of
claim for settlement. Subsequent payments shall be made on the
fifteenth day of each subsequent month in accordance with the
manner of payment selected.
DEATH OF THE ANNUITANT
In the event of the death of the Annuitant while receiving
annuity payments, the present value of any remaining payments
will be paid in one sum to the Beneficiary unless other
provisions shall have been made and approved by the Company.
If the Annuitant was also the Contract Owner, any method of
distribution must provide that any amount payable as a death
benefit will be distributed at least as rapidly as under the
method of distribution in effect at the Contract Owner's
death. In the case of the Separate Account calculations, for
such present value of the remaining payments the Company will
assume a net investment rate of 5% per annum. The Annuity Unit
value on the date of receipt of Due Proof of Death shall be
used for the purpose of determining such present value. In the
case of the General Account the net investment rate assumed
will be the rate used by the Company to determine the amount
of each certain payment.
ALLOCATION OF ANNUITY
The person electing an annuity option may further elect to
have the value of the contract applied to provide a variable
annuity, a fixed dollar annuity a or combination of both. Once
very 3 months, following the commencement of annuity payments,
the Contract Owner may elect, in writing, to transfer among
any Sub-Account(s) on which variable annuity payments are
based. No transfers may be made between the Sub-Accounts and
the General Account.
If no election is made to the contrary, the value of each Sub-
Account shall be applied to provide a variable annuity based
thereon, and the value of the Fixed Account shall be applied
to provide a fixed dollar annuity.
VARIABLE ANNUITY AND FIXED DOLLAR ANNUITY
VARIABLE ANNUITY - A variable annuity is an annuity with
payments increasing or decreasing in amount in accordance
with the net investment results of the Sub-Account(s) of the
Separate Account (as described in the Valuation Provisions).
After the first monthly payment for a variable annuity has
been determined in accordance with the provisions of this
contract, a number of Sub-Account Annuity Units is determined
by dividing that first monthly payment by the appropriate Sub-
Account Annuity Unit value on the effective date of the
annuity payments.
Page 13
<PAGE>
SETTLEMENT Once variable annuity payments have begun, the number
PROVISIONS of Annuity Units remains fixed with respect to a particular
(CONTINUED) Sub-Account. If the Contract Owner elects that continuing
annuity payments be based on a different Sub-Account, the
number will change effective with that election but will
remain fixed in number following such election. The method of
calculating the unit value is described under Valuation
Provisions.
The dollar amount of the second and subsequent variable
annuity payments is not predetermined and may increase or
decrease from month to month. The actual amount of each
variable annuity payment after the first is determined by
multiplying the number of Sub-Account Annuity Units by the
Sub-Account Annuity Unit value as described in the Valuation
Provisions. The Sub-Account Annuity Unit value will be
determined no earlier than the fifth Valuation Day preceding
the date the annuity payment is due.
The Company guarantees that the dollar amount of variable
annuity payments will not be adversely affected by variations
in the expense results and in the actual mortality experience
of payees from the mortality assumptions, including any age
adjustment, used in determining the first monthly payment.
Fixed Dollar Annuity - A fixed dollar annuity is an annuity
with payments which remain fixed as to dollar amount
throughout the payment period.
ANNUITY OPTIONS
FIRST OPTION - Life Annuity - An annuity payable monthly
during the lifetime of the payee, ceasing with the last
payment due prior to the death of the payee.
SECOND OPTION - Life Annuity with 120, 180 or 240 Monthly
Payments Certain - An annuity providing monthly income to the
payee for a fixed period of 120 months, 180 months, or 240
months (as selected), and for as long thereafter as the
payee shall live.
THIRD OPTION - Joint and Last Survivor Life Annuity - An
annuity payable monthly during the joint lifetime of the payee
and a secondary payee, and thereafter during the remaining
lifetime of the survivor, ceasing with the last payment prior
to the death of the survivor.
FOURTH OPTION - Payment for a Designated Period - An amount
payable monthly for the number of years selected which may be
from 5 to 30 years. The remaining balance of proceeds in the
General Account or the Separate Account for any day is equal
to the balance on the previous day decreased by the amount of
any installment paid on that day and the remainder multiplied
by the applicable net investment factor for the day as
described in the valuation provisions. Any surrender out of
this option will be subject to contingent deferred sales
charges, as described on Page 3.
If this contract is issued to qualify under Section 401, 403,
or 408 of the Internal Revenue Code of 1954 as amended, the
fourth option shall be available only if the guaranteed
payment period is less than the life expectancy of the
Annuitant at the time the option becomes effective. Such life
expectancy will be computed under the mortality table then in
use by the Company.
Page 14
<PAGE>
SETTLEMENT FIFTH OPTION - Death Benefit Remaining with the Company
PROVISIONS - Proceeds from the Death Benefit left with the
(CONTINUED) Company for a period not to exceed five years from the
date of the Contract Owner's death prior to the Annuity
Commencement Date. The proceeds will remain in the Sub-
Account(s) to which they were allocated at the time of death
unless the Beneficiary elects to reallocate them. Full or
partial withdrawals may be made at any time. In the event of
withdrawals, the remaining value will equal the Contract Value
of the proceeds left with the Company, minus any withdrawals.
In the absence of an election by the Contract Owner, the
Termination Value, without deduction for any contingent
deferred sales charge, will be applied on the Annuity
Commencement Date under the second option to provide a life
annuity with 120 monthly payments certain.
ANNUITY TABLES DESCRIPTION OF TABLES
The attached tables show the minimum dollar amount of the
first monthly payments for each $1,000 applied under the
options. Under the First or Second Options, the amount of each
payment will depend upon the age and sex of the payee at the
time the first payment is due. Under the Third Option, the
amount of each payment will depend upon the sex of both payees
and their ages at the time the first payment is due.
