<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
PRE-EFFECTIVE AMENDMENT NO. 2
TO FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
A. Exact name of trust: Separate Account Five
B. Name of depositor: ITT Hartford Life and Annuity Insurance Company
C. Complete address of depositor's principal executive offices:
P. O. Box 2999
Hartford, CT 06104-2999
D. Name and address of agent for service:
Thomas S. Clark, Esquire
ITT Hartford Life Insurance Companies
P. O. Box 2999
Hartford, CT 06104-2999
E. Title and amount of securities being registered:
Modified single premium variable life insurance contracts.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the
Registrant has registered an indefinite amount of securities.
F. Proposed maximum aggregate offering price to the public of the securities
being registered:
Not yet determined.
G. Amount of filing fee: Paid
H. Approximate date of proposed public offering: As soon as practicable
after the effective date of this registration statement.
The Registrant hereby amends this Registration Statement on such dates as may
be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
The registrant hereby represents that it is relying on Section (13)(i)(B)
of Rule 6e-3(T).
________________________
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RECONCILIATION AND TIE BETWEEN
FORM N-8B AND PROSPECTUS
Item No. of
Form N-8B-2 CAPTION IN PROSPECTUS
- ----------- ---------------------
1. Cover page
2. Cover page
3. Not applicable
4. The Company; Distribution of the Contracts
5. Summary - The Separate Account; The Separate Account -
General
6. The Separate Account - General
7. Not required by Form S-6
8. Not required by Form S-6
9. Legal Proceedings
10. Summary; The Separate Account - Portfolios; The Contract -
Application for a Contract; Contract Benefits and Rights;
Other Matters - Voting Rights, Dividends
11. Summary; The Separate Account - Portfolios
12. Summary; The Separate Account - Portfolios
13. Deductions and Charges; Distribution of the Contracts;
Federal Tax Considerations
14. The Contract - Application for a Contract
15. The Contract - Allocation of Premium
16. The Separate Account - Portfolios; The Contract -
Allocation of Premium
17. Summary; Contract Benefits and Rights - Account Value and
Amount Payable on Surrender of the Contract, Cancellation
and Examine Rights
<PAGE>
Item No. of
Form N-8B-2 CAPTION IN PROSPECTUS
- ----------- ---------------------
18. The Separate Account - Portfolios; Deduction and Charges;
Federal Tax Considerations
19. Other Matters - Statement to Contract Owners
20. Not applicable
21. Contract Benefits and Rights - Contract Loans
22. Not applicable
23. Safekeeping of Separate Account Assets
24. Other Matters - Assignment
25. The Company
26. Not applicable
27. The Company
28. The Company
29. The Company
30. Not applicable
31. Not applicable
32. Not applicable
33. Not applicable
34. Not applicable
35. Distribution of Contracts
36. Not required by Form S-6
37. Not applicable
38. Distribution of the Contracts
<PAGE>
Item No. of
Form N-8B-2 CAPTION IN PROSPECTUS
- ----------- ---------------------
39. The Company; Distribution of the Contracts
40. Not applicable
41. The Company; Distribution of the Contracts
42. Not applicable
43. Not applicable
44. The Contract - Allocation of Premium
45. Not applicable
46. Contract Benefits and Rights - Account Value
47. The Separate Account - Portfolio
48. Cover Page; The Company
49. Not applicable
50. The Separate Account - General
51. Summary; The Company; The Contract; Contract Benefits
and Rights; Other Matters - Beneficiary
52. The Separate Account - Portfolios, Investment Adviser
53. Federal Tax Considerations
54. Not applicable
55. Not applicable
56. Not required by Form S-6
57. Not required by Form S-6
58. Not required by Form S-6
59. Not required by Form S-6
<PAGE>
ITT HARTFORD LIFE AND
ANNUITY INSURANCE COMPANY
P.O. Box 2999
Hartford, CT 06104-2999
Telephone (800) 243-5433
SELECT DIMENSIONS LIFE
Modified Single Premium
Variable Life Insurance Contracts
[LOGO]
This prospectus describes Select Dimensions Life, a modified single premium
variable life insurance contract ("Contract" or "Contracts") offered by ITT
Hartford Life and Annuity Insurance Company ("ITT Hartford") to applicants age
90 and under. The Contract lets the Contract Owner pay a single premium, and
subject to restrictions, additional premiums.
The Contract is a modified endowment contract for federal income tax
purposes, except in certain cases described under "Federal Tax
Considerations," page . A LOAN, DISTRIBUTION OR OTHER AMOUNT RECEIVED FROM A
MODIFIED ENDOWMENT CONTRACT DURING THE LIFE OF THE INSURED WILL BE TAXED TO
THE EXTENT OF ANY ACCUMULATED INCOME IN THE CONTRACT. ANY AMOUNTS THAT ARE
TAXABLE WITHDRAWALS WILL BE SUBJECT TO A 10% ADDITIONAL TAX, WITH CERTAIN
EXCEPTIONS.
Generally, the minimum initial premium ITT Hartford will accept is $10,000.
The initial premium will be allocated to the Money Market Portfolio. After the
Right to Cancel Period has expired, the amount so allocated will be
transferred to the Portfolios specified in the Contract Owner's application.
The following underlying investment portfolios ("Portfolios") of the Dean
Witter Select Dimensions Investment Series are available under the Contracts:
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.
There is no guaranteed minimum Account Value for a Contract. The Account
Value of a Contract will vary up or down to reflect the investment experience
of the Portfolios to which premiums have been allocated. The Contract Owner
bears the investment risk for all amounts so allocated. The Contract continues
in effect while the Cash Surrender Value is sufficient to pay the monthly
charges under the Contract ("Deduction Amount"). The contract may terminate if
the cash surrender value is insufficient to cover a Deduction Amount, and
after expiration of a specified period, no additional premium payments are
made.
The Contracts provide for a Face Amount, which is the minimum death benefit
under the Contract. The death benefit ("Death Benefit") may be greater than
the Face Amount. The Account Value will, and under certain circumstances the
Death Benefit of the Contract may, increase or decrease based on the
investment experience of the Portfolios to which premiums have been allocated.
However, while the Contract is in force, the Death Benefit will never be less
than the Face Amount. At the death of the Insured, we will pay the death
proceeds ("Death Proceeds") to the beneficiary. The Death Proceeds equal the
Death Benefit less any Indebtedness under the Contract.
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IT MAY NOT BE ADVANTAGEOUS TO PURCHASE VARIABLE LIFE INSURANCE AS A
REPLACEMENT FOR YOUR CURRENT LIFE INSURANCE OR IF YOU ALREADY OWN A VARIABLE
LIFE INSURANCE CONTRACT.
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THIS PROSPECTUS IS VALID ONLY IF ACCOMPANIED BY THE CURRENT PROSPECTUSES OF
THE APPLICABLE ELIGIBLE PORTFOLIOS WHICH CONTAIN A FULL DESCRIPTION OF THOSE
PORTFOLIOS. ALL PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
------------------------------------------------------------------------------
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
THE PRODUCTS DESCRIBED HEREIN ARE NOT DEPOSITS OF, OR GUARANTEED BY ANY BANK,
NOR ARE THEY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
------------------------------------------------------------------------------
The date of this Prospectus is .
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<PAGE>
SPECIAL TERMS
As used in this Prospectus, the following terms have the indicated meanings:
ACCOUNT VALUE: The current value of Accumulation Units plus the value of the
Loan Account under the Contract.
ACCUMULATION UNIT: An accounting unit of measure used to calculate the value of
a Sub-Account.
ANNUAL WITHDRAWAL AMOUNT: The amount of a surrender or partial withdrawal that
is not subject to the contingent deferred sales charge. This amount in any
Contract year is the greater of 10% of premiums or 100% of cumulative earnings
(Account Value less premiums paid).
CASH SURRENDER VALUE: The Account Value less any contingent deferred sales
charge and additional premium tax charge and all Indebtedness.
CODE: The Internal Revenue Code of 1986, as amended.
CONTRACT ANNIVERSARY: The yearly anniversary of the Contract Date.
CONTRACT DATE: A date not later than three business days after receipt of the
initial premium at ITT Hartford 's Home Office.
CONTRACT OWNER: The person having rights to benefits under the Contract during
the lifetime of the Insured; the Contract Owner may or may not be the Insured.
CONTRACT YEARS: Annual periods computed from the Contract Date.
COVERAGE AMOUNT: The Death Benefit less the Account Value.
DEATH BENEFIT: The greater of (1) the Face Amount specified in the Contract or
(2) the Account Value on the date of death multiplied by a stated percentage as
specified in the Contract.
DEATH PROCEEDS: The amount that we will pay on the death of the Insured. This
equals the Death Benefit less any Indebtedness.
DEDUCTION AMOUNT: A deduction on the Contract Date and on each Monthly Activity
Date for the cost of insurance, a tax expense charge, an administrative charge,
and a mortality and expense risk charge.
FACE AMOUNT: On the Contract Date, the initial Face Amount is the amount shown
on the Contract's Specifications page. Thereafter, the Face Amount is reduced by
any partial withdrawals.
FUND: Dean Witter Select Dimensions Investment Series.
GUIDELINE SINGLE PREMIUM: The "Guideline Single Premium" as defined in Section
7702 of the Code.
HOME OFFICE: Currently located at 200 Hopmeadow Street, Simsbury, Connecticut;
however, the mailing address is P.O. Box 2999, Hartford, Connecticut 06104-2999.
INDEBTEDNESS: All monies owed to ITT Hartford by the Contract Owner. These
monies include all outstanding loans on the Contract, including any interest due
or accrued Deduction Amount or Annual Maintenance Fee.
INSURED: The person on whose life the Contract is issued.
LOAN ACCOUNT: An account in ITT Hartford 's General Account, established for any
amounts transferred from the Sub-Accounts for requested loans. The Loan Account
credits a fixed rate of interest of 4% per annum that is not based on the
investment experience of the Separate Account.
MONTHLY ACTIVITY DATE: The day of each month on which the Deduction Amount is
deducted from the Account Value of the Contract. Monthly Activity Dates occur on
the same day of the month as the Contract Date.
PORTFOLIOS: Currently, the portfolios of the Dean Witter Select Dimensions
Investment Series described on page 8 of this Prospectus.
PREFERRED LOAN: The amount of the Loan Account that equals the difference
between the Account Value and the total of all premiums paid under the Contract.
SEPARATE ACCOUNT: Separate Account Five, an account established by ITT Hartford
to separate the assets funding the Contracts from other assets of ITT Hartford.
SUB-ACCOUNT: The subdivisions of the Separate Account used to allocate a
Contract Owner's Account Value, less Indebtedness, among the Portfolios.
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.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
SPECIAL TERMS........................................................... 2
SUMMARY................................................................. 5
THE COMPANY............................................................. 7
THE SEPARATE ACCOUNT.................................................... 8
General............................................................... 8
Portfolios............................................................ 8
Investment Adviser.................................................... 10
THE CONTRACT............................................................ 11
Application for a Contract............................................ 11
Premiums.............................................................. 11
Allocation of Premiums................................................ 11
Accumulation Unit Values.............................................. 12
DEDUCTIONS AND CHARGES.................................................. 12
Monthly Deductions.................................................... 12
Annual Maintenance Fee................................................ 13
Taxes Charged Against the Separate Account............................ 14
Charges Against the Portfolios........................................ 14
Contingent Deferred Sales Charge...................................... 14
Premium Tax Charge.................................................... 14
CONTRACT BENEFITS AND RIGHTS............................................ 14
Death Benefit......................................................... 14
Account Value......................................................... 15
Transfer of Account Value............................................. 15
Contract Loans........................................................ 16
Amount Payable on Surrender of the Contract........................... 16
Partial Withdrawals................................................... 17
Benefits at Maturity.................................................. 17
Lapse and Reinstatement............................................... 17
Cancellation and Exchange Rights...................................... 17
Suspension of Valuation, Payments and Transfers....................... 18
LAST SURVIVOR CONTRACTS................................................. 18
OTHER MATTERS........................................................... 18
Voting Rights......................................................... 18
Statements to Contract Owners......................................... 19
Limit on Right to Contest............................................. 19
Misstatement as to Age and Sex........................................ 19
Payment Options....................................................... 19
Beneficiary........................................................... 21
Assignment............................................................ 21
Dividends............................................................. 21
EXECUTIVE OFFICERS AND DIRECTORS........................................ 22
DISTRIBUTION OF THE CONTRACTS........................................... 24
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS............................ 24
FEDERAL TAX CONSIDERATIONS.............................................. 24
General............................................................... 24
Taxation of ITT Hartford and the Separate Account..................... 25
Income Taxation of Contract Benefits.................................. 25
Last Survivor Contracts............................................... 25
Modified Endowment Contracts.......................................... 25
Estate and Generation Skipping Taxes.................................. 26
Diversification Requirements.......................................... 26
Ownership of the Assets in the Separate Account....................... 26
Life Insurance Purchased for Use in Split Dollar Arrangements......... 27
Federal Income Tax Withholding........................................ 27
</TABLE>
3
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<TABLE>
<S> <C>
Non-Individual Ownership of Contracts................................. 27
Other................................................................. 27
Life Insurance Purchases by Nonresident Aliens and Foreign
Corporation.......................................................... 27
LEGAL PROCEEDINGS....................................................... 28
LEGAL MATTERS........................................................... 28
EXPERTS................................................................. 28
REGISTRATION STATEMENT.................................................. 28
APPENDIX A.............................................................. 29
</TABLE>
THE CONTRACTS MAY NOT BE AVAILABLE IN ALL STATES.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER OR OTHER PERSON IS AUTHORIZED
TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED ON.
4
<PAGE>
SUMMARY
THE CONTRACT
The Contracts are life insurance contracts with death benefits, cash values,
and other traditional life insurance features. The Contracts are "variable."
Unlike the fixed benefits of ordinary whole life insurance, the Account Value
will, and the Death Benefit may, increase or decrease based on the investment
experience of the Portfolios to which premiums have been allocated. The
Contracts are credited with units ("Accumulation Units") to calculate cash
values. The Contract Owner may transfer the cash values among the Portfolios.
The Contracts can be issued on a single life or "last survivor" basis. For a
discussion of how last survivor Contracts operate differently from single life
Contracts, see "Last Survivor Contracts," page 18.
THE SEPARATE ACCOUNT AND THE PORTFOLIOS
Separate Account Five ("Separate Account") funds the variable life insurance
Contracts offered by this prospectus. ITT Hartford established the Separate
Account pursuant to Wisconsin insurance law and organized as a unit investment
trust registered under the Investment Company Act of 1940. The Contracts
currently offer twelve sub-accounts ("Sub-Accounts"), each investing exclusively
in a Portfolio. If an initial premium is submitted with an application for a
Contract, it will be allocated, within three business days of receipt at ITT
Hartford's Home Office, to the Money Market Portfolio. After the expiration of
the Right to Cancel Period, the values in the Money Market Portfolio will be
allocated to one or more of the Portfolios as specified in the Contract Owner's
application. See "The Contract -- Allocation of Premiums," page 11.
Currently, the Portfolios of the Dean Witter Select Dimensions Investment
Series available under the Contracts 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. Applicants should read the prospectus for the
Portfolios accompanying this prospectus in connection with the purchase of a
Contract. The investment objectives of the Portfolios are as set forth in "The
Separate Account," page 8.
The investment adviser for all the Portfolios is Dean Witter InterCapital
Inc. Dean Witter InterCapital Inc. retains a sub-investment adviser with respect
to some of the Portfolios. See "The Separate Account,"
page 8.
In 1994 and 1995, the investment adviser has agreed to waive the management
fee and to reimburse the Fund for all other expenses, except for any brokerage
fees and a portion of organizational expenses. For the period January 1, 1996
through December 31, 1996, the investment adviser will continue to waive the
management fee and to reimburse the operating expenses to the extent they exceed
0.50% of daily net assets of the Portfolio or until such time as the respective
Portfolio has $50 million of net assets, whichever comes first. There are no
12b-1 fees assessed against the underlying Portfolios. See the "The Fund and its
Management" within the Fund Prospectus for a complete description of the fees
that are payable for fund operating expenses and the conditions of the fee
waiver.
PREMIUMS
The Contract permits the Contract Owner to pay a large single premium, and
subject to restrictions, additional premiums. The Contract Owner may choose a
minimum initial premium of 80%, 90% or 100% of the Guideline Single Premium
(based on the Face Amount). Under current underwriting rules, which are subject
to change, Applicants between the ages of 45 and 80 who pay an initial premium
of 100% of the Guideline Single Premium are eligible for simplified underwriting
without a medical examination if they meet simplified underwriting standards as
evidenced in their responses in the application. For Contract Owners who pay an
initial premium of 80% or 90% of the Guideline Single Premium or who are below
age 45 or above age 80, standard underwriting applies, except that substandard
underwriting applies only in those cases that represent substandard risks
according to customary underwriting guidelines. Additional premiums are allowed
if they do not cause the Contract to fail to meet the definition of a life
insurance contract under Section 7702 of the Code. ITT Hartford may require
evidence of insurability for any additional premiums which increase the
5
<PAGE>
Coverage Amount. Generally, the minimum initial premium ITT Hartford will accept
is $10,000. ITT Hartford may accept less than $10,000 under certain
circumstances. No premium will be accepted which does not meet the tax
qualification guidelines for life insurance under the Code.
DEDUCTIONS AND CHARGES
On the Contract Date and on each Monthly Activity Date, ITT Hartford will
deduct a Deduction Amount from the Account Value. The Deduction Amount will be
made pro rata respecting each Sub-Account attributable to the Contract. The
Deduction Amount includes a cost of insurance charge, tax expense charge,
administrative charge, and a mortality and expense risk charge. The monthly cost
of insurance charge is to cover ITT Hartford's anticipated mortality costs. In
addition, ITT Hartford will deduct monthly from the Account Value a tax expense
charge equal to an annual rate of 0.40% for the first ten Contract Years. This
charge compensates ITT Hartford for premium taxes imposed by various states and
local jurisdictions and for federal taxes imposed under Section 848 of the Code.
The charge includes a premium tax deduction of 0.25% and a federal tax deduction
of 0.15%. The premium tax deduction represents an average premium tax of 2.5% of
premiums over ten years. ITT Hartford will deduct from the Account Value
attributable to the Separate Account a monthly administrative charge equal to an
annual rate of 0.40%. This charge compensates ITT Hartford for administrative
expenses incurred in the administration of the Separate Account and the
Contracts. ITT Hartford will also deduct from the Account Value attributable to
the Separate Account a monthly charge equal to an annual rate of 0.90% for the
mortality risks and expense risks ITT Hartford assumes in relation to the
variable portion of the Contracts. If the Cash Surrender Value is not sufficient
to cover a Deduction Amount due on any Monthly Activity Date the Contract may
lapse. See "Deductions and Charges -- Monthly Deductions," page 12 and "Contract
Benefits and Rights -- Lapse and Reinstatement," page 17.
If the Account Value on a Contract Anniversary is less than $50,000, ITT
Hartford will deduct on such date an Annual Maintenance Fee of $30. This fee
will help reimburse ITT Hartford for administrative and maintenance costs of the
Contracts. See "Deductions and Charges -- Annual Maintenance Fee," page 13.
ITT Hartford may set up a provision for income taxes against the assets of
the Separate Account. See "Deductions and Charges -- Charges Against The
Separate Account," page 14 and "Federal Tax Considerations," page 24.
Applicants should review the prospectuses for the Portfolios which accompany
this prospectus for a description of the charges assessed against the assets of
the Portfolios.
Upon surrender of the Contract and partial withdrawals in excess of the
Annual Withdrawal Amount, a contingent deferred sales charge may be assessed. In
Contract Years 1 through 3, this charge is 7.5% of surrendered Account Value
attributable to premiums paid. In Contract Years 4 through 5, this charge is 6%.
