<PAGE>
As filed with the Securities and Exchange Commission on April 14, 1999.
File No. 33-83652
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 6 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
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
---------
X on May 3, 1999 pursuant to paragraph (b) of Rule 485
---------
60 days after filing pursuant to paragraph (a)(1) of Rule 485
---------
on __________, 1999 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 has registered an
indefinite amount of securities.
F. Proposed maximum aggregate offering price to the public of the securities
being registered: Not yet determined.
G. Amount of filing fee: Not applicable.
H. Approximate date of proposed public offering: As soon as practicable after
the effective date of this registration statement.
<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. Statement of Additional Information -
Distribution of the Policies
5. About Us - Separate Account Five
6. About Us - Separate Account Five
7. Not required by Form S-6
8. Not required by Form S-6
9. Legal Proceedings
10. About Us - Separate Account Five; The
Funds
11. About Us - Separate Account Five; The
Funds
12. About Us - The Funds
13. Fee Table; Charges and Deductions
14. Premiums
15. Premiums
16. Premiums
17. Making Withdrawals From Your Policy
18. About Us - The Funds; Charges and
Deductions
19. Your Policy - Policy Rights
20. Not Applicable
21. Loans
22. Not Applicable
23. Not Applicable
24. Not Applicable
25. About Us - Hartford Life and Annuity
Insurance Company
26. Not Applicable
27. About Us - Hartford Life and Annuity
Insurance Company
28. Statement of Additional Information -
General Information and History
29. About Us - Hartford Life Insurance and
Annuity Company
30. Not Applicable
31. Not Applicable
<PAGE>
Item No. of Form N-8B-2 Caption In Prospectus
----------------------- ---------------------
32. Not Applicable
33. Not Applicable
34. Not Applicable
35. Statement of Additional Information -
Distribution of the Policies
36. Not required by Form S-6
37. Not Applicable
38. Statement of Additional Information -
Distribution of the Policies
39. Statement of Additional Information -
Distribution of the Policies
40. Not Applicable
41. Statement of Additional Information -
Distribution of the Policies
42. Not Applicable
43. Not Applicable
44. Premiums
45. Not Applicable
46. Premiums; Making Withdrawals From Your
Policy
47. About Us - The Funds
48. Cover Page; About Us - Hartford Life
and Annuity Insurance Company
49. Not Applicable
50. About Us - Separate Account Five
51. Not Applicable
52. About Us - The Funds
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 A
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
PUTNAM CAPITAL MANAGER VARIABLE LIFE
MODIFIED SINGLE PREMIUM
VARIABLE LIFE INSURANCE POLICIES
P.O. Box 2999
Hartford, Connecticut 06104-2999
Telephone: 1-800-231-5453
- --------------------------------------------------------------------------------
This Prospectus describes information you should know before you purchase Putnam
Capital Manager Variable Life. Please read it carefully.
Putnam Capital Manager Variable Life is a modified single premium variable life
insurance policy. It is:
X Modified single premium, because you make one single premium payment, and
under certain limited circumstances, you may make additional premium payments.
X Variable, because the value of your life insurance policy will fluctuate with
the performance of the underlying funds.
At purchase, you allocate your payments to "Sub-Accounts" or subdivisions of our
Separate Account, an account that keeps your life insurance policy assets
separate from our company assets. These Sub-Accounts then purchase shares of
mutual funds set up exclusively for variable annuity or variable life insurance
products. These funds are not the same mutual funds that you buy through your
stockbroker or through a retail mutual fund. They may have similar investment
strategies and the same portfolio managers as retail mutual funds. This life
insurance policy offers you funds with investment strategies ranging from
conservative to aggressive and you may pick those funds that meet your
investment style.
The following Sub-Accounts are available under the Policy:
- - Putnam Asia Pacific Growth Sub-Account which purchases Class IA shares of
Putnam VT Asia Pacific Growth Fund of Putnam Variable Trust
- - Putnam Diversified Income Sub-Account which purchases Class IA shares of
Putnam VT Diversified Income Fund of Putnam Variable Trust
- - Putnam The George Putnam Fund of Boston Sub-Account which purchases Class IA
shares of Putnam VT The George Putnam Fund of Boston of Putnam Variable Trust
- - Putnam Global Asset Allocation Sub-Account which purchases Class IA shares of
of Putnam VT Global Asset Allocation Fund of Putnam Variable Trust
- - Putnam Global Growth Sub-Account which purchases Class IA shares of Putnam VT
Global Growth Fund of Putnam Variable Trust
- - Putnam Growth and Income Sub-Account which purchases Class IA shares of Putnam
VT Growth and Income Fund of Putnam Variable Trust
- - Putnam Health Sciences Sub-Account which purchases Class IA shares of Putnam
VT Health Sciences Fund of Putnam Variable Trust
- - Putnam High Yield Sub-Account which purchases Class IA shares of Putnam VT
High Yield Fund of Putnam Variable Trust
- - Putnam Income Sub-Account (formerly Putnam U.S. Government and High Quality
Bond Sub-Account) which purchases Class IA shares of Putnam VT Income Fund
(formerly Putnam VT U.S. Government and High Quality Bond Fund) of Putnam
Variable Trust
- - Putnam International Growth Sub-Account which purchases Class IA shares of
Putnam VT International Growth Fund of Putnam Variable Trust
- - Putnam International Growth and Income Sub-Account which purchases Class IA
shares of Putnam VT International Growth and Income Fund of Putnam Variable
Trust
- - Putnam International New Opportunities Sub-Account which purchases Class IA
shares of Putnam VT International New Opportunities Fund of Putnam Variable
Trust
1 - PROSPECTUS
<PAGE>
- - Putnam Investors Sub-Account which purchases Class IA shares of Putnam VT
Investors Fund of Putnam Variable Trust
- - Putnam Money Market Sub-Account which purchases Class IA shares of Putnam VT
Money Market Fund of Putnam Variable Trust
- - Putnam New Opportunities Sub-Account which purchases Class IA shares of Putnam
VT New Opportunities Fund of Putnam Variable Trust
- - Putnam New Value Sub-Account which purchases Class IA shares of Putnam VT New
Value Fund of Putnam Variable Trust
- - Putnam OTC & Emerging Growth Sub-Account which purchases Class IA shares of
Putnam VT OTC & Emerging Growth Fund of Putnam Variable Trust
- - Putnam Research Sub-Account which purchases Class IA shares of Putnam VT
Research Fund of Putnam Variable Trust
- - Putnam Utilities Growth and Income Sub-Account which purchases Class IA shares
of Putnam VT Utilities Growth and Income Fund of Putnam Variable Trust
- - Putnam Vista Sub-Account which purchases Class IA shares of Putnam VT Vista
Fund of Putnam Variable Trust
- - Putnam Voyager Sub-Account which purchases Class IA shares of Putnam VT
Voyager Fund of Putnam Variable Trust
If you decide to buy this life insurance policy, you should keep this prospectus
for your records. Although we file the Prospectus with the Securities and
Exchange Commission, the Commission doesn't approve or disapprove these
securities or determine if the information is truthful or complete. Anyone who
represents that the Securities and Exchange Commission ("SEC") does these things
may be guilty of a criminal offense.
You can call us at 1-800-231-5453 to ask us questions, or to get a Statement of
Additional Information, free of charge. The Statement of Additional Information
contains more information about this life insurance policy and, like this
prospectus, is filed with the Securities and Exchange Commission.
We file other information with the Securities and Exchange Commission. You may
read and copy any document we file at the SEC's public reference room in
Washington, DC 20549-6009. Please call the SEC at 1-800-SEC-0330 for further
information. Our SEC filings, including this prospectus, are also available to
the public at the SEC's web site at http://www.sec.gov.
This life insurance policy IS NOT:
- - a bank deposit or obligation
- - federally insured
- - endorsed by any bank or governmental agency
- - available for sale in all states
Prospectus Dated: May 3, 1999
2 - PROSPECTUS
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
Page
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<S> <C>
Summary of Benefits and Risks 4
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Fee Table 5
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About Us 7
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Hartford Life and Annuity Insurance Company 7
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Separate Account Five 7
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The Funds 7
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Charges and Deductions 9
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Your Policy 11
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Premiums 12
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<CAPTION>
Page
<S> <C>
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Death Benefits and Policy Values 14
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Making Withdrawals From Your Policy 15
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Loans 16
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Lapse and Reinstatement 17
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Federal Tax Considerations 17
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Legal Proceedings 20
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Other Matters 21
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Glossary of Special Terms 23
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</TABLE>
3 - PROSPECTUS
<PAGE>
SUMMARY OF BENEFITS AND RISKS
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BENEFITS OF YOUR POLICY
FLEXIBILITY -- The policy is designed to be flexible to meet your specific life
insurance needs. You have the flexibility to choose your premium payment,
settlement options and investment options.
RIGHT TO EXAMINE -- For a limited time, usually 10 days after you receive your
life insurance policy, you may cancel it without paying a surrender charge. A
longer period maybe provided in certain states.
CASH VALUES -- Your policy has a cash value. The value of your policy will
fluctuate with the performance of the underlying funds.
DEATH BENEFIT -- You designate a beneficiary who will receive the Death Benefit
if you die while the policy is in force. The policy pays a minimum Death
Benefit, called the "Face Amount." The actual Death Benefit may be larger than
the Face Amount if the underlying funds of the policy perform well.
INVESTMENT OPTIONS -- Your policy offers a choice of investment options. You may
transfer money among your investment options, subject to the restrictions
described in this prospectus and the funds' prospectuses.
SURRENDERS -- At any time, you may surrender all or part of your policy. Each
year you may surrender the greater of up to 10% of your premium payments or 100%
of your Account Value minus premiums paid without being charged a surrender
charge. (See "Risks of Your Policy" below)
LOANS -- You can take a loan on the policy. Your policy provides for two types
of cash loans. Your policy secures the loans. Loans may not exceed 90% of the
policy's cash value.
SETTLEMENT OPTIONS -- You may choose to receive surrender or death benefit
proceeds over a period of time by using one of our settlement options.
WHAT DOES YOUR PREMIUM PAYMENT PAY FOR?
Your premium payment pays for insurance coverage, it acts as an investment in
the Sub-Accounts, and it pays for sales charges, premium taxes and
administrative fees.