The variable payment annuity tables for the First, Second and
Third Options are based on the 1983a Individual Annuity
Mortality Table with ages set back one year and an interest
rate of 5% per annum. The table for the Fourth Option is based
on an interest rate of 5% per annum.
The fixed annuity payment tables for the First, Second and
Third Options are based on the 1983a Individual Annuity
Mortality Table with ages set back one year and an interest
rate of 3% per annum. The table for the Fourth Option
is based on an interest rate of 3% per annum.
Once the Contract Owner has elected an annuity option, that
election may not be changed with respect to any Annuitant
following the commencement of annuity payments.
MINIMUM PAYMENT
No election of any options or combination of options may be
made under this contract unless the first payment for each
affected Account would be at least equal to the minimum
payment amount according to Company rules then in effect. If
at any time, payments to be made to any payee from each
Account are or become less than the minimum payment amount,
the Company shall have the right to change the frequency of
payment to such intervals as will result in a payment at least
equal to the minimum. If any amount due would be less than the
minimum payment amount per annum, the Company may make such
other settlement as may be equitable to the payee.
Page 15
<PAGE>
VARIABLE PAYMENT ANNUITY TABLES
Amount of First Monthly Payment
For Each $1,000 Applied to
Variable Payment Annuities
Second and subsequent annuity payments, when based on the investment experience
of a Separate Account, are variable and are not guaranteed as to fixed dollar
amount.
SINGLE LIFE ANNUITIES
<TABLE>
<CAPTION>
Male Payee Female Payee
---------- ------------
Monthly Payments Guaranteed Monthly Payments Guaranteed
Age -------------------------------- --------------------------------
None 120 180 240 None 120 180 240
<S> <C> <C> <C> <C> <C> <C> <C> <C>
35 $4.68 $4.67 $4.66 $4.64 $4.52 $4.52 $4.51 $4.50
40 4.86 4.85 4.82 4.79 4.65 4.65 4.64 4.62
45 5.10 5.07 5.03 4.97 4.83 4.82 4.80 4.77
50 5.41 5.35 5.28 5.20 5.06 5.04 5.01 4.97
51 5.48 5.41 5.34 5.24 5.12 5.09 5.06 5.01
52 5.55 5.48 5.40 5.30 5.17 5.14 5.11 5.05
53 5.63 5.55 5.46 5.35 5.23 5.20 5.16 5.10
54 5.71 5.63 5.53 5.40 5.30 5.26 5.22 5.15
55 5.80 5.70 5.60 5.45 5.37 5.33 5.28 5.20
56 5.89 5.79 5.67 5.51 5.44 5.40 5.34 5.26
57 5.99 5.88 5.74 5.57 5.52 5.47 5.40 5.31
58 6.10 5.97 5.82 5.62 5.60 5.54 5.47 5.37
59 6.21 6.07 5.90 5.68 5.69 5.62 5.54 5.43
60 6.33 6.17 5.98 5.74 5.79 5.71 5.62 5.49
61 6.46 6.28 6.07 5.80 5.89 5.80 5.70 5.55
62 6.60 6.40 6.16 5.86 6.00 5.90 5.78 5.61
63 6.75 6.52 6.25 5.91 6.11 6.00 5.86 5.67
64 6.91 6.64 6.34 5.97 6.23 6.11 5.95 5.74
65 7.09 6.78 6.43 6.02 6.37 6.22 6.04 5.80
66 7.27 6.91 6.52 6.08 6.51 6.34 6.14 5.87
67 7.47 7.06 6.62 6.12 6.66 6.47 6.24 5.93
68 7.68 7.21 6.71 6.17 6.82 6.60 6.34 5.99
69 7.91 7.36 6.81 6.22 7.00 6.74 6.44 6.05
70 8.15 7.52 6.90 6.26 7.19 6.89 6.54 6.11
75 9.65 8.35 7.30 6.41 8.41 7.74 7.06 6.34
80 11.78 9.16 7.59 6.48 10.24 8.70 7.46 6.46
85 14.73 9.80 7.74 6.51 13.00 9.55 7.69 6.50
90 18.62 10.21 7.80 6.51 17.00 10.10 7.79 6.51
</TABLE>
JOINT AND LAST SURVIVOR ANNUITY
<TABLE>
<CAPTION>
Age of Age of Female Payee
Male 35 40 45 50 55 60 65 70 75 80 85 90
Payee
- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
35 $4.38 $4.42 $4.47 $4.52 $4.56 $4.59 $4.62 $4.64 $4.65 $4.66 $4.67 $4.68
40 4.41 4.47 4.54 4.60 4.66 4.71 4.75 4.79 4.81 4.83 4.85 4.85
45 4.43 4.51 4.60 4.68 4.77 4.85 4.91 4.97 5.01 5.05 5.07 5.08
50 4.45 4.55 4.65 4.76 4.88 5.00 5.10 5.19 5.26 5.31 5.35 5.37
55 4.47 4.57 4.70 4.84 4.99 5.15 5.30 5.44 5.56 5.65 5.71 5.75
60 4.49 4.60 4.73 4.90 5.09 5.30 5.52 5.73 5.92 6.07 6.17 6.24
65 4.50 4.61 4.76 4.95 5.17 5.43 5.73 6.04 6.34 6.59 6.79 6.91
70 4.50 4.63 4.78 4.98 5.23 5.54 5.92 6.34 6.79 7.21 7.55 7.80
75 4.51 4.64 4.80 5.01 5.28 5.63 6.07 6.60 7.22 7.87 8.46 8.91
80 4.51 4.64 4.81 5.03 5.31 5.69 6.18 6.81 7.60 8.52 9.45 10.24
85 4.52 4.65 4.82 5.04 5.34 5.73 6.25 6.96 7.89 9.07 10.40 11.67
90 4.52 4.65 4.82 5.05 5.35 5.75 6.30 7.05 8.09 9.49 11.21 13.03
</TABLE>
PAYMENTS FOR A DESIGNATED PERIOD
<TABLE>
<CAPTION>
Amount Amount Amount Amount Amount Amount
No. of No. of No. of No. of No. of No. of
of Monthly of Monthly of Monthly of Monthly of Monthly of Monthly
Years Payments Years Payments Years Payments Years Payments Years Payments Years Payments
- ----- -------- ----- -------- ----- -------- ----- -------- ----- -------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 $18.74 10 $10.51 15 $7.82 20 $6.51 25 $5.76 30 $5.28
6 15.99 11 9.77 16 7.49 21 6.33 26 5.65
7 14.02 12 9.16 17 7.20 22 6.17 27 5.54
8 12.56 13 8.64 18 6.94 23 6.02 28 5.45
9 11.42 14 8.20 19 6.71 24 5.88 29 5.36
</TABLE>
The monthly payment for any combination of ages not shown will be quoted upon
request.
