<PAGE>
File No. 33-80732
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
Separate Account Three
(Exact Name of Registrant)
ITT Hartford Life and Annuity Insurance Company
(Name of Depositor)
P.O. Box 2999
Hartford, CT 06104-2999
(Address of Depositor's Principal Offices)
Depositor's Telephone Number: (203) 843-8847
Rodney J. 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
-----
60 days after filing pursuant to paragraph (a)(1) of Rule 485
-----
on May 1, 1995 pursuant to paragraph (a)(1) of Rule 485
-----
75 days after filing pursuant to paragraph (a)(2) of Rule 485
-----
on _____ pursuant to paragraph (a)(2) of Rule 485
-----
Calculation of Registration Fee Under Securities Act of 1933
<PAGE>
Calculation of Registration Fee Under Securities Act of 1933
- -------------------------------------------------------------------------------
Title of Amount Proposed Maximum Proposed Maximum Amount of
Securities Being Offering Aggregate Registration
Being Registered Price Per Unit Offering Price Fee
Requested
- -------------------------------------------------------------------------------
*PAID
ITT Hartford Life and Pursuant to Regulation 270. 24f-2 under the
Annuity Insurance Company Investment Company Act of 1940, Registrant
Separate Account Three hereby elects to register an indefinite
Units of Interest number of units of interest in this Separate Account
- -------------------------------------------------------------------------------
A Rule 24f-2 Notice for the Registrant's most recent fiscal year will be filed
on or about February 28, 1995.
<PAGE>
-2-
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;
Depositor, and Portfolio Companies The Separate Account;
The Fixed Account;
The Company;
The Portfolios; 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;
General Matters
8. Annuity Period Annuity/Payout Period
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
15. Cover Page Part B; Statement of
Additional Information
<PAGE>
-3-
16. Table of Contents Tables of Contents
17. General Information and Introduction
History
18. Services None
19. Purchase of Securities Distribution of Contracts
being Offered
20. Underwriters Distribution of Contracts
21. Calculation of Performance Calculation of Yield and
Data Return
22. Annuity Payments Annuity/Payout Period
23. Financial Statements Financial Statements
24. Financial Statements and Financial Statements and
Exhibits Exhibits
25. Directors and Officers of the Directors and Officers of the
Depositor Depositor
26. Persons Controlled by or Under Persons Controlled by or Under
Common Control with the Depositor Common Control with the Depositor
or Registrant or Registrant
27. Number of Contract Owners Number of Contract Owners
28. Indemnification Indemnification
29. Principal Underwriters Principal Underwriters
30. Location of Accounts and Records Location of Accounts and Records
31. Management Services Management Services
32. Undertakings Undertakings
<PAGE>
-4-
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY--
SEPARATE ACCOUNT THREE
- -----------------------------------------------
This Prospectus describes the Dean Witter Select Dimensions Plan, a tax deferred
variable annuity issued by ITT Hartford Life and Annuity Insurance Company
("ILA"). Payments for the Contract will be held in the Fixed Account and/or a
series of ITT Hartford Life and Annuity Insurance Company - Separate Account
Three (the "Separate Account"). Allocations to and transfers to and from the
Fixed Account are not permitted in certain states.
There are currently twelve Sub-Accounts available under the Contract. The
underlying investment portfolios ("Portfolios") of the Dean Witter Select
Dimensions Investment Series for the Sub-Accounts are the Money Market
Portfolio, the North American Government Securities Portfolio, the Diversified
Income Portfolio, the Balanced Portfolio, the Utilities Portfolio, the Dividend
Growth Portfolio, the Value-Added Market Portfolio, the Core Equity Portfolio,
the American Value Portfolio, the Global Equity Portfolio, the Developing Growth
Portfolio, and the Emerging Markets Portfolio.
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 THE DEAN WITTER
SELECT DIMENSIONS INVESTMENT SERIES ("FUND") AND IS VALID ONLY WHEN ACCOMPANIED
BY A CURRENT PROSPECTUS FOR THE FUND
- -------------------------------------------------------------------------------
Prospectus Dated: May 1, 1995
----------------
Statement of Additional Information Dated: May 1, 1995
------------------
<PAGE>
-5-
TABLE OF CONTENTS
-----------------
Page
----
GLOSSARY OF SPECIAL TERMS. . . . . . . . . . . . . . . . . . . . . . . . . .
FEE TABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PERFORMANCE RELATED INFORMATION. . . . . . . . . . . . . . . . . . . . . . .
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE CONTRACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right to Cancel Period. . . . . . . . . . . . . . . . . . . . . . . . .
THE SEPARATE ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE FIXED ACCOUNT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE COMPANY' . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE PORTFOLIOS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
-6-
TABLE OF CONTENTS
-----------------
Page
----
Contingent Deferred Sales Charges . . . . . . . . . . . . . . . . . . .
During the First Seven Contract Years . . . . . . . . . . . . . . . . .
After the Seventh Contract Year . . . . . . . . . . . . . . . . . . . .
Mortality and Expense Risk Charge . . . . . . . . . . . . . . . . . . .
Administration and Maintenance Fees . . . . . . . . . . . . . . . . . .
Premium Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ANNUITY BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Annuity Options. . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Annuity Unit and Valuation. . . . . . . . . . . . . . . . . . . . .
Determination of Payment Amount . . . . . . . . . . . . . . . . . . . .
FEDERAL TAX CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . .
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxation of ILA and the Separate Account. . . . . . . . . . . . . . . .
Taxation of Annuities in General - Non-Tax Qualified Purchasers . . . .
Federal Income Tax Withholding. . . . . . . . . . . . . . . . . . . . .
General Provisions Affecting Tax Qualified Plans. . . . . . . . . . . .
Aggregation of Two or More Annuity Contracts. . . . . . . . . . . . . .
GENERAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Modification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Delay of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . .
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
-7-
TABLE OF CONTENTS
-----------------
Page
----
Distribution of the Contracts . . . . . . . . . . . . . . . . . . . . .
Other Contracts Offered . . . . . . . . . . . . . . . . . . . . . . . .
Custodian of Separate Account Assets. . . . . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . .
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional Information. . . . . . . . . . . . . . . . . . . . . . . . .
APPENDIX I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION . . . . . . . . . .
<PAGE>
-8-
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 without 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.
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 ILA to which a Contract Owner may
allocate all or a portion of his Premium Payment or Contract Value.
<PAGE>
-9-
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.
FUND: Dean Witter Select Dimensions Investment Series.
GENERAL ACCOUNT: The General Account of ILA which consists of all assets of the
ITT Hartford Life and Annuity Insurance Company other than those allocated to
the separate accounts of the ITT Hartford Life and Annuity Insurance Company.
ILA: 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.
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.
PORTFOLIOS: Currently, the portfolios of Dean Witter Select Dimensions
Investment Series described on page _____ of this Prospectus.
PREMIUM PAYMENT: A payment made to ILA pursuant to the terms of the Contract.
PREMIUM TAX: A tax charged by a state or municipality on Premium Payments or
Contract Values.
SEPARATE ACCOUNT: The ILA separate account entitled "ITT Hartford Life and
Annuity Insurance Company - Separate Account Three".
SUB-ACCOUNT: Accounts established within the Separate Account with respect to a
Fund.
TERMINATION VALUE: The Contract Value upon termination of the Contract prior to
the Annuity Commencement Date, less any applicable Premium Taxes, the Annual
Maintenance Fee and any applicable contingent deferred sales charges.
UNALLOCATED CONTRACTS: Contracts issued to employers or such other entities as
Contract Owners with no allocation to a specific Participant, as defined herein.
<PAGE>
-10-
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>
SUMMARY
Contract Owner Transaction Expenses
(All Sub-Accounts)
<TABLE>
<S> <C>
Sales Load Imposed on Purchases (as a percentage of premium payments). . . . . . . . . . . None
Exhange 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%
Administrative Fees 0.150%
------
Total 1.400%
</TABLE>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of net assets)
<TABLE>
<CAPTION>
Total Fund
Management Other Operating
Fees Expenses Expenses
---------- -------- ----------
<S> <C> <C> <C> <C>
The Money Market Portfolio ...... 0.323% 0.209% 0.532%
The North American Government
Securities Portfolio ...... 0.650% 0.302% 0.952%
The Diversified Income Portfolio ...... 0.391% 0.374% 0.765%
The Balanced Portfolio ............... 0.750% 0.242% 0.992%
The Utilities Portfolio ...... 0.640% 0.291% 0.931%
The Dividend Growth Portfolio ...... 0.625% 0.215% 0.840%
The Value-Added Market Portfolio ...... 0.500% 0.270% 0.770%
The Core Equity Portfolio ............... 0.850% 0.258% 1.108%
The American Value Portfolio ...... 0.625% 0.260% 0.885%
The Global Equity Portfolio ............. 1.000% 0.292% 1.292%
The Developing Growth Portfolio ...... 0.500% 0.266% 0.766%
The Emerging Markets Portfolio ...... 1.250% 0.494% 1.744%
</TABLE>
(1) Length of time from premium payment.
(2) The annual contract fee is a single $30 charge on a Contract. It is
deducted proportionally from the investment options in use at the time of the
charge. In the Example, the annual contract fee is approximated as a 0.08%
annual asset charge based on the experience of the Contracts.
<PAGE>
<TABLE>
<CAPTION>
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>
The Money Market Portfolio . . . . . . . $81 $114 $149 $236 $20 $63 $108 235
The North American Government. . . . . . 85 127 171 279 24 76 130 278
The Diversified Income Portfolio . . . . 83 121 161 260 22 70 121 259
The Balanced Portfolio . . . . . . . . . 85 128 173 283 25 77 132 282
The Utilities Portfolio. . . . . . . . . 85 126 170 277 24 75 129 276
The Dividend Growth Portfolio. . . . . . 84 123 165 268 23 72 124 267
The Value-Added Market Portfolio . . . . 83 121 162 261 22 70 121 260
The Core Equity Portfolio. . . . . . . . 87 131 179 295 26 81 138 294
The American Value Portfolio . . . . . . 84 125 168 273 23 74 127 272
The Global Equity Portfolio. . . . . . . 88 137 188 313 28 86 147 312
The Developing Growth Portfolio. . . . . 83 121 161 260 22 70 121 259
The Emerging Markets Portfolio . . . . . 93 151 211 357 32 100 170 356
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>
The Money Market Portfolio . . . . . . . $21 $64 $109 236
The North American Government. . . . . . 25 77 131 279
The Diversified Income Portfolio . . . . 23 71 121 260
The Balanced Portfolio . . . . . . . . . 25 78 133 283
The Utilities Portfolio. . . . . . . . . 25 76 130 277
The Dividend Growth Portfolio. . . . . . 24 73 125 268
The Value-Added Market Portfolio . . . . 23 71 122 261
The Core Equity Portfolio. . . . . . . . 27 81 139 295
The American Value Portfolio . . . . . . 24 75 128 273
The Global Equity Portfolio. . . . . . . 28 87 148 313
The Developing Growth Portfolio. . . . . 23 71 121 260
The Emerging Markets Portfolio . . . . . 33 101 171 357
</TABLE>
The purpose of this table is to assist the contractowner 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.
<PAGE>
-14-
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 ILA 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 ILA 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 ("Qualified Contracts"). These
Contracts are also available for IRA's. (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 the Dean Witter Select
Dimensions Investment Series, an open-end diversified series investment company
with multiple portfolios ("Portfolio") as follows: the Money Market Portfolio,
the North American Government Securities Portfolio, the Diversified Income
Portfolio, the Balanced Portfolio, the Utilities Portfolio, the Dividend Growth
Portfolio, the Value-Added Market Portfolio, the Core Equity Portfolio, the
American Value Portfolio, the Global Equity Portfolio, the Developing Growth
Portfolio, and the Emerging Markets Porfolio and such other Portfolios as shall
be offered from time to time, and the Fixed Account, or a combination of the
Portfolios and the Fixed Account. (See "The Portfolios" commencing on page _____
and "The Fixed Account" commencing on page _____.)
