<PAGE>
As filed with the Securities and Exchange Commission on February 12, 1998.
File No. 333-36367
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 2
TO FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933 OF
SECURITIES OF UNIT INVESTMENT TRUSTS REGISTERED ON
FORM N-8B-2
A. Exact name of trust: Separate Account Five
B. Name of depositor: Hartford Life and Annuity Insurance Company
(Formerly ITT Hartford Life and Annuity Insurance Company)
C. Complete address of depositor's principal executive offices:
P.O. Box 2999
Hartford, CT 06104-2999
D. Name and complete address of agent for service:
Marianne O'Doherty, Esq.
Hartford Life Insurance Companies
P.O. Box 2999
Hartford, CT 06104-2999
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b) of Rule 485
___ on May 1, 1998 pursuant to paragraph (b) of Rule 485
___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
___ on May 1, 1998 pursuant to paragraph (a)(1) of Rule 485
___ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
E. Title and amount of securities being registered: Pursuant to Rule 24f-2
under the Investment Company Act of 1940, the Registrant is registering an
indefinite amount of securities.
F. Proposed maximum aggregate offering price to the public of the securities
being registered: Not yet determined.
G. Amount of filing fee: Not applicable.
H. Approximate date of proposed public offering: As soon as practicable after
the effective date of this registration statement.
The registrant hereby amends this Registration Statement on such dates as may
be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
RECONCILIATION AND TIE BETWEEN
FORM N-8B-2 AND PROSPECTUS
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
1. Cover page
2. Cover page
3. Not applicable
4. The Company; Distribution of the Policies
5. Summary - The Separate Account; The Separate Account -
General
6. The Separate Account - General
7. Not required by Form S-6
8. Not required by Form S-6
9. Legal Proceedings
10. Summary; The Separate Account - Funds; The Policy -
Application for a Policy; Policy Benefits and Rights;
Other Matters - Voting Rights, Dividends
11. Summary; The Separate Account - Funds
12. Summary; The Separate Account - Funds
13. Deductions and Charges; Distribution of the Policies;
Federal Tax Considerations
14. The Policy - Application for a Policy
15. The Policy - Allocation of Premium
16. The Separate Account - Funds; The Policy - Allocation
of Premium
17. Summary; Policy Benefits and Rights - Account Value and
Amount Payable on Surrender of the Policy, Cancellation and
Examine Rights
<PAGE>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
18. The Separate Account - Funds; Deduction and Charges;
Federal Tax Considerations
19. Other Matters - Statement to Policy Owners
20. Not applicable
21. Policy Benefits and Rights - Policy Loans
22. Not applicable
23. Safekeeping of Separate Account Assets
24. Other Matters - Assignment
25. The Company
26. Not applicable
27. The Company
28. The Company
29. The Company
30. Not applicable
31. Not applicable
32. Not applicable
33. Not applicable
34. Not applicable
35. Distribution of Policies
36. Not required by Form S-6
37. Not applicable
38. Distribution of the Policies
<PAGE>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
39. The Company; Distribution of the Policies
40. Not applicable
41. The Company; Distribution of the Policies
42. Not applicable
43. Not applicable
44. The Policy - Allocation of Premium
45. Not applicable
46. Policy Benefits and Rights - Account Value
47. The Separate Account - Funds
48. Cover Page; The Company
49. Not applicable
50. The Separate Account - General
51. Summary; The Company; The Policy; Policy Benefits and
Rights; Other Matters - Beneficiary
52. The Separate Account - Funds, The Separate Account -
Investment Adviser
53. Federal Tax Considerations
54. Not applicable
55. Not applicable
56. Not required by Form S-6
57. Not required by Form S-6
58. Not required by Form S-6
59. Not required by Form S-6
<PAGE>
PART I
<PAGE>
PUTNAM CAPITAL MANAGER LIFE
MODIFIED SINGLE PREMIUM VARIABLE LIFE
INSURANCE POLICIES
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
P.O. BOX 2999
HARTFORD, CT 06104-2999
[LOGO] TELEPHONE 1-800-231-5453
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This Prospectus describes Series II of Putnam Capital Manager Life, a modified
single premium variable life insurance policy ("Policy" or "Policies") offered
by Hartford Life and Annuity Insurance Company ("Hartford") to applicants age 90
and under. Effective January 1, 1998, ITT Hartford Life and Annuity Insurance
Company name changed to Hartford. The Policy lets the Policy Owner pay a single
premium and, subject to restrictions, additional premiums.
The Policy is a modified endowment contract for federal income tax purposes,
except in certain cases described under "Federal Tax Considerations," page 23. 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 policy. Any surrender amounts that are taxable 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 amounts allocated will be
transferred to the Funds specified in the Policy Owner's application. The
underlying investment options ("Funds") of Putnam Variable Trust currently
available under the Policy are: Putnam VT Asia Pacific Growth Fund, Putnam VT
Diversified Income Fund (Bond 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 (International
Fund), Putnam VT Money Market Fund, Putnam VT New Opportunities Fund (Capital
Appreciation 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 (Capital Appreciation Fund), and Putnam VT Voyager Fund (Capital
Appreciation Fund).
There is no guaranteed minimum Account Value for a Policy. The Account Value of
a Policy will vary up or down to reflect the investment experience of the Funds
to which premiums have been allocated. The Policy Owner bears the investment
risk for all amounts allocated to the Funds. The Policy continues in effect as
long as the Cash Surrender Value is sufficient to pay the monthly charges under
the Policy ("Deduction Amount"). The Policy 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 received by Hartford.
The Policies provide for a Face Amount, which is the minimum death benefit under
a Policy. The Death Benefit may be greater than the Face Amount. The Account
Value will, and under certain circumstances the Death Benefit of the Policy may,
increase or decrease based on the investment experience of the Funds to which
premiums have been allocated. However, while the Policy 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 to the beneficiary. The Death Proceeds
equal the Death Benefit less any Indebtedness under the Policy.
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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
POLICY.
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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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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 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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THE DATE OF THIS PROSPECTUS IS FEBRUARY , 1998.
<PAGE>
2 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SPECIAL TERMS......................................................... 4
SUMMARY............................................................... 6
THE COMPANY........................................................... 8
THE SEPARATE ACCOUNT.................................................. 8
General............................................................. 8
Funds............................................................... 8
Investment Adviser.................................................. 10
THE POLICY............................................................ 10
Application for a Policy............................................ 10
Premiums............................................................ 10
Allocation of Premiums.............................................. 11
Accumulation Unit Values............................................ 11
DEDUCTIONS AND CHARGES................................................ 11
Chart of Deductions and Charges..................................... 12
Cost of Insurance Charge............................................ 12
Administrative Charge............................................... 13
Annual Maintenance Fee.............................................. 13
Surrender Charge.................................................... 13
Policy Owner Options................................................ 13
Option 1.......................................................... 13
Option 2.......................................................... 14
Other Deductions or Charges......................................... 14
POLICY BENEFITS AND RIGHTS............................................ 14
Death Benefit....................................................... 14
Account Value....................................................... 15
Transfer of Account Value........................................... 15
Policy Loans........................................................ 15
Amount Payable on Surrender of the Policy........................... 16
Partial Surrenders.................................................. 16
Benefits at Maturity................................................ 16
Lapse and Reinstatement............................................. 17
Cancellation and Exchange Rights.................................... 17
Suspension of Valuation, Payments and Transfers..................... 17
LAST SURVIVOR POLICIES................................................ 17
OTHER MATTERS......................................................... 17
Voting Rights....................................................... 17
Statements to Policy Owners......................................... 18
Limit on Right to Contest........................................... 18
Misstatement as to Age and Sex...................................... 18
Payment Options..................................................... 18
Beneficiary......................................................... 20
Assignment.......................................................... 20
Dividends........................................................... 20
EXECUTIVE OFFICERS AND DIRECTORS...................................... 20
DISTRIBUTION OF THE POLICIES.......................................... 22
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS.......................... 23
FEDERAL TAX CONSIDERATIONS............................................ 23
General............................................................. 23
Taxation of Hartford and the Separate Account....................... 23
Income Taxation of Policy Benefits.................................. 23
Last Survivor Policies.............................................. 23
Modified Endowment Contracts........................................ 24
Estate and Generation Skipping Taxes................................ 24
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 3
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<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Diversification Requirements........................................ 24
Ownership of the Assets in the Separate Account..................... 25
Life Insurance Purchased for Use in Split Dollar Arrangements....... 25
Federal Income Tax Withholding...................................... 25
Non-Individual Ownership of Policies................................ 25
Other............................................................... 25
Life Insurance Purchases by Nonresident Aliens and Foreign
Corporations....................................................... 25
LEGAL PROCEEDINGS..................................................... 25
LEGAL MATTERS......................................................... 26
EXPERTS............................................................... 26
REGISTRATION STATEMENT................................................ 26
APPENDIX A............................................................ 27
</TABLE>
THE POLICIES AND/OR POLICY OWNER OPTION 2 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.
<PAGE>
4 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 the Sub-Accounts plus the value of the Loan
Account under the Policy.
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 surrender that is
not subject to the Surrender Charge. This amount in any Policy Year is the
greater of 10% of premiums or 100% of cumulative earnings (Account Value less
premiums paid).
ANNUITY UNIT: An accounting unit of measure used to calculate the amount of
annuity payments.
ATTAINED AGE: The Issue Age plus the number of fully completed Policy Years.
CASH SURRENDER VALUE: The Cash Value less all Indebtedness.
CASH VALUE: The Account Value less any Surrender Charge and any Unamortized Tax
Charge due upon Surrender.
CODE: The Internal Revenue Code of 1986, as amended.
COVERAGE AMOUNT: The Death Benefit less the Account Value.
DEATH BENEFIT: The greater of (1) the Face Amount specified in the Policy or (2)
the Account Value on the date of death multiplied by a stated percentage as
specified in the Policy.
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 Policy Date and on each Monthly Activity
Date for the cost of insurance, Tax Expense charges under Option 1, an
administrative charge and a mortality and expense risk charge.
FACE AMOUNT: On the Policy Date, the initial Face Amount is the amount shown on
the Policy's specifications page. Thereafter, the Face Amount is reduced by any
partial surrenders.
FUNDS: The registered management investment companies in which assets of the
Separate Account may be invested.
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 Policy Owner, including all
outstanding loans on the Policy, any interest due or accrued and any unpaid
Deduction Amount or annual maintenance fee arising during a grace period.
INSURED: The person on whose life the Policy is issued.
ISSUE AGE: As of the Policy Date, the Insured's age on Insured's last birthday.
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 that is not based on the investment experience
of the Separate Account.
MONTHLY ACTIVITY DATE: The day of each month on which deductions and charges are
subtracted from the Account Value of the Policy. Monthly Activity Dates occur on
the same day of the month as the Policy Date.
POLICY ANNIVERSARY: The anniversary of the Policy Date.
POLICY DATE: The date from which Policy Anniversaries and Policy Years are
measured.
POLICY OWNER: The owner of the Policy.
POLICY OWNER OPTIONS: The Policy Owner may elect one of two options offered by
Hartford to pay Mortality and Expense Risk charges and certain tax related
charges. The Policy Owner must elect the option at the time the Policy is issued
and the option cannot be changed once the Policy is issued. The following
options are available:
OPTION 1: ASSET BASED CHARGES: Under this option the Policy Owner elects to
pay a Mortality and Expense Risk charge that is deducted monthly from
Account Value at an annual rate of .90% in Policy Years 1 through 10 and at
an annual rate of .50% in Policy Years 11 and beyond; a Tax Expense charge
that is also deducted monthly at an annual rate of .40% for the first 10
Policy Years and an Unamortized Tax charge that is imposed during the first
9 Policy Years on surrenders or partial surrenders according to the rate set
forth in "Deductions and Charges -- Policy Owner Options -- Unamortized Tax
Charge" page 13. See "Deductions and Charges -- Policy Owner Options" page
13.
OPTION 2: FRONTED CHARGES: Under this option the Policy Owner elects to pay
a Mortality and Expense Risk charge that is deducted monthly from Account
Value at an annual rate of .65% in Policy Years 1 through 10 and an annual
rate of .50% in Policy Years 11 and beyond and a Tax Expense charge that is
deducted from any Premium payment in all Policy Years at an annual rate of
4.0%. This option is not available in all states. See "Deductions and
Charges -- Policy Owner Options" page 13.
POLICY YEAR: The twelve months between Policy Anniversaries.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 5
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SEPARATE ACCOUNT: Separate Account Five, an account established by Hartford to
separate the assets funding the Policies from other assets of Hartford.
SUB-ACCOUNT: The subdivisions of the Separate Account used to allocate a Policy
Owner's Account Value, less Indebtedness, among the Funds.
SURRENDER CHARGE: A charge which may be assessed upon surrender of a Policy or
partial surrenders in excess of the Annual Withdrawal Amount.
VALUATION DAY: The date on which the Sub-Account is valued. The Valuation Day is
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.
<PAGE>
6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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SUMMARY
THE POLICIES
The Policies are life insurance policies with death benefits, cash values,
and other traditional life insurance features. The Policies 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 premium payments have been allocated. The
Policies are credited with units ("Accumulation Units") to calculate Account
Values. The Policy Owner may transfer the Account Values among the Funds.
The Policies can be issued on a single life or "last survivor" basis. For a
discussion of how last survivor Policies operate differently from single life
Policies, see "Last Survivor Policies," page 17.
THE SEPARATE ACCOUNT AND THE FUNDS
Separate Account Five ("Separate Account") funds the variable life insurance
Policies 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 Policies currently
offer 16 sub-accounts ("Sub-Accounts"), each investing exclusively in a Fund.
The investment objectives of the Funds are as set forth in "The Separate
Account," page 8. Applicants should read the Funds' prospectuses accompanying
this Prospectus in connection with the purchase of a Policy.
The following table shows annual Fund operating expenses for 1996:
ANNUAL FUND OPERATING EXPENSES
(as a percentage of net assets)
<TABLE>
<CAPTION>
OTHER
MANAGEMENT EXPENSES
FEES (ABSENT ANY
(ABSENT ANY EXPENSE
FEE WAIVERS) REIMBURSEMENTS)
------------ ----------------
<S> <C> <C>
Putnam VT Asia Pacific Growth Fund...................................................... 0.80% 0.43%
Putnam VT Diversified Income Fund....................................................... 0.70% 0.13%
Putnam VT Global Asset Allocation Fund.................................................. 0.68% 0.15%
Putnam VT Global Growth Fund............................................................ 0.60% 0.16%
Putnam VT Growth and Income Fund........................................................ 0.49% 0.05%
Putnam VT High Yield Fund............................................................... 0.68% 0.08%
Putnam VT International Growth Fund..................................................... 0.80% 0.18%
Putnam VT International Growth and Income Fund.......................................... 0.80% 0.17%
Putnam VT International New Opportunities Fund.......................................... 1.20% 0.19%
Putnam VT Money Market Fund (2)......................................................... 0.45% 0.10%
Putnam VT New Opportunities Fund........................................................ 0.63% 0.09%
Putnam VT New Value Fund................................................................ 0.70% 0.13%
Putnam VT U.S. Government and High Quality Bond Fund.................................... 0.62% 0.07%
Putnam VT Utilities Growth and Income Fund (3).......................................... 0.69% 0.09%
Putnam VT Vista Fund.................................................................... 0.65% 0.16%
Putnam VT Voyager Fund.................................................................. 0.57% 0.06%
<CAPTION>
TOTAL FUND
OPERATING
EXPENSES (1)
------------
<S> <C>
Putnam VT Asia Pacific Growth Fund...................................................... 1.23%
Putnam VT Diversified Income Fund....................................................... 0.83%
Putnam VT Global Asset Allocation Fund.................................................. 0.83%
Putnam VT Global Growth Fund............................................................ 0.76%
Putnam VT Growth and Income Fund........................................................ 0.54%
Putnam VT High Yield Fund............................................................... 0.76%
Putnam VT International Growth Fund..................................................... 0.98%
Putnam VT International Growth and Income Fund.......................................... 0.97%
Putnam VT International New Opportunities Fund.......................................... 1.39%
Putnam VT Money Market Fund (2)......................................................... 0.55%
Putnam VT New Opportunities Fund........................................................ 0.72%
Putnam VT New Value Fund................................................................ 0.83%
Putnam VT U.S. Government and High Quality Bond Fund.................................... 0.69%
Putnam VT Utilities Growth and Income Fund (3).......................................... 0.78%
Putnam VT Vista Fund.................................................................... 0.81%
Putnam VT Voyager Fund.................................................................. 0.63%
</TABLE>
- ------------------------
(1) Management Fees generally represent the fees paid to the investment adviser
or its affiliate for investment and administrative services provided. Other
Expenses are expenses (other than Management Fees) which are deducted from
the fund including legal, accounting and custodian fees. For a complete
description of the nature of the services provided in consideration of the
operating expenses deducted, please see the Fund prospectuses.
(2) 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.
(3) On July 11, 1996, shareholders approved an increase in the fees payable to
Putnam Investment Management, Inc. ("Putnam Management") under the
Management Policy 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.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 7
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The investment adviser for all the Funds is Putnam Management. See "The
Separate Account," page 8.
PREMIUMS
The Policy permits the Policy Owner to pay a large single premium and,
subject to restrictions, additional premiums. The Policy 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 may be eligible for
simplified underwriting without a medical examination if they meet simplified
underwriting standards. For applicants who are below age 35 or above age 80, or
who do not meet simplified underwriting eligibility, full underwriting applies,
except that substandard underwriting applies in those cases that represent
substandard risks according to customary underwriting guidelines.
DEDUCTIONS AND CHARGES
On the Policy 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 from each Sub-Account. The Deduction Amount includes a cost of insurance
charge, a Tax Expense charge under Option 1, an administrative charge and a
mortality and expense risk charge. If the Cash Surrender Value is not sufficient
to cover a Deduction Amount due on any Monthly Activity Date the Policy may
lapse. See "Deductions and Charges," page 11, and "Policy Benefits and Rights --
Lapse and Reinstatement," page 17.
If the Account Value on a Policy Anniversary or on any date the Policy is
surrendered is less than $50,000, Hartford will deduct an annual maintenance fee
of $30. See "Deductions and Charges -- Annual Maintenance Fee," page 13.
The Policy Owner may pay certain deductions and charges by electing one of
two available options at the time the Policy is issued. Once elected, the Policy
Owner Options cannot be changed:
Under Option 1:
- a Mortality and Expense Risk charge is deducted monthly from Account Value
at an annual rate of .90% in Policy Years 1 through 10 and at an annual
rate of .50% in Policy Years 11 and beyond.
- a Tax Expense charge is also deducted monthly at an annual rate of .40%
for the first 10 Policy Years.
- an Unamortized Tax charge is imposed during the first 9 Policy Years on
surrenders or partial surrenders according to the rate set forth in
"Deductions and Charges -- Policy Owner Options -- Unamortized Tax
Charges," page 18.
Under Option 2: (May not be available in all states)
- a Mortality and Expense Risk charge is deducted monthly from Account Value
at an annual rate of .65% in Policy Years 1 through 10 and an annual rate
of .50% in Policy Years 11 and beyond.
- a Tax Expense charge is deducted from any Premium payment in all Policy
Years at an annual rate of 4.0%.
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 14, and "Federal Tax Considerations," page 23.
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 Policy and partial surrenders in excess of the Annual
Withdrawal Amount, a Surrender Charge may be assessed. See "Deductions and
Charges -- Surrender Charge," page 13.
For a discussion of the tax consequences of surrender of the Policy or a
partial surrender, see "Federal Tax Considerations," page 23.
DEATH BENEFIT
The Policies provide for a Face Amount which is the minimum Death Benefit
under the Policy. 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 of
the Policy. See "Policy Benefits and Rights -- Death Benefit," page 14.
ACCOUNT VALUE
The Account Value will increase or decrease to reflect the investment
experience of the Funds applicable to the Policy and deductions for the monthly
Deduction Amount. There is no minimum guaranteed Account Value and the Policy
Owner bears the risk of the investment in the Funds. See "Policy Benefits and
Rights -- Account Value," page 15.
POLICY LOANS
A Policy Owner may obtain one or both types of cash loans from Hartford.
Both types of loans are secured by the Policy. 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 Cash Value. See "Policy Benefits and Rights -- Policy
Loans," page 15.
<PAGE>
8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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LAPSE
A Policy may terminate if the Cash Surrender Value on any Monthly Activity
Date is less than the required Deduction Amount. Hartford will give written
notice to the Policy Owner and a 61-day grace period during which additional
amounts may be paid to continue the Policy. See "Policy Benefits and Rights --
Policy Loans," page 15, and "Lapse and Reinstatement," page 17.
CANCELLATION AND EXCHANGE RIGHTS
A Policy Owner has a limited right to return the Policy for cancellation. If
the Policy Owner returns the Policy to Hartford or to the agent who sold the
Policy, to be canceled within ten days after delivery of the Policy to the
Policy Owner (in certain cases, this free-look period is longer), Hartford will
return to the Policy Owner, within seven days thereafter, the greater of the
premiums paid for the Policy, less any Indebtedness, or the sum of (1) the
Account Value less any Indebtedness on the date the returned Policy is received
by Hartford or its agent and (2) any deductions under the Policy or by the Funds
for taxes, charges or fees.