Page 16
<PAGE>
FIXED PAYMENT ANNUITY TABLES
Amount of Monthly Payments
For Each $1,000 Applied to
Fixed Payment Annuities
Payments are fixed and are guaranteed as to fixed dollar amount.
FIRST AND SECOND OPTIONS - SINGLE LIFE ANNUITIES WITH:
<TABLE>
<CAPTION>
Male Payee Female Payee
---------- ------------
Monthly Payments Guaranteed Monthly Payments Guaranteed
-------------------------------- --------------------------------
None 120 180 240 None 120 180 240
<S> <C> <C> <C> <C> <C> <C> <C> <C>
35 $3.41 $3.40 $3.39 $3.38 $3.23 $3.23 $3.22 $3.22
40 3.61 3.60 3.58 3.56 3.39 3.38 3.38 3.37
45 3.87 3.85 3.82 3.77 3.59 3.58 3.57 3.55
50 4.19 4.15 4.10 4.03 3.84 3.83 3.81 3.77
51 4.27 4.22 4.17 4.08 3.90 3.89 3.86 3.82
52 4.34 4.29 4.23 4.14 3.97 3.95 3.92 3.88
53 4.43 4.37 4.30 4.20 4.03 4.01 3.98 3.93
54 4.51 4.45 4.37 4.26 4.10 4.08 4.04 3.99
55 4.60 4.54 4.45 4.32 4.18 4.15 4.11 4.04
56 4.70 4.62 4.53 4.39 4.25 4.22 4.18 4.11
57 4.80 4.72 4.61 4.45 4.34 4.30 4.25 4.17
58 4.91 4.82 4.69 4.51 4.42 4.38 4.32 4.23
59 5.03 4.92 4.78 4.58 4.52 4.47 4.40 4.30
60 5.15 5.03 4.87 4.64 4.61 4.56 4.48 4.37
61 5.28 5.14 4.96 4.71 4.72 4.66 4.57 4.44
62 5.42 5.26 5.06 4.78 4.83 4.76 4.66 4.51
63 5.57 5.39 5.16 4.84 4.95 4.86 4.75 4.58
64 5.74 5.52 5.26 4.90 5.07 4.98 4.85 4.65
65 5.91 5.66 5.36 4.96 5.21 5.10 4.95 4.72
66 6.10 5.81 5.46 5.02 5.35 5.22 5.05 4.79
67 6.29 5.96 5.56 5.08 5.51 5.36 5.16 4.86
68 6.50 6.11 5.66 5.13 5.67 5.50 5.26 4.93
69 6.73 6.28 5.76 5.18 5.85 5.65 5.37 5.00
70 6.97 6.44 5.86 5.23 6.04 5.80 5.49 5.06
75 8.45 7.32 6.31 5.40 7.26 6.69 6.04 5.32
80 10.55 8.17 6.62 5.48 9.07 7.69 6.48 5.45
</TABLE>
THIRD OPTION - JOINT AND LAST SURVIVOR ANNUITY
<TABLE>
<CAPTION>
Age of Age of Female Payee
Male 35 40 45 50 55 60 65 70 75 80
Payee
- ------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
35 $3.07 $3.14 $3.20 $3.25 $3.30 $3.33 $3.35 $3.37 $3.39 $3.40
40 3.11 3.20 3.28 3.36 3.42 3.48 3.52 3.55 3.57 3.59
45 3.15 3.25 3.36 3.46 3.56 3.64 3.71 3.76 3.80 3.83
50 3.17 3.29 3.42 3.56 3.69 3.82 3.92 4.01 4.08 4.12
55 3.19 3.32 3.47 3.64 3.81 3.99 4.16 4.29 4.40 4.48
60 3.20 3.34 3.51 3.70 3.92 4.15 4.39 4.61 4.79 4.93
65 3.21 3.36 3.54 3.75 4.00 4.29 4.61 4.94 5.24 5.48
70 3.22 3.37 3.56 3.78 4.05 4.40 4.80 5.25 5.70 6.12
75 3.22 3.38 3.57 3.81 4.11 4.48 4.95 5.51 6.15 6.80
80 3.23 3.38 3.58 3.82 4.14 4.54 5.05 5.71 6.52 7.45
</TABLE>
FOURTH OPTION - PAYMENTS FOR A DESIGNATED PERIOD
<TABLE>
<CAPTION>
Amount Amount Amount Amount Amount Amount
No. of No. of No. of No. of No. of No. of
of Monthly of Monthly of Monthly of Monthly of Monthly of Monthly
Years Payments Years Payments Years Payments Years Payments Years Payments Years Payments
- ----- -------- ----- -------- ----- -------- ----- -------- ----- -------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5 $17.91 10 $9.61 15 $6.87 20 $5.51 25 $4.71 30 $4.18
6 15.14 11 8.86 16 6.53 21 5.32 26 4.59
7 13.16 12 8.24 17 6.23 22 5.15 27 4.47
8 11.68 13 7.71 18 5.96 23 4.99 28 4.37
9 10.53 14 7.26 19 5.73 24 4.84 29 4.27
</TABLE>
The monthly payment for any combination of ages not shown will be quoted upon
request.
