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PUTNAM CAPITAL MANAGER LIFE
MODIFIED SINGLE PREMIUM VARIABLE LIFE
INSURANCE CONTRACTS
ITT HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY
P. O. BOX 2999
HARTFORD, CT 06104-2999
[LOGO] TELEPHONE (800) 231-5453
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This Prospectus describes Putnam Capital Manager Life, a modified single premium
variable life insurance contract ("Contract" or "Contracts") offered by ITT
Hartford Life and Annuity Insurance Company ("Hartford") to applicants age 90
and under. (On January 1, 1998, Hartford's name will change to Hartford Life and
Annuity Insurance Company). 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 20. 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 Hartford will accept is $10,000. The
initial premium will be allocated to the PCM Money Market Fund Sub-Account.
After the Right to Cancel Period has expired, the amount so allocated will be
transferred to the Funds specified in the Contract Owner's application. The
following underlying investment portfolios ("Funds") of Putnam Variable Trust
are available under the Contracts: Putnam VT Asia Pacific Growth Fund, Putnam VT
Diversified Income Fund, Putnam VT Global Asset Allocation Fund, Putnam VT
Global Growth Fund, Putnam VT Growth and Income Fund, Putnam VT High Yield Fund,
Putnam VT International Growth Fund, Putnam VT International Growth and Income
Fund, Putnam VT International New Opportunities Fund, Putnam VT Money Market
Fund, Putnam VT New Opportunities Fund, Putnam VT New Value Fund, Putnam VT U.S.
Government and High Quality Bond Fund, Putnam VT Utilities Growth and Income
Fund, Putnam VT Vista Fund, and Putnam VT Voyager Fund.
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
Funds 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 a 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 Funds 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, Hartford 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 FUNDS WHICH CONTAIN A FULL DESCRIPTION OF THOSE FUNDS.
ALL PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
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THE PRODUCTS DESCRIBED HEREIN ARE NOT DEPOSITS OF, OR GUARANTEED BY ANY
BANK, NOT 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.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS MAY 1, 1997.
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2 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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TABLE OF CONTENTS
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SPECIAL TERMS......................................................... 4
SUMMARY............................................................... 5
THE COMPANY........................................................... 7
THE SEPARATE ACCOUNT.................................................. 7
General............................................................. 7
Funds............................................................... 8
Investment Adviser.................................................. 9
THE CONTRACT.......................................................... 9
Application for a Contract.......................................... 9
Premiums............................................................ 10
Allocation of Premiums.............................................. 10
Accumulation Unit Values............................................ 10
DEDUCTIONS AND CHARGES................................................ 10
Monthly Deductions.................................................. 10
Annual Maintenance Fee.............................................. 12
Taxes Charged against the Separate Account.......................... 12
Charges Against the Funds........................................... 12
Contingent Deferred Sales Charge.................................... 12
Premium Tax Charge.................................................. 12
CONTRACT BENEFITS AND RIGHTS.......................................... 12
Death Benefit....................................................... 12
Account Value....................................................... 13
Transfer of Account Value........................................... 13
Contract Loans...................................................... 13
Amount Payable on Surrender of the Contract......................... 14
Partial Withdrawals................................................. 14
Benefits at Maturity................................................ 14
Lapse and Reinstatement............................................. 15
Cancellation and Exchange Rights.................................... 15
Suspension of Valuation, Payments and Transfers..................... 15
LAST SURVIVOR CONTRACTS............................................... 15
OTHER MATTERS......................................................... 15
Voting Rights....................................................... 15
Statements to Contract Owners....................................... 16
Limit on Right to Contest........................................... 16
Misstatement as to Age and Sex...................................... 16
Payment Options..................................................... 16
Beneficiary......................................................... 18
Assignment.......................................................... 18
Dividends........................................................... 18
EXECUTIVE OFFICERS AND DIRECTORS...................................... 19
DISTRIBUTION OF THE CONTRACTS......................................... 20
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS.......................... 20
FEDERAL TAX CONSIDERATIONS............................................ 20
General............................................................. 20
Taxation of Hartford and the Separate Account....................... 21
Income Taxation of Contract Benefits................................ 21
Last Survivor Contracts............................................. 21
Modified Endowment Contracts........................................ 21
Estate and Generation Skipping Taxes................................ 22
Diversification Requirements........................................ 22
Ownership of the Assets in the Separate Account..................... 22
Life Insurance Purchased for Use in Split Dollar Arrangements....... 23
Federal Income Tax Withholding...................................... 23
Non-Individual Ownership of Contracts............................... 23
Other............................................................... 23
Life Insurance Purchases by Nonresident Aliens and Foreign
Corporations....................................................... 23
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ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 3
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LEGAL PROCEEDINGS..................................................... 23
LEGAL MATTERS......................................................... 23
EXPERTS............................................................... 23
REGISTRATION STATEMENT................................................ 24
APPENDIX A -- ILLUSTRATION OF BENEFITS................................ 25
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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.
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4 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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. (For Contracts purchased in New York, see
Appendix 1, page __).
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 the 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 Hartford 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.
FUNDS: Currently, the portfolios of Putnam Variable Trust described on page 8 of
this Prospectus.
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 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 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. (For Contracts purchased in New
York, see Appendix A, page __).
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.
SEPARATE ACCOUNT: Separate Account Five, an account established by Hartford to
separate the assets funding the Contracts from other assets of Hartford.
SUB-ACCOUNT: The subdivisions of the Separate Account used to allocate a
Contract Owner's Account Value, less Indebtedness, among the Funds. Trust:
Putnam Variable Trust.
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.
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ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 5
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SUMMARY
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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 Funds 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 Funds.
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 15.
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THE SEPARATE ACCOUNT AND THE FUNDS
Separate Account Five ("Separate Account") funds the variable life insurance
Contracts offered by this Prospectus. Hartford established the Separate Account
pursuant to Connecticut insurance law and organized as a unit investment trust
registered under the Investment Company Act of 1940. The Contracts currently
offer 16 sub-accounts ("Sub-Accounts"), each investing exclusively in a Fund. If
an initial premium is submitted with an application for a Contract, it will be
allocated, within three business days of receipt at Hartford's Home Office, to
the PCM Money Market Fund Sub-Account. After the expiration of the Right to
Cancel Period, the values in the PCM Money Market Fund Sub-Account will be
allocated to one or more of the Funds, as specified in the Contract Owner's
application. See "The Contract -- Allocation of Premiums," page 10.
Currently, the Funds of Putnam Variable Trust available under the Contracts
are: Putnam VT Asia Pacific Growth Fund, Putnam VT Diversified Income Fund,
Putnam VT Global Asset Allocation Fund, Putnam VT Global Growth Fund, Putnam VT
Growth and Income Fund, Putnam VT High Yield Fund, Putnam VT International
Growth Fund, Putnam VT International Growth and Income Fund, Putnam VT
International New Opportunities Fund, Putnam VT Money Market Fund, Putnam VT New
Opportunities Fund, Putnam VT New Value Fund, Putnam VT U.S. Government and High
Quality Bond Fund, Putnam VT Utilities Growth and Income Fund, Putnam VT Vista
Fund, and Putnam VT Voyager Fund. Applicants should read the Funds prospectuses
accompanying this Prospectus in connection with the purchase of a Contract. The
investment objectives of the Funds are as set forth in "The Separate Account,"
page 7.
The following table shows annual fund operating expenses in 1996:
ANNUAL FUND OPERATING EXPENSES
(as a percentage of net assets)
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TOTAL FUND
MANAGEMENT OTHER OPERATING
FEES EXPENSES EXPENSES
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Putnam VT Asia Pacific Growth
Fund............................. 0.80% 0.43% 1.23%
Putnam VT Diversifed Income
Fund............................. 0.70% 0.13% 0.83%
Putnam VT Global Asset Allocation
Fund............................. 0.68% 0.15% 0.83%
Putnam VT Global Growth Fund...... 0.60% 0.16% 0.76%
Putnam VT Growth and Income
Fund............................. 0.49% 0.05% 0.54%
Putnam VT High Yield Fund......... 0.68% 0.08% 0.76%
Putnam VT International Growth
Fund............................. 0.80% 0.18% 0.98%
Putnam VT International Growth and
Income Fund...................... 0.80% 0.17% 0.97%
Putnam VT International New
Opportunities Fund............... 1.20% 0.19% 1.39%
Putnam VT Money Market Fund (1)... 0.45% 0.10% 0.55%
Putnam VT New Opportunities
Fund............................. 0.63% 0.09% 0.72%
Putnam VT New Value Fund.......... 0.70% 0.13% 0.83%
Putnam VT U.S. Government and High
Quality Bond Fund................ 0.62% 0.07% 0.69%
Putnam VT Utilities Growth and
Income Fund (2).................. 0.69% 0.09% 0.78%
Putnam VT Vista Fund.............. 0.65% 0.16% 0.81%
Putnam VT Voyager Fund............ 0.57% 0.06% 0.63%
</TABLE>
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(1) Other expenses for Putnam VT Money Market Fund have been restated to reflect
the cost of certain insurance purchased by the Fund. See "Putnam VT Money
Market Fund -- Insurance" in the Fund's prospectus. Actual other expenses
and total Fund operating expenses were 0.08% and 0.53, respectively.
(2) On July 11, 1996, shareholders approved an increase in the fees payable to
Putnam Investment Management, Inc. ("Putnam Management") under the
Management Contract for Putnam VT Utilities Growth and Income Fund. The
management fees and total expenses shown in the table have been restated to
reflect the increase. Actual management fees and total expenses were 0.64%
and 0.73%, respectively.
The investment adviser for all the Funds is Putnam Management. See "The
Separate Account," page 7.
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6 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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 35 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 35 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. Hartford may require evidence
of insurability for any additional premiums which increase the Coverage Amount.
Generally, the minimum initial premium Hartford will accept is $10,000. 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.
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DEDUCTIONS AND CHARGES
On the Contract Date and on each Monthly Activity Date, 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 Hartford's anticipated mortality costs. In addition, 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
Hartford for premium taxes imposed by various states and local jurisdictions and
for federal taxes imposed under Section 848 of the Code. The tax expense 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. 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 Hartford for administrative expenses incurred in
the administration of the Separate Account and the Contracts. 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 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 10, and "Contract Benefits and Rights -- Lapse and
Reinstatement," page 14.
If the Account Value on a Contract Anniversary is less than $50,000,
Hartford will deduct on such date an annual maintenance fee of $30. This fee
will help reimburse Hartford for administrative and maintenance costs of the
Contracts. See "Deductions and Charges -- Annual Maintenance Fee," page 12.
Hartford may set up a provision for income taxes against the assets of the
Separate Account. See "Deductions and Charges -- Taxes Charged Against the
Separate Account," page 12, and "Federal Tax Considerations," page 20.
Applicants should review the Funds prospectuses accompanying this Prospectus
for a description of the charges assessed against the assets of the Funds.
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 ninth Contract Year, there is no charge. The
contingent deferred sales charge is imposed to cover a portion of the sales
expense incurred by 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 12.
During the first nine Contract Years, an additional premium tax charge will
be imposed on surrender or partial withdrawals. See "Deductions and Charges --
Premium Tax Charges," page 12.