In Contract Years 6 through 7, this charge is 4%. In Contract Years 8 through 9,
this charge is 2%. After the 9th Contract Year, there is no charge. The
contingent deferred sales charge is imposed to cover a portion of the sales
expense incurred by ITT Hartford in distributing the Contracts. This expense
includes agents commissions, advertising and the printing of prospectuses. See
"Deductions and Charges -- Contingent Deferred Sales Charge," page 14.
During the first nine Contract Years, an additional premium tax charge will
be imposed on surrender or partial withdrawals. See "Deductions and Charges --
Additional Premium Tax Charges," page 14.
For a discussion of the tax consequences of surrender of the Contract or a
partial withdrawal, see "Federal Tax Considerations," page 24.
DEATH BENEFIT
The Contracts provide for a Face Amount which is the minimum Death Benefit
under the Contract. The Death Benefit may be greater than the Face Amount. At
the death of the Insured, we will pay the Death Proceeds to the beneficiary. The
Death Proceeds equal the Death Benefit less any Indebtedness under the Contract.
See "Contract Benefits and Rights -- Death Benefit," page 14.
6
<PAGE>
ACCOUNT VALUE
The Account Value of the Contract will increase or decrease to reflect the
investment experience of the Portfolios applicable to the Contract and
deductions for the monthly Deduction Amount. There is no minimum guaranteed
Account Value and the Contract Owner bears the risk of the investment in the
Portfolios. See "Contract Benefits and Rights -- Account Value," page 15.
CONTRACT LOANS
A Contract Owner may obtain one or both of two types of cash loans from ITT
Hartford. Both types of loans are secured by the Contract. At the time a loan is
requested, the aggregate amount of all loans (including the currently applied
for loan) may not exceed 90% of the difference of the Account Value less any
contingent deferred sales charge and due and unpaid Deduction Amount. See
"Contract Benefits and Rights -- Contract Loans," page 16.
LAPSE
Under certain circumstances a Contract may terminate if the Cash Surrender
Value on any Monthly Activity Date is less than the required Monthly Deduction
Amount. ITT Hartford will give written notice to the Contract Owner and a 61 day
grace period during which additional amounts may be paid to continue the
Contract. See "Contract Benefits and Rights -- Contract Loans," page 16 and
"Lapse and Reinstatement," page 17.
CANCELLATION AND EXCHANGE RIGHTS
An applicant has a limited right to return his or her Contract for
cancellation. If the applicant returns the Contract, by mail or hand delivery,
to ITT Hartford or to the agent who sold the Contract, to be cancelled within 10
days after delivery of the Contract to the applicant (in certain cases, this
free-look period is longer), ITT Hartford will return to the applicant within 7
days thereafter the greater of the premiums paid for the Contract or the sum of
(1) the Account Value on the date the returned Contract is received by ITT
Hartford or its agent and (2) any deductions under Contract or by the Portfolios
for taxes, charges or fees.
In addition, once the Contract is in effect it may be exchanged during the
first 24 months after its issuance for a permanent life insurance contract on
the life of the Insured without submitting proof of insurability. See "Contract
Benefits and Rights -- Cancellation and Exchange Rights," page 17.
TAX CONSEQUENCES
The current Federal tax law generally excludes all death benefit payments
from the gross income of the Contract beneficiary. The Contracts generally will
be treated as modified endowment contracts. This status does not affect the
Contracts' classification as life insurance, nor does it affect the exclusion of
death benefit payments from gross income. HOWEVER, LOANS, DISTRIBUTIONS OR OTHER
AMOUNTS RECEIVED UNDER A MODIFIED ENDOWMENT CONTRACT ARE TAXED TO THE EXTENT OF
ACCUMULATED INCOME IN THE CONTRACT (GENERALLY, THE EXCESS OF ACCOUNT VALUE OVER
PREMIUMS PAID) AND MAY BE SUBJECT TO A 10% PENALTY TAX. SEE "FEDERAL TAX
CONSIDERATIONS," PAGE 24.
THE COMPANY
ITT Hartford Life and Annuity Insurance Company ("ITT Hartford"), formerly
ITT Life Insurance Corporation, was originally incorporated under the laws of
Wisconsin on January 9, 1956. ITT Hartford was redomiciled to Connecticut on May
1, 1996. 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. The offices of ITT Hartford are
located in Minneapolis, Minnesota; however, its mailing address is P.O. Box
5085, Hartford, Connecticut 06102-5085.
ITT Hartford is a wholly owned subsidiary of Hartford Life Insurance
Company. ITT Hartford is ultimately 100% owned by Hartford Fire Insurance
Company, one of the largest multiple lines insurance carriers in the United
States. On December 20, 1995, Hartford Fire Insurance Company became an
independent, publicly traded corporation.
7
<PAGE>
ITT Hartford is rated A+ (superior) by A.M. Best and Company, Inc. on the
basis of its financial soundness and operating performance. ITT Hartford is
rated AA by Standard & Poor's and AA+ by Duff and Phelps on the basis of its
claims paying ability. These ratings do not apply to the investment performance
of the Sub-Accounts of the Separate Account. The ratings apply to ITT Hartford's
ability to meet its insurance obligations under the contract.
THE SEPARATE ACCOUNT
GENERAL
Separate Account Five ("Separate Account") is a separate account of ITT
Hartford established on August 17, 1994 pursuant to the insurance laws of the
State of Connecticut and organized as a unit investment trust registered with
the Securities and Exchange Commission under the Investment Company Act of 1940.
The Separate Account meets the definition of "separate account" under federal
securities law. Under Connecticut law, the assets of the Separate Account are
held exclusively for the benefit of Contract Owners and persons entitled to
payments under the Contracts. The assets for the Separate Account are not
chargeable with liabilities arising out of any other business which ITT Hartford
may conduct.
PORTFOLIOS
The underlying investment for the Contracts are shares of the Dean Witter
Select Dimensions Investment Series, an open-end diversified series investment
company with multiple portfolios ("Portfolios"). The assets of each Sub-Account
of the Separate Account are invested exclusively in one of the Portfolios. A
Contract Owner may allocate premiums among the Portfolios. Contract Owners
should review the following brief descriptions of the investment objectives of
the Portfolios in connection with that allocation. There is no assurance that
any of the Portfolios will achieve its stated objectives. Contract Owners are
also advised to read the prospectus for the Portfolios accompanying this
prospectus for more detailed information.
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.
8
<PAGE>
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.
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, 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 Fund is organized as a Massachusetts business trust and is an open-end
diversified management investment company with multiple portfolios under the
Investment Company Act of 1940. Each Portfolio of the Fund is managed for
investment purposes as if it were a separate fund issuing a separate class of
shares. Shares of the Fund are offered to the Separate Account established by
ITT Hartford or one of its affiliated companies specifically to fund the
Contracts and certain flexible premium deferred variable annuity contracts
issued by ITT Hartford or one of its affiliates as permitted by the Investment
Company Act of 1940.
The Portfolios are managed in styles similar to other investment companies
whose shares are generally offered to the public which are managed by Dean
Witter InterCapital Inc., the Investment Manager, 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,
9
<PAGE>
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.
It is conceivable that in the future it may be disadvantageous for variable
life insurance separate accounts and variable annuity separate accounts to
invest in the Portfolios simultaneously. Although ITT Hartford and the Fund do
not currently foresee any such disadvantages either to variable life insurance
or variable annuity contract owners, the Fund's Board of Trustees intends to
monitor events in order to identify any material conflicts between variable life
and variable annuity contract owners 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, ITT Hartford will bear the attendant
expenses.
All investment income of and other distributions to each Sub-Account of the
Separate Account arising from the applicable Portfolio are reinvested in shares
of that Portfolio at net asset value. The income and both realized gains or
losses on the assets of each Sub-Account of the Separate Account are therefore
separate and are credited to or charged against the Sub-Account without regard
to income, gains or losses from any other Sub-Account or from any other business
of ITT Hartford. ITT Hartford will purchase shares in the Portfolios in
connection with premiums allocated to the applicable Sub-Account in accordance
with Contract Owners directions and will redeem shares in the Portfolios to meet
Contract obligations or make adjustments in reserves, if any. The Portfolios are
required to redeem Portfolio shares at net asset value and to make payment
within seven days.
ITT Hartford reserves the right, subject to compliance with the law as then
in effect, to make additions to, deletions from, or substitutions for the
Separate Account and its Sub-Accounts which fund the Contracts. If shares of any
of the Portfolios should no longer be available for investment, or if, in the
judgment of ITT Hartford's management, further investment in shares of any
Portfolio should become inappropriate in view of the purposes of the Contracts,
ITT Hartford may substitute shares of another Portfolio for shares already
purchased, or to be purchased in the future, under the Contracts. No
substitution of securities will take place without notice to and consent of
Contract Owners and without prior approval of the Securities and Exchange
Commission to the extent required by the Investment Company Act of 1940. Subject
to Contract Owner approval, ITT Hartford also reserves the right to end the
registration under the Investment Company Act of 1940 of the Separate Account or
any other separate accounts of which it is the depositor which may fund the
Contracts.
Each Portfolio is subject to investment restrictions which may not be
changed without the approval of a majority of the shareholders of the Fund. See
the accompanying prospectus for the Fund.
INVESTMENT ADVISER
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 sales of portfolio
securities. InterCapital has retained its wholly-owned subsidiary, Dean Witter
Services Company Inc., to perform the aforementioned administrative services for
the Portfolios. For its services, each Portfolio pays 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.
10
<PAGE>
THE CONTRACT
APPLICATION FOR A CONTRACT
Individuals wishing to purchase a Contract must submit an application to ITT
Hartford. A Contract will be issued only on the lives of insureds age 90 and
under who supply evidence of insurability satisfactory to ITT Hartford.
Acceptance is subject to ITT Hartford's underwriting rules and ITT Hartford
reserves the right to reject an application for any reason. IF AN APPLICATION
FOR A CONTRACT IS REJECTED, THEN YOUR INITIAL PREMIUM WILL BE RETURNED ALONG
WITH AN ADDITIONAL AMOUNT FOR INTEREST, BASED ON THE CONTRACT RATE BEING
CREDITED BY ITT HARTFORD. No change in the terms or conditions of a Contract
will be made without the consent of the Contract Owner.
The Contract will be effective on the Contract Date only after ITT Hartford
has received all outstanding delivery requirements and received the initial
premium. The Contract Date is the date used to determine all future cyclical
transactions on the Contract, e.g., Monthly Activity Date, Contract Months and
Contract Years. The Contract Date may be prior to, or the same as, the date the
Contract is issued ("Issue Date").
If the Coverage Amount is over then current limits established by ITT
Hartford, the initial payment will not be accepted with the application. In
other cases where we receive the initial payment with the application, we will
provide fixed conditional insurance during underwriting according to the terms
of a conditional receipt. The fixed conditional insurance will be the insurance
applied for, up to a maximum that varies by age. If no fixed conditional
insurance was in effect, on Contract delivery we will require a sufficient
payment to place the insurance in force.
PREMIUMS
The Contract permits the Contract Owner to pay a large single premium, and
subject to restrictions, additional premiums. The Contract Owner may choose a
minimum initial premium of 80%, 90% or 100% of the Guideline Single Premium
(based on the Face Amount). Under current underwriting rules, which are subject
to change, Applicants between ages 45 and 80 who pay an initial premium of 100%
of the Guideline Single Premium (subject to then current premium limits) are
eligible for simplified underwriting without a medical examination if they meet
simplified underwriting standards as evidenced in their responses in the
application. For Contract Owners who pay an initial premium of 80% or 90% of the
Guideline Single Premium or who are below age 45 or above age 80, standard
underwriting applies, except that substandard underwriting applies only in those
cases that represent substandard risks according to customary underwriting
guidelines. Additional premiums are allowed if they do not cause the Contract to
fail to meet the definition of a life insurance contract under Section 7702 of
the Code. ITT Hartford may require evidence of insurability for any additional
premiums which increase the Coverage Amount. Generally, the minimum initial
premium ITT Hartford will accept is $10,000. ITT Hartford may accept less than
$10,000 under certain circumstances. No premium will be accepted which does not
meet the tax qualification guidelines for life insurance under the Code.
ALLOCATION OF PREMIUMS
Within three business days of receipt of a completed application and the
initial premium at ITT Hartford's Home Office, ITT Hartford will allocate the
entire premium to the Money Market Portfolio. After the expiration of the Right
To Cancel Period the Account Value in the Money Market Portfolio will be
allocated among the Portfolios in whole percentages to purchase Accumulation
Units in the applicable Sub-Accounts as the Contract Owner directs in the
application. Premiums received on or after the expiration of the Right to Cancel
Period will be allocated among the Sub-Accounts to purchase Accumulation Units
in such Sub-Accounts as directed by the Contract Owner or, in the absence of
directions, as specified in the original application. The number of Accumulation
Units in each Sub-Account to be credited to a Contract (including the initial
allocation to the Money Market Portfolio) will be determined first by
multiplying the premium by the percentage to be allocated to each Portfolio to
determine the portion to be invested in the Sub-Account. Each portion to be
invested in each Sub-Account is then divided by the Accumulation Unit Value of
that particular Sub-Account next computed after receipt of the payment.
ACCUMULATION UNIT VALUES
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
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<PAGE>
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 Sub-Account is the net asset value per share of
the corresponding Portfolio at the end of the Valuation Period (plus the per
share dividends or capital gains 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.
Applicants should refer to the prospectus for the Portfolios which accompany
this prospectus for a description of how the assets of each Portfolio are valued
since such determination has a direct bearing on the Accumulation Unit Value of
the Sub-Account and therefore the Account Value of a Contract. See also,
"Contract Benefits and Rights -- Account Value," page 15.
All valuations in connection with a Contract, e.g., with respect to
determining Account Value and Cash Surrender Value and in connection with
Contract Loans, or calculation of Death Benefits, or with respect to determining
the number of Accumulation Units to be credited to a Contract with each premium,
other than the initial premium, will be made on the date the request or payment
is received by ITT Hartford at its Home Office if such date is a Valuation Day;
otherwise such determination will be made on the next succeeding date which is a
Valuation Day.
DEDUCTIONS AND CHARGES
MONTHLY DEDUCTIONS
On the Contract Date, and on each Monthly Activity Date after the Contract
Date, ITT Hartford will deduct an amount ("Deduction Amount") to cover charges
and expenses incurred in connection with a Contract. Each monthly Deduction
Amount will be deducted pro rata from each Sub-Account attributable to the
Contract such that the proportion of Account Value of the Contract attributable
to each Sub-Account remains the same before and after the deduction. The
Deduction Amount will vary from month to month. If the Cash Surrender Value is
not sufficient to cover a Deduction Amount due on any Monthly Activity Date, the
Contract may lapse. See "Contract Benefits and Rights -- Lapse and
Reinstatement," page 17. The following is a summary of the monthly deductions
and charges which constitute the Deduction Amount:
COST OF INSURANCE CHARGE: The cost of insurance charge covers ITT
Hartford's anticipated mortality costs for standard and substandard risks.
Current cost of insurance rates are lower after the 10th Contract Year and are
based on whether 100%, 90% or 80% of the Guideline Single Premium has been paid.
The current cost of insurance charge will not exceed the guaranteed cost of
insurance charge. This charge is a guaranteed maximum monthly rate multiplied by
the Coverage Amount on the Contract Date or any Monthly Activity Date. For
standard risks, the guaranteed cost of insurance rate is based on the 1980
Commissioners Standard Ordinary Mortality Table, age last birthday. (Unisex
rates may be required in some states.) A table of guaranteed cost of insurance
rates per $1,000 will be included in each Contract; however, ITT Hartford
reserves the right to use rates less than those shown in the table. Substandard
risks will be charged at a higher cost of insurance rate that will not exceed
rates based on a multiple of the 1980 Commissioners Standard Ordinary Mortality
Table, age last birthday. The multiple will be based on the insured's
substandard rating.
The Coverage Amount is first set on the Contract Date and then on each
Monthly Activity Date. On such days, it is the Face Amount less the Account
Value subject to a Minimum Coverage Amount. The Coverage Amount remains level
between the Monthly Activity Dates.
The Coverage Amount may be adjusted to continue to qualify the Contracts as
life insurance contracts under the current Federal tax law. Under that law, the
Minimum Coverage Amount is a stated percentage of the Account Value of the
Contract determined on each Monthly Activity Date. The percentages vary
according to the attained age of the Insured.
EXAMPLE:
Face Amount = $100,000
Account Value on the Monthly Activity Date = $30,000
Insured's attained age = 40
Minimum Coverage Amount percentage for age 40 = 150%
On the Monthly Activity Date, the Coverage Amount is $70,000. This is
calculated by subtracting the Account Value on the Monthly Activity Date
($30,000) from the Face Amount ($100,000), subject to a possible
12
<PAGE>
Minimum Coverage Amount adjustment. This Minimum Coverage Amount is determined
by taking a percentage of the Account Value on the Monthly Activity Date. In
this case, the Minimum Coverage Amount is $45,000 (150% of $30,000). Since
$45,000 is less than the Face Amount less the Account Value ($70,000), no
adjustment is necessary. Therefore, the Coverage Amount will be $70,000.
Assume that the Account Value in the above example was $50,000. The Minimum
Coverage Amount would be $75,000 (150% of $50,000). Since this is greater than
the Face Amount less the Account Value ($50,000), the Coverage Amount for the
Contract Month is $75,000. (For an explanation of the Death Benefit, see
"Contract Benefits and Rights" on page 14.)
Because the Account Value and, as a result, the Coverage Amount under a
Contract may vary from month to month, the cost of insurance charge may also
vary on each Monthly Activity Date.
TAX EXPENSE CHARGE: ITT Hartford will deduct monthly from the Account Value
a tax expense charge equal to an annual rate of 0.40% for the first ten Contract
Years. This charge compensates ITT Hartford for premium taxes imposed by various
states and local jurisdictions and for federal taxes imposed under Section 848
of the Code. The charge includes a premium tax deduction of 0.25% and a federal
tax deduction of 0.15%. The 0.25% premium tax deduction over ten Contract Years
approximates ITT Hartford's average expenses for state and local premium taxes
(2.5%). Premium taxes vary, ranging from zero to more than 4.0%. The premium tax
deduction is made whether or not any premium tax applies. The deduction may be
higher or lower than the premium tax imposed. However, ITT Hartford does not
expect to make a profit from this deduction. The 0.15% federal tax deduction
helps reimburse ITT Hartford for approximate expenses incurred from federal
taxes under Section 848 of the Code. The federal tax deduction is a factor ITT
Hartford must use when computing the maximum sales load chargeable under
Securities and Exchange Commission rules.
ADMINISTRATIVE CHARGE: ITT Hartford will deduct monthly from the Account
Value attributable to the Separate Account an administrative charge equal to an
annual rate of 0.40%. This charge compensates ITT Hartford for administrative
expenses incurred in the administration of the Separate Account and the
Contracts.
MORTALITY AND EXPENSE RISK CHARGE: ITT Hartford will deduct monthly from
the Account Value attributable to the Separate Account a charge equal to an
annual rate of 0.90% for the mortality risks and expense risks ITT Hartford
assumes in relation to the variable portion of the Contracts. The mortality risk
assumed is that the cost of insurance charges specified in the Contract will be
insufficient to meet claims. ITT Hartford also assumes a risk that the Face
Amount (the minimum Death Benefit) will exceed the Coverage Amount on the date
of death plus the Account Value on the date ITT Hartford receives written notice
of death. The expense risk assumed is that expenses incurred in issuing and
administering the Contracts will exceed the administrative charges set in the
Contract. ITT Hartford may profit from the mortality and expense risk charge and
may use any profits for any proper purpose, including any difference between the
cost it incurs in distributing the Contracts and the proceeds of the contingent
deferred sales charge.