In addition, once the Policy is in effect it may be exchanged during the
first 24 months after its issuance for a permanent life insurance policy on the
life of the Insured without submitting proof of insurability. See "Policy
Benefits and Rights -- Cancellation and Exchange Rights," page 17.
TAX CONSEQUENCES
The current federal tax law generally excludes all death benefit payments
from the gross income of the Policy beneficiary. The Policies generally will be
treated as modified endowment contracts. This status does not affect the
Policies' 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 Policy (generally, the excess of Account Value over
premiums paid) and may be subject to a 10% penalty tax. See "Federal Tax
Considerations," page 23.
THE COMPANY
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
changed from ITT Hartford Life and Annuity Insurance Company 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 controlled by
The Hartford Financial Services Group, Inc., a Delaware Corporation.
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. The ratings apply to Hartford's ability to meet its insurance
obligations, including those described in this Prospectus.
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 it is 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 Policy Owners and persons entitled to
payments under the Policies. The assets of the Separate Account are not
chargeable with liabilities arising out of any other business which Hartford may
conduct.
FUNDS
The underlying investment options for the Policies are shares of Putnam
Variable Trust, an open-end series investment company. 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 close Funds or 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 in 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.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 9
- --------------------------------------------------------------------------------
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 what are
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 a secondary objective if 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 Investor Services, 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 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
<PAGE>
10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 policies. 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 policy owners, the Trust's Board of
Trustees intends to monitor events in order to identify any material conflicts
between such contract owners and policy owners and to determine what action, if
any, should be taken in response thereto. If the Fund's Board of Trustees were
to conclude that separate funds should be established for variable life and
variable annuity separate accounts, the variable life policy owners and the
variable annuity contract owners 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 Trust prospectus accompanying this
Prospectus for a more complete description of Putnam Management and the
respective fees of the Funds.
THE POLICY
APPLICATION FOR A POLICY
Individuals wishing to purchase a Policy must submit an application to
Hartford. A Policy 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 POLICY 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 Policy will be made without the consent
of the Policy Owner.
The Policy will be effective on the Policy Date only after Hartford has
received all outstanding delivery requirements and received the initial premium.
The Policy Date is the date used to determine all future cyclical transactions
on the Policy, e.g., Monthly Activity Date, Policy Months and Policy Years. The
Policy Date may be prior to, or the same as, the date the Policy is issued
("Issue Date").
If the Coverage Amount is over the current limits established by Hartford,
the initial payment will not be accepted 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 Policy delivery Hartford will require a sufficient
payment to place the insurance in force.
PREMIUMS
The Policy permits the Policy Owner to pay a large single premium and,
subject to restrictions, additional premiums. The Policy 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 may be eligible for simplified
underwriting without a medical examination if they meet simplified underwriting
standards as evidenced in their responses in the application. For applicants who
are below age 35 or above age 80, or who do not meet simplified underwriting
eligibility, full underwriting applies, except that substandard underwriting
applies only in those cases
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 11
- --------------------------------------------------------------------------------
that represent substandard risks according to customary underwriting guidelines.
Additional premiums are allowed if they do not cause the Policy to fail to
meet the definition of a life insurance Policy under Section 7702 of the Code.
The amount and frequency of additional premium payments will affect the Cash
Value and the amount and duration of insurance. 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. Premium which does not
meet the tax qualification guidelines for life insurance under the Code will not
be applied to the Policy.
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 Policy 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 Policy 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 Policy (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 premium 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. 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 Policy. See also, "Policy
Benefits and Rights -- Account Value," page 15.
All valuations in connection with a Policy, e.g., with respect to
determining Account Value and Cash Surrender Value and in connection with Policy
Loans, or calculation of Death Benefits, or with respect to determining the
number of Accumulation Units to be credited to a Policy 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
The deduction or charges associated with this Policy are subtracted,
depending on the type of deduction or charge, from Premium payments as they are
made, upon surrender or partial surrender of the Policy, on the Policy
Anniversary Date or on a monthly pro rated basis from each Sub-Account
("Deduction Amount").
Deductions are taken from Premium payments before allocations to the
Sub-Accounts are made. Monthly Deduction Amounts are subtracted on the Policy
Date and on each Monthly Activity Date after the Policy Date to cover charges
and expenses incurred in connection with a Policy. Each Deduction Amount will be
subtracted pro rata from each Sub-Account such that the proportion of Account
Value of the Policy attributable to each Sub-Account remains the same before and
after the deduction. The Deduction Amount will vary from month to month. If the
Cash Surrender Value is not sufficient to cover a Deduction Amount due on any
Monthly Activity Date, the Policy may lapse. See "Policy Benefits and Rights --
Lapse and Reinstatement," page 17.
The Policy Owner may elect one of two options offered by Hartford to pay the
Mortality and Expense Risk charge, the Tax Expense charge and any Unamortized
Tax charge. Once selected, the option may not be changed. Option 2 may not be
available in all states.
<PAGE>
12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
The following chart illustrates the charges and deductions associated with
this Policy. For a more detailed discussion see the descriptions below:
<TABLE>
<CAPTION>
DEDUCTION OR CHARGE DEDUCTED FROM ALL POLICIES WHEN DEDUCTION IS MADE AMOUNT DEDUCTED
---------------------- ---------------------------------- ---------------------------------- ----------------------------------
<S> <C> <C> <C>
Cost of Insurance Yes Monthly Individualized depending on age,
sex and other factors
Administrative Charge Yes Monthly .25% of amounts allocated to the
Separate Account
Annual Maintenance Fee Only Policies with an Account On the Policy Anniversary Date or $30.00
Value of less than $50,000 on the upon surrender of the Policy
Policy Anniversary Date or date of
surrender
Surrender Charge Yes Upon surrender or partial A percentage of the amount
surrender of the Policy surrendered, depending on the
Policy Year, which is attributable
to premiums paid
Tax Expense Charge Yes Under Option 1: Monthly Under Option 1: .40% of Account
Under Option 2: Receipt of premium Value for Policy Years 1-10
payment Under Option 2: 4% of each premium
payment in all Policy Years
Mortality and Expense Yes Monthly Under Option 1: .90% of Account
Risk Charge Value in Policy Years 1-10 and
.50% for Policy Years 11 and
beyond.
Under Option 2: .65% of Account
Value in Policy Years 1-10 and
.50% for Policy years 11 and
beyond
Unamortized Tax Charge No, only under Option 1 Upon surrender or partial A percentage of the Account Value
surrender of the Policy depending on the Policy Year the
surrender takes place.
</TABLE>
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 Policy Year and are based on whether 100%, 90% or 80% of the
Guideline Single Premium has been paid at issue. 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 Policy
Date or any Monthly Activity Date. For Policies eligible for simplified
underwriting, standard risks have a guaranteed cost of insurance of 125% based
on the 1980 Commissioners Standard Ordinary Smoker/Non-Smoker Mortality Table
through age 90, grading down to 100% of the 1980 Commissioners Standard Ordinary
Smoker/Non-Smoker Mortality Table at age 100 (age last birthday). For Policies
not eligible for simplified underwriting, standard risks have a guaranteed cost
of insurance of 100% of the 1980 Commissioners Standard Ordinary Smoker/Non-
Smoker Mortality Table. (Unisex rates may be required in some states.) A table
of guaranteed cost of insurance rates per $1,000 will be included in each
Policy; however, Hartford reserves the right to use rates less than those shown
in the Table. Substandard risks and Policies issued employing simplified
underwriting procedures 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 Smoker/Non-Smoker Mortality Table (age last birthday). The multiple
will be based on the Insured's substandard rating.
The Coverage Amount is first set on the Policy 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 Policies as life insurance Policies under the current federal tax
law. Under that law, the Minimum Coverage Amount is a stated percentage of the
Account Value of the Policy determined
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 13
- --------------------------------------------------------------------------------
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 = $70,000
Insured's attained age = 60
Minimum Coverage Amount percentage for age 60 = 30%
On the Monthly Activity Date, the Coverage Amount is $30,000. This is
calculated by subtracting the Account Value on the Monthly Activity Date
($70,000) 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 $21,000 (30% of $70,000). Since $21,000 is less
than the Face Amount less the Account Value ($30,000), no adjustment is
necessary. Therefore, the Coverage Amount will be $30,000.
Assume that the Account Value in the above example was $90,000. The Minimum
Coverage Amount would be $27,000 (30% of $90,000). Since this is greater than
the Face Amount less the Account Value ($10,000), the Coverage Amount for the
Policy Month is $27,000. (For an explanation of the Death Benefit, see "Policy
Benefits and Rights -- Death Benefit," page 14.)
Because the Account Value and, as a result, the Coverage Amount under a
Policy may vary from month to month, the cost of insurance charge may also vary
on each Monthly Activity Date.
ADMINISTRATIVE CHARGE
Hartford will deduct monthly from the Account Value attributable to the
Separate Account an administrative charge equal to an annual rate of 0.25%. This
charge compensates Hartford for administrative expenses incurred in the
administration of the Separate Account and the Policies.
ANNUAL MAINTENANCE FEE
If the Account Value on a Policy Anniversary or on the date the Policy is
surrendered 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 Policies. 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 Policies.
SURRENDER CHARGE
Upon surrender of the Policy or partial surrenders in excess of the Annual
Withdrawal Amount, a Surrender Charge may be assessed. In Policy Years 1 through
3, this charge is 7.5% of surrendered Account Value attributable to premiums
paid. In Policy Years 4 through 5, this charge is 6%. In Policy Years 6 through
7, this charge is 4%. In Policy Years 8 through 9, this charge is 2%. After the
ninth Policy Year, there is no charge.
In determining the Surrender Charge and any Unamortized Tax charge discussed
below, any surrender or partial surrender during the first ten Policy Years will
be deemed first from premiums paid and then from earnings. If an amount equal to
all premiums paid has been withdrawn, no charge will be assessed on a surrender
of the remaining Account Value.
The Surrender Charge is imposed to cover a portion of the sales expense
incurred by Hartford in distributing the Policies. This expense includes agents
commissions, advertising and the printing of prospectuses. See "Policy Benefits
and Rights -- Amount Payable on Surrender of the Policy," page 16.
POLICY OWNER OPTIONS
In addition to the deductions and charges described above, the Policy Owner,
at the time the Policy is issued, will elect one of two options described below
to pay charges relating to certain taxes and mortality and expense risk charges.
The option selected by the Policy Owner may affect Policy Value.
OPTION 1: ASSET-BASED CHARGES: Under this payment option, the Policy Owner
will pay:
MORTALITY AND EXPENSE RISK CHARGE: Hartford will deduct monthly from the
Account Value attributable to the Separate Account for Policy Years 1 through 10
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 Policies. In
Policy Years 11 and beyond, the charge drops to an annual rate of 0.50% for the
mortality risks and expense risks Hartford assumes in relation to the variable
portion of the Policies. The mortality risk assumed is that the cost of
insurance charges specified in the Policy 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 Hartford receives written notice of death. The expense risk assumed is
that expenses incurred in issuing and administering the Policies will exceed the
administrative charges set in the Policy. 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 Policies
and the proceeds of the Surrender Charge. The mortality and expense risk charge
is deducted while the Policy is in force, including the duration of a payment
option.
<PAGE>
14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
TAX EXPENSE CHARGE: Hartford will deduct monthly from the Account Value a
charge equal to an annual rate of 0.40% for the first ten Policy Years. This
charge compensates Hartford for premium taxes imposed by various states and
local jurisdictions and for the cost of the capitalization of certain policy
acquisition expenses under Section 848 of the Code. The charge includes a
premium tax deduction of 0.25% and Section 848 cost of 0.15%. The 0.25% premium
tax deduction over ten Policy 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% charge helps reimburse Hartford for approximate expenses incurred from
federal taxes under Section 848 of the Code.
UNAMORTIZED TAX CHARGE: Under this option, during the first nine Policy
Years, an Unamortized Tax charge will be imposed on surrender or partial
surrenders. The Unamortized Tax charge is shown below, as a percentage of
Account Value, at the end of each Policy Year:
<TABLE>
<CAPTION>
POLICY
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 Policy Year, no Unamortized Tax charge will be imposed.
OPTION 2: FRONTED CHARGES: Under this option, the Policy Owner will pay:
MORTALITY AND EXPENSE RISK CHARGE: In Policy Years 1 through 10, Hartford
will deduct monthly from the Account Value attributable to the Separate Account
a charge equal to an annual rate of 0.65% for the mortality risks and expense
risks Hartford assumes in relation to the variable portion of the Policies. In
Policy Years 11 and beyond, the charge drops to an annual rate of 0.50%. The
mortality risk assumed is that the cost of insurance charges specified in the
Policy 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 Hartford receives written
notice of death. The expense risk assumed is that expenses incurred in issuing
and administering the Policies will exceed the administrative charges set in the
Policy. 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 Policies and the proceeds of the Surrender
Charge. The mortality and expense risk charge is deducted while the Policy is in
force, including the duration of a payment option.
TAX EXPENSE CHARGE: Hartford will deduct from Premium payments a tax expense
charge equal to an annual rate of 4.0% for all Policy Years. This charge
compensates Hartford for premium taxes imposed by various states and local
jurisdictions and for the cost of capitalization of certain policy acquisition
expenses under Section 848 of the Code. The charge includes a premium tax
deduction of 2.5% and a Section 848 cost of 1.5%. The premium tax deduction
approximates Hartford's average expenses for state and local premium taxes.
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% charge helps reimburse Hartford
for approximate expenses incurred from federal taxes under Section 848 of the
Code.
This Option may not be available in all states.
OTHER DEDUCTIONS OR CHARGES
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.
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.
POLICY BENEFITS AND RIGHTS
DEATH BENEFIT
While in force, the Policy provides for the payment of the Death Proceeds to
the named beneficiary when the Insured under the Policy 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
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 15
- --------------------------------------------------------------------------------
Policy. Therefore, an increase in Account Value may increase the Death Benefit.
However, because the Death Benefit will never be less than the Face Amount, a
decrease in Account Value may decrease the Death Benefit, but never below the
Face Amount.
EXAMPLES:
<TABLE>
<CAPTION>
A B
---------- ----------
<S> <C> <C>
Face Amount............................ $ 100,000 $ 100,000
Insured's Age.......................... 40 40
Account Value on Date of Death......... $ 46,500 $ 34,000
Specified Percentage................... 250% 250%
</TABLE>
In Example A, the Death Benefit equals $116,250, i.e., the greater of
$100,000 (the Face Amount) or $116,250 (the Account Value at the Date of Death
of $46,500, multiplied by the specified percentage of 250%). This amount, less
any outstanding loans, constitutes the Death Proceeds which 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 18.
ACCOUNT VALUE
The Account Value of a Policy 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 Policy is related to the net asset value
of the Funds to which premiums on the Policy have been allocated. The Account
Value on any Valuation Day is calculated by multiplying the number of
Accumulation Units credited to the Policy 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 Policy and the value
of the Loan Account. See "The Policy -- Accumulation Unit Values," page 11.
TRANSFER OF ACCOUNT VALUE
While the Policy remains in effect and subject to Hartford's transfer rules
then in effect, the Policy 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 Policy 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 requirements that callers provide certain
information for identification purposes. All transfer instructions by telephone
are tape recorded. Hartford will send the Policy Owner a confirmation of the
transfer within 5 days from the date of any instruction. IT IS THE
RESPONSIBILITY OF THE POLICY OWNER TO VERIFY THE ACCURACY OF ALL CONFIRMATIONS
OF TRANSFERS AND TO PROMPTLY ADVISE HARTFORD OF ANY INACCURACIES WITHIN A
REASONABLE TIME.
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 Policy Owners is, or would be, to the disadvantage
of other Policy 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 Policy 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 Policy 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.
POLICY LOANS
While the Policy is in effect, a Policy 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 Policy. The aggregate loans (including the
<PAGE>
16 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
currently applied for loan) may not exceed at the time a loan is requested 90%
of the Cash Value.
The loan amount will be transferred pro rata from each Sub-Account
attributable to the Policy (unless the Policy Owner specifies otherwise) to the
Loan Account. The amounts allocated to the Loan Account will earn interest at a
rate of 4% per annum (6% for "Preferred Loans"). The amount of the Loan Account
that equals the difference between the Cash Value and the total of all premiums
paid under the Policy is considered a "Preferred Loan." For exchanges which take
place according to Code Section 1035(a) that have an outstanding loan at the
time of transfer, the difference between the Account Value and the total of all
premiums paid under the Policy 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. The proceeds of a loan will be delivered to the Policy Owner
within seven business days of Hartford's receipt of the loan request.
If the aggregate outstanding loan(s) secured by the Policy exceeds the
Account Value of the Policy less any Surrender Charges and due and unpaid
Deduction Amount, Hartford will give written notice to the Policy Owner that,
unless Hartford receives an additional payment within 61 days to reduce the
aggregate outstanding loan(s) secured by the Policy, the Policy may lapse.
All or any part of any loan secured by a Policy may be repaid while the
Policy 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 Policy 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 Policy
will be reinstated. See "Policy Benefits and Rights -- Lapse and Reinstatement,"
page 17.
A loan, whether or not repaid, will have a permanent effect on the Account
Value because the investment results of each Sub-Account will apply only to the
amount remaining in such Sub-Accounts. The longer a loan is outstanding, the
greater the effect is likely to be. The effect could be favorable or
unfavorable. If the Sub-Accounts earn more than the annual interest rate for
amounts held in the Loan Account, a Policy 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 the interest rate for amounts held in the Loan Account, the
Policy 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 POLICY
While the Policy is in force, a Policy Owner may elect, without the consent
of the beneficiary (provided the designation of beneficiary is not irrevocable),
to fully surrender the Policy. Upon surrender, the Policy Owner will receive the
Cash Surrender Value determined as of the day Hartford receives the Policy
Owner's written request or the date requested by the Policy Owner whichever is
later. The Cash Surrender Value equals the Account Value less any Surrender
Charges and Unamortized Tax charge and all Indebtedness. Hartford will pay the
Cash Surrender Value of the Policy within seven days of receipt by Hartford of
the written request or on the effective surrender date requested by the Policy
Owner, whichever is later. The Policy will terminate on the date of receipt of
the written request, or the date the Policy Owner requests the surrender to be
effective, whichever is later. For a discussion of the tax consequences of
surrendering the Policy, see "Federal Tax Considerations," page 23.
If the Policy Owner chooses to apply the surrender proceeds to a payment
option (see "Other Matters-- Payment Options," page 18), the Surrender 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 Surrender Charge. However, any Unamortized Tax charge, if
applicable, will be deducted from the surrender proceeds to be applied. In
addition, amounts withdrawn from payment Option 1, Option 5 or Option 6 will be
subject to any applicable Surrender Charge.
PARTIAL SURRENDERS
While the Policy is in force, a Policy Owner may elect, by written request,
to make partial surrenders from the Cash Surrender Value. The Cash Surrender
Value, after a partial surrender, 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 Policy Owner instructs otherwise. The Face Amount will
be reduced proportionate to the reduction in the Account Value due to the
partial withdrawal. Partial surrenders in excess of the Annual Withdrawal Amount
will be subject to the Surrender Charge and any Unamortized Tax charges. See
"Deductions and Charges -- Surrender Charge," page 13. For a discussion of the
tax consequences of partial surrenders, see "Federal Tax Considerations," page
23.
BENEFITS AT MATURITY
If the Insured is living on the "Maturity Date" (the anniversary of the
Policy Date on which the Insured is age 100), on surrender of the Policy to
Hartford, Hartford will pay to the Policy Owner the Cash Surrender Value. In
such case, the Policy will terminate and Hartford will have no
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 17
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further obligations under the Policy. (The Maturity Date may be extended by
rider where approved, but see "Federal Tax Considerations -- Income Taxation of
Policy Benefits," page 23.)
LAPSE AND REINSTATEMENT
The Policy 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 Policy Owner of the deficiency in writing and will
provide a 61-day 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 Policy 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 Policy dies during the grace period, the Death Proceeds
payable under the Policy will be reduced by the Deduction Amount(s) due and
unpaid. See "Policy Benefits and Rights -- Death Benefit," page 14.
If the Policy lapses, the Policy Owner may apply for reinstatement of the
Policy by payment of the reinstatement premium and any applicable charges. 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
A Policy Owner has a limited right to return a Policy for cancellation. If
the Policy is returned, by mail or personal delivery to Hartford or to the agent
who sold the Policy, to be cancelled within ten days after delivery of the
Policy to the Policy Owner (a longer free-look period is provided in certain
cases), Hartford will return to the Policy Owner within seven days the greater
of premiums paid for the Policy less any Indebtedness or the sum of (1) the
Account Value less Indebtedness on the date the returned Policy is received by
Hartford or its agent and (2) any deductions under the Policy or by the Funds
for taxes, charges or fees.
Once the Policy is in force, it may be exchanged during the first 24 months
after its issuance, for a non-variable flexible premium adjustable life
insurance policy offered by Hartford (or an affiliated company) on the life of
the Insured. No evidence of insurability will be required. The new policy will
have, at the election of the Policy Owner, either the same Coverage Amount under
the exchanged Policy 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 Policy. If a Policy 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 Policies be suspended
for the protection of Policy Owners, until such condition has ended.