Page 17
<PAGE>
Exhibit (b)(5)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INDIVIDUAL FLEXIBLE PREMIUM
VARIABLE ANNUITY CONTRACT
[ITT HARTFORD LOGO]
Hartford Life Insurance Company
P.O. Box 2999
Hartford, Connecticut 06104-2999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
<S><C>
Application for U.S.P.S.-First Class or Express-Mail to: Private Express Mail Carriers-M
VariableAnnuity Contract ITT Hartford 200 Hopmeadow Street
Attn: IAO-PCM Simsbury, CT 06089
ITT Hartford Life and P.O. Box 2999
Annuity Insurance Company Hartford, CT 06104-2999
[ITT HARTFORD LOGO]
- ------------------------------------------------------------------------------------------------------------------------------------
1. Contract Owner James Scott
------------------------------------
If no Annuitant is Name
specified in Section 3, --- -- ----
the Contract Owner 1 Main Street SS#/TIN 123 45 6789
will be the Annuitant. ------------------------------------ --- -- ----
Street Address -- -- --
Date of Birth 09 10 58
Hartford CT 06106 -- -- --
------------------------------------ month day year
City State Zip /X/ Male / / Female / / Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
2. Joint Contract ------------------------------------ --- -- ----
Owner (if any) Name SS#/TIN
--- -- ----
------------------------------------ -- -- --
Relationship to Contract Owner Date of Birth
-- -- --
month day year
/ / Male / / Female
- ------------------------------------------------------------------------------------------------------------------------------------
3. Annuitant ------------------------------------ --- -- ----
Name SS#
Complete only if --- -- ----
different from the ------------------------------------ -- -- --
contract owner in Street Address Date of Birth
Section 1. -- -- --
------------------------------------ month day year
City State Zip / / Male / / Female
- ------------------------------------------------------------------------------------------------------------------------------------
4. Contingent Annuitant Paul Scott Brother
------------------------------------------------------------------------------------------------------
Name Relationship to Owner
- ------------------------------------------------------------------------------------------------------------------------------------
5. Beneficiary (ies) Ann Scott Wife 100%
------------------------------------------------------------------------------------------------------
Designated Name(s) Relationship to Contract Owner Percentage
------------------------------------------------------------------------------------------------------
Contingent Name(s) Relationship to Contract Owner Percentage
- ------------------------------------------------------------------------------------------------------------------------------------
6. Tax Qualified Plans A. / / Initial / / Transfer / / Rollover
Check the appropriate B. / / IRA / / 403(b) / / 401(k) / / 401(a) / / SEP-IRA / / Other
box(es) in A, B, and C. --------------------
C. / / Individual Accounts / / Unallocated Plan Account
Tax Year for which initial contribution is being made:
-------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
7. Fund Selection Please check selected fund(s) and note whole percentage allocations.
The initial premium /X/ PCM Voyager Fund 50 % / / PCM High Yield Fund %
will be allocated as ---- ----
selected here. If / / PCM Global Growth Fund % / / PCM Diversified Income Fund %
Dollar Cost Averaging, ---- ----
complete the DCA / / PCM Global Asset Allocation Fund % / / PCM U.S. Gov. & High Quality Bond %
enrollment section ---- Fund ----
on the reverse side. / / PCM Growth & Income Fund % / / PCM Money Market Fund %
---- ----
/X/ PCM Utilities Growth & Income Fund 50 % / / PCM Fixed Account %
---- ----
/ / Other %
-------------------- ----
Make checks payable to: ITT Hartford Life Insurance Companies Initial $ 20,000 Total 100 %
-------- ----
Monies remitted via /X/ check / / wire / / 1035 / / Qualified Transfer
- ------------------------------------------------------------------------------------------------------------------------------------
8. Special Remarks
- ------------------------------------------------------------------------------------------------------------------------------------
Will the annuity applied for replace one or more existing annuity or life insurance contracts? / / Yes /X/ No (If yes, explain
Have you purchased another ITT Hartford Annuity during the previous 12 months? / / Yes /X/ No in Special
Remarks)
I hereby represent my answers to the above questions to be true and correct to the best of my knowledge and belief. I UNDERSTAND
THAT ANNUITY PAYMENTS OR SURRENDER VALUES, WHEN BASED UPON THE INVESTMENT EXPERIENCE OF A SEPARATE ACCOUNT, ARE VARIABLE AND NOT
GUARANTEED AS TO A FIXED DOLLAR AMOUNT.
/X/ RECEIPT OF A VARIABLE ANNUITY AND FUND PROSPECTUS IS HEREBY ACKNOWLEDGED. If not checked, the appropriate prospectus will be
mailed to you.
SIGNED AT Hartford, CT ON 2-4-94 /s/ James Scott
------------------------ ---------- ------------------------------------------------------------------
City, State Date (Contract Owner's signature)
Do you, as Agent, have reason to believe the contract applied
for will replace existing annuities or insurance? / / Yes / / No ------------------------------------------------------------------
(Joint Contract Owner's signature)
LICENSED
AGENT /s/ John Adams Broker/Dealer Paine Webber
--------------------------------- ----------------------------------------------------
(signature)
John Adams Address Financial Plaza, Hartford, CT
--------------------------------- -----------------------------------------------------------
(print)
Telephone # (203) 547-5000
--------------------------------- -------------------------------------------------------
(License I.D. # (Florida Agents Only)
</TABLE>
<PAGE>
Arthur Andersen LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of
this Registration Statement File No. 33-73572 on Form N-4 for ITT Hartford
Life and Annuity Insurance Company.