RISKS OF YOUR POLICY
INVESTMENT PERFORMANCE -- The value of your policy will fluctuate with the
performance of its underlying funds. Your investment options may decline in
value, or they may not perform to your expectations. Your policy values in the
Sub-Accounts are not guaranteed.
UNSUITABLE FOR SHORT-TERM SAVINGS -- The policy is designed for long term
financial planning. You should not purchase the policy if you will need your
premium payment in a short time.
RISK OF LAPSE -- Your policy could terminate if the value of the policy becomes
so low that it cannot support the policy's monthly charges and fees. If this
occurs, we will notify you in writing. You will then have a 61-day grace period
to pay additional amounts to prevent the policy from terminating.
LOANS -- Taking a loan from your policy may increase the risk that your policy
will teminate, may have a permanent effect on the policy's Account Value, and
may reduce the death benefit proceeds.
SURRENDER AND PARTIAL SURRENDERS -- You may have to pay tax on the money you
take out and, if you take money out before you are 59 1/2 you may have to pay a
federal income tax penalty.
TRANSFER LIMITATIONS -- We reserve the right to limit the size of transfers and
to limit the number and frequency of transfers among your investment options.
ADVERSE TAX CONSEQUENCES -- Under current tax law, your Beneficiaries will
receive the Death Benefit free of federal income tax. However, you may be
required to pay federal income tax if you receive any loans, surrenders or other
amounts from the policy, and you may also be subject to a 10% federal income
penalty tax if you take money out prior to age 59 1/2.
4 - PROSPECTUS
<PAGE>
FEE TABLE
-------------------------------------------------------------------
The following tables describes the MAXIMUM fees and expenses that you will pay
when buying, owning, and surrendering the policy. The first table describes the
maximum fees and expenses that you will pay at the time that you surrender the
policy.
SURRENDER FEES
<TABLE>
<CAPTION>
Policies from Which Charge is
Charge When Charge is Deducted Amount Deducted Deducted
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
Surrender Charges When you fully or partially A percentage of the amount All, if the surrender is
surrender your policy. surrendered, not to exceed the subject to a charge.
premium payments, depending on
the Policy Year, in which the
premium payment was made.
The percentage is as follows:
Policy Year Percentage
--------------- ---------------
1 7.5%
2 7.5%
3 7.5%
4 6%
5 6%
6 4%
7 4%
8 2%
9 2%
10+ 0%
- ----------------------------------------------------------------------------------------------------------------------
Unamortized Tax Upon surrender or partial A percentage of the Account All
Charge surrender of the policy. Value depending on the Policy
Year the surrender takes place.
The percentage is as follows:
Policy Year Percentage
--------------- ---------------
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>
5 - PROSPECTUS
<PAGE>
The next table describes the MAXIMUM fees and expenses that you will pay
periodically during the time that you own the policy, not including Fund fees
and expenses.
ANNUAL CHARGES OTHER THAN FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
Policies from Which Charge is
Charge When Charge is Deducted Amount Deducted Deducted
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Cost of Insurance Monthly. Individualized depending on age, All
Charges sex and other factors.
- ----------------------------------------------------------------------------------------------------------------------------
Mortality and Monthly. .90% (annualized) of Sub-Account All
Expense Risk Charge Value
- ----------------------------------------------------------------------------------------------------------------------------
Tax Expense Charge Monthly. .40% (annualized) of Account All
Value for Policy Years 1-10
- ----------------------------------------------------------------------------------------------------------------------------
Annual Maintenance On Policy Anniversary Date or $30.00 Only policies with an Account
Fee upon surrender of the policy. Value of less than $50,000 on
the Policy Anniversary Date or
date of surrender.
- ----------------------------------------------------------------------------------------------------------------------------
Administrative Monthly. .40% (annualized) of Sub-Account All
Charge Value
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The next table describes the Fund fees and expenses that you will pay
periodically during the time that you own the policy. The table shows the
minimum and maximum fees and expenses charged by any of the Funds. More detail
concerning each Fund's fees and expenses is contained in the prospectus for each
Fund.
ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
Policies from Which Charge is
Charge When Charge is Deducted Amount Deducted (annualized) Deducted
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Management Fees Daily net asset values of a Fund 0.450% - 1.200% All policies, but deductions
reflect Management Fees already only from underlying Funds
deducted from assets of the selected by you.
Fund.
- ----------------------------------------------------------------------------------------------------------------------------
Other Expenses Daily net asset values of a Fund 0.040% - 0.480% All policies, but deductions
reflect Other Expenses already only from underlying Funds
deducted from the assets of the selected by you.
Fund.
- ----------------------------------------------------------------------------------------------------------------------------
Total Fund Annual Daily net asset values of a Fund 0.500% - 1.620% All policies, but deductions
Expenses reflect Total Fund Annual only from underlying Funds
Operating Expenses already selected by you.
deducted from assets of the
Fund.
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
6 - PROSPECTUS
<PAGE>
ABOUT US
-------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
Hartford Life and Annuity Insurance Company 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, the District of Columbia and
Puerto Rico, 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. We were originally incorporated under the laws of Wisconsin
on January 9, 1956, and subsequently redomiciled to Connecticut. Our offices are
located in Simsbury, Connecticut; however, our mailing address is P.O. Box 2999,
Hartford, CT 06104-2999. We are ultimately controlled by The Hartford Financial
Services Group, Inc., one of the largest financial service providers in the
United States.
HARTFORD'S RATINGS
<TABLE>
<CAPTION>
Effective
Date of
Rating Agency Rating Rating Basis of Rating
<S> <C> <C> <C>
- -------------------------------------------------------------------
A.M. Best and Financial
Company, Inc. 1/1/99 A+ performance
- -------------------------------------------------------------------
Standard & Insurer financial
Poor's 6/1/98 AA strength
- -------------------------------------------------------------------
Claims paying
Duff & Phelps 12/21/98 AA+ ability
- -------------------------------------------------------------------
</TABLE>
SEPARATE ACCOUNT FIVE
The Sub-Accounts are subdivisions of our separate account, called Separate
Account Five. The Separate Account was established to keep your life insurance
policy assets separate from our company assets. The investment performance of
the Separate Account is independent from the investment performance of
Hartford's other assets. Hartford's other assets are utilized to pay our
insurance obligations under the policy. Your assets in the Separate Account are
held exclusively for your benefit and the benefit of other policy owners and may
not be used for any other liability of Hartford. Separate Account Five was
established on August 17, 1994 under the laws of Connecticut.
THE FUNDS
The Sub-Accounts purchase shares of Putnam Variable Trust, an open-end series
investment company with multiple portfolios ("Funds"). Putnam Investment
Management, Inc. ("Putnam Management") serves as the investment manager for the
Funds. Putnam Management is ultimately controlled by Marsh & McLennan Companies,
Inc., a publicly owned holding company whose principal businesses are
international insurance brokerage and employee benefit consulting.
We do not guarantee the investment results of any of the underlying Funds. Since
each underlying Fund has different investment objectives, each is subject to
different risks. These risks and the Funds' expenses are more fully described in
the accompanying prospectus for the Funds, and the Statement of Additional
Information, which may be ordered from us. The Funds' prospectus should be read
in conjunction with this Prospectus before investing.
The Funds may not be available in all states.
The investment goals of each of the Funds are as follows:
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.
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 and Investment Grade Sector, a High
Yield Sector (which invests primarily in securities commonly known as "junk
bonds"), and an International Sector. See the special considerations for
investments in high yield securities described in the Fund prospectus.
PUTNAM VT THE GEORGE PUTNAM FUND OF BOSTON Seeks to provide a balanced
investment composed of a well-diversified portfolio of stocks and bonds which
will produce both capital growth and current income.
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 HEALTH SCIENCES FUND Seeks capital appreciation by investing primarily
in common stocks and other securities of companies in the health sciences
industries.
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 INCOME FUND (formerly Putnam VT U.S. Government and High Quality Bond
Fund) Seeks high current income consistent with what Putnam Management
7 - PROSPECTUS
<PAGE>
believes to be prudent risk. The Fund will normally invest mostly in bonds and
other debt securities, and, to a lesser degree, in preferred stocks.
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 of high current income by investing primarily in common
stocks that Putnam Management believes offer potential for capital growth and
may, when consistent with its investment objectives, invest in common stocks
that Putnam Management believes 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 INVESTORS FUND Seeks long-term growth of capital and any increased
income that results from this growth by investing primarily in common stocks
that Putnam Management believes afford the best opportunity for capital growth
over the long term.
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 OTC & EMERGING GROWTH FUND Seeks capital appreciation by investing
primarily in common stocks that Putnam Management believes have potential for
capital appreciation significantly greater than that of market averages.
PUTNAM VT RESEARCH FUND Seeks capital appreciation. The fund is not intended to
be a complete investment program, and there is no assurance it will achieve its
objective.
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.
The Funds 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 Putnam funds may, however, employ different
investment practices and may invest in securities different from those in which
their counterpart Funds invest, and consequently will not have identical
portfolios or experience identical investment results.
Subject to the general oversight of the Trustees of Putnam Variable Trust,
Putnam Management manages the Funds' portfolios in accordance with their stated
investment objectives and policies, makes investment decisions for the Funds,
places orders to purchase and sell securities on behalf of the Funds, and
administers the affairs of the Funds. For its services, the Funds pay Putnam
Management a quarterly fee. See the accompanying Funds prospectus for a more
complete description of Putnam Management and the respective fees of the Funds.
MIXED AND SHARED FUNDING -- Shares of the Funds may be sold to our other
separate accounts and our insurance company affiliates or other unaffiliated
insurance companies to serve as the underlying investment for both variable
annuity contracts and variable life insurance policies, a practice known as
"mixed and shared funding." As a result, there is a possibility that a material
conflict may arise between the interests of policy owners, owners of other
policies or owners of variable annuity contracts with values allocated to one or
more of these other separate accounts investing in any one of the Funds. In the
event of any such material conflicts, we will consider what action may be
appropriate, including removing the Fund from the Separate Account or replacing
the Fund with another underlying fund. There are certain risks associated with
mixed and shared funding, as disclosed in the Funds' prospectus.
8 - PROSPECTUS
<PAGE>
VOTING RIGHTS -- We are the legal owners of all Fund shares held in the Separate
Account and we have the right to vote at the Fund's shareholder meetings. To the
extent required by federal securities laws or regulations, we will:
- - Notify you of any Fund shareholders' meeting if the shares held for your
policy may be voted.