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
<PAGE>
-15-
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:
<TABLE>
<CAPTION>
LENGTH OF TIME
CHARGE FROM PREMIUM PAYMENT
------ --------------------
(Number of Years)
<S> <C>
6% 1
6% 2
5% 3
5% 4
4% 5
3% 6
2% 7
0% 8 or more
</TABLE>
No contingent deferred sales charge will be assessed in the event of death
of the Annuitant or Contract Owner, or upon the exercise of the withdrawal
privilege or if Contract Values are applied to an Annuity option provided
for under the Contract (except that a surrender out of 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.
MORTALITY AND EXPENSE RISKS
For assuming the mortality and expense risks under the Contract, ILA 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 _____.)
<PAGE>
Dean Witter December 31, 1994
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, which is incorporated by reference to this Prospectus.
Year Ended
-----------------
December 31, 1994
-----------------
Money Market fund Sub-Account
Accumulation unit value at beginning of period . . . . . . . . . $10.000 (a)
Accumulation Unit value at end of period . . . . . . . . . . . . $10.056
Number of accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . . . . 112,689
North American Government Securities Fund Sub-Account
Accumulation unit value at beginning of period . . . . . . . . . $10.000 (a)
Accumulation Unit value at end of period . . . . . . . . . . . . $10.041
Number of accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . . . . 2,180
Balanced Fund Sub-Account
Accumulation unit value at beginning of period . . . . . . . . . $10.000 (a)
Accumulation Unit value at end of period . . . . . . . . . . . . $10.040
Number of accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . . . . 69,227
Utilities Fund Sub-Account
Accumulation unit value at beginning of period . . . . . . . . . $10.000 (a)
Accumulation Unit value at end of period . . . . . . . . . . . . $10.045
Number of accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . . . . 39,538
Dividend Growth Fund Sub-Account
Accumulation unit value at beginning of period . . . . . . . . . $10.000 (a)
Accumulation Unit value at end of period . . . . . . . . . . . . $ 9.975
Number of accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . . . . 128,053
Value Added Market Fund Sub-Account
Accumulation unit value at beginning of period . . . . . . . . . $10.000 (a)
Accumulation Unit value at end of period . . . . . . . . . . . . $9.904
Number of accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . . . . 25,201
Core Equity Fund Sub-Account
Accumulation unit value at beginning of period . . . . . . . . . $10.000 (a)
Accumulation Unit value at end of period . . . . . . . . . . . . $10.047
Number of accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . . . . 21,434
American Value Fund Sub-Account
Accumulation unit value at beginning of period . . . . . . . . . $10.000 (a)
Accumulation Unit value at end of period . . . . . . . . . . . . $10.049
Number of accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . . . . 71,807
Global Equity Fund Sub-Account
Accumulation unit value at beginning of period . . . . . . . . . $10.000 (a)
Accumulation Unit value at end of period . . . . . . . . . . . . $9.950
Number of accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . . . . 110,033
<PAGE>
Developing Growth Fund Sub-Account
Accumulation unit value at beginning of period . . . . . . . . . $10.000 (a)
Accumulation Unit value at end of period . . . . . . . . . . . . $10.138
Number of accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . . . . 27,472
Emerging Market Fund Sub-Account
Accumulation unit value at beginning of period . . . . . . . . . $10.000 (a)
Accumulation Unit value at end of period . . . . . . . . . . . . $10.037
Number of accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . . . . 34,571
Diversified Income Fund Sub-Account
Accumulation unit value at beginning of period . . . . . . . . . $10.000 (a)
Accumulation Unit value at end of period . . . . . . . . . . . . $10.056
Number of accumulation units outstanding at end of period
(in thousands). . . . . . . . . . . . . . . . . . . . . . . . . 29,991
(a) inception date September 14, 1994.
<PAGE>
-16-
CHARGES BY THE PORTFOLIOS
The Portfolios are subject to certain fees, charges and expenses. (See the
Prospectus for the Fund 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, ILA may terminate the Contract in its entirety. (See
"Redemption/Surrender of a Contract," page _____; see also "Federal Tax
Considerations," page _____, for a discussion of federal tax consequences,
including a 10% penalty tax that may apply upon surrender or withdrawal.)
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. 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 Portfolio. If a Contract
Owner does not vote, ILA shall vote such interests in the same proportion as
shares of the Portfolio for which instructions have been received by ILA. (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.
Each Portfolio 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
<PAGE>
-17-
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 North American Government Securities Portfolio and Diversified Income
Portfolio 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 Money Market Portfolio Sub-Account may advertise yield and effective yield.
The yield of a Sub-Account is based upon the income earned by the Sub-Account
over a seven-day period and then annualized, i.e. the income earned in the
period is assumed to be earned every seven days over a 52-week period and stated
as a percentage of the investment. Effective yield is calculated similarly but
when annualized, the income earned by the investment is assumed to be reinvested
in Sub-Account units and thus compounded in the course of a 52-week period.
Yield reflect 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
Portfolio 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 ILA and funded by the Fixed Account and/or a series of the Separate
Account. Please read the Glossary of Special Terms on pages _____ and _____
prior to reading this Prospectus to familiarize yourself with the terms being
used.
THE CONTRACT
The Dean Witter Select Dimensions 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 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
Portfolio 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.
<PAGE>
-18-
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 ILA.
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,
ILA 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 ILA receipt of request for cancellation. ILA 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.
THE SEPARATE ACCOUNT
The Separate Account was established on June 13, 1994, in accordance with
authorization by the Board of Directors of ILA. It is the Separate Account
<PAGE>
-19-
in which ILA 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 ILA, 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
ILA. 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 ILA may conduct.
So Contract Values allocated to the Sub-Accounts will not be affected by the
rate of return of ILA's General Account, nor by the investment performance of
any of ILA's other separate accounts. However, the obligations arising under
the Contracts are general obligations of ILA.
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 Portfolio. Net Premium Payments and proceeds of
transfers between Portfolios 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 Portfolios 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 Portfolio. During the Variable Annuity payout
period, both your Annuity payments and reserve values will vary in accordance
with these factors.
ILA does not guarantee the investment results of the Portfolios 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 Portfolio has different investment objectives
and policies, each is subject to different risks. These risks are more fully
described in the accompanying Fund Prospectus.
ILA reserves the right, subject to compliance with the law, to substitute the
shares of any other registered investment company for the shares of any
Portfolio held by the Separate Account. Substitution may occur only if shares
of the Portfolio(s) become unavailable or if there are changes in applicable law
or interpretations of law. Current law requires notification to you of any such
substitution and approval of the Commission.
The Separate Account may be subject to liabilities arising from a Series of the
Separate Account whose assets are attributable to other variable annuity
contracts or variable life insurance policies offered by the Separate Account
which are not described in this Prospectus.
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
<PAGE>
-20-
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 ILA. ILA invests the assets of the General
Account in accordance with applicable laws governing investments of Insurance
Company General Accounts.
Currently, ILA 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, ILA reserves the right to change the rate
according to state insurance law. ILA may credit interest at a rate in excess
of 3% per year; however, ILA 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 the 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.
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 2999, Hartford Connecticut 06104-2999; 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 ILA. These ratings do apply to ILA's ability to meet
its insurance obligations under the contract.
<PAGE>
-21-
THE PORTFOLIOS
The underlying investment for the Contracts are shares of the Dean Witter Select
Dimensions Investment Series ("Fund"), an open-end diversified series investment
company with multiple portfolios. The underlying Portfolio corresponding to
each Sub-Account and their investment objectives are described below. ILA
reserves the right, subject to compliance with the law, to offer additional
portfolios with differing investment objectives. The Portfolios may not be
available in all states.
MONEY MARKET PORTFOLIO
Seeks high current income, preservation of capital and liquidity by investing in
the following money market instruments: U.S. Government securities, obligations
of U.S. regulated banks and savings institutions having total assets of more
than $1 billion, or less than $1 billion if such are fully federally insured as
to principal (the interest may not be insured) and high grade corporate debt
obligations maturing in thirteen months or less.
NORTH AMERICAN GOVERNMENT SECURITIES PORTFOLIO
Seeks to earn a high level of current income while maintaining relatively low
volatility of principal, by investing primarily in investment grade fixed-income
securities issued or guaranteed by the U.S., Canadian or Mexican governments.
DIVERSIFIED INCOME PORTFOLIO
Seeks, as a primary objective, to earn a high level of current income and, as a
secondary objective, to maximize total return, but only to the extent consistent
with its primary objective, by equally allocating its assets among three
separate groupings of fixed-income securities. Up to one-third of the
securities in which the Diversified Income Portfolio may invest will include
securities rated Baa/BBB or lower. See the special considerations for
investments for high yield securities disclosed in the Fund prospectus.
BALANCED PORTFOLIO
Seeks to achieve high total return through a combination of income and capital
appreciation, by investing in a diversified portfolio of common stocks and
investment grade fixed-income securities.
UTILITIES PORTFOLIO
Seeks to provide current income and long-term growth of income and capital by
investing in equity and fixed-income securities of companies in the public
utilities industry.
DIVIDEND GROWTH PORTFOLIO
Seeks to provide reasonable current income and long-term growth of income and
capital by investing primarily in common stock of companies with a record of
paying dividends and the potential for increasing dividends.
<PAGE>
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VALUE-ADDED MARKET PORTFOLIO
Seeks to achieve a high level of total return on its assets through a
combination of capital appreciation and current income, by investing, on an
equally-weighted basis, in a diversified portfolio of common stocks of the
companies which are represented in the Standard & Poor's 500 Composite Stock
Price Index.
CORE EQUITY PORTFOLIO
Seeks long-term growth of capital by investing primarily in common stocks and
securities convertible into common stocks issued by domestic and foreign
companies.
AMERICAN VALUE PORTFOLIO
Seeks long-term capital growth consistent with an effort to reduce volatility,
by investing principally in common stock of companies in industries which, at
the time of the investment, are believed to be undervalued in the marketplace.
GLOBAL EQUITY PORTFOLIO
Seeks a high level of total return on its assets primarily through long-term
capital growth and, to a lesser extent, from income, through investments in all
types of common stocks and equivalents (such as convertible securities and
warrants), preferred stocks and bonds and other debt obligations of domestic and
foreign companies and governments and international organizations.
DEVELOPING GROWTH PORTFOLIO
Seeks long-term capital growth by investing primarily in common stocks of
smaller and medium-sized companies that, in the opinion of the Investment
Manager, have the potential for growing more rapidly than the economy and which
may benefit from new products or services, technological developments or changes
in management.
EMERGING MARKETS PORTFOLIO
Seeks long-term capital appreciation by investing primarily in equity securities
of companies in emerging market countries. The Emerging Markets Portfolio may
invest up to 35% of its total assets in high risk fixed-income securities that
are rated below investment grade or are unrated (commonly referred to as "junk
bonds"). See the special considerations for investments in high yield
securities disclosed in the Fund prospectus.
The Portfolios are managed in styles similar to other investment companies whose
shares are generally offered to the public, or by TCW Funds Management, Inc.,
the Sub-Adviser to certain of the Portfolios. The Portfolios of these other
investment companies may, however, employ different investment practices and may
invest in securities different from those in which their counterpart Portfolios
invest, and consequently will not have identical portfolios or experience
identical investment results.
The Portfolios are available only to serve as the underlying investment for
variable annuity and variable life contracts. A full description of the
Portfolios, their investment objectives, policies and restrictions, risks,
charges and expenses and other aspects of their operation is contained in the
accompanying Fund Prospectus which should be read in conjunction with this
Prospectus before investing, and in the Fund Statement of Additional Information
which may be ordered without charge from Dean Witter Select Dimensions
Investment Series.
<PAGE>
-23-
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 Portfolios simultaneously. Although ILA and the Fund do not
currently foresee any such disadvantages either to variable annuity contract
owners or to variable life insurance policyowners, the Fund's Board of Trustees
would monitor events in order to identify any material conflicts between such
Contract Owners and policyowners and to determine what action, if any, should be
taken in response thereto. If the Board of Trustees of the Fund were to
conclude that separate Portfolios should be established for variable life and
variable annuity separate accounts, the variable annuity Contract holders would
not bear any expenses attendant upon establishment of such separate funds.