LAST SURVIVOR POLICIES
The Policies are offered on both a single life and a "last survivor" basis.
Policies 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 policies 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. See the last survivor illustrations in "Appendix A,"
page 27.
2. To qualify for simplified underwriting under a last survivor policy, both
Insureds must meet the simplified underwriting standards.
3. For a last survivor policy to be reinstated, both Insureds must be alive on
the date of reinstatement.
4. The Policy provisions regarding misstatement of age or sex, suicide and
incontestability apply to either Insured.
5. Additional tax disclosures applicable to last survivor policies are provided
in "Federal Tax Considerations," page 22.
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 Policy Owners (or
the assignee of the Policy, as the case may be) having a voting interest in the
Separate Account. The number of shares held in the Separate Account which are
attributable to each Policy Owner is determined by dividing the Policy Owner's
interest in each Sub-Account by the net asset value
<PAGE>
18 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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 Policy
Owners (i.e., shares owned by Hartford) in the same proportion as it votes
shares for which it has received instructions. However, if the Investment
Company Act of 1940 or any rule promulgated thereunder should be amended, 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 Policy Owner (or the assignee) in the Funds will
be determined as follows: Policy Owners may cast one vote for each full or
fractional Accumulation Unit owned under the Policy 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 Policy
Owner has taken a loan secured by the Policy, amounts transferred from the Sub-
Account(s) to the Loan Account in connection with the loan (see "Policy Benefits
and Rights -- Policy Loans," page 15) will not be considered in determining the
voting interests of the Policy Owner. Policy 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 Policy Owners' voting instructions if such 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 policy for the Funds.
In addition, Hartford itself may disregard Policy Owners' voting
instructions in favor of changes initiated by a Policy 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 Policy Owners.
STATEMENTS TO POLICY OWNERS
Hartford will maintain all records relating to the Separate Account and the
Sub-Accounts. At least once each Policy Year, Hartford will send to Policy
Owners a statement showing the Coverage Amount and the Account Value of the
Policy (indicating the number of Accumulation Units credited to the Policy in
each Sub-Account and the corresponding Accumulation Unit Value) and any
outstanding loan secured by the Policy as of the date of the statement. The
statement will also show premium paid, and Deduction Amounts under the Policy
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 Policy after it has been in
effect during the Insured's lifetime for two years from the Issue Date. If the
Policy 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
payment 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 Policy.
PAYMENT OPTIONS
The surrender proceeds or Death Proceeds under the Policies 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 PAYMENT OPTIONS 2, 3 AND 4, NO SURRENDER OR
PARTIAL SURRENDERS ARE PERMITTED AFTER PAYMENTS COMMENCE. FULL SURRENDER OR
PARTIAL SURRENDERS MAY BE MADE FROM PAYMENT OPTION 1 OR 6, BUT THEY ARE SUBJECT
TO THE SURRENDER CHARGE, IF APPLICABLE. ONLY A FULL SURRENDER IS ALLOWED FROM
PAYMENT OPTION 5. A SURRENDER FROM PAYMENT OPTION 5 WILL ALSO BE SUBJECT TO THE
SURRENDER 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 Policies (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 largest payment amount of any of the life annuity options, since
there is no guarantee of a minimum number of
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 19
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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 annuity payments 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 Policy 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 surrenders 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 Policy 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 Policy
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 Policy.
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 specified in the fixed payment annuity tables in the
Policy. The annuity payment will remain level for the duration of the annuity.
<PAGE>
20 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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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 Policy. The
Policy 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 Policy Owner if
living; otherwise to the Policy Owner's estate.
ASSIGNMENT
The Policy 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 Policies.
EXECUTIVE OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST FIVE YEARS; OTHER DIRECTORSHIPS
- -------------------------------- ------------------------------------- ----------------------------------------------------------
<S> <C> <C>
Wendell J. Bossen, 63 Vice President, 1995** Vice President (1992-Present), Hartford Life and Accident
Insurance Company; Vice President (1992-Present),
Hartford Life Insurance Company; President
(1992-Present), International Corporate Marketing Group,
Inc.; Executive Vice President (1984-1992), Mutual
Benefit.
Gregory A. Boyko, 45 Senior Vice President, Vice President & Controller (1995-1997), Hartford; Senior
Chief Financial Officer & Vice President, Chief Financial Officer & Treasurer
Treasurer, 1997 (1997-Present); Vice President & Controller (1995-1997),
Director, 1997* Hartford Life and Accident Insurance Company; Director
(1997-Present); Senior Vice President, Chief Financial
Officer & Treasurer (1997-Present); Vice President and
Controller (1995-1997), Hartford Life Insurance Company;
Senior Vice President, Chief Financial Officer &
Treasurer (1997-Present), Hartford Life, Inc.; Chief
Financial Officer (1994-1995), IMG American Life; Senior
Vice President (1992-1994), Connecticut Mutual Life
Insurance Company.
Peter W. Cummins, 60 Senior Vice President, 1997 Vice President (1993-1997), Hartford; Senior Vice
President, (1997-Present); Vice President (1989-1997),
Hartford Life and Accident Insurance Company; Senior
Vice President (1997-Present); Vice President
(1989-1997); Director of Broker Dealer Sales--ILAD
(1989-1992), Hartford Life Insurance Company.
Ann M. de Raismes, 46 Senior Vice President, 1997 Vice President (1994-1997), Hartford; Senior Vice
Director of Human Resources, President (1997-Present); Vice President (1994-1997);
1994 Assistant Vice President (1992-1994), Hartford Life and
Accident Insurance Company; Senior Vice President
(1997-Present); Vice President (1994-1997); Assistant
Vice President (1992-1994), Hartford Life Insurance
Company; Vice President, Human Resources (1997-Present),
Hartford Life, Inc.
James R. Dooley, 60 Vice President, 1993 Director, Information Services (1973-1997), Hartford Life
Insurance Company.
Timothy M. Fitch, 44 Vice President, 1995 Vice President(1995-Present); Actuary (1994-Present);
Actuary, 1997 Assistant Vice President (1992-1995), Hartford Life and
Accident Insurance Company; Vice President
(1995-Present); Actuary (1994-Present); Assistant Vice
President (1992-1995), Hartford Life Insurance Company.
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 21
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<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST FIVE YEARS; OTHER DIRECTORSHIPS
- -------------------------------- ------------------------------------- ----------------------------------------------------------
<S> <C> <C>
J. Richard Garrett, 52 Vice President, 1994 Treasurer (1994-1997), Hartford; Vice President
Assistant Treasurer, 1997 (1993-Present); Assistant Treasurer (1997-Present);
Treasurer (1984-1997), Hartford Life and Accident
Insurance Company; Vice President, (1993-Present);
Assistant Treasurer (1997-Present); Treasurer
(1986-1997), Hartford Life Insurance Company; Vice
President (1997-Present), Hartford Life, Inc.
Donald J. Gillette, 51 Vice President, 1997 Assistant Vice President (1995-1997), Hartford; Assistant
Vice President (1995-1997), Hartford Life and Accident
Insurance Company; Assistant Vice President
(1995-Present), Hartford Life Insurance Company.
Lynda Godkin, 43 Senior Vice President, 1997 Assistant General Counsel and Secretary (1994-1995),
General Counsel, 1996 Hartford; Director (1997-Present); Senior Vice President
Corporate Secretary, 1996 (1997-Present); General Counsel (1996-Present);
Director, 1997* Corporate Secretary (1995-Present); Associate General
Counsel (1995-1996); Assistant General Counsel and
Secretary (1994-1995); Counsel (1990-1994), Hartford
Life and Accident Company; Senior Vice President
(1997-Present); General Counsel (1996-Present);
Corporate Secretary (1995-Present); Director
(1997-Present); Associate General Counsel (1995-1996);
Assistant General Counsel and Secretary (1994-1995);
Counsel (1990-1994), Hartford Life Insurance Company;
Vice President and General Counsel (1997-Present),
Hartford Life, Inc.
Lois W. Grady, 52 Vice President, 1994 Vice President (1993-1997); Assistant Vice President
(1987-1993), Hartford Life and Accident Insurance
Company; Vice President (1993-Present); Assistant Vice
President (1987-1993), Hartford Life Insurance Company.
Christopher Graham, 46 Vice President, 1997 Vice President (1997-Present), Hartford Life Insurance
Company.
Stephen T. Joyce, 38 Vice President, 1997 Assistant Vice President (1995-1997), Hartford; Assistant
Vice President (1994-1997), Hartford Life and Accident
Insurance Company; Vice President (1997-Present);
Assistant Vice President (1994-1997), Hartford Life
Insurance Company.
Robert A. Kerzner, 45 Vice President, 1997 Vice President (1994-1997), Hartford Life and Accident
Insurance Company; Vice President (1994-Present);
Regional Vice President (1991-1994), Hartford Life
Insurance Company.
William B. Malchodi, Jr., 47 Vice President, 1994 Vice President (1994-Present); Director of Taxes
Director of Taxes, 1992 (1992-Present), Hartford Life and Accident Insurance
Company; Vice President (1994-Present); Director of
Taxes (1991-Present), Hartford Life Insurance Company.
Thomas M. Marra, 39 Executive Vice President Director, Senior Vice President (1993-1996); Director of Individual
Individual Life and Annuity Annuities (1991-1993), Hartford; Director
Division, 1993 (1994-Present); Executive Vice President (1995-Present);
Director, 1994* Director, Individual Life and Annuity Division
(1994-Present); Senior Vice President (1994-1995); Vice
President (1989-1994); Actuary (1987-1997), Hartford
Life Insurance Company; Executive Vice President,
Individual Life and Annuities (1997-Present), Hartford
Life, Inc.
Steven L. Mattieson, 52 Vice President, 1984 Director of New Business (1984-1997), Hartford.
</TABLE>
<PAGE>
22 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
POSITION WITH HARTFORD; OTHER BUSINESS PROFESSION, VOCATION OR EMPLOYMENT
NAME, AGE YEAR OF ELECTION FOR PAST FIVE YEARS; OTHER DIRECTORSHIPS
- -------------------------------- ------------------------------------- ----------------------------------------------------------
<S> <C> <C>
C. Michael O'Halloran, 50 Vice President, 1997 Vice President (1997-Present), Hartford Life Insurance
Company; Corporate Secretary (1997-Present), Hartford
Life, Inc.; Senior Associate General Counsel
(1988-Present), Director of Corporate Law
(1994-Present), The Hartford Financial Services Group.
Craig R. Raymond, 36 Senior Vice President, 1997 Vice President (1993-1997); Assistant Vice President
Chief Actuary, 1994 (1992-1993); Actuary (1989-1994), Hartford; Senior Vice
President (1997-Present); Chief Actuary (1994-Present);
Vice President (1993-1997); Assistant Vice President
(1992-1993); Actuary (1989-1994), Hartford Life
Insurance Company; Vice President and Chief Actuary
(1997-Present), Hartford Life, Inc.
David T. Schrandt, 49 Vice President, 1987 Treasurer (1987-1997); Controller (1987-[1997]), Hartford.
Lowndes A. Smith, 58 President, 1989 Chief Operating Officer (1989-1997), Hartford; President
Chief Executive Officer, 1997 (1989-Present), Chief Executive Officer (1997-Present);
Director, 1985* Director (1981-Present); Chief Operating Officer
(1989-1997), Hartford Life Insurance Company; Chief
Executive Officer and President and Director
(1997-Present), Hartford Life, Inc.
Walter C. Welsh, 50 Senior Vice President, 1997 Senior Vice President (1997-Present); Vice President
(1995-1997); Assistant Vice President (1993-1995),
Hartford Life Insurance Company; Vice President,
Government Affairs (1997-Present), Hartford Life, Inc.
David M. Znamierowski, 37 Senior Vice President, 1997 Senior Vice President (1997-Present); Director, Risk
Management Strategy (1996-Present); Vice President
(1997), Hartford Life Insurance Company; Vice President,
Investment Strategy (1997-Present), Hartford Life, Inc.;
Vice President, Investment Strategy & Policy, Aetna Life
and Casualty.
</TABLE>
- ------------------------
* Denotes date of election to Board of Directors.
** The Hartford Financial Services Group, Inc.
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
DISTRIBUTION OF THE POLICIES
Hartford intends to sell the Policies in all jurisdictions where it is
licensed to do business. The Policies 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 policies 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 Policy Owners and
prospective Policy 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
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 23
- --------------------------------------------------------------------------------
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 Policies 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 POLICY OWNER INVOLVED, LEGAL AND TAX ADVICE MAY BE
NEEDED BY A PERSON, EMPLOYER, OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A
POLICY DESCRIBED HEREIN.
It should be understood that any detailed description of the federal income
tax consequences regarding the purchase of the Policies cannot be made in this
Prospectus and that special tax rules may be applicable with respect to certain
purchase situations not discussed herein. In addition, no attempt is made here
to consider any applicable state or other tax laws. For detailed information, a
qualified tax adviser should always be consulted. This discussion of federal tax
considerations is based upon 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 "Policy Benefits and Rights -- Account Value," page 15).
As a result, such investment income and realized capital gains are automatically
applied to increase reserves under the Policy.
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 POLICY BENEFITS
For federal income tax purposes, the Policies should be treated as life
insurance Policies under Section 7702 of the Code. The death benefit under a
life insurance policy is generally excluded from the gross income of the
beneficiary. Also, a life insurance Policy Owner is generally not taxed on
increments in the policy's value until the Policy is partially or completely
surrendered. Section 7702 limits the amount of premiums that may be invested in
a Policy that is treated as life insurance. Hartford intends to monitor premium
levels to assure compliance with the Section 7702 requirements.
During the first 15 Policy 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 Policy.
The Maturity Date Extension Rider allows a Policy Owner to extend the
Maturity Date to the date of the Insured's death. If the Maturity Date of the
Policy is extended by rider, Hartford believes that the Policy will continue to
be treated as a life insurance policy 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 Policy is not treated as a life
insurance policy for federal income tax purposes after the scheduled Maturity
Date, among other things, the Death Proceeds may be taxable to the recipient.
The Policy Owner should consult a qualified tax adviser regarding the possible
adverse tax consequences resulting from an extension of the scheduled Maturity
Date.
LAST SURVIVOR POLICIES
Although Hartford believes that the last survivor Policies 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 Policy is not
<PAGE>
24 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 Policy will meet the Section 7702 definition of a life
insurance policy.
MODIFIED ENDOWMENT CONTRACTS
A life insurance policy 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
Policy does not meet the specified computational rules for the "seven-pay test"
under Section 7702A(c). Therefore, the Policy 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 policy issued before
June 21, 1988 will not cause the new policy 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 policy that is classified as a 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 policy (generally, the
excess of account value over premiums paid). Any liquidations that are taxable
will be subject to a 10% additional tax, with certain exceptions.
All modified endowment contracts that are issued within any calendar year to
the same Policy 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 Policy Owner's estate for purposes of federal estate tax if the last
surviving Insured owned the Policy. If the Policy Owner was not the last
surviving Insured, the fair market value of the Policy would be included in the
Policy Owner's estate upon the Policy 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 Policy Owner (whether or not he or she is an Insured) transfers
ownership of the Policy 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 Policy. 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 Policy
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 policy
(other than a pension plan policy) will not be treated as a life insurance
policy 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 Policy is not treated as a life
insurance policy, the Policy 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 policy 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 Policy Owner must agree to pay the tax due for the period during which the
diversification requirements were not met.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 25
- --------------------------------------------------------------------------------
Hartford monitors the diversification of investments in the Separate
Accounts and tests for diversification as required by the Code. Hartford intends
to administer all Policies, 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 Policy to qualify for tax deferral,
assets in the segregated asset accounts supporting the variable Policy must be
considered to be owned by the insurance company and not by the variable Policy
Owner. The Internal Revenue Service ("IRS") has issued several rulings which
discuss investor control. The IRS has ruled that incidents of ownership by the
Policy Owner, such as the ability to select and control investments in a
separate account, will cause the Policy Owner to be treated as the owner of the
assets for tax purposes.
Further, in the explanation to the temporary Section 817 diversification
regulations, the Treasury Department noted that the temporary regulations "do
not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset account may cause the investor, rather
than the insurance company, to be treated as the owner of the assets in the
account." The explanation further indicates that "the temporary regulations
provide that in appropriate cases a segregated asset account may include
multiple sub-accounts, but do not specify the extent to which policyholders may
direct their investments to particular sub-accounts without being treated as the
owners of the underlying assets." Guidance on this and other issues will be
provided in regulations or revenue rulings under Section 817(d), relating to the
definition of "variable policy." 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 Policy Owner could be considered the owner of
the assets for tax purposes. Hartford reserves the right to modify the Policies,
as necessary, to prevent Policy 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 Policy Owner,
such amounts will be subject to federal income tax withholding and reporting,
pursuant to the Code.
NON-INDIVIDUAL OWNERSHIP OF POLICIES
Legislation has recently been proposed which would limit certain of the tax
advantages now afforded non-individual owners of life insurance policies.
Prospective Policy 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 Policy proceeds depend on the
circumstances of each Policy 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.
<PAGE>
26 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
LEGAL MATTERS
Legal matters in connection with the issue and sale of flexible premium
variable life insurance Policies described in this Prospectus and the
organization of Hartford, its authority to issue the Policies under Connecticut
law and the validity of the forms of the Policies 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.
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 reports 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 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, CT 06103.
The hypothetical Policy 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 Product
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 Policies.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 27
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APPENDIX A
ILLUSTRATIONS OF BENEFITS
The tables in Appendix A illustrate the way in which a Policy 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 preferred age 45, a female preferred age 55 and a
male preferred age 65 with Face Amounts of $44,053, $34,014 and $20,000,
respectively, are illustrated for the single life preferred Policy for both
Policy Owner Option 1 and Policy Owner Option 2. The illustrations for the last
survivor preferred Policy assume male preferred and female preferred of equal
ages, including age 55 and 65 for Face Amounts of $45,454 and $28,329.
The death benefit and surrender value for a Policy 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 Policy
Years. They would also differ if any Policy loan were made during the period of
time illustrated.
The tables reflect the deductions of current Policy charges for Policy Owner
Option 1 and Policy Owner Option 2 and guaranteed Policy 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 Policy 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.
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 14).
The "Premium Paid Plus Interest" column of each table shows the amount which
would accumulate if the initial premium was invested to earn interest, after
taxes of 5% per year, compounded annually.