- - Send proxy materials and a form of instructions that you can use to tell us
how to vote the Fund shares held for your policy.
- - Arrange for the handling and tallying of proxies received from policy owners.
- - Vote all Fund shares attributable to your policy according to instructions
received from you, and
- - Vote all Fund shares for which no voting instructions are received in the same
proportion as shares for which instructions have been received.
If any federal securities laws or regulations, or their present interpretation,
change to permit us to vote Fund shares on our own, we may decide to do so. You
may attend any Shareholder Meeting at which shares held for your policy may be
voted. After we begin to make annuity payouts to you, the number of votes you
have will decrease.
CHARGES AND DEDUCTIONS
-------------------------------------------------------------------
The deductions 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.
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 so 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
"Lapse and Reinstatement".
The deductions and charges associated with your policy are listed below.
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. The current cost
of insurance charge will not exceed the guaranteed cost of insurance charge. The
guaranteed cost of insurance charge is a guaranteed maximum monthly rate,
multiplied by the Coverage Amount on the Policy Date or any Monthly Activity
Date. A table of guaranteed maximum 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. For standard risks, the guaranteed maximum cost
of insurance rate is 100% of the 1980 Commissioner's Standard Ordinary
Unismoker, Sex Distinct Age Last Birthday Mortality Table (1980 CSO Table).
Substandard risks will be assessed a higher guaranteed maximum cost of insurance
rate that will not exceed rates based on a multiple of the 1980 CSO Table. The
multiple will be based on the insured's substandard rating. Unisex rates may be
required in some states.
Your Coverage Amount is first set on the date we issue your policy and then on
each Monthly Activity Date. The Coverage Amount is the Face Amount minus the
Account Value. There is a Minimum Coverage Amount. It is a stated percentage of
the Account Value of the policy determined on each Monthly Activity Date. The
percentages vary according to the attained age of the Insured.
EXAMPLE:
Face Amount = $100,000
Account Value on the Monthly Activity Date = $30,000
Insured's attained age = 40
Minimum Coverage Amount percentage for age 40 = 150%
On the Monthly Activity Date, the Coverage Amount is $70,000. This is calculated
by subtracting the Account Value on the Monthly Activity Date ($30,000) from the
Face Amount ($100,000), subject to a possible Minimum Coverage Amount
adjustment. This Minimum Coverage Amount is determined by taking a percentage of
the Account Value on the Monthly Activity Date. In this case, the Minimum
Coverage Amount is $45,000 (150% of $30,000). Since $45,000 is less than the
Face Amount less the Account Value ($70,000), no adjustment is necessary.
Therefore, the Coverage Amount will be $70,000.
9 - PROSPECTUS
<PAGE>
Assume that the Account Value in the above example was $50,000. The Minimum
Coverage Amount would be $75,000 (150% of $50,000). Since this is greater than
the Face Amount less the Account Value ($50,000), the Coverage Amount for the
Policy Month is $75,000. (For an explanation of the Death Benefit, see "Death
Benefit and Policy Values".)
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.
MORTALITY AND EXPENSE RISK CHARGE: For assuming mortality and expense risks
under the policy, we deduct monthly from Sub-Account Value a charge equal to an
annual rate of 0.90%. The mortality and expense risk charge is broken into
charges for mortality risks and for expense risks:
MORTALITY RISK -- The mortality risk we assume is that the cost of insurance
charges specified in the policy will be insufficient to pay claims. We also
assume a risk that the Death Proceeds will exceed: (1) the Coverage Amount on
the date of death; and (2) your policy's Account Value on the date we receive
written notice of death.
EXPENSE RISK -- The expense risk we assume is that expenses we incur in issuing
and administering your policy will exceed the administrative charges.
We may profit from the mortality and expense risk charge and may use any profits
for any proper purpose, including any difference between the cost we incur 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 settlement option.
TAX EXPENSE CHARGE: During the first ten years of your policy, we deduct a
monthly charge equal to an annual rate of 0.40% from your Account Value. This
tax expense charge compensates us for certain expenses including:
(1) Premium taxes imposed by various states and local jurisdictions.
A premium tax deduction of 0.25% of the Account Value is deducted over ten
Policy Years and approximates our 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, we do not expect to make
a profit from this deduction.
(2) The cost of the capitalization of certain policy acquisition expenses under
Section 848 of the Internal Revenue Code.
During your first ten Policy Years, we deduct a charge of 0.15% of Account
Value. This charge helps reimburse us for the approximate expenses we incur from
federal taxes we pay under Section 848 of the Internal Revenue Code.
UNAMORTIZED TAX CHARGE: During the first nine Policy Years, an Unamortized Tax
charge is imposed on surrender or partial surrenders. The Unamortized Tax charge
is shown below, as a percentage of amount surrendered, during 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.
ANNUAL MAINTENANCE FEE -- The annual maintenance fee is a flat fee that is
deducted from your Account Value to reimburse us for expenses relating to the
maintenance of the policy. The annual $30 charge is deducted on a Policy
Anniversary or when the policy is fully surrendered if the Account Value at
either of those times is less than $50,000. We reserve the right to waive the
annual maintenance fee under other conditions.
ADMINISTRATIVE CHARGE -- We will deduct a monthly administrative charge from
Sub-Account Value equal to an annual rate of 0.40%. This charge compensates us
for expenses incurred in the administration of the Separate Account and the
policy.
SURRENDER CHARGE -- We may charge you a Surrender Charge when you surrender
amounts invested in your policy. We assess a Surrender Charge on amounts
surrendered in any Policy Year that exceed the greater of 10% of the premiums
you have paid into your policy or 100% of your Account Value minus premiums
paid. If the amount you paid has been in your policy:
X For less than three years, the charge is 7.5%.
X For more than three years and less than five years, the charge is 6%.
X For more than five years and less than seven years, the charge is 4%.
X For more than seven years and less than nine years, the charge is 2%.
10 - PROSPECTUS
<PAGE>
X For more than nine years, the charge is 0%.
In determining the Surrender Charge, any surrender or partial surrender during
the first ten Policy Years will first come from premiums paid and then from
earnings. If an amount equal to all premiums paid has been withdrawn, no
Surrender Charge will be assessed on the remaining Account Value.
The Surrender Charge is imposed to cover a portion of the sales expense incurred
by us in distributing the Policies. This expense includes commissions,
advertising and the printing of prospectuses.
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.
YOUR POLICY
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POLICY RIGHTS
POLICY OWNER, OR "YOU" -- As long as your policy is in force, you may exercise
all rights under the policy while the Insured is alive and a beneficiary has not
been irrevocably named.
BENEFICIARY -- You name the beneficiary in the application for the policy. You
may change the beneficiary (unless irrevocably named) during the Insured's
lifetime by written request to us. 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
You may assign your policy as collateral for a loan or other obligation. Until
you notify us in writing, we are not responsible for any payment made or action
taken. We are not responsible for the validity of any assignment.
STATEMENTS TO POLICY OWNERS -- We will send you a statement at least once each
year, showing:
(a) the current Account Value, Cash Surrender Value and Face Amount;
(b) the premiums paid, monthly deduction amounts and any loans since your last
statement;
(c) the amount of any Indebtedness;
(d) any notifications required by the provisions of your policy; and
(e) any other information required by the Insurance Department of the state
where your policy was delivered.
LIMIT ON RIGHT TO CONTEST -- During the Insured's lifetime, we may not contest
the validity of the policy after it has been in force for two years from date we
issue the policy. 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 within two years from the date we issue
the policy, or such period as specified in state law, the benefit payable will
be limited to the Account Value minus 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.
POLICY LIMITATIONS
DIVIDENDS -- No dividends will be paid under the policy.
TRANSFERS OF ACCOUNT VALUE -- While the policy remains in force, and subject to
our transfer rules then in effect, you may request that part or all of the
Account Value of a particular Sub-Account be transferred to other Sub-Accounts.
We reserve the right to restrict the number of these 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 us toll free
1-800-231-5453. Transfers by telephone may be made by the agent of record or by
an attorney-in-fact pursuant to a power of attorney. Telephone transfers may not
be permitted in some states. Hartford, its agents or affiliates will not be
responsible for losses resulting from acting upon telephone requests reasonably
believed to be genuine. We will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. The procedures we follow for
transactions initiated by telephone include requirements that callers provide
certain information for identification purposes. All transfer instructions
received by telephone are tape-recorded. We will send you a confirmation of the
transfer within five days from the date of any transfer.
11 - PROSPECTUS
<PAGE>
It is your responsibility to verify the accuracy of all confirmations and to
promptly advise us of any inaccuracies within 30 days of receipt.
CHANGES TO POLICY OR SEPARATE ACCOUNT
SUBSTITUTIONS, ADDITIONS, OR DELETIONS OF FUNDS -- We reserve the right, subject
to any applicable law, to make certain changes to the Funds offered under your
policy. We may, in our sole discretion, establish new Funds. New Funds will be
will be made available to existing policyholders as we determine appropriate. We
may also close one or more Funds to additional payments or transfers from
existing Sub-Accounts.
We reserve the right to eliminate the shares of any of the Funds for any reason
and to substitute shares of another registered investment company for the shares
of any Fund already purchased or to be purchased in the future by the Separate
Account. To the extent required by the Investment Company Act of 1940 (the "1940
Act"), substitutions of shares attributable to your interest in a Fund will not
be made until we have the approval of the Commission and we have notified you of
the change.
In the event of any change, we may, by appropriate endorsement, make any changes
in the policy necessary or appropriate to reflect the modification. If we decide
that it is in the best interest contracts owners, the Separate Account may be
operated as a management company under the 1940 Act or any other form permitted
by law, may be de-registered under the 1940 Act in the event such registration
is no longer required, or may be combined with one or more other Separate
Accounts.
SEPARATE ACCOUNT TAXES -- Currently, there is no charge for federal income taxes
that may be attributable to the Separate Account. However, we reserve the right
to make such a charge in the future. Charges for other taxes, if any,
attributable to the Separate Account may also be made.
OTHER BENEFITS OF YOUR POLICY
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 policy 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 "Statement of
Additional Information."
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. The younger Insured's attained age is used to calculate the Minimum Death
Benefit to ensure that the policy continues to qualify as life insurance.
6. Additional tax disclosures applicable to last survivor policies are provided
in "Federal Tax Considerations."