Dean Witter InterCapital, Inc. ("InterCapital" or the "Investment Manager"), a
Delaware Corporation, whose address is Two World Trade Center, New York, New
York 10048, is the Fund's Investment Manager. The Investment Manager, which was
incorporated in July, 1992, is a wholly-owned subsidiary of Dean Witter,
Discover & Co., ("DWDC"), a balanced financial services organization providing a
broad range of nationally marketed credit and investment products.
The Fund has retained the Investment Manager to provide administrative services,
manage its business affairs and manage the investment of the Fund's assets,
including the placing of orders for the purchase and sale of portfolio
securities. Inter-Capital has retained its wholly-owned subsidiary, Dean Witter
Services Company Inc., to perform the aforementioned administrative services for
the Fund. For its services, the Portfolios pay the Investment Manager a monthly
fee. See the accompanying Fund Prospectus for a more complete description of
the Investment Manager and the respective fees of the Portfolios.
With regard to the North American Government Securities Portfolio, the Balanced
Portfolio, the Core Equity Portfolio and the Emerging Markets Portfolio, under a
Sub-Advisory Agreement between TCW Funds Management, Inc. (the "Sub-Adviser")
and the Investment Manager, the Sub-Adviser provides these Portfolios with
investment advice and portfolio management, in each case subject to the overall
supervision of the Investment Manager. The Sub-Adviser's address is 865 South
Figueroa Street, Suite 1800, Los Angeles, California 90017.
The Fund's Board of Trustees reviews the various services provided by or under
the direction of the Investment Manager (or by the Sub-Adviser) to ensure that
the Fund's general investment policies and programs are being properly carried
out and that administrative services are being provided to the Fund in a
satisfactory manner.
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 ILA at its Home Office, P.O. Box 30197,
Hartford, CT 06150-0197. 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
<PAGE>
-24-
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 ILA in
its Home Office or other designated administrative office.
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.
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 HL The
principal business address of HESCO and HSD is the same as ILA.
VALUE OF ACCUMULATION UNITS
The Accumulation Unit value for each Sub-Account will vary to reflect the
investment experience of the applicable Portfolio and will be determined on each
Valuation Day by multiplying the Accumulation Unit value of the particular
Sub-Account on the preceding Valuation Day by a "Net Investment Factor" for that
Sub-Account for the Valuation Period then ended. The "Net Investment Factor"
for each of the Sub-Accounts is equal to the net asset value per share of the
corresponding Portfolio at the end of the Valuation Period (plus the per share
amount of any dividends or capital gains distributed by that Portfolio if the
ex-dividend date occurs in the Valuation Period then ended) divided by the net
asset value per share of the corresponding Portfolio at the beginning of the
Valuation Period. You should refer to the Fund Prospectus which accompanies this
Prospectus for a description of how the assets of each Portfolio 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 Portfolio(s), expenses
and deduction of the charges described in this Prospectus.
The shares of the Portfolio are valued at net asset value on each Valuation Day.
A description of the valuation methods used in valuing Portfolio shares may be
found in the accompanying Prospectus of the Fund.
VALUE OF THE FIXED ACCOUNT
ILA 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. ILA may credit a lower minimum interest rate
according to state law. ILA also may credit interest at rates greater than the
minimum Fixed Account interest rate.
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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
the agent of record or by the attorney-in-fact pursuant to a power of attorney
by calling (800) 862-6668. Telephone transfers may not be permitted by some
states for their residents who purchase variable annuities. The policy of ILA
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.
ILA will employ reasonable procedures to confirm that instructions communicated
by telephone are genuine; otherwise, ILA may be liable for any losses due to
unauthorized or fraudulent instructions. The procedures ILA 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.
ILA 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. ILA may permit the Contract Owner to preauthorize transfers between the
Sub-Accounts and the Fixed Account under certain circumstances.
The right to reallocate Contract Values between the Sub-Accounts is subject to
modification if ILA 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 ILA 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 ILA permits preauthorized transfers from the Fixed Account to the
Sub-Accounts, this restriction is inapplicable.
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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 Portfolios 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. ILA
reserves the right to defer transfers from the Fixed Account for up to six
months from the date of request.
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. Surrenders are not permitted after Annuity payments
commence EXCEPT that a full surrender is allowed when payments for a designated
period (Option 4 and 5) are selected as the Annuity option.
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.
Currently, there is no minimum amount rule in effect. However, ILA may
institute minimum amount rules at some future time. 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), ILA may terminate the Contract and pay the Termination Value.
Certain plans or programs may have different withdrawal privileges. ILA 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%.
ILA 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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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 ILA at its Home
Office, Attn: Individual Annuity Operations, P.O. Box 5085, Hartford, CT
06102-5085. ILA may defer payment of any amounts from the Fixed Account for up
to six months from the date of the request for surrender. If ILA defers payment
for more than 30 days, ILA 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 ILA in its Home Office. With regard to Joint Contract Owners, after
the 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 ILA, or (b) 100% of the total Premium
Payments made to such contract, reduced by any prior surrenders, or (c) the
Maximum Anniversary Value immediately preceding the date of death.
The Maximum Anniversary Value is equal to the greatest Anniversary Value
attained from the following:
As of the 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,
payable 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,
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however, that: (a) in the event of the death of any Contract Owner prior to
the Annuity Commencement Date, the entire interest in the Contract will be
distributed within 5 years after the death of the Contract Owner and (b) in
the event of the death of any Contract Owner or Annuitant which occurs on or
after the Annuity Commencement Date, any remaining interest in the Contract will
be paid at least as rapidly as under the method of distribution in effect at
the time of death, or, if the benefit is payable over a period not extending
beyond the life expectancy of the Beneficiary or over the life of the
Beneficiary, such distribution must commence within one year of the date of
death. 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 ILA 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 ILA will give ILA the right to terminate this extension of
benefits.
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
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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
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 ILA 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 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 Withdrawl Amount to comply with IRS
mimimum 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 ILA 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.
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ILA 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 Portfolio shares
held in the Sub-Account(s), the payments will not be affected by (a) ILA's
actual mortality experience among Annuitants before or after the Annuity
Commencement Date or (b) ILA's actual expenses, if greater than the deductions
provided for in the Contracts because of the expense and mortality undertakings
by ILA.
For assuming these risks under the Contracts, ILA 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).
The mortality undertaking provided by ILA 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. ILA also assumes the liability for payment of a minimum death
benefit under the Contract.
The mortality undertakings are based on ILA's determination of expected
mortality rates among all Annuitants. If actual experience among Annuitants
during the Annuity payment period deviates from ILA's actuarial determination of
expected mortality rates among Annuitants because, as a group, their longevity
is longer than anticipated, ILA must provide amounts from its general Portfolios
to fulfill its Contract obligations. In that event, a loss will fall on ILA.
Also, in the event of the death of an Annuitant or Contract Owner before the
commencement of Annuity payments, whichever is earlier, ILA 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, ILA 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
ILA 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, ILA will deduct an annual fee of $30 on each
Contract Anniversary on or before the Annuity Commencement Date. The deduction
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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, ILA will deduct the Contract Maintenance Fee at the time of
such surrender. For administration, ILA 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.
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 Holder inquiries, reconciling and depositing cash
receipts, calculation and monitoring daily Sub-Account unit values, Separate
Account reporting, including semiannual and annual reports and mailing and
tabulation of shareholder proxy solicitations.
You should refer to the Fund Prospectus for a description of deductions and
expenses paid out of the assets of the 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. ILA will pay
Premium Taxes at the time imposed under applicable law. At its sole discretion,
ILA may deduct Premium Taxes at the time ILA 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 ILA. 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 the Company.
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 ILA, the Annuitant may elect that the
payment to the survivor be less than the payment made during the joint lifetime
of the Annuitant and a designated second person.
It would be possible under this option for an Annuitant and designated second
person to receive only one payment in the event of the common or simultaneous
death of the parties prior to the due date for the second payment and so on.
Option 4: Payments for a Designated Period
An amount payable monthly for the number of years selected which may be from 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 ILA.
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 the Company.
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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 ILA
Proceeds from the Death Benefit may be left with ILA 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 ILA, minus any withdrawals.
ILA 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
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 annumm 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 ILA 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
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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.
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
ILA's understanding of current Federal income tax laws as they are currently
interpreted.
B. TAXATION OF ILA AND THE SEPARATE ACCOUNT
The Separate Account is taxed as part of ILA 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.
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C. TAXATION OF ANNUITIES -- GENERAL PROVISIONS AFFECTING PURCHASERS OTHER THAN
QUALIFIED 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 Plan and certain immediate annuities. A non-natural person
which is a tax-exempt entity for Federal tax purposes will not be
subject to income tax as a result of this provision.
If the Contract Owner is not an individual, the primary Annuitant shall
be treated as the Contract Owner for purposes of making distributions
which are required to be made upon the death of the Contract Owner. If
there is a change in the primary Annuitant, such change shall be treated
as the death of the Contract Owner.
2. OTHER CONTRACT OWNERS (NATURAL PERSONS). A Contract Owner is not taxed
on increases in the value of the Contract until an amount is received or
deemed received, e.g., in the form of a lump sum payment (full or
partial value of a Contract) or as Annuity payments under the settlement
option elected.
The provisions of Section 72 of the Code concerning distributions are
summarized briefly below. Also summarized are special rules affecting
distributions from Contracts obtained in a tax-free exchange for other
annuity contracts or life insurance contracts which were purchased prior
to August 14, 1982.
a. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
i. Total premium payments less prior withdrawals which were not
includable in gross income equal the "investment in the contract"
under Section 72 of the Code.
ii. When the value of the Contract (ignoring any surrender charges)
exceeds the "investment in the contract," any amount surrendered
which is less than or equal to the difference between such value of
the Contract and the "investment in the contract" will be included
in gross income.
iii. When such value of the Contract is less than or equal to the
"investment in the contract," any amount surrendered which is less
than or equal to the "investment in the contract" shall be treated
as a return of "investment in the contract" and will not be
included in gross income.
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 surrendered which will be covered by
the provisions in subparagraph ii. or iii. above.
v. In general, the transfer of the Contract, without full and adequate
consideration, will be treated as an amount surrendered which will
be covered by the provisions in subparagraph ii. or iii. above.
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
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. Certain distributions, such as surrenders made after the Annuity
Commencement Date, are not treated as annuity payments, and shall
be included in gross income.
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. ILA
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 of amounts received or deemed
received prior to the Annuity Commencement Date. Withdrawals will first
be treated as withdrawals of income until all of the income from all
such Contracts is withdrawn. As of the date of this Prospectus, there
are no regulations interpreting this provision.
d. PENALTY -- 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 penalty 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.
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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 "investments in
the contract" made prior to August 14, 1982.
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
surrendered prior to the Annuity Commencement Date which does not exceed
the portion of the "investment in the contract" (generally premiums paid
into the prior Contract, less amounts deemed received) prior to August
14, 1982, shall not be included in gross income. In all other respects,
the general provisions apply to distributions from such Contracts.
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 must
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
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the assets of a mutual fund (such as the ILA 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:
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 ILA, ILA 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 TAX QUALIFIED PLANS
The Contract may be used for a number of qualified plans. If the Contract
is being purchased with respect to some form of Qualified Plan, please
refer to Appendix II 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 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 ___.)
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MODIFICATION
ILA 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
ILA is subject; or (ii) is necessary to assure continued qualification of
the Contract under the Code or other federal or state laws relating to
retirement annuities or annuity Contracts; or (iii) is necessary to reflect
a change in the operation of the Separate Account or the Sub-Account(s) or
(iv) provides additional Separate Account options or (v) withdraws Separate
Account options. In the event of any such modification ILA will provide
notice to the Contract Owner or to the payee(s) during the Annuity period.
ILA 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
ILA is the legal owner of all Fund shares held in the Separate Account. As
the owner, ILA has the right to vote at the Funds' shareholder meetings.
However, to the extent required by federal securites laws or regulations,
ILA 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 ILA to vote Fund shares in its own right,
ILA may elect to do so.
ILA will notify you of any Portfolio shareholders' meeting if the shares
held for your account may be voted at such meetings. ILA will also send
proxy materials and a form of instruction by means of which you can instruct
ILA with respect to the voting of the Portfolio shares held for your
account.