Hartford, Connecticut
April 21, 1995
<PAGE>
Exhibit (b)(6)(a)
RESTATED ARTICLES OF INCORPORATION
ITT LIFE INSURANCE CORPORATION
These Restated Articles of Incorporation give effect to amendments of the
Articles of Incorporation and otherwise purport merely to restate all those
provisions already in effect. These Restated Articles of Incorporation have
been adopted by the sole shareholder and shall supersede and take the place of
the heretofore existing Articles of Incorporation and amendments thereto.
FIRST: The name of the corporation is ITT Life Insurance Corporation.
SECOND: The address of the Registered Office of the Corporation is Whyte
and Hirschboeck, 111 East Wisconsin Avenue, Milwaukee, Wisconsin 53202. The
name of the Registered Agent at such address is Joseph C. Branch.
THIRD: The Corporation may make insurance upon lives, may grant and issue
annuities, either in connection with or separate from contracts of insurance
predicated upon life risks, may issue policies stipulated to be with or without
participation in profits, may issue policies or certificates of insurance
against loss of life or personal injury resulting from any cause, and against
loss resulting from disease or accident, and against any other casualty or risk
which may be subject to life, accident or health insurance. Said Corporation
in addition to the foregoing is authorized generally to do a life, accident
and health insurance business, and is authorized to insure against any and all
hazards against which life, accident and health insurance companies are
authorized to insure by the laws of this state, or of any other state or
territory of the United States or foreign countries in which the company may
be licensed to carry on business. In addition to the foregoing powers, the
purposes of said Corporation are all those permitted by Section 610.21 of
the Wisconsin Statutes.
FOURTH: The aggregate number of shares which the corporation shall have
authority to issue is 2,000 shares consisting of one class only, designated as
Common Shares, of the par value of $1,000 per share.
FIFTH: No shareholder shall, because of his ownership of shares, have a
preemptive or other right to purchase, subscribe for, or take any part of any
shares or any part of the notes, debentures, bonds, or other securities
convertible into or carrying options or warrants to purchase shares of this
corporation issued, optioned, or said by it after its incorporation.
<PAGE>
-2-
SIXTH: Amendments to these Articles of Incorporation may be made at any
special meeting of shareholders duly called for that purpose, or at any annual
meeting of shareholders, provided that a statement of the nature of the proposed
amendment is included in the Notice of Meeting, upon receiving the affirmative
vote of the holders of at least two-thirds of the shares entitled to vote
thereon.
Dated: March xx, 1xxx ITT Life Insurance Corporation
By /s/ Raymond x. xxxx
---------------------------------
Raymond x. xxxx
Chairman of the Board
Attest:
William x. xxxxxxx
- -----------------------------------
William x. xxxxxxx
Secretary
610-0/xxD
This document was drafted
by: William x. xxxxxxx
<PAGE>
SECOND AMENDMENT OF RESTATED ARTICLES
ITT LIFE INSURANCE CORPORATION
Amendment of Restated Articles in duplicate are hereby executed by the
undersigned, William E. Sweeney, President, and L. L. Kohlhof, Vice President
and Secretary, of ITT Life Insurance Corporation, a Wisconsin corporation as
follows:
On March 15, 1993, the following amendment to the Restated Articles of
Incorporation of ITT Life Insurance Corporation was duly adopted by the
written consent of all the shareholders and the Company's Board of
Directors:
RESOLVED, that the First and Second Articles of the Company's Restated
Articles of Incorporation be and are hereby amended and restated as
follows. All other Articles of the Restated Articles of Incorporation
are unchanged and continue in full force and effect.
"FIRST: The name of the Corporation is ITT Hartford Life and
Annuity Insurance Company."
"SECOND: The name of the Registered Agent of the Corporation is
CT Corporation Systems and the address of the
Registered Office is 44 East Miffilin Street, Madison,
Wisconsin 53703."
FURTHER RESOLVED, that the directors and officers of the Company be
and they are hereby authorized and directed to take whatever action
may be required by law to give effect to this amendment of the
Restated Articles of Incorporation.
Dated: March 15, 1993 /s/ William E. Sweeney
- ------------------------------------- ------------------------------------
William E. Sweeney, President
(Seal)
/s/ L. L. Kohlhof
------------------------------------
L. L. Kohlhof, Vice President
& Secretary
<PAGE>
STATE OF MINNESOTA)
) SS
COUNTY OF HENNEPIN)
On this 15th day of March, 1993, before me appeared William E. Sweeney, to me
personally known, who, being by me duly sworn, did say that he is the President
of ITT Life Insurance Corporation, and that the seal affixed to the foregoing
instrument is the corporate seal of the corporation, and that the instrument was
executed in behalf of the corporation by authority of its Board of Directors,
and said William E. Sweeney acknowledged the instrument to be the free act and
deed of the corporation.
/s/ Tami L. Johnson
[SEAL] ---------------------------------------
Notary Public
My commission expires on
9/10/97
STATE OF MINNESOTA)
) ss
COUNTY OF HENNEPIN)
On this 15th day of March, 1993, before me appeared L. L. Kohlhof, who
acknowledged himself to be the Vice President and Secretary of ITT Life
Insurance Corporation, and that he, as such Secretary by authority to do so,
executed the foregoing instrument for the purposes therein contained, by signing
the name of the corporation by himself as Secretary.