PREMIUMS
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APPLICATION FOR A POLICY -- To purchase a policy you must submit an application
to us. A policy will be issued only on the lives of Insureds age 90 and under
who supply evidence of insurability satisfactory to us. Acceptance is subject to
our underwriting rules and we reserve the right to reject an application for any
reason. If your application for a policy is rejected, then your initial premium
payment will be returned along with an additional amount for interest, based on
the current rate being credited by us. Other than those described in this
prospectus, no change in the terms or conditions of a policy will be made
without your consent. Generally, the minimum initial premium we accept is
$10,000. We may accept less than $10,000 under certain circumstances.
Your policy is effective after we receive all outstanding delivery requirements
and receive your initial premium. The date your policy becomes effective is
called the Policy Date. This date is the date used to determine all future
cyclical transactions on your policy. The Policy Date may be prior to, or the
same as, the date your policy is issued ("Issue Date").
If your Coverage Amount is over then current limits established by us, we will
not accept your initial premium
12 - PROSPECTUS
<PAGE>
payment with your application. In other cases where we receive the initial
payment with the application, we will provide fixed conditional insurance during
underwriting according to the terms of conditional receipt established by us.
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,
then on policy delivery we will require a sufficient payment to place the
insurance in force.
PREMIUM PAYMENTS -- You pay a single premium and, subject to restrictions,
additional premiums. You may choose a minimum initial premium of 80%, 90% or
100% of the Guideline Single Premium (based on the Face Amount).
UNDERWRITING RULES OF YOUR POLICY
- - Under current underwriting rules, which are subject to change, if you are
between ages 35 and 80, you may be eligible for simplified underwriting
without a medical examination if they meet simplified underwriting standards.
- - If you are below age 35 or above age 80, or do not meet simplified
underwriting eligibility, full underwriting applies, except that substandard
underwriting applies only in those cases that represent substandard risks
according to customary underwriting guidelines.
Your policy allows for additional premium payments so long as the additional
premiums 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. We may require evidence of insurability for any
additional premiums that increase the Coverage Amount. Premiums, which do not
meet the tax qualification guidelines for life insurance under the Internal
Revenue Code, will not be applied to your policy.
ALLOCATION OF PREMIUMS -- Within three business days of receipt of your
completed application and your initial premium payment at our Home Office, we
allocate your entire premium payment to the Putnam Money Market Sub-Account.
We will then allocate the Account Value in the Putnam Money Market Sub-Account
to the Sub-Accounts according to the premium allocations you specify in your
policy application. The allocation is made upon the expiration of the right to
examine policy period, or the date we receive the final requirement to put the
policy in force, whichever is later.
ACCUMULATION UNITS -- The premiums you allocate to the Sub-Accounts are used to
purchase Accumulation Units in such Sub-Accounts. We determine the number of
Accumulation Units of each Sub-Account by dividing the amount of premium you
have allocated to the Sub-Account by the accumulation unit value of that
particular Sub-Account.
ACCUMULATION UNIT VALUES -- The accumulation unit value for each Sub-Account
varies to reflect the investment experience of the applicable underlying Fund.
To determine the current accumulation unit value, we take the prior Valuation
Day's accumulation unit value and multiply it by the Net Investment Factor for
the Valuation Period then ended.
The Net Investment Factor is used to measure the investment performance of a
Sub-Account from one Valuation Day to the next. The Net Investment Factor for
each Sub-Account equals:
- - The net asset value per share of each Fund held in the Sub-Account at the end
of the current Valuation Period; divided by
- - The net asset value per share of each Fund held in the Sub-Account at the
beginning of the Valuation Period.
You should refer to the Funds' prospectuses accompanying this Prospectus for a
description of how the assets of each Fund are valued, since these
determinations have a direct bearing on the Accumulation Unit Value of the
Sub-Account and therefore the Account Value of a policy.
All valuations in connection with a policy, will be made on the date your
request or payment is received by us before the close of the New York Stock
Exchange on any Valuation Day at our Home Office. Otherwise a valuation will be
made on the next date which is a Valuation Day.
ACCOUNT VALUE -- Each policy has an Account Value. There is no minimum
guaranteed Account Value. A policy's Account Value equals the policy's value in
all of the Sub-Accounts and any amounts in the Loan Account.
The Account Value of your policy is related to the net asset value of the Funds
to which your have allocated your premiums. The Account Value on any Valuation
Day is calculated by multiplying the number of Accumulation Units by the
Accumulation Unit Value and then totaling the results for all the Sub-Accounts.
The Account Value of a policy changes on a daily basis and is computed on each
Valuation Day. Therefore, your Account Value varies to reflect the investment
performance of the underlying Funds, the value of the Loan Account and the
monthly Deduction Amounts.
SUSPENSION OF VALUATION, PAYMENTS AND TRANSFERS -- We will suspend all
procedures requiring valuation (including transfers, surrenders and loans) when:
(a) the New York Stock Exchange is closed;
(b) trading on the New York Stock Exchange is restricted by the SEC;
(c) the SEC permits and orders postponement; or
13 - PROSPECTUS
<PAGE>
(d) the SEC determines that an emergency exists to restrict valuation.
DEATH BENEFITS AND POLICY VALUES
-------------------------------------------------------------------
DEATH BENEFIT -- While in force, your policy provides for the payment of the
Death Proceeds to the beneficiary when the Insured under the policy dies. You
must notify us in writing as soon as possible after the death of the Insured.
The Death Proceeds payable to the beneficiary equal the Death Benefit less any
loans outstanding.
We will pay interest of at least 3 1/2% per year on the Death Proceeds from the
date of the Insured's death to the date payment is made or a settlement option
is elected. At such times, the proceeds are not subject to the investment
experience of the Separate Account.
The Death Benefit equals the greater of:
(1) the Face Amount; or
(2) the Account Value multiplied by a specified percentage.
The percentage varies according to the attained age of the Insured and is
specified in the 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. This is illustrated in the following examples:
<TABLE>
<CAPTION>
EXAMPLES: A B
<S> <C> <C>
- ----------------------------------------------------
Face Amount: $ 100,000 $ 100,000
Insured's Age: 40 40
Account Value on Date of
Death: $ 46,500 $ 34,000
Specified Percentage 250% 250%
</TABLE>
In Example A, the Death Benefit equals $116,250, i.e., the greater of $100,000
(the Face Amount) or $116,250 (the Account Value at the Date of Death of
$46,500, multiplied by the specified percentage of 250%). This amount less any
outstanding loans constitutes the Death Proceeds which we would pay to the
beneficiary.
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%).
DEATH BENEFIT POLICY PROCEEDS -- Proceeds from the Death Benefit left with us
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.
All or part of the Death Proceeds may be paid in cash or applied under a
Settlement Option.
SETTLEMENT OPTIONS -- The surrender proceeds or Death Proceeds under the your
policy may be paid in a lump sum or may be applied to one of our settlement
options. The minimum amount that may be applied under a settlement option is
$5,000, unless we consent to a lesser amount. UNDER SETTLEMENTS OPTIONS LIFE
ANNUITY, LIFE ANNUITY WITH 120, 180, OR 240 MONTHLY PAYMENTS CERTAIN AND JOINT
AND LAST SURVIVOR ANNUITY, NO SURRENDER OR PARTIAL SURRENDERS ARE PERMITTED
AFTER PAYMENTS START. FULL SURRENDER OR PARTIAL SURRENDERS MAY BE MADE FROM THE
INTEREST INCOME SETTLEMENT OPTION, PAYMENTS FOR A DESIGNATED PERIOD SETTLEMENT
OPTION OR THE DEATH BENEFIT POLICY PROCEEDS, BUT THEY ARE SUBJECT TO THE
SURRENDER CHARGE, IF APPLICABLE. THERE MAY BE ADVERSE TAX CONSEQUENCES FOR
PARTIAL SURRENDERS FROM PAYMENTS FOR A DESIGNATED PERIOD SETTLEMENT OPTION.
PLEASE CHECK WITH YOUR TAX ADVISOR BEFORE REQUESTING A PARTIAL SURRENDER.
The following settlement options are available under your policy:
OPTION 1 -- INTEREST INCOME This option offers payments of interest, at the rate
we declare, on the amount applied under this settlement option. The interest
rate will never be less than 3 1/2% per year.
OPTION 2 -- LIFE ANNUITY Death Proceeds are used to purchase a variable annuity
where we make annuity payments as long as the annuitant is living. When the
annuitant dies, we stop making annuity payments. A payee would receive only one
annuity payment if the annuitant dies after the first payment, two annuity
payments if the annuitant dies after the second payment, and so forth.
OPTION 3 -- LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN We make
monthly annuity payments during the lifetime of the annuitant but annuity
payments are at least guaranteed for a minimum of 120, 180 or 240 months, as you
elect. If, at the death of the annuitant, annuity payments have been made for
less than the minimum elected number of months, then the beneficiary can either
receive the present value (as of the date of the annuitant's
14 - PROSPECTUS
<PAGE>
death) of the remaining payments in one sum or continue annuity payments for the
remaining period certain.
OPTION 4 -- JOINT AND LAST SURVIVOR LIFE ANNUITY We will make annuity payments
as long as the annuitant and joint annuitant are living. When one annuitant
dies, we continue to make annuity payments until that second annuitant dies. The
annuitant may elect that the payment be less than the payment made during the
joint lifetime of the annuitants. When choosing this option, you must decide
what will happen to the annuity payments after the first annuitant dies.
Under this option, it is possible for an annuitant and joint annuitant to
receive only one payment in the event of the common or simultaneous death of the
annuitants prior to the date of the second payment.
OPTION 5 -- PAYMENTS FOR A DESIGNATED PERIOD We will make annuity payments for
the number of years that you select. You can select between 5 years and 30
years. Under this option, you may, at any time, request a full surrender and
receive the Cash Surrender Value of your policy.
VARIABLE AND FIXED ANNUITY PAYMENTS -- When the settlement option you select
involves an annuity, unless you specify otherwise, the surrender proceeds or
Death Proceeds provide a variable annuity. Fixed annuity options are also
available.
VARIABLE ANNUITY -- Your policy contains tables indicating the minimum dollar
amount of the first monthly payment under a variable annuity for each $1,000 of
value of a Sub-Account. Your first monthly payment varies with the annuity
option chosen and specific parameters chosen by you. 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 assumed investment rate is the investment return
used to calculate subsequent variable annuity payments.