ANNUAL MAINTENANCE FEE: If the Account Value on a Contract Anniversary is
less than $50,000, ITT Hartford will deduct on such date an Annual Maintenance
Fee of $30. This fee will help reimburse ITT Hartford for administrative and
maintenance costs of the Contracts. The sum of the monthly administrative
charges and the annual maintenance fee will not exceed the cost ITT Hartford
incurs in providing administrative services under the Contracts.
TAXES CHARGED AGAINST THE SEPARATE ACCOUNT
Currently, no charge is made to the Separate Account for federal income
taxes that may be attributable to the Separate Account. ITT Hartford may,
however, make such a charge in the future. Charges for other taxes, if any,
attributable to the Separate Account may also be made.
CHARGES AGAINST THE PORTFOLIOS
The Separate Account purchases shares of the Portfolios at net asset value.
The net asset value of the Portfolio shares reflects investment advisory fees
and administrative expenses already deducted from the assets of the Portfolios.
These charges are described in the prospectus for the Portfolios.
CONTINGENT DEFERRED SALES CHARGE
Upon surrender of the Contract and partial withdrawals in excess of the
Annual Withdrawal Amount, a contingent deferred sales charge may be assessed. In
Contract Years 1 through 3, this charge is 7.5% of
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<PAGE>
surrendered Account Value attributable to premiums paid. In Contract Years 4
through 5, this charge is 6%. In Contract Years 6 through 7, this charge is 4%.
In Contract Years 8 through 9, this charge is 2%. After the 9th Contract Year,
there is no charge.
In determining the contingent deferred sales charge and the additional
premium tax charge discussed below, any surrender or partial withdrawal during
the first ten Contract Years will be deemed first from earnings and then from
premiums paid. If an amount equal to all premiums paid has been withdrawn, no
charge will be assessed on a withdrawal of the remaining Account Value.
The contingent deferred sales charge is imposed to cover a portion of the
sales expense incurred by ITT Hartford in distributing the Contracts. This
expense includes agents commissions, advertising and the printing of
prospectuses.
See "Contract Benefits and Rights -- Amount Payable on Surrender of the
Contract," page 16.
PREMIUM TAX CHARGE
During the first nine Contract Years, an additional premium tax charge will
be imposed on surrender or partial withdrawals. The additional premium tax
charge is shown below, as a percent of Account Value, at the end of each
Contract Year:
<TABLE>
<CAPTION>
CONTRACT
YEAR RATE
-------- -----
<S> <C>
1 2.50%
2 2.25%
3 2.00%
4 1.75%
5 1.50%
6 1.25%
7 1.00%
8 0.75%
9 0.50%
10+ 0.00%
</TABLE>
After the ninth Contract Year, no additional premium tax charge will be
imposed.
CONTRACT BENEFITS AND RIGHTS
DEATH BENEFIT
While inforce, the Contract provides for the payment of the Death Proceeds
to the named beneficiary when the Insured under the Contract dies. The Death
Proceeds payable to the beneficiary equal the Death Benefit less any loans
outstanding. The Death Benefit equals the greater of (1) the Face Amount or (2)
the Account Value multiplied by a specified percentage. The percentages vary
according to the attained age of the Insured and are specified in the Contract.
Therefore, an increase in Account Value may increase the Death Benefit. However,
because the Death Benefit will never be less than the Face Amount, a decrease in
Account Value may decrease the Death Benefit but never below the Face Amount.
EXAMPLES:
<TABLE>
<CAPTION>
A B
----------- -----------
<S> <C> <C>
Face Amount: $ 100,000 $ 100,000
Insured's Age: 40 40
Account Value on Date of Death: 46,500 34,000
Specified Percentage: 250% 250%
</TABLE>
In Example A, the Death Benefit equals $116,250, i.e., the greater of
$100,000 (the Face Amount) or $116,250 (the Account Value at the Date of
Death of $46,500, multiplied by the specified percentage of 250%). This
amount less any outstanding loans constitutes the Death Proceeds which we
would pay to the beneficiary.
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<PAGE>
In Example B, the death benefit is $100,000, i.e., the greater of $100,000
(the Face Amount) or $85,000 (the Account Value of $34,000 multiplied by the
specified percentage of 250%).
All or part of the Death Proceeds may be paid in cash or applied under a
"Payment Option." See "Other Matters -- Payment Options," page 19.
ACCOUNT VALUE
The Account Value of a Contract will be computed on each Valuation Day. The
Account Value will vary to reflect the investment experience of the Portfolios,
the value of the Loan Account and the monthly Deduction Amounts. There is no
minimum guaranteed Account Value.
The Account Value of a particular Contract is related to the net asset value
of the Portfolios to which premiums on the Contract have been allocated. The
Account Value on any Valuation Day is calculated by multiplying the number of
Accumulation Units credited to the Contract in each Sub-Account as of the
Valuation Day by the Accumulation Unit Value of that Sub-Account and then
summing the result for all the Sub-Accounts credited to the Contract and the
value of the Loan Account. See "The Contract -- Accumulation Unit Values," page
12.
TRANSFER OF ACCOUNT VALUE
While the Contract remains in effect and subject to ITT Hartford's transfer
rules then in effect, the Contract Owner may request that part or all of the
Account Value of a particular Sub-Account be transferred to other Sub-Accounts.
ITT Hartford reserves the right to restrict the number of such transfers to no
more than 12 per Contract Year with no two transfers being made on consecutive
Valuation Days. However, there are no restrictions on the number of transfers at
the present time. Transfers may be made by written request or by calling toll
free 1-800-231-5453. Telephone transfers may not be permitted in some states.
The policy of ITT Hartford and its agents and affiliates is that they will not
be responsible for losses resulting from acting upon telephone requests
reasonably believed to be genuine. ITT Hartford will employ reasonable
procedures to confirm that instructions communicated by telephone are genuine;
otherwise, ITT Hartford may be liable for any losses due to unauthorized or
fraudulent instructions. The procedures ITT Hartford follows for transactions
initiated by telephone include requirements that callers provide certain
information for identification purposes. All transfer instructions by telephone
are tape recorded.
ITT Hartford may modify the right to reallocate Account Value among the
Sub-Accounts if ITT Hartford determines, in its sole discretion, that the
exercise of that right by one or more Contract Owners is, or would be, to the
disadvantage of other Contract Owners. Any modification could be applied to
transfers to or from some or all of the Sub-Accounts and could include, but not
be limited to, the requirement of a minimum period between each transfer, not
accepting transfer requests of an agent acting under the power of attorney on
behalf of more than one Contract Owner, or limiting the dollar amount that may
be transferred among the Sub-Accounts at one time. These restrictions may be
applied in any manner reasonably designed to prevent any use of the transfer
right that ITT Hartford considered to be disadvantageous to other Contract
Owners.
As a result of a transfer, the number of Accumulation Units credited to the
Sub-Account from which the transfer is made will be reduced by the number
obtained by dividing the amount transferred by the Accumulation Unit Value of
that Sub-Account on the Valuation Day ITT Hartford receives the transfer
request. The number of Accumulation Units credited to the Sub-Account to which
the transfer is made will be increased by the number obtained by dividing the
amount transferred by the Accumulation Unit Value of that Sub-Account on the
Valuation Day ITT Hartford receives the transfer request.
CONTRACT LOANS
While the Contract is in effect, a Contract Owner may obtain, without the
consent of the beneficiary (provided the designation of beneficiary is not
irrevocable), one or both of two types of cash loans from ITT Hartford. Both
types of loans are secured by the Contract. The aggregate loans (including the
currently applied for loan) may not exceed at the time a loan is requested 90%
of the Account Value less any contingent deferred sales charge and due and
unpaid Deduction Amount.
The loan amount will be transferred pro rata from each Sub-Account
attributable to the Contract (unless the Contract Owner specifies otherwise) to
the Loan Account. The amounts allocated to the Loan Account will bear interest
at a rate of 4% per annum (6% for "Preferred Loans"). The amount of the Loan
Account that equals the difference between the Account Value and the total of
all premiums paid under the Contract is
15
<PAGE>
considered a "Preferred Loan." The loan interest rate that ITT Hartford will
charge on all loans is 6% per annum. The difference between the value of the
Loan Account and the Indebtedness will be transferred on a pro-rata basis from
the Sub-Accounts to the Loan Account on each Monthly Activity Date.
If the aggregate outstanding loan(s) secured by the Contract exceeds the
Account Value of the Contract less any contingent deferred sales charges and due
and unpaid Deduction Amount, ITT Hartford will give written notice to the
Contract Owner that unless ITT Hartford receives an additional payment within 61
days to reduce the aggregate outstanding loan(s) secured by the Contract, the
Contract may lapse.
All or any part of any loan secured by a Contract may be repaid while the
Contract is still in effect. When loan repayments or interest payments are made,
they will be allocated among the Sub-Account(s) in the same percentage as,
premiums are allocated (unless the Contract Owner requests a different
allocation) and an amount equal to the payment will be deducted from the Loan
Account. Any outstanding loan at the end of a Grace Period must be repaid before
the Contract will be reinstated. See "Contract Benefits and Rights -- Lapse and
Reinstatement," page 17.
A loan, whether or not repaid, will have a permanent effect on the Account
Value because the investment results of each Sub-Account will apply only to the
amount remaining in such Sub-Accounts. The longer a loan is outstanding, the
greater the effect is likely to be. The effect could be favorable or
unfavorable. If the Sub-Accounts earn more than 4% per annum, the annual
interest rate for amounts held in the Loan Account, a Contract Owner's Account
Value will not increase as rapidly as it would have had no loan been made. If
the Sub-Accounts earn less than 4% per annum, the Contract Owner's Account Value
will be greater than it would have been had no loan been made. Also, if not
repaid, the aggregate outstanding loan(s) will reduce the Death Proceeds and
Cash Surrender Value otherwise payable.
AMOUNT PAYABLE ON SURRENDER OF THE CONTRACT
While the Contract is in effect, a Contract Owner may elect, without the
consent of the beneficiary (provided the designation of beneficiary is not
irrevocable), to fully surrender the Contract. Upon surrender, the Contract
Owner will receive the Cash Surrender Value determined as of the day ITT
Hartford receives the Contract Owner's written request or the date requested by
the Contract Owner whichever is later. The Cash Surrender Value equals the
Account Value less any contingent deferred sales charges and additional premium
tax charge and all Indebtedness. ITT Hartford will pay the Cash Surrender Value
of the Contract within seven days of receipt by ITT Hartford of the written
request or on the effective surrender date requested by the Contract Owner,
whichever is later. The Contract will terminate on the date of receipt of the
written request, or the date the Contract Owner requests the surrender to be
effective, whichever is later. For a discussion of the tax consequences of
surrendering the Contract, see "Federal Tax Considerations," page 24.
If the Contract Owner chooses to apply the surrender proceeds to a payment
option (see "Other Matters -- Payment Options," page 19), the contingent
deferred sales charge will not be imposed to the surrender proceeds applied to
the option. In other words, the surrender proceeds will equal the Cash Surrender
Value without reduction for the contingent deferred sales charge. However, the
additional premium tax charge, if applicable, will be deducted from the
surrender proceeds to be applied, and amounts withdrawn from Options 1, 5 or 6
will be subject to the contingent deferred sales charge, if applicable.
PARTIAL WITHDRAWALS
While the Contract is in effect, a Contract Owner may elect, by written
request, to make partial withdrawals from the Cash Surrender Value. The Cash
Surrender Value, after partial withdrawal, must at least equal ITT Hartford's
minimum amount rules then in effect; otherwise, the request will be treated as a
request for full surrender. The partial withdrawal will be deducted pro rata
from each Sub-Account, unless the Contract Owner instructs otherwise. The Face
Amount will be reduced proportionate to the reduction in the Account Value due
to the partial withdrawal. Partial withdrawals will be deemed to be first from
earnings, if any, and then from premiums paid. Partial withdrawals in excess of
the Annual Withdrawal Amount will be subject to the contingent deferred sales
charge and any additional premium tax charges. See "Deductions and Charges --
Contingent Deferred Sales Charge, Premium Tax Charge." For a discussion of the
tax consequences of partial withdrawals, see "Federal Tax Considerations," page
24.
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<PAGE>
BENEFITS AT MATURITY
If the Insured is living on the "Maturity Date" (the anniversary of the
Contract Date on which the Insured is age 100), on surrender of the Contract to
ITT Hartford, ITT Hartford will pay to the Contract Owner the Cash Surrender
Value. In such case, the Contract will terminate and ITT Hartford will have no
further obligations under the Contract. (The Maturity Date may be extended by
rider where approved, but see "Income Taxation of Contract Benefits.")
LAPSE AND REINSTATEMENT
The Contract will remain in effect until the Cash Surrender Value is
insufficient to cover a Deduction Amount due on a Monthly Activity Date. ITT
Hartford will notify the Contract Owner of the deficiency in writing and will
provide a 61 day period ("Grace Period") to pay an amount sufficient to cover
the Deduction Amounts Due.
The Notice will indicate the amount that must be paid. The Contract will
continue through the Grace Period, but if no additional premium payment is made,
it will terminate at the end of the Grace Period. If the person insured under
the Contract dies during the Grace Period, the Death Proceeds payable under the
Contract will be reduced by the Deduction Amount(s) due and unpaid. See
"Contract Benefits and Rights -- Death Benefit," page 14.
If the Contract lapses, the Contract Owner may apply for reinstatement of
the Contract by payment of the reinstatement premium (and any applicable
charges) shown in the Contract. A request for reinstatement may be made within
five years of lapse. If a loan was outstanding at the time of lapse, ITT
Hartford will require repayment of the loan before permitting reinstatement. In
addition, ITT Hartford reserves the right to require evidence of insurability
satisfactory to ITT Hartford.
CANCELLATION AND EXCHANGE RIGHTS
An Applicant has a limited right to return a Contract for cancellation. If
the Contract is returned, by mail or personal delivery to ITT Hartford or to the
agent who sold the Contract, to be cancelled within 10 days after delivery of
the Contract to the Contract Owner (a longer free-look period is provided in
certain cases), ITT Hartford will return to the Applicant within 7 days the
greater of premiums paid for the Contract or the sum of (1) the Account Value on
the date the returned Contract is received by ITT Hartford or its agent and (2)
any deductions under Contract or by the Portfolios for taxes, charges or fees.
Once the Contract is in effect, it may be exchanged during the first 24
months after its issuance, for a non-variable flexible premium adjustable life
insurance contract offered by ITT Hartford (or an affiliated company) on the
life of the Insured. No evidence of insurability will be required. The new
contract will have, at the election of the Contract Owner, either the same
Coverage Amount under the exchanged contract on the date of exchange or the same
Death Benefit. The effective date, issue date and issue age will be the same as
existed under the exchanged contract. If a contract loan was outstanding, the
entire loan must be repaid. There may be a cash adjustment required on the
exchange.
SUSPENSION OF VALUATION, PAYMENTS AND TRANSFERS
ITT Hartford will suspend all procedures requiring valuation (including
transfers, surrenders and loans) on any day a national stock exchange is closed
or trading is restricted due to an existing emergency as defined by the
Securities and Exchange Commission, or on any day the Commission has ordered
that the right of surrender of the Contracts be suspended for the protection of
Contract Owners, until such condition has ended.
17
<PAGE>
LAST SURVIVOR CONTRACTS
The Contracts are offered on a single life and "last survivor" basis.
Contracts sold on a last survivor basis operate in a manner almost identical to
the single life version. The most important difference is that the last survivor
version involves two Insureds and the Death Proceeds are paid on the death of
the last surviving Insured. The other significant differences between the last
survivor and single life versions are listed below:
1. The cost of insurance charges under the last survivor Contracts are
determined in a manner that reflects the anticipated mortality of the
two Insureds and the fact that the Death Benefit is not payable until
the death of the second Insured to die. See the last survivor
illustrations in "Appendix A," page 29.
2. To qualify for simplified underwriting under a last survivor
Contract, both Insureds must meet the simplified underwriting
standards.
3. For a last survivor Contract to be reinstated, both Insureds must be
alive on the date of reinstatement.
4. The Contract provisions regarding misstatement of age or sex,
suicide and incontestability apply to either Insured.
5. Additional tax disclosures applicable to last survivor Contracts are
provided in "Federal Tax Considerations," page 24."
OTHER MATTERS
VOTING RIGHTS
In accordance with its interpretation of presently applicable law, ITT
Hartford will vote the shares of the Portfolios at regular and special meetings
of the shareholders of the Portfolios in accordance with instructions from
Contract Owners (or the assignee of the Contract, as the case may be) having a
voting interest in the Separate Account. The number of shares held in the
Separate Account which are attributable to each Contract Owner is determined by
dividing the Contract Owner's interest in each Sub-Account by the net asset
value of the applicable shares of the Portfolios. ITT Hartford will vote shares
for which no instructions have been given and shares which are not attributable
to Contract Owners (i.e., shares owned by ITT Hartford) in the same proportion
as it votes shares for which it has received instructions. If the Investment
Company Act of 1940 or any rule promulgated thereunder should be amended,
however, or if ITT Hartford's present interpretation should change and, as a
result, ITT Hartford determines it is permitted to vote the shares of the
Portfolios in its own right, it may elect to do so.
The voting interests of the Contract Owner (or the assignee) in the
Portfolios will be determined as follows: Contract Owners may cast one vote for
each full or fractional Accumulation Unit owned under the Contract and allocated
to a Sub-Account the assets of which are invested in the particular Portfolio on
the record date for the shareholder meeting for that Portfolio. If, however, a
Contract Owner has taken a loan secured by the Contract, amounts transferred
from the Sub-Account(s) to the Loan Account in connection with the loan (See
"Contract Benefits and Rights -- Contract Loans," page 16) will not be
considered in determining the voting interests of the Contract Owner. Contract
Owners should review the prospectus for the Portfolios which accompany this
prospectus to determine matters on which shareholders may vote.
ITT Hartford 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 one or more of the Portfolios or to approve or disapprove an investment
advisory contract for the Portfolios.
In addition, ITT Hartford itself may disregard voting instructions in favor
of changes initiated by a Contract Owner in the investment policy or the
investment adviser of the Portfolios if ITT Hartford reasonably disapproves of
such changes. A change would be disapproved only if the proposed change is
contrary to state law or prohibited by state regulatory authorities. If ITT
Hartford does disregard voting instructions, a summary of that action and the
reasons for such action will be included in the next periodic report to Contract
Owners.
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<PAGE>
STATEMENTS TO CONTRACT OWNERS
ITT Hartford will maintain all records relating to the Separate Account and
the Sub-Accounts. At least once each Contract Year, ITT Hartford will send to
Contract Owners a statement showing the Coverage Amount and the Account Value of
the Contract (indicating the number of Accumulation Units credited to the
Contract in each Sub-Account and the corresponding Accumulation Unit Value), and
any outstanding loan secured by the Contract as of the date of the statement.
The statement will also show premium paid, and Deduction Amounts under the
Contract since the last statement, and any other information required by any
applicable law or regulation.
LIMIT ON RIGHT TO CONTEST
ITT Hartford may not contest the validity of the Contract after it has been
in effect during the Insured's lifetime for two years from the Issue Date. If
the Contract is reinstated, the two-year period is measured from the date of
reinstatement. Any increase in the Coverage Amount as a result of a premium is
contestable for 2 years from its effective date. In addition, if the Insured
commits suicide in the two-year period, or such period as specified in state
law, the benefit payable will be limited to the Account Value less any
Indebtedness.
MISSTATEMENT AS TO AGE AND SEX
If the age or sex of the Insured is incorrectly stated, the Death Benefit
will be appropriately adjusted as specified in the Contract.