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>
28 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 45 MALE PREFERRED
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
POLICY 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 10,814 9,821 44,053 10,754 9,762 44,053
2 11,025 11,697 10,714 44,053 11,571 10,589 44,053
3 11,576 12,655 11,684 44,053 12,455 11,487 44,053
4 12,155 13,694 12,888 44,053 13,413 12,612 44,053
5 12,763 14,820 14,035 44,053 14,453 13,673 44,053
6 13,401 16,042 15,481 44,053 15,582 15,026 44,053
7 14,071 17,366 16,836 44,053 16,806 16,280 44,053
8 14,775 18,803 18,509 44,053 18,136 17,846 44,053
9 15,513 20,360 20,110 44,053 19,582 19,333 44,053
10 16,289 22,050 22,050 44,053 21,154 21,154 44,053
11 17,103 24,123 24,123 44,053 23,054 23,054 44,053
12 17,959 26,393 26,393 44,053 25,147 25,147 44,053
13 18,856 28,880 28,880 44,053 27,461 27,461 44,053
14 19,799 31,614 31,614 44,053 30,023 30,023 44,053
15 20,789 34,640 34,640 46,418 32,868 32,868 44,053
16 21,829 37,972 37,972 49,363 36,022 36,022 46,829
17 22,920 41,620 41,620 53,274 39,482 39,482 50,537
18 24,066 45,615 45,615 57,475 43,270 43,270 54,520
19 25,270 49,989 49,989 61,987 47,418 47,418 58,799
20 26,533 54,811 54,811 66,870 51,992 51,992 63,430
25 33,864 86,619 86,619 100,478 82,155 82,155 95,300
35 55,160 215,966 215,966 228,925 204,699 204,699 216,982
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 29
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MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 45 MALE PREFERRED
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
POLICY 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 10,230 9,249 44,053 10,168 9,189 44,053
2 11,025 10,465 9,506 44,053 10,330 9,374 44,053
3 11,576 10,707 9,769 44,053 10,486 9,553 44,053
4 12,155 10,955 10,190 44,053 10,634 9,875 44,053
5 12,763 11,209 10,469 44,053 10,773 10,038 44,053
6 13,401 11,470 10,956 44,053 10,900 10,391 44,053
7 14,071 11,738 11,250 44,053 11,012 10,530 44,053
8 14,775 12,013 11,753 44,053 11,106 10,851 44,053
9 15,513 12,295 12,064 44,053 11,179 10,951 44,053
10 16,289 12,584 12,584 44,053 11,225 11,225 44,053
11 17,103 13,011 13,011 44,053 11,333 11,333 44,053
12 17,959 13,453 13,453 44,053 11,413 11,413 44,053
13 18,856 13,911 13,911 44,053 11,459 11,459 44,053
14 19,799 14,386 14,386 44,053 11,466 11,466 44,053
15 20,789 14,878 14,878 44,053 11,427 11,427 44,053
16 21,829 15,388 15,388 44,053 11,333 11,333 44,053
17 22,920 15,916 15,916 44,053 11,176 11,176 44,053
18 24,066 16,464 16,464 44,053 10,941 10,941 44,053
19 25,270 17,032 17,032 44,053 10,613 10,613 44,053
20 26,533 17,620 17,620 44,053 10,177 10,177 44,053
25 33,864 20,897 20,897 44,053 5,615 5,615 44,053
35 55,160 29,494 29,494 44,053 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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>
30 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 45 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,718 8,749 44,053 9,655 8,688 44,053
2 11,025 9,443 8,504 44,053 9,302 8,366 44,053
3 11,576 9,175 8,265 44,053 8,941 8,034 44,053
4 12,155 8,914 8,180 44,053 8,569 7,841 44,053
5 12,763 8,659 7,951 44,053 8,186 7,484 44,053
6 13,401 8,411 7,927 44,053 7,789 7,311 44,053
7 14,071 8,169 7,708 44,053 7,374 6,919 44,053
8 14,775 7,933 7,693 44,053 6,939 6,704 44,053
9 15,513 7,703 7,484 44,053 6,479 6,263 44,053
10 16,289 7,479 7,479 44,053 5,991 5,991 44,053
11 17,103 7,334 7,334 44,053 5,515 5,515 44,053
12 17,959 7,191 7,191 44,053 4,999 4,999 44,053
13 18,856 7,050 7,050 44,053 4,437 4,437 44,053
14 19,799 6,912 6,912 44,053 3,824 3,824 44,053
15 20,789 6,775 6,775 44,053 3,152 3,152 44,053
16 21,829 6,641 6,641 44,053 2,412 2,412 44,053
17 22,920 6,509 6,509 44,053 1,593 1,593 44,053
18 24,066 6,379 6,379 44,053 681 681 44,053
19 25,270 6,251 6,251 44,053 -- -- --
20 26,533 6,124 6,124 44,053 -- -- --
25 33,864 5,522 5,522 44,053 -- -- --
35 55,160 4,449 4,449 44,053 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0.00% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY AVERAGED 0.00%, 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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 31
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 45 MALE PREFERRED
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
POLICY 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 10,449 9,699 44,053 10,383 9,633 44,053
2 11,025 11,375 10,625 44,053 11,236 10,486 44,053
3 11,576 12,386 11,636 44,053 12,168 11,418 44,053
4 12,155 13,490 12,890 44,053 13,184 12,584 44,053
5 12,763 14,694 14,094 44,053 14,295 13,695 44,053
6 13,401 16,009 15,609 44,053 15,509 15,109 44,053
7 14,071 17,444 17,044 44,053 16,837 16,437 44,053
8 14,775 19,011 18,811 44,053 18,290 18,090 44,053
9 15,513 20,721 20,521 44,053 19,881 19,681 44,053
10 16,289 22,588 22,588 44,053 21,627 21,627 44,053
11 17,103 24,712 24,712 44,053 23,580 23,580 44,053
12 17,959 27,039 27,039 44,053 25,734 25,734 44,053
13 18,856 29,588 29,588 44,053 28,116 28,116 44,053
14 19,799 32,401 32,401 44,714 30,756 30,756 44,053
15 20,789 35,509 35,509 47,583 33,686 33,686 45,140
16 21,829 38,925 38,925 50,602 36,925 36,925 48,003
17 22,920 42,665 42,665 54,612 40,472 40,472 51,804
18 24,066 46,761 46,761 58,920 44,355 44,355 55,888
19 25,270 51,277 51,277 63,584 48,608 48,608 60,275
20 26,533 56,223 56,223 68,592 53,297 53,297 65,023
25 33,864 88,850 88,850 103,066 84,218 84,218 97,693
35 55,160 221,529 221,529 234,821 209,839 209,839 222,430
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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>
32 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 45 MALE PREFERRED
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
POLICY 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 9,884 9,134 44,053 9,817 9,067 44,053
2 11,025 10,176 9,426 44,053 10,031 9,281 44,053
3 11,576 10,479 9,729 44,053 10,243 9,493 44,053
4 12,155 10,791 10,191 44,053 10,450 9,850 44,053
5 12,763 11,114 10,514 44,053 10,651 10,051 44,053
6 13,401 11,447 11,047 44,053 10,844 10,444 44,053
7 14,071 11,790 11,390 44,053 11,027 10,627 44,053
8 14,775 12,146 11,946 44,053 11,196 10,996 44,053
9 15,513 12,512 12,312 44,053 11,347 11,147 44,053
10 16,289 12,891 12,891 44,053 11,477 11,477 44,053
11 17,103 13,329 13,329 44,053 11,599 11,599 44,053
12 17,959 13,783 13,783 44,053 11,693 11,693 44,053
13 18,856 14,253 14,253 44,053 11,755 11,755 44,053
14 19,799 14,740 14,740 44,053 11,779 11,779 44,053
15 20,789 15,245 15,245 44,053 11,758 11,758 44,053
16 21,829 15,768 15,768 44,053 11,685 11,685 44,053
17 22,920 16,311 16,311 44,053 11,549 11,549 44,053
18 24,066 16,873 16,873 44,053 11,338 11,338 44,053
19 25,270 17,455 17,455 44,053 11,037 11,037 44,053
20 26,533 18,059 18,059 44,053 10,630 10,630 44,053
25 33,864 21,421 21,421 44,053 6,280 6,280 44,053
35 55,160 30,243 30,243 44,053 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 33
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 45 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,389 8,639 44,053 9,321 8,571 44,053
2 11,025 9,182 8,432 44,053 9,032 8,282 44,053
3 11,576 8,979 8,229 44,053 8,732 7,982 44,053
4 12,155 8,780 8,180 44,053 8,418 7,818 44,053
5 12,763 8,585 7,985 44,053 8,090 7,490 44,053
6 13,401 8,393 7,993 44,053 7,745 7,345 44,053
7 14,071 8,205 7,805 44,053 7,380 6,980 44,053
8 14,775 8,021 7,821 44,053 6,992 6,792 44,053
9 15,513 7,839 7,639 44,053 6,575 6,375 44,053
10 16,289 7,662 7,662 44,053 6,128 6,128 44,053
11 17,103 7,514 7,514 44,053 5,652 5,652 44,053
12 17,959 7,368 7,368 44,053 5,136 5,136 44,053
13 18,856 7,225 7,225 44,053 4,575 4,575 44,053
14 19,799 7,084 7,084 44,053 3,963 3,963 44,053
15 20,789 6,945 6,945 44,053 3,291 3,291 44,053
16 21,829 6,808 6,808 44,053 2,552 2,552 44,053
17 22,920 6,673 6,673 44,053 1,735 1,735 44,053
18 24,066 6,540 6,540 44,053 824 824 44,053
19 25,270 6,410 6,410 44,053 -- -- --
20 26,533 6,281 6,281 44,053 -- -- --
25 33,864 5,667 5,667 44,053 -- -- --
35 55,160 4,573 4,573 44,053 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0.00% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY AVERAGED 0.00%, 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 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,814 9,821 34,014 10,709 9,718 34,014
2 11,025 11,697 10,714 34,014 11,477 10,497 34,014
3 11,576 12,655 11,684 34,014 12,311 11,345 34,014
4 12,155 13,694 12,888 34,014 13,218 12,420 34,014
5 12,763 14,820 14,035 34,014 14,207 13,429 34,014
6 13,401 16,042 15,481 34,014 15,284 14,731 34,014
7 14,071 17,366 16,836 34,014 16,458 15,934 34,014
8 14,775 18,803 18,509 34,014 17,736 17,447 34,014
9 15,513 20,360 20,110 34,014 19,129 18,881 34,014
10 16,289 22,050 22,050 34,014 20,651 20,651 34,014
11 17,103 24,123 24,123 34,014 22,502 22,502 34,014
12 17,959 26,396 26,396 34,014 24,560 24,560 34,014
13 18,856 28,926 28,926 34,133 26,858 26,858 34,014
14 19,799 31,735 31,735 37,130 29,433 29,433 34,437
15 20,789 34,816 34,816 40,388 32,289 32,289 37,455
16 21,829 38,196 38,196 43,926 35,420 35,420 40,734
17 22,920 41,913 41,913 47,362 38,866 38,866 43,919
18 24,066 46,005 46,005 51,066 42,658 42,658 47,351
19 25,270 50,545 50,545 55,094 46,837 46,837 51,053
20 26,533 55,507 55,507 60,503 51,435 51,435 56,065
25 33,864 88,547 88,547 93,860 82,050 82,050 86,974
35 55,160 221,396 221,396 232,466 202,127 202,127 212,234
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 35
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,230 9,249 34,014 10,123 9,145 34,014
2 11,025 10,465 9,506 34,014 10,238 9,283 34,014
3 11,576 10,707 9,769 34,014 10,343 9,412 34,014
4 12,155 10,955 10,190 34,014 10,440 9,683 34,014
5 12,763 11,209 10,469 34,014 10,526 9,794 34,014
6 13,401 11,470 10,956 34,014 10,597 10,091 34,014
7 14,071 11,738 11,250 34,014 10,650 10,170 34,014
8 14,775 12,013 11,753 34,014 10,678 10,425 34,014
9 15,513 12,295 12,064 34,014 10,673 10,447 34,014
10 16,289 12,584 12,584 34,014 10,630 10,630 34,014
11 17,103 13,011 13,011 34,014 10,631 10,631 34,014
12 17,959 13,453 13,453 34,014 10,590 10,590 34,014
13 18,856 13,911 13,911 34,014 10,501 10,501 34,014
14 19,799 14,386 14,386 34,014 10,362 10,362 34,014
15 20,789 14,878 14,878 34,014 10,161 10,161 34,014
16 21,829 15,388 15,388 34,014 9,886 9,886 34,014
17 22,920 15,916 15,916 34,014 9,515 9,515 34,014
18 24,066 16,464 16,464 34,014 9,023 9,023 34,014
19 25,270 17,032 17,032 34,014 8,376 8,376 34,014
20 26,533 17,620 17,620 34,014 7,537 7,537 34,014
25 33,864 20,897 20,897 34,014 -- -- --
35 55,160 29,494 29,494 34,014 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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>
36 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,718 8,749 34,014 9,611 8,644 34,014
2 11,025 9,443 8,504 34,014 9,211 8,276 34,014
3 11,576 9,175 8,265 34,014 8,800 7,896 34,014
4 12,155 8,914 8,180 34,014 8,378 7,653 34,014
5 12,763 8,659 7,951 34,014 7,944 7,244 34,014
6 13,401 8,411 7,927 34,014 7,492 7,017 34,014
7 14,071 8,169 7,708 34,014 7,018 6,566 34,014
8 14,775 7,933 7,693 34,014 6,516 6,283 34,014
9 15,513 7,703 7,484 34,014 5,976 5,761 34,014
10 16,289 7,479 7,479 34,014 5,393 5,393 34,014
11 17,103 7,334 7,334 34,014 4,802 4,802 34,014
12 17,959 7,191 7,191 34,014 4,153 4,153 34,014
13 18,856 7,050 7,050 34,014 3,443 3,443 34,014
14 19,799 6,912 6,912 34,014 2,665 2,665 34,014
15 20,789 6,775 6,775 34,014 1,809 1,809 34,014
16 21,829 6,641 6,641 34,014 859 859 34,014
17 22,920 6,509 6,509 34,014 -- -- --
18 24,066 6,379 6,379 34,014 -- -- --
19 25,270 6,251 6,251 34,014 -- -- --
20 26,533 6,124 6,124 34,014 -- -- --
25 33,864 5,522 5,522 34,014 -- -- --
35 55,160 4,449 4,449 34,014 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0.00% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY AVERAGED 0.00%, 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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 37
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,449 9,699 34,014 10,336 9,586 34,014
2 11,025 11,375 10,625 34,014 11,139 10,389 34,014
3 11,576 12,386 11,636 34,014 12,017 11,267 34,014
4 12,155 13,490 12,890 34,014 12,980 12,380 34,014
5 12,763 14,694 14,094 34,014 14,036 13,436 34,014
6 13,401 16,009 15,609 34,014 15,195 14,795 34,014
7 14,071 17,444 17,044 34,014 16,467 16,067 34,014
8 14,775 19,011 18,811 34,014 17,864 17,664 34,014
9 15,513 20,721 20,521 34,014 19,399 19,199 34,014
10 16,289 22,588 22,588 34,014 21,090 21,090 34,014
11 17,103 24,712 24,712 34,014 22,995 22,995 34,014
12 17,959 27,050 27,050 34,014 25,114 25,114 34,014
13 18,856 29,660 29,660 34,999 27,481 27,481 34,014
14 19,799 32,541 32,541 38,074 30,132 30,132 35,255
15 20,789 35,702 35,702 41,415 33,056 33,056 38,346
16 21,829 39,168 39,168 45,044 36,263 36,263 41,703
17 22,920 42,981 42,981 48,569 39,791 39,791 44,965
18 24,066 47,178 47,178 52,368 43,674 43,674 48,479
19 25,270 51,833 51,833 56,498 47,954 47,954 52,270
20 26,533 56,922 56,922 62,045 52,662 52,662 57,402
25 33,864 90,803 90,803 96,252 84,007 84,007 89,048
35 55,160 227,038 227,038 238,390 206,948 206,948 217,296
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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>
38 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,884 9,134 34,014 9,770 9,020 34,014
2 11,025 10,176 9,426 34,014 9,935 9,185 34,014
3 11,576 10,479 9,729 34,014 10,094 9,344 34,014
4 12,155 10,791 10,191 34,014 10,248 9,648 34,014
5 12,763 11,114 10,514 34,014 10,393 9,793 34,014
6 13,401 11,447 11,047 34,014 10,529 10,129 34,014
7 14,071 11,790 11,390 34,014 10,649 10,249 34,014
8 14,775 12,146 11,946 34,014 10,748 10,548 34,014
9 15,513 12,512 12,312 34,014 10,819 10,619 34,014
10 16,289 12,891 12,891 34,014 10,856 10,856 34,014
11 17,103 13,329 13,329 34,014 10,871 10,871 34,014
12 17,959 13,783 13,783 34,014 10,844 10,844 34,014
13 18,856 14,253 14,253 34,014 10,773 10,773 34,014
14 19,799 14,740 14,740 34,014 10,651 10,651 34,014
15 20,789 15,245 15,245 34,014 10,471 10,471 34,014
16 21,829 15,768 15,768 34,014 10,218 10,218 34,014
17 22,920 16,311 16,311 34,014 9,873 9,873 34,014
18 24,066 16,873 16,873 34,014 9,409 9,409 34,014
19 25,270 17,455 17,455 34,014 8,795 8,795 34,014
20 26,533 18,059 18,059 34,014 7,994 7,994 34,014
25 33,864 21,421 21,421 34,014 -- -- --
35 55,160 30,243 30,243 34,014 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 39
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,389 8,639 34,014 9,275 8,525 34,014
2 11,025 9,182 8,432 34,014 8,937 8,187 34,014
3 11,576 8,979 8,229 34,014 8,586 7,836 34,014
4 12,155 8,780 8,180 34,014 8,221 7,621 34,014
5 12,763 8,585 7,985 34,014 7,839 7,239 34,014
6 13,401 8,393 7,993 34,014 7,438 7,038 34,014
7 14,071 8,205 7,805 34,014 7,011 6,611 34,014
8 14,775 8,021 7,821 34,014 6,553 6,353 34,014
9 15,513 7,839 7,639 34,014 6,055 5,855 34,014
10 16,289 7,662 7,662 34,014 5,509 5,509 34,014
11 17,103 7,514 7,514 34,014 4,919 4,919 34,014
12 17,959 7,368 7,368 34,014 4,272 4,272 34,014
13 18,856 7,225 7,225 34,014 3,562 3,562 34,014
14 19,799 7,084 7,084 34,014 2,786 2,786 34,014
15 20,789 6,945 6,945 34,014 1,933 1,933 34,014
16 21,829 6,808 6,808 34,014 985 985 34,014
17 22,920 6,673 6,673 34,014 -- -- --
18 24,066 6,540 6,540 34,014 -- -- --
19 25,270 6,410 6,410 34,014 -- -- --
20 26,533 6,281 6,281 34,014 -- -- --
25 33,864 5,667 5,667 34,014 -- -- --
35 55,160 4,573 4,573 34,014 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0.00% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY AVERAGED 0.00%, 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 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,000
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,814 9,821 20,000 10,623 9,634 20,000
2 11,025 11,697 10,714 20,000 11,295 10,319 20,000
3 11,576 12,655 11,684 20,000 12,025 11,064 20,000
4 12,155 13,694 12,888 20,000 12,822 12,030 20,000
5 12,763 14,820 14,035 20,000 13,700 12,928 20,000
6 13,401 16,042 15,481 20,000 14,673 14,126 20,000
7 14,071 17,367 16,837 20,000 15,761 15,243 20,000
8 14,775 18,836 18,542 20,908 16,990 16,706 20,000
9 15,513 20,455 20,204 22,297 18,396 18,150 20,052
10 16,289 22,202 22,202 24,201 19,964 19,964 21,761
11 17,103 24,297 24,297 26,241 21,845 21,845 23,593
12 17,959 26,598 26,598 28,461 23,911 23,911 25,585
13 18,856 29,105 29,105 31,143 26,159 26,159 27,991
14 19,799 31,862 31,862 33,774 28,634 28,634 30,353
15 20,789 34,871 34,871 36,963 31,328 31,328 33,208
16 21,829 38,181 38,181 40,091 34,299 34,299 36,015
17 22,920 41,792 41,792 43,883 37,533 37,533 39,410
18 24,066 45,748 45,748 48,036 41,046 41,046 43,099
19 25,270 50,081 50,081 52,586 44,859 44,859 47,103
20 26,533 54,858 54,858 57,601 48,990 48,990 51,440
25 33,864 86,509 86,509 90,835 75,359 75,359 79,127
35 55,160 215,307 215,307 217,461 181,841 181,841 183,660
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 41
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,000
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,230 9,249 20,000 10,034 9,059 20,000
2 11,025 10,465 9,506 20,000 10,041 9,090 20,000
3 11,576 10,707 9,769 20,000 10,014 9,089 20,000
4 12,155 10,955 10,190 20,000 9,951 9,201 20,000
5 12,763 11,209 10,469 20,000 9,842 9,119 20,000
6 13,401 11,470 10,956 20,000 9,679 9,182 20,000
7 14,071 11,738 11,250 20,000 9,449 8,978 20,000
8 14,775 12,013 11,753 20,000 9,135 8,889 20,000
9 15,513 12,295 12,064 20,000 8,717 8,495 20,000
10 16,289 12,584 12,584 20,000 8,170 8,170 20,000
11 17,103 13,011 13,011 20,000 7,534 7,534 20,000
12 17,959 13,453 13,453 20,000 6,709 6,709 20,000
13 18,856 13,911 13,911 20,000 5,649 5,649 20,000
14 19,799 14,386 14,386 20,000 4,296 4,296 20,000
15 20,789 14,878 14,878 20,000 2,565 2,565 20,000
16 21,829 15,388 15,388 20,000 339 339 20,000
17 22,920 15,916 15,916 20,000 -- -- --
18 24,066 16,464 16,464 20,000 -- -- --
19 25,270 17,032 17,032 20,000 -- -- --
20 26,533 17,620 17,620 20,000 -- -- --
25 33,864 20,897 20,897 21,942 -- -- --
35 55,160 29,519 29,519 29,814 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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>
42 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,000
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,718 8,749 20,000 9,520 8,555 20,000
2 11,025 9,443 8,504 20,000 9,002 8,072 20,000
3 11,576 9,175 8,265 20,000 8,442 7,544 20,000
4 12,155 8,914 8,180 20,000 7,830 7,113 20,000
5 12,763 8,659 7,951 20,000 7,158 6,469 20,000
6 13,401 8,411 7,927 20,000 6,412 5,948 20,000
7 14,071 8,169 7,708 20,000 5,575 5,133 20,000
8 14,775 7,933 7,693 20,000 4,623 4,400 20,000
9 15,513 7,703 7,484 20,000 3,529 3,320 20,000
10 16,289 7,479 7,479 20,000 2,261 2,261 20,000
11 17,103 7,334 7,334 20,000 795 795 20,000
12 17,959 7,191 7,191 20,000 -- -- --
13 18,856 7,050 7,050 20,000 -- -- --
14 19,799 6,912 6,912 20,000 -- -- --
15 20,789 6,775 6,775 20,000 -- -- --
16 21,829 6,641 6,641 20,000 -- -- --
17 22,920 6,509 6,509 20,000 -- -- --
18 24,066 6,379 6,379 20,000 -- -- --
19 25,270 6,251 6,251 20,000 -- -- --
20 26,533 6,124 6,124 20,000 -- -- --
25 33,864 5,522 5,522 20,000 -- -- --
35 55,160 4,449 4,449 20,000 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0.00% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY AVERAGED 0.00%, 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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 43
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,000
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,449 9,699 20,000 10,242 9,492 20,000
2 11,025 11,375 10,625 20,000 10,938 10,188 20,000
3 11,576 12,386 11,636 20,000 11,699 10,949 20,000
4 12,155 13,490 12,890 20,000 12,537 11,937 20,000
5 12,763 14,694 14,094 20,000 13,465 12,865 20,000
6 13,401 16,009 15,609 20,000 14,501 14,101 20,000
7 14,071 17,446 17,046 20,000 15,669 15,269 20,000
8 14,775 19,048 18,848 21,144 16,998 16,798 20,000