We determine the total first monthly variable annuity payment by multiplying the
Death Proceeds (expressed in thousands of dollars) in 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 your first monthly variable annuity payment is divided by the
value of an annuity unit for the appropriate Sub-Account no earlier than the
close of business on the fifth Valuation Day preceding the day on which the
payment is due. This determines 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 assumed investment rate. Payments will vary
up or down as the investment rate varies up or down relative to the assumed
investment rate.
FIXED ANNUITY PAYMENTS -- You will receive equal fixed annuity payments
throughout the annuity payment period. We determine fixed annuity payment
amounts by multiplying the amount applied to the annuity by an annuity rate. The
annuity rate is set by us and is not less than the rate specified in the fixed
payment annuity tables in your policy.
Hartford will make any other arrangements for income payments as may be agreed
on.
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 us, we will pay you the Cash Surrender Value. In such case, the
policy will terminate and we will have no 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."
CHARGES AND POLICY VALUES -- Your policy value decreases due to the deduction of
policy charges. Policy value may increase or decrease depending on investment
performance. Fluctuations in your Account Value may have an effect on your Death
Benefit. If your policy lapses, your policy terminates and no Death Benefit will
be paid.
MAKING WITHDRAWALS FROM YOUR POLICY
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SURRENDERS -- While your policy is in force, you may, without the consent of the
beneficiary (provided the designation of beneficiary is not irrevocable), fully
surrender your policy. Upon surrender, you receive the Cash Surrender Value
determined as of the day we receive your request or the date requested by you,
whichever is later. The Cash Surrender Value equals the Account Value less any
Surrender Charges and any Unamortized Tax charge and all Indebtedness. We
15 - PROSPECTUS
<PAGE>
pay the Cash Surrender Value of the policy within seven days of our receipt of
your written request or on the effective surrender date requested by you,
whichever is later. Your policy will terminate on the date of our receipt of the
written request, or the date you request the surrender to be effective,
whichever is later. For a discussion of the tax consequences of surrendering
your policy, see "Federal Tax Considerations".
If you choose to apply the surrender proceeds to a settlement option, 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 you withdraw from the Interest Income settlement
option, the Payments for a Designated Period settlement option or the Death
Benefit Policy Proceeds are subject to any applicable Surrender Charge.
PARTIAL SURRENDERS -- While your policy is in force, you may elect, by written
request, to make partial surrenders from the Cash Surrender Value. The Cash
Surrender Value, after partial surrender, must at least equal our minimum amount
rules then in effect; otherwise, the request will be treated as a request for
full surrender. The partial surrenders will be deducted pro rata from each
Sub-Account, unless the you instruct otherwise. The Face Amount will be reduced
proportionate to the reduction in the Account Value due to the partial
surrender. Partial surrenders in excess of the greater of 10% of premiums or
100% of Account Value less premiums paid will be subject to the Surrender Charge
and any Unamortized Tax charges. For a discussion of the tax consequences of
partial surrenders, see "Federal Tax Considerations".
RIGHT TO EXAMINE -- You have a limited right to return your policy for
cancellation. You may deliver or mail the policy to us or to the agent from whom
it was purchased any time during your free look period. Your free look period
begins on the day you get your policy and ends ten days after you get it (or
longer in some states). In such event, the policy will be rescinded and we will
pay an amount equal to the greater of the premiums paid for the policy less any
Indebtedness or the sum of: i) the Account Value less any Indebtedness, on the
date the returned policy is received by us or the agent from whom it was
purchased; and, ii) any deductions under the policy or charges associated with
the Separate Account. If your policy is replacing another policy, your free look
period and the amount paid to you upon the return of your policy vary by state.
RIGHT TO EXCHANGE -- Once the policy is in effect, it may be exchanged, during
the first 24 months after its issuance, for a non-variable flexible premium
adjustable life insurance policy offered by us (or an affiliated company) on the
life of the Insured. No evidence of insurability will be required. The new
policy will have, at your election, either the same Coverage Amount as 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. The exchange is subject to adjustments in payments and Account Values to
reflect variances, if any, in the payments and Account Values under this policy
and the new policy.
LOANS
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AVAILABILITY OF LOANS -- At any time while the policy is in force, you, without
the consent of the beneficiary, (provided the designation of beneficiary is not
irrevocable) may borrow against the policy by assigning it as sole security to
us. Two types of cash loans are available. Any new loan taken together with any
existing Indebtedness may not exceed 90% of the Cash Value. The minimum loan
amount that we will allow is $25.00.
The proceeds of a loan will be delivered to you within seven business days of
our receipt of the loan request.
Unless you specify otherwise, all loan amounts will be transferred pro rata
basis from each Sub-Account to the Loan Account. The difference between the
value of the Loan Account and the Indebtedness will be transferred on a pro-rata
basis from the Sub-Accounts to the Loan Account on each Monthly Activity Date.
If total Indebtedness equals or exceeds the Account Value of the policy on any
Monthly Activity Date, we will give you written notice that, unless we receive
an additional payment within 61 days to reduce the aggregate outstanding loan(s)
secured by the policy, the policy may lapse. See "Lapse and Reinstatement."
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."
16 - PROSPECTUS
<PAGE>
LOAN REPAYMENTS -- You can repay all or any part of a loan at any time while
your policy is in force. The amount of your policy loan repayment will be
deducted from the Loan Account. It will be allocated among the -Sub-Accounts in
the same percentage as premiums are allocated. Any outstanding loan at the end
of a grace period must be repaid before the policy will be reinstated.
EFFECT OF LOANS ON ACCOUNT VALUE -- A loan, whether or not repaid, has a
permanent effect on your Account Value. This effect occurs because the
investment result of each Sub-Account applies only to the amount remaining in
such Sub-Accounts. The longer a loan is outstanding, the greater the effect on
your Account Value 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, your Account Value will not increase as
rapidly as it would have had no loan been made. If the Sub-Accounts earn less
than the Loan Account, then your Account Value will be greater than it would
have been had no loan been made. If not repaid, the aggregate amount of the
outstanding Indebtedness will reduce the Death Proceeds and the Cash Surrender
Value otherwise payable. For a discussion of the consequences of obtaining a
loan against the policy see "Federal Tax Considerations".
CREDITED INTEREST -- Any amounts in the Loan Account will be credited with
interest at an annual rate of 4.0%. The annual rate for Preferred Loans is 6%.
POLICY LOAN RATES -- The loan interest rate that we will charge on all loans is
6% per annum.
LAPSE AND REINSTATEMENT
-------------------------------------------------------------------
LAPSE -- Your policy will remain in force until the Cash Surrender Value is
insufficient to cover the Deduction Amount due on a Monthly Activity Date. We
will notify you of the default in writing, warning you that your policy is in
danger of terminating.
GRACE PERIOD -- Your policy provides a 61-day grace period to pay an amount
sufficient to cover the Deduction Amounts due. The notice will indicate the
amount that must be paid.
The policy will continue through the grace period, but if no additional premium
payment is made, it will terminate at the end of the grace period. If the person
Insured under the 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 " Death Benefits and Policy Values."
REINSTATEMENT -- If your policy lapses, you may apply for reinstatement of the
policy by payment of the reinstatement premium shown in the policy and any
applicable charges. A request for reinstatement may be made within five years of
lapse. If a loan is outstanding at the time of lapse, we require repayment of
the loan before permitting reinstatement. In addition, we reserve the right to
require evidence of insurability satisfactory to Hartford.
The Account Value on the reinstatement date will reflect:
(a) the Cash Value at the time of termination; plus
(b) Net Premiums derived from premiums paid at the time of reinstatement; minus
(c) the Monthly Deduction Amounts that were due and unpaid during the Policy
Grace Period; plus
(d) the Surrender Charge at the time of reinstatement.
The surrender charge is based on the duration from the original policy date as
through the policy has never lapsed.
FEDERAL TAX CONSIDERATIONS
-------------------------------------------------------------------
GENERAL
Since federal tax law is complex, the tax consequences of purchasing this policy
will vary depending on your situation. You may need tax or legal advice to help
you determine whether purchasing this policy is right for you.
Our general discussion of the tax treatment of this policy is based on our
understanding of federal income tax laws as they are currently interpreted. A
detailed description of all federal income tax consequences regarding the
purchase of this policy cannot be made in the prospectus. We also do not
17 - PROSPECTUS
<PAGE>
discuss state, municipal or other tax laws that may apply to this policy. For
detailed information, you should consult with a qualified tax adviser familiar
with your situation.
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 "Premiums -- Account Value"). 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 contracts under Section 7702 of the Code. The death benefit under a
life insurance contract is generally excluded from the gross income of the
beneficiary. Also, a life insurance Policy Owner is generally not taxed on
increments in the contract 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 fifteen 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 contract for federal income tax purposes after the scheduled
Maturity Date. However, due to the lack of specific guidance on this issue, the
result is not certain. If the Policy is not treated as a life insurance contract
for federal income tax purposes after the scheduled Maturity Date, among other
things, the Death Proceeds may be taxable to the recipient. The 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 contract is
not directly addressed by Section 7702. In the absence of final regulations or
other guidance issued under Section 7702, there is necessarily some uncertainty
whether a last survivor Policy will meet the Section 7702 definition of a life
insurance contract.
MODIFIED ENDOWMENT CONTRACTS
A life insurance contract is treated as a "modified endowment contract" under
Section 7702A of the Code if it meets the definition of life insurance in
Section 7702 but fails the "seven-pay" test of Section 7702A. The seven-pay test
provides that premiums cannot be paid at a rate more rapidly than that allowed
by the payment of seven annual premiums using specified computational rules
provided in Section 7702A(c). The large single premium permitted under the
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 contract 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.
A contract that is classified as modified endowment contract is eligible for
certain aspects of 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). Amounts that are taxable
withdrawals will be subject to a 10% additional tax, with certain exceptions.
All modified endowment contracts that are issued within any calendar year to the
same 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
18 - PROSPECTUS
<PAGE>
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.