For a discussion of the tax consequences of surrender of the Contract or a
partial withdrawal, see "Federal Tax Considerations," page 20.
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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, Hartford 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
12.
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ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 7
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ACCOUNT VALUE
The Account Value will increase or decrease to reflect the investment
experience of the Funds 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 Funds. See "Contract
Benefits and Rights -- Account Value," page 13.
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CONTRACT LOANS
A Contract Owner may obtain one or both of two types of cash loans from
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 13.
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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. 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 13, and
"Lapse and Reinstatement," page 14.
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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 Hartford or to the agent who sold the Contract, to be cancelled within ten
days after delivery of the Contract to the applicant (in certain cases, this
free-look period is longer), Hartford will return to the applicant within seven
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 Hartford
or its agent and (2) any deductions under Contract or by the Funds 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 15.
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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 20.
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THE COMPANY
ITT Hartford Life and Annuity Insurance Company ("Hartford") is a stock life
insurance company engaged in the business of writing life insurance and
annuities, both individual and group, in all states of the United States and the
District of Columbia, except New York. On January 1, 1998, Hartford's name will
change to Hartford Life and Annuity Insurance Company. Hartford was originally
incorporated under the laws of Wisconsin on January 9, 1956, and was
subsequently redomiciled to Connecticut. Its offices are located in Simsbury,
Connecticut; however, its mailing address is P.O. Box 2999, Hartford, CT
06104-2999. Hartford is a subsidiary of Hartford Fire Insurance Company, one of
the largest multiple lines insurance carriers in the United States. Hartford is
ultimately owned by ITT Hartford Group, Inc., a Delaware corporation. Subject to
shareholder approval on May 2, 1997, the name of ITT Hartford Group, Inc. will
change to The Hartford Financial Services Group, Inc.
Hartford is rated A+ (superior) by A.M. Best and Company, Inc., on the basis
of its financial soundness and operating performance. 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 Hartford's ability to
meet its insurance obligations, including those described in this Prospectus.
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THE SEPARATE ACCOUNT
- -------------------------------- GENERAL
Separate Account Five ("Separate Account") is a separate account of 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
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8 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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Owners and persons entitled to payments under the Contracts. The assets of the
Separate Account are not chargeable with liabilities arising out of any other
business which Hartford may conduct.
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FUNDS
The underlying investments for the Contracts are shares of Putnam Variable
Trust (formerly named Putnam Capital Manager Trust), an open-end series
investment company with multiple portfolios ("Funds"). The assets of each
Sub-Account of the Separate Account are invested exclusively in one of the
Funds. The underlying Funds corresponding to each Sub-Account and their
investment objectives are described below. Hartford reserves the right, subject
to compliance with the law, to offer additional funds with differing investment
objectives. There is no assurance that any of the Funds will achieve its stated
objectives.
PUTNAM VT ASIA PACIFIC GROWTH FUND seeks capital appreciation by investing
primarily in securities of companies located in Asia and the Pacific Basin. The
Fund's investments will normally include common stocks, preferred stocks,
securities convertible into common stocks or preferred stocks, and warrants to
purchase common stocks or preferred stocks.
PUTNAM VT DIVERSIFIED INCOME FUND seeks high current income consistent with
capital preservation by investing in the following three sectors of the fixed
income securities markets: a U.S. Government Sector, a High Yield Sector (which
invests primarily in securities commonly known as "junk bonds"), and an
International Sector. See the special considerations for investments in high
yield securities described in the Fund prospectus.
PUTNAM VT GLOBAL ASSET ALLOCATION FUND seeks a high level of long-term total
return consistent with preservation of capital by investing in U.S. equities,
international equities, U.S. fixed income securities, and international fixed
income securities.
PUTNAM VT GLOBAL GROWTH FUND seeks capital appreciation through a globally
diversified portfolio of common stocks.
PUTNAM VT GROWTH AND INCOME FUND seeks capital growth and current income by
investing primarily in common stocks that offer potential for capital growth,
current income, or both.
PUTNAM VT HIGH YIELD FUND seeks high current income and, when consistent
with this objective, a secondary objective of capital growth, by investing
primarily in high-yielding, lower-rated fixed income securities, constituting a
portfolio which Putnam Management believes does not involve undue risk to income
or principal. See the special considerations for investments in high yield
securities described in the Fund prospectus.
PUTNAM VT INTERNATIONAL GROWTH FUND seeks capital appreciation by investing
primarily in equity securities of companies located in a country other than the
United States.
PUTNAM VT INTERNATIONAL GROWTH AND INCOME FUND seeks capital growth and
secondary objective of high current income by investing primarily in common
stocks that offer potential for capital growth and may, when consistent with its
investment objectives, invest in common stocks that offer potential for current
income. Under normal market conditions, the Fund expects to invest substantially
all of its assets in securities principally traded on markets outside the United
States.
PUTNAM VT INTERNATIONAL NEW OPPORTUNITIES FUND seeks long-term capital
appreciation by investing in companies that have above-average growth prospects
due to the fundamental growth of their market sector. Under normal market
conditions, the Fund expects to invest substantially all of its total assets,
other than cash or short-term investments held pending investment, in common
stocks, preferred stocks, convertible preferred stocks, convertible bonds and
other equity securities principally traded in securities markets outside the
United States.
PUTNAM VT MONEY MARKET FUND seeks as high a rate of current income as Putnam
Management believes is consistent with preservation of capital and maintenance
of liquidity by investing in high quality money market instruments.
PUTNAM VT NEW OPPORTUNITIES FUND seeks long-term capital appreciation by
investing principally in common stocks of companies in sectors of the economy
which Putnam Management believes possess above-average long-term growth
potential.
PUTNAM VT NEW VALUE FUND seeks long-term capital appreciation by investing
primarily in common stocks that Putnam Management believes are undervalued at
the time of purchase and have the potential for long-term capital appreciation.
PUTNAM VT U.S. GOVERNMENT AND HIGH QUALITY BOND FUND seeks current income
consistent with preservation of capital by investing primarily in securities
issued or guaranteed as to principal and interest by the U.S. Government or by
its agencies or instrumentalities and in other debt obligations rated at least A
by a nationally recognized securities rating agency such as Standard & Poor's or
Moody's Investors Service, Inc. or, if not rated, determined by Putnam
Management to be of comparable quality.
PUTNAM VT UTILITIES GROWTH AND INCOME FUND seeks capital growth and current
income by concentrating its
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 9
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investments in debt and equity securities issued by companies in the public
utilities industries.
PUTNAM VT VISTA FUND seeks capital appreciation by investing in a
diversified portfolio of common stocks which Putnam Management believes have the
potential for above-average capital appreciation.
PUTNAM VT VOYAGER FUND seeks capital appreciation by investing primarily in
common stocks of companies that Putnam Management believes have potential for
capital appreciation that is significantly greater than that of market averages.
Putnam VT Asia Pacific Growth Fund, Putnam VT Diversified Income Fund,
Putnam VT Global Growth Fund, Putnam VT Growth and Income Fund, Putnam VT High
Yield Fund, Putnam VT International Growth Fund, Putnam VT International Growth
and Income Fund, Putnam VT International New Opportunities Fund, Putnam VT Money
Market Fund, Putnam VT New Opportunities Fund, Putnam VT New Value Fund, Putnam
VT Utilities Growth and Income Fund, Putnam VT Vista Fund, and Putnam VT Voyager
Fund are generally managed in styles similar to other open-end investment
companies which are managed by Putnam Management and whose shares are generally
offered to the public. These other funds managed by Putnam Management may,
however, employ different investment practices and may invest in securities
different from those in which their counterpart Funds invest, and consequently
will not have identical portfolios or experience identical investment results.
The Funds are available only to serve as the underlying investment for
variable annuity and variable life contracts. A full description of the Funds,
their investment objectives, policies and restrictions, risks, charges and
expenses and other aspects of their operation are contained in the accompanying
Fund's prospectuses, which should be read in conjunction with this Prospectus
before investing, and in the Funds Statement of Additional Information which may
be ordered without charge from Putnam Investor Services, Inc.
It is conceivable that in the future it may be disadvantageous for variable
annuity separate accounts and variable life insurance separate accounts to
invest in the Funds simultaneously. Although Hartford and the Funds do not
currently foresee any such disadvantages either to variable annuity contract
owners or to variable life insurance policyowners, the Trust's Board of Trustees
intends to monitor events in order to identify any material conflicts between
such Contract Owners and policyowners and to determine what action, if any,
should be taken in response thereto. If the Fund's Board of Trustees were to
conclude that separate funds should be established for variable life and
variable annuity separate accounts, the variable annuity Contract holders would
not bear any expenses attendant upon establishment of such separate funds.
- ---------------------------------------------------
INVESTMENT ADVISER
Putnam Management, One Post Office Square, Boston, MA 02109, serves as the
investment manager for the Funds. An affiliate, Putnam Advisory Company, Inc.,
manages domestic and foreign institutional accounts and mutual funds. Another
affiliate, Putnam Fiduciary Trust Company, provides investment advice to
institutional clients under its banking and fiduciary policies. Putnam
Management and its affiliates are wholly-owned subsidiaries of Marsh & McLennan
Companies, Inc., a publicly owned holding company whose principal businesses are
international insurance brokerage and employee benefit consulting.
Subject to the general oversight of the Trust's Board of Trustees, Putnam
Management manages the Funds' portfolios in accordance with their stated
investment objectives and policies, makes investment decisions for the Funds,
places orders to purchase and sell securities on behalf of the Funds and
administers the affairs of the Funds. For its services, the Funds pay Putnam
Management a quarterly fee. See the accompanying Funds prospectuses for a more
complete description of Putnam Management and the respective fees of the Funds.
- ---------------------------------------------------
THE CONTRACT
- --------------------------------
APPLICATION FOR A CONTRACT
Individuals wishing to purchase a Contract must submit an application to
Hartford. A Contract will be issued only on the lives of insureds age 90 and
under who supply evidence of insurability satisfactory to Hartford. Acceptance
is subject to Hartford's underwriting rules, and 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 CURRENT RATE BEING CREDITED BY 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 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 the current limits established by Hartford,
the initial payment will not be accepted
<PAGE>
10 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
with the application. In other cases where Hartford receives the initial payment
with the application, Hartford 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 Hartford 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 35 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 35 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. Hartford may require evidence of insurability for any additional
premiums which increase the Coverage Amount. Generally, the minimum initial
premium Hartford will accept is $10,000. 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 Hartford's Home Office, Hartford will allocate the entire
premium to the PCM Money Market Fund Sub-Account. After the expiration of the
Right To Cancel Period,the Account Value in the PCM Money Market Fund
Sub-Account will be allocated among the Funds, 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 PCM Money Market Fund Sub-Account) is determined
first by multiplying the premium by the percentage to be allocated to each Fund
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 Fund and will be determined on each
Valuation Day by multiplying the Accumulation Unit Value of the particular Sub-
Account on the preceding Valuation Day by a "Net Investment Factor" for 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 Fund at
the end of the Valuation Period (plus the per share dividends or capital gains
by that Fund if the ex dividend date occurs in the Valuation Period then ended)
divided by the net asset value per share of the corresponding Fund at the
beginning of the Valuation Period. Applicants should refer to the Funds
prospectuses accompanying this Prospectus for a description of how the assets of
each Fund 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 13.