/s/ Tami L. Johnson
---------------------------------------
Notary Public
My commission expires on
9/10/97
[SEAL]
<PAGE>
Arthur Andersen LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of
this Registration Statement File No. 33-73572 on Form N-4 for Hartford
Life and Annuity Insurance Company.
Hartford, Connecticut
April 21, 1995
<PAGE>
AMENDED BYLAWS
OF
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
(formerly ITT LIFE INSURANCE CORPORATION)
EFFECTIVE MARCH 23, 1993
<PAGE>
ARTICLE I
Name - Home Office
SECTION 1. This company shall be named ITT Hartford and Annuity Life
Insurance Company.
SECTION 2. The Company may have such principal and other business offices,
either within or without the State of Wisconsin, as the Board of Directors may
designate or as the business of the Company may require.
SECTION 3. The registered office of the Company required by law to be
maintained in the State of Wisconsin may be, but need not be, identical with
the principal office in the State of Wisconsin.
ARTICLE II
Stockholders' Meetings - Notice-Quorum-Right to Vote
SECTION 1. All meetings of the stockholders shall be held at the principal
business office of the Company unless the Board of Directors shall otherwise
provide and direct.
SECTION 2. The annual meeting of the stockholders shall be held on such day and
at such hour as the Board of Directors may decide. For cause the Board of
Directors may postpone or adjourn such annual meeting to any other time during
the year.
SECTION 3. Special meetings of the stockholders may be called by the Board of
Directors, the Executive Committee, the Chairman or Vice Chairman of the Board,
the President or any Vice President.
SECTION 4. Notice of stockholders' meetings shall be delivered to each
stockholder, either personally or by mail at his address as it appears on the
records of the Company, at least seven days prior to the meeting. The notice
shall state the place, date and time of the meeting and shall specify all
matters proposed to be acted upon at the meeting.
SECTION 5. At each annual meeting, the stockholders shall choose Directors as
hereinafter provided.
SECTION 6. Each stockholder shall be entitled to one vote at all meetings of
the Company for each share of stock held by such stockholder. Proxies may be
authorized by written power of attorney.
SECTION 7. A majority of the total number of shares entitled to vote,
represented in person or by proxy, shall constitute a quorum.
<PAGE>
SECTION 8. Each stockholder shall be entitled to a certificate of stock which
shall be signed by the President or a Vice President, and either the Treasurer
or an Assistant Treasurer of the Company, and shall bear the seal of the
Company, but such signatures and seal may be facsimile.
ARTICLE III
Directors - Meetings - Quorum
SECTION 1. The property, business and affairs of the Company shall be managed
by a board of not less than three nor more than twenty Directors, who shall be
chosen by the stockholders at each annual meeting. Vacancies occurring between
annual meetings may be filled by the affirmative vote of a majority of the
Directors then in office. Each Director shall hold office until the next annual
meeting of stockholders and until his successor is chosen and qualified.
SECTION 2. Meetings of the Board of Directors may be called by the direction of
the Chairman of the Board, the President, or any three Directors.
SECTION 3. Three days' notice of meetings of the Board of Directors shall be
given to each Director, either personally or by mail or telegraph, at his
residence or usual place of business, but notice may be waived, at any time, in
writing, and attendance of a Director at a meeting shall constitute a waiver of
notice of such meeting except where a Director attends a meeting and objects
thereat to the transaction of any business on grounds that the meeting was not
lawfully called or convened.
SECTION 4. A majority of the number of existing directorships, but not less than
two Directors, shall constitute a quorum.
ARTICLE IV
Election of Officer - Duties of Board of
Directors and Executive Committee
SECTION 1. The Board of Directors shall annually elect a President, a Secretary
and a Treasurer. It may elect a Chairman of the Board, a Vice Chairman of the
Board and such Vice Presidents, other Secretaries, Assistant Secretaries,
Assistant Treasurers and other officers as it may determine. All officer of
the Company shall hold office during the pleasure of the Board of Directors.
SECTION 2. The Directors may fill any vacancy among the officers by election
for the unexpired term.
SECTION 3. The Board of Directors may appoint from its own number an
Executive Committee of not less than five Directors. The Executive Committee may
exercise all powers vested in and
- 2 -
<PAGE>
conferred upon the Board of Directors at any time when the Board is not in
session. A majority of the members of said Committee shall constitute a
quorum. Meetings of the Committee shall be called whenever the Chairman of
the Board, the President or a majority of its members shall request.
SECTION 4. The Board of Directors may annually appoint from its own number a
Finance Committee of not less than three Directors, whose duties shall be as
hereinafter provided.
SECTION 5. The Board of Directors may, at any time, appoint such other
committees, not necessarily from its own number, as it may deem necessary for
the proper conduct of the business of the Company, which committees shall have
only such powers and duties as are specifically assigned to them by the Board of
Directors or the Executive Committee.
For all meetings, forty-eight hours' notice shall be given but notice may be
waived, at any time, in writing, and attendance of a Director at a meeting shall
constitute a waiver of notice of such meeting except where a Director attends a
meeting and objects thereat to the transaction of any business on grounds that
the meeting was not lawfully called or convened.
SECTION 6. The Board of Directors may authorize corporate contributions, in such
amounts as it determines to be reasonable, for public welfare or for charitable,
scientific or educational purposes, subject to the limits and restrictions
imposed by law and to such rules and regulations consistent with law as it
makes.
ARTICLE V
Officers
Chairman of the Board
and
Vice Chairman of the Board
SECTION 1. The Chairman of the Board shall preside at the meetings of the
Board of Directors and the Executive Committee and, in the absence of the
Chairman of the Finance Committee, at the meetings of the Finance Committee.