The federal estate tax is integrated with the federal gift tax under a unified
rate schedule and unified credit which shelters up to $650,000 (1999) from the
estate and gift tax. The Taxpayer Relief Act of 1997 gradually raises the credit
over the next seven years to $1,000,000. 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, as adjusted for inflation. 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
The Code requires that investments supporting your policy be adequately
diversified. Code Section 817 provides that a variable life insurance contract
will not be treated as a life insurance contract for any period during which the
investments made by the separate account or underlying fund are not adequately
diversified. If a contract is not treated as a life insurance contract, the
policy owner will be subject to income tax on annual increases in cash value.
The Treasury Department's diversification regulations require, among other
things, that:
- - no more than 55% of the value of the total assets of the segregated asset
account underlying a variable contract is represented by any one investment,
- - no more than 70% is represented by any two investments,
- - no more than 80% is represented by any three investments and
- - no more than 90% is represented by any four investments.
In determining whether the diversification standards are met, all securities of
the same issuer, all interests in the same real property project, and all
interests in the same commodity are each treated as a single investment. In the
case of government securities, each government agency or instrumentality is
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 still comply within a reasonable period and avoid
the taxation of contract 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.
We monitor the diversification of investments in the separate accounts and test
for diversification as required by the Code. We intend 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 contract to qualify for tax deferral,
assets in the separate accounts supporting the contract must be considered to be
owned by the insurance company and not by the policy owner. It is unclear under
what circumstances an investor is considered to have enough control over the
assets in the separate account to be considered the owner of the assets for tax
purposes.
The IRS has issued several rulings discussing investor control. These rulings
say that certain 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.
In its explanation of the diversification regulations, the Treasury Department
recognized that the temporary regulations "do not provide guidance concerning
the circumstances in which investor control of the investments of a segregated
asset account may cause the investor, rather than the insurance company, to be
treated as the owner of the assets in the account." The explanation further
indicates that "the temporary regulations provide that in appropriate cases a
segregated asset account may include multiple sub-accounts, but do not specify
the extent to which policyholders may direct their investments to particular
sub-accounts without being treated as the owners of the underlying assets.
Guidance on this and other issues will be provided in regulations or revenue
rulings under Section 817(d), relating to the definition of variable contract."
19 - PROSPECTUS
<PAGE>
The final regulations issued under Section 817 did not provide guidance
regarding investor control, and as of the date of this prospectus, guidance has
yet to be issued. We do not know if additional guidance will be issued. If
guidance is issued, we do not know if it will have a retroactive effect.
Due to the lack of specific guidance on investor control, there is some
uncertainty about when a policy owner is considered the owner of the assets for
tax purposes. We reserve the right to modify the policy, as necessary, to
prevent you from being considered the owner of assets in the separate account.
TAX DEFERRAL DURING ACCUMULATION PERIOD
Under existing provisions of the Code, except as described below, any increase
in an Owner's Investment Value is generally not taxable to the Policy Owner
unless amounts are received (or are deemed to be received) under the Policy
prior to the Insured's death. If the Policy is surrendered or matures, the
amount received will be includable in the Policy Owner's income to the extent
that it exceeds the Policy Owner's "investment in the contract." (If there is
any debt at the time of a surrender, then such debt will be treated as an amount
distributed to the Owner.) The "investment in the contract" is the aggregate
amount of premium payments and other consideration paid for the Policy, less the
aggregate amount received previously under the Policy to the extent such amounts
received were excluded from gross income. Since this Policy is a modified
endowment contract, partial withdrawals (or other such amounts deemed to be
distributed) from the Policy constitute income to the Policy Owner for Federal
income tax purposes.
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
In certain circumstances, the Code limits the application of specific tax
advantages to individual owners of life insurance contracts. Prospective Policy
Owners which are not individuals should consult a qualified tax adviser to
determine the 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.
20 - PROSPECTUS
<PAGE>
OTHER MATTERS
-------------------------------------------------------------------
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, Senior Vice President, General Counsel and Corporate
Secretary of Hartford.
YEAR 2000 -- IN GENERAL The Year 2000 issue relates to the ability or inability
of computer hardware, software and other information technology (IT) systems, as
well as non-IT systems, such as equipment and machinery with imbedded chips and
microprocessors, to properly process information and data containing or related
to dates beginning with the year 2000 and beyond. The Year 2000 issue exists
because, historically, many IT and non-IT systems that are in use today were
developed years ago when a year was identified using a two-digit date field
rather than a four-digit date field. As information and data containing or
related to the century date are introduced to date sensitive systems, these
systems may recognize the year 2000 as "1900", or not at all, which may result
in systems processing information incorrectly. This, in turn, may significantly
and adversely affect the integrity and reliability of information databases of
IT systems, may cause the malfunctioning of certain non-IT systems, and may
result in a wide variety of adverse consequences to a company. In addition, Year
2000 problems that occur with third parties with which a company does business,
such as suppliers, computer vendors, distributors and others, may also adversely
affect any given company.
The integrity and reliability of Hartford's IT systems, as well as the
reliability of its non-IT systems, are integral aspects of Hartford's business.
Hartford issues insurance policies, annuities, mutual funds and other financial
products to individual and business customers, nearly all of which contain date
sensitive data, such as policy expiration dates, birth dates and premium payment
dates. In addition, various IT systems support communications and other systems
that integrate Hartford's various business segments and field offices. Hartford
also has business relationships with numerous third parties that affect
virtually all aspects of Hartford's business, including, without limitation,
suppliers, computer hardware and software vendors, insurance agents and brokers,
securities broker-dealers and other distributors of financial products, many of
which provide date sensitive data to Hartford, and whose operations are
important to Hartford's business.
INTERNAL YEAR 2000 EFFORTS AND TIMETABLE Beginning in 1990, Hartford began
working on making its IT systems Year 2000 ready, either through installing new
programs or replacing systems. Since January 1998, Hartford's Year 2000 efforts
have focused on the remaining Year 2000 issues related to IT and non-IT systems
in all of Hartford's business segments. These Year 2000 efforts include the
following five main initiatives: (1) identifying and assessing Year 2000 issues;
(2) taking actions to remediate IT and non-IT systems so that they are Year 2000
ready; (3) testing IT and non-IT systems for Year 2000 readiness; (4) deploying
such remediated and tested systems back into their respective production
environments; and (5) conducting internal and external integrated testing of
such systems. As of December 31, 1998, Hartford substantially completed
initiatives (1) through (4) of its internal Year 2000 efforts. Hartford has
begun initiative (5) and management currently anticipates that such activity
will continue into the fourth quarter of 1999.
THIRD PARTY YEAR 2000 EFFORTS AND TIMETABLE Hartford's Year 2000 efforts include
assessing the potential impact on Hartford of third parties' Year 2000
readiness. Hartford's third party Year 2000 efforts include the following three
main initiatives: (1) identifying third parties which have significant business
relationships with Hartford, including, without limitation, insurance agents,
brokers, third party administrators, banks and other distributors and servicers
of financial products, and inquiring of such third parties regarding their Year
2000 readiness; (2) evaluating such third parties' responses to Hartford's
inquiries; and (3) based on the evaluation of third party responses (or a third
party's failure to respond) and the significance of the business relationship,
conducting additional activities with respect to third parties as determined to
be necessary in each case. These activities may include conducting additional
inquiries, more in-depth evaluations of Year 2000 readiness and plans, and
integrated IT systems testing. Hartford has completed the first third party
initiative and, as of early 1999, had substantially completed evaluating third
party responses received. Hartford has begun conducting the additional
activities described in initiative (3) and management currently anticipates that
it will continue to do so through the end of 1999. However, notwithstanding
these third party Year 2000 efforts, Hartford does not have control over these
third parties and, as a result, Hartford cannot currently determine to what
extent future operating results may be adversely affected by the failure of
these third parties to adequately address their Year 2000 issues.
YEAR 2000 COSTS The costs of Hartford's Year 2000 program that were incurred
through the year ended December 31, 1997 were not material to Hartford's
financial condition or results of operations. The after-tax costs of Hartford's
Year 2000 efforts for the year ended December 31, 1998 were approximately $3
million. Management currently estimates that after-tax costs related to the Year
2000 program to be incurred in 1999 will be less than $10 million. These costs
are being expensed as incurred.
21 - PROSPECTUS
<PAGE>
RISKS AND CONTINGENCY PLANS If significant Year 2000 problems arise, including
problems arising with third parties, failures of IT and non-IT systems could
occur, which in turn could result in substantial interruptions in Hartford's
business. In addition, Hartford's investing activities are an important aspect
of its business and Hartford may be exposed to the risk that issuers of
investments held by it will be adversely impacted by Year 2000 issues. Given the
uncertain nature of Year 2000 problems that may arise, especially those related
to the readiness of third parties discussed above, management cannot determine
at this time whether the consequences of Year 2000 related problems that could
arise will have a material impact on Hartford's financial condition or results
of operations.
Hartford is in the process of developing certain contingency plans so that if,
despite its Year 2000 efforts, Year 2000 problems ultimately arise, the impact
of such problems may be avoided or minimized. These contingency plans are being
developed based on, among other things, known or reasonably anticipated
circumstances and potential vulnerabilities. The contingency planning also
includes assessing the dependency of Hartford's business on third parties and
their Year 2000 readiness. Hartford currently anticipates that internal and
external contingency plans will be substantially complete by the end of the
second quarter of 1999. However, in many contexts, Year 2000 issues are dynamic,
and ongoing assessments of business functions, vulnerabilities and risks must be
made. As such, new contingency plans may be needed in the future and/or existing
plans may need to be modified as circumstances warrant.
22 - PROSPECTUS
<PAGE>
GLOSSARY OF 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: A unit of measure we use 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 your Account Value minus premiums paid.
ANNUITY UNIT: A unit of measure we use to calculate the amount of annuity
payments.
CASH SURRENDER VALUE: The policy's Cash Value minus all Indebtedness.
CASH VALUE: The policy's Account Value minus 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 we will pay on the death of the Insured. This
equals the Death Benefit minus any Indebtedness.
DEDUCTION AMOUNT: A charge on the Policy Date and on each Monthly Activity Date
for the cost of insurance, Tax Expense charges an administrative charge and a
mortality and expense risk charge.
FACE AMOUNT: On the Policy Date, the Face Amount is the amount shown on the
policy's Specifications page. Thereafter, the Face Amount is reduced in
proportion to any partial surrenders.
HARTFORD, WE OR US: Hartford Life and Annuity Insurance Company.
HOME OFFICE: Currently located at 200 Hopmeadow Street, Simsbury, Connecticut;
however, the mailing address is P.O. Box 2999, Hartford, Connecticut 06104-2999.