In connection with the voting of Portfolio shares held by it, ILA will
arrange for the handling and tallying of voting instructions received from
Contract Owners. ILA 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. ILA will, however,
vote the Portfolio 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 ILA to furnish a proxy or otherwise arrange for the exercise of
voting rights with respect to the Portfolio 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, ILA will vote such shares of
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the appropriate Portfolio in the same proportion as shares of that Portfolio
for which instructions have been received. During the Annuity period under
a Contract the number of votes will decrease as the assets held to Portfolio
Annuity benefits decrease.
DISTRIBUTION OF THE CONTRACTS
The securities will be sold by insurance and Variable Annuity agents of ILA
who are registered representatives of Dean Witter Reynold Inc. Dean Witter
is registered with the Commission under the Securities Exchange Act of 1934
as a Broker-Dealer and is a member of the National Association of Securities
Dealers, Inc.
Commissions will be paid by ILA and will not be more than 6% of Premium
Payments.
From time to time, ILA 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 ILA 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. ILA and Dean
Witter are engaged in various matters of routine litigation which in their
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 report with
respect thereto, and are included therein in reliance upon the authority of
said firm as experts in accounting and auditing.
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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
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APPENDIX I
INFORMATION REGARDING TAX QUALIFIED PLANS
THE TAX REFORM ACT OF 1986 AND THE TECHNICAL AND MISCELLANEOUS REVENUE ACT OF
1988 HAVE MADE SUBSTANTIAL CHANGES TO QUALIFIED 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 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.
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
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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 nondeductible 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 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
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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 of 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 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. 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 a distribution.
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 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. 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 such a distribution.
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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 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
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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.
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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:
ITT Hartford Life and Annuity 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:
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TABLE OF CONTENTS
TO
STATEMENT OF ADDITIONAL INFORMATION
Section Page No.
- ------- --------
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 . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
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- - - - - - - - - - - - - - - - - -
To Obtain a Statement of Additional Information, please complete the form below
and mail to:
ITT Hartford Life and Annuity Insurance Company
Attn: Individual Annuity Operations
P.O. Box 5085
Hartford, CT 06102-5085
Please send a Statement of Additional Information for Separate Account Three to
me at the following address:
- ------------------------------------------
Name
- ------------------------------------------
Address
- ------------------------------------------
City/State Zip Code
- - - - - - - - - - - - - - - - - -
<PAGE>
PART B
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY -
SEPARATE ACCOUNT THREE
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
<PAGE>
-3-
TABLE OF CONTENTS
SECTION PAGE NO.
- ------ --------
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 . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
-4-
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 Annuitant must
reach 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 twelve portfolios of the Dean Witter Select
Dimensions Investment Series, an open-end diversified series investment company:
the Money Market Portfolio, the North American Government Securities Portfolio,
the Diversified Income Portfolio, the Balanced Portfolio, the Utilities
Portfolio, the Dividend Growth Portfolio, the Value-Added Market Portfolio, the
Core Equity Portfolio, the American Value Portfolio, the Global Equity
Portfolio, The Developing Growth Portfolio, and the Emerging Markets Portfolio.
Shares of the Portfolios 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 Portfolio 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 ILA in its Home Office. 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 ILA, 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.
DESCRIPTION OF ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
ITT Hartford Life and Annuity Insurance Company, ("ILA"), 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.
ILA 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.
<PAGE>
-5-
ILA is a wholly owned subsidiary of Hartford Life Insurance Company. ILA 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 ILA. These ratings do apply to ILA's ability to meet
its insurance obligations under the contract.
SAFEKEEPING OF ASSETS
The assets of the Separate Account are held by ILA 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.
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 HL The
principal business address of HESCO and HSD is the same as ILA.
The securities will be sold by insurance and Variable Annuity agents of ILA who
are registered representatives of Dean Witter Reynold Inc. Dean Witter is
registered with the Commission under the Securities Exchange Act of 1934 as a
Broker-Dealer and is a member of the National Association of Securities Dealers,
Inc.
The offering of the Separate Account Contracts is continuous.
ANNUITY/PAYOUT PERIOD
ANNUITY PAYMENTS
Variable Annuity payments are determined on the basis of (1) a mortality table
set forth in the Contracts 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 Contracts, and will
remain level for the duration of the Annuity.
<PAGE>
-6-
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 Portfolio shares selected.
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 ______ of 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
<TABLE>
<S> <C>
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
</TABLE>
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 contain 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 a
Fixed Annuity and 5.00% per annum for a 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 ILA which is no
<PAGE>
-7-
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 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.
CALCULATION OF YIELD AND RETURN
YIELD OF THE MONEY MARKET PORTFOLIO 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) RAISED TO THE POWER OF 365/7] - 1
The Money Market Portfolio Sub-Account's yield and effective yield will vary in
response to fluctuations in interest rates and in the expenses of the
Sub-Account.
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
<PAGE>
-8-
years or some other relevant periods if a Sub-Account has not been in
existence for at least ten years.
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 Sub-Account to which it is
compared and is not adjusted for commissions and other costs. Portfolio
holdings of the 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 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 of 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 High Yield Fund invests. Its performance figures
reflect changes in market prices and reinvestment of all interest payments.
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.
<PAGE>
-9-
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 &
Poor'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.
The manner in which total return and yield will be calculated for public use is
described above.
<PAGE>
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- -------------------------------------------------------------------------------
TO ITT HARTFORD LIFE & ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT THREE AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
- -------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities of
ITT Hartford Life & Annuity Insurance Company Separate Account Three as of
December 31, 1994, and the related statement of operations and statement of
changes in net assets for the period from inception, September 14, 1994, to
December 31, 1994. 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 audit.
We conducted our audit 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 audit provides 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 Separate Account Three as of December 31, 1994, and
the results of its operations and changes in its net assets for the period from
inception, September 14, 1994, to December 31, 1994, in conformity with
generally accepted accounting principles.
Hartford, Connecticut
February 10, 1995 Arthur Andersen LLP
<PAGE>
- -------------------------------------------------------------------------------
SEPARATE ACCOUNT THREE
- -------------------------------------------------------------------------------
ITT HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1994
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH AMERICAN
MONEY MARKET GOVERNMENT BALANCED
FUND SECURITIES FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- --------------- -----------
<S> <C> <C> <C>
ASSETS:
Investments in Dean Witter Select
Dimensions Investment Series:
Money Market Fund
Shares 1,133,187
Cost $1,133,187
Market Value................... $ 1,133,187 -- --
North American Gov't Securities
Fund
Shares 2,180
Cost $21,807
Market Value................... -- $ 21,886 --
Balanced Fund
Shares 69,225
Cost $692,760
Market Value................... -- -- $ 695,018
Utilities Fund
Shares 39,558
Cost $396,308
Market Value................... -- -- --
Dividend Growth Fund
Shares 128,112
Cost $1,271,060
Market Value................... -- -- --
Value Added Market Fund
Shares 25,213
Cost $245,505
Market Value................... -- -- --
Core Equity Fund
Shares 21,428
Cost $214,693
Market Value................... -- -- --
American Value Fund
Shares 71,810
Cost $709,528
Market Value................... -- -- --
Global Equity Fund
Shares 110,131
Cost $1,092,383
Market Value................... -- -- --
Developing Growth Fund
Shares 27,494
Cost $275,919
Market Value................... -- -- --
Emerging Markets Fund
Shares 34,561
Cost $346,153
Market Value................... -- -- --
Diversified Income Fund
Shares 30,008
Cost $300,864
Market Value................... -- -- --
Due from ITT Hartford Life and
Annuity Insurance Company...... -- -- 11,310
Receivable from fund shares
sold........................... 82 10,042 --
--------------- ------------ -----------
Total Assets..................... 1,133,269 31,928 706,328
--------------- ------------ -----------
LIABILITIES:
Due to ITT Hartford Life and
Annuity Insurance Company...... 82 10,042 --
Payable for fund shares
purchased...................... -- -- 11,310
--------------- ------------ -----------
Total Liabilities................ 82 10,042 11,310
--------------- ------------ -----------
Net Assets (variable annuity
contract liabilities).......... $ 1,133,187 $ 21,886 $ 695,018
--------------- ------------ -----------
--------------- ------------ -----------
DEFERRED ANNUITY CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by Participants...... 112,689 2,180 69,277
Unit Price....................... $ 10.055845 $ 10.041019 $10.039727
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
DIVIDEND VALUE ADDED
UTILITIES GROWTH MARKET CORE EQUITY AMERICAN
FUND FUND FUND FUND VALUE FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ----------- --------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in Dean Witter Select
Dimensions Investment Series:
Money Market Fund
Shares 1,133,187
Cost $1,133,187
Market Value................... -- -- -- -- --
North American Gov't Securities
Fund
Shares 2,180
Cost $21,807
Market Value................... -- -- -- -- --
Balanced Fund
Shares 69,225
Cost $692,760
Market Value................... -- -- -- -- --
Utilities Fund
Shares 39,558
Cost $396,308
Market Value................... $ 397,165 -- -- -- --
Dividend Growth Fund
Shares 128,112
Cost $1,271,060
Market Value................... -- $1,277,274 -- -- --
Value Added Market Fund
Shares 25,213
Cost $245,505
Market Value................... -- -- $ 249,606 -- --
Core Equity Fund
Shares 21,428
Cost $214,693
Market Value................... -- -- -- $ 215,349 --
American Value Fund
Shares 71,810
Cost $709,528
Market Value................... -- -- -- -- $ 721,695
Global Equity Fund
Shares 110,131
Cost $1,092,383
Market Value................... -- -- -- -- --
Developing Growth Fund
Shares 27,494
Cost $275,919
Market Value................... -- -- -- -- --
Emerging Markets Fund
Shares 34,561
Cost $346,153
Market Value................... -- -- -- -- --
Diversified Income Fund
Shares 30,008
Cost $300,864
Market Value................... -- -- -- -- --
Due from ITT Hartford Life and
Annuity Insurance Company...... 2,559 7,484 3,069 6,470 27,160
Receivable from fund shares
sold........................... -- -- -- -- --
--------------- ------------ ----------- --------------- ------------
Total Assets..................... 399,724 1,284,758 252,675 221,819 748,855
--------------- ------------ ----------- --------------- ------------
LIABILITIES:
Due to ITT Hartford Life and
Annuity Insurance Company...... -- -- -- -- --
Payable for fund shares
purchased...................... 2,558 7,474 3,072 6,470 27,249
--------------- ------------ ----------- --------------- ------------
Total Liabilities................ 2,558 7,474 3,072 6,470 27,249
--------------- ------------ ----------- --------------- ------------
Net Assets (variable annuity
contract liabilities).......... $ 397,166 $ 1,277,284 $ 249,603 $ 215,349 $ 721,606
--------------- ------------ ----------- --------------- ------------
--------------- ------------ ----------- --------------- ------------
DEFERRED ANNUITY CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by Participants...... 39,538 128,053 25,201 21,434 71,807
Unit Price....................... $ 10.045272 $ 9.974646 $ 9.904456 $ 10.047005 $ 10.049200
<PAGE>
<CAPTION>
GLOBAL DEVELOPING EMERGING DIVERSIFIED
EQUITY GROWTH MARKET INCOME
FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments in Dean Witter Select
Dimensions Investment Series:
Money Market Fund
Shares 1,133,187
Cost $1,133,187
Market Value................... -- -- -- --
North American Gov't Securities
Fund
Shares 2,180
Cost $21,807
Market Value................... -- -- -- --
Balanced Fund
Shares 69,225
Cost $692,760
Market Value................... -- -- -- --
Utilities Fund