In the absence or inability of the Chairman of the Board to so preside, the
Vice Chairman shall preside in his place if there be one, otherwise the
President shall preside.
SECTION 2. The Vice Chairman of the Board shall, in the absence of the Chairman
of the Board, exercise the powers and perform the duties of the Chairman of the
Board. He shall perform such other duties and have such other powers as may be
assigned to him by the Board of Directors.
-3-
<PAGE>
President
SECTION 3. The President, unless the Board of Directors shall otherwise order
pursuant to Section 7 below, shall be the chief executive officer of the Company
and, subject to the control of the Board of Directors, shall in general
supervise and control all the business and affairs of the Company. Unless
the Board of Directors shall provide otherwise, he shall, when present, preside
at all meetings of the shareholders and shall preside at all meetings of the
Board of Directors unless the Board shall have elected a Chairman of the Board
of Directors. He shall have authority, subject to such rules as may be
prescribed by the Board of Directors, to appoint such agents and employees of
the Company as he shall deem necessary, to prescribe their powers, duties and
compensation, and to delegate authority to them. Such agents and employees
shall hold office at the discretion of the President. Except as otherwise
provided in these Bylaws or by resolution of the Board of Directors, the
President shall have authority to sign, execute and acknowledge, on behalf of
the Company all contracts, reports and other documents or instruments necessary
or proper to be executed in the course of the Company's regular business, or
which shall be authorized by resolution of the Board of Directors; and except as
otherwise provided by law or the Board of Directors, he may authorize any Vice
President or other officer or agent of the Company to sign, execute and
acknowledge such documents or instruments in his place and stead. In general,
he shall perform all duties incident to the office of the chief executive
officer and such other duties as may be prescribed by the Board of Directors
from time to time.
If the President is not the chief executive officer, he shall have such duties
and authority as prescribed by the Board of Directors or the chief executive
officer.
SECTION 4. In the absence or inability of the President to perform his duties,
the Board or the Chairman thereof may designate a Vice President to exercise the
powers and perform the duties of the President during such absence or inability.
Secretary
SECTION 5. The Secretary shall keep a record of all the meetings of the
Company, of the Board of Directors and of the Executive Committee, and he shall
discharge all other duties specifically required of the Secretary by law.
The other Secretaries and the Assistant Secretaries shall perform such duties as
may be assigned to them by the Board of Directors or by their senior officers
and any Secretary or Assistant Secretary may affix the seal of the Company and
attest it and the Signature of any officer to any and all instruments.
-4-
<PAGE>
Treasurer
SECTION 6. The Treasurer shall keep, or cause to be kept, full and accurate
accounts of the Company. He shall see that the funds of the Company are
disbursed as may be ordered by the Board of Directors, the Finance Committee or
a duly authorized individual. He shall have charge of all moneys paid to the
Company and shall deposit such to the credit of the Company or in any other
properly authorized name, in such banks or depositories as may be designated in
a manner provided by these Bylaws. He shall also discharge all other duties
that may be required of him by law.
Other Officers
SECTION 7. The other officers shall perform such duties as may be assigned to
them by the President or the Board of Directors. The Board of Directors may
designate the Chairman of the Board or the Vice Chairman as the chief executive
officer of the Company. In such event that person shall assume all authority,
power, duties and responsibilities otherwise appointed to the President pursuant
to Section 3 above, and all references to the President in these Bylaws shall
be regarded as references to the Chairman of the Board or Vice Chairman, as the
case may be, as such chief executive officer, except where a contrary meaning is
clearly required, and provided that in no case shall that person be empowered in
place of the President to sign the certificates for shares of stock of the
Company.
ARTICLE VI
Finance Committee
SECTION 1. If a Finance Committee is established, it shall be the duty of that
committee to supervise the investment of the funds of the Company in securities
in which insurance companies are permitted by law to invest, and all other
matters connected with the management of investments. If no Finance Committee
is established, this duty shall be performed by the Board of Directors.
SECTION 2. All loans or purchases for the investment and reinvestment of the
funds of the Company shall be submitted for approval to the Finance Committee,
if not specifically approved by the Board of Directors.
SECTION 3. Sale or transfer of any stocks or bonds shall be made upon
authorization of the Finance Committee unless specifically authorized by the
Board of Directors.
SECTION 4. Transfers of stock and registered bonds, deeds, leases, releases,
sales, mortgages chattel or real, assignments or partial releases of mortgages
chattel or real, and in general all instruments of defeasance of property and
all agreements or
-5-
<PAGE>
contracts affecting the same, except discharges of mortgages and entries to
foreclose the same as hereinafter provided, shall be authorized by the
Finance Committee or the Board of Directors, and be executed jointly for the
Company by two persons, to wit: the Chairman of the Board, the Vice
Chairman, the President or a Vice President, and a Secretary, the Treasurer
or an Assistant Treasurer, but may be acknowledged and delivered by either
one of those executing the instrument; provided, however, that either a
Secretary, the Treasurer, or an Assistant Treasurer alone, when authorized as
aforesaid, or any person specially authorized by the Finance Committee as
attorney for the Company, may make entry to foreclose any mortgage, and a
Secretary, the Treasurer or an Assistant Treasurer alone is authorized,
without the necessity of further authority, to discharge by deed or otherwise
any mortgage on payment to the Company of the principal, interest and all
charges due.
SECTION 5. The Finance Committee may fix times and places for regular
meetings. No notice of regular meetings shall be necessary. Reasonable notice
shall be given of special meetings but the action of a majority of the Finance
Committee at any meeting shall be valid notwithstanding any defect in the notice
of such meeting.
SECTION 6. In the absence of specific authorization from the Board of
Directors or the Finance Committee, the Chairman of the Board, the President, a
Vice President or the Treasurer shall have the power to vote or execute proxies
for voting any shares held by the Company.