9 15,513 20,822 20,622 22,696 18,528 18,328 20,196
10 16,289 22,748 22,748 24,796 20,239 20,239 22,061
11 17,103 24,895 24,895 26,888 22,146 22,146 23,918
12 17,959 27,254 27,254 29,162 24,241 24,241 25,938
13 18,856 29,823 29,823 31,911 26,521 26,521 28,378
14 19,799 32,649 32,649 34,609 29,031 29,031 30,773
15 20,789 35,733 35,733 37,877 31,763 31,763 33,669
16 21,829 39,126 39,126 41,083 34,775 34,775 36,514
17 22,920 42,827 42,827 44,969 38,054 38,054 39,957
18 24,066 46,882 46,882 49,226 41,617 41,617 43,698
19 25,270 51,353 51,353 53,921 45,483 45,483 47,758
20 26,533 56,251 56,251 59,064 49,672 49,672 52,156
25 33,864 88,706 88,706 93,142 76,407 76,407 80,228
35 55,160 220,776 220,776 222,984 184,372 184,372 186,216
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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>
44 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,000
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,884 9,134 20,000 9,674 8,924 20,000
2 11,025 10,176 9,426 20,000 9,721 8,971 20,000
3 11,576 10,479 9,729 20,000 9,738 8,988 20,000
4 12,155 10,791 10,191 20,000 9,719 9,119 20,000
5 12,763 11,114 10,514 20,000 9,658 9,058 20,000
6 13,401 11,447 11,047 20,000 9,545 9,145 20,000
7 14,071 11,790 11,390 20,000 9,367 8,967 20,000
8 14,775 12,146 11,946 20,000 9,109 8,909 20,000
9 15,513 12,512 12,312 20,000 8,749 8,549 20,000
10 16,289 12,891 12,891 20,000 8,265 8,265 20,000
11 17,103 13,329 13,329 20,000 7,641 7,641 20,000
12 17,959 13,783 13,783 20,000 6,830 6,830 20,000
13 18,856 14,253 14,253 20,000 5,788 5,788 20,000
14 19,799 14,740 14,740 20,000 4,456 4,456 20,000
15 20,789 15,245 15,245 20,000 2,752 2,752 20,000
16 21,829 15,768 15,768 20,000 559 559 20,000
17 22,920 16,311 16,311 20,000 -- -- --
18 24,066 16,873 16,873 20,000 -- -- --
19 25,270 17,455 17,455 20,000 -- -- --
20 26,533 18,059 18,059 20,000 -- -- --
25 33,864 21,421 21,421 22,493 -- -- --
35 55,160 30,268 30,268 30,572 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 45
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,000
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,389 8,639 20,000 9,177 8,427 20,000
2 11,025 9,182 8,432 20,000 8,713 7,963 20,000
3 11,576 8,979 8,229 20,000 8,204 7,454 20,000
4 12,155 8,780 8,180 20,000 7,640 7,040 20,000
5 12,763 8,585 7,985 20,000 7,011 6,411 20,000
6 13,401 8,393 7,993 20,000 6,305 5,905 20,000
7 14,071 8,205 7,805 20,000 5,504 5,104 20,000
8 14,775 8,021 7,821 20,000 4,583 4,383 20,000
9 15,513 7,839 7,639 20,000 3,514 3,314 20,000
10 16,289 7,662 7,662 20,000 2,265 2,265 20,000
11 17,103 7,514 7,514 20,000 799 799 20,000
12 17,959 7,368 7,368 20,000 -- -- --
13 18,856 7,225 7,225 20,000 -- -- --
14 19,799 7,084 7,084 20,000 -- -- --
15 20,789 6,945 6,945 20,000 -- -- --
16 21,829 6,808 6,808 20,000 -- -- --
17 22,920 6,673 6,673 20,000 -- -- --
18 24,066 6,540 6,540 20,000 -- -- --
19 25,270 6,410 6,410 20,000 -- -- --
20 26,533 6,281 6,281 20,000 -- -- --
25 33,864 5,667 5,667 20,000 -- -- --
35 55,160 4,573 4,573 20,000 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0.00% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY AVERAGED 0.00%, 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>
46 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE PREFERRED/55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,454
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,904 9,909 45,454 10,904 9,909 45,454
2 11,025 11,886 10,898 45,454 11,886 10,898 45,454
3 11,576 12,953 11,976 45,454 12,953 11,976 45,454
4 12,155 14,110 13,299 45,454 14,110 13,299 45,454
5 12,763 15,367 14,575 45,454 15,367 14,575 45,454
6 13,401 16,730 16,163 45,454 16,730 16,163 45,454
7 14,071 18,209 17,672 45,454 18,209 17,672 45,454
8 14,775 19,813 19,513 45,454 19,813 19,513 45,454
9 15,513 21,551 21,297 45,454 21,551 21,297 45,454
10 16,289 23,436 23,436 45,454 23,436 23,436 45,454
11 17,103 25,706 25,706 45,454 25,689 25,689 45,454
12 17,959 28,198 28,198 45,454 28,159 28,159 45,454
13 18,856 30,935 30,935 45,454 30,876 30,876 45,454
14 19,799 33,944 33,944 45,454 33,872 33,872 45,454
15 20,789 37,267 37,267 45,454 37,186 37,186 45,454
16 21,829 40,954 40,954 47,098 40,864 40,864 46,995
17 22,920 45,021 45,021 50,874 44,922 44,922 50,763
18 24,066 49,493 49,493 54,937 49,384 49,384 54,817
19 25,270 54,444 54,444 59,344 54,324 54,324 59,214
20 26,533 59,862 59,862 65,250 59,731 59,731 65,107
25 33,864 95,891 95,891 101,645 95,679 95,679 101,420
35 55,160 244,542 244,542 256,769 235,932 235,932 247,729
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 47
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE PREFERRED/55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,454
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 45,454 10,314 9,332 45,454
2 11,025 10,633 9,670 45,454 10,633 9,670 45,454
3 11,576 10,955 10,013 45,454 10,955 10,013 45,454
4 12,155 11,278 10,509 45,454 11,278 10,509 45,454
5 12,763 11,601 10,856 45,454 11,601 10,856 45,454
6 13,401 11,922 11,403 45,454 11,922 11,403 45,454
7 14,071 12,238 11,746 45,454 12,238 11,746 45,454
8 14,775 12,557 12,295 45,454 12,545 12,282 45,454
9 15,513 12,886 12,653 45,454 12,838 12,606 45,454
10 16,289 13,223 13,223 45,454 13,111 13,111 45,454
11 17,103 13,707 13,707 45,454 13,467 13,467 45,454
12 17,959 14,210 14,210 45,454 13,797 13,797 45,454
13 18,856 14,733 14,733 45,454 14,095 14,095 45,454
14 19,799 15,276 15,276 45,454 14,352 14,352 45,454
15 20,789 15,840 15,840 45,454 14,558 14,558 45,454
16 21,829 16,426 16,426 45,454 14,700 14,700 45,454
17 22,920 17,035 17,035 45,454 14,757 14,757 45,454
18 24,066 17,668 17,668 45,454 14,705 14,705 45,454
19 25,270 18,325 18,325 45,454 14,514 14,514 45,454
20 26,533 19,007 19,007 45,454 14,146 14,146 45,454
25 33,864 22,840 22,840 45,454 7,825 7,825 45,454
35 55,160 33,093 33,093 45,454 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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>
48 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE PREFERRED/55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,454
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,798 8,828 45,454 9,798 8,828 45,454
2 11,025 9,594 8,652 45,454 9,594 8,652 45,454
3 11,576 9,384 8,470 45,454 9,384 8,470 45,454
4 12,155 9,168 8,430 45,454 9,168 8,430 45,454
5 12,763 8,943 8,231 45,454 8,943 8,231 45,454
6 13,401 8,710 8,222 45,454 8,707 8,220 45,454
7 14,071 8,481 8,018 45,454 8,457 7,994 45,454
8 14,775 8,258 8,017 45,454 8,188 7,947 45,454
9 15,513 8,040 7,820 45,454 7,895 7,675 45,454
10 16,289 7,827 7,827 45,454 7,570 7,570 45,454
11 17,103 7,696 7,696 45,454 7,267 7,267 45,454
12 17,959 7,567 7,567 45,454 6,915 6,915 45,454
13 18,856 7,439 7,439 45,454 6,504 6,504 45,454
14 19,799 7,313 7,313 45,454 6,026 6,026 45,454
15 20,789 7,188 7,188 45,454 5,467 5,467 45,454
16 21,829 7,065 7,065 45,454 4,809 4,809 45,454
17 22,920 6,944 6,944 45,454 4,028 4,028 45,454
18 24,066 6,824 6,824 45,454 3,091 3,091 45,454
19 25,270 6,706 6,706 45,454 1,958 1,958 45,454
20 26,533 6,590 6,590 45,454 582 582 45,454
25 33,864 6,029 6,029 45,454 -- -- --
35 55,160 5,010 5,010 45,454 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0.00% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY AVERAGED 0.00%, 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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 49
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE PREFERRED/55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,454
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,535 9,785 45,454 10,535 9,785 45,454
2 11,025 11,558 10,808 45,454 11,558 10,808 45,454
3 11,576 12,676 11,926 45,454 12,676 11,926 45,454
4 12,155 13,898 13,298 45,454 13,898 13,298 45,454
5 12,763 15,233 14,633 45,454 15,233 14,633 45,454
6 13,401 16,692 16,292 45,454 16,692 16,292 45,454
7 14,071 18,287 17,887 45,454 18,287 17,887 45,454
8 14,775 20,028 19,828 45,454 20,028 19,828 45,454
9 15,513 21,931 21,731 45,454 21,931 21,731 45,454
10 16,289 24,010 24,010 45,454 24,010 24,010 45,454
11 17,103 26,336 26,336 45,454 26,325 26,325 45,454
12 17,959 28,890 28,890 45,454 28,866 28,866 45,454
13 18,856 31,697 31,697 45,454 31,661 31,661 45,454
14 19,799 34,788 34,788 45,454 34,746 34,746 45,454
15 20,789 38,208 38,208 45,454 38,162 38,162 45,454
16 21,829 41,999 41,999 48,299 41,948 41,948 48,240
17 22,920 46,170 46,170 52,173 46,114 46,114 52,109
18 24,066 50,787 50,787 56,374 50,725 50,725 56,305
19 25,270 55,867 55,867 60,896 55,799 55,799 60,821
20 26,533 61,428 61,428 66,957 61,353 61,353 66,875
25 33,864 98,399 98,399 104,303 98,277 98,277 104,174
35 55,160 250,936 250,936 263,483 242,338 242,338 254,456
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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>
50 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE PREFERRED/55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,454
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,965 9,215 45,454 9,965 9,215 45,454
2 11,025 10,339 9,589 45,454 10,339 9,589 45,454
3 11,576 10,720 9,970 45,454 10,720 9,970 45,454
4 12,155 11,107 10,507 45,454 11,107 10,507 45,454
5 12,763 11,499 10,899 45,454 11,499 10,899 45,454
6 13,401 11,894 11,494 45,454 11,894 11,494 45,454
7 14,071 12,290 11,890 45,454 12,290 11,890 45,454
8 14,775 12,693 12,493 45,454 12,681 12,481 45,454
9 15,513 13,110 12,910 45,454 13,065 12,865 45,454
10 16,289 13,542 13,542 45,454 13,435 13,435 45,454
11 17,103 14,039 14,039 45,454 13,806 13,806 45,454
12 17,959 14,555 14,555 45,454 14,153 14,153 45,454
13 18,856 15,091 15,091 45,454 14,470 14,470 45,454
14 19,799 15,648 15,648 45,454 14,747 14,747 45,454
15 20,789 16,227 16,227 45,454 14,975 14,975 45,454
16 21,829 16,828 16,828 45,454 15,141 15,141 45,454
17 22,920 17,452 17,452 45,454 15,225 15,225 45,454
18 24,066 18,101 18,101 45,454 15,204 15,204 45,454
19 25,270 18,775 18,775 45,454 15,047 15,047 45,454
20 26,533 19,475 19,475 45,454 14,719 14,719 45,454
25 33,864 23,406 23,406 45,454 8,738 8,738 45,454
35 55,160 33,922 33,922 45,454 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 51
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE PREFERRED/55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $45,454
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,467 8,717 45,454 9,467 8,717 45,454
2 11,025 9,328 8,578 45,454 9,328 8,578 45,454
3 11,576 9,183 8,433 45,454 9,183 8,433 45,454
4 12,155 9,029 8,429 45,454 9,029 8,429 45,454
5 12,763 8,864 8,264 45,454 8,864 8,264 45,454
6 13,401 8,689 8,289 45,454 8,686 8,286 45,454
7 14,071 8,517 8,117 45,454 8,492 8,092 45,454
8 14,775 8,347 8,147 45,454 8,277 8,077 45,454
9 15,513 8,181 7,981 45,454 8,035 7,835 45,454
10 16,289 8,017 8,017 45,454 7,760 7,760 45,454
11 17,103 7,883 7,883 45,454 7,456 7,456 45,454
12 17,959 7,751 7,751 45,454 7,103 7,103 45,454
13 18,856 7,621 7,621 45,454 6,693 6,693 45,454
14 19,799 7,492 7,492 45,454 6,215 6,215 45,454
15 20,789 7,366 7,366 45,454 5,657 5,657 45,454
16 21,829 7,240 7,240 45,454 5,000 5,000 45,454
17 22,920 7,117 7,117 45,454 4,220 4,220 45,454
18 24,066 6,995 6,995 45,454 3,286 3,286 45,454
19 25,270 6,875 6,875 45,454 2,156 2,156 45,454
20 26,533 6,756 6,756 45,454 784 784 45,454
25 33,864 6,184 6,184 45,454 -- -- --
35 55,160 5,147 5,147 45,454 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0.00% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY AVERAGED 0.00%, 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>
52 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE PREFERRED/65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,329
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,898 9,903 28,329 10,898 9,903 28,329
2 11,025 11,860 10,872 28,329 11,860 10,872 28,329
3 11,576 12,890 11,914 28,329 12,890 11,914 28,329
4 12,155 13,994 13,184 28,329 13,994 13,184 28,329
5 12,763 15,184 14,394 28,329 15,178 14,389 28,329
6 13,401 16,477 15,912 28,329 16,451 15,887 28,329
7 14,071 17,883 17,349 28,329 17,822 17,288 28,329
8 14,775 19,412 19,115 28,329 19,303 19,007 28,329
9 15,513 21,074 20,822 28,329 20,911 20,658 28,329
10 16,289 22,881 22,881 28,329 22,668 22,668 28,329
11 17,103 25,096 25,096 28,329 24,810 24,810 28,329
12 17,959 27,550 27,550 29,479 27,223 27,223 29,129
13 18,856 30,249 30,249 32,367 29,890 29,890 31,982
14 19,799 33,214 33,214 35,207 32,819 32,819 34,788
15 20,789 36,452 36,452 38,639 36,018 36,018 38,179
16 21,829 40,012 40,012 42,013 39,535 39,535 41,512
17 22,920 43,908 43,908 46,104 43,373 43,373 45,542
18 24,066 48,186 48,186 50,596 47,554 47,554 49,933
19 25,270 52,914 52,914 55,561 52,132 52,132 54,739
20 26,533 58,107 58,107 61,012 57,101 57,101 59,957
25 33,864 92,786 92,786 97,425 88,736 88,736 93,173
35 55,160 236,587 236,587 238,954 215,115 215,115 217,267
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 53
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE PREFERRED/65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,329
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,308 9,326 28,329 10,308 9,326 28,329
2 11,025 10,606 9,644 28,329 10,606 9,644 28,329
3 11,576 10,890 9,949 28,329 10,890 9,949 28,329
4 12,155 11,171 10,403 28,329 11,155 10,388 28,329
5 12,763 11,460 10,716 28,329 11,397 10,654 28,329
6 13,401 11,757 11,239 28,329 11,607 11,091 28,329
7 14,071 12,062 11,572 28,329 11,779 11,290 28,329
8 14,775 12,376 12,114 28,329 11,899 11,639 28,329
9 15,513 12,699 12,468 28,329 11,954 11,724 28,329
10 16,289 13,032 13,032 28,329 11,926 11,926 28,329
11 17,103 13,509 13,509 28,329 11,894 11,894 28,329
12 17,959 14,004 14,004 28,329 11,745 11,745 28,329
13 18,856 14,519 14,519 28,329 11,453 11,453 28,329
14 19,799 15,053 15,053 28,329 10,985 10,985 28,329
15 20,789 15,609 15,609 28,329 10,299 10,299 28,329
16 21,829 16,186 16,186 28,329 9,332 9,332 28,329
17 22,920 16,785 16,785 28,329 7,999 7,999 28,329
18 24,066 17,408 17,408 28,329 6,178 6,178 28,329
19 25,270 18,055 18,055 28,329 3,701 3,701 28,329
20 26,533 18,727 18,727 28,329 334 334 28,329
25 33,864 22,501 22,501 28,329 -- -- --
35 55,160 32,596 32,596 32,923 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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>
54 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE PREFERRED/65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,329
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,792 8,822 28,329 9,792 8,822 28,329
2 11,025 9,567 8,625 28,329 9,567 8,625 28,329
3 11,576 9,319 8,406 28,329 9,318 8,405 28,329
4 12,155 9,077 8,341 28,329 9,042 8,306 28,329
5 12,763 8,840 8,130 28,329 8,731 8,022 28,329
6 13,401 8,609 8,123 28,329 8,376 7,893 28,329
7 14,071 8,383 7,920 28,329 7,968 7,508 28,329
8 14,775 8,162 7,922 28,329 7,489 7,252 28,329
9 15,513 7,947 7,727 28,329 6,921 6,704 28,329
10 16,289 7,736 7,736 28,329 6,242 6,242 28,329
11 17,103 7,606 7,606 28,329 5,472 5,472 28,329
12 17,959 7,477 7,477 28,329 4,526 4,526 28,329
13 18,856 7,351 7,351 28,329 3,368 3,368 28,329
14 19,799 7,226 7,226 28,329 1,951 1,951 28,329
15 20,789 7,102 7,102 28,329 211 211 28,329
16 21,829 6,981 6,981 28,329 -- -- --
17 22,920 6,861 6,861 28,329 -- -- --
18 24,066 6,742 6,742 28,329 -- -- --
19 25,270 6,625 6,625 28,329 -- -- --
20 26,533 6,509 6,509 28,329 -- -- --
25 33,864 5,953 5,953 28,329 -- -- --
35 55,160 4,944 4,944 28,329 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0.00% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY AVERAGED 0.00%, 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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 55
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE PREFERRED/65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,329
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 10,529 9,779 28,329 10,529 9,779 28,329
2 11,025 11,530 10,780 28,329 11,530 10,780 28,329
3 11,576 12,611 11,861 28,329 12,611 11,861 28,329
4 12,155 13,777 13,177 28,329 13,777 13,177 28,329
5 12,763 15,046 14,446 28,329 15,038 14,438 28,329
6 13,401 16,434 16,034 28,329 16,404 16,004 28,329
7 14,071 17,954 17,554 28,329 17,888 17,488 28,329
8 14,775 19,616 19,416 28,329 19,504 19,304 28,329
9 15,513 21,435 21,235 28,329 21,275 21,075 28,329
10 16,289 23,428 23,428 28,329 23,229 23,229 28,329
11 17,103 25,699 25,699 28,329 25,448 25,448 28,329
12 17,959 28,223 28,223 30,199 27,942 27,942 29,898
13 18,856 30,988 30,988 33,158 30,679 30,679 32,828
14 19,799 34,026 34,026 36,068 33,687 33,687 35,708
15 20,789 37,344 37,344 39,585 36,971 36,971 39,190
16 21,829 40,992 40,992 43,043 40,582 40,582 42,612
17 22,920 44,985 44,985 47,234 44,523 44,523 46,750
18 24,066 49,368 49,368 51,837 48,816 48,816 51,257
19 25,270 54,213 54,213 56,924 53,514 53,514 56,190
20 26,533 59,532 59,532 62,509 58,616 58,616 61,547
25 33,864 95,062 95,062 99,816 91,089 91,089 95,644
35 55,160 242,392 242,392 244,817 220,821 220,821 223,030
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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>
56 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE PREFERRED/65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,329
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,959 9,209 28,329 9,959 9,209 28,329
2 11,025 10,311 9,561 28,329 10,311 9,561 28,329
3 11,576 10,654 9,904 28,329 10,654 9,904 28,329
4 12,155 10,999 10,399 28,329 10,981 10,381 28,329
5 12,763 11,357 10,757 28,329 11,290 10,690 28,329
6 13,401 11,727 11,327 28,329 11,572 11,172 28,329
7 14,071 12,111 11,711 28,329 11,819 11,419 28,329
8 14,775 12,508 12,308 28,329 12,021 11,821 28,329
9 15,513 12,919 12,719 28,329 12,164 11,964 28,329
10 16,289 13,344 13,344 28,329 12,231 12,231 28,329
11 17,103 13,833 13,833 28,329 12,222 12,222 28,329
12 17,959 14,341 14,341 28,329 12,100 12,100 28,329
13 18,856 14,869 14,869 28,329 11,840 11,840 28,329
14 19,799 15,417 15,417 28,329 11,411 11,411 28,329
15 20,789 15,987 15,987 28,329 10,772 10,772 28,329
16 21,829 16,578 16,578 28,329 9,863 9,863 28,329
17 22,920 17,193 17,193 28,329 8,601 8,601 28,329
18 24,066 17,832 17,832 28,329 6,872 6,872 28,329
19 25,270 18,495 18,495 28,329 4,512 4,512 28,329
20 26,533 19,185 19,185 28,329 1,296 1,296 28,329
25 33,864 23,055 23,055 28,329 -- -- --
35 55,160 33,408 33,408 33,742 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY 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>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 57
- --------------------------------------------------------------------------------
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE PREFERRED/65 FEMALE PREFERRED
INITIAL FACE AMOUNT: $28,329
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.75% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS ---------------------------- ------------------------------
END OF ACCUMULATED CASH CASH
POLICY 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 9,460 8,710 28,329 9,460 8,710 28,329
2 11,025 9,301 8,551 28,329 9,301 8,551 28,329
3 11,576 9,118 8,368 28,329 9,116 8,366 28,329
4 12,155 8,939 8,339 28,329 8,900 8,300 28,329
5 12,763 8,763 8,163 28,329 8,647 8,047 28,329
6 13,401 8,589 8,189 28,329 8,349 7,949 28,329
7 14,071 8,418 8,018 28,329 7,993 7,593 28,329
8 14,775 8,251 8,051 28,329 7,565 7,365 28,329
9 15,513 8,085 7,885 28,329 7,046 6,846 28,329
10 16,289 7,923 7,923 28,329 6,412 6,412 28,329
11 17,103 7,791 7,791 28,329 5,645 5,645 28,329
12 17,959 7,660 7,660 28,329 4,704 4,704 28,329
13 18,856 7,531 7,531 28,329 3,553 3,553 28,329
14 19,799 7,404 7,404 28,329 2,144 2,144 28,329
15 20,789 7,278 7,278 28,329 415 415 28,329
16 21,829 7,154 7,154 28,329 -- -- --
17 22,920 7,031 7,031 28,329 -- -- --
18 24,066 6,911 6,911 28,329 -- -- --
19 25,270 6,791 6,791 28,329 -- -- --
20 26,533 6,674 6,674 28,329 -- -- --
25 33,864 6,107 6,107 28,329 -- -- --
35 55,160 5,079 5,079 28,329 -- -- --
</TABLE>
<TABLE>
<C> <S>
* 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.