PAYMENT OPTIONS
The surrender proceeds or Death Proceeds under the Contracts may be paid in
a lump sum or may be applied to one of ITT Hartford's payment options. The
minimum amount that may be applied under a payment option is $5,000 unless ITT
Hartford consents to a lesser amount. Under Options 2, 3 and 4, no surrender or
partial withdrawals are permitted after payments commence. Full surrender or
partial withdrawals may be made from Options 1 or 6, but they are subject to the
contingent deferred sales charge, if applicable. Only a full surrender is
allowed from Option 5. A surrender from Option 5 will also be subject to the
contingent deferred sales charge, if applicable.
We will pay interest of at least 3 1/2% per year on the Death Proceeds from
the date of the Insured's death to the date payment is made or a payment option
is elected. At such times, the proceeds are not subject to the investment
experience of the Separate Account.
The following options are available under the Contracts (ITT Hartford may
offer other payment options):
OPTION 1: INTEREST INCOME
This option offers payments of interest, at the rate we declare, on the
amount applied under this option. The interest rate will never be less than
3 1/2% per year.
OPTION 2: LIFE ANNUITY
A life annuity is an annuity payable during the lifetime of the payee and
terminating with the last payment preceding the death of the payee. 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 a payee 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 3: LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN
This annuity option is an annuity payable monthly during the lifetime of the
payee 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 payee, payments have been made
for less than the minimum elected number of months, then the present value as of
the date of the payee's death, of any remaining guaranteed payments will be paid
in one sum to the beneficiary or beneficiaries designated unless other
provisions have been made and approved by ITT Hartford.
19
<PAGE>
OPTION 4: JOINT AND LAST SURVIVOR ANNUITY
An annuity payable monthly during the joint lifetime of the payee and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
Based on the options currently offered by ITT Hartford, the payee may elect that
the payment to the survivor be less than the payment made during the joint
lifetime of the payee and a designated second person.
It would be possible under this option for a payee 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 5: 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, request a full surrender
and receive, within seven days, the termination value of the Contract as
determined by ITT Hartford.
In the event of the payee's death prior to the end of the designated period,
the present value as of the date of the payee's death, of any remaining
guaranteed payments will be paid in one sum to the beneficiary or beneficiaries
designated unless other provisions have been made and approved by ITT Hartford.
Option 5 is an option that does not involve life contingencies.
OPTION 6: DEATH PROCEEDS REMAINING WITH ITT HARTFORD
Proceeds from the Death Benefit left with ITT Hartford. These proceeds will
remain in the Sub-Accounts 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.
VARIABLE AND FIXED ANNUITY PAYMENTS: When an annuity is effected, unless
otherwise specified, the surrender proceeds or Death Proceeds 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 annuities options are also available.
YOU SHOULD CONSIDER WHETHER THE ALLOCATION OF PROCEEDS AMONG SUB-ACCOUNTS OF THE
SEPARATE ACCOUNT FOR YOUR ANNUITY PAYMENTS ARE BASED ON THE INVESTMENT
ALTERNATIVE BEST SUITED TO YOUR RETIREMENT NEEDS.
VARIABLE ANNUITY: The Contract contains tables indicating the minimum
dollar amount of the first monthly payment under the optional variable forms of
annuity for each $1,000 of value of a Sub-Account. The first monthly payment
varies according to the form and type of variable payment annuity selected. The
Contract contains variable payment 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 5% per annum. The total first monthly
variable annuity payment is determined by multiplying the proceeds value
(expressed in thousands of dollars) of a Sub-Account by the amount of the first
monthly payment per $1,000 of value obtained from the tables in the Contracts.
The amount of the first monthly variable annuity payment is divided by the
value of an annuity unit (an accounting unit of measure used to calculate the
value of annuity payments) for the appropriate Sub-Account no earlier than the
close of business on the fifth Valuation Day preceding the day on which the
payment is due in order to determine the number of annuity units represented by
the first payment. This number of annuity units remains fixed during the annuity
payment period, and in each subsequent month the dollar amount of the variable
annuity payment is determined by multiplying this fixed number of annuity units
by the current annuity unit value.
LEVEL VARIABLE ANNUITY PAYMENTS WOULD BE PRODUCED IF THE INVESTMENT RATE
REMAINED CONSTANT AND EQUAL TO THE A.I.R. IN FACT, PAYMENTS WILL VARY UP OR DOWN
AS THE INVESTMENT RATE VARIES UP OR DOWN RELATIVE TO THE A.I.R.
FIXED ANNUITY: Fixed annuity payments are determined by multiplying the
amount applied to the annuity by a rate to be determined by ITT Hartford which
is no less than the rate specified in the fixed payment annuity tables in the
Contract. The annuity payment will remain level for the duration of the annuity.
ITT Hartford will make any other arrangements for income payments as may be
agreed on.
20
<PAGE>
BENEFICIARY
The applicant names the beneficiary in the application for the Contract. The
Contract Owner may change the beneficiary (unless irrevocably named) during the
Insured's lifetime by written request to ITT Hartford. If no beneficiary is
living when the Insured dies, the Death Proceeds will be paid to the Contract
Owner if living; otherwise to the Contract Owner's estate.
ASSIGNMENT
The Contract may be assigned as collateral for a loan or other obligation.
ITT Hartford is not responsible for any payment made or action taken before
receipt of written notice of such assignment. Proof of interest must be filed
with any claim under a collateral assignment.
DIVIDENDS
No dividends will be paid under the Contracts.
21
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
OTHER BUSINESS PROFESSION,
VOCATION OR EMPLOYMENT
POSITION WITH ITT HARTFORD, FOR PAST 5 YEARS;
NAME, AGE YEAR OF ELECTION OTHER DIRECTORSHIPS
- ------------------------------- ----------------------------------- ----------------------------------------------
<S> <C> <C>
Andrew, Joan M., 38 Vice President, 1992 Vice President and Director, National Service
Center Operations (1992-Present), ITT
Hartford.
Bossen, Wendell J., 62 Vice President, 1995** Vice President (1992), Hartford Life Insurance
Company; Executive Vice President (1984),
Mutual Benefit.
Boyko, Gregory A., 44 Vice President, 1995 Vice President and Controller (1995-Present),
Hartford Life Insurance Company; Chief
Financial Officer (1994-1995), IMG American
Life; Senior Vice President (1992-1994),
Connecticut Mutual.
Cummins, Peter W., 59 Vice President, 1993 Vice President, Individual Annuity Operations
(1989-Present), Hartford Life Insurance
Company.
deRaismes, Ann M., 45 Vice President, 1994 Vice President (1994-Present), Assistant Vice
President (1992), Director of Human
Resources (1991-Present), Hartford Life
Insurance Company.
Dooley, James R., 59 Vice President, 1977 Vice President, Director Information Services
(1973-Present), ITT Hartford.
Fitch, Timothy M., 43 Vice President, 1995 Vice President (1995-Present); Assistant Vice
President (1993); Director (1991), Hartford
Life.
Frahm, Donald R., 64 Director, 1995* Chairman and Chief Executive Officer
(1988-Present), ITT Hartford Insurance
Group, Inc.
Gardner, Bruce D., 45 Director, 1991* Vice President (1996-Present) General Counsel
and Corporate Secretary (1991), Hartford
Life Insurance Company
Gareau, Joseph H., 49 Executive Vice President, 1993 Executive Vice President and Chief Investment
Chief Investment Officer 1993 Officer (1993-Present), Hartford Life
Director, 1993* Insurance Company
Gillette, Donald J., 50 Vice President, 1993 Vice President, Director of Marketing
(1991-Present), ITT Hartford; MSI Insurance
(1986)
Godkin, Lynda, 42 General Counsel, 1996 Corporate General Counsel (1996-Present), Associate
Secretary, 1995 General Counsel and Corporate Secretary
(1995), Assistant General Counsel and
Secretary (1994), Counsel (1990), Hartford
Life Insurance Company
Grady, Lois W., 51 Vice President, 1993 Vice President (1993-Present), Assistant Vice
President (1988), Hartford Life Insurance
Company
Hall, David A., 42 Senior Vice President, 1993 Senior Vice President and Actuary
Actuary, 1993 (1993-Present), Hartford Life Insurance
Company
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
OTHER BUSINESS PROFESSION,
VOCATION OR EMPLOYMENT
POSITION WITH ITT HARTFORD, FOR PAST 5 YEARS;
NAME, AGE YEAR OF ELECTION OTHER DIRECTORSHIPS
- ------------------------------- ----------------------------------- ----------------------------------------------
<S> <C> <C>
Kanarek, Joseph, 48 Vice President, 1994 Vice President (1991-Present), Director
Director, 1994* (1992-Present), Hartford Life Insurance
Company
Kerzner, Robert A., 44 Vice President, 1994 Vice President (1994-Present), Regional Vice
President (1991), Life Sales Manager (1990),
Hartford Life Insurance Company
Kohlhof, LaVern L., 66 Vice President, 1980 Secretary, Vice President and Secretary (1980-Present),
1980 ITT Hartford
Malchodi, Jr., William B., 45 Vice President, 1994 Vice President (1994-Present), Director of
Director of Taxes, 1992 Taxes (1992-Present), Assistant General
Counsel and Assistant Director of Taxes
(1986), Hartford Insurance Group
Marra, Thomas M., 37 Executive Vice President, 1995 Senior Vice President (1994), Director of
Director, 1994* Individual Annuities (1991), Vice President
(1989), Hartford Life Insurance Company
Matthiesen, Steven L., 51 Vice President, 1984 Vice President, Director of New Business
(1984-Present), ITT Hartford
Noto, Joseph J., 44 Vice President, 1989 Vice President (1989-Present), Hartford Life
Insurance Company.
Raymond, Craig D., 32 Vice President, 1993 Vice President and Chief Actuary
Chief Actuary, 1994 (1994-Present), Vice President (1993),
Assistant Vice President (1992), Actuary
(1989-1994), Hartford Life Insurance Company
Schrandt, David T., 48 Vice President, 1987 Treasurer, Vice President, Treasurer and Controller
1987 (1987-Present), ITT Hartford
Smith, Lowndes A., 55 President, 1993 President and Chief Executive Officer
Chief Executive Officer, 1989 (1993-Present), ITT Hartford; President and
Director, 1985* Chief Operating Officer (1989-Present),
Hartford Life Insurance Company
Zlatkus, Lizabeth H., 36 Vice President, 1994 Vice President, Director Business Operations
Director, 1994* (1994), Assistant Vice President, Director
Executive Operations (1992), Executive Staff
Assistant to President (1990), Hartford Life
Insurance Company
<FN>
- ------------------------
* Denotes year of election to Board of Directors
** ITT Hartford Affiliated Company
</TABLE>
23
<PAGE>
DISTRIBUTION OF THE CONTRACTS
ITT Hartford intends to sell the Contracts in all jurisdictions where it is
licensed to do business. The Contracts will be sold by life insurance sales
representatives who represent ITT Hartford and who are registered
representatives of Hartford Equity Sales Company, Inc. ("HESCO") or certain
other independent registered broker-dealers. Any sales representative or
employee will have been qualified to sell variable life insurance contracts
under applicable Federal and state laws. Each broker-dealer is registered with
the Securities and Exchange Commission under the Securities Exchange Act of 1934
and all are members of the National Association of Securities Dealers, Inc.
Hartford Securities Distribution Company, Inc. serves as Principal
Underwriter for the securities issued with respect to the Separate Account. Both
HESCO and HSD are wholly-owned subsidiaries of Hartford Life Insurance Company.
The principal business address of HESCO and HSD is the same as ITT Hartford.
The maximum sales commission payable to ITT Hartford agents, independent
registered insurance brokers, and other registered broker-dealers is 6.0% of
initial and subsequent premiums. Additional annual compensation of no more than
0.75% of Account Value may be paid. From time to time, ITT Hartford may pay or
permit other promotional incentives, in cash or credit or other compensation.
ITT Hartford may provide information on various topics to Contract Owners
and prospective Contract Owners in advertising, sales literature or other
materials. These topics may include the relationship between sectors of the
economy and the economy as a whole and its effect on various securities markets,
investment strategies and techniques (such as value investing, dollar cost
averaging and asset allocation), the advantages and disadvantages of investing
in tax-advantaged and taxable instruments, customer profiles and hypothetical
purchase scenarios, financial management and tax and retirement planning, and
variable annuities and other investment alternatives, including comparisons
between the Contracts and the characteristics of and market for such
alternatives.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
The assets of the Separate Account are held by ITT Hartford. The assets of
the Separate Account are kept physically segregated and held separate and apart
from the General Account of ITT Hartford. ITT Hartford maintains records of all
purchases and redemptions of shares of the Portfolio. Additional protection for
the assets of the Separate Account is afforded by ITT Hartford's blanket
fidelity bond issued by Aetna Casualty and Surety Company, in the aggregate of
$50 million, covering all of the officers and employees of ITT Hartford.
FEDERAL TAX CONSIDERATIONS
GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING
TO THE ACTUAL STATUS OF THE CONTRACT OWNER INVOLVED, LEGAL AND TAX ADVICE MAY BE
NEEDED BY A PERSON, EMPLOYER 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. This discussion
of Federal tax considerations is based upon ITT Hartford's understanding of
current Federal income tax laws as they are currently interpreted.
24
<PAGE>
TAXATION OF ITT HARTFORD AND THE SEPARATE ACCOUNT
The Separate Account is taxed as a part of ITT Hartford which is taxed as a
life insurance company under Subchapter L of the Internal Revenue Code ("Code").
Accordingly, the Separate Account will not be taxed as a "regulated investment
company" under Subchapter M of the Code. Investment income and realized capital
gains on the assets of the Separate Account (the underlying Funds) are
reinvested and are taken into account in determining the value of the
Accumulation Units (see "Contract Benefits and Right -- Account Value," on page
15). As a result, such investment income and realized capital gains are
automatically applied to increase reserves under the Contract.
ITT Hartford does not expect to incur any Federal income tax on the earnings
or realized capital gains attributable to the Separate Account. Based upon this
expectation, no charge is currently being made to the Separate Account for
Federal income taxes. If ITT Hartford incurs income taxes attributable to the
Separate Account or determines that such taxes will be incurred, it may assess a
charge for such taxes against the Separate Account.
INCOME TAXATION OF CONTRACT BENEFITS
For Federal income tax purposes, the Contracts should be treated as life
insurance contracts under Section 7702 of the Code. The death benefit under a
life insurance contract is generally excluded from the gross income of the
beneficiary. Also, a life insurance Contract Owner is generally not taxed on
increments in the contract value until the Contract is partially or completely
surrendered. Section 7702 limits the amount of premiums that may be invested in
a Contract that is treated as life insurance. ITT Hartford intends to monitor
premium levels to assure compliance with the Section 7702 requirements.
During the first fifteen Contract Years, an "income first" rule generally
applies to distributions of cash required to be made under Code Section 7702
because of a reduction in benefits under the Contract.
The Maturity Date Extension Rider allows a Contract Owner to extend the
Maturity Date to the date of the Insured's death. If the Maturity Date of the
Contract is extended by rider, ITT Hartford believes that the Contract will
continue to be treated as a life insurance contract for federal income tax
purposes after the scheduled Maturity Date. However, due to the lack of specific
guidance on this issue, the result is not certain. If the Contract is not
treated as a life insurance contract for federal income tax purposes after the
scheduled Maturity Date, among other things, the Death Proceeds may be taxable
to the recipient. The Contract Owner should consult a qualified tax adviser
regarding the possible adverse tax consequences resulting from an extension of
the scheduled Maturity Date.
LAST SURVIVOR CONTRACTS
Although ITT Hartford believes that the last survivor Contracts are in
compliance with Section 7702 of the Code, the manner in which Section 7702
should be applied to certain features of a joint survivorship life insurance
contract is not directly addressed by Section 7702. In the absence of final
regulations or other guidance issued under Section 7702, there is necessarily
some uncertainty whether a last survivor Contract will meet the Section 7702
definition of a life insurance contract.
MODIFIED ENDOWMENT CONTRACTS
A life insurance contract is treated as a "modified endowment contract"
under Section 7702A of the Code if it meets the definition of life insurance in
Section 7702 but fails the "seven-pay" test of Section 7702A. The seven-pay test
provides that premiums cannot be paid at a rate more rapidly than that allowed
by the payment of seven annual premiums using specified computational rules
provided in Section 7702A(c). The large single premium permitted under the
Contract does not meet the specified computational rules for the "seven-pay
test" under Section 7702A(c). Therefore, the Contract will generally be treated
as a modified endowment contract for federal income tax purposes. However, an
exchange under Section 1035 of the Code of a life insurance contract issued
before June 21, 1988 will not cause the new Contract to be treated as a modified
endowment contract if no additional premiums are paid and there is no change in
the death benefit as the result of the exchange.
A contract that is classified as modified endowment contract is generally
eligible for the beneficial tax treatment accorded to life insurance. That is,
the death benefit is excluded from income and increments in value are not
subject to current taxation. However, a loan, distributions or other amounts
received from a
25
<PAGE>
modified endowment contract during the life of the Insured will be taxed to the
extent of any accumulated income in the contract (generally, the excess of
account value over premiums paid). Amounts that are taxable withdrawals will be
subject to a 10% additional tax, with certain exceptions.
All modified endowment contracts that are issued within any calendar year to
the same Contract Owner by one company or its affiliates shall be treated as one
modified endowment contract in determining the taxable portion of any loan or
distributions.
ESTATE AND GENERATION SKIPPING TAXES
When the Insured dies, the Death Proceeds will generally be includible in
the Contract Owner's estate for purposes of federal estate tax if the last
surviving Insured owned the Contract. If the Contract Owner was not the last
surviving Insured, the fair market value of the Contract would be included in
the Contract Owner's estate upon the Contract Owner's death. Nothing would be
includible in the last surviving Insured's estate if he or she neither retained
incidents of ownership at death nor had given up ownership within three years
before death.
Federal estate tax is integrated with federal gift tax under a unified rate
schedule. In general, estates less than $600,000 will not incur a federal estate
tax liability. In addition, an unlimited marital deduction may be available for
federal estate and gift tax purposes. The unlimited marital deduction permits
the deferral of taxes until the death of the surviving spouse (when the Death
Proceeds would be available to pay taxes due and other expenses incurred).
If the Contract Owner (whether or not he or she is an Insured) transfers
ownership of the Contract to someone two or more generations younger, the
transfer may be subject to the generation-skipping transfer tax, the taxable
amount being the value of the Contract. The generation-skipping transfer tax
provisions generally apply to transfers which would be subject to the gift and
estate tax rules. Individuals are generally allowed an aggregate generation
skipping transfer exemption of $1 million. Because these rules are complex, the
Contract Owner should consult with a qualified tax adviser for specific
information if ownership is passing to younger generations.
DIVERSIFICATION REQUIREMENTS
Section 817 of the Code provides that a variable life insurance contract
(other than a pension plan policy) will not be treated as a life insurance
contract for any period during which the investments made by the separate
account or underlying fund are not adequately diversified in accordance with
regulations prescribed by the Treasury Department. If a Contract is not treated
as a life insurance contract, the Contract Owner will be subject to income tax
on the annual increases in cash value.
The Treasury Department has issued diversification regulations which
generally require, among other things, that no more than 55% of the value of the
total assets of the segregated asset account underlying a variable contract is
represented by any one investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three investments, and no
more than 90% is represented by any four investments. In determining whether the
diversification standards are met, all securities of the same issuer, all
interests in the same real property project, and all interests in the same
commodity are each treated as a single investment. In addition, in the case of
government securities, each government agency or instrumentality shall be
treated as a separate issuer.