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 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, 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
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 11
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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 14. 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 Hartford's
anticipated mortality costs for standard and substandard risks. Current cost of
insurance rates are lower after the tenth 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, 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 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," page 12.)
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: 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 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 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, Hartford does not expect
to make a profit from this deduction. The 0.15% federal tax deduction helps
reimburse Hartford for approximate expenses incurred from federal taxes under
Section 848 of the Code. The federal tax deduction is a factor Hartford must use
when computing the maximum sales load chargeable under Securities and Exchange
Commission rules.
ADMINISTRATIVE CHARGE: 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 Hartford for administrative expenses
incurred in the administration of the Separate Account and the Contracts.
MORTALITY AND EXPENSE RISK CHARGE: 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 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. 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
<PAGE>
12 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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. 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. The
mortality and expense risk charge is deducted while the Contract is in force,
including the duration of a payment option.
- ---------------------------------------------------
ANNUAL MAINTENANCE FEE
If the Account Value on a Contract Anniversary is less than $50,000,
Hartford will deduct on such date an annual maintenance fee of $30. This fee
will help reimburse 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 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. 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 FUNDS
The Separate Account purchases shares of the Funds at net asset value. The
net asset value of the Fund shares reflects investment advisory fees and
administrative expenses already deducted from the assets of the Funds. These
charges are described in the Funds prospectuses accompanying this Prospectus.
- ---------------------------------------------------
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 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 ninth 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 premium payments and then
from earnings. 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 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 14.
- ---------------------------------------------------
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 2.25%
2 2.00%
3 1.75%
4 1.50%
5 1.25%
6 1.00%
7 0.75%
8 0.50%
9 0.25%
10+ 0.00%
</TABLE>
After the ninth Contract Year, no additional premium tax charge will be
imposed.
- ---------------------------------------------------
CONTRACT BENEFITS AND RIGHTS
- -------------------------------- DEATH BENEFIT
While in force, 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.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 13
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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 Hartford would pay
to the beneficiary.
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 16.
- ---------------------------------------------------
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 Funds, 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 Funds 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
10.
- ---------------------------------------------------
TRANSFER OF ACCOUNT VALUE
While the Contract remains in effect and subject to 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.
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. Transfers by telephone may be made by the agent of record
or by the attorney-in-fact pursuant to a power of attorney. Telephone transfers
may not be permitted in some states. The policy of Hartford and its agents and
affiliates is that they will not be responsible for losses resulting from acting
upon telephone requests reasonably believed to be genuine. Hartford will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine; otherwise, Hartford may be liable for any losses due to unauthorized or
fraudulent instructions. The procedures Hartford follows for transactions
initiated by telephone include requiring callers to provide certain information
for identification purposes. All transfer instructions by telephone are tape
recorded.
Hartford may modify the right to reallocate Account Value among the
Sub-Accounts if 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 Hartford considers 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 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 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 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
<PAGE>
14 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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
considered a "Preferred Loan." The loan interest rate that 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. Before advancing
the loan amount Hartford may withhold an amount sufficient to pay interest on
total loans to the end of the Contract Year and any monthly Deduction Amounts
due on or before the next Contract Anniversary. The proceeds of a loan will be
delivered to the Contract Owner within seven business days of Hartford's receipt
of the loan request.
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, Hartford will give written notice to the Contract
Owner that unless 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 14.
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 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. Hartford will pay the Cash Surrender Value of the
Contract within seven days of receipt by 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 20.
If the Contract Owner chooses to apply the surrender proceeds to a payment
option (see "Other Matters -- Payment Options," page 16), 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 Option 1, Option 5
or Option 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 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 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," page 12. For a discussion of the
tax consequences of partial withdrawals, see "Federal Tax Considerations," page
20.
- ---------------------------------------------------
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
Hartford, Hartford will pay to the Contract Owner the Cash Surrender Value. In
such case, the Contract will terminate and 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," page 21.)
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 15
- --------------------------------------------------------------------------------
- -------------------------------------------
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.
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 Amount(s) due. The notice will indicate the amount that must be
paid.
The Contract will continue through the Grace Period, but if no payment is
forthcoming 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 12.
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, Hartford
will require repayment of the loan before permitting reinstatement. In addition,
Hartford reserves the right to require evidence of insurability satisfactory to
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 Hartford or to the
agent who sold the Contract, to be cancelled within ten days after delivery of
the Contract to the Contract Owner (a longer free-look period is provided in
certain cases), Hartford will return to the applicant within seven 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 Hartford or its agent and (2) any
deductions under Contract or by the Funds 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 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
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 Securities and Exchange
Commission has ordered that the right of surrender of the Contracts be suspended
for the protection of Contract Owners, until such condition has ended.
- ---------------------------------------------------
LAST SURVIVOR CONTRACTS
The Contracts are offered on both a single life and a "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 35.
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 20.
- ---------------------------------------------------
OTHER MATTERS
- -------------------------------- VOTING RIGHTS
In accordance with its interpretation of presently applicable law, Hartford
will vote the shares of the Funds at regular and special meetings of the
shareholders of the Funds 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
<PAGE>
16 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 Funds. Hartford will vote shares for which no instructions have
been given and shares which are not attributable to Contract Owners (i.e.,
shares owned by Hartford) in the same proportion as it votes shares for which it
has received instructions. If the Investment Company Act of 1940 or any rule
promulgated thereunder should be amended, however, or if Hartford's present
interpretation should change and, as a result, Hartford determines it is
permitted to vote the shares of the Funds in its own right, it may elect to do
so.
The voting interests of the Contract Owner (or the assignee) in the Funds
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 Fund on the record
date for the shareholder meeting for that Fund. 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 13) will not be considered in
determining the voting interests of the Contract Owner. Contract Owners should
review the Funds prospectuses accompanying this Prospectus to determine matters
on which shareholders may vote.
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 Funds or to approve or disapprove an investment advisory
contract for the Funds.
In addition, 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 Funds if 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 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.
- ---------------------------------------------------
STATEMENTS TO CONTRACT OWNERS
Hartford will maintain all records relating to the Separate Account and the
Sub- Accounts. At least once each Contract Year, 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 loans 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
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 two 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 Hartford's payment options. The minimum
amount that may be applied under a payment option is $5,000 unless 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 Option 1 or Option 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.
Hartford 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 (Hartford may offer
other payment options):
OPTION 1 -- Interest Income
This option offers payments of interest, at the rate Hartford declares, 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
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 17
- --------------------------------------------------------------------------------
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 Hartford.
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 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
five 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 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 Hartford.
Option 5 is an option that does not involve life contingencies.
OPTION 6 -- Death Proceeds Remaining with Hartford
Proceeds from the Death Benefit left with 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 1983(a)
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 Hartford, which is
no less than the rate
<PAGE>
18 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
specified in the fixed payment annuity tables in the Contract. The annuity
payment will remain level for the duration of the annuity.
Hartford will make any other arrangements for income payments as may be
agreed on.
- ---------------------------------------------------
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 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.
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.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXECUTIVE OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
POSITION WITH HARTFORD LIFE, OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- ------------------------------ ------------------------------------- ------------------------------------------------------------
<S> <C> <C>
Wendell J. Bossen 63 Vice President, 1995** Vice President (1992-Present), Hartford Life Insurance
Company; Executive Vice President (1984) Mutual Benefit.
Gregory A. Boyko 45 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 Life Insurance Company.
Peter W. Cummins 60 Vice President, 1993 Vice President, Individual Annuity Operations
(1989-Present), Hartford.
Ann M. deRaismes 46 Vice President, 1997 Vice President (1994-Present); Assistant Vice President
(1992-1994); Director of Human Resources (1991-1997),
Hartford Life Insurance Company.
James R. Dooley 60 Vice President, 1973 Vice President, Director Information Services
(1973-Present), Hartford.
Timothy M. Fitch 44 Vice President, 1995 Vice President, (1995-Present);Assistant Vice President
(1993-1995); Director (1991-1993), Hartford Life Insurance
Company.
Bruce D. Gardner 46 Director, 1991* Vice President (1996-Present); General Counsel and Corporate
Secretary (1991-1995), Hartford Life Insurance Company.
Joseph H. Gareau 50 Executive Vice President and Senior Vice President & Chief Investment Officer
Chief Investment Officer, 1993 (1992-1993), Hartford; Senior Vice President and Chief
Director, 1993* Investment Officer (1992), Hartford Insurance Group.
Donald J. Gillette 51 Vice President, 1993 Vice President, Director of Marketing (1991-Present),
Hartford.
Lynda Godkin 43 General Counsel, 1996 Associate General Counsel and Corporate Secretary
Corporate Secretary, 1995 (1995-1996); Assistant General Counsel and Secretary
(1994-1995); Counsel (1990-1994), Hartford Life Insurance
Company.
Lois W. Grady 52 Vice President, 1993 Assistant Vice President (1988-1993), Hartford Life
Insurance Company.
David A. Hall 43 Senior Vice President and Senior Vice President and Actuary (1993-Present), Hartford.
Actuary, 1993
Robert A. Kerzner 45 Vice President, 1994 Vice President (1994-Present); Regional Vice President
(1991-1994), Hartford.
William B. Malchodi, Jr. 46 Vice President, 1994 Vice President (1994-Present); Director of Taxes
Director of Taxes, 1992 (1992-Present), Hartford Insurance Group.
Thomas M. Marra 38 Executive Vice President and Senior Vice President and Director, Individual Life and
Director, Individual Life and Annuity Division (1993- 1996); Director of Individual
Annuity Division, 1996 Annuities (1991-1993), Hartford.
Director, 1994*
Steven L. Mattieson 52 Vice President, 1984 Vice President, Director of New Business (1984-Present)
Hartford.
Joseph J. Noto 45 Vice President, 1989 President, and Director (1994-Present), American Maturity
Life Insurance Company; Vice President (1989-Present),
Hartford Life Insurance Company.
Craig D. Raymond 36 Vice President, 1993 Assistant Vice President (1992-1993); Actuary (1989-1994),
Chief Actuary, 1994 Hartford Life Insurance Company.
</TABLE>
<PAGE>
20 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH HARTFORD LIFE, OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST 5 YEARS; OTHER DIRECTORSHIPS
- ------------------------------ ------------------------------------- ------------------------------------------------------------
<S> <C> <C>
David T. Schrandt 49 Vice President, 1987 Vice President, Treasurer and Controller (1987-Present),
Treasurer, 1987 Hartford.
Lowndes A. Smith 57 President, 1989 President and Chief Operating Officer (1989-Present),
Chief Executive Officer, 1993 Hartford Life Insurance Company.
Director, 1985*
Lizabeth H. Zlatkus 37 Vice President, 1994 Vice President, Director Business Operaitons (1994-Present),
Director, 1994* Assistant Vice President, Director Executive Operations
(1992-1994), Hartford Life Insurance Company.
</TABLE>
- ------------------------
* Denotes date of election to Board of Directors.
** ITT Hartford Affiliated Company.
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
- ---------------------------------------------------
DISTRIBUTION OF THE CONTRACTS
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 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. ("HSD") 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 that of Hartford.
The maximum sales commission payable to 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, Hartford may pay or
permit other promotional incentives, in cash or credit or other compensation.