</TABLE>
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 POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0.00% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY 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 POLICY AVERAGED 0.00%, 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>
58 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
PART I. FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
The following unaudited condensed consolidated financial statements of
Hartford Life Insurance Company and its subsidiaries (the "Company") have been
prepared in accordance with generally accepted accounting principles and
reflect, in the opinion of management, all adjustments which are of normal
recurring nature necessary to present fairly the financial position, the results
of operations and the cash flows for the periods presented. Certain
reclassifications of prior year results were made to conform to current
presentation. Interim results are not indicative of the results which may be
expected for any other interim period or the full year. Certain statements
contained in this discussion, other than statements of historical fact, are
forward-looking statements. These statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. The
forward-looking statements are made based upon management's expectations and
beliefs concerning future developments and their potential effect on the
Company. There can be no assurance that future developments will be in
accordance with management's expectations or that the effect of these future
developments on the Company will be those anticipated by management. Actual
results could differ materially from those expected by the Company, depending on
the outcome of certain factors, including those described with the
forward-looking statements. For a description of accounting policies, see Note 1
to Consolidated Financial Statements in the 1996 Form 10-K. The Company is an
indirect subsidiary of Hartford Life, Inc. ("HLI"). Accordingly, the financial
statements presented below are a partial disclosure of HLI's financial
statements. For a full disclosure of HLI's operations, refer to the HLI Form
10-Q, as filed with the Securities and Exchange Commission, for the quarter
ended September 30, 1997.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES 59
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS)
<TABLE>
<CAPTION>
QUARTER
ENDED SIX MONTHS
SEPTEMBER ENDED
30, SEPTEMBER 30,
----------- ---------------
1997 1996 1997 1996
---- ---- ------ ------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues
Premiums and other considerations............... $360 $319 $ 993 $1,262
Net investment income........................... 319 355 978 1,006
Net realized capital gains (losses)............. -- (202) 4 (203)
---- ---- ------ ------
Total Revenues................................ 679 472 1,975 2,065
---- ---- ------ ------
Benefits, Claims and Expenses
Benefits, claims and claim adjustment
expenses....................................... 318 447 970 1,235
Amortization of deferred policy acquisition
costs.......................................... 80 68 252 197
Dividends to policyholders...................... 47 63 119 410
Other insurance expenses........................ 105 58 295 256
---- ---- ------ ------
Total benefits, claims and expenses........... 550 636 1,636 2,098
---- ---- ------ ------
Income (loss) before income tax expense......... 129 (164) 339 (33)
Income tax expense (benefit).................... 48 (58) 121 (13)
---- ---- ------ ------
Net income (loss)................................. $ 81 $(106) $ 218 $ (20)
---- ---- ------ ------
---- ---- ------ ------
</TABLE>
<PAGE>
60 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER
30, DECEMBER 31,
1997 1996
----------- ------------
(UNAUDITED)
<S> <C> <C>
Assets
Investments:
Fixed maturities, available for sale, at fair
value (amortized cost $13,849 and $13,579)..... $14,046 $13,624
Equity securities, available for sale, at fair
value.......................................... 155 119
Mortgage loans, at outstanding balance.......... -- 2
Policy loans, at outstanding balance............ 3,747 3,836
Other investments, at cost...................... 48 54
----------- ------------
Total investments............................. 17,996 17,635
Cash............................................ 53 43
Premiums and amounts receivable................. 134 137
Reinsurance recoverable......................... 6,356 6,259
Accrued investment income....................... 359 407
Deferred policy acquisition costs............... 3,156 2,760
Deferred income tax............................. 431 474
Other assets.................................... 246 357
Separate account assets......................... 64,020 49,690
----------- ------------
Total assets.................................. $92,751 $77,762
----------- ------------
----------- ------------
Liabilities and Stockholders' Equity
Future policy benefits.......................... $ 3,124 $ 2,474
Other policyholder funds........................ 21,168 22,134
Other liabilities............................... 2,224 1,572
Separate account liabilities.................... 64,020 49,690
----------- ------------
Total liabilities............................. 90,536 75,870
----------- ------------
----------- ------------
Common stock -- authorized 1,000 shares, $5,690
par value, issued and outstanding 1,000
shares......................................... 6 6
Additional paid-in capital...................... 1,045 1,045
Unrealized gain on securities, net of tax....... 135 30
Retained earnings............................... 1,029 811
----------- ------------
Total stockholders' equity.................... 2,215 1,892
----------- ------------
Total liabilities and stockholders' equity...... $92,751 $77,762
----------- ------------
----------- ------------
</TABLE>
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES 61
- --------------------------------------------------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------
1997 1996
-------- --------
(UNAUDITED)
<S> <C> <C>
Operating Activities:
Net income (loss)..................... $ 218 $ (20)
Adjustments to net income (loss):
Net realized capital (gains)
losses............................. (4) 203
Net increase in deferred policy
acquisition costs.................. (396) (399)
Net amortization of premium on fixed
maturities......................... 5 6
Increase in deferred income tax
benefit............................ (14) (188)
Decrease in premiums and amounts
receivable......................... 3 75
Decrease in other assets............ 169 15
Increase in reinsurance
recoverable........................ (310) (254)
Increase in liability for future
policy benefits.................... 650 278
Increase in other liabilities....... 131 116
Decrease in accrued investment
income............................. 48 --
-------- --------
Cash provided by (used for)
operating activities.............. 500 (168)
-------- --------
Investing Activities:
Purchases of fixed maturities
investments.......................... (4,628) (4,111)
Sales of fixed maturities
investments.......................... 3,039 2,450
Maturities and principal paydowns of
fixed maturities investments......... 1,643 2,124
Net sales (purchases) of other
investments.......................... 32 (339)
Net (purchases) sales of short-term
investments.......................... (70) 328
-------- --------
Cash provided by investing
activities........................ 16 452
-------- --------
Financing Activities:
Net disbursements for investment and
universal life-type contracts charged
from policyholder accounts........... (506) (316)
Capital contribution.................. -- 38
-------- --------
Cash used for financing
activities........................ (506) (278)
-------- --------
Net increase in cash.................. 10 6
Cash at beginning of period........... 43 46
-------- --------
Cash at end of period................... $ 53 $ 52
-------- --------
-------- --------
</TABLE>
<PAGE>
62 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. HARTFORD LIFE INC. INITIAL PUBLIC OFFERING
On February 10, 1997, HLI, an indirect parent of the Company, filed a
registration statement with the Securities and Exchange Commission, as amended,
relating to the Initial Public Offering ("IPO") of up to 20% of HLI's Class A
common stock. Pursuant to the IPO on May 22, 1997, HLI sold to the public 26
million shares at $28.25 per share and received net proceeds of $687. Of the
proceeds, $527 was used to retire debt related to HLI's promissory notes
outstanding and the line of credit discussed in the note below with the
remaining $160 contributed to HLI's insurance subsidiaries to be used for
working capital and other general corporate purposes.
The 26 million shares sold from the IPO represent approximately 18.6% of the
equity ownership in HLI and approximately 4.4% of the combined voting power of
HLI's Class A and Class B Common Stock. The Hartford Financial Services Group,
Inc. ("The Hartford"), an indirect parent of HLI, owns all of the 114 million
outstanding shares of Class B Common Stock of HLI, representing 81.4% of the
equity ownership in HLI and approximately 95.6% of the combined voting power of
HLI's Class A and Class B Common Stock. Holders of Class A Common Stock
generally have identical rights to the holders of Class B Common Stock except
that the holders of Class A Common Stock are entitled to one vote per share
while holders of Class B Common Stock are entitled to five votes per share on
all matters submitted to a vote of the HLI stockholders.
NOTE 2. HARTFORD LIFE INC. DEBT OFFERING
On February 7, 1997, HLI declared a dividend of $1,184 payable to its direct
parent, Hartford Accident and Indemnity Company ("HA&I"). As a result, HLI
borrowed $1,084 on February 18, 1997, pursuant to a $1,300 line of credit, with
interest payable at the two-month Eurodollar rate plus 15 basis points, which,
together with a promissory note in the amount of $100, was paid as a dividend to
HA&I on February 20, 1997. Of the $1,184 dividend, $893 constituted a repayment
of the portion of HLI's third party indebtedness internally allocated, for
financial reporting purposes, to HLI's insurance subsidiaries (the "Allocated
Advances"). In addition, on April 4, 1997, HLI declared and paid a dividend of
$25 to its parent in the form of a promissory note. Subsequently, $12 of this
note was forgiven in the form of a capital contribution from HA&I.
On February 14, 1997, HLI filed a shelf registration statement for the
issuance and sale of up to $1.0 billion in the aggregate of senior debt
securities, subordinated debt securities and preferred stock. On June 17, 1997,
HLI issued $650 of unsecured redeemable long-term debt in the form of notes and
debentures. Of this amount, $200 was in the form of 6.90% notes due June 15,
2004, $200 of 7.10% notes due June 15, 2007, and $250 of 7.65% debentures due
June 15, 2027. Interest on each of the notes and debentures is payable
semi-annually on June 15 and December 15, of each year, commencing December 15,
1997. HLI also issued $50 of short-term debt in the form of commercial paper. Of
the proceeds from this issuance, $670 was used to retire the remaining balance
on the $1,300 line of credit with the remainder being used for working capital
and other general corporate purposes. Subsequently, HLI reduced the capacity of
the line of credit from $1,300 to $250, which will be primarily used to support
the commercial paper program.
NOTE 3. CONTINGENCIES
(A) LITIGATION
The Company is involved in pending and threatened litigation in the normal
course of its business in which claims for monetary and punitive damages have
been asserted. Although there can be no assurances, management, at the present
time, does not anticipate that the ultimate liability arising from such pending
or threatened litigation will have a material effect on the financial condition
or operating results of the Company.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES 63
- --------------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S NARRATIVE ANALYSIS
OF RESULTS OF OPERATIONS
(IN MILLIONS)
QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
SEGMENT RESULTS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
QUARTER ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- --------------------
1997 1996 1997 1996
----- --------- --------- ---------
<S> <C> <C> <C> <C>
Annuity........................ $ 56 $ 40 $ 148 $ 110
Individual Life Insurance...... 15 11 38 30
Employee Benefits.............. 8 8 23 22
Guaranteed Investment
Contracts.................... -- (184) -- (214)
Corporate Operation............ 2 19 9 32
--- --------- --------- ---------
Net Income (Loss).............. $ 81 $ (106) $ 218 $ (20)
--- --------- --------- ---------
--- --------- --------- ---------
</TABLE>
Net income was $81 and $218 for the third quarter and nine months ended
September 30, 1997, as compared to a loss of $106 and $20 for the same periods
in 1996. Included in the results for the third quarter and nine months ended
September 30, 1996, are after-tax losses, primarily related to Closed Book GRC,
of $179 and $210. Excluding these after-tax losses, operating income increased
$8, or 11%, and $28, or 15%, for the third quarter and nine months ended
September 30, 1997, compared to the same periods in 1996. Net income in the
Annuity segment increased due to higher fee income on growing account values as
well as strong new business sales. Net income in the Individual Life Insurance
segment increased due to cost of insurance charges and other fee income on a
growing block of life insurance in-force. Guaranteed Investment Contracts
reported no net income in the third quarter of 1997 consistent with management's
expectations that net income (loss) subsequent to 1996 will be immaterial.
ANNUITY
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues........................ $ 336 $ 241 $ 924 $ 707
Expenses........................ 280 201 776 597
--------- --------- --------- ---------
Net Income...................... $ 56 $ 40 $ 148 $ 110
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
Revenues, which are primarily comprised of investment income and fees earned
on assets under management, grew $95 or 39%, to $336 in the third quarter of
1997 and $217 or 31%, to $924 for the nine months ended September 30, 1997,
compared to the same periods in 1996. This growth resulted from an increase in
the average account value, primarily driven by individual variable annuities, of
$15.4 billion, or 36%, to $57.9 billion as of September 30, 1997 from $42.5
billion as of September 30, 1996, as a result of strong sales and market
appreciation in the separate account assets. Individual annuity sales were
approximately $2.6 billion and $7.6 billion for the third quarter and nine
months ended September 30, 1997, respectively, as compared to sales of $2.4
billion and $7.4 billion, respectively, for the same periods in 1996. Growth in
the assets under management by this segment also resulted in increased expenses
related to other insurance expenses, amortization of deferred policy acquisition
costs and taxes. Expenses increased $79, or 39%, to $280 in the third quarter of
1997 and $179, or 30%, to $776 for the nine months ended September 30, 1997,
compared to the same periods in 1996. Net income increased $16, or 40%, to $56
in the third quarter of 1997 and $38, or 35%, to $148 for the nine months ended
September 30, 1997, compared to the same periods in 1996.
INDIVIDUAL LIFE INSURANCE
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues........................ $ 122 $ 107 $ 358 $ 323
Expenses........................ 107 96 320 293
--------- --------- --------- ---------
Net Income...................... $ 15 $ 11 $ 38 $ 30
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
Revenues increased $15, or 14%, to $122 in the third quarter of 1997 and
$35, or 11%, to $358 for the nine months ended September 30, 1997, over the
comparable periods in 1996. In the first quarter of 1996, a block of business
was assumed from Investors Equity which increased 1996 revenues by $9. Excluding
this transaction, year to date revenues increased $44, or 14% over prior year.
This growth was driven by increased cost of insurance charges and other fee
income earned on this growing block of business. Life insurance in-force grew
approximately $3 billion, or 6%, for September 30, 1997 over the prior period,
primarily due to sales of variable life products. Expenses in this segment
increased $11 or 11%, and $27 or 9%, for the third quarter and nine months ended
September 30, 1997, over the same periods in 1996, consistent with this growing
block of business. As a result, net income increased $4, or 36%, to $15 in the
third quarter of 1997 and $8, or 27%, to $38 for the nine months ended September
30, 1997, compared to the same periods in 1996.
<PAGE>
64 HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
- --------------------------------------------------------------------------------
EMPLOYEE BENEFITS
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1997 1996 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues........................ $ 150 $ 223 $ 471 $ 976
Expenses........................ 142 215 448 954
--------- --------- --------- ---------
Net Income...................... $ 8 $ 8 $ 23 $ 22
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
Revenues declined $73, or 33%, to $150 in the third quarter of 1997 and
$505, or 52%, for the nine months ended September 30, 1997, as compared to the
same periods in 1996. This decline is mainly related to the passage of the
Health Insurance Portability and Accountability Act of 1996, which effectively
eliminated all future sales of leveraged COLI due to the phase out of the
interest deduction on policy loans by 1998. The Company continues to write
variable COLI. Expenses declined $73, or 34%, in the third quarter of 1997 and
$506, or 53%, for the nine months ended September 30, 1997, as compared to the
same periods in 1996. Significant declines in benefits, claims and claim
adjustment expenses and policyholder dividends are the result of the decline of
the block of COLI business. As a result, net income was unchanged for the third
quarter of 1997, as compared to the same periods in 1996 and increased $1, or
5%, for the nine months ended September 30, 1997, as compared to the same
periods in 1996.
GUARANTEED INVESTMENT CONTRACTS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
QUARTER ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- --------------------
1997 1996 1997 1996
----- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues....................... $ 62 $ (163) $ 196 $ (23)
Expenses....................... 62 21 196 191
--- --------- --------- ---------
Net Income (Loss).............. $ 0 $ (184) $ 0 $ (214)
--- --------- --------- ---------
--- --------- --------- ---------
</TABLE>
This segment reported no net income for the nine months ended September 30,
1997, as compared to losses of $184 and $214 for the same periods last year.
Exclusive of after-tax realized losses and other charges taken in the third
quarter of 1996 related to Closed Book GRC, this segment had an operating loss
of $15 and $45 for the third quarter and nine months ended September 30, 1996.
These results are consistent with management's expectations that net income
(loss) from Closed Book GRC in the years subsequent to 1996 will be immaterial
based on the Company's current projections for the performance of the assets and
liabilities associated with Closed Book GRC due to actions taken in the third
quarter of 1996. However, no assurance can be given that, under certain
unanticipated economic circumstances which results in the Company's assumptions
being proven inaccurate, further losses in respect of Closed Book GRC will not
occur in the future.
<PAGE>
ITT Hartford Life and Annuity Insurance Company 65
- --------------------------------------------------------------------------------
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>
66 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 67
- --------------------------------------------------------------------------------
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>
68 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
STATUTORY BASIS STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
<TABLE>
<CAPTION>
FOR THE YEAR 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 69
- --------------------------------------------------------------------------------
STATUTORY BASIS STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR 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>
70 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 realized gains and losses are recognized in
the period the asset is sold;
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 71
- --------------------------------------------------------------------------------
(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.