ARTICLE VII
Funds
SECTION 1. All monies belonging to the Company shall be deposited to the
credit of the Company, or in such other name as the Finance Committee, the
Chairman of the Finance Committee or such executive officers as are designated
by the Board of Directors shall direct, in such bank or banks as may be
designated from time to time by the Finance Committee, the Chairman of the
Finance Committee or by such executive officers as are designated by the Board
of Directors. Such monies shall be drawn only on checks or drafts signed by any
two executive officers of the Company, provided that the Board of Directors may
authorize the withdrawal of such monies by check or draft signed with the
facsimile signature of any one or more executive officers, and provided further,
that the Finance Committee may authorize such alternative methods of withdrawal
as it deems proper.
The Board of Directors, the President, the Chairman of the Finance Committee, a
Vice President, or such executive officers as are designated by the Board of
Directors may authorize withdrawal of funds by checks or drafts drawn at offices
of the
-6-
<PAGE>
Company to be signed by Managers, General Agents, or employees of the Company,
provided that all such checks or drafts shall be signed by two such
authorized persons, except checks or drafts used for the payment of claims or
losses which need to be signed by only one such authorized person, and provided
further that the Board of Directors of the Company or executive officers
designated by the Board of Directors may impose such limitations or
restrictions upon the withdrawal of such funds as it deems proper.
ARTICLE VIII
Liability and Indemnity
SECTION 1. No person shall be liable to the Company for any loss or damage
suffered by it on account of any action taken or omitted to be taken by him
as director or officer of the Company, or of any other company, partnership,
joint venture, trust or other enterprise for which he serves as a director,
officer or employee at the request of the Company, in good faith, if such
person (a) exercised and used the same degree of care and skill as a prudent
man would have exercised or used under the circumstances in the conduct of
his own affairs, or (b) took or omitted to take such action in reliance upon
advice of counsel for the Company or upon statements made or information
furnished by officers or employees of the Company which he had reasonable
grounds to believe to be true. The foregoing shall not be exclusive of other
rights and defenses to which he may be entitled as a matter of law.
SECTION 2. The Company shall indemnify any person who was or is a party or
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, (other than one by or in the right of the Company) by
reason of the fact that he is or was a director, officer or employee of the
Company, or is or was serving at the request of the Company as a director,
officer or employee of another company, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or 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 Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding had reasonable
cause to believe that his conduct was unlawful.
-7-
<PAGE>
SECTION 3. The Company shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, by or in the right of the Company to procure a judgment in
its favor by reason of the fact that he is or was a director, officer or
employee of the Company, or is or was serving at the request of the Company as a
director, officer or employee of another company, partnership, joint venture,
trust or other enterprise against expenses, including attorneys' fees, actually
and reasonably incurred by him in connection with the defense or settlement of
such action or suit, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Company, except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Company unless and only to the
extent that the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability and in view of all
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as such court shall deem proper.
SECTION 4. Expenses, including attorneys' fees, incurred in defending a civil
or criminal action, suit or proceeding may be paid by the Company in advance of
the final disposition of such action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or employee to repay such amount
unless it shall ultimately be determined that he is entitled to be indemnified
by the Company as authorized hereby.
SECTION 5. The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any statute, bylaw, agreement, vote of shareholders or of disinterested
directors or otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office, and shall continue as to
a person who has ceased to be a director, officer or employee and shall inure
to the benefit of the heirs, executors and administrators of such a person.
ARTICLE IX
Amendment of Bylaws
SECTION 1. The Directors shall have power to adopt, amend and repeal such
bylaws as may be deemed necessary or appropriate for the management of the
property and affairs of the Company.
SECTION 2. The stockholders at any annual or special meeting may amend or
repeal these bylaws or adopt new ones if the notice of such meeting contains a
statement of the proposed alteration, amendment, repeal or adoption of the
substance thereof. Bylaws amended or adopted by the stockholders may be amended
or repealed by the Directors.
-8-
<PAGE>
This is to certify that the foregoing is a true copy of the Bylaws of ITT
Hartford Life and Annuity Insurance Company in full force and effect on this
29th day of July, 1993.
Attest:
/s/ Dave T. Schrandt
--------------------------------
Dave T. Schrandt
Vice President, Controller
-9-
<PAGE>
Exhibit (b)(11)
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
POWER OF ATTORNEY
Bruce D. Gardner
Joseph H. Gareau
Joseph Kanarek
Thomas M. Marra
Lowndes A. Smith
Lizabeth H. Zlatkus
Donald J. Znamierowski
do hereby jointly and severally authorize Bruce D. Gardner or Rodney J.
Vessels to sign as their agent, any Registration Statement, pre-effective
amendment, and any post-effective amendment of the ITT Hartford Life and
Annuity Insurance Company under the Securities Act of 1933 and/or the
Investment Company Act of 1940.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for
the purpose herein set forth.
/s/ Bruce D. Gardner Dated:
- -------------------------- --------------------
Bruce D. Gardner
/s/ Joseph H. Gareau Dated:
- -------------------------- --------------------
Joseph H. Gareau
/s/ Joseph Kanarek Dated: 12-9-94
- -------------------------- --------------------
Joseph Kanarek
/s/ Thomas M. Marra Dated: 12-9-94
- -------------------------- --------------------
Thomas M. Marra
/s/ Lowndes A. Smith Dated:
- -------------------------- --------------------
Lowndes A. Smith
/s/ Lizabeth H. Zlatkus Dated:
- -------------------------- --------------------
Lizabeth H. Zlatkus
/s/ Donald J. Znamierowski Dated: 12/8/94
- -------------------------- --------------------
Donald J. Znamierowski
<TABLE> <S> <C>
<PAGE>
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