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 Hartford. The assets of the
Separate Account are kept physically segregated and held separate and apart from
the General Account of Hartford. Hartford maintains records of all purchases and
redemptions of shares of the Fund. Additional protection for the assets of the
Separate Account is afforded by 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 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 the Contracts cannot be made in this
Prospectus and that special tax rules may be applicable with
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 21
- --------------------------------------------------------------------------------
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 Hartford's understanding
of existing federal income tax laws as they are currently interpreted.
- ---------------------------------------------------
TAXATION OF HARTFORD AND
THE SEPARATE ACCOUNT
The Separate Account is taxed as a part of Hartford which is taxed as a life
insurance company under Subchapter L of the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Separate Account will not be taxed as a
"regulated investment company" under Subchapter M of 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," page
13). As a result, such investment income and realized capital gains are
automatically applied to increase reserves under the Contract.
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 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. Hartford intends to monitor
premium levels to assure compliance with the Section 7702 requirements.
During the first 15 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, 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 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, loans, distributions or other amounts
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 (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.
<PAGE>
22 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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.
Hartford monitors the diversification of investments in its separate
accounts, including the Separate Account, and tests for diversification as
required by the Code. Hartford intends to administer all Contracts subject to
the diversification requirements in a manner that will maintain adequate
diversification.
- ---------------------------------------------------
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 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
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 23
- --------------------------------------------------------------------------------
revenue rulings under section 817(d), relating to the definition of "variable
contract." The final regulations issued under Section 817 do not provide
guidance regarding investor control, and as of the date of this Prospectus, no
other such guidance has been issued. Further, Hartford does not know if or in
what form such guidance will be issued. In addition, although regulations are
generally issued with prospective effect, it is possible that regulations may be
issued with retroactive effect. Due to the lack of specific guidance regarding
the issue of investor control, there is necessarily some uncertainty regarding
whether a Contract Owner could be considered the owner of the assets for tax
purposes. Hartford reserves the right to modify the Contracts, as necessary, to
prevent Contract Owners from being considered the owners of the assets in the
Separate Account.
- ---------------------------------------------------
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 adviser
regarding U.S., state, and foreign taxation with respect to a life insurance
policy purchase.
- ---------------------------------------------------
LEGAL PROCEEDINGS
There are no material legal proceedings pending to which the Separate
Account is a party.
- ---------------------------------------------------
LEGAL MATTERS
Legal matters in connection with the issue and sale of flexible premium
variable life insurance Contracts described in this Prospectus and the
organization of 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 Hartford Life Insurance Companies.
- ---------------------------------------------------
EXPERTS
The audited 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 reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports. Reference is made to said report on the
statutory-basis financial statements of ITT Hartford Life and Annuity Insurance
Company which states the statutory-basis financial statements are presented in
accordance with statutory accounting practices prescribed or permitted by the
National Association of Insurance Commissioners and the State of Connecticut
Insurance Department, not presented
<PAGE>
24 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
in accordance with generally accepted accounting principles. Reference is made
to said report on the statutory-basis financial statements of ITT Hartford Life
and Annuity Insurance Company (the Depositor), which includes an explanatory
paragraph with respect to the change in valuation method in determining
aggregate reserves for future benefits in 1994, as discussed in Note 1 of Notes
to Statutory Financial Statements. The principal business address of Arthur
Andersen LLP is One Financial Plaza, Hartford, Connecticut 06103.
The hypothetical Contract illustrations included in this Prospectus and the
registration statement with respect to the Separate Account have been approved
by Michael Winterfield, FSA, MAAA, Director, Individual Annuity Inforce
Management, for 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 Funds, Hartford, and the Contracts.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 25
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 Funds for investment
advisory and administrative services fees. The gross annual investment return
rates of 0%, 6% and 12% on the Fund'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 -- Taxes Charged Against the Separate Account,"
page 12).
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. 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. 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.
<PAGE>
26 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 55,160 201,997 201,997 214,118 189,092 189,092 200,438
</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.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 27
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 -- -- --
</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.
<PAGE>
28 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 8,621 40,161
2 11,025 9,340 8,404 40,161 9,169 8,235 40,161
3 11,576 9,026 8,118 40,161 8,747 7,844 40,161
4 12,155 8,721 7,990 40,161 8,319 7,594 40,161
5 12,763 8,425 7,720 40,161 7,883 7,185 40,161
6 13,401 8,138 7,657 40,161 7,438 6,964 40,161
7 14,071 7,860 7,401 40,161 6,980 6,528 40,161
8 14,775 7,591 7,353 40,161 6,506 6,274 40,161
9 15,513 7,330 7,111 40,161 6,013 5,798 40,161
10 16,289 7,076 7,076 40,161 5,498 5,498 40,161
11 17,103 6,865 6,865 40,161 4,978 4,978 40,161
12 17,959 6,659 6,659 40,161 4,427 4,427 40,161
13 18,856 6,459 6,459 40,161 3,843 3,843 40,161
14 19,799 6,264 6,264 40,161 3,221 3,221 40,161
15 20,789 6,073 6,073 40,161 2,558 2,558 40,161
16 21,829 5,888 5,888 40,161 1,845 1,845 40,161
17 22,920 5,707 5,707 40,161 1,075 1,075 40,161
18 24,066 5,531 5,531 40,161 237 237 40,161
19 25,270 5,360 5,360 40,161 -- -- --
20 26,533 5,193 5,193 40,161 -- -- --
25 33,864 4,420 4,420 40,161 -- -- --
35 55,160 3,145 3,145 40,161 -- -- --
</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.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 29
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
<PAGE>
30 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 -- -- --
</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.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 31
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 -- -- --
19 25,270 5,360 5,360 33,334 -- -- --
20 26,533 5,193 5,193 33,334 -- -- --
25 33,864 4,420 4,420 33,334 -- -- --
35 55,160 3,145 3,145 33,334 -- -- --
</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.
<PAGE>
32 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.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 33
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 -- -- --
20 26,533 17,428 17,428 19,380 -- -- --
25 33,864 20,353 20,353 21,371 -- -- --
35 55,160 27,854 27,854 28,133 -- -- --
</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.
<PAGE>
34 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 -- -- --
13 18,856 6,459 6,459 19,380 -- -- --
14 19,799 6,264 6,264 19,380 -- -- --
15 20,789 6,073 6,073 19,380 -- -- --
16 21,829 5,888 5,888 19,380 -- -- --
17 22,920 5,707 5,707 19,380 -- -- --
18 24,066 5,531 5,531 19,380 -- -- --
19 25,270 5,360 5,360 19,380 -- -- --
20 26,533 5,193 5,193 19,380 -- -- --
25 33,864 4,420 4,420 19,380 -- -- --
35 55,160 3,145 3,145 19,380 -- -- --
</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.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 35
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
<PAGE>
36 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 -- -- --
</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.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 37
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 -- -- --
35 55,160 3,633 3,633 44,053 -- -- --
</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.
<PAGE>
38 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.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 39
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 -- -- --
35 55,160 31,696 31,696 32,014 -- -- --
</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.
<PAGE>
40 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 -- -- --
17 22,920 6,088 6,088 27,778 -- -- --
18 24,066 5,923 5,923 27,778 -- -- --
19 25,270 5,762 5,762 27,778 -- -- --
20 26,533 5,604 5,604 27,778 -- -- --
25 33,864 4,866 4,866 27,778 -- -- --
35 55,160 3,619 3,619 27,778 -- -- --
</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.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
ITT Hartford Life and Annuity Insurance Company:
We have audited the accompanying statutory-basis balance sheets of ITT Hartford
Life and Annuity Insurance Company (a Connecticut Corporation and wholly owned
subsidiary of Hartford Life Insurance Company) (the Company) as of December 31,
1996 and 1995, and the related statutory-basis statements of income, changes in
capital and surplus, and cash flows for each of the three years in the period
ended December 31, 1996. 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-basis
financial statements. When statutory-basis 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-basis financial statements referred to above do not present fairly, in
accordance with generally accepted accounting principles, the financial position
of the Company as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996.
However, in our opinion, the statutory-basis financial statements referred to
above present fairly, in all material respects, the financial position of the
Company as of December 31, 1996 and 1995, and the results of its operations and
its cash flows for each of the three years in the period ended December 31, 1996
in conformity with statutory accounting practices as described in Note 1.