A separate account must be in compliance with the diversification standards
on the last day of each calendar quarter or within 30 days after the quarter
ends. If an insurance company inadvertently fails to meet the diversification
requirements, the company may comply within a reasonable period and avoid the
taxation of policy income on an ongoing basis. However, either the company or
the Contract Owner must agree to pay the tax due for the period during which the
diversification requirements were not met.
ITT Hartford monitors the diversification of investments in the separate
accounts and tests for diversification as required by the Code. ITT Hartford
intends to administer all contracts subject to the diversification requirements
in a manner that will maintain adequate diversification.
OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT
In order for a variable life insurance contract to qualify for tax deferral,
assets in the segregated asset accounts supporting the variable contract must be
considered to be owned by the insurance company and
26
<PAGE>
not by the variable contract owner. The Internal Revenue Service ("IRS") has
issued several rulings which discuss investor control. The IRS has ruled that
incidents of ownership by the contract owner, such as the ability to select and
control investments in a separate account, will cause the contract owner to be
treated as the owner of the assets for tax purposes.
Further, in the explanation to the temporary Section 817 diversification
regulations, the Treasury Department noted that the temporary regulations "do
not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset account may cause the investor, rather
than the insurance company, to be treated as the owner of the assets in the
account." The explanation further indicates that "the temporary regulations
provide that in appropriate cases a segregated asset account may include
multiple sub-accounts, but do not specify the extent to which policyholders may
direct their investments to particular sub-accounts without being treated as the
owners of the underlying assets. Guidance on this and other issues will be
provided in regulations or revenue rulings under section 817(d), relating to the
definition of variable contract." The final regulations issued under Section 817
did not provide guidance regarding investor control, and as of the date of this
Prospectus, no other such guidance has been issued. Further, ITT Hartford does
not know if or in what form such guidance will be issued. In addition, although
regulations are generally issued with prospective effect, it is possible that
regulations may be issued with retroactive effect. Due to the lack of specific
guidance regarding the issue of investor control, there is necessarily some
uncertainty regarding whether a Contract Owner could be considered the owner of
the assets for tax purposes. ITT Hartford reserves the right to modify the
contracts, as necessary, to prevent Contract Owners from being considered the
owners of the assets in the separate accounts.
LIFE INSURANCE PURCHASED FOR USE IN SPLIT DOLLAR ARRANGEMENTS
On January 26, 1996, the IRS released a technical advice memorandum ("TAM")
on the taxability of life insurance policies used in certain split dollar
arrangements. A TAM, issued by the National Office of the IRS, provides advice
as to the internal revenue laws, regulations, and related statutes with respect
to a specific set of facts and a specific taxpayer. In the TAM, among other
things, the IRS concluded that an employee was subject to current taxation on
the excess of the cash surrender value of the policy over the premiums to be
returned to the employer. Purchasers of life insurance policies to be used in
split dollar arrangements are strongly advised to consult with a qualified tax
adviser to determine the tax treatment resulting from such an arrangement.
FEDERAL INCOME TAX WITHHOLDING
If any amounts are deemed to be current taxable income to the Contract
Owner, such amounts will be subject to federal income tax withholding and
reporting, pursuant to the Code.
NON-INDIVIDUAL OWNERSHIP OF CONTRACTS
Legislation has recently been proposed which would limit certain of the tax
advantages now afforded non-individual owners of life insurance contracts.
Prospective Contract Owners which are not individuals should consult a tax
adviser to determine the status of this proposed legislation and its potential
impact on the purchaser.
OTHER
Federal estate tax, state and local estate, inheritance and other tax
consequences of ownership, or receipt of Contract proceeds depend on the
circumstances of each Contract Owner or beneficiary. A tax adviser should be
consulted to determine the impact of these taxes.
LIFE INSURANCE PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal
income tax consequences to life insurance purchasers that are U.S. citizens or
residents. Purchasers that are not U.S. citizens or residents will generally be
subject to U.S. federal income tax and withholding on taxable distributions from
life insurance policies at a 30% rate, unless a lower treaty rate applies. In
addition, purchasers may be subject to state and/or municipal taxes and taxes
that may be imposed by the purchaser's country of citizenship or residence.
Prospective purchasers are advised to consult with a qualified tax advisor
regarding U.S. state, and foreign taxation with respect to a life insurance
policy purchase.
27
<PAGE>
LEGAL PROCEEDINGS
There are no pending material legal proceedings affecting the Contracts, the
Separate Account or any of the Portfolios.
LEGAL MATTERS
Legal matters in connection with the issue and sale of modified single
premium variable life insurance contracts described in this Prospectus and the
organization of ITT Hartford, its authority to issue the Contracts under
Connecticut law and the validity of the forms of the Contracts under Connecticut
law and legal matters relating to the Federal securities and income tax laws
have been passed on by Lynda Godkin, General Counsel of ITT Hartford Life
Insurance Companies.
EXPERTS
The statutory financial statements included in this Prospectus and elsewhere
in the Registration Statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said report. Reference is made to
said report on the financial statements of ITT Hartford Life and Annuity
Insurance Company (the depositor), which includes an explanatory paragraph with
respect to changing the valuation method in determining aggregate reserves for
future benefits. The principal business address of Arthur Andersen LLP is One
Financial Plaza, Hartford, Connecticut 06103.
The hypothetical Contract illustrations included in this Prospectus and
Registration Statement have been approved by Michael Winterfield, FSA, MAAA,
Director, Individual Annuity Inforce Management, for ITT Hartford, and are
included in reliance upon his opinion as to their reasonableness.
REGISTRATION STATEMENT
A registration statement has been filed with the Securities and Exchange
Commission under the Securities Act of 1933 as amended. This Prospectus does not
contain all information set forth in the registration statement, its amendments
and exhibits, to all of which reference is made for further information
concerning the Separate Account, the Portfolios, ITT Hartford, and the
Contracts.
28
<PAGE>
APPENDIX A
ILLUSTRATIONS OF BENEFITS
The tables in Appendix A illustrate the way in which a Contract operates.
They show how the death benefit and surrender value could vary over an extended
period of time assuming hypothetical gross rates of return equal to constant
after tax annual rates of 0%, 6% and 12%. The tables are based on an initial
premium of $10,000. A male age 45, a female age 55 and a male age 65 with Face
Amounts of $40,161, $33,334 and $19,380, respectively, are illustrated for the
single life Contract. The illustrations for the last survivor Contract assume
male and female of equal ages, including age 55 and 65 for Face Amounts of
$44,053 and $27,778.
The death benefit and surrender value for a Contract would be different from
those shown if the rates of return averaged 0%, 6% and 12% over a period of
years, but also fluctuated above or below those averages for individual Contract
Years. They would also differ if any contract loan were made during the period
of time illustrated.
The tables reflect the deductions of current Contract charges and guaranteed
Contract charges for a single gross interest rate. The death benefits and
surrender values would change if the current cost of insurance charges change.
The amounts shown for the death benefit and surrender value as of the end of
each Contract Year take into account an average daily charge equal to an annual
charge of 0.75% of the average daily net assets of the Portfolios for investment
advisory and administrative services fees. The gross annual investment return
rates of 0%, 6% and 12% on the Portfolio's assets are equal to net annual
investment return rates (net of the 0.75% average daily charge) of -0.75%, 5.25%
and 11.25%, respectively.
In addition the death benefit and surrender value as of the end of each
Contract Year take into account the (1) tax expense charge equal to an annual
rate of 0.40% of Account Value for the first ten Contract Years; (2)
administrative charge equal to an annual rate of 0.40% of Account Value
attributable to the Separate Account; (3) mortality and expense risk charge
equal to an annual rate of 0.90% of Account Value attributable to the Separate
Account; and (4) any Contingent Deferred Sales Charge and Premium Tax Charge
which may be applicable in the first nine Contract Years.
The hypothetical returns shown in the tables are without any tax charges
that may be attributable to the Separate Account in the future. In order to
produce after tax returns of 0%, 6%, and 12%, the Separate Account would have to
earn a sufficient amount in excess of 0% or 6% or 12% to cover any tax charges
(see "Deductions and Charges -- Charges Against The Separate Account -- Taxes,"
page 14).
The "Premium Paid Plus Interest" column of each table shows the amount which
would accumulate if the initial premium was invested to earn interest, after
taxes of 5% per year, compounded annually.
ITT Hartford will furnish upon request, a comparable illustration reflecting
the proposed insureds age, risk classification, Face Amount or initial premium
requested, and reflecting guaranteed cost of insurance rates. ITT Hartford will
also furnish an additional similar illustration reflecting current cost of
insurance rates which may be less than, but never greater than, the guaranteed
cost of insurance rates.
29
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE
INITIAL FACE AMOUNT: $40,161
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------- -------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
-------- -------------- -------- --------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,834 9,840 40,161 10,756 9,764 40,161
2 11,025 11,740 10,755 40,161 11,575 10,593 40,161
3 11,576 12,724 11,751 40,161 12,463 11,495 40,161
4 12,155 13,794 12,987 40,161 13,427 12,626 40,161
5 12,763 14,956 14,169 40,161 14,474 13,693 40,161
6 13,401 16,219 15,657 40,161 15,613 15,057 40,161
7 14,071 17,592 17,060 40,161 16,851 16,324 40,161
8 14,775 19,083 18,788 40,161 18,198 17,907 40,161
9 15,513 20,704 20,452 40,161 19,666 19,417 40,161
10 16,289 22,465 22,465 40,161 21,268 21,268 40,161
11 17,103 24,501 24,501 40,161 23,113 23,113 40,161
12 17,959 26,724 26,724 40,161 25,145 25,145 40,161
13 18,856 29,153 29,153 41,398 27,386 27,386 40,161
14 19,799 31,808 31,808 43,896 29,864 29,864 41,213
15 20,789 34,714 34,714 46,517 32,590 32,590 43,670
16 21,829 37,895 37,895 49,264 35,574 35,574 46,247
17 22,920 41,367 41,367 52,951 38,832 38,832 49,705
18 24,066 45,156 45,156 56,897 42,386 42,386 53,407
19 25,270 49,292 49,292 61,122 46,266 46,266 57,371
20 26,533 53,807 53,807 65,645 50,502 50,502 61,613
25 33,864 83,601 83,601 96,978 78,372 78,372 90,912
35 55,160 201,997 201,997 214,118 180,092 189,092 200,438
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
30
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE
INITIAL FACE AMOUNT: $40,161
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ----------------------------- -----------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
-------- -------------- ------- --------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,249 9,269 40,161 10,171 9,192 40,161
2 11,025 10,506 9,546 40,161 10,337 9,380 40,161
3 11,576 10,769 9,831 40,161 10,497 9,564 40,161
4 12,155 11,040 10,275 40,161 10,651 9,891 40,161
5 12,763 11,319 10,577 40,161 10,796 10,061 40,161
6 13,401 11,605 11,089 40,161 10,930 10,421 40,161
7 14,071 11,900 11,411 40,161 11,052 10,569 40,161
8 14,775 12,202 11,941 40,161 11,158 10,902 40,161
9 15,513 12,514 12,282 40,161 11,244 11,016 40,161
10 16,289 12,833 12,833 40,161 11,309 11,309 40,161
11 17,103 13,228 13,228 40,161 11,394 11,394 40,161
12 17,959 13,636 13,636 40,161 11,455 11,455 40,161
13 18,856 14,058 14,058 40,161 11,486 11,486 40,161
14 19,799 14,494 14,494 40,161 11,486 11,486 40,161
15 20,789 14,944 14,944 40,161 11,450 11,450 40,161
16 21,829 15,409 15,409 40,161 11,370 11,370 40,161
17 22,920 15,889 15,889 40,161 11,239 11,239 40,161
18 24,066 16,385 16,385 40,161 11,048 11,048 40,161
19 25,270 16,898 16,898 40,161 10,787 10,787 40,161
20 26,533 17,428 17,428 40,161 10,442 10,442 40,161
25 33,864 20,353 20,353 40,161 6,987 6,987 40,161
35 55,160 27,852 27,852 40,161 0 0 0
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
31
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 45 MALE
INITIAL FACE AMOUNT: $40,161
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------- -------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
-------- -------------- -------- --------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,665 8,698 40,161 9,586 8,649 40,161
2 11,025 9,340 8,404 40,161 9,169 8,291 40,161
3 11,576 9,026 8,118 40,161 8,747 7,925 40,161
4 12,155 8,721 7,990 40,161 8,319 7,699 40,161
5 12,763 8,425 7,720 40,161 7,883 7,312 40,161
6 13,401 8,138 7,657 40,161 7,438 7,113 40,161
7 14,071 7,860 7,401 40,161 6,980 6,696 40,161
8 14,775 7,591 7,353 40,161 6,506 6,461 40,161
9 15,513 7,330 7,111 40,161 6,013 6,002 40,161
10 16,289 7,076 7,076 40,161 5,498 5,717 40,161
11 17,103 6,865 6,865 40,161 4,978 5,211 40,161
12 17,959 6,659 6,659 40,161 4,427 4,673 40,161
13 18,856 6,459 6,459 40,161 3,843 4,100 40,161
14 19,799 6,264 6,264 40,161 3,221 3,488 40,161
15 20,789 6,073 6,073 40,161 2,558 2,833 40,161
16 21,829 5,888 5,888 40,161 1,845 2,127 40,161
17 22,920 5,707 5,707 40,161 1,075 1,361 40,161
18 24,066 5,531 5,531 40,161 237 526 40,161
19 25,270 5,360 5,360 40,161 0 0 0
20 26,533 5,193 5,193 40,161 0 0 0
25 33,864 4,420 4,420 40,161 0 0 0
35 55,160 3,145 3,145 40,161 0 0 0
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
32
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE
INITIAL FACE AMOUNT: $33,334
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------- --------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
-------- -------------- -------- ---------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,834 9,840 33,334 10,727 9,736 33,334
2 11,025 11,740 10,755 33,334 11,517 10,537 33,334
3 11,576 12,724 11,751 33,334 12,378 11,411 33,334
4 12,155 13,794 12,987 33,334 13,317 12,517 33,334
5 12,763 14,956 14,169 33,334 14,343 13,564 33,334
6 13,401 16,219 15,657 33,334 15,464 14,909 33,334
7 14,071 17,592 17,060 33,334 16,688 16,163 33,334
8 14,775 19,083 18,788 33,334 18,025 17,735 33,334
9 15,513 20,704 20,452 33,334 19,487 19,238 33,334
10 16,289 22,465 22,465 33,334 21,088 21,088 33,334
11 17,103 24,501 24,501 33,334 22,940 22,940 33,334
12 17,959 26,736 26,736 33,334 24,991 24,991 33,334
13 18,856 29,218 29,218 34,478 27,270 27,270 33,334
14 19,799 31,946 31,946 37,377 29,804 29,804 34,891
15 20,789 34,928 34,928 40,517 32,585 32,585 37,799
16 21,829 38,190 38,190 43,919 35,625 35,625 40,969
17 22,920 41,765 41,765 47,195 38,958 38,958 44,023
18 24,066 45,686 45,686 50,712 42,614 42,614 47,301
19 25,270 49,992 49,992 54,492 46,627 46,627 50,824
20 26,533 54,687 54,687 59,609 51,004 51,004 55,594
25 33,864 85,841 85,841 90,992 80,060 80,060 84,864
35 55,160 208,273 208,273 218,687 192,260 192,260 201,873
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
33
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE
INITIAL FACE AMOUNT: $33,334
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ----------------------------- -----------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
-------- -------------- ------- --------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,249 9,269 33,334 10,142 9,164 33,334
2 11,025 10,506 9,546 33,334 10,279 9,324 33,334
3 11,576 10,769 9,831 33,334 10,412 9,480 33,334
4 12,155 11,040 10,275 33,334 10,539 9,781 33,334
5 12,763 11,319 10,577 33,334 10,661 9,928 33,334
6 13,401 11,605 11,089 33,334 10,774 10,266 33,334
7 14,071 11,900 11,411 33,334 10,875 10,394 33,334
8 14,775 12,202 11,941 33,334 10,959 10,704 33,334
9 15,513 12,514 12,282 33,334 11,021 10,793 33,334
10 16,289 12,833 12,833 33,334 11,055 11,055 33,334
11 17,103 13,228 13,228 33,334 11,106 11,106 33,334
12 17,959 13,636 13,636 33,334 11,127 11,127 33,334
13 18,856 14,058 14,058 33,334 11,117 11,117 33,334
14 19,799 14,494 14,494 33,334 11,073 11,073 33,334
15 20,789 14,944 14,944 33,334 10,988 10,988 33,334
16 21,829 15,409 15,409 33,334 10,854 10,854 33,334
17 22,920 15,889 15,889 33,334 10,656 10,656 33,334
18 24,066 16,385 16,385 33,334 10,375 10,375 33,334
19 25,270 16,898 16,898 33,334 9,991 9,991 33,334
20 26,533 17,428 17,428 33,334 9,479 9,479 33,334
25 33,864 20,353 20,353 33,334 3,955 3,955 33,334
35 55,160 27,852 27,852 33,334 0 0 0
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
34
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 55 FEMALE
INITIAL FACE AMOUNT: $33,334
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ----------------------------- -----------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
-------- -------------- ------- --------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,665 8,698 33,334 9,558 8,593 33,334
2 11,025 9,340 8,404 33,334 9,112 8,179 33,334
3 11,576 9,026 8,118 33,334 8,662 7,761 33,334
4 12,155 8,721 7,990 33,334 8,209 7,486 33,334
5 12,763 8,425 7,720 33,334 7,750 7,053 33,334
6 13,401 8,138 7,657 33,334 7,283 6,810 33,334
7 14,071 7,860 7,401 33,334 6,803 6,352 33,334
8 14,775 7,591 7,353 33,334 6,305 6,073 33,334
9 15,513 7,330 7,111 33,334 5,782 5,568 33,334
10 16,289 7,076 7,076 33,334 5,230 5,230 33,334
11 17,103 6,865 6,865 33,334 4,665 4,665 33,334
12 17,959 6,659 6,659 33,334 4,061 4,061 33,334
13 18,856 6,459 6,459 33,334 3,419 3,419 33,334
14 19,799 6,264 6,264 33,334 2,733 2,733 33,334
15 20,789 6,073 6,073 33,334 1,997 1,997 33,334
16 21,829 5,888 5,888 33,334 1,200 1,200 33,334
17 22,920 5,707 5,707 33,334 324 324 33,334
18 24,066 5,531 5,531 33,334 0 0 0
19 25,270 5,360 5,360 33,334 0 0 0
20 26,533 5,193 5,193 33,334 0 0 0
25 33,864 4,420 4,420 33,334 0 0 0
35 55,160 3,145 3,145 33,334 0 0 0
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
35
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE
INITIAL FACE AMOUNT: $19,380
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------- --------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
-------- --------------- -------- ---------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,834 9,840 19,380 10,650 9,660 19,380