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
<PAGE>
72 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
$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>
(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.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 73
- --------------------------------------------------------------------------------
(G) BONDS, SHORT-TERM AND COMMON STOCK INVESTMENTS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
----------------------------------
GROSS UNREALIZED
AMORTIZED --------------------
COST GAINS LOSSES
------------ --------- ---------
<S> <C> <C> <C>
U.S. government and government agencies and authorities:
(Guaranteed and sponsored)....................................................... $ 58,761 $ 6 $ (195)
(Guaranteed and sponsored) -- asset-backed....................................... 78,237 1,477 (609)
States, municipalities and political subdivisions.................................. 25,958 163 (2)
International governments.......................................................... 7,447 205 --
Public utilities................................................................... 70,116 396 (424)
All other corporate................................................................ 410,530 6,357 (1,355)
All other corporate -- asset-backed................................................ 485,953 2,654 (1,081)
Short-term investments............................................................. 148,094 -- (66)
Certificates of deposit............................................................ 83,378 563 (110)
Parents, subsidiaries and affiliates............................................... 48,100 -- --
------------ --------- ---------
Total bonds and short-term investments......................................... $ 1,416,574 $ 11,821 $ (3,842)
------------ --------- ---------
------------ --------- ---------
Common stock -- unaffiliated....................................................... $ 13,064 $ 713 $ 0
Common stock -- affiliated......................................................... 35,379 0 4,160
------------ --------- ---------
Total common stocks............................................................ $ 48,443 $ 713 $ 4,160
------------ --------- ---------
------------ --------- ---------
<CAPTION>
AS OF DECEMBER 31, 1995
----------------------------------
GROSS UNREALIZED
AMORTIZED --------------------
COST GAINS LOSSES
------------ --------- ---------
<S> <C> <C> <C>
U.S. government and government agencies and authorities:
(Guaranteed and sponsored)....................................................... $ 44,268 $ 14 $ (248)
(Guaranteed and sponsored) -- asset-backed....................................... 176,160 4,644 (682)
States, municipalities and political subdivisions.................................. 16,948 38 (6)
International governments.......................................................... 5,402 441 --
Public utilities................................................................... 108,083 1,652 (90)
All other corporate................................................................ 374,058 8,145 (248)
All other corporate -- asset-backed................................................ 410,197 5,841 (89)
Short-term investments............................................................. 139,011 18 --
Certificates of deposit............................................................ 91,373 1,458 (11)
------------ --------- ---------
Total bonds and short-term investments......................................... $ 1,365,500 $ 22,251 $ (1,374)
------------ --------- ---------
------------ --------- ---------
Common stock -- unaffiliated....................................................... $ 2,668 $ 555 $ --
Common stock -- affiliated......................................................... 35,384 1,169 --
------------ --------- ---------
Total common stocks............................................................ $ 38,052 $ 1,724 $ --
------------ --------- ---------
------------ --------- ---------
<CAPTION>
FAIR
VALUE
------------
<S> <C>
U.S. government and government agencies and authorities:
(Guaranteed and sponsored)....................................................... $ 58,572
(Guaranteed and sponsored) -- asset-backed....................................... 79,105
States, municipalities and political subdivisions.................................. 26,119
International governments.......................................................... 7,652
Public utilities................................................................... 70,088
All other corporate................................................................ 415,532
All other corporate -- asset-backed................................................ 487,526
Short-term investments............................................................. 148,028
Certificates of deposit............................................................ 83,831
Parents, subsidiaries and affiliates............................................... 48,100
------------
Total bonds and short-term investments......................................... $ 1,424,553
------------
------------
Common stock -- unaffiliated....................................................... $ 13,777
Common stock -- affiliated......................................................... 31,219
------------
Total common stocks............................................................ $ 44,996
------------
------------
FAIR
VALUE
------------
<S> <C>
U.S. government and government agencies and authorities:
(Guaranteed and sponsored)....................................................... $ 44,034
(Guaranteed and sponsored) -- asset-backed....................................... 180,122
States, municipalities and political subdivisions.................................. 16,980
International governments.......................................................... 5,843
Public utilities................................................................... 109,645
All other corporate................................................................ 381,955
All other corporate -- asset-backed................................................ 415,949
Short-term investments............................................................. 139,029
Certificates of deposit............................................................ 92,820
------------
Total bonds and short-term investments......................................... $ 1,386,377
------------
------------
Common stock -- unaffiliated....................................................... $ 3,223
Common stock -- affiliated......................................................... 36,553
------------
Total common stocks............................................................ $ 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 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 FAIR
MATURITY AMORTIZED 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>
<PAGE>
74 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 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.
<PAGE>
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 75
- --------------------------------------------------------------------------------
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.
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,
<PAGE>
76 ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
- --------------------------------------------------------------------------------
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>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------------
December 31, 1997 Asia Pacific Diversified Global Asset Global
(unaudited) Growth Income Allocation Growth
Fund Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments:
Putnam VT Asia Pacific Growth Fund
Shares 39,192
Cost $409,610
- --------------------------------------------------------------------------------------
Market Value: $ 360,568 $ - $ - $ -
- --------------------------------------------------------------------------------------
Putnam VT Diversified Income Fund
Shares 220,923
Cost $2,412,930
- --------------------------------------------------------------------------------------
Market Value: - 2,498,643 - -
- --------------------------------------------------------------------------------------
Putnam VT Global Asset Allocation Fund
Shares 167,002
Cost $2,779,091
- --------------------------------------------------------------------------------------
Market Value: - - 3,132,958 -
- --------------------------------------------------------------------------------------
Putnam VT Global Growth Fund
Shares 348,458
Cost $5,697,759
- --------------------------------------------------------------------------------------
Market Value: - - - 6,390,726
- --------------------------------------------------------------------------------------
Putnam VT Growth and Income Fund
Shares 865,166
Cost $20,237,142
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Putnam VT High Yield Fund
Shares 247,281
Cost $3,105,496
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Putnam VT International Growth Fund
Shares 26,962
Cost $294,404
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Putnam VT International Growth and Income Fund
Shares 31,389
Cost $348,543
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Putnam VT International New Opportunities Fund
Shares 55,483
Cost $583,820
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Putnam VT Money Market Fund
Shares 4,369,477
Cost $4,369,477
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Putnam VT New Opportunities Fund
Shares 590,759
Cost $10,187,467
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Putnam VT New Value Fund
Shares 74,976
Cost $798,149
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Putnam VT U.S. Government and High Quality Fund
Shares 71,748
Cost $934,277
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Putnam VT Utilities Growth & Income Fund
Shares 134,120
Cost $1,836,083
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Putnam VT Vista Fund
Shares 36,520
Cost $407,685
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Putnam VT Voyager Fund
Shares 347,145
Cost $11,091,194
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Due From ITT Hartford Life & Annuity 31 213
- --------------------------------------------------------------------------------------
Insurance Company
Receivable from fund shares sold - - - -
- --------------------------------------------------------------------------------------
Total Assets 360,568 2,498,707 3,132,989 6,390,939
- --------------------------------------------------------------------------------------
Liabilities
Due to ITT Hartford Life & Annuity 2 - - -
- --------------------------------------------------------------------------------------
Insurance Company
- --------------------------------------------------------------------------------------
Payable for fund shares purchased - - - 209
- --------------------------------------------------------------------------------------
Total Liabilities 2 - - 209
- --------------------------------------------------------------------------------------
Net Assets (variable annuity
contract liabilities $ 360,566 $2,498,707 $3,132,989 $6,390,730
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------------
International
December 31, 1997 Growth International Growth
(unaudited) and Income High Yield Growth and Income
Fund Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments:
Putnam VT Asia Pacific Growth Fund
Shares 39,192
Cost $409,610
- --------------------------------------------------------------------------------------
Market Value: $ - $ - $ - $ -
- --------------------------------------------------------------------------------------
Putnam VT Diversified Income Fund
Shares 220,923
Cost $2,412,930
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Putnam VT Global Asset Allocation Fund
Shares 167,002
Cost $2,779,091
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Putnam VT Global Growth Fund
Shares 348,458
Cost $5,697,759
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Putnam VT Growth and Income Fund
Shares 865,166
Cost $20,237,142
- --------------------------------------------------------------------------------------
Market Value: 24,501,515 - - -
- --------------------------------------------------------------------------------------
Putnam VT High Yield Fund
Shares 247,281
Cost $3,105,496
- --------------------------------------------------------------------------------------
Market Value: - 3,367,965 - -
- --------------------------------------------------------------------------------------
Putnam VT International Growth Fund
Shares 26,962
Cost $294,404
- --------------------------------------------------------------------------------------
Market Value: - - 308,179 -
- --------------------------------------------------------------------------------------
Putnam VT International Growth and Income Fund
Shares 31,389
Cost $348,543
- --------------------------------------------------------------------------------------
Market Value: - - - 361,910
- --------------------------------------------------------------------------------------
Putnam VT International New Opportunities Fund
Shares 55,483
Cost $583,820
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Putnam VT Money Market Fund
Shares 4,369,477
Cost $4,369,477
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Putnam VT New Opportunities Fund
Shares 590,759
Cost $10,187,467
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Putnam VT New Value Fund
Shares 74,976
Cost $798,149
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Putnam VT U.S. Government and High Quality Fund
Shares 71,748
Cost $934,277
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Putnam VT Utilities Growth & Income Fund
Shares 134,120
Cost $1,836,083
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Putnam VT Vista Fund
Shares 36,520
Cost $407,685
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Putnam VT Voyager Fund
Shares 347,145
Cost $11,091,194
- --------------------------------------------------------------------------------------
Market Value: - - - -
- --------------------------------------------------------------------------------------
Due From ITT Hartford Life &
Annuity - 47 - -
- --------------------------------------------------------------------------------------
Insurance Company
- --------------------------------------------------------------------------------------
Receivable from fund shares
sold - - 23 -
- --------------------------------------------------------------------------------------
Total Assets 24,501,515 3,368,012 308,202 361,910
- --------------------------------------------------------------------------------------
LIABILITIES
Due to ITT Hartford Life & Annuity 86 - - 37
- --------------------------------------------------------------------------------------
Insurance Company
- --------------------------------------------------------------------------------------
Payable for fund shares
purchased - 28 - -
- --------------------------------------------------------------------------------------
Total Liabilities 86 28 - 37
- --------------------------------------------------------------------------------------
Net Assets (variable annuity
contract liabilities $24,501,429 $3,367,984 $308,202 $361,873
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
- -----------------------------------------------------------------------------------------------------------------
International
New Money New New
Opportunities Market Opportunities Value
December 31, 1997 Fund Fund Fund Fund
(unaudited) Sub-Account Sub-Account Sub-Account Sub-Account
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments:
Putnam VT Asia Pacific Growth Fund
Shares 39,192
Cost $409,610
- -----------------------------------------------------------------------------------------------------------------
Market Value: $ - $ - $ - $ -
- -----------------------------------------------------------------------------------------------------------------
Putnam VT Diversified Income Fund
Shares 220,923
Cost $2,412,930
- -----------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -----------------------------------------------------------------------------------------------------------------
Putnam VT Global Asset Allocation Fund
Shares 167,002
Cost $2,779,091
- -----------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -----------------------------------------------------------------------------------------------------------------
Putnam VT Global Growth Fund
Shares 348,458
Cost $5,697,759
- -----------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -----------------------------------------------------------------------------------------------------------------
Putnam VT Growth and Income Fund
Shares 865,166
Cost $20,237,142
- -----------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -----------------------------------------------------------------------------------------------------------------
Putnam VT High Yield Fund
Shares 247,281
Cost $3,105,496
- -----------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -----------------------------------------------------------------------------------------------------------------
Putnam VT International Growth Fund
Shares 26,962
Cost $294,404
- -----------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -----------------------------------------------------------------------------------------------------------------
Putnam VT International Growth and Income Fund
Shares 31,389
Cost $348,543
- -----------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -----------------------------------------------------------------------------------------------------------------
Putnam VT International New Opportunities Fund
Shares 55,483
Cost $583,820
- -----------------------------------------------------------------------------------------------------------------
Market Value: 552,610 - - -
- -----------------------------------------------------------------------------------------------------------------
Putnam VT Money Market Fund
Shares 4,369,477
Cost $4,369,477
- -----------------------------------------------------------------------------------------------------------------
Market Value: - 4,369,477 - -
- -----------------------------------------------------------------------------------------------------------------
Putnam VT New Opportunities Fund
Shares 590,759
Cost $10,187,467
- -----------------------------------------------------------------------------------------------------------------
Market Value: - - 12,541,819 -
- -----------------------------------------------------------------------------------------------------------------
Putnam VT New Value Fund
Shares 74,976
Cost $798,149
- -----------------------------------------------------------------------------------------------------------------
Market Value: - - - 881,713
- -----------------------------------------------------------------------------------------------------------------
Putnam VT U.S. Government and High Quality Fund
Shares 71,748
Cost $934,277
- -----------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -----------------------------------------------------------------------------------------------------------------
Putnam VT Utilities Growth & Income Fund
Shares 134,120
Cost $1,836,083
- -----------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -----------------------------------------------------------------------------------------------------------------
Putnam VT Vista Fund
Shares 36,520
Cost $407,685
- -----------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -----------------------------------------------------------------------------------------------------------------
Putnam VT Voyager Fund
Shares 347,145
Cost $11,091,194
- -----------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -----------------------------------------------------------------------------------------------------------------
Due From ITT Hartford Life & Annuity - 88 828 -
- -----------------------------------------------------------------------------------------------------------------
Insurance Company
Receivable from fund shares sold - - - 1
- -----------------------------------------------------------------------------------------------------------------
Total Assets 552,610 4,369,565 12,542,647 881,714
- -----------------------------------------------------------------------------------------------------------------
LIABILITIES
Due to ITT Hartford Life & Annuity - - - -
- -----------------------------------------------------------------------------------------------------------------
Insurance Company
- -----------------------------------------------------------------------------------------------------------------
Payable for fund shares purchased - 58 - -
- -----------------------------------------------------------------------------------------------------------------
Total Liabilities - 58 - -
- -----------------------------------------------------------------------------------------------------------------
Net Assets (variable life
contract liabilities $552,610 $4,369,507 $12,542,647 $881,714
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------------------------------------------
U.S. Government Utilities
and High Growth
Quality Bond and Income Vista Voyager
December 31, 1997 Fund Fund Fund Fund
(unaudited) Sub-Account Sub-Account Sub-Account Sub-Account
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments:
Putnam VT Asia Pacific Growth Fund
Shares 39,192
Cost $409,610
- -------------------------------------------------------------------------------------------------------------------
Market Value: $ - $ - $ - $ -
- -------------------------------------------------------------------------------------------------------------------
Putnam VT Diversified Income Fund
Shares 220,923
Cost $2,412,930
- -------------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -------------------------------------------------------------------------------------------------------------------
Putnam VT Global Asset Allocation Fund
Shares 167,002
Cost $2,779,091
- -------------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -------------------------------------------------------------------------------------------------------------------
Putnam VT Global Growth Fund
Shares 348,458
Cost $5,697,759
- -------------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -------------------------------------------------------------------------------------------------------------------
Putnam VT Growth and Income Fund
Shares 865,166
Cost $20,237,142
- -------------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -------------------------------------------------------------------------------------------------------------------
Putnam VT High Yield Fund
Shares 247,281
Cost $3,105,496
- -------------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -------------------------------------------------------------------------------------------------------------------
Putnam VT International Growth Fund
Shares 26,962
Cost $294,404
- -------------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -------------------------------------------------------------------------------------------------------------------
Putnam VT International Growth and Income Fund
Shares 31,389
Cost $348,543
- -------------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -------------------------------------------------------------------------------------------------------------------
Putnam VT International New Opportunities Fund
Shares 55,483
Cost $583,820
- -------------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -------------------------------------------------------------------------------------------------------------------
Putnam VT Money Market Fund
Shares 4,369,477
Cost $4,369,477
- -------------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -------------------------------------------------------------------------------------------------------------------
Putnam VT New Opportunities Fund
Shares 590,759
Cost $10,187,467
- -------------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -------------------------------------------------------------------------------------------------------------------
Putnam VT New Value Fund
Shares 74,976
Cost $798,149
- -------------------------------------------------------------------------------------------------------------------
Market Value: - - - -
- -------------------------------------------------------------------------------------------------------------------
Putnam VT U.S. Government and High Quality Fund
Shares 71,748
Cost $934,277
- -------------------------------------------------------------------------------------------------------------------
Market Value: 962,859 - - -
- -------------------------------------------------------------------------------------------------------------------
Putnam VT Utilities Growth & Income Fund
Shares 134,120
Cost $1,836,083
- -------------------------------------------------------------------------------------------------------------------
Market Value: - 2,298,810 - -
- -------------------------------------------------------------------------------------------------------------------
Putnam VT Vista Fund
Shares 36,520
Cost $407,685
- -------------------------------------------------------------------------------------------------------------------
Market Value: - - 449,928 -
- -------------------------------------------------------------------------------------------------------------------
Putnam VT Voyager Fund
Shares 347,145
Cost $11,091,194
- -------------------------------------------------------------------------------------------------------------------
Market Value: - - - $13,566,417
- -------------------------------------------------------------------------------------------------------------------
Due From ITT Hartford Life & Annuity - 506 - 461
Insurance Company
Receivable from fund shares sold 121 - - -
- -------------------------------------------------------------------------------------------------------------------
Total Assets 962,980 2,299,316 449,928 13,566,878
- -------------------------------------------------------------------------------------------------------------------
LIABILITIES
Due to ITT Hartford Life & Annuity 122 - 2 -
- -------------------------------------------------------------------------------------------------------------------
Insurance Company
- -------------------------------------------------------------------------------------------------------------------
Payable for fund shares purchased - 389 - -
- -------------------------------------------------------------------------------------------------------------------
Total Liabilities 122 389 2 -
- -------------------------------------------------------------------------------------------------------------------
Net Assets (variable life
contract liabilities $962,858 $2,298,927 $449,926 $13,566,878
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)
- -------------------------------------------------------------------------------------------------
December 31, 1997 Units
(unaudited) Owned by Unit Contract
Participants Price Liability
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred life contracts in the accumulation period:
Individual Sub-Accounts:
- -------------------------------------------------------------------------------------------------
Asia Pacific Growth Fund Sub-Account 37,853 $ 9.525374 $ 360,566
- -------------------------------------------------------------------------------------------------
Diversified Income Fund Sub-Account 178,602 13.990371 2,498,707
- -------------------------------------------------------------------------------------------------
Global Asset Allocation Sub-Account 181,430 17.268298 3,132,989
- -------------------------------------------------------------------------------------------------
Global Growth Fund Sub-Account 408,646 15.638791 6,390,730
- -------------------------------------------------------------------------------------------------
Growth and Income Fund Sub-Account 1,192,000 20.554886 24,501,429
- -------------------------------------------------------------------------------------------------
High Yield Fund Sub-Account 220,685 15.261496 3,367,984
- -------------------------------------------------------------------------------------------------
International Growth and Income Fund Sub-Account 30,304 11.941331 361,873
- -------------------------------------------------------------------------------------------------
International Growth Fund Sub-Account 26,538 11.613622 308,202
- -------------------------------------------------------------------------------------------------
International New Opportunities Fund Sub-Account 55,319 9.989509 552,610
- -------------------------------------------------------------------------------------------------
Money Market Fund Sub-Account 3,749,175 1.165458 4,369,507
- -------------------------------------------------------------------------------------------------
New Opportunities Fund Sub-Account 634,437 19.769721 12,542,647
- -------------------------------------------------------------------------------------------------
New Value Fund Sub-Account 74,976 11.759921 881,714
- -------------------------------------------------------------------------------------------------
U.S. Government and High Quality Bond Fund Sub-Account 71,791 13.411936 962,858
- -------------------------------------------------------------------------------------------------
Utilities Growth and Income Fund Sub-Account 119,168 19.291514 2,298,927
- -------------------------------------------------------------------------------------------------
Vista Fund Sub-Account 36,516 12.321288 449,926
- -------------------------------------------------------------------------------------------------
Voyager Fund Sub-Account 670,510 $20.233655 $13,566,878
- -------------------------------------------------------------------------------------------------
GRAND TOTAL: $76,547,547
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
- ---------------------------------------------------------------------------------------------------------------
For the year ended Asia Pacific Diversified Global Asset Global
December 31, 1997 Growth Income Allocation Growth
(unaudited) Fund Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $6,828 $132,930 $69,277 $104,380
- ---------------------------------------------------------------------------------------------------------------
Capital gains income - 20,956 118,411 112,272
- ---------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) on security transactions 132 11,405 1,345 (747)
- ---------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments
during the period (65,164) 14,728 222,497 425,520
- ---------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments (65,032) 26,133 223,842 424,773
- ---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations ($58,204) $180,019 $411,530 $641,425
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
<CAPTION>
STATEMENT OF OPERATIONS
- ----------------------------------------------------------------------------------------------------------------
For the year ended Growth High Yield International International
December 31, 1997 and Income Fund Growth Growth