As discussed in Note 1 of notes to statutory financial statements, during 1994,
the Company changed its valuation method in determining aggregate reserves for
future benefits.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 10, 1997
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATUTORY BASIS STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
----------------------------------
1996 1995 1994
---------- ---------- ----------
($000)
<S> <C> <C> <C>
Revenues
Premiums and Annuity Considerations.... $ 250,244 $ 165,792 $ 442,173
Annuity and Other Fund Deposits........ 1,897,347 1,087,661 608,685
Net Investment Income.................. 98,441 78,787 29,012
Commissions and Expense Allowances on
Reinsurance Ceded..................... 370,637 183,380 154,527
Reserve Adjustment on Reinsurance
Ceded................................. 3,864,395 1,879,785 1,266,926
Other Revenues......................... 161,906 140,796 41,857
---------- ---------- ----------
Total Revenues....................... 6,642,970 3,536,201 2,543,180
---------- ---------- ----------
Benefits and Expenses
Death and Annuity Benefits............. 60,111 53,029 7,948
Surrenders and Other Benefit
Payments.............................. 276,720 221,392 181,749
Commissions and Other Expenses......... 491,720 236,202 186,303
Increase in Reserves for Future
Benefits.............................. 27,351 94,253 416,748
Increase in Liability for Premium and
Other Deposit Funds................... 207,156 460,124 182,934
Net Transfers to Separate Accounts..... 5,492,964 2,414,669 1,541,419
---------- ---------- ----------
Total Benefits and Expenses.......... 6,556,022 3,479,669 2,517,101
---------- ---------- ----------
Net Gain from Operations Before Federal
Income Tax Expense...................... 86,948 56,532 26,079
Federal Income Tax Expense............. 19,360 14,048 24,038
---------- ---------- ----------
Net Gain from Operations................. 67,588 42,484 2,041
Net Realized Capital Gains (Losses).... 407 374 (2)
---------- ---------- ----------
Net Income............................... $ 67,995 $ 42,858 $ 2,039
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATUTORY BASIS BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------
1996 1995
----------- ----------
<S> <C> <C>
($000)
Assets
Bonds........................................... $ 1,268,480 $1,226,489
Common Stocks................................... 44,996 39,776
Policy Loans.................................... 28,853 22,521
Cash and Short-Term Investments................. 176,830 173,304
Other Invested Assets........................... 2,858 13,432
----------- ----------
Total Cash and Invested Assets................ 1,522,017 1,475,522
----------- ----------
Investment Income Due and Accrued............... 14,555 18,021
Premium Balances Receivable..................... 373 402
Receivables from Affiliates..................... 257 8,182
Other Assets.................................... 19,099 25,907
Separate Account Assets......................... 14,619,324 7,324,910
----------- ----------
Total Assets.................................. $16,175,625 $8,852,944
----------- ----------
----------- ----------
Liabilities
Aggregate Reserves for Future Benefits.......... $ 571,970 $ 542,082
Policy and Contract Claims...................... 6,806 8,223
Liability for Premium and Other Deposit Funds... 1,155,143 948,361
Asset Valuation Reserve......................... 7,442 8,010
Payable to Affiliates........................... 10,022 3,682
Other Liabilities............................... (498,195) (220,658)
Separate Account Liabilities.................... 14,619,324 7,324,910
----------- ----------
Total Liabilities............................. 15,872,512 8,614,610
----------- ----------
Capital and Surplus
Common Stock.................................... 2,500 2,500
Gross Paid-In and Contributed Surplus........... 226,043 226,043
Unassigned Funds................................ 74,570 9,791
----------- ----------
Total Capital and Surplus..................... 303,113 238,334
----------- ----------
Total Liabilities and Capital and Surplus....... $16,175,625 $8,852,944
----------- ----------
----------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATUTORY BASIS STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
--------- --------- --------
<S> <C> <C> <C>
($000)
Capital and Surplus -- Beginning of
Year................................... $ 238,334 $ 91,285 $ 88,693
--------- --------- --------
Net Income............................ 67,995 42,858 2,039
Change in Net Unrealized Capital
(Losses) Gains on Common Stocks...... (5,171) 1,709 (133)
Change in Asset Valuation Reserve..... 568 (5,588) (1,356)
Change in Non-Admitted Assets......... 1,387 (1,944) (8,599)
Change in Reserve (Valuation Basis)... -- -- 10,659
Aggregate Write-ins for Surplus....... -- 8,080 (18)
Dividends to Shareholder.............. -- (10,000) --
Paid-In Surplus....................... -- 111,934 --
--------- --------- --------
Change in Capital and Surplus....... 64,779 147,049 2,592
--------- --------- --------
Capital and Surplus -- End of Year...... $ 303,113 $ 238,334 $ 91,285
--------- --------- --------
--------- --------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATUTORY BASIS STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
($000)
Operations
Premiums, Annuity Considerations and
Other Fund Deposits.................. $ 2,147,627 $ 1,253,511 $ 1,050,493
Net Investment Income................. 106,178 78,328 24,519
Other Revenues........................ 4,396,892 2,253,466 1,515,700
----------- ----------- -----------
Total Revenues...................... 6,650,697 3,585,305 2,590,712
----------- ----------- -----------
Benefits Paid......................... 338,998 277,965 181,205
Federal Income Taxes Paid on
Operations........................... 28,857 208,423 20,634
Other Expenses........................ 6,254,139 2,664,385 1,832,905
----------- ----------- -----------
Total Benefits and Expenses......... 6,621,994 3,150,773 2,034,744
----------- ----------- -----------
Net Cash from Operations............ 28,703 434,532 555,968
----------- ----------- -----------
Proceeds from Investments
Bonds................................. 871,019 287,941 87,747
Common Stocks......................... 72,100 52 --
Other................................. 10 28 40
----------- ----------- -----------
Total Investment Proceeds........... 943,129 288,021 87,787
----------- ----------- -----------
Taxes (Paid) Received on Capital (Gains)
Losses................................. (936) (226) 96
Paid-In Surplus......................... -- 111,934 --
Other Cash Provided..................... 41,998 28,199 30,554
----------- ----------- -----------
Total Proceeds...................... 1,012,894 862,460 674,405
----------- ----------- -----------
Cost of Investments Acquired
Bonds................................. 914,523 720,521 595,181
Common Stocks......................... 82,495 35,794 808
Miscellaneous Applications............ 130 2,146 2,523
----------- ----------- -----------
Total Investments Acquired.......... 997,148 758,461 598,512
----------- ----------- -----------
Other Cash Applied
Dividends Paid to Shareholders........ -- 10,000 --
Other................................. 12,220 5,007 24,813
----------- ----------- -----------
Total Other Cash Applied............ 12,220 15,007 24,813
----------- ----------- -----------
Total Applications................ 1,009,368 773,468 623,325
----------- ----------- -----------
Net Change in Cash and Short-Term
Investments............................ 3,526 88,992 51,080
Cash and Short-Term Investments,
Beginning of Year...................... 173,304 84,312 33,232
----------- ----------- -----------
Cash and Short-Term Investments, End of
Year................................... $ 176,830 $ 173,304 $ 84,312
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
- ---------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
ITT Hartford Life and Annuity Insurance Company ("ILA" or "the Company"),
formerly known as ITT Life Insurance Corporation, is a wholly owned subsidiary
of Hartford Life Insurance Company ("HLIC"), which is an indirect subsidiary of
Hartford Life, Inc. ("Hartford Life"), which is ultimately owned by ITT Hartford
Group, Inc. ("The Hartford"), formerly a wholly owned subsidiary of ITT
Corporation ("ITT"). On February 10, 1997, The Hartford announced its plans to
sell up to 20% of Hartford Life to the public. On December 19, 1995, ITT
Corporation distributed all the outstanding shares of The Hartford to ITT
shareholders of record in an action known herein as the "Distribution". As a
result of the Distribution, The Hartford became an independent, publicly traded
company. During 1996, ILA re-domesticated from the State of Wisconsin to the
State of Connecticut.
ILA offers a complete line of ordinary and universal life insurance,
individual annuities and certain supplemental accident and health benefit
coverages.
BASIS OF PRESENTATION
The accompanying ILA statutory-basis financial statements were prepared in
conformity with statutory accounting practices prescribed or permitted by the
National Association of Insurance Commissioners ("NAIC") and the State of
Connecticut Department of Insurance.
The preparation of financial statements in conformity with statutory
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates.
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 agents' balances and furniture and equipment) from the balance
sheet for statutory purposes by directly charging surplus;
(6) establishing accruals for post-retirement and post-employment health
care benefits on an option basis, using a twenty year phase-in approach,
whereas GAAP liabilities are required to be recorded;
(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
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
realized gains and losses are recognized in the period the asset is sold;
(8) the reporting of reserves and benefits net of reinsurance ceded, where
risk transfer has taken place; whereas on a GAAP basis, reserves are
reported gross of reinsurance with reserve credits presented as recoverable
assets;
(9) the reporting of fixed maturities at amortized cost, whereas GAAP
requires that fixed maturities be classified as "held-to-maturity",
"available-for-sale" or "trading", based on the Company's intentions with
respect to the ultimate disposition of the security and its ability to
affect those intentions. The Company's fixed maturities were classified on a
GAAP basis as "available-for- sale" and accordingly, those investments were
reflected at fair value with the corresponding impact included as a
component of Stockholder's Equity designated as "Net unrealized capital
(loss)/ gain on investments, net of tax". For statutory reporting purposes,
Net Unrealized Capital Losses (Gains) on Common Stocks represent unrealized
losses (gains) on common stock reported at fair value; and
(10) separate account liabilities are valued on the Commissioner's Annuity
Reserve Valuation Method ("CARVM"), with the surplus generated recorded as a
liability to the general account (and a contra liability on the balance
sheet of the general account), whereas GAAP liabilities are valued at
account value.
As of and for the years ended December 31, 1996, 1995 and 1994, the
significant differences between statutory and GAAP basis net income and capital
and surplus for the Company are summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
GAAP Net Income................ $ 41,202 $ 38,821 $ 23,295
Amortization and deferral of
policy acquisition costs...... (341,572) (174,341) (117,863)
Change in unearned revenue
reserve....................... 55,504 32,300 24,494
Deferred taxes................. 2,090 2,801 (9,267)
Separate accounts.............. 306,978 146,635 75,941
Other, net..................... 3,793 (3,358) 5,439
----------- ----------- -----------
Statutory Net Income........... $ 67,995 $ 42,858 $ 2,039
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
GAAP Capital and Surplus....... $ 503,887 $ 455,541 $ 199,785
Deferred policy acquisition
costs......................... (938,114) (596,542) (422,201)
Unearned revenue reserve....... 130,148 74,644 42,344
Deferred taxes................. 12,823 1,493 13,257
Separate accounts.............. 640,101 333,123 186,488
Asset valuation reserve........ (7,442) (8,010) (2,422)
Unrealized gain (loss) on
bonds......................... 5,112 (1,696) 21,918
Adjustment relating to Lyndon
contribution (see Note 3)..... (41,277) (41,277) --
Other, net..................... (2,125) 21,058 52,116
----------- ----------- -----------
Statutory Capital and
Surplus....................... $ 303,113 $ 238,334 $ 91,285
----------- ----------- -----------
----------- ----------- -----------
</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 actuarial standards. Reserves for life
insurance policies are generally based on the 1958 and 1980 Commissioner's
Standard Ordinary Mortality Tables and various valuation rates ranging from 2.5%
to 5%. Accumulation and on-benefit annuity reserves are based principally on
individual annuity tables at various rates ranging from 2.5% to 8.75% and using
CARVM. Accident and health reserves are established using a two year preliminary
term method and morbidity tables based on Company experience.
ILA has established separate accounts to segregate the assets and
liabilities of certain annuity contracts that must be segregated from the
Company's general assets under the terms of the contracts. The assets consist
primarily of marketable securities reported at market value. Premiums, benefits
and expenses of these contracts are reported in the Statutory Basis Statements
of 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 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
- --------------------------------------------------------------------------------
Changes in net unrealized capital (losses)/gains on common stocks are
reported as (reductions)/additions of surplus. The Asset Valuation Reserve
("AVR") is designed to provide a standardized reserving process for realized and
unrealized losses due to default and equity risks associated with invested
assets. The reserve decreased by $568 in 1996 and increased by $5,588 and $1,356
in 1995 and 1994, 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 Basis 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 $1,413 and $39 in 1996 and 1995,
respectively, and the amount of net capital losses was $67 in 1994. The amount
of income amortized was $392, $256 and $114 in 1996, 1995 and 1994,
respectively.
OTHER LIABILITIES
The amount reflected in other liabilities includes a receivable from the
separate accounts of $640 million and $333 million as of December 31, 1996 and
1995, respectively. The balances are classified in accordance with NAIC
accounting practices.
- ---------------------------------------------------
2. INVESTMENTS
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Interest income from
bonds.................... $ 89,940 $ 76,100 $ 28,335
Interest income from
policy loans............. 1,846 1,504 454
Interest and dividends
from other investments... 7,864 2,288 1,069
--------- --------- ---------
Gross investment income... 99,650 79,892 29,858
Less: investment
expenses................. 1,209 1,105 846
--------- --------- ---------
Net investment income..... $ 98,441 $ 78,787 $ 29,012
--------- --------- ---------
--------- --------- ---------
</TABLE>
(B) COMPONENTS OF NET UNREALIZED CAPITAL (LOSSES) GAINS ON COMMON STOCKS
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Gross unrealized capital gains
at end of year............... $ 713 $ 1,724 $ 75
Gross unrealized capital
losses at end of year........ (4,160) -- (60)
--------- --------- ---------
Net unrealized capital
(losses) gains............... (3,447) 1,724 15
Balance at beginning of
year......................... 1,724 15 148
--------- --------- ---------
Change in net unrealized
capital (losses) gains on
common stocks................ $ (5,171) $ 1,709 $ (133)
--------- --------- ---------
--------- --------- ---------
</TABLE>
(C) COMPONENTS OF NET UNREALIZED CAPITAL (LOSSES) GAINS ON BONDS AND SHORT-TERM
INVESTMENTS
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Gross unrealized
capital gains at end
of year............... $ 11,821 $ 22,251 $ 986
Gross unrealized
capital losses at end
of year............... (3,842) (1,374) (34,718)
---------- ---------- ----------
Net unrealized capital
gains (losses) after
tax................... 7,979 20,877 (33,732)
Balance at beginning of
year.................. 20,877 (33,732) 5,232
---------- ---------- ----------
Change in net
unrealized capital
(losses) gains on
bonds and short-term
investments........... $ (12,898) $ 54,609 $ (38,964)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
(D) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Bonds and short-term
investments.................... $ 2,756 $ 156 $ (101)
Common stocks................... 0 52 0
Real estate and other........... 0 0 34
--------- --------- ---------
Realized capital gains
(losses)....................... 2,756 208 (67)
Capital gains taxes (benefit)... 936 (205) 2
--------- --------- ---------
Net realized capital gains
(losses) after tax............. 1,820 413 (69)
Less: IMR capital gains
(losses)....................... 1,413 39 (67)
--------- --------- ---------
Net realized capital gains
(losses)....................... $ 407 $ 374 $ (2)
--------- --------- ---------
--------- --------- ---------
</TABLE>
<PAGE>
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, 1996 and 1995.