2 11,025 11,740 10,755 19,380 11,357 10,380 19,380
3 11,576 12,724 11,751 19,380 12,131 11,169 19,380
4 12,155 13,794 12,987 19,380 12,984 12,190 19,380
5 12,763 14,956 14,169 19,380 13,930 13,156 19,380
6 13,401 16,219 15,657 19,380 14,986 14,436 19,380
7 14,071 17,595 17,063 19,883 16,172 15,650 19,380
8 14,775 19,106 18,810 21,208 17,516 17,228 19,443
9 15,513 20,760 20,508 22,629 19,027 18,780 20,740
10 16,289 22,549 22,549 24,578 20,664 20,664 22,524
11 17,103 24,595 24,595 26,563 22,536 22,536 24,340
12 17,959 26,837 26,837 28,716 24,587 24,587 26,309
13 18,856 29,275 29,275 31,325 26,816 26,816 28,693
14 19,799 31,947 31,947 33,864 29,260 29,260 31,016
15 20,789 34,856 34,856 36,948 31,916 31,916 33,831
16 21,829 38,046 38,046 39,949 34,834 34,834 36,576
17 22,920 41,517 41,517 43,594 38,005 38,005 39,906
18 24,066 45,308 45,308 47,574 41,447 41,447 43,520
19 25,270 49,448 49,448 51,921 45,177 45,177 47,436
20 26,533 53,969 53,969 56,667 49,215 49,215 51,677
25 33,864 83,837 83,837 88,030 74,965 74,965 78,714
35 55,160 202,335 202,335 204,358 175,528 175,528 177,284
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
36
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE
INITIAL FACE AMOUNT: $19,380
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ----------------------------- -----------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
-------- -------------- ------- --------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,249 9,269 19,380 10,062 9,086 19,380
2 11,025 10,506 9,546 19,380 10,104 9,152 19,380
3 11,576 10,769 9,831 19,380 10,123 9,196 19,380
4 12,155 11,040 10,275 19,380 10,116 9,364 19,380
5 12,763 11,319 10,577 19,380 10,077 9,351 19,380
6 13,401 11,605 11,089 19,380 10,002 9,502 19,380
7 14,071 11,900 11,411 19,380 9,880 9,406 19,380
8 14,775 12,202 11,941 19,380 9,703 9,454 19,380
9 15,513 12,514 12,282 19,380 9,455 9,232 19,380
10 16,289 12,833 12,833 19,380 9,124 9,124 19,380
11 17,103 13,228 13,228 19,380 8,730 8,730 19,380
12 17,959 13,636 13,636 19,380 8,217 8,217 19,380
13 18,856 14,058 14,058 19,380 7,564 7,564 19,380
14 19,799 14,494 14,494 19,380 6,738 6,738 19,380
15 20,789 14,944 14,944 19,380 5,699 5,699 19,380
16 21,829 15,409 15,409 19,380 4,387 4,387 19,380
17 22,920 15,889 15,889 19,380 2,723 2,723 19,380
18 24,066 16,385 16,385 19,380 595 595 19,380
19 25,270 16,898 16,898 19,380 0 0 0
20 26,533 17,428 17,428 19,380 0 0 0
25 33,864 20,353 20,353 21,371 0 0 0
35 55,160 27,854 27,854 28,133 0 0 0
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
37
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE 65 MALE
INITIAL FACE AMOUNT: $19,380
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------- --------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
-------- -------------- ------ ------- ------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,665 8,698 19,380 9,475 8,512 19,380
2 11,025 9,340 8,404 19,380 8,923 7,994 19,380
3 11,576 9,026 8,118 19,380 8,340 7,444 19,380
4 12,155 8,721 7,990 19,380 7,720 7,004 19,380
5 12,763 8,425 7,720 19,380 7,056 6,368 19,380
6 13,401 8,138 7,657 19,380 6,338 5,875 19,380
7 14,071 7,869 7,401 19,380 5,553 5,111 19,380
8 14,775 7,591 7,353 19,380 4,684 4,461 19,380
9 15,513 7,330 7,111 19,380 3,712 3,503 19,380
10 16,289 7,076 7,076 19,380 2,616 2,616 19,380
11 17,103 6,865 6,865 19,380 1,379 1,379 19,380
12 17,959 6,659 6,659 19,380 0 0 0
13 18,856 6,459 6,459 19,380 0 0 0
14 19,799 6,264 6,264 19,380 0 0 0
15 20,789 6,073 6,073 19,380 0 0 0
16 21,829 5,888 5,888 19,380 0 0 0
17 22,920 5,707 5,707 19,380 0 0 0
18 24,066 5,531 5,531 19,380 0 0 0
19 25,270 5,360 5,360 19,380 0 0 0
20 26,533 5,193 5,193 19,380 0 0 0
25 33,864 4,420 4,420 19,380 0 0 0
35 55,160 3,145 3,145 19,380 0 0 0
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE DIFFERENT
FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE CONTACT AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
38
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE / 55 FEMALE
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------- --------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
-------- -------------- -------- ---------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,902 9,906 44,053 10,902 9,906 44,053
2 11,025 11,882 10,894 44,053 11,882 10,894 44,053
3 11,576 12,946 11,970 44,053 12,946 11,970 44,053
4 12,155 14,103 13,292 44,053 14,103 13,292 44,053
5 12,763 15,360 14,568 44,053 15,360 14,568 44,053
6 13,401 16,726 16,159 44,053 16,726 16,159 44,053
7 14,071 18,210 17,674 44,053 18,210 17,674 44,053
8 14,775 19,825 19,526 44,053 19,822 19,523 44,053
9 15,513 21,585 21,331 44,053 21,574 21,320 44,053
10 16,289 23,505 23,505 44,053 23,477 23,477 44,053
11 17,103 25,727 25,727 44,053 25,652 25,652 44,053
12 17,959 28,162 28,162 44,053 28,031 28,031 44,053
13 18,856 30,830 30,830 44,053 30,640 30,640 44,053
14 19,799 33,755 33,755 44,053 33,507 33,507 44,053
15 20,789 36,960 36,960 44,053 36,667 36,667 44,053
16 21,829 40,479 40,479 46,551 40,154 40,154 46,177
17 22,920 44,337 44,337 50,102 43,981 43,981 49,699
18 24,066 48,565 48,565 53,908 48,175 48,175 53,475
19 25,270 53,202 53,202 57,991 52,774 52,774 57,524
20 26,533 58,305 58,305 63,553 57,828 57,828 63,033
25 33,864 92,176 92,176 97,707 91,132 91,132 96,600
35 55,160 230,373 230,373 241,893 219,404 219,404 230,374
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
39
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE / 55 FEMALE
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ----------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
-------- -------------- ------- -------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,314 9,332 44,053 10,314 9,332 44,053
2 11,025 10,632 9,669 44,053 10,632 9,669 44,053
3 11,576 10,954 10,012 44,053 10,954 10,012 44,053
4 12,155 11,279 10,509 44,053 11,279 10,509 44,053
5 12,763 11,605 10,860 44,053 11,605 10,860 44,053
6 13,401 11,941 11,422 44,053 11,931 11,412 44,053
7 14,071 12,288 11,796 44,053 12,255 11,763 44,053
8 14,775 12,646 12,383 44,053 12,574 12,311 44,053
9 15,513 13,015 12,782 44,053 12,885 12,652 44,053
10 16,289 13,396 13,396 44,053 13,182 13,182 44,053
11 17,103 13,858 13,858 44,053 13,517 13,517 44,053
12 17,959 14,337 14,337 44,053 13,834 13,834 44,053
13 18,856 14,834 14,834 44,053 14,127 14,127 44,053
14 19,799 15,349 15,349 44,053 14,393 14,393 44,053
15 20,789 15,883 15,883 44,053 14,624 14,624 44,053
16 21,829 16,436 16,436 44,053 14,809 14,809 44,053
17 22,920 17,010 17,010 44,053 14,938 14,938 44,053
18 24,066 17,606 17,606 44,053 14,991 14,991 44,053
19 25,270 18,223 18,223 44,053 14,949 14,949 44,053
20 26,533 18,863 18,863 44,053 14,787 14,787 44,053
25 33,864 22,433 22,433 44,053 11,078 11,078 44,053
35 55,160 31,836 31,836 44,053 0 0 0
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
40
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE / 55 FEMALE
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS --------------------------- ---------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
-------- -------------- ------ -------- ------- ------ -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,726 8,757 44,053 9,726 8,757 44,053
2 11,025 9,452 8,512 44,053 9,451 8,512 44,053
3 11,576 9,177 8,266 44,053 9,177 8,266 44,053
4 12,155 8,899 8,166 44,053 8,899 8,166 44,053
5 12,763 8,628 7,920 44,053 8,618 7,910 44,053
6 13,401 8,365 7,881 44,053 8,331 7,848 44,053
7 14,071 8,108 7,647 44,053 8,035 7,575 44,053
8 14,775 7,859 7,619 44,053 7,727 7,489 44,053
9 15,513 7,616 7,397 44,053 7,403 7,185 44,053
10 16,289 7,380 7,380 44,053 7,058 7,058 44,053
11 17,103 7,186 7,186 44,053 6,713 6,713 44,053
12 17,959 6,996 6,996 44,053 6,334 6,334 44,053
13 18,856 6,811 6,811 44,053 5,916 5,916 44,053
14 19,799 6,630 6,630 44,053 5,451 5,451 44,053
15 20,789 6,453 6,453 44,053 4,932 4,932 44,053
16 21,829 6,280 6,280 44,053 4,345 4,345 44,053
17 22,920 6,110 6,110 44,053 3,673 3,673 44,053
18 24,066 5,945 5,945 44,053 2,896 2,896 44,053
19 25,270 5,783 5,783 44,053 1,985 1,985 44,053
20 26,533 5,625 5,625 44,053 910 910 44,053
25 33,864 4,885 4,885 44,053 0 0 0
35 55,160 3,633 3,633 44,053 0 0 0
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
41
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE / 65 FEMALE
INITIAL FACE AMOUNT: $27,778
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ------------------------------- -------------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
-------- -------------- -------- --------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,897 9,902 27,778 10,897 9,902 27,778
2 11,025 11,862 10,875 27,778 11,862 10,875 27,778
3 11,576 12,903 11,927 27,778 12,902 11,926 27,778
4 12,155 14,037 13,227 27,778 14,021 13,211 27,778
5 12,763 15,274 14,483 27,778 15,229 14,439 27,778
6 13,401 16,623 16,057 27,778 16,535 15,969 27,778
7 14,071 18,094 17,558 27,778 17,948 17,413 27,778
8 14,775 19,698 19,399 27,778 19,482 19,185 27,778
9 15,513 21,447 21,193 27,778 21,155 20,902 27,778
10 16,289 23,354 23,354 27,778 22,988 22,988 27,778
11 17,103 25,561 25,561 27,778 25,115 25,115 27,778
12 17,959 27,981 27,981 29,940 27,485 27,485 29,409
13 18,856 30,632 30,632 32,776 30,076 30,076 32,182
14 19,799 33,537 33,537 35,550 32,914 32,914 34,889
15 20,789 36,721 36,721 38,925 36,007 36,007 38,168
16 21,829 40,211 40,211 42,222 39,396 39,396 41,367
17 22,920 44,035 44,035 46,238 43,088 43,088 45,243
18 24,066 48,227 48,227 50,639 47,104 47,104 49,460
19 25,270 52,820 52,820 55,462 51,466 51,466 54,040
20 26,533 57,887 57,887 60,782 56,231 56,231 59,043
25 33,864 91,514 91,514 96,090 86,546 86,546 90,874
35 55,160 228,720 228,720 231,007 203,577 203,577 205,613
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
42
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE / 65 FEMALE
INITIAL FACE AMOUNT: $27,778
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ----------------------------- -----------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
-------- -------------- ------- --------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,309 9,327 27,778 10,309 9,327 27,778
2 11,025 10,612 9,650 27,778 10,612 9,650 27,778
3 11,576 10,917 9,976 27,778 10,907 9,967 27,778
4 12,155 11,232 10,463 27,778 11,191 10,423 27,778
5 12,763 11,556 10,812 27,778 11,460 10,717 27,778
6 13,401 11,891 11,372 27,778 11,710 11,193 27,778
7 14,071 12,236 11,744 27,778 11,935 11,445 27,778
8 14,775 12,592 12,329 27,778 12,126 11,866 27,778
9 15,513 12,960 12,727 27,778 12,275 12,045 27,778
10 16,289 13,339 13,339 27,778 12,370 12,370 27,778
11 17,103 13,799 13,799 27,778 12,451 12,451 27,778
12 17,959 14,276 14,276 27,778 12,455 12,455 27,778
13 18,856 14,770 14,770 27,778 12,368 12,368 27,778
14 19,799 15,283 15,283 27,778 12,172 12,172 27,778
15 20,789 15,815 15,815 27,778 11,843 11,843 27,778
16 21,829 16,366 16,366 27,778 11,347 11,347 27,778
17 22,920 16,937 16,937 27,778 10,641 10,641 27,778
18 24,066 17,530 17,530 27,778 9,661 9,661 27,778
19 25,270 18,144 18,144 27,778 8,326 8,326 27,778
20 26,533 18,781 18,781 27,778 6,527 6,527 27,778
25 33,864 22,335 22,335 27,778 0 0 0
35 55,160 31,696 31,696 32,014 0 0 0
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
43
<PAGE>
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE / 65 FEMALE
INITIAL FACE AMOUNT: $27,778
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------- --------------------------
END OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
-------- -------------- ------ ------- ------- ------ ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,721 8,752 27,778 9,721 8,752 27,778
2 11,025 9,432 8,493 27,778 9,432 8,493 27,778
3 11,576 9,147 8,236 27,778 9,129 8,220 27,778
4 12,155 8,869 8,136 27,778 8,809 8,077 27,778
5 12,763 8,599 7,891 27,778 8,466 7,760 27,778
6 13,401 8,336 7,852 27,778 8,095 7,614 27,778
7 14,071 8,080 7,619 27,778 7,687 7,230 27,778
8 14,775 7,831 7,592 27,778 7,232 6,996 27,778
9 15,513 7,589 7,370 27,778 6,716 6,499 27,778
10 16,289 7,354 7,354 27,778 6,122 6,122 27,778
11 17,103 7,161 7,161 27,778 5,457 5,457 27,778
12 17,959 6,972 6,972 27,778 4,673 4,673 27,778
13 18,856 6,787 6,787 27,778 3,747 3,747 27,778
14 19,799 6,606 6,606 27,778 2,652 2,652 27,778
15 20,789 6,430 6,430 27,778 1,349 1,349 27,778
16 21,829 6,257 6,257 27,778 0 0 0
17 22,920 6,088 6,088 27,778 0 0 0
18 24,066 5,923 5,923 27,778 0 0 0
19 25,270 5,762 5,762 27,778 0 0 0
20 26,533 5,604 5,604 27,778 0 0 0
25 33,864 4,866 4,866 27,778 0 0 0
35 55,160 3,619 3,619 27,778 0 0 0
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS
PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF
PAST OR FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS
THAN THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR
A CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
44
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1.
FINANCIAL STATEMENTS
The following unaudited financial statements, reflect, in the opinion of
management, all normal recurring adjustments necessary to present fairly the
financial position, the results of operations and the cash flows for the
periods presented. Certain reclassifications of prior year results were made
to conform to current presentation. Interim results are not indicative of
the results which may be expected for any other interim period or the full
year. Certain of the statements contained herein (other than statements of
historical fact) are forward-looking statements. Forward looking statements
are made based upon management's expectations and belief concerning future
developments and their potential effect upon Hartford Life Insurance Company
("Hartford Life"). There can be no assurance that future developments will
be in accordance with management's expectaton or that the effect of future
developments on Hartford Life will be those anticipated by management.
Actual results could differ materially from those expected by Hartford Life,
depending on the outcome of certain factors, including those described with
the forward-looking statements. For a description of accounting policies,
see Notes to Consolidated Financial Statements in the 1995 Form 10-K.
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in millions)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
(unaudited) (unaudited)
REVENUES
<S> <C> <C> <C> <C>
Premiums and other considerations $ 319 $ 385 $ 1,262 $ 1,105
Net investment income 355 357 1,006 1,032
Net realized losses on investments (202) (4) (203) (10)
---------- ---------- ---------- ----------
TOTAL REVENUES 472 738 2,065 2,127
---------- ---------- ---------- ----------
BENEFITS, CLAIMS AND EXPENSES
Benefits, claims and claim adjustment expenses 447 446 1,235 1,162
Amortization of deferred policy acquisition costs 68 48 197 140
Dividends to policyholders 63 152 410 449
Other insurance expenses 58 47 256 240
---------- ---------- ---------- ----------
TOTAL BENEFITS, CLAIMS AND EXPENSES 636 693 2,098 1,991
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAX (164) 45 (33) 136
Income tax expense (benefit) (58) 15 (13) 45
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ (106) $ 30 $ (20) $ 91
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions except share data)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
---- ----
(unaudited)
ASSETS
<S> <C> <C>
Investments:
Fixed maturities, available for sale, at fair value $ 13,309 $ 14,400
Equity securities, at fair value 133 63
Mortgage loans, at outstanding balance 45 265
Policy loans, at outstanding balance 3,898 3,381
Other investments, at cost 81 156
---------- ----------
Total investments 17,466 18,265
Cash 52 46
Premiums and amounts receivable 178 165
Reinsurance recoverable 6,658 6,221
Accrued investment income 394 394
Deferred policy acquisition costs 2,587 2,188
Deferred income tax 611 420
Other assets 210 234
Separate account assets 45,540 36,264
---------- ----------
TOTAL ASSETS $ 73,696 $ 64,197
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDER'S EQUITY
Future policy benefits $ 2,651 $ 2,373
Other policyholder funds 22,415 22,598
Other liabilities 1,346 1,233
Separate account liabilities 45,540 36,264
---------- ----------
TOTAL LIABILITIES 71,952 62,468
---------- ----------
Common stock - authorized 1,000 shares, $5,690 par value,
issued and outstanding 1,000 shares 6 6
Additional paid-in capital 1,045 1,007
Unrealized loss on investments, net of tax (60) (57)
Retained earnings 753 773
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 1,744 1,729
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 73,696 $ 64,197
---------- ----------
---------- ----------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
-------------------
1996 1995
---- ----
(unaudited)
OPERATING ACTIVITIES:
<S> <C> <C>
Net (loss) income $ (20) $ 91
Adjustments to net (loss) income:
Realized losses on investments 203 10
Net policyholder investment gains (2) (3)
Net increase in deferred policy acquisition costs (399) (257)
Net amortization of premium on fixed maturities 6 15
Deferred income tax benefit (188) (128)
Decrease (increase) in premiums and amounts receivable 75 (168)
Decrease (increase) in other assets 15 (102)
Increase in reinsurance recoverable (254) (61)
Increase in liability for future policy benefits 278 434
Increase in other liabilities 116 261
Increase in accrued investment income 0 (36)
---------- ----------
CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES (170) 56
---------- ----------
INVESTING ACTIVITIES:
Purchases of fixed maturities investments (4,111) (3,752)
Proceeds from sales of fixed maturities investments 2,450 3,211
Maturities and principal paydowns of fixed maturities
investments 2,124 1,078
Net purchases of other investments (337) (1,931)
Net sales (purchases) of short-term investments 328 (184)
---------- ----------
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 454 (1,578)
---------- ----------
FINANCING ACTIVITIES:
Net (disbursements for) receipts from investment and
universal life-type contracts (charged from) credited
to policyholder account (316) 1,525
Capital contribution 38 0
---------- ----------
CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES (278) 1,525
---------- ----------
NET INCREASE IN CASH 6 3
Cash at beginning of period 46 20
---------- ----------
CASH AT END OF PERIOD $ 52 $ 23
---------- ----------
---------- ----------
</TABLE>
<PAGE>
2. MANAGEMENT'S NARRATIVE ANALYSIS OF
RESULTS OF OPERATIONS
(In Millions)
QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
INDIVIDUAL LIFE AND ANNUITY DIVISION (ILAD)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Quarter Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues $ 322 $ 205 $ 846 $ 612
Expenses 258 168 688 508
------ ------ ------ ------
NET INCOME $ 64 $ 37 $ 158 $ 104
------ ------ ------ ------
------ ------ ------ ------
- -------------------------------------------------------------------------------------
</TABLE>
The premiums, investment income, management and maintenance fees and cost of
insurance associated with this growing asset base continue to be the source
of ILAD's increased revenues, an increase over prior year of 57% and 38% for
the third quarter and nine months ended respectively. New deposits of fixed
and variable annuities for the nine months ended September 30, 1996 were
approximately $7.4 billion, but are not reported as revenues. Net income, up
73% and 52% for the third quarter and nine months ended respectively,
continues to grow as earnings are generated from an existing asset base.