Shares 39,558
Cost $396,308
Market Value................... -- -- -- --
Dividend Growth Fund
Shares 128,112
Cost $1,271,060
Market Value................... -- -- -- --
Value Added Market Fund
Shares 25,213
Cost $245,505
Market Value................... -- -- -- --
Core Equity Fund
Shares 21,428
Cost $214,693
Market Value................... -- -- -- --
American Value Fund
Shares 71,810
Cost $709,528
Market Value................... -- -- -- --
Global Equity Fund
Shares 110,131
Cost $1,092,383
Market Value................... $ 1,094,707 -- -- --
Developing Growth Fund
Shares 27,494
Cost $275,919
Market Value................... -- $ 778,515 -- --
Emerging Markets Fund
Shares 34,561
Cost $346,153
Market Value................... -- -- $ 364,990 --
Diversified Income Fund
Shares 30,008
Cost $300,864
Market Value................... -- -- -- $ 301,585
Due from ITT Hartford Life and
Annuity Insurance Company...... 35,219 -- 27,247 5,099
Receivable from fund shares
sold........................... -- 9 -- --
--------------- ------------ ----------- -----------
Total Assets..................... 1,129,926 278,524 374,237 306,684
--------------- ------------ ----------- -----------
LIABILITIES:
Due to ITT Hartford Life and
Annuity Insurance Company...... -- 9 -- --
Payable for fund shares
purchased...................... 35,111 -- 27,250 5,096
--------------- ------------ ----------- -----------
Total Liabilities................ 35,111 9 27,250 5,096
--------------- ------------ ----------- -----------
Net Assets (variable annuity
contract liabilities).......... $ 1,094,815 $ 278,515 $ 346,987 $ 301,588
--------------- ------------ ----------- -----------
--------------- ------------ ----------- -----------
DEFERRED ANNUITY CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by Participants...... 110,033 27,472 34,571 29,991
Unit Price....................... $ 9.949914 $ 10.138121 $10.036843 $10.056028
</TABLE>
<PAGE>
- -------------------------------------------------------------------------------
SEPARATE ACCOUNT THREE
- -------------------------------------------------------------------------------
ITT HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
FROM INCEPTION (SEPTEMBER 14, 1994) TO DECEMBER 31, 1994
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH AMERICAN
MONEY MARKET GOVERNMENT BALANCED
FUND SECURITIES FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- --------------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends........................ $3,850 $ 40 $ 655
EXPENSES:
Mortality and expense
undertakings................... (977) (44) (807)
--------------- ------------ ----------
Net investment income (loss)... 2,873 (4) (152)
--------------- ------------ ----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions.......... -- 19 2
Net unrealized appreciation
(depreciation) of investments
during the period.............. -- 79 2,258
--------------- ------------ ----------
Net gains (losses) on
investments.................. -- 98 2,260
--------------- ------------ ----------
Net increase (decrease) in net
assets resulting from
operations................... $2,873 $ 94 $2,108
--------------- ------------ ----------
--------------- ------------ ----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
DIVIDEND VALUE-ADDED
UTILITIES GROWTH MARKET CORE EQUITY AMERICAN
FUND FUND FUND FUND VALUE FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ----------- --------------- ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends........................ 350 $ 1,614 $ 109 $ 171 $ 609
EXPENSES:
Mortality and expense
undertakings................... (403) $(1,503) (228) (221) (827)
--------------- ------------ ----------- --------------- ------------
Net investment income (loss)... (53) 111 (119) (50) (218)
--------------- ------------ ----------- --------------- ------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions.......... 8 (2) (25) 10 --
Net unrealized appreciation
(depreciation) of investments
during the period.............. 857 6,214 4,101 656 12,167
--------------- ------------ ----------- --------------- ------------
Net gains (losses) on
investments.................. 865 6,212 4,076 666 12,167
--------------- ------------ ----------- --------------- ------------
Net increase (decrease) in net
assets resulting from
operations................... 812 $ 6,323 $3,957 $ 616 $11,949
--------------- ------------ ----------- --------------- ------------
--------------- ------------ ----------- --------------- ------------
<CAPTION>
GLOBAL DEVELOPING EMERGING DIVERSIFIED
EQUITY GROWTH MARKETS INCOME
FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends........................ $ 1,373 $ 112 $ 186 $136
EXPENSES:
Mortality and expense
undertakings................... (1,217) (257) (335) (206)
--------------- ------------ ----------- -----------
Net investment income (loss)... 156 (145) (149) (70)
--------------- ------------ ----------- -----------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on
security transactions.......... (25) 50 41 --
Net unrealized appreciation
(depreciation) of investments
during the period.............. 2,324 2,596 837 721
--------------- ------------ ----------- -----------
Net gains (losses) on
investments.................. 2,299 2,646 878 721
--------------- ------------ ----------- -----------
Net increase (decrease) in net
assets resulting from
operations................... $ 2,455 $2,501 $ 729 $651
--------------- ------------ ----------- -----------
--------------- ------------ ----------- -----------
</TABLE>
<PAGE>
- -------------------------------------------------------------------------------
SEPARATE ACCOUNT THREE
- -------------------------------------------------------------------------------
ITT HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FROM INCEPTION (SEPTEMBER 14, 1994) TO DECEMBER 31, 1994
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH AMERICAN
MONEY MARKET GOVERNMENT BALANCED
FUND SECURITIES FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- --------------- -----------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss)..... $ 2,873 $ (4) $ (152)
Net realized gain (loss) on
security transactions.......... -- 19 2
Net unrealized appreciation
(depreciation) of investments
during the period.............. -- 79 2,258
--------------- --------------- -----------
Net increase (decrease) in net
assets resulting from
operations..................... 2,873 94 2,108
UNIT TRANSACTIONS:
Purchases........................ 1,200,999 21,792 704,789
Net transfers.................... (60,300) -- --
Surrenders....................... (10,385) -- (11,879)
--------------- ------------- ------------
Net increase (decrease) in net
assets resulting from unit
transactions................... 1,130,314 21,792 692,910
--------------- ------------- ------------
Total increase (decrease) in net
assets......................... 1,133,187 21,886 695,018
NET ASSETS:
Beginning of period.............. -- -- --
--------------- ------------- ------------
End of period.................... $1,133,187 $21,886 $695,018
--------------- ------------- ------------
--------------- ------------- ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DIVIDEND VALUE ADDED
UTILITIES GROWTH MARKET CORE EQUITY AMERICAN
FUND FUND FUND FUND VALUE FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------- -------------- ----------- --------------- ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)..... $ (53) $ 111 $ (119) $ (50) $ (218)
Net realized gain (loss) on
security transactions.......... 8 (2) (25) 10 --
Net unrealized appreciation
(depreciation) of investments
during the period.............. 857 6,214 4,101 656 12,167
-------------- -------------- ----------- --------------- ------------
Net increase (decrease) in net
assets resulting from
operations..................... 812 6,323 3,957 616 11,949
UNIT TRANSACTIONS:
Purchases........................ 407,086 953,687 215,625 224,714 545,727
Net transfers.................... -- 327,490 30,000 -- 174,045
Surrenders....................... (10,732) (10,216) 21 (9,981) (10,115)
-------------- -------------- ----------- --------------- ------------
Net increase (decrease) in net
assets resulting from unit
transactions................... 396,354 1,270,961 245,646 214,733 709,657
-------------- -------------- ----------- --------------- ------------
Total increase (decrease) in net
assets......................... 397,166 1,277,284 249,603 215,349 721,606
-------------- -------------- ----------- --------------- ------------
NET ASSETS:
Beginning of period.............. -- -- -- -- --
-------------- -------------- ----------- --------------- ------------
End of period.................... $ 397,166 $1,277,284 $249,603 $ 215,349 $721,606
-------------- -------------- ----------- --------------- ------------
-------------- -------------- ----------- --------------- ------------
<CAPTION>
GLOBAL DEVELOPING EMERGING DIVERSIFIED
EQUITY GROWTH MARKETS INCOME
FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------- -------------- ----------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)..... $ 156 $ (145) $ (149) $ (70)
Net realized gain (loss) on
security transactions.......... (25) 50 41 --
Net unrealized appreciation
(depreciation) of investments
during the period.............. 2,324 2,596 837 721
-------------- -------------- ----------- ---------------
Net increase (decrease) in net
assets resulting from
operations..................... 2,455 2,501 729 651
UNIT TRANSACTIONS:
Purchases........................ 928,611 276,071 356,320 300,934
Net transfers.................... 173,745 10,000 -- --
Surrenders....................... (9,996) (10,057) (10,062) 3
-------------- -------------- ----------- ---------------
Net increase (decrease) in net
assets resulting from unit
transactions................... 1,092,360 276,014 346,258 300,937
-------------- -------------- ----------- ---------------
Total increase (decrease) in net
assets......................... 1,094,815 278,515 346,987 301,588
-------------- -------------- ----------- ---------------
NET ASSETS:
Beginning of period.............. -- -- -- --
-------------- -------------- ----------- ---------------
End of period.................... $1,094,815 $278,515 $346,987 $301,588
-------------- -------------- ----------- ---------------
-------------- -------------- ----------- ---------------
</TABLE>
<PAGE>
- -------------------------------------------------------------------------------
SEPARATE ACCOUNT THREE
- -------------------------------------------------------------------------------
ITT HARTFORD LIFE & ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
- -------------------------------------------------------------------------------
1. ORGANIZATION:
Separate Account Three (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 and the SEC. The Account commenced operations on
September 14, 1994.
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 Dean Witter Select
Dimensions Investment Series 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
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.
<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 16,488 110,547 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
<PAGE>
-2-
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) Exhibit (1) is filed with this Registration Statement.
(2) Not applicable. ILA maintains custody of all assets.
Exhibits (3), 6(a) and 6(b) are filed with this Registration
Statement. The form of Principal Underwriter Agreement is
filed herewith as Exhibit 3(a).
(4) A copy of the Individual Flexible Premium Variable Annuity
is filed with this Registration Statement.
(5) The form of Application is filed with this Registration
Statement.
(7) Not applicable.
(8) Not applicable.
(9) Not applicable.
(10) Consent of Arthur Andersen LLP is filed herewith.
(11) Not applicable.
(12) Not applicable.
(13) Schedule of Performance Data filed herewith.
(14) Form of Share Purchase Agreement by the registrant and
Dean Witter Select Dimensions Investment Series is filed
herewith.
<PAGE>
-3-
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
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
<PAGE>
Item 26. Persons Controlled By or Under Common Control with the Depositor or
Registrant.
Exhibit 26 is incorporated by reference to Part C of the Registration
Statement filed on June 28, 1988.
Item 27. Number of Contract Owners
As of _______________, there were contract owners.
Item 28. Indemnification-Incorporated herein by reference to the Registration
Statement filed on September 14, 1987.
Item 29. Principal Underwriters.
(a) HESCO acts as principal underwriter for the following investment
companies:
ITT Hartford Life and Annuity Insurance Company -
DC Variable Account I
ITT Hartford Life and Annuity Insurance Company -
Separate Account Two (DC Variable Account II)
ITT Hartford Life and Annuity Insurance Company -
Separate Account Two (Variable Account "A")
ITT Hartford Life and Annuity Insurance Company -
Separate Account Two (QP Variable Account)
ITT Hartford Life and Annuity Insurance Company -
Separate Account Two (NQ Variable Account)
ITT Hartford Life and Annuity Insurance Company -
Separate Account One
ITT Hartford Life and Annuity Insurance Company -
Separate Account Two (Director)
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
<PAGE>
-5-
Hartford Life Insurance Company Separate Account VL I
(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 ILA.
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.
The Registrant is relying on the no-action letter issued by the Division of
Investment Management to American Council of Life Insurance, Ref. No. IP-6-88,
November 28, 1988. The Registrant has complied with the four provisions of the
no-action letter.
<PAGE>
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 -----------------------
<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 486(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 27 day
of April, 1995.
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY-
(SEPARATE ACCOUNT THREE)
(Registrant)
*By: *By: /s/ Rodney J. Vessels
-------------------------------------- ---------------------
Thomas M. Marra, Senior Vice President
Rodney J. Vessels
Attorney-in-Fact
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
(Depositor)
*By:
--------------------------------------
Thomas M. Marra, Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons and in the
capacity and on the date indicated.
Donald R. Frahm, Chairman and
Chief Executive Officer, Director*
Bruce D. Gardner, General Counsel
Corporate Secretary, Director*
Joseph H. Gareau, Executive Vice
President and Chief Investment
Officer, Director*
John P. Ginnetti, Senior Vice
President, Director*
Thomas M. Marra, Senior Vice By: /s/ Rodney J. Vessels
President, Director* --------------------
Leonard E. Odell, Jr., Senior Rodney J. Vessels
Vice President, Director* Attorney-In-Fact
Lowndes A. Smith, President,
Chief Operating Officer, Dated: April 27,1995
Director* ----------------------
Raymond P. Welnicki, Senior Vice
President, Director*
Lizabeth H. Zlatkus, Vice President
Director*
Donald J. Znamierowski, Vice President
Comptroller, Director*
<PAGE>
EXHIBIT (b)(1)
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
CONSENT OF DIRECTORS
The undersigned, being all of the Directors of ITT Hartford and Annuity Life
Insurance Company, hereby consent to the following action, such action to have
the same force and effect as if taken at a meeting duly called and held for such
purpose.