INDEBTEDNESS: Monies you owe us, 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 our 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 any deductions or charges
are subtracted from Account Value of your policy. Monthly Activity Dates occur
on the same day of the month as the Policy Anniversary.
POLICY ANNIVERSARY: The yearly anniversary of the Policy Date.
POLICY DATE: The issue date of the policy.
POLICY LOAN RATE: The interest rate charged on policy loans.
POLICY OWNER OR YOU: The owner of the policy.
POLICY YEAR: The twelve months between Policy Anniversaries.
SUB-ACCOUNT VALUE: The current value of the Sub-Accounts.
SURRENDER CHARGE: A charge which may be assessed upon surrender of the 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
(generally 4:00 p.m. Eastern Time) on such days.
VALUATION PERIOD: The period between the close of business on successive
Valuation Days.
23 - PROSPECTUS
<PAGE>
PART B
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT FIVE
-------------------------------------------------------------------
This Statement of Additional Information is not a prospectus. We will send you a
prospectus if you write us at P.O. Box 2999, Hartford, CT 06104-2999, or if you
call us at 1-800-231-5453.
Date of Prospectus: May 3, 1999
Date of Statement of Additional Information: May 3, 1999
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
PAGE
<S> <C>
- -----------------------------------------------------------------
General Information and History 3
- -----------------------------------------------------------------
Services 6
- -----------------------------------------------------------------
Experts 6
- -----------------------------------------------------------------
Distribution of the Policies 6
- -----------------------------------------------------------------
Additional Information About Charges 7
- -----------------------------------------------------------------
Illustration of Benefits 8
- -----------------------------------------------------------------
Financial Statements
- -----------------------------------------------------------------
</TABLE>
2 - PROSPECTUS
<PAGE>
GENERAL INFORMATION AND HISTORY
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY. Hartford Life and Annuity Insurance
Company 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, the District of Columbia and Puerto Rico, 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. We were
originally incorporated under the laws of Wisconsin on January 9, 1956, and
subsequently redomiciled to Connecticut. Our offices are located in Simsbury,
Connecticut; however, our mailing address is P.O. Box 2999, Hartford, CT
06104-2999. We are ultimately controlled by The Hartford Financial Services
Group, Inc., one of the largest financial service providers in the United
States.
The following table shows a brief description of the business experience of
officers and directors of Hartford Life and Annuity Insurance Company:
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS PROFESSION,
HARTFORD; VOCATION OR EMPLOYMENT FOR PAST
NAME YEAR OF ELECTION FIVE YEARS; OTHER DIRECTORSHIPS
<S> <C> <C>
Wendell J. Bossen 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.
Gregory A. Boyko Senior Vice President, Vice President & Controller (1995-1997), Hartford Life
Director, 1997* Insurance Company; Director (1997-Present); Senior Vice
President (1997-Present), Chief Financial Officer &
Treasurer (1997-1998); Vice President & Controller
(1995-1997), 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 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);
Senior Vice President (1997-Present); Vice President
(1989-1997), Hartford Life Insurance Company.
Timothy M. Fitch 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.
Mary Jane B. Fortin Vice President & Chief Vice President & Chief Accounting Office (1998-Present),
Accounting Officer, 1998 Hartford Life Insurance Company; Vice President & Chief
Accounting Officer, (1998-Present), Royal Life Insurance
Company of America; Vice President & Chief Accounting
Officer (1998-Present) Alpine Life Insurance Company; Chief
Accounting Officer (1997-Present), Hartford Life, Inc.;
Director, Finance (1995-1997), Value Health, Inc.; Senior
Manager (1993-1995), Coopers and Lybrand; Audit Manager
(1993-1996) Arthur Andersen & Co.
</TABLE>
3 - PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS PROFESSION,
HARTFORD; VOCATION OR EMPLOYMENT FOR PAST
NAME YEAR OF ELECTION FIVE YEARS; OTHER DIRECTORSHIPS
<S> <C> <C>
David T. Foy Senior Vice President & Senior Vice President (1998-Present), Vice President
Treasurer, 1998 (1998), Assistant Vice President (1995-1998), Hartford;
Senior Vice President (1998-Present), Hartford Life and
Accident Insurance Company; Director, Strategic Planning
Corporate Finance (1995-1996), IA Product Development
(1994-1995), Hartford; Various Actuarial Roles (1989-1993)
Milliman & Robertson
Lynda Godkin 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); Corporate
Director, 1997* Secretary (1995-Present); Associate General Counsel
(1995-1996); Assistant General Counsel and Secretary
(1994-1995); Counsel (1990-1994), Hartford Life and
Accident Insurance 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 Senior Vice President, 1998 Vice President (1994-1998), Hartford; Senior Vice President
Vice President, 1994 (1998-Present); Vice President (1993-1997); Assistant Vice
President (1987-1993), Hartford Life and Accident Insurance
Company; Senior Vice President (1998-Present); Vice
President (1994-1997); Assistant Vice President
(1987-1994), Hartford Life Insurance Company.
Stephen T. Joyce 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.
Michael D. Keeler Vice President, 1998 Vice President (1998-Present); Hartford Life and Accident
Insurance Company; Vice President (1995-1997), Providian
Insurance; Supervisor/Manager (1985-1995), U.S. West
Communications.
Robert A. Kerzner Senior Vice President, 1998 Senior Vice President (1998-Present); Vice President
Vice President, 1997 (1994-1998), Hartford; Senior Vice President
(1998-Present); Vice President (1994-1997); Regional Vice
President (1991-1994), Hartford Life Insurance Company.
</TABLE>
4 - PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH OTHER BUSINESS PROFESSION,
HARTFORD; VOCATION OR EMPLOYMENT FOR PAST
NAME YEAR OF ELECTION FIVE YEARS; OTHER DIRECTORSHIPS
<S> <C> <C>
Thomas M. Marra Executive Vice President, Senior Vice President (1993-1996); Director of Individual
1996 Annuities (1991-1993), Hartford; Director (1994-Present);
Director, Individual Life and Executive Vice President (1995-Present); Director,
Annuity Division, 1993 Individual Life and Annuity Division (1994-Present); Senior
Director, 1994* Vice President (1994-1995); Vice President (1989-1994);
Actuary (1987-1997), Hartford Life and Accident Insurance
Company; Director (1994-Present); Executive Vice President
(1995-Present); Director, Individual Life and Annuity
Division (1994-Present); Senior Vice President (1994-1995);
Vice President (1989-1994); Actuary (1987-1995), Hartford
Life Insurance Company; Executive Vice President,
Individual Life and Annuities (1997-Present), Hartford
Life, Inc.
Steven L. Matthieson Vice President, 1984 Director of New Business (1984-1997), Hartford.
Craig R. Raymond 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 (1995-Present);
Vice President (1993-1997); Actuary (1990-1995), Hartford
Life and Accident Insurance Company; 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.
Lowndes A. Smith President, 1989 Chief Operating Officer (1989-1997), Hartford; Director
Chief Executive Officer, 1997 (1981-Present); President (1989-Present); Chief Executive
Director, 1985* Officer (1997-Present); Chief Operating Officer
(1989-1997), Hartford Life and Accident Insurance Company;
Director (1981-Present); President (1989-Present), Chief
Executive Officer (1997-Present); Chief Operating Officer
(1989-1997), Hartford Life Insurance Company; Chief
Executive Officer and President and Director
(1997-Present), Hartford Life, Inc.
David M. Znamierowski Senior Vice President, 1997 Vice President (1997) Senior Vice President (1997)
Director, 1998 Director, Risk Management Strategy (1996) Director (1998),
Hartford; Director (1998-Present); Senior Vice President
(1997-Present); Hartford Life and Accident Insurance
Company; Vice President, Investment Strategy
(1997-Present), Hartford Life, Inc.; Vice President,
Investment Strategy & Policy (1991-1996), Aetna Life and
Casualty.
</TABLE>
- ------------------------
* Denotes date of election to Board of Directors of Hartford.
** Affiliated Company of The Hartford Financial Services Group, Inc.
Unless otherwise indicated, the principal business address of each of the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
SEPARATE ACCOUNT FIVE was established as a separate account under Connecticut
law on August 17, 1994. The Separate Account is classified as a unit investment
trust registered with the Securities and Exchange Commission under the
Investment Company Act of 1940.
5 - PROSPECTUS
<PAGE>
SERVICES
-------------------------------------------------------------------
SAFEKEEPING OF 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.
EXPERTS
-------------------------------------------------------------------
INDEPENDENT PUBLIC ACCOUNTANTS. The audited financial statements included in
this 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 the report on the statutory
financial statements of Hartford Life and Annuity Insurance Company which states
the statutory 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, and
are not presented in accordance with generally accepted accounting principles.
The principal business address of Arthur Andersen LLP is One Financial Plaza,
Hartford, Connecticut 06103.
ACTUARIAL EXPERT. The hypothetical Policy illustrations included in this
Statement of Additional Information and the registration statement with respect
to the Separate Account have been approved by Michael Winterfield, FSA, MAAA,
Assistant Vice President and Director, Individual Annuity Product Management,
for Hartford, and are included in reliance upon his opinion as to their
reasonableness.
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 affiliates of Hartford. The principal business address of
HESCO and HSD is the same as that of Hartford.
The following table shows officers and directors of HSD:
<TABLE>
<CAPTION>
Name and
Principal Business
Address Positions and Offices
<S> <C>
- --------------------------------------------------------------
Lowndes A. Smith President and Chief Executive Officer,
Director
- --------------------------------------------------------------
Thomas M. Marra Executive Vice President, Director
- --------------------------------------------------------------
Robert A. Kerzner Executive Vice President
- --------------------------------------------------------------
Lynda Godkin Senior Vice President, General Counsel
and Corporate Secretary, Director
- --------------------------------------------------------------
Peter W. Cummins Senior Vice President
- --------------------------------------------------------------
David T. Foy Treasurer
- --------------------------------------------------------------
George R. Jay Controller
- --------------------------------------------------------------
</TABLE>
The maximum sales commission payable to Hartford agents, independent registered
insurance brokers, and other registered broker-dealers is 7.0% of initial and
subsequent premiums.