Revenue, new deposit, and net income increases are all indicative of strong,
stable growth.
ASSET MANAGEMENT SERVICES (AMS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Quarter Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues $ 100 $ 96 $ 300 $ 292
Expenses 95 93 287 280
------ ------ ------ ------
NET INCOME $ 5 $ 3 $ 13 $ 12
------ ------ ------ ------
------ ------ ------ ------
- -------------------------------------------------------------------------------------
</TABLE>
Continuing to be an industry leader in deferred compensation products,
revenues in this segment increased 4% and 2% over prior year for the third
quarter and nine months ended, respectively. Included in 1995 results is a
one time benefit of approximately $2 million. Excluding this benefit, net
income rose 30% over prior year for the nine months ended. AMS is currently
engaged in a restructuring process that is anticipated to result in new
product development as well as expense reductions.
SPECIALTY
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Quarter Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues $ 223 $ 358 $ 976 $ 951
Expenses 215 351 954 933
------ ------ ------ ------
NET INCOME $ 8 $ 7 $ 22 $ 18
------ ------ ------ ------
------ ------ ------ ------
- -------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Net income for the nine months ended is attributable to net investment income
and other revenues on the existing block of coporate owned life insurance
(COLI) business. Net income in the Specialty segment held steady in the
third quarter as compared to the same period last year, however, revenues
decreased. As mentioned in the second quarter, Congress passed COLI
legislation which provides for a three year phase-out of the interest
deduction on loans taken against COLI policies. In anticipation of
unfavorable tax legislation, there were no new deposits of leveraged COLI,
but new products, such as variable COLI and other non-qualified deferred
compensation vehicles, and new international ventures have been and continue
to be developed to mitigate lost earnings due to leveraged COLI.
RUNOFF
Quarter Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
------ ------ ------ ------
Revenues $ (173) $ 79 $ (57) $ 272
Expenses 10 96 156 315
------ ------ ------ ------
NET LOSS $ (183) $ (17) $ (213) $ (43)
------ ------ ------ ------
------ ------ ------ ------
The Runoff segment consists of a closed block of guaranteed rate contracts
(Closed Book GRC) which had no new or renewal business at the end of 1995.
Prior to 1996, Closed Book GRC was reported as a component of the Asset
Management Services Division of the Hartford Life. The majority of products
included in Closed Book GRC are guaranteed investment contracts with
guaranteed fixed or indexed rates for a specific period. Closed Book GRC
results have been negatively affected by lower investment rates and earnings
on mortgage backed securities due to prepayments experienced in excess of
assumed levels in years prior to 1995. Closed Book GRC was also affected by
the interest rate rise in 1994 when the duration of its assets lengthened
relative to that of the liabilities. Due to the reduced investment earnings
and duration mismatch, the portfolio had insufficient assets to fund fully
its liability commitments. During the third quarter of 1996, assets in the
amount of $200 million were transferred to the Runoff segment to adequately
fund Closed Book GRC so that future cash infusions would be minimal.
Although the Closed Book GRC asset portfolio as a whole is duration matched with
its liabilities, certain investments continue to have a longer maturity than
their corresponding liabilities and will need to be liquidated prior to maturity
in order to meet the specific liability commitments. To protect the existing
value of these investments, Hartford Life entered into various hedge
transactions in late September 1996 which substantially eliminated further
fluctuation in fair value of the investments due to interest rate changes.
Hartford Life's accounting policy is to record an other than temporary
impairment charge on a security if it is determined that the Company is
unable to recover all amounts due under the contractual obligations of the
security. In addition, Hartford Life has established specific criteria to
be used in the impairment evaluation of an individual portfolio of assets.
Specifically, if the asset portfolio is supporting a runoff operation, is
forced to be liquidated prior to maturity to meet liability commitments, and
has a fair value below amortized cost, which will not materially fluctuate as
a result of future interest rate changes, then an other than temporary
impairment has been determined to have occurred. Once an impairment charge
has been recorded, Hartford Life continues to review the impaired securities
for appropriate valuation.
With the initiation of the hedge transactions, which eliminated the
possibility that the fair value of the Closed Book GRC investments would
recover to their current amortized cost, an other than temporary impairment
loss of $82 million after tax was determined to have occurred and was
recorded in September 1996. Also, during the third quarter of 1996, Closed
Book GRC had asset sales resulting in proceeds of approximately $500 and a
realized loss of $55 after tax. The asset sales were the result of current
liquidity needs in addition to taking advantage of favorable market
conditions for certain securities. Other charges of $32 after tax were also
incurred in the third quarter.
<PAGE>
During 1995, Closed Book GRC incurred a $68 after tax loss from operations.
In addition, prior to the above actions the level of the 1995 loss was
expected by management to decline by 10% to 25% in 1996 and 1997 with the
losses having run off in their entirety by the year 2000. As a result of the
above actions, management expects that the comparable 1996 after tax loss
will be in the range of $51 to $55, while after tax losses in 1997 and 1998
will be reduced to the range of $10 to $20 per year. Losses from Closed Book
GRC in years subsequent to 1998 are expected to be minimal.
FINANCIAL RATINGS
The following table summarizes ITT Hartford's significant U.S. member companies'
financial ratings from the major independent rating organizations as of
September 30, 1996:
Duff & Standard
A.M. Best Phelps & Poor's Moody's
------------------------------------------
Hartford Fire A+ AA AA Aa2
Hartford Life A+ AA+ AA Aa2
Hartford Life and Accident A+ AA+ AA Not Rated
ITT Hartford Life and Annuity A+ AA+ AA Not Rated
On September 24, 1996, Standard & Poor's announced that it had reduced the
claims-paying ability ratings of the ITT Hartford group of companies (ITT
Hartford), including Hartford Life Insurance Company, from AA+ to AA. In
announcing the rating change, Standard and Poor's said that the action was based
primarily on increased concern with the overall strength of ITT Hartford's
consolidated capital, partially offset by superior business position within the
markets that ITT Hartford operates. It noted that the rating action assumed
continued significant capital raising initiatives by ITT Hartford over the next
year and said that these initiatives, in combination with continued improvement
in operating earnings, excluding any unusual charges, should allow ITT Hartford
to improve it's overall capital position.
On October 18, 1996, Moody's Investors Service announced that it was reviewing
for possible downgrade various ratings of ITT Hartford and its subsidiaries,
including the financial strength ratings of ITT Hartford's insurance
subsidiaries. Moody's stated that the reveiw was prompted by ITT Hartford's
announcement that it was taking the charges related to its environmental and
asbestos reserves and Closed Book GRC, and that its review would focus on ITT
Hartford's exposure to asbestos and environmental losses, its appetite for
financial leverage and its strategic complexion over the intermediate term.
Financial ratings from A.M. Best and Duff & Phelps were reaffirmed for ITT
Hartford's significant U.S. member companies as of October 18, 1996.
<PAGE>
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Board of Directors of
ITT Hartford Life and Annuity Insurance Company:
We have audited the accompanying statutory balance sheets of ITT Hartford
Life and Annuity Insurance Company (a Wisconsin corporation and wholly-owned
subsidiary of Hartford Life Insurance Company) (the Company) as of December
31, 1995 and 1994, and the related statutory statements of income, changes in
capital and surplus, and cash flows for each of the three years in the period
ended December 31, 1995. 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 of notes to statutory financial
statements. When statutory financial statements are presented for purposes
other than for filing with a regulatory agency, generally accepted auditing
standards require that an auditors' report on them state whether they are
presented in conformity with generally accepted accounting principles. The
accounting practices used by the Company vary from generally accepted
accounting principles as explained and quantified in Note 1. In our opinion,
because the differences in accounting practices as described in Note 1 are
material, the statutory financial statements referred to above do not present
fairly, in accordance with generally accepted accounting principles, the
financial position of the Company as of December 31, 1995 and 1994, and the
results of its operations and its cash flows for each of the three years in
the period ended December 31, 1995.
<PAGE>
However, in our opinion, the statutory financial statements referred to above
present fairly, in all material respects, the financial position of the
Company as of December 31, 1995 and 1994, and the results of operations and
its cash flows for each of the three years in the period ended December 31,
1995 in conformity with statutory accounting practices as described in Note 1.
As discussed in Note 1 of notes to statutory financial statements, the
Company changed its valuation method in determining aggregate reserves for
future benefits.
/s/ Arthur Andersen LLP
Hartford, Connecticut
January 24, 1996
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
Revenues
Premiums and Annuity Considerations..................................... $ 165,792 $ 442,173 $ 14,281
Annuity and Other Fund Deposits......................................... 1,087,661 608,685 1,986,140
Net Investment Income................................................... 78,787 29,012 7,970
Commissions and Expense Allowances on Reinsurance
Ceded.................................................................. 183,380 154,527 60,700
Reserve Adjustment on Reinsurance Ceded................................. 1,879,785 1,266,926 0
Other Revenues.......................................................... 140,796 41,857 369,598
------------- ------------- -------------
Total Revenues........................................................ 3,536,201 2,543,180 2,438,689
------------- ------------- -------------
Benefits and Expenses
Death and Annuity Benefits.............................................. 53,029 7,948 3,192
Surrenders and Other Benefit Payments................................... 221,392 181,749 4,955
Commissions and Other Expenses.......................................... 236,202 186,303 132,169
Increase in Reserves for Future Benefits................................ 94,253 416,748 5,120
Increase in Liability for Premium and Other Deposit Funds............... 460,124 182,934 281,024
Net Transfers to Separate Accounts...................................... 2,414,669 1,541,419 2,013,183
------------- ------------- -------------
Total Benefits and Expenses........................................... 3,479,669 2,517,101 2,439,643
------------- ------------- -------------
Net Gain (Loss) from Operations before Federal Income Tax Expense......... 56,532 26,079 (954)
Federal Income Tax Expense.............................................. 14,048 24,038 11,270
------------- ------------- -------------
Net Gain (Loss) from Operations........................................... 42,484 2,041 (12,224)
Net Realized Capital Gains (Losses)..................................... 374 (2) 877
------------- ------------- -------------
Net Income (Loss)......................................................... $ 42,858 $ 2,039 $ (11,347)
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements
49
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
----------------------------
1995 1994
------------- -------------
<S> <C> <C>
Assets
Bonds................................................................................... $ 1,226,489 $ 798,501
Common Stocks........................................................................... 39,776 2,275
Policy Loans............................................................................ 22,521 20,145
Cash and Short-Term Investments......................................................... 173,304 84,312
Other Invested Assets................................................................... 13,432 2,519
------------- -------------
Total Cash and Invested Assets........................................................ 1,475,522 907,752
------------- -------------
Investment Income Due and Accrued....................................................... 18,021 12,757
Premium Balances Receivable............................................................. 402 467
Receivables from Affiliates............................................................. 8,182 2,861
Other Assets............................................................................ 25,907 13,749
Separate Account Assets................................................................. 7,324,910 3,588,077
------------- -------------
Total Assets.......................................................................... $ 8,852,944 $ 4,525,663
------------- -------------
------------- -------------
Liabilities
Aggregate Reserves for Future Benefits.................................................. $ 542,082 $ 447,284
Policy and Contract Claims.............................................................. 8,223 9,902
Liability for Premium and Other Deposit Funds........................................... 948,361 479,202
Asset Valuation Reserve................................................................. 8,010 2,422
Payable to Affiliates................................................................... 3,682 7,840
Other Liabilities....................................................................... (220,658) (100,349)
Separate Account Liabilities............................................................ 7,324,910 3,588,077
------------- -------------
Total Liabilities..................................................................... 8,614,610 4,434,378
------------- -------------
Capital and Surplus
Common Stock............................................................................ 2,500 2,500
Gross Paid-In and Contributed Surplus................................................... 226,043 114,109
Unassigned Funds........................................................................ 9,791 (25,324)
------------- -------------
Total Capital and Surplus............................................................. 238,334 91,285
------------- -------------
Total Liabilities and Capital and Surplus................................................. $ 8,852,944 $ 4,525,663
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
50
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
----------- --------- ----------
<S> <C> <C> <C>
Capital and Surplus -- Beginning of Year........................................... $ 91,285 $ 88,693 $ 30,027
----------- --------- ----------
Net Income (Loss)................................................................ 42,858 2,039 (11,347)
Net Unrealized Gains (Losses).................................................... 1,709 (133) (1,198)
Change in Asset Valuation Reserve................................................ (5,588) (1,356) 135
Change in Non-Admitted Assets.................................................... (1,944) (8,599) 1,076
Change in Reserve (calculation basis--see Note 1)................................ 0 10,659 0
Aggregate Write-ins for Surplus (see Note 3)..................................... 8,080 (18) 0
Dividends to Shareholder......................................................... (10,000) 0 0
Paid-in Surplus.................................................................. 111,934 0 70,000
----------- --------- ----------
Change in Capital and Surplus.................................................. 147,049 2,592 58,666
----------- --------- ----------
Capital and Surplus -- End of Year................................................. $ 238,334 $ 91,285 $ 88,693
----------- --------- ----------
----------- --------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements
51
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATUTORY STATEMENTS OF CASH FLOW
($000)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
Operations
Premiums, Annuity Considerations and Fund Deposits...................... $ 1,253,511 $ 1,050,493 $ 2,000,492
Investment Income....................................................... 78,328 24,519 5,594
Other Income............................................................ 2,253,466 1,515,700 434,851
------------- ------------- -------------
Total Income.......................................................... 3,585,305 2,590,712 2,440,937
------------- ------------- -------------
Benefits Paid........................................................... 277,965 181,205 8,215
Federal Income Taxes Paid on Operations................................. 208,423 20,634 9,666
Other Expenses.......................................................... 2,664,385 1,832,905 2,231,477
------------- ------------- -------------
Total Benefits and Expenses........................................... 3,150,773 2,034,744 2,249,358
------------- ------------- -------------
Net Cash From Operations.............................................. 434,532 555,968 191,579
------------- ------------- -------------
Proceeds from Investments
Bonds................................................................... 287,941 87,747 88,334
Common Stocks........................................................... 52 0 0
Other................................................................... 28 40 23,638
------------- ------------- -------------
Net Investment Proceeds............................................... 288,021 87,787 111,972
------------- ------------- -------------
Tax on Capital Gains.................................................... 226 (96) 376
Paid-in-Surplus......................................................... 111,934 0 70,000
Other Cash Provided..................................................... 28,199 30,554 0
------------- ------------- -------------
Total Proceeds........................................................ 862,460 674,405 373,175
------------- ------------- -------------
Cost of Investments Acquired
Bonds................................................................... 720,521 595,181 314,933
Common Stocks........................................................... 35,794 808 567
Miscellaneous Applications.............................................. 2,146 2,523 0
------------- ------------- -------------
Total Investments Acquired............................................ 758,461 598,512 315,500
------------- ------------- -------------
Other Cash Applied
Dividends Paid to Stockholder........................................... 10,000 0 0
Other................................................................... 5,007 24,813 24,626
------------- ------------- -------------
Total Other Cash Applied.............................................. 15,007 24,813 24,626
------------- ------------- -------------
Total Applications.................................................. 773,468 623,325 340,126
------------- ------------- -------------
Net Change in Cash and Short-Term Investments............................. 88,992 51,080 33,049
Cash and Short-Term Investments, Beginning of Year........................ 84,312 33,232 183
------------- ------------- -------------
Cash and Short-Term Investments, End of Year.............................. $ 173,304 $ 84,312 $ 33,232
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
52
<PAGE>
ITT Hartford Life and Annuity Insurance Company 51
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(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
ITT Hartford Group, Inc. (ITT Hartford), formerly a wholly owned subsidiary of
ITT Corporation (ITT). On December 19, 1995, ITT Corporation distributed all the
outstanding shares of ITT Hartford Group to ITT shareholders of record in an
action known herein as the "Distribution". As a result of the Distribution, ITT
Hartford became an independent, publicly traded company.
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.
The preparation of financial statements in conformity with statutory
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilties and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates.
Statutory accounting practices and generally accepted accounting principles
(GAAP) differ in certain significant respects. These differences principally
involve:
(1) treatment of policy acquisition costs (commissions, underwriting and
selling expenses, premium taxes, etc.) which are charged to expense when
incurred for statutory purposes rather than on a pro-rata basis over the
expected life of the policy;
(2) recognition of premium revenues, which for statutory purposes are
generally recorded as collected or when due during the premium paying period of
the contract and which for GAAP purposes, generally, for universal life policies
and investment products, are only recorded for policy charges for the cost of
insurance, policy administration and surrender charges assessed to policy
account balances. Also, for GAAP purposes, premiums for traditional life
insurance policies are recognized as revenues when they are due from
policyholders and the retrospective deposit method is used in accounting for
universal life and other types of contracts where the payment pattern is
irregular or surrender charges are a significant source of profit. The
prospective deposit method is used for GAAP purposes where investment margins
are the primary source of profit;
(3) development of liabilities for future policy benefits, which for
statutory purposes predominantly use interest rate and mortality assumptions
prescribed by the NAIC which may vary considerably from interest and mortality
assumptions used for GAAP financial reporting;
(4) providing for income taxes based on current taxable income (tax return)
only for statutory purposes, rather than establishing additional assets or
liabilities for deferred Federal income taxes to recognize the tax effect
related to reporting revenues and expenses in different periods for financial
reporting and tax return purposes;
(5) excluding certain GAAP assets designated as non-admitted assets (e.g.,
past due agent's balances and furniture and equipment) from the balance sheet
for statutory purposes by directly charging surplus;
(6) establishing accruals for post-retirement and post-employment health
care benefits on an optional basis, immediate recognition or a twenty year
phase-in approach, whereas GAAP liabilities were established at date of
adoption;
(7) establishing a formula reserve for realized and unrealized losses due to
default and equity risk associated with certain invested assets (Asset Valuation
Reserve); as well as the deferral and amortization of realized gains and losses,
motivated by changes in interest rates during the period the asset is held, into
income over the remaining life to maturity of the asset sold (Interest
Maintenance Reserve); whereas on a GAAP basis, no such formula reserve is
required and realized gains and losses are recognized in the period the asset is
sold;
(8) the reporting of reserves and benefits net of reinsurance ceded, where
risk transfer has taken place; whereas on a GAAP basis, reserves are reported
gross of reinsurance with reserve credits presented as recoverable assets;
<PAGE>
52 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
(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 affect 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 Gain/Loss on Investments, Net of Tax". For
statutory reporting purposes, Net Unrealized Loss on Investments represents
unrealized gains or losses on common stock and other bonds reported at fair
value; and
(10) separate account liabilties are valued on the Commissioner's Annuity
Reserve Valuation Method (CARVM), with the surplus generated recorded as a
liability to the general account (and a contra liability on the balance sheet of
the general account), whereas GAAP liabilities are valued at account value.