(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>
AS OF DECEMBER 31, 1996
------------------------------------------------
GROSS UNREALIZED
AMORTIZED -------------------- FAIR
COST GAINS LOSSES VALUE
------------ --------- --------- ------------
<S> <C> <C> <C> <C>
U.S. government and government agencies and authorities:
(Guaranteed and sponsored)............................................. $ 58,761 $ 6 $ (195) $ 58,572
(Guaranteed and sponsored) -- asset-backed............................. 78,237 1,477 (609) 79,105
States, municipalities and political subdivisions........................ 25,958 163 (2) 26,119
International governments................................................ 7,447 205 -- 7,652
Public utilities......................................................... 70,116 396 (424) 70,088
All other corporate...................................................... 410,530 6,357 (1,355) 415,532
All other corporate -- asset-backed...................................... 485,953 2,654 (1,081) 487,526
Short-term investments................................................... 148,094 -- (66) 148,028
Certificates of deposit.................................................. 83,378 563 (110) 83,831
Parents, subsidiaries and affiliates..................................... 48,100 -- -- 48,100
------------ --------- --------- ------------
Total bonds and short-term investments................................. $ 1,416,574 $ 11,821 $ (3,842) $ 1,424,553
------------ --------- --------- ------------
------------ --------- --------- ------------
Common stock -- unaffiliated............................................. $ 13,064 $ 713 $ 0 $ 13,777
Common stock -- affiliated............................................... 35,379 0 4,160 31,219
------------ --------- --------- ------------
Total common stocks...................................................... $ 48,443 $ 713 $ 4,160 $ 44,996
------------ --------- --------- ------------
------------ --------- --------- ------------
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1995
----------------------------------------------------
GROSS UNREALIZED
AMORTIZED ------------------------ FAIR
COST GAINS LOSSES VALUE
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
U.S. government and government agencies and authorities:
(Guaranteed and sponsored)........................................... $ 44,268 $ 14 $ (248) $ 44,034
(Guaranteed and sponsored) -- asset-backed........................... 176,160 4,644 (682) 180,122
States, municipalities and political subdivisions...................... 16,948 38 (6) 16,980
International governments.............................................. 5,402 441 -- 5,843
Public utilities....................................................... 108,083 1,652 (90) 109,645
All other corporate.................................................... 374,058 8,145 (248) 381,955
All other corporate -- asset-backed.................................... 410,197 5,841 (89) 415,949
Short-term investments................................................. 139,011 18 -- 139,029
Certificates of deposit................................................ 91,373 1,458 (11) 92,820
------------ ----------- ----------- ------------
Total bonds and short-term investments............................... $ 1,365,500 $ 22,251 $ (1,374) $ 1,386,377
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
Common stock -- unaffiliated........................................... $ 2,668 $ 555 $ -- $ 3,223
Common stock -- affiliated............................................. 35,384 1,169 -- 36,553
------------ ----------- ----------- ------------
Total common stocks.................................................. $ 38,052 $ 1,724 $ -- $ 39,776
------------ ----------- ----------- ------------
------------ ----------- ----------- ------------
</TABLE>
The amortized cost and estimated market value of bonds and short-term
investments at December 31, 1996 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
- --------------------------------------------------------------------------------
over the remaining life of the securities. Expected maturities differ from
contractual maturities reflecting borrowers' rights to call or prepay their
obligations.
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
MATURITY COST VALUE
- ------------------------------ ------------ ------------
<S> <C> <C>
Due in one year or less....... $ 478,095 $ 478,852
Due after one year through
five years................... 622,805 623,105
Due after five years through
ten years.................... 259,479 265,681
Due after ten years........... 56,195 56,915
------------ ------------
Total....................... $ 1,416,574 $ 1,424,553
</TABLE>
Proceeds from sales of investments in bonds and short-term investments
during 1996, 1995 and 1994 were $668,078, $313,961 and $117,912, respectively,
resulting in gross realized gains of $3,675, $1,419 and $518, respectively, and
gross realized losses of $919, $1,263 and $619, 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>
1996 1995
---------------------- ----------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Assets
Bonds and short-term
investments......... $ 1,417 $ 1,425 $ 1,366 $ 1,386
Common stocks........ 45 45 40 40
Policy loans......... 29 29 23 23
Other invested
assets.............. 3 3 13 13
Liabilities
Liabilities on
investment
contracts........... $ 1,245 $ 1,191 $ 1,031 $ 981
</TABLE>
The carrying amounts for policy loans approximates fair value. The
liabilities are determined by forecasting future cash flows and discounting the
forecasted cash flows at current market rates.
- ---------------------------------------------------
3. RELATED PARTY TRANSACTIONS
Transactions between the Company and its affiliates within The Hartford
relate principally to tax settlements, reinsurance, service fees, capital
contributions and payments of dividends.
On June 30, 1995, the assets of Lyndon Insurance Company were contributed to
ILA. As a result, ILA received approximately $365 million in bonds and short-
term investments, common stocks and cash, $28 million in policy reserves, $187
million of current tax liability, $26 million in IMR, $8 million in AVR (offset
by an aggregate write-in to surplus), and $4 million of other liabilities. The
assets in excess of liabilities of $112 million were recorded as an increase to
paid-in surplus.
For additional information, see Note 5.
- ---------------------------------------------------
4. FEDERAL INCOME TAXES
The Company and The Hartford have entered into a tax sharing agreement under
which each member in the consolidated U.S. Federal income tax return will make
payments between them such that, with respect to any period, the amount of taxes
to be paid by the Company, subject to certain adjustments, generally will be
determined as though the Company were to file separate federal, state and local
income tax returns.
As long as The Hartford continues to beneficially own, directly or
indirectly, at least 80% of the combined voting power and 80% of the value of
the outstanding capital stock of Hartford Life, the Company will be included for
Federal income tax purposes in the consolidated group of which The Hartford is
the common parent. It is the current intention of The Hartford and its
subsidiaries to continue to file a single consolidated Federal income tax
return. The Company will continue to remit (receive from) The Hartford a current
income tax provision (benefit) computed in accordance with such tax sharing
agreement. Federal income taxes paid by the Company were $29,792, $215,921 and
$20,538 in 1996, 1995 and 1994, respectively. The effective tax rate was 22%,
25% and 92% in 1996, 1995 and 1994, respectively. The following schedule
provides a reconciliation of the tax provision at the U.S. Federal Statutory
rate to Federal income tax expense (in millions).
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- -----
<S> <C> <C> <C>
Tax provision at U.S. Federal statutory rate..... $ 30 $ 20 $ 9
Tax deferred acquisition costs................... 27 8 8
Statutory to tax reserve differences............. -- 3 5
Unrealized (gain)/loss on separate accounts...... (21) (13) 2
Investments and other............................ (17) (4) --
--------- --------- ---
Federal income tax expense....................... $ 19 $ 14 $ 24
--------- --------- ---
--------- --------- ---
</TABLE>
- ---------------------------------------------------
5. CAPITAL AND SURPLUS AND SHAREHOLDER
DIVIDEND RESTRICTIONS
The maximum amount of dividends which can be paid, without prior approval,
by State of Connecticut insurance companies to shareholders is subject to
restrictions relating to statutory surplus. Dividends are paid as determined by
the Board of Directors and are not cumulative. No dividends were paid in 1996 or
1994. ILA paid dividends of $10 million to its parent, HLIC, in 1995. As a
result of the Distribution by ITT, the assets of ITT Lyndon Insurance
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 surplus.
- ---------------------------------------------------
6. PENSION PLANS AND OTHER POST-RETIREMENT
AND POST-EMPLOYMENT BENEFITS
The Company's employees are included in The Hartford's non-contributory
defined benefit pension plans. These plans provide pension benefits that are
based on years of service and the employee's compensation during the last ten
years of employment. The Company's funding policy is to contribute annually an
amount between the minimum funding requirements set forth in the Employee
Retirement Income Security Act of 1974 and the maximum amount that can be
deducted for Federal income tax purposes. Generally, pension costs are funded
through the purchase of HLIC's group pension contracts. Pension expense was
$358, $1,034, and $1,211 in 1996, 1995 and 1994, respectively. Liabilities for
the plan are held by The Hartford.
The Company also participates in The Hartford's Investment and Savings Plan,
which includes a deferred compensation option under IRC section 401(k) and an
ESOP allocation under IRC section 404(k). The liabilities for these plans are
included in the financial statements of The Hartford. The cost to ILA was not
material in 1996, 1995 and 1994.
The Company's employees are included in The Hartford's contributory defined
health care and life insurance benefit plans. These plans provide health care
and life insurance benefits for retired employees. Substantially all employees
may become eligible for those benefits if they reach normal or early retirement
age while still working for the Company. The Company has prefunded a portion of
the health care and life insurance obligations through trust funds where such
prefunding can be accomplished on a tax effective basis. Amounts allocated by
The Hartford for post-retirement health care and life insurance benefits expense
(not including provisions for accrual of post-retirement benefit obligations)
are immaterial. The assumed rate of future increases in the per capita cost of
health care (the health care trend rate) was 9.3% for 1996, 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
1996, 1995 and 1994.
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 1996, 1995 and 1994.
- ---------------------------------------------------
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>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Direct premiums................... $ 226,612 $ 159,918 $ 133,180
Premiums assumed.................. 33,817 13,299 960
Premiums ceded.................... (10,185) (7,425) 308,033
---------- ---------- ----------
Premiums and annuity
considerations................... $ 250,244 $ 165,792 $ 442,173
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
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, in
December 1994, 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 1994.
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 1994.
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 1994.
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.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
- ---------------------------------------------------
8. SEPARATE ACCOUNTS
The Company maintains separate account assets and liabilities totaling $14.6
billion and $7.3 billion at December 31, 1996 and 1995, respectively. Separate
account assets are reported at fair value and separate account liabilities are
determined in accordance with CARVM, which approximates the market value less
applicable surrender charges. Separate account assets are segregated from other
investments, the policyholder assumes the investment risk, and the investment
income and gains and losses accrue directly to the policyholder. Separate
account management fees, net of minimum guarantees, were $144 million, $72
million and $42 million in 1996, 1995 and 1994, respectively, and are recorded
as a component of other revenues on the Statutory Basis Statements of Income.