(unaudited) Fund Sub-Account Fund and Income
Sub-Account Sub-Account Fund
Sub-Account
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $324,482 $165,816 $4,598 $10,865
- ----------------------------------------------------------------------------------------------------------------
Capital gains income 789,799 19,228 - -
- ----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) on security transactions (3,845) 1,555 (3) 145
- ----------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments
during the period 2,878,520 177,334 13,775 13,367
- ----------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 2,874,675 178,889 13,772 13,512
- ----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $3,988,956 $363,933 $18,370 $24,377
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
- ----------------------------------------------------------------------------------------------------------------
For the year ended International Money New New
December 31, 1997 New Market Opportunities Value
(unaudited) Opportunities Fund Fund Fund
Fund Sub-Account Sub-Account Sub-Account
Sub-Account
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $1,554 $263,015 $0 $0
- ----------------------------------------------------------------------------------------------------------------
Capital gains income
- ----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) on security transactions (129) - 24,784 (7,183)
- ----------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments
during the period (31,210) - 2,122,853 83,564
- ----------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments (31,339) - 2,147,637 76,381
- ----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations ($29,785) $263,015 $2,147,637 $76,381
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
<CAPTION>
STATEMENT OF OPERATIONS
- ----------------------------------------------------------------------------------------------------------------
For the year ended U.S. Government Utilities Vista Voyager
December 31, 1997 and High Growth Fund Fund
(unaudited) Quality Bond and Income Sub-Account Sub-Account
Fund Fund
Sub-Account Sub-Account
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $41,593 $50,859 $33 $18,916
- ----------------------------------------------------------------------------------------------------------------
Capital gains income - 69,354 - 407,658
- ----------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
Net realized gain (loss) on security transactions 1,535 2,809 (8,009) 4,822
- ----------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments
during the period 23,755 341,948 42,243 2,153,271
- ----------------------------------------------------------------------------------------------------------------
Net gain (loss) on investments 25,290 344,757 34,234 2,158,093
- ----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $66,883 $464,970 $34,267 $2,584,667
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------
For the year ended Asia Pacific Diversified Global Asset Global
December 31, 1997 Growth Income Allocation Growth
(unaudited) Fund Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $6,828 $132,930 $69,277 $104,380
- ---------------------------------------------------------------------------------------------------------------------------
Capital gains income - 20,956 118,411 112,272
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on security transactions 132 11,405 1,345 (747)
- ---------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments
during the period (65,164) 14,728 222,497 425,520
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (58,204) 180,019 411,530 641,425
- ---------------------------------------------------------------------------------------------------------------------------
UNIT TRANSACTIONS:
Purchases - - - -
- ---------------------------------------------------------------------------------------------------------------------------
Net transfers 79,345 672,116 1,228,080 2,514,584
- ---------------------------------------------------------------------------------------------------------------------------
Surrenders (6,561) (19,125) (73,245) (102,670)
- ---------------------------------------------------------------------------------------------------------------------------
Net loan activity 10 13 (8,703) (72,872)
- ---------------------------------------------------------------------------------------------------------------------------
Cost of insurance (2,368) (18,488) (16,817) (37,044)
- ---------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets resulting from unit 70,426 634,516 1,129,315 2,301,998
- ---------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 12,222 814,535 1,540,845 2,943,423
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 348,344 1,684,172 1,592,144 3,447,307
- ---------------------------------------------------------------------------------------------------------------------------
End of period $360,566 $2,498,707 $3,132,989 $6,390,730
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
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 Growth High Yield International International
December 31, 1997 and Income Fund Growth Growth
(unaudited) Fund Sub-Account Fund and Income
Sub-Account Sub-Account Fund
Sub-Account
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $324,482 $165,816 $4,598 $10,865
- -----------------------------------------------------------------------------------------------------------------------------
Capital gains income 789,799 19,228 - -
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on security transactions (3,845) 1,555 (3) 145
- -----------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments
during the period 2,878,520 177,334 13,775 13,367
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 3,988,956 363,933 18,370 24,377
- -----------------------------------------------------------------------------------------------------------------------------
UNIT TRANSACTIONS:
Purchases - - 1,000 1,000
- -----------------------------------------------------------------------------------------------------------------------------
Net transfers 8,374,826 1,399,456 298,426 346,481
- -----------------------------------------------------------------------------------------------------------------------------
Surrenders (532,447) (72,741) (2,846) (3,498)
- -----------------------------------------------------------------------------------------------------------------------------
Net loan activity (152,771) 3,935 (5,512) (5,432)
- -----------------------------------------------------------------------------------------------------------------------------
Cost of insurance (129,399) (18,397) (1,236) (1,055)
- -----------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets resulting from unit 7,560,209 1,312,253 289,832 337,496
- -----------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 11,549,165 1,676,186 308,202 361,873
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period - 1,691,798 - -
- -----------------------------------------------------------------------------------------------------------------------------
End of period $24,501,429 $3,367,984 $308,202 $361,873
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
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
(unaudited) Fund Fund Fund Fund
Sub-Account Sub-Account Sub-Account Sub-Account
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $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 (decrease) 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)
- ---------------------------------------------------------------------------------------------------------------------------
Net loan activity (19) (30) (1) (4,157)
- ---------------------------------------------------------------------------------------------------------------------------
Cost of insurance (1,348) (5,600) (5,712) (12,445)
- ---------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets resulting from unit 287,784 1,479,154 1,232,025 2,609,226
- ---------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) 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
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
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 Growth High Yield International International
December 31, 1996 and Income Fund Growth Growth
(unaudited) Fund Sub-Account Fund and Income
Sub-Account Sub-Account Fund
Sub-Account
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $190,521 $58,411 - -
- ----------------------------------------------------------------------------------------------------------------------------
Capital gains income 86,385 - - -
- ----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on security transactions (249) 12,566 - -
- ----------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments
during the period 1,193,437 76,806 - -
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 1,470,094 147,783 - -
- ----------------------------------------------------------------------------------------------------------------------------
UNIT TRANSACTIONS:
Purchases 7,606 - - -
- ----------------------------------------------------------------------------------------------------------------------------
Net transfers 9,205,818 1,302,945 - -
- ----------------------------------------------------------------------------------------------------------------------------
Surrenders (177,135) (15,962) - -
- ----------------------------------------------------------------------------------------------------------------------------
Net loan activity (14,121) (382) - -
- ----------------------------------------------------------------------------------------------------------------------------
Cost of insurance (46,206) (7,414) - -
- ----------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets resulting from unit 8,975,962 1,279,187 - -
- ----------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 10,446,056 1,426,970 - -
- ----------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 2,506,208 264,828 - -
- ----------------------------------------------------------------------------------------------------------------------------
End of period $12,952,264 $1,691,798 - -
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------
For the year ended International Money New New
December 31, 1997 New Market Opportunities Value
(unaudited) Opportunities Fund Fund Fund
Fund Sub-Account Sub-Account Sub-Account
Sub-Account
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $1,554 $263,015 $0 $0
- ---------------------------------------------------------------------------------------------------------------------------
Capital gains income - - - -
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on security transactions (129) - 24,784 (7,183)
- ---------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments
during the period (31,210) - 2,122,853 83,564
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (29,785) 263,015 2,147,637 76,381
- ---------------------------------------------------------------------------------------------------------------------------
UNIT TRANSACTIONS:
Purchases 1,000 24,471,594 - 1,000
- ---------------------------------------------------------------------------------------------------------------------------
Net transfers 594,284 (25,898,707) 3,948,752 822,347
- ---------------------------------------------------------------------------------------------------------------------------
Surrenders (6,019) (138,936) (264,042) (9,033)
- ---------------------------------------------------------------------------------------------------------------------------
Net loan activity (4,621) (1,205,487) (71,438) (5,472)
- ---------------------------------------------------------------------------------------------------------------------------
Cost of insurance (2,249) (47,389) (64,510) (3,509)
- ---------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets resulting from unit 582,395 (2,818,925) 3,548,762 805,333
- ---------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 552,610 (2,555,910) 5,696,399 881,714
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period - 6,925,417 6,846,248 -
- ---------------------------------------------------------------------------------------------------------------------------
End of period $552,610 $4,369,507 $12,542,647 $881,714
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
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 U.S. Government Utilities Vista Voyager
December 31, 1997 and High Growth Fund Fund
(unaudited) Quality Bond and Income Sub-Account Sub-Account
Fund Fund
Sub-Account Sub-Account
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $41,593 $50,859 $33 $18,916
- ---------------------------------------------------------------------------------------------------------------------------
Capital gains income - 69,354 - 407,658
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on security transactions 1,535 2,809 (8,009) 4,822
- ---------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments
during the period 23,755 341,948 42,243 2,153,271
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations 66,883 464,970 34,267 2,584,667
- ---------------------------------------------------------------------------------------------------------------------------
UNIT TRANSACTIONS:
Purchases - - 1,000 -
- ---------------------------------------------------------------------------------------------------------------------------
Net transfers 290,877 842,138 425,017 4,061,985
- ---------------------------------------------------------------------------------------------------------------------------
Surrenders (30,658) (45,296) (3,307) (284,657)
- ---------------------------------------------------------------------------------------------------------------------------
Net loan activity 43,121 (11,744) (5,648) (36,310)
- ---------------------------------------------------------------------------------------------------------------------------
Cost of insurance (5,318) (12,723) (1,403) (71,377)
- ---------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets resulting from unit 298,022 772,375 415,659 3,669,641
- ---------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets 364,905 1,237,345 449,926 6,254,308
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 597,953 1,061,582 - 7,312,570
- ---------------------------------------------------------------------------------------------------------------------------
End of period $962,858 $2,298,927 $449,926 $13,566,878
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
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 International Money New New
December 31, 1996 New Market Opportunities Value
(unaudited) Opportunities Fund Fund Fund
Fund Sub-Account Sub-Account Sub-Account
Sub-Account
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) - $208,905 $0 -
- ---------------------------------------------------------------------------------------------------------------------------
Capital gains income - - - -
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on security transactions - - (8,438) -
- ---------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments
during the period - - 80,783 -
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations - 208,905 72,345 -
- ---------------------------------------------------------------------------------------------------------------------------
UNIT TRANSACTIONS:
Purchases - 33,859,102 7,159 -
- ---------------------------------------------------------------------------------------------------------------------------
Net transfers - (28,335,131) 5,351,891 -
- ---------------------------------------------------------------------------------------------------------------------------
Surrenders - (82,757) (120,649) -
- ---------------------------------------------------------------------------------------------------------------------------
Net loan activity - (1,520,254) (1,410) -
- ---------------------------------------------------------------------------------------------------------------------------
Cost of insurance - (45,730) (26,304) -
- ---------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets resulting from unit - 3,875,230 5,210,687 -
- ---------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets - 4,084,135 5,283,032 -
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period - 2,841,282 1,563,216 -
- ---------------------------------------------------------------------------------------------------------------------------
End of period $- $6,925,417 $6,846,248 $-
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
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 U.S. Government Utilities Vista Voyager
December 31, 1996 and High Growth Fund Fund
(unaudited) Quality Bond and Income Sub-Account Sub-Account
Fund Fund
Sub-Account Sub-Account
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $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 perod (6,719) 95,368 - 192,061
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) 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)
- -----------------------------------------------------------------------------------------------------------------------------
Net loan activity (25,381) (1,571) - (209)
- -----------------------------------------------------------------------------------------------------------------------------
Cost of insurance (3,228) (5,397) - (27,501)
- -----------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in net assets resulting from unit 344,168 644,585 - 5,505,295
- -----------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) 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>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE --- ITT HARTFORD LIFE AND
ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(unaudited)
1. ORGANIZATION:
Putnam Capital Manager Trust Separate Account Five (the Account) is a
separate investment account within ITT Hartford Life & Annuity Insurance
Company (the Company) and is registered with the Securities and Exchange
Commission (SEC) as a unit investment trust under the Investment Company
Act of 1940, as amended. Both the Company and the Account are subject to
supervision and regulation by the Department of Insurance of the State of
Connecticut and the SEC. The Account 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.
Dividend 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 investment 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, 1997.
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 REALTED 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.
<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 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>
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 Pacific 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.
<PAGE>
PART II
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The prospectus consisting of pages.
The undertaking to file reports.
The Rule 484 undertaking.
The signatures.
(1) The following exhibits included herewith correspond to those required by
paragraph A of the instructions for exhibits to Form N-8B-2.
(A1) Resolution of Board of Directors of Hartford Life and Annuity
Insurance Company ("Hartford") authorizing the establishment of the
Separate Account. (1)
(A2) Not Applicable.
(A3a) Principal Underwriting Agreement. (2)
(A3b) Forms of Selling Agreements. (2)
(A4) Not Applicable.
(A5) Form of Modified Single Premium Variable Life Insurance Policy. (1)
(A6a) Certificate of Incorporation of Hartford. (3)
(A6b) Bylaws of Hartford. (2)
- --------------------------
(1) Incorporated by reference to Post Effective Amendment No. 2, to the
Registration Statement File No. 33-83652 dated May 1, 1995.
(2) Incorporated by reference to Post Effective Amendment No. 3, to the
Registration Statement File No. 33-83652, dated May 1, 1996.
(3) Incorporated by reference to Post Effective Amendment No. 4, to the
Registration Statement File No. 33-83652, filed on April 14, 1997.
<PAGE>
(A7) Not Applicable.
(A8) Not Applicable.
(A9) Not Applicable.
(A10) Form of Application for Modified Single Premium Variable Life
Insurance Policies. (1)
(A11) Memorandum describing transfer and redemption procedures. (1)
(2) Opinion and Consent of Lynda Godkin, Senior Vice President, General Counsel
and Corporate Secretary.
(3) No financial statement will be omitted from the Prospectus pursuant to
Instruction 1 (b) or (c) of Part I.
(4) Not Applicable.
(5) Opinion and Consent of Michael Winterfield, FSA, MAAA.
(6) Consent of Arthur Andersen LLP, Independent Public Accountants.
(7) Power of attorney. (3)
(8) Not applicable.
<PAGE>
REPRESENTATION OF REASONABLENESS OF FEES
Hartford Life and Annuity Insurance Company ("Hartford") hereby represents
that the aggregate fees and charges under the Policy are reasonable in
relation to the services rendered, the expenses expected to be incurred, and
the risks assumed by Hartford.
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
UNDERTAKINGS AND REPRESENTATIONS AS REQUIRED BY RULE 6E-3(T)
1. Separate Account Five meets the definition of "Separate Account" under Rule
6e-3(T).
2. Hartford undertakes to keep and make available to the Commission upon
request any documents used to support any representation as to the
reasonableness of fees.
UNDERTAKING OF INDEMNIFICATION
Under Section 33-772 of the Connecticut General Statutes, unless limited by
its certificate of incorporation, the Registrant must indemnify a director
who was wholly successful, on the merits or otherwise, in the defense of any
proceeding to which he was a party because he is or was a director of the
corporation against reasonable expenses incurred by him in connection with
the proceeding.
The Registrant may indemnify an individual made a party to a proceeding
because he is or was a director against liability incurred in the proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Registrant, and, with respect to any
criminal proceeding, had no reason to believe his conduct was unlawful. Conn.
Gen. Stat. Section 33-771(a). Additionally, pursuant to Conn. Gen. Stat.
Section 33-776, the Registrant may indemnify officers and employees or agents
for liability incurred and for any expenses to which they become subject by
reason of being or having been an employee or officer of the Registrant.
Connecticut law does not prescribe standards for the indemnification of
officers, employees and agents and expressly states that their
indemnification may be broader than the right of indemnification granted to
directors.
The foregoing statements are specifically made subject to the detailed
provisions of Section 33-770 et seq.
Notwithstanding the fact that Connecticut law obligates the Registrant to
indemnify only a director that was successful on the merits in a suit, under
Article III, Section 1 of the Registrant's bylaws, the Registrant must
indemnify both directors and officers of the Registrant for (1) any claims
and liabilities to which they become subject by reason of being or having
been a director or officer of the company and legal and (2) other expenses
incurred in defending against such claims, in each case, to the extent such
is consistent with statutory provisions.
<PAGE>
Additionally, the directors and officers of Hartford and Hartford Securities
Distribution Company, Inc. ("HSD") are covered under a directors and officers
liability insurance policy issued to The Hartford Financial Services Group,
Inc. and its subsidiaries. Such policy will reimburse the Registrant for any
payments that it shall make to directors and officers pursuant to law and
will, subject to certain exclusions contained in the policy, further pay any
other costs, charges and expenses and settlements and judgments arising from
any proceeding involving any director or officer of the Registrant in his
past or present capacity as such, and for which he may be liable, except as
to any liabilities arising from acts that are deemed to be uninsurable.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
INFORMATION REGARDING CERTAIN SALES LOADS, ADMINISTRATIVE,
MANAGEMENT AND OTHER FEES
Separate Account Five of Hartford Life and Annuity Insurance Company was
established to separate the assets funding the Policies from other assets of
Hartford. In addition to the Policies described in this Prospectus the
Separate Account holds assets of several other Registration Statements. In
1995, the Separate Account received approximately $33,918,567 in policyholder
premiums. In the same year it charged policyholders approximately $273,433 in
sales load, administrative, management and other fees ("Separate Account
Charges"). In 1996 policyholder premium was $102,373,233 with the associated
Separate Account Charges equaled approximately $1,009,339. Year to date 1997
policyholder premium for the entire Separate Account equaled $85,768,272 with
Separate Account Charges for the same time period being $4,177,979
<PAGE>
OFFICERS AND DIRECTORS
The principal underwriter for Hartford Life and Annuity Insurance Company
Separate Account Five is Hartford Securities Distribution Company, Inc. The
following list is of Officers and Directors:
Name and Principal Positions and Offices
Business Address With Underwriter
------------------ -------------------------
Lowndes A. Smith President and Chief Executive Officer, Director
John P. Ginnetti Executive Vice President, Director
Thomas M. Marra Executive Vice President, Director
Peter W. Cummins Senior Vice President
Lynda Godkin Senior Vice President, General Counsel and
Corporate Secretary
Donald E. Waggaman, Jr. Treasurer
George R. Jay Controller
Paul E. Olson Supervising Registered Principal
James Cubanski Assistant Secretary
Stephen T. Joyce Assistant Secretary
Glen J. Kvadus Assistant Secretary
Edward M. Ryan, Jr. Assistant Secretary
Unless otherwise indicated, the principal business address of each of
the above individuals is P.O. Box 2999, Hartford, CT 06104-2999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, and attested, all in the Town of Simsbury, and
State of Connecticut, on the 11th day of February, 1998.
HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY - PUTNAM CAPITAL MANAGER TRUST
SEPARATE ACCOUNT FIVE (Registrant)
By: /s/ Gregory A. Boyko
-----------------------------------
Gregory A. Boyko, Senior Vice President,
Chief Financial Officer and Treasurer,
Director
HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY (Depositor)
By: /s/ Gregory A. Boyko
-----------------------------------
Gregory A. Boyko, Senior Vice President,
Chief Financial Officer and Treasurer,
Director
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons and in the capacities and on
the dates indicated.
Gregory A. Boyko, Senior Vice
President, Chief Financial Officer and
Treasurer, Director*
Lynda Godkin, Senior Vice President
General Counsel and Corporate
Secretary, Director*
Thomas M. Marra, Executive Vice *By: /s/ Lynda Godkin
President and Director, Individual ------------------
Life and Annuity Division, Director* Lynda Godkin
Lowndes A. Smith, President and Attorney-In-Fact
Chief Executive Officer,
Director* Dated: February 11, 1998
<PAGE>
EXHIBIT INDEX
(2) Opinion and Consent of Lynda Godkin, Senior Vice President, General
Counsel and Corporate Secretary.
(5) Opinion and Consent of Michael Winterfield, FSA, MAAA.
(6) Consent of Arthur Andersen LLP, Independent Public Accountants.
<PAGE>
[LOGO]
HARTFORD LIFE
February 11, 1998 LYNDA GODKIN
Senior Vice President, General
Counsel & Corporate Secretary
Law Department
Board of Directors
Hartford Life and Annuity Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
RE: SEPARATE ACCOUNT FIVE
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
FILE NO. 333-36367
Dear Sir/Madam:
I have acted as General Counsel to Hartford Life and Annuity Insurance
Company (the "Company"), a Connecticut insurance company, and Hartford Life
and Annuity Insurance Company Separate Account Five (the "Account") in
connection with the registration of an indefinite amount of securities in the
form of modified single premium variable life insurance contracts (the
"Contracts") with the Securities and Exchange Commission under the Securities
Act of 1933, as amended. I have examined such documents (including the Form
S-6 Registration Statement) and reviewed such questions of law as I
considered necessary and appropriate, and on the basis of such examination
and review, it is my opinion that:
1. The Company is a corporation duly organized and validly existing as a stock
life insurance company under the laws of the State of Connecticut and is
duly authorized by the Insurance Department of the State of Connecticut to
issue the Contracts.
2. The Account is a duly authorized and validly existing separate account
established pursuant to the provisions of Section 38a-433 of the
Connecticut Statutes.
3. To the extent so provided under the Contracts, that portion of the assets
of the Account equal to the reserves and other contract liabilities with
respect to the Account will not be chargeable with liabilities arising out
of any other business that the Company may conduct.
Hartford Life Inc.
200 Hopmeadow Street
Simsbury, CT 06089
860 843 3153
860 843 8665 Fax
Mailing Address: P.O. Box 2999
Hartford, CT 06104-2999
<PAGE>
Board of Directors
Hartford Life and Annuity Insurance Company
February 11, 1998
Page 2
4. The Contracts, when issued as contemplated by the Form S-6 Registration
Statement, will constitute legal, validly issued and binding obligations
of the Company.
I hereby consent to the filing of this opinion as an exhibit to the Form S-6
Registration Statement for the Contracts and the Account.
Sincerely,
/s/ Lynda Godkin
Lynda Godkin
<PAGE>
[LOGO]
HARTFORD
MICHAEL R. WINTERFIELD, FSA, MAAA 200 Hopmeadow Street
Assistant Vice President Simsbury, CT 06089
Individual Annuity Product Management Mailing Address:
P.O. Box 2999
Hartford, CT 06104-2999
Telephone (860) 843-5480
February 11, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir:
This opinion is furnished in connection with the Form S-6 Registration
Statement under the Securities Act of 1933, as amended ("Securities Act"), of
a certain modified single premium variable life insurance policy (the
"Policy") that will be offered and sold by Hartford Life and Annuity
Insurance Company and certain units of interest to be issued in connection
with the Policy.
The hypothetical illustrations of the Policy used in the Form S-6
Registration Statement accurately reflect reasonable estimates of projected
performance of the Policy under the stipulated rates of investment return,
the contractual expense deductions and guaranteed cost-of-insurance rates,
and utilizes a reasonable estimation for expected fund operating expenses.
I hereby consent to the use of this opinion as an exhibit to the Form S-6
Registration Statement and to the reference to my name under the heading
"Experts" in the Prospectus included as a part of such Form S-6 Registration
Statement.
Very truly yours,
/s/ Michael Winterfield
Michael Winterfield, FSA, MAAA
Director Individual Annuity Product Management
<PAGE>
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of
this Registration Statement File No. 333-36367 for Hartford Life and Annuity
Insurance Company (formerly known as ITT Hartford Life and Annuity Insurance
Company) Separate Account Five on Form S-6.
/s/ Arthur Andersen LLP
Hartford, Connecticut
February 9, 1998