As of December 31, 1995, 1994 and 1993, the significant differences between
statutory and GAAP basis net income and capital and surplus for the Company are
summarized as follows:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
GAAP Net Income:.............................................................................. $ 38,821 $ 23,295
Amortization and deferral of policy acquisition costs....................................... (174,341) (117,863)
Benefit reserve adjustment.................................................................. 31,392 30,912
Deferred taxes.............................................................................. 2,801 (9,267)
Separate accounts........................................................................... 146,635 75,941
Coinsurance................................................................................. 0 3,472
Other, net.................................................................................. (2,450) (4,451)
Statutory Net Income (Loss)................................................................. $ 42,858 $ 2,039
GAAP Capital and Surplus...................................................................... $ 455,541 $ 199,785
Deferred policy acquisition costs........................................................... (596,542) (422,201)
Benefit reserve adjustment.................................................................. 74,782 85,191
Deferred taxes.............................................................................. 1,493 13,257
Separate accounts........................................................................... 333,123 186,488
Asset valuation reserve..................................................................... (8,010) (2,422)
Coinsurance................................................................................. 0 0
Unrealized gain (loss) on bonds............................................................. (1,696) 21,918
Adjustment relating to Lyndon contribution.................................................. (41,277) 0
Other, net.................................................................................. 20,920 9,269
Statutory Capital and Surplus............................................................... $ 238,334 $ 91,285
<CAPTION>
1993
-----------
<S> <C>
GAAP Net Income:.............................................................................. $ 6,071
Amortization and deferral of policy acquisition costs....................................... (147,700)
Benefit reserve adjustment.................................................................. 14,059
Deferred taxes.............................................................................. (7,123)
Separate accounts........................................................................... 110,547
Coinsurance................................................................................. 11,578
Other, net.................................................................................. 1,221
Statutory Net Income (Loss)................................................................. $ (11,347)
GAAP Capital and Surplus...................................................................... $ 198,408
Deferred policy acquisition costs........................................................... (304,338)
Benefit reserve adjustment.................................................................. 43,621
Deferred taxes.............................................................................. 13,706
Separate accounts........................................................................... 110,547
Asset valuation reserve..................................................................... (1,066)
Coinsurance................................................................................. 22,642
Unrealized gain (loss) on bonds............................................................. 0
Adjustment relating to Lyndon contribution.................................................. 0
Other, net.................................................................................. 5,173
Statutory Capital and Surplus............................................................... $ 88,693
</TABLE>
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 6.0%. 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 Statements of
Income.
During 1994, the Company changed the valuation method on aggregate reserves
for future benefits resulting in a $10.7 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 a permanent reduction in the value of
publicly traded securities occurs, the decrease is reported as a realized loss
and the carrying value is adjusted accordingly. Common stocks are carried at
market value with the difference from cost reflected in surplus. Other invested
assets are generally recorded at fair value.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 53
- --------------------------------------------------------------------------------
Changes in unrealized capital gains and losses on common stock are reported
as additions to or reductions of surplus. The Asset Valuation Reserve 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 $5,588, $1,356 and $135 in 1995, 1994 and 1993,
respectively. 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, net of taxes, not included in IMR are reported in the
Statutory Statements of Income. Realized investment gains and losses are
determined on a specific identification basis. The amount of net capital gains
reclassified from the IMR was $39 in 1995 and the amount of net capital losses
was $67 and $264 in 1994 and 1993, respectively. The amount of income amortized
was $256, $114 and $178 in 1995, 1994 and 1993, respectively.
OTHER LIABILITIES
The amount reflected in other liabilities includes a receivable from the
separate accounts of $333.1, $186.5 million in 1995 and 1994, respectively. The
balances are classified in accordance with NAIC accounting practices.
2. INVESTMENTS:
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Interest income from
fixed maturity
securities........... $ 76,100 $ 28,335 $ 7,541
Interest income from
policy loans......... 1,504 454 124
Interest and dividends
from other
investments.......... 2,288 1,069 481
--------- --------- ---------
Gross investment
income............... 79,892 29,858 8,146
Less: investment
expenses............. 1,105 846 176
Net investment
income............... $ 78,787 $ 29,012 $ 7,970
--------- --------- ---------
--------- --------- ---------
</TABLE>
(B) UNREALIZED GAINS (LOSSES) ON COMMON STOCKS
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Gross unrealized gains at
end of year............... $ 1,724 $ 75 $ 148
Gross unrealized losses at
end of year............... 0 (60) 0
--------- --------- ---------
Net unrealized gains....... 1,724 15 148
Balance at beginning of
year...................... 15 148 93
--------- --------- ---------
Change in net unrealized
gains on common stocks.... $ 1,709 $ (133) $ 55
--------- --------- ---------
--------- --------- ---------
</TABLE>
(C) UNREALIZED GAINS (LOSSES) ON BONDS AND SHORT-TERM INVESTMENTS
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ---------
<S> <C> <C> <C>
Gross unrealized
gains at end of
year............... $ 22,251 $ 986 $ 5,916
Gross unrealized
losses at end of
year............... (1,374) (34,718) (684)
---------- ---------- ---------
Net unrealized gains
(losses) after
tax................ 20,877 (33,732) 5,232
Balance at beginning
of year............ (33,732) 5,232 2,287
---------- ---------- ---------
Change in net
unrealized gains
(losses) on bonds
and short-term
investments........ $ 54,609 $ (38,964) $ 2,945
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
(D) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Bonds and short term
investments.............. $ 156 $ (101) $ (316)
Common stocks............. 52 0 0
Real estate and other..... 0 34 1,316
--------- --------- ---------
Realized gains (losses)... 208 (67) 1,000
Capital gains (benefit)
taxes.................... (205) 2 386
--------- --------- ---------
Net realized capital gains
(losses) after tax....... 413 (69) 614
Less: IMR capital gains
(losses)................. 39 (67) (263)
--------- --------- ---------
Net realized capital gains
(losses)................. $ 374 $ (2) $ 877
--------- --------- ---------
--------- --------- ---------
</TABLE>
<PAGE>
54 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
(E) OFF-BALANCE SHEET INVESTMENTS
The Company had no significant financial instruments with off-balance sheet
risk as of December 31, 1995 and 1994.
(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 COMMON STOCK INVESTMENTS
<TABLE>
<CAPTION>
1995
--------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES
------------ ----------- -----------
<S> <C> <C> <C>
U.S. government and government agencies and authorities:
-- guaranteed and sponsored.................................................... $ 44,268 $ 14 $ (248)
-- guaranteed and sponsored -- asset backed.................................... 176,160 4,644 (682)
States, municipalities and political subdivisions................................ 16,948 38 (6)
International governments........................................................ 5,402 441 0
Public utilities................................................................. 108,083 1,652 (90)
All other corporate.............................................................. 374,058 8,145 (248)
All other corporate -- asset backed.............................................. 410,197 5,841 (89)
Short-term investments........................................................... 139,011 18 0
Certificates of deposit.......................................................... 91,373 1,458 (11)
------------ ----------- -----------
Total........................................................................ $ 1,365,500 $ 22,251 $ (1,374)
------------ ----------- -----------
------------ ----------- -----------
<CAPTION>
FAIR
VALUE
------------
<S> <C>
U.S. government and government agencies and authorities:
-- guaranteed and sponsored.................................................... $ 44,034
-- guaranteed and sponsored -- asset backed.................................... 180,122
States, municipalities and political subdivisions................................ 16,980
International governments........................................................ 5,843
Public utilities................................................................. 109,645
All other corporate.............................................................. 381,955
All other corporate -- asset backed.............................................. 415,949
Short-term investments........................................................... 139,029
Certificates of deposit.......................................................... 92,820
------------
Total........................................................................ $ 1,386,377
------------
------------
</TABLE>
<TABLE>
<CAPTION>
1995
------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Common Stock -- Unaffiliated................................................. $ 2,668 $ 555 $ 0 $ 3,223
Common Stock -- Affiliated................................................... 35,384 1,169 0 36,553
----------- ----------- ----------- ---------
Total Common Stock....................................................... $ 38,052 $ 1,724 $0 $ 39,776
----------- ----------- ----------- ---------
----------- ----------- ----------- ---------
</TABLE>
<TABLE>
<CAPTION>
1994
--------------------------------------------------
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.............................................. $ 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
---------- ----- ----------- ----------
---------- ----- ----------- ----------
</TABLE>
<TABLE>
<CAPTION>
1994
----------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ------------- ------------- ---------
<S> <C> <C> <C> <C>
Common Stock -- Unaffiliated.................................................. $ 2,260 $ 75 $ (60) $ 2,275
</TABLE>
The amortized cost and estimated market value of bonds and short-term
investments at December 31, 1995 by management's anticipated maturity are shown
below. Asset backed securities are distributed to maturity year based on ILA's
estimate of the rate of future prepayments of principal
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 55
- --------------------------------------------------------------------------------
over the remaining life of the securities. Expected maturities differ from
contractual maturities reflecting borrowers' rights to call or prepay their
obligations.
<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
MATURITY COST FAIR VALUE
- ------------------------------------ ------------ ------------
<S> <C> <C>
Due in one year or less............. $ 439,793 $ 442,327
Due after one year through five
years.............................. 840,088 855,741
Due after five years through ten
years.............................. 80,820 83,432
Due after ten years................. 4,799 4,877
------------ ------------
Total............................... $ 1,365,500 $ 1,386,377
------------ ------------
------------ ------------
</TABLE>
Proceeds from sales of investments in bonds and short-term investments
during 1995, 1994 and 1993 were $313,961, $117,912 and $333,023, respectively,
resulting in gross realized gains of $1,419, $518 and $937, respectively, and
gross realized losses of $1,263, $624 and $1,255, respectively, before transfers
to IMR. The Company had realized gains of $52 during 1995 from a capital gain
distribution.
(H) FAIR VALUE OF FINANCIAL INSTRUMENTS
BALANCE SHEET ITEMS:
(IN MILLIONS)
<TABLE>
<CAPTION>
1995 1994
---------------------- ----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Fixed maturities....... $ 1,366 $ 1,386 $ 855 $ 821
Common stocks.......... 40 40 2 2
Policy loans........... 23 23 20 20
Miscellaneous.......... 13 13 2 2
LIABILITIES
Liabilities on
investment
contracts............. $ 1,031 $ 981 $ 534 $ 526
</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.
On June 30, 1995, the assets of Lyndon Insurance Company were contributed to
ILA. As a result, ILA received approximately $365 million in fixed maturities,
equity securities and cash, $28 million in policy reserves, $187 million of
current tax liability, $26 million in IMR, $8 million in AVR (offset by an
aggregate write-in to surplus), and $4 million of other liabilities. The assets
in excess of liabilities of $112 were recorded as an increase to paid-in
surplus.
For additional information, see Note 5.
4. FEDERAL INCOME TAXES:
The Company is included in the consolidated Federal income tax return of ITT
Hartford and its includable subsidiaries. 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 Insurance
Company (Hartford Fire), a subsidiary of ITT Hartford. Federal income taxes paid
by the Company were $215,921, $20,538, and $10,042 in 1995, 1994 and 1993,
respectively. The effective tax rate was 25%, 92%, and 1,181% in 1995, 1994, and
1993 respectively. The following schedule provides a reconciliation of the
effective tax rate (in millions).
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ---
<S> <C> <C> <C>
Tax provision (benefit) at US statutory rate..................... 20 9 (1)
Tax acquisiton deferred costs.................................... 8 8 10
Statutory to tax reserves........................................ 3 5 0
Investments and other............................................ (17) 2 2
Federal income tax expense....................................... 14 24 11
</TABLE>
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. ILA paid dividends of $10 million
to its parent, HLIC, in 1995. No dividends were paid in 1994 and 1993. As a
result of the distribution by ITT, the assets of ITT Lyndon Insurance Company
(Lyndon) were contributed to ILA in June 1995. Substantially all the business
was removed from Lyndon prior to the contribution. The amount of assets which
exceeded liabilities at the contribution date ($112 million) was included in
paid-in capital.
6. PENSION PLANS AND OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS:
The Company's employees are included in ITT Hartford's non-contributory
defined benefit pension plans. These plans provide pension benefits that are
based on years of service and the employee's compensation during the last ten
years of employment. The Company's funding policy is to contribute annually an
amount between the
<PAGE>
56 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 $1,034, $1,211, and $765 in
1995, 1994 and 1993, respectively. Liabilities for the plan are held by Hartford
Fire.
The Company also participates in ITT Hartford's Investment and Savings Plan,
which includes a deferred compensation option under IRC section 401(k) and an
ESOP allocation under IRC section 404(k). The liabilities for these plans are
included in the financial statements of Hartford Fire. The cost to ILA was not
material in 1995, 1994 and 1993.
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. Amounts allocated by
Hartford Fire for post-retirement health care and life insurance benefits
expense (not including provisions for accrual of post-retirement benefit
obligations) are immaterial.
The assumed rate of future increases in the per capita cost of health care
(the health care trend rate) was 10.1% for 1995, decreasing ratably to 6% in the
year 2001. Increasing the health care trend rates by one percent per year would
have an immaterial impact on the accumulated post-retirement benefit obligation
and the annual expense. The cost to ILA was not material in 1995, 1994 and 1993.
Post-employment benefits are primarily comprised of obligations to provide
medical and life insurance to employees on long term disability. Post-employment
benefit expense was not material in 1995, 1994 and 1993.
7. REINSURANCE:
The Company cedes insurance to non-affiliated insurers in order to limit its
maximum loss. Such transfer does not relieve ILA of its primary liability. ILA
also assumes insurance from other insurers.
Life insurance net retained premiums were comprised of the following:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
-----------------------------------
1995 1994 1993
---------- ----------- ----------
<S> <C> <C> <C>
Direct premiums........... $ 159,918 $ 133,180 $ 131,586
Premiums assumed.......... 13,299 960 841
Premiums ceded............ 7,425 (308,033) 118,146
Premiums and annuity
considerations........... 165,792 442,173 14,281
</TABLE>
In December 1994 the Company ceded to a third party, on a modified
coinsurance basis, 80% of the variable annuity business written in 1994. 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. 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 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 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 Hartford Life and Accident, an affiliate. As a result of this
transaction, the assets and liabilities of the Company increased approximately
$1 billion, substantially all of which was transferred to the separate accounts
of the Company. The remaining assets and liabilities (approximately $41 million)
were transferred in October 1995. The impact of these transactions on net income
and surplus was not significant.
8. SEPARATE ACCOUNTS:
The Company maintains separate account assets and liabilities totaling $7.3
billion and $3.6 billion at December 31, 1995 and 1994, respectively. Separate
account assets are reported at fair value and separate account liabilities are
determined in accordance with the Commissioners Annuity Reserve Valuation Method
(CARVM), which approximates the market value less applicable surrender
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 57
- --------------------------------------------------------------------------------
charges. Separate account assets are segregated from other investments, the
policyholder assumes the investment risk, and the investment income and gains
and losses accrue directly to the policyholder. Separate account management
fees, net of minimum guarantees, were $72 million, $42 million, and $6 million
in 1995, 1994, and 1993, respectively.
9. COMMITMENTS AND CONTINGENCIES:
As of December 31, 1995, the Company had no material contingent liabilities,
nor had the Company committed any surplus funds for any contingent liabilities
or arrangements. The Company is involved in various legal actions which have
arisen in the 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.
Under insurance guaranty laws in most states, insurers doing business
therein can be assessed up to prescribed limits for policyholder losses incurred
by insolvent companies. The amount of any future assessments on ILA under these
laws cannot be reasonably estimated. Most of the laws do provide, however, that
an assessment may be excused or deferred if it would threaten an insurer's own
financial strength. Additionally, guaranty fund assessments are used to reduce
state premium taxes paid by the company in certain states. ILA paid guaranty
fund assessments of $1,684, $583, and $495 in 1995, 1994, and 1993,
respectively.
<PAGE>
PART II
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The prospectus consisting of ____ pages.
The undertaking to file reports.
The Rule 484 undertaking.
The signatures.
(1) The following exhibits included herewith correspond to those required by
paragraph A of the instructions for exhibits to Form N-8B-2.
(A1) Resolution of Board of Directors of the Company is incorporated by
reference to the Initial Submission, to the Registration Statement
File No. 333-00259 filed on January 17, 1996.
(A2) Not Applicable.
(A3a) Principal Underwriting Agreement is incorporated by reference to
the Pre-Effective Amendment No. 1 to the Registration Statement
File No. 333-00259 filed on November 1, 1996.
(A3b) Form of Selling Agreement is incorporated by reference to
the Pre-Effective Amendment No. 1 to the Registration Statement
File No. 333-00259 filed on November 1, 1996.
(A3c) Not applicable.
(A4) Not applicable.
(A5) Form of Modified Single Premium Variable Life Insurance Policy and
Last Survivor Modified Single Premium Variable Life Insurance
Policy is incorporated by reference to the Initial Submission, to
the Registration Statement File No. 333-00259 filed on January
17, 1996.
(A6a) Certificate of Incorporation of ITT Hartford Life and Annuity
Insurance Company is incorporated by reference to the
Pre-Effective Amendment No. 1 to the Registration Statement
File No. 333-00259 filed on November 1, 1996.
(A6b) Bylaws of ITT Hartford Life and Annuity Insurance Company is
incorporated by reference to the Pre-Effective Amendment No. 1
to the Registration Statement File No. 333-00259 filed on
November 1, 1996.
(A7) Not Applicable.
<PAGE>
(A8) Not Applicable.
(A9) Not Applicable.
(A10) Form of Application for Modified Single Premium Variable Life
Insurance Policies and Last Survivor Modified Single Premium
Variable Life Insurance Policy is incorporated by reference
to the Initial Submission, to the Registration Statement File
No. 333-00259 filed on January 17, 1996.
(11) Memorandum describing transfer and redemption procedures is
incorporated by reference to the Initial Submission, to the
Registration Statement File No. 333-00259 filed on January 17, 1996.
(2) Opinion and consent of Scott Richardson, Assistant Counsel is
incorporated by reference as stated above.
(3) No financial statement will be omitted from the Prospectus pursuant to
Instruction 1 (b) or (c) of Part I.
(4) Not applicable.
(5) Opinion and consent of Michael Winterfield, FSA, MAAA is incorporated by
reference to the Initial Submission, to the Registration Statement File
No. 333-00259 filed on January 17, 1996.
(6) Consent of Arthur Andersen LLP Independent Public Accountants.
(7) Power of Attorney is incorporated by refrence to the Initial Submission,
to the Registration Statement File No. 333-00259 filed on
January 17, 1996.
<PAGE>
REPRESENTATION OF REASONABLENESS OF FEES
ITT Hartford Life and Annuity Insurance Company hereby represents that the
aggregate fees and charges under the Policy are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks
assumed by ITT Hartford.
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
UNDERTAKING ON INDEMNIFICATION
Article VIII of the Bylaws of ITT Hartford Life and Annuity Insurance
Company, a Connecticut corporation, provides for indemnification of its
officers, directors and employees as follows:
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.
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
<PAGE>
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 if any 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.
The registrant hereby undertakes that insofar as indemnification for
liability arising under the Securities Act of 1933 (the "Act") may be
permitted to directors, officers and controlling persons of the registrant,
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 has duly caused this Registration Statement to be signed
by the following persons in the capacities and on the dates indicated.
ITT HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY - SEPARATE ACCOUNT FIVE (Registrant)
By: /s/ Gregory A. Boyko
--------------------------------------------
Gregory A. Boyko, Vice President & Controller
ITT HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY (Depositor)
By: /s/ Gregory A. Boyko
--------------------------------------------
Gregory A. Boyko, Vice President & Controller
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons and in the capacities and
on the dates indicated.
Donald R. Frahm, Director *
Bruce D. Gardner, Director *
Joseph H. Gareau, Executive Vice
President and Chief Investment
Officer, Director *
Joseph Kanarek, Vice President *By: /s/ Lynda Godkin
Director * --------------------------
Lynda Godkin
Attorney-in-Fact
Thomas M. Marra, Executive Vice
President, Director *
Lowndes A. Smith, President, Dated: November 20, 1996
Chief Executive Officer, Director * ------------------
Lizabeth H. Zlatkus, Vice President,
Director *
<PAGE>
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report (and to all references to our Firm) included in or made a part of
this Registration Statement File No. 333-00259 on Form S-6 for ITT Hartford
Life and Annuity Insurance Company Separate Account Five.
/s/ Arthur Andersen LLP
Hartford, Connecticut
November 25, 1996