- ---------------------------------------------------
9. COMMITMENTS AND CONTINGENCIES
As of December 31, 1996 and 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 normal course of its business. In the opinion of
management, the ultimate liability with respect to such lawsuits as well as
other contingencies is not considered to be material in relation to the results
of operations and financial position of the Company.
Under insurance guaranty laws in most states, insurers doing business
therein can be assessed up to prescribed limits for policyholder losses incurred
by insolvent companies. The amount of any future assessments on ILA under these
laws cannot be reasonably estimated. Most of the laws do provide, however, that
an assessment may be excused or deferred if it would threaten an insurer's own
financial strength. Additionally, guaranty fund assessments are used to reduce
state premium taxes paid by the Company in certain states. ILA paid guaranty
fund assessments of $1,262, $1,684 and $583 in 1996, 1995 and 1994,
respectively. ILA incurred guaranteed fund expense of $548, $0 and $0 in 1996,
1995 and 1994, respectively.
<PAGE>
Report of Independent Public Accountants
To ITT Hartford Life and Annuity Insurance Company Putnam Capital
Manager Trust Separate Account Five and to the Owners of Units
of Interest therein:
We have audited the accompanying statement of assets and liabilities of
ITT Hartford Life and Annuity Insurance Company Putnam Capital Manager
Trust Separate Account Five (the Account) as of December 31, 1996, and
the related statement of operations for the year then ended and
statements of changes in net assets for the year ended December 31, 1996
and the period from inception, January 10, 1995, to December 31, 1995.
These financial statements are the responsibility of the Account's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of ITT Hartford
Life and Annuity Insurance Company Putnam Capital Manager Trust Separate
Account Five as of December 31, 1996, the results of its operations for
the year then ended and the changes in its net assets for the year ended
December 31, 1996 and the period from inception, January 10, 1995, to
December 31, 1995, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 14, 1997
<PAGE>
<TABLE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
<CAPTION>
Statement of Assets and Liabilities
- ------------------------------------------------------------------------------------------------------------------------
December 31, 1996 Asia Pacific Diversified Global Asset Global Growth High Yield
Growth Income Allocation Growth and Income Fund
Fund Fund Fund Fund Fund Sub-Account
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Investments:
........................................................................................................................
Putnam VT Asia Pacific Growth Fund
Shares 31,639
Cost $332,220
........................................................................................................................
Market Value: $ 348,343 $ -- $ -- $ -- $ -- $ --
........................................................................................................................
Putnam VT Diversified Income Fund
Shares 149,440
Cost $1,613,208
........................................................................................................................
Market Value: -- 1,684,193 -- -- -- --
........................................................................................................................
Putnam VT Global Asset
Allocation Fund
Shares 92,300
Cost $1,460,811
........................................................................................................................
Market Value: -- -- 1,592,181 -- -- --
........................................................................................................................
Putnam VT Global Growth Fund
Shares 204,225
Cost $3,179,877
........................................................................................................................
Market Value: -- -- -- 3,447,322 -- --
........................................................................................................................
Putnam VT Growth and
Income Fund
Shares 527,388
Cost $11,566,786
........................................................................................................................
Market Value: -- -- -- -- 12,952,638 --
........................................................................................................................
Putnam VT High Yield Fund
Shares 130,539
Cost $1,606,653
........................................................................................................................
Market Value: -- -- -- -- -- 1,691,788
........................................................................................................................
Putnam VT Money Market Fund
Shares 6,925,394
Cost $6,925,394
........................................................................................................................
Market Value: -- -- -- -- -- --
........................................................................................................................
Putnam VT New Opportunities Fund
Shares 397,542
Cost $6,614,167
........................................................................................................................
Market Value: -- -- -- -- -- --
........................................................................................................................
Putnam VT U.S. Government and
High Quality Bond Fund
Shares 45,265
Cost $593,129
........................................................................................................................
Market Value: -- -- -- -- -- --
........................................................................................................................
Putnam VT Utilities Growth and
Income Fund
Shares 71,722
Cost $940,712
........................................................................................................................
Market Value: -- -- -- -- -- --
........................................................................................................................
Putnam VT Voyager Fund
Shares 224,785
Cost $6,990,309
........................................................................................................................
Market Value: -- -- -- -- -- --
........................................................................................................................
Due from ITT Hartford
Life and Annuity
Insurance Company 1 27,205 10,853 32,656 26,852 10
- ------------------------------------------------------------------------------------------------------------------------
Total Assets 348,344 1,711,398 1,603,034 3,479,978 12,979,490 1,691,798
- ------------------------------------------------------------------------------------------------------------------------
Liabilities
Due to ITT Hartford Life
and Annuity Insurance
Company -- -- -- -- -- --
........................................................................................................................
Payable for fund
shares purchased -- 27,226 10,890 32,671 27,226 --
........................................................................................................................
Total Liabilities -- 27,226 10,890 32,671 27,226 --
- ------------------------------------------------------------------------------------------------------------------------
Net Assets (variable
annuity contract
liabilities)... $348,344 $1,684,172 $1,592,144 $3,447,307 $12,952,264 $1,691,798
- ------------------------------------------------------------------------------------------------------------------------
Units Outstanding 31,210 129,261 110,336 252,023 782,291 126,752
- ------------------------------------------------------------------------------------------------------------------------
Accumulation Unit Value
at end of period 11.161102 13.029218 14.429914 13.678537 16.556836 13.347317
- ------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Statement of Assets & Liabilities
- -----------------------------------------------------------------------------------------------------
December 31, 1996 Money New U.S. Govt. Utilities Voyager
Market Opportunities and High Growth Fund
Fund Fund Quality Bond and Income Sub-Account
Sub-Account Sub-Account Fund Fund
Sub-Account Sub-Account
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Assets
Investments:
.....................................................................................................
Putnam VT Asia Pacific Growth Fund
Shares 31,639
Cost $332,220
.....................................................................................................
Market Value: $ -- $ -- $ -- $ -- $ --
.....................................................................................................
Putnam VT Diversified Income Fund
Shares 149,440
Cost $1,613,208
.....................................................................................................
Market Value: -- -- -- -- --
.....................................................................................................
Putnam VT Global Asset
Allocation Fund
Shares 92,300
Cost $1,460,811
.....................................................................................................
Market Value: -- -- -- -- --
.....................................................................................................
Putnam VT Global Growth Fund
Shares 204,225
Cost $3,179,877
.....................................................................................................
Market Value: -- -- -- -- --
.....................................................................................................
Putnam VT Growth and
Income Fund
Shares 527,388
Cost $11,566,786
.....................................................................................................
Market Value: -- -- -- -- --
.....................................................................................................
Putnam VT High Yield Fund
Shares 130,539
Cost $1,606,653
.....................................................................................................
Market Value: -- -- -- -- --
.....................................................................................................
Putnam VT Money Market Fund
Shares 6,925,394
Cost $6,925,394
.....................................................................................................
Market Value: 6,925,394 -- -- -- --
.....................................................................................................
Putnam VT New Opportunities Fund
Shares 397,542
Cost $6,614,167
.....................................................................................................
Market Value: -- 6,845,668 -- -- --
.....................................................................................................
Putnam VT U.S. Government and
High Quality Bond Fund
Shares 45,265
Cost $593,129
.....................................................................................................
Market Value: -- -- 597,955 -- --
.....................................................................................................
Putnam VT Utilities Growth and
Income Fund
Shares 71,722
Cost $940,712
.....................................................................................................
Market Value: -- -- -- 1,061,489 --
.....................................................................................................
Putnam VT Voyager Fund
Shares 224,785
Cost $6,990,309
.....................................................................................................
Market Value: -- -- -- -- 7,312,263
.....................................................................................................
Due from ITT Hartford
Life and Annuity
Insurance Company 253,270 11,470 -- 93 307
- -----------------------------------------------------------------------------------------------------
Total Assets 7,178,664 6,857,138 597,955 1,061,582 7,312,570
- -----------------------------------------------------------------------------------------------------
Liabilities
Due to ITT Hartford Life
and Annuity Insurance
Company -- -- 2 -- --
.....................................................................................................
Payable for fund
shares purchased 253,247 10,890 -- -- --
.....................................................................................................
Total Liabilities 253,247 10,890 2 -- --
- -----------------------------------------------------------------------------------------------------
Net Assets (variable
annuity contract
liabilities) $6,925,417 $6,846,248 $ 597,953 $1,061,582 $7,312,570
- -----------------------------------------------------------------------------------------------------
Units Outstanding 6,252,357 426,940 48,435 69,940 457,231
- -----------------------------------------------------------------------------------------------------
Accumulation Unit Value
at end of period 1.107649 16.035615 12.345439 15.178606 15.993147
- -----------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
<CAPTION>
Statement of Operations
- -------------------------------------------------------------------------------------------------------------------------
For the Year Ended Asia Paciific Diversified Global Asset Global
December 31, 1996 Growth Income Allocation Growth
Fund Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income:
Dividends $ 2,103 $21,970 $ 16,598 $ 23,213
.........................................................................................................................
Capital gains income -- -- 10,892 33,815
.........................................................................................................................
Net realized and
unrealized gain
(loss) on
investments:
.........................................................................................................................
Net realized gain(loss)
on security transactions 139 11,050 (60) 515
.........................................................................................................................
Net unrealized
appreciation
(depreciation) of
investments during
the period 15,115 65,917 117,195 242,512
.........................................................................................................................
Net gain (loss) on
investments 15,254 76,967 117,135 243,027
- -------------------------------------------------------------------------------------------------------------------------
Net increase
in net assets
resulting from
operations $17,357 $98,937 $144,625 $300,055
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Statement of Operations (Continued)
- ---------------------------------------------------------------------------------------------------------------------------
For the Year Ended Growth High Yield Money New
December 31, 1996 and Income Fund Market Opportunities
Fund Sub-Account Fund Fund
Sub-Account Sub-Account Sub-Account
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment income:
Dividends $ 190,521 $ 58,411 $208,905 $ --
...........................................................................................................................
Capital gains income 86,385 -- -- --
...........................................................................................................................
Net realized and
unrealized gain
(loss) on
investments:
...........................................................................................................................
Net realized gain(loss)
on security transactions (249) 12,566 -- (8,438)
...........................................................................................................................
Net unrealized
appreciation
(depreciation) of
investments during
the period 1,193,437 76,806 -- 80,783
...........................................................................................................................
Net gain (loss) on
investments 1,193,188 89,372 -- 72,345
- ---------------------------------------------------------------------------------------------------------------------------
Net increase
in net assets
resulting from
operations $1,470,094 $147,783 $208,905 $72,345
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Statement of Operations (Continued)
- -----------------------------------------------------------------------------------------------------
For the Year Ended U.S. Govt. Utilities Voyager
December 31, 1996 and High Growth Fund
Quality Bond and Income Sub-Account
Fund Fund
Sub-Account Sub-Account
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment income:
Dividends $23,073 $ 20,790 $ 48,841
.....................................................................................................
Capital gains income -- -- 94,981
.....................................................................................................
Net realized and
unrealized gain
(loss) on
investments:
.....................................................................................................
Net realized gain(loss)
on security transactions (7) 2,502 (1,003)
.....................................................................................................