ESTABLISHMENT OF SEPARATE ACCOUNTS
RESOLVED, that the Company is hereby authorized to establish a new separate
account designated Separate Account Three, herein referred to as the "Account."
RESOLVED, that the Officers of the Company are hereby authorized and directed to
take all actions necessary 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; including filing all
necessary registrations and application for exemptive relief under the
federal securities law.
3. Establish, from time to time, the terms and conditions pursuant to which
interests in the Account will be sold to contract owners;
4. Establish all procedures, standards and arrangements necessary or
appropriate for the operation of the Account.
/s/ Donald R. Frahm /s/ John P. Ginnetti
-------------------------- --------------------------
Donald R. Frahm John P. Ginnetti
(retired) /s/ Larry K. Lance
-------------------------- --------------------------
James T. French Larry K. Lance
/s/ Bruce D. Gardner /s/ David J. McDonald
-------------------------- ---------------------------
Bruce D. Gardner David J. McDonald
/s/ Joseph H. Gareau /s/ Lowndes A. Smith
-------------------------- ---------------------------
Joseph H. Gareau Lowndes A. Smith
/s/ Donald J. Znamierowski
---------------------------
Donald J. Znamierowski
Dated: June 22, 1994
<PAGE>
PRINCIPAL UNDERWRITER AGREEMENT
THIS AGREEMENT, dated as of the __________________, 1994, made by and between
ITT HARTFORD LIFE and ANNUITY INSURANCE COMPANY ("ILA" 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 ILA has made provision for the
establishment of a separate account within HLIC 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 Separate Account Three of ITT
Hartford Life and Annuity Insurance Company (referred to as the "Unit Trust");
and
WHEREAS, HESCO offers to the public a certain Tax Deferred Variable Annuity
Insurance Policy (the "Policy") issued by ILA with
respect to the Unit Trust 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 Policy 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 Policy, will use its best efforts
to effect offers and sales of the Policy 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 ILA.
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 relating to the sales and distribution of the Policy, the
need for which arises out of its duties as principal underwriter of said
Policy and relating to the creation of the Unit Trust.
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 Policy if
any of the foregoing in any way represent the duties, obligations, or
liabilities of HLIC as being greater than, or different
<PAGE>
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 Policies 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 designed 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 under a Policy 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 Policies upon 30 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 advice 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 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.
6
<PAGE>
ILA will furnish to HESCO such information with respect to the Unit Trust
and the Policies in such from and signed by such of its officers and
directors and HESCO may reasonable request and will warrant that the
statements therein contained when so signed will be trust and correct. ILA
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 ILA and HESCO.
IV.
RESIGNATION AND REMOVAL OF PRINCIPAL UNDERWRITER
HESCO may resign as a Principal Underwriter hereunder, upon 120 days' prior
written notice to ILA. However, such registration shall not become effective
until either the Unit Trust has been completely liquidated and the proceeds of
the liquidation distributed through ILA to the Policy 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:
(a) If to ILA - Hartford Life and Annuity Insurance Company, P.O.
Box 2999, Hartford, Connecticut, 06104.
(b) If to HESCO - Hartford Equity Sales Company, Inc., P.O. Box 2999,
Hartford, Connecticut 06104.
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
7
<PAGE>
copy of this Agreement and all amendments hereto shall be kept on file by
the Sponsor and shall be open to inspection any 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 May 6, 1995, 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 HLIC.
(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 ILA on 60 days' prior written notice to HESCO;
(2) shall immediately terminate in the event of its assignment and (3)
may be terminated by HESCO on 60 days' prior written notice to ILA,
but such termination will not be effective until ILA shall have
policy with one or more persons to act as principal underwriter of the
Policies. HESCO hereby agrees that it will continue to act as
principal underwriter until its successor or successors assume
such undertaking.
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 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
BY:
-----------------------------------
Thomas M. Marra
Senior Vice President
HARTFORD EQUITY SALES COMPANY, INC.
Attest:
BY:
- ---------------------------- -----------------------------------
Lynda Godkin Peter Cummins
Secretary Vice President
8
<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, 20xx]
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.
ANNUTITY 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
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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 if
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 or a combination of both. Once
every 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>
Age 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 4.06 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)
<TABLE>
<CAPTION>
<S><C>
Application for U.S.P.S.-First Class or Express-Mail to: Private Express Mail Carriers-M
Variable Annuity 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 SS#/TIN 123 45 6789
------------------------------------ --- -- ----
If no Annuitant is Name -- -- --
specified in Section 3, Date of Birth 09 10 58
the Contract Owner 1 Main Street -- -- --
will be the Annuitant. ------------------------------------ month day year
Street Address
Hartford CT 06106
------------------------------------ /X/ Male / / Female / / Trustee
City State Zip
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
2. Joint Contract ------------------------------------
Owner (if any) Name
--- -- ----
------------------------------------ SS#/TIN
Relationship to Contract Owner / / Male / / Female --- -- ----
-- -- --
Date of Birth
-- -- --
month day year
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
3. Annuitant ------------------------------------ --- -- ----
Name SS#/TIN
Complete only if --- -- ----
different from the ------------------------------------
contract owner in Street Address -- -- --
Section 1. Date of Birth
------------------------------------ -- -- --
City State Zip / / Male / / Female
month day year
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
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 /X/ No ------------------------------------------------------------------
(Joint Contract Owner's signature)
LICENSED
AGENT /s/ John Adams Broker/Dealer Pains Webber
--------------------------------- ----------------------------------------------------
(signature)
John Adams Address Financial Plaza, Hartford, CT
--------------------------------- -----------------------------------------------------------
(print)
Telephone # (203) 547-5000
--------------------------------- -------------------------------------------------------
</TABLE>
<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 sold 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 26, 1982 ITT Life Insurance Corporation
By /s/ Raymond H. Deck
---------------------------------
Raymond H. Deck
Chairman of the Board
Attest:
/s/ William A. McMahon
- -----------------------------------
William A. McMahon
Secretary
6104D/82D
This document was drafted
by: William A. McMahon
<PAGE>
STATE OF WISCONSIN
OFFICE OF THE COMMISSIONER OF INSURANCE
P.O. BOX 7873
MADISON, WISCONSIN 53707-7873
CERTIFICATION OF THE AUTHENTICITY OF COPY OF DOCUMENT ON FILE
The Commissioner of Insurance of the State of Wisconsin certifies
that the attached copy of
RESTATED ARTICLES OF INCORPORATION
for ITT LIFE INSURANCE CORPORATION
is a true and correct copy of the original now on file
with the Office of the Commissioner of Insurance.
Dated at Madison, Wisconsin this 2nd day of March, 1990
Robert xxxxxx
Commissioner of Insurance
<PAGE>
AMENDMENT OF RESTATED ARTICLES
ITT LIFE INSURANCE CORPORATION
Amendment of Restated Articles in duplicate are hereby executed by the
undersigned, Robert W. MacDonald, President, and L. L. Kohlhof, Vice
President and Secretary, of ITT Life Insurance Corporation, a Wisconsin
corporation, as follows:
On July 27, 1984 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 Fourth Article of the corporation's Restated
Articles of Incorporation be and it is hereby amended and
restated as follows. All other Articles of the Restated Articles
of Incorporation are unchanged and to continue in full force
and effect.
"Fourth: The aggregate number of shares which the corporation
shall have authority to issue is 3,000 shares consisting of
one class only, designated as Common Shares, of the par value
of $1,250) per share."
FURTHER RESOLVED, That the directors and officers of the corporation
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: August 6, 1984 /s/ Robert W. MacDonald
----------------------- ------------------------------
Robert W. MacDonald, President
/s/ L. L. Kohlhof
-------------------------------
L. L. Kohlhof, Vice President &
Secretary
<PAGE>
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
On this 6th day of August, 1984, before me appeared Robert W. MacDonald,
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 Robert W. MacDonald acknowledged the
instrument to be the free act and deed of the corporation.
/s/ Steven Puck
---------------------
Notary Public
My commission expires on
October 22, 1985 (SEAL)
STATE OF MINNESOTA )
) ss
COUNTY OF HENNEPIN )
On this 6th day of August, 1984, 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/ Steven Puck
---------------------
Notary Public
My commission expires on
October 22, 1985 (SEAL)
<PAGE>
EXHIBIT (b)(6)(b)
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 officers 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)(10)
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this
Registration Statement File No. 33-80732 on Form N-4 for Hartford Life Insurance
Company.
/s/ ARTHUR ANDERSEN LLP
Hartford, Connecticut
April 6, 1995
<PAGE>
EXHIBIT (b)(13)
<TABLE>
<CAPTION>
EXPLANATION OF TOTAL RETURN CALCULATION
- ------------------------------------------------------------------------------------------------------------------------------------
Dean Witter ------------ 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>
Money Market $1,000 100,000000 $10,055845 $80 $30 $915.58
TOTAL RETURN FORMULA:
n
________________
T =
ERV -1
------
P
1
-----------------
T = $915.58 -1 = -8.44%
-------- ------------
$1,000.00 ------------
WHERE: P= a hypothetical initial payment (of $1,000) invested on 09/14/94.
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 5% of the initial payment.)
</TABLE>
<PAGE>
EXHIBIT (b)(14)
PARTICIPATION AGREEMENT
THIS AGREEMENT is entered into this 31st day of August, 1994 by HARTFORD
LIFE INSURANCE COMPANY ("Hartford Life"), a Connecticut corporation, on its own
behalf and on behalf of its Separate Account Three, ITT HARTFORD LIFE AND
ANNUITY INSURANCE COMPANY ("ITT Hartford"), a Wisconsin corporation, on its own
behalf and on behalf of its Separate Account Three, and DEAN WITTER SELECT
DIMENSIONS INVESTMENT SERIES, a Massachusetts business trust ("Fund").
WHEREAS, Hartford Life and ITT Hartford (singly "Company" and together
"Companies") have each established a Separate Account Three (singly "Account"
and together "Accounts"), as unit investment trusts to purchase shares from the
Fund for the purpose of funding variable annuity contracts ("Contracts") issued
by the Companies;
WHEREAS, the Fund wishes to permit the Companies and the Separate Accounts
to participate in the purchase of shares of the Fund for the purpose of funding
the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the Companies
and the Fund agree as follows:
1. PURCHASE OF SHARES. The Companies will purchase shares at the net
asset value applicable to the then currently effective prospectus of the Fund.
The Companies will order Fund shares in the quantities and at the times each
Company determines to be necessary to meet the requirements of its Contracts.
Orders from Contract owners received and processed by the Companies prior to the
close of the New York Stock Exchange ("Exchange") on any given day that the
Exchange is open ("business day") will be executed by the Fund at the net asset
value determined as of the close of the Exchange on such business day. Any
orders received and processed on such day but after the close of the Exchange
will be executed by the Fund at the net asset value determined as of the close
of the Exchange on the next business day following the day of receipt of such
order. Each Company will forward to the Fund a list of names and specimen
signatures of persons authorized to act on the Company's behalf. The Fund shall
not accept orders given on behalf of a Company by persons not on such list. Each
Company agrees to promptly notify the Fund in writing of any additions,
deletions or other modifications to such list. Until so notified of such
modifications, the Fund shall have no liability as a result of the execution of
orders given by a person previously identified on the list as authorized.