Net unrealized
appreciation
(depreciation) of
investments during
the period (6,719) 95,368 192,061
.....................................................................................................
Net gain (loss) on
investments (6,726) 97,870 191,058
- -----------------------------------------------------------------------------------------------------
Net increase
in net assets
resulting from
operations $16,347 $118,660 $334,880
- -----------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
<CAPTION>
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------------------------------------------------
For the Year Ended Asia Pacific Diversified Global Asset Global
December 31, 1996 Growth Income Allocation Growth
Fund Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations:
Net investment
income $ 2,103 $ 21,970 $ 16,598 $ 23,213
.........................................................................................................................
Capital gains income -- -- 10,892 33,815
.........................................................................................................................
Net realized gain (loss)
on security transactions 139 11,050 (60) 515
.........................................................................................................................
Net unrealized
appreciation
(depreciation) of
investments during
the period 15,115 65,917 117,195 242,512
.........................................................................................................................
Net increase in net
assets resulting
from operations 17,357 98,937 144,625 300,055
.........................................................................................................................
Unit transactions:
Purchases -- -- -- --
.........................................................................................................................
Net transfers 292,487 1,527,357 1,263,299 2,718,060
.........................................................................................................................
Surrenders (3,336) (42,573) (25,561) (92,232)
.........................................................................................................................
Loan withdrawals (19) (30) (1) (4,157)
.........................................................................................................................
Cost of insurance (1,348) (5,600) (5,712) (12,445)
.........................................................................................................................
Net increase in
net assets resulting
from unit transactions 287,784 1,479,154 1,232,025 2,609,226
.........................................................................................................................
Total increase
in net assets 305,141 1,578,091 1,376,650 2,909,281
.........................................................................................................................
Net assets:
Beginning of period 43,203 106,081 215,494 538,026
- -------------------------------------------------------------------------------------------------------------------------
End of period $348,344 $1,684,172 $1,592,144 $3,447,307
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Statement of Changes in Net Assets (Continued)
- ---------------------------------------------------------------------------------------------------------------------------
For the Year Ended Growth High Yield Money New
December 31, 1996 and Income Fund Market Opportunities
Fund Sub-Account Fund Fund
Sub-Account Sub-Account Sub-Account
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations:
Net investment
income $ 190,521 $ 58,411 $ 208,905 $ --
...........................................................................................................................
Capital gains income 86,385 -- -- --
...........................................................................................................................
Net realized gain (loss)
on security transactions (249) 12,566 -- (8,438)
...........................................................................................................................
Net unrealized
appreciation
(depreciation) of
investments during
the period 1,193,437 76,806 -- 80,783
...........................................................................................................................
Net increase in net
assets resulting
from operations 1,470,094 147,783 208,905 72,345
...........................................................................................................................
Unit transactions:
Purchases 7,606 -- 33,859,102 7,159
...........................................................................................................................
Net transfers 9,205,818 1,302,945 (28,335,131) 5,351,891
...........................................................................................................................
Surrenders (177,135) (15,962) (82,757) (120,649)
...........................................................................................................................
Loan withdrawals (14,121) (382) (1,520,254) (1,410)
...........................................................................................................................
Cost of insurance (46,206) (7,414) (45,730) (26,304)
...........................................................................................................................
Net increase in
net assets resulting
from unit transactions 8,975,962 1,279,187 3,875,230 5,210,687
...........................................................................................................................
Total increase
in net assets 10,446,056 1,426,970 4,084,135 5,283,032
...........................................................................................................................
Net assets:
Beginning of period 2,506,208 264,828 2,841,282 1,563,216
- ---------------------------------------------------------------------------------------------------------------------------
End of period $12,952,264 $1,691,798 $6,925,417 $6,846,248
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Statement of Changes in Net Assets (Continued)
- -----------------------------------------------------------------------------------------------------
For the Year Ended U.S. Govt. Utilities Voyager
December 31, 1996 and High Growth Fund
Quality Bond and Income Sub-Account
Fund Fund
Sub-Account Sub-Account
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment
income $ 23,073 $ 20,790 $ 48,841
.....................................................................................................
Capital gains income -- -- 94,981
.....................................................................................................
Net realized gain (loss)
on security transactions (7) 2,502 (1,003)
.....................................................................................................
Net unrealized
appreciation
(depreciation) of
investments during
the period (6,719) 95,368 192,061
.....................................................................................................
Net increase in net
assets resulting
from operations 16,347 118,660 334,880
.....................................................................................................
Unit transactions:
Purchases -- -- 7,606
.....................................................................................................
Net transfers 381,013 662,417 5,629,844
.....................................................................................................
Surrenders (8,236) (10,864) (104,445)
.....................................................................................................
Loan withdrawals (25,381) (1,571) (209)
.....................................................................................................
Cost of insurance (3,228) (5,397) (27,501)
.....................................................................................................
Net increase in
net assets resulting
from unit transactions 344,168 644,585 5,505,295
.....................................................................................................
Total increase
in net assets 360,515 763,245 5,840,175
.....................................................................................................
Net assets:
Beginning of period 237,438 298,337 1,472,395
- -----------------------------------------------------------------------------------------------------
End of period $597,953 $1,061,582 $7,312,570
- -----------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
<CAPTION>
Statement of Changes in Net Assets
- -------------------------------------------------------------------------------------------------------------------------
For the period Asia Paciific Diversified Global Asset Global
from inception Growth Income Allocation Growth
January 10, 1995 to Fund Fund Fund Fund
December 31, 1995 Sub-Account* Sub-Account Sub-Account Sub-Account
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations:
Net investment
income $ -- $ 521 $ 192 $ 91
.........................................................................................................................
Capital gains income -- -- -- 170
.........................................................................................................................
Net realized gain (loss)
on security transactions (36) 679 134 31
.........................................................................................................................
Net unrealized
appreciation
of investments
during the period 1,006 5,068 14,176 24,935
.........................................................................................................................
Net increase in net
assets resulting
from operations 970 6,268 14,502 25,227
.........................................................................................................................
Unit transactions:
Purchases -- -- -- --
.........................................................................................................................
Net transfers 52,584 112,303 215,112 527,767
.........................................................................................................................
Surrenders (10,314) (12,286) (13,604) (14,119)
.........................................................................................................................
Loan withdrawals -- -- -- --
.........................................................................................................................
Cost of insurance (37) (204) (516) (849)
.........................................................................................................................
Net increase in
net assets resulting
from unit transactions 42,233 99,813 200,992 512,799
.........................................................................................................................
Total increase
in net assets 43,203 106,081 215,494 538,026
.........................................................................................................................
Net assets:
Beginning of period -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
End of period $43,203 $106,081 $215,494 $538,026
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Statement of Changes in Net Assets (Continued)
- ---------------------------------------------------------------------------------------------------------------------------
For the period Growth High Yield Money New
from inception and Income Fund Market Opportunities
January 10, 1995 to Fund Sub-Account Fund Fund
December 31, 1995 Sub-Account Sub-Account Sub-Account
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations:
Net investment
income $ 387 $ 916 $ 44,306 $ 1
...........................................................................................................................
Capital gains income 100 -- -- 31
...........................................................................................................................
Net realized gain (loss)
on security transactions 18 83 -- (213)
...........................................................................................................................
Net unrealized
appreciation
of investments
during the period 192,416 8,329 -- 150,716
...........................................................................................................................
Net increase in net
assets resulting
from operations 192,921 9,328 44,306 150,535
...........................................................................................................................
Unit transactions:
Purchases -- -- 10,030,006 --
...........................................................................................................................
Net transfers 2,340,814 268,388 (6,734,538) 1,436,274
...........................................................................................................................
Surrenders (23,281) (12,554) (30,724) (21,087)
...........................................................................................................................
Loan withdrawals -- -- (457,482) --
...........................................................................................................................
Cost of insurance (4,246) (334) (10,286) (2,506)
...........................................................................................................................
Net increase in
net assets resulting
from unit transactions 2,313,287 255,500 2,796,976 1,412,681
...........................................................................................................................
Total increase
in net assets 2,506,208 264,828 2,841,282 1,563,216
...........................................................................................................................
Net assets:
Beginning of period -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
End of period $2,506,208 $264,828 $2,841,282 $1,563,216
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Statement of Changes in Net Assets (Continued)
- -----------------------------------------------------------------------------------------------------
For the period U.S. Govt. Utilities Voyager
from inception and High Growth Fund
January 10, 1995 to Quality Bond and Income Sub-Account
December 31, 1995 Fund Fund
Sub-Account Sub-Account
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operations:
Net investment
income $ 696 $ 543 $ 30
.....................................................................................................
Capital gains income -- -- 224
.....................................................................................................
Net realized gain (loss)
on security transactions 99 516 379
.....................................................................................................
Net unrealized
appreciation
of investments
during the period 11,545 25,411 129,891
.....................................................................................................
Net increase in net
assets resulting
from operations 12,340 26,470 130,524
.....................................................................................................
Unit transactions:
Purchases -- -- --
.....................................................................................................
Net transfers 238,607 287,063 1,365,625
.....................................................................................................
Surrenders (13,066) (14,542) (21,100)
.....................................................................................................
Loan withdrawals -- -- --
.....................................................................................................
Cost of insurance (443) (654) (2,654)
.....................................................................................................
Net increase in
net assets resulting
from unit transactions 225,098 271,867 1,341,871
.....................................................................................................
Total increase
in net assets 237,438 298,337 1,472,395
.....................................................................................................
Net assets:
Beginning of period -- -- --
- -----------------------------------------------------------------------------------------------------
End of period $237,438 $298,337 $1,472,395
- -----------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
*From inception May 1, 1995 to December 31, 1995.
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE --
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
Notes to Financial Statements
December 31, 1996
1. ORGANIZATION:
Putnam Capital Manager Trust Separate Account Five (the Account) is a
separate investment account within ITT Hartford Life and Annuity
Insurance Company (the Company) and is registered with the Securities
and Exchange Commission (SEC) as a unit investment trust under the
Investment Company Act of 1940, as amended. Both the Company and the
Account are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut and the SEC. The Account invests
deposits by variable life contractholders of the Company in the various
mutual funds as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
A) Security Transactions -- Security transactions are recorded on the
trade date (date the order to buy or sell is executed). Cost of
investments sold is determined on the basis of identified cost.
Dividends and capital gains income are accrued as of the ex-dividend
date. Capital gains income represents dividends from the Funds which are
characterized as capital gains under tax regulations.
B) Security Valuation -- The investments in shares of the Funds are
valued at the closing net asset value per share as determined by the
appropriate Fund as of December 31, 1996.
C) Federal Income Taxes -- The operations of the Account form a part of,
and are taxed with, the total operations of the Company, which is taxed
as an insurance company under the Internal Revenue Code. Under current
law, no federal income taxes are payable with respect to the operations
of the Account.
D) Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities as of the date of the financial
statements and the reported amounts of income and expenses during the
period. Operating results in the future could vary from the amounts
derived from management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
In accordance with the terms of the contracts, the Company makes
deductions for mortality and expense undertakings, cost of insurance,
administrative fees, and state premium taxes. These charges are deducted
through termination of units of interest from applicable contract
owners' accounts, in accordance with the terms of the contracts.