2. SALES OF SHARES. The Fund will sell its shares to the Companies for
allocation to their respective Accounts. The Fund will execute share orders on a
daily basis at the next determined net asset value per share after receipt by
the Fund or its designee of the order for shares of the applicable Portfolio of
the Fund determined as set forth in the Fund prospectus. For each Portfolio, the
Fund will determine the closing net asset value, dividend and capital gain rate
information at the close of each business day. The Fund will provide this
information to the Companies by 5:30 p.m. Eastern Time or as soon thereafter as
is practicable. By 10:00 a.m. Eastern Time the following such business day or as
soon thereafter as is practicable, the Companies will send directly to the Fund
or its specified agent orders to purchase or redeem Fund shares for the
preceding business day. Payment for net purchases will be wired by the Companies
to a custodial account designated by the Fund as nearly as practicable to
coincide with the order for shares of the Fund. The Fund shares will be sold
only to insurance companies and separate accounts which have entered into
agreements to purchase shares or participation agreements substantially
identical to this Agreement, except that the Fund may sell its shares to its
investment manager(s) consistent with Section 817(h) of the Internal Revenue
Code ("Code") and Treasury Regulation 1.817-5, as amended from time to time, and
any Treasury interpretations thereof, relating to the diversification
requirements for variable annuity or variable life insurance contracts and any
amendments or other modifications to such section or Regulations. No shares of
the Fund will be sold to the general public. The Fund will send confirmations of
Fund share purchases by a Company directly to the Company. The Fund will
maintain all Fund share purchases in a book share account in the name of each
Company.
3. REDEMPTION OF SHARES. At a Company's request, the Fund agrees to
redeem for cash without charge, any full or fractional shares of the Fund held
by the Company, executing such requests on a daily basis at the net asset value
of the applicable Portfolio computed after receipt of the redemption request;
provided, however, that the Fund reserves the right to suspend the right of
redemption or to postpone the date of payment upon redemption of the shares of
any Portfolio under the circumstances and for the period
<PAGE>
of time specified in the prospectus. To the extent that it is able to do so,
payments for net redemptions of shares of the Funds will be wired by the Fund
from the Fund's custodial account to an account designated by each Company.
Until the Fund is so able to wire such redemption proceeds, they may be sent by
check or by such other means as the Fund and each Company agree.
4. AVAILABILITY OF SHARES. The Fund agrees to make its shares available
for purchase by the Companies at the applicable net asset value per share on
those days on which the Fund calculates its net asset value pursuant to rules of
the Securities and Exchange Commission ("SEC"). The Fund shall use reasonable
efforts to calculate such net asset value on each day on which the Exchange is
open for trading. The Fund shall have the right to suspend the sale of its
shares if (a) the Exchange has closed or has suspended or materially restricted
trading, (b) an emergency exists as a result of which disposal by the Fund of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Fund fairly to determine the value of its net assets,
(c) the SEC, by order, so permits, (d) a banking moratorium shall have been
declared by federal or New York authorities, or (e) there shall have been some
other extraordinary event which, in the judgment of the Fund, makes it
impracticable to sell the shares.
5. PAYMENT OF SHARES. The Companies shall pay for Fund shares within five
days after they place the order for Fund shares. The Fund reserves the right to
delay issuing or transferring Fund shares and/or to delay accruing or declaring
dividends in accordance with any policy set forth in the prospectus with respect
to such shares until any payment check has cleared. If the Fund does not receive
payment within the five-day period, the Fund may, without notice, cancel the
order and require a Company to reimburse the Fund promptly for any loss the Fund
suffered by reason of the Company failing to timely pay for its shares.
6. FEE FOR SHARES. The Companies shall purchase and redeem shares in the
Fund at net asset value.
7. FUND'S REGISTRATION STATEMENT AND PROSPECTUS. The Fund shall amend the
Registration Statement for its shares under the Securities Act of 1933 ("1933
Act") and the Investment Company Act of 1940 ("1940 Act") from time to time as
required in order to effect the continuous offering of its shares and, at the
expense of Dean Witter Reynolds Inc., shall provide the Companies with as many
copies of its current prospectus as the Companies may reasonably request.
The Companies shall not accept any order for an additional purchase payment
to a Contract funded by the Fund unless a current prospectus of the Fund shall
have been furnished by the applicable Company, at the expense of Dean Witter
Reynolds Inc., to the Contract Owner no later than with the confirmation for
such order. Unless and until the procedure described below has been established,
the Companies agree that current prospectuses of the Fund will be routinely
distributed by the Companies, at the expense of Dean Witter Reynolds Inc., to
all existing Contract Owners, whether or not additional purchase payments have
been made to the Contract, on an annual basis. The Companies agree to use their
best efforts to establish a procedure to identify Contract Owners who are making
an additional purchase payment to their Contracts and who have not previously
been furnished with a then current prospectus of the Fund, and to have the
procedure in place by the time the Fund's 1997 prospectus is effective so that a
current prospectus can be mailed by the Companies, at the expense of Dean Witter
Reynolds Inc., solely to those Contract Owners so identified, with the
confirmation for such additional purchase payment. There can be no assurance
that the procedure will be in place by the time the Fund's 1997 prospectus is
effective. Such procedure may be established only with the consent of the Fund,
which consent will not be unreasonably withheld. Until such time as the
procedure is in place, current prospectuses of the Fund will be routinely
distributed by the Companies, at the expense of Dean Witter Reynolds Inc., to
Contract Owners, whether or not additional purchase payments have been made to
the Contract, on an annual basis as described above.
8. INVESTMENT OF ASSETS. The Fund agrees to invest its assets in
accordance with its investment policies as disclosed in the prospectus and the
provisions of Section 817(h) of the Code and Treasury Regulation 1.817-5, as
amended from time to time, and any Treasury interpretations thereof, relating to
the diversification requirements for variable annuity and variable life
insurance contracts and any amendments or other modifications to such Section or
Regulations.
9. ADMINISTRATION OF CONTRACTS. The Companies shall be responsible for
administering their respective Contracts and keeping records on the Contracts.
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10. SHAREHOLDER INFORMATION. The Fund shall in a timely manner, at the
expense of the Fund or Dean Witter Reynolds Inc., furnish the Companies copies
of its proxy material, reports to shareholders and other communication to
shareholders in such quantity as the Companies shall reasonably require for
distributing to owners or participants under the Contracts. The Companies, at
the expense of the Fund or Dean Witter Reynolds Inc., will distribute these
materials to such owners or participants as required; provided that any proxy
materials required as a result of events originating from the Companies will be
furnished and distributed at the expense of the Companies.
11. RECORD KEEPING AND ACCESS TO RECORDS. Each Company and the Fund shall
maintain records in accordance with the applicable federal and state statutes,
rules and regulations applicable to their respective operations in connection
with the performance of their duties under this Agreement. Upon request, a party
to this Agreement shall promptly provide to another party copies of such records
as the party shall reasonably request. At the expense of the requesting party,
each party to this Agreement shall cooperate with and assist the requesting
party's auditors or representatives of regulatory agencies having jurisdiction
over the requesting party in connection with inquiries, complaints or judicial
proceedings involving responsibilities carried out under this Agreement. Such
cooperation and assistance shall include the production of copies of potentially
relevant records if so requested.
12. VOTING. To the extent required by law, the Companies shall vote Fund
shares in accordance with instructions received from Contract owners. If,
however, the 1940 Act or any regulation thereunder should be amended or if the
present interpretation thereof should change, and as a result the Companies
determine that they are permitted to vote the Fund's shares in their own right,
they may elect to do so. The Companies shall vote shares of a Portfolio for
which no instructions have been received in the same proportion as the voting
instructions which are received with respect to all Contracts participating in
that Portfolio. Neither the Companies nor persons under their control shall
recommend action in connection with solicitation of proxies for Fund shares
allocated to the Accounts. The Companies shall also vote shares they own that
are not attributable to Contract owners in the same proportion. The Companies
may, when required by state insurance regulatory authorities, disregard voting
instructions if the instructions require that the shares be voted so as to cause
a change in the sub-classification or investment objective of the Fund or one or
more of its Portfolios or to approve or disapprove an investment advisory
contract for a Portfolio of the Fund. In addition, the Companies themselves may
disregard voting instructions in favor of changes initiated by a Contract owner
in the investment policy or the investment adviser of a Portfolio of the Fund if
the Companies reasonably disapprove of such changes.
13. FUND'S WARRANTY. The Fund represents and warrants that Fund shares
sold pursuant to this Agreement shall be registered under the 1933 Act and duly
authorized for issuance in accordance with all applicable federal and state
laws.
14. EACH COMPANY'S WARRANTY. Each Company represents and warrants that it
is an insurance company duly organized and in good standing under the law of its
state of domicile and that it has legally and validly established its Account
under the laws of its state of domicile, and will register the Account as a unit
investment trust in accordance with the provisions of the 1940 Act to serve as a
segregated investment account for certain Contracts. Each Company further
represents and warrants that its Contracts will be registered under the 1933 Act
and will be issued and sold in compliance with all applicable federal and state
laws.
15. TERMINATION OF AGREEMENT. (a) The parties may terminate this
Agreement as follows:
(i) at the option of a Company with respect to that Company or the
Fund upon 180 days' written notice to the other parties;
(ii) at the option of each Company if, for any reason except for those
specified in Section 4, Fund shares are not available to meet the
requirements of the Company's Contracts as determined by the Company;
(iii) at the option of the Fund with respect to a Company, upon the
National Association of Securities Dealers, Inc. ("NASD"), the SEC, the
director of the Department of Insurance in a Company's state of domicile or
any other regulatory body instituting legal proceedings against the Company
regarding its duties under this Agreement;
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(iv) at the option of each Company upon institution of formal
proceedings against the Fund by the SEC or other regulatory body; or
(v) at the option of each Company if Fund shares are not registered,
issued or sold in conformance with applicable federal or state law,
including Section 817(h) and Regulations and Treasury interpretations
thereunder. Prompt notice shall be given to the Companies if the conditions
of this provision occur.
(b) This Agreement shall automatically terminate in the event of its
assignment.
(c) Notwithstanding any termination of this Agreement, the Fund shall, at
the Companies' option, continue to make available additional shares of the Fund
pursuant to the terms and conditions of this Agreement, for all Contracts in
effect on the effective date of termination of this Agreement (hereinafter
referred to as "Existing Contracts"), so long as the Fund is in existence.
Specifically, without limitation, the owners of the Existing Contracts shall be
permitted to reallocate investments in the Fund, redeem investments in the Fund,
or invest in the Fund upon the making of additional purchase payments under the
Existing Contracts. A termination under Section 18 of this Agreement shall end
rights of the owners of Existing Contracts.
(d) The Companies shall not redeem Fund shares attributable to the
Contracts (as opposed to Fund shares attributable to the Companies' assets held
in the Accounts) except (i) as necessary to implement transactions permitted
under the Contracts, or (ii) as required by state or federal laws or regulations
or judicial or other legal precedent of general application (hereinafter
referred to as a "Legally Required Redemption"). Upon request, a Company will
promptly furnish to the Fund the opinion of counsel for the Company (which
counsel shall be reasonably satisfactory to the Fund) to the effect that any
redemption pursuant to clause (ii) above is a Legally Required Redemption.
Furthermore, except in cases where permitted under the terms of the Contracts, a
Company shall not prevent its Contract owners from allocating payments to a
Portfolio that was otherwise available under the Contracts without first giving
the Fund 90 days' notice of its intention to do so.
16. EACH COMPANY'S INDEMNIFICATION AGREEMENT. (a) Each Company agrees to
indemnify and hold harmless the Fund and each of its Trustees who is not an
"interested person" of the Fund, as defined in the 1940 Act (collectively the
"Fund's Indemnified Parties" for purposes of this Section 16), against any
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Company) or expenses or actions to which the Fund's
Indemnified Parties may become subject, under the Federal securities laws or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements arise as a result of any failure by
the Company to provide the services and furnish the materials under the terms of
this Agreement or which arise from erroneous instructions by the Company to the
Fund concerning the particular Portfolio or Portfolios whose shares are to be
allocated to the Account. This indemnity agreement is in addition to any
liability which the Company may otherwise have.
(b) The Company will reimburse the Fund's Indemnified Parties for any
legal or other expenses reasonably incurred by the Fund's Indemnified Parties in
connection with investigating or defending any such loss, claim, damage,
liability or action.
(c) Promptly after receipt by any of the Fund's Indemnified Parties of
notice of the commencement of any action, or the making of any claim for which
indemnity may apply under this section, the Fund's Indemnified Parties will, if
a claim in respect thereof is to be made against the Fund, notify the Company of
the commencement thereof; but the omission so to notify the Company will not
relieve the Company from any liability which it may have to the Fund's
Indemnified Parties otherwise than under this Agreement. In case any such action
is brought against the Fund's Indemnified Parties, and the Company is notified
of the commencement thereof, the Company will be entitled to participate therein
and to assume the defense thereof, with counsel satisfactory to the party named
in the action, and after notice from the Company to such party of the Company's
election to assume the defense thereof, the Company will not be liable to such
party under this Agreement for any legal or other expenses subsequently incurred
by such party independently in connection with the defense thereof other than
reasonable costs of investigation.
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17. FUND INDEMNIFICATION AGREEMENT. (a) The Fund agrees to indemnify and
hold harmless each Company and each of the Company's Directors who is not an
"interested person" of the Company, as defined in the 1940 Act (collectively the
"Company's Indemnified Parties" for purposes of this Section 17), against any
losses, claims, damages, liabilities (including amounts paid in settlement with
the written consent of the Fund) or expenses or actions to which the Company's
Indemnified Parties may become subject, under the Federal securities laws or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements:
(i) arise as a result of any failure by the Fund to provide the
services and furnish the materials under the terms of this Agreement;
(ii) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or prospectus or sales literature of the Fund (or any amendment
or supplement to any of the foregoing), or arise out of or are based upon
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, provided that this Agreement to indemnify shall not apply
as to the Company's Indemnified Parties if such statement or omission was
made in reliance upon and in conformity with information furnished to the
Fund by or on behalf of the Company for use in the registration statement
or prospectus of the Fund or in sales literature (or any amendment or
supplement) or otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(iii) arise out of or result from any material breach of any
representation and/or warranty made by the Fund in this Agreement or arise
out of or result from any other material breach of this Agreement by the
Fund, including a failure, whether unintentional or in good faith or
otherwise, to comply with the requirements specified in Section 8 of this
Agreement. This indemnity agreement is in addition to any liability which
the Fund may otherwise have.
(b) The Fund represents and warrants that the Fund will at all times
invest its assets in such a manner as to ensure that the Contracts will be
treated as variable annuity or flexible premium life insurance contracts under
the Code and the regulations thereunder. Without limiting the scope of the
foregoing, the Fund will at all times comply with Section 817(h) of the Code and
Treasury Regulation 1.817-5, as amended from time to time, and any Treasury
interpretations thereof, relating to the diversification requirements for
variable annuity or variable life insurance contracts and any amendments or
other modifications to such section or Regulations.
(c) Fund shares will not be sold to any person or entity that would result
in the Contracts not being treated as annuity contracts or variable life
contracts.
(d) The Fund will reimburse the Companies, as shareholders of the Fund,
for pricing errors respecting Fund shares transacted with incorrect net asset
values by paying the Companies the amount of the difference between the
incorrect net asset value as of the date of the error and the correct net asset
value as of the date of the error, provided that: (a) in the case of an
overstatement of net asset value, any such reimbursement resulting from
overpayments by the Companies on Fund share purchases during the period the
error in pricing was in effect will be net of overpayments to the Companies on
Fund share redemptions during such period, (b) in the case of an understatement
of net asset value, any such reimbursement resulting from underpayments to the
Companies on Fund share redemptions during the period the error in pricing was
in effect will be net of underpayments by the Companies on Fund share purchases
during such period, and (c) in the case of a series of pricing errors over a
period of days consisting alternately of overstatements and understatements of
net asset value, any such reimbursements shall reflect the combined effect of
the net of all overpayments and underpayments during such period; and provided
further that reimbursements in connection with a pricing error discovered for a
period for which another pricing error has previously been corrected will be
calculated as if all errors pertaining to that period had been discovered at the
same time for purposes of the foregoing netting process.
(e) The Fund will reimburse the Company's Indemnified Parties for any
legal or other expenses reasonably incurred by the Company's Indemnified Parties
in connection with investigating or defending of any such loss, claim, damage,
liability or action.
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(f) Promptly after receipt by any of the Company's Indemnified Parties of
notice of the commencement of any action, or the making of any claim for which
indemnity may apply under this section, the Company's Indemnified Parties will,
if a claim in respect thereof is to be made against the Company, notify the Fund
of commencement thereof; but the omission so to notify the Fund will not relieve
the Fund from any liability which it may have to the Company's Indemnified
Parties otherwise than under this Agreement. In case any such action is brought
against the Company's Indemnified Parties, and the Fund is notified of the
commencement thereof, the Fund will be entitled to participate therein and to
assume the defense thereof, with counsel satisfactory to the party named in the
action, and after notice from the Fund to such party of the Fund's election to
assume the defense thereof, the Fund will not be liable to such party under this
Agreement for any legal or other expenses subsequently incurred by such party
independently in connection with the defense thereof other than reasonable costs
of investigation.
18. POTENTIAL CONFLICTS. (a) The Trustees of the Fund will monitor the
operations of the Fund for the existence of any material irreconcilable conflict
between the interests of the contract owners of all separate accounts investing
in the Fund. An irreconcilable material conflict may arise for a variety of
reasons, including: (i) an action by any state insurance regulatory authority;
(ii) a change in applicable Federal or state insurance, tax, or securities laws
or regulations, or a public ruling, private letter ruling, no-action or
interpretative letter, or any similar action by insurance, tax, or securities
regulatory authorities; (iii) an administrative or judicial decision in any
relevant proceeding; (iv) the manner in which the investments of any Portfolio
are being managed; (v) a difference in voting instructions given by variable
annuity contract and variable life insurance contract owners; or (vi) a decision
by an insurer to disregard the voting instructions of contract owners. The
Trustees shall promptly inform the Companies if they determine that an
irreconcilable material conflict exists and the implications thereof.
(b) Each Company will report any potential or existing conflicts of which
it is aware to the Trustees of the Fund. The Company will assist the Trustees in
carrying out their responsibilities under sections (a) and (b) of this section,
by providing the Trustees with all information reasonably necessary for the
Trustees to consider any issues raised. This includes, but is not limited to, an
obligation by the Company to inform the Trustees whenever contract owner voting
instructions are disregarded.
(c) If it is determined by a majority of the Trustees, or a majority of
the Trustees who are not parties to this Agreement or interested persons of any
such party and who have no direct or indirect financial interest in this
Agreement or any agreement related thereto (the "Independent Trustees"), that a
material irreconcilable conflict exists, the Company shall, at its expense and
to the extent reasonably practicable (as determined by a majority of the
Independent Trustees), take whatever steps are necessary to remedy or eliminate
the irreconcilable material conflict, up to and including: (i) withdrawing the
assets allocable to the Account from the Fund or any Portfolio and reinvesting
such assets in a different investment medium, including (but not limited to)
another Portfolio of the Fund, or submitting the question whether such
segregation should be implemented to a vote of all affected contract owners and,
as appropriate, segregating the assets of variable annuity contract owners
invested in the Account from those of any other appropriate group (i.e., annuity
contract owners, life insurance contract owners, or variable contract owners of
other life insurance companies) that votes in favor of such segregation, or
offering to the contract owners the option of making such a change; and
(ii) establishing a new registered management investment company or managed
separate account.
(d) If a material irreconcilable conflict arises because of a decision by
a Company to disregard contract owner voting instructions and that decision
represents a minority position or would preclude a majority vote, the Company
may be required, at the Fund's election, to withdraw the Account's investment in
the Fund and terminate this Agreement; provided, however, that such withdrawal
and termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the Independent
Trustees. Any such withdrawal and termination must take place within six (6)
months after the Fund gives written notice that this provision is being
implemented, and until the end of that six month period the Fund shall continue
to accept and implement orders by the Company for the purchase (and redemption)
of shares of the Fund.
(e) If a material irreconcilable conflict arises because a particular
state insurance regulator's decision applicable to a Company conflicts with the
majority of other state regulators, then the Company will
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withdraw the Account's investment in the Fund and terminate this Agreement
within six months after the Trustees inform the Company in writing that they
have determined that such decision has created an irreconcilable material
conflict; provided, however, that such withdrawal and termination shall be
limited to the extent required by the foregoing material irreconcilable conflict
as determined by a majority of the Independent Trustees. Until the end of the
foregoing six month period, the Fund shall continue to accept and implement
orders by the Company for the purchase (and redemption) of shares of the Fund.
(f) For purposes of sections (c) through (f) of this section, a majority
of the Independent Trustees shall determine whether any proposed action
adequately remedies any irreconcilable material conflict, but in no event will
the Fund be required to establish a new funding medium for the Contracts. A
Company shall not be required by section (c) to establish a new funding medium
for its Contracts if an offer to do so has been declined by vote of a majority
of contract owners materially adversely affected by the irreconcilable material
conflict. In the event that the Trustees determine that any proposed action does
not adequately remedy any irreconcilable material conflict, then the Company
will withdraw its Account's investment in the Fund and terminate this Agreement
within six (6) months after the Trustees inform the Company in writing of the
foregoing determination, provided, however, that such withdrawal and termination
shall be limited to the extent required by any such material irreconcilable
conflict as determined by a majority of the Independent Trustees.
19. DURATION OF THIS AGREEMENT. This Agreement shall become effective as
of the date first above written and shall remain in force until April 30, 1996
and thereafter, but only so long as such continuance is specifically approved at
least annually by the Trustees of the Fund, or by the vote of a majority of the
outstanding voting securities of the Fund, cast in person or by proxy. This
Agreement also may be terminated in accordance with Section 15 hereof.
The terms "vote of a majority of the outstanding voting securities",
"assignment" and "interested person", when used in this Agreement, shall have
the respective meanings specified in the 1940 Act.
20. AMENDMENTS OF THIS AGREEMENT. This Agreement may be amended by the
parties only if such amendment is specifically approved by: (i) the Trustees of
the Fund, or by the vote of a majority of outstanding voting securities of the
Fund, and (ii) a majority of the Independent Trustees, cast in person at a
meeting called for the purpose of voting on such approval.
21. GOVERNING LAW. This Agreement shall be construed in accordance with
the law of the State of New York and the applicable provisions of the 1933, 1934
and 1940 Acts and the rules and regulations and rulings thereunder including
such exemptions from those statutes, rules and regulations as the SEC may grant
and the terms hereof shall be interpreted and construed in accordance therewith.
To the extent the applicable law of the State of New York, or any of the
provisions herein, conflicts with the applicable provisions of the 1940 Act, the
latter shall control. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise the remainder of the
Agreement shall not be affected thereby.
22. NOTICES. Any notice under this Agreement shall be in writing and if
to the Fund, delivered or mailed postage prepaid to it at Two World Trade
Center, New York, NY 10048; and if to the Companies, delivered or mailed postage
prepaid to Vice President, Individual Annuity Sales and Marketing, 200 Hopmeadow
Street, Simsbury, CT 06070, with a copy to General Counsel at the same address.
The parties shall have the right to designate any other address hereafter by
written notice to the other parties.
23. PERSONAL LIABILITY. The Declaration of Trust establishing Dean Witter
Select Dimensions Investment Series, dated June 2, 1994, a copy of which,
together with all amendments thereto (the "Declaration"), is on file in the
office of the Secretary of the Commonwealth of Massachusetts, provides that the
name Dean Witter Select Dimensions Investment Series refers to the Trustees
under the Declaration collectively as Trustees, but not as individuals or
personally; and no Trustee, shareholder, officer, employee or agent of Dean
Witter Select Dimensions Investment Series shall be held to any personal
liability, nor shall resort be had to their private property for the
satisfaction of any obligation or claim or otherwise, in connection with the
affairs of said Dean Witter Select Dimensions Investment Series, but the Trust
Estate only shall be liable.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
COMPANIES:
HARTFORD LIFE INSURANCE COMPANY
By:
-----------------------------------
Attest:
- ---------------------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY
By:
-----------------------------------
Attest:
- ---------------------------
FUND:
DEAN WITTER SELECT DIMENSIONS INVESTMENT
SERIES
By:
-----------------------------------
Attest:
- ---------------------------
Accepted with regard to Paragraphs 7 and 10 hereof:
DEAN WITTER REYNOLDS INC.
By:
-----------------------------------
Attest:
- ---------------------------
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