Broker-dealers or financial institutions are compensated according to a schedule
set forth by HSD and any applicable rules or regulations for variable insurance
compensation. Compensation is generally based on premium payments made by
policyholders or contract owners. This compensation is usually paid from the
sales charges described in the Prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HSD, its affiliates or Hartford may also make compensation
arrangements with certain broker-dealers or financial institutions based on
total sales by the broker-dealer or financial institution of insurance products.
These payments, which may be different for different broker-dealers or financial
institutions, will be made by HSD, its affiliates or Hartford out of their own
assets and will not effect the amounts paid by the policyholders or contract
owners to purchase, hold or surrender variable insurance products.
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
6 - PROSPECTUS
<PAGE>
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.
ADDITIONAL INFORMATION ABOUT CHARGES
-------------------------------------------------------------------
UNDERWRITING PROCEDURES. To purchase a policy you must submit an application to
us. Generally, the minimum initial premium we accept is $10,000. A policy will
be issued only on the lives of insureds age 90 and under who supply evidence of
insurability satisfactory to us. Acceptance is subject to our underwriting rules
and we reserve the right to reject an application for any reason. No change in
the terms or conditions of a policy will be made without your consent.
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. The current cost
of insurance charge will not exceed the guaranteed cost of insurance charge. The
guaranteed cost of insurance charge is a guaranteed maximum monthly rate,
multiplied by the Coverage Amount on the Policy Date or any Monthly Activity
Date. A table of guaranteed maximum 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. For standard risks, the guaranteed maximum cost
of insurance rate is 100% of the 1980 Commissioner's Standard Ordinary
Unismoker, Sex Distinct Age Last Birthday Mortality Table (1980 CSO Table).
Substandard risks will be assessed a higher guaranteed maximum cost of insurance
rate that will not exceed rates based on a multiple of the 1980 CSO Table. The
multiple will be based on the insured's substandard rating. Unisex rates may be
required in some states.
7 - PROSPECTUS
<PAGE>
ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES
AND CASH SURRENDER VALUES
-------------------------------------------------------------------
The tables 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 age 45, a female age 55 and a male age 65 with Face Amounts of $40,161,
$33,334 and $19,380, respectively, are illustrated for the single life preferred
Policy. The illustrations for the last survivor preferred Policy assume male and
female of equal ages, including age 55 and 65 for Face Amounts of $44,053 and
$27,778.
The death benefit and surrender value for a 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 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 0.82% 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 annual charge of 0.82% described above) of -0.82%,
5.18% and 11.18%, 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
Changes to Policy or Separate Account -- Separate Account Taxes).
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.
8 - PROSPECTUS
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
-------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE MALE 45 PREFERRED
INITIAL FACE AMOUNT: $40,161
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
END PREMIUMS -----------------------------------------------------------------------------
OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
1 10,500 10,827 9,833 40,161 10,749 9,757 40,161
2 11,025 11,725 10,740 40,161 11,560 10,579 40,161
3 11,576 12,700 11,728 40,161 12,439 11,471 40,161
4 12,155 13,759 12,953 40,161 13,392 12,591 40,161
5 12,763 14,909 14,123 40,161 14,426 13,646 40,161
6 13,401 16,158 15,596 40,161 15,550 14,995 40,161
7 14,071 17,514 16,982 40,161 16,771 16,245 40,161
8 14,775 18,987 18,692 40,161 18,099 17,808 40,161
9 15,513 20,586 20,334 40,161 19,544 19,295 40,161
10 16,289 22,323 22,323 40,161 21,120 21,120 40,161
11 17,103 24,330 24,330 40,161 22,934 22,934 40,161
12 17,959 26,521 26,521 40,161 24,930 24,930 40,161
13 18,856 28,913 28,913 41,056 27,130 27,130 40,161
14 19,799 31,526 31,526 43,506 29,561 29,561 40,793
15 20,789 34,384 34,384 46,074 32,237 32,237 43,197
16 21,829 37,511 37,511 48,764 35,167 35,167 45,717
17 22,920 40,922 40,922 52,379 38,363 38,363 49,104
18 24,066 44,642 44,642 56,248 41,848 41,848 52,728
19 25,270 48,699 48,699 60,386 45,649 45,649 56,604
20 26,533 53,126 53,126 64,813 49,797 49,797 60,752
25 33,864 82,284 82,284 95,449 76,989 76,989 89,306
35 55,160 197,567 197,567 209,421 184,589 184,589 195,664
- --------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance
rates, administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
9 - PROSPECTUS
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
-------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE MALE 45 PREFERRED
INITIAL FACE AMOUNT: $40,161
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
END PREMIUMS -----------------------------------------------------------------------------
OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
1 10,500 10,243 9,262 40,161 10,164 9,186 40,161
2 11,025 10,492 9,532 40,161 10,323 9,367 40,161
3 11,576 10,748 9,810 40,161 10,476 9,542 40,161
4 12,155 11,011 10,246 40,161 10,621 9,862 40,161
5 12,763 11,281 10,540 40,161 10,757 10,023 40,161
6 13,401 11,559 11,043 40,161 10,883 10,374 40,161
7 14,071 11,844 11,355 40,161 10,995 10,513 40,161
8 14,775 12,137 11,876 40,161 11,091 10,836 40,161
9 15,513 12,438 12,207 40,161 11,167 10,939 40,161
10 16,289 12,747 12,747 40,161 11,221 11,221 40,161
11 17,103 13,131 13,131 40,161 11,294 11,294 40,161
12 17,959 13,526 13,526 40,161 11,342 11,342 40,161
13 18,856 13,935 13,935 40,161 11,360 11,360 40,161
14 19,799 14,357 14,357 40,161 11,345 11,345 40,161
15 20,789 14,793 14,793 40,161 11,293 11,293 40,161
16 21,829 15,243 15,243 40,161 11,197 11,197 40,161
17 22,920 15,707 15,707 40,161 11,048 11,048 40,161
18 24,066 16,187 16,187 40,161 10,839 10,839 40,161
19 25,270 16,682 16,682 40,161 10,557 10,557 40,161
20 26,533 17,193 17,193 40,161 10,190 10,190 40,161
25 33,864 20,009 20,009 40,161 6,594 6,594 40,161
35 55,160 27,193 27,193 40,161 -- -- --
- --------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance
rates, administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
10 - PROSPECTUS
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
-------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE MALE 45 PREFERRED
INITIAL FACE AMOUNT: $40,161
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
END PREMIUMS -----------------------------------------------------------------------------
OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
1 10,500 9,658 8,691 40,161 9,580 8,614 40,161
2 11,025 9,327 8,391 40,161 9,156 8,223 40,161
3 11,576 9,007 8,099 40,161 8,728 7,825 40,161
4 12,155 8,696 7,966 40,161 8,294 7,570 40,161
5 12,763 8,395 7,690 40,161 7,853 7,155 40,161
6 13,401 8,103 7,622 40,161 7,403 6,929 40,161
7 14,071 7,821 7,362 40,161 6,941 6,489 40,161
8 14,775 7,547 7,310 40,161 6,463 6,231 40,161
9 15,513 7,282 7,064 40,161 5,967 5,752 40,161
10 16,289 7,026 7,026 40,161 5,448 5,448 40,161
11 17,103 6,811 6,811 40,161 4,925 4,925 40,161
12 17,959 6,602 6,602 40,161 4,371 4,371 40,161
13 18,856 6,398 6,398 40,161 3,784 3,784 40,161
14 19,799 6,200 6,200 40,161 3,161 3,161 40,161
15 20,789 6,007 6,007 40,161 2,495 2,495 40,161
16 21,829 5,820 5,820 40,161 1,782 1,782 40,161
17 22,920 5,637 5,637 40,161 1,011 1,011 40,161
18 24,066 5,459 5,459 40,161 173 173 40,161
19 25,270 5,285 5,285 40,161 -- -- --
20 26,533 5,117 5,117 40,161 -- -- --
25 33,864 4,337 4,337 40,161 -- -- --
35 55,160 3,059 3,059 40,161 -- -- --
- --------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance
rates, administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
11 - PROSPECTUS
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
-------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE FEMALE 55 PREFERRED
INITIAL FACE AMOUNT: $33,334
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
END PREMIUMS -----------------------------------------------------------------------------
OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
1 10,500 10,827 9,833 33,334 10,720 9,729 33,334
2 11,025 11,725 10,740 33,334 11,502 10,522 33,334
3 11,576 12,700 11,728 33,334 12,353 11,387 33,334
4 12,155 13,759 12,953 33,334 13,282 12,482 33,334
5 12,763 14,909 14,123 33,334 14,295 13,516 33,334
6 13,401 16,158 15,596 33,334 15,401 14,847 33,334
7 14,071 17,514 16,982 33,334 16,608 16,084 33,334
8 14,775 18,987 18,692 33,334 17,925 17,636 33,334
9 15,513 20,586 20,334 33,334 19,364 19,116 33,334
10 16,289 22,323 22,323 33,334 20,939 20,939 33,334
11 17,103 24,330 24,330 33,334 22,759 22,759 33,334
12 17,959 26,530 26,530 33,334 24,773 24,773 33,334
13 18,856 28,971 28,971 34,186 27,009 27,009 33,334
14 19,799 31,655 31,655 37,036 29,495 29,495 34,509
15 20,789 34,589 34,589 40,122 32,227 32,227 37,382
16 21,829 37,794 37,794 43,463 35,211 35,211 40,492
17 22,920 41,306 41,306 46,675 38,480 38,480 43,482
18 24,066 45,156 45,156 50,122 42,065 42,065 46,691
19 25,270 49,380 49,380 53,824 45,997 45,997 50,137
20 26,533 53,983 53,983 58,841 50,282 50,282 54,807
25 33,864 84,470 84,470 89,538 78,681 78,681 83,401
35 55,160 203,661 203,661 213,844 187,763 187,763 197,150
- --------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance
rates, administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
12 - PROSPECTUS
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
-------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE FEMALE 55 PREFERRED
INITIAL FACE AMOUNT: $33,334
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
END PREMIUMS -----------------------------------------------------------------------------
OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
1 10,500 10,243 9,262 33,334 10,135 9,157 33,334
2 11,025 10,492 9,532 33,334 10,265 9,310 33,334
3 11,576 10,748 9,810 33,334 10,390 9,458 33,334
4 12,155 11,011 10,246 33,334 10,510 9,752 33,334
5 12,763 11,281 10,540 33,334 10,623 9,890 33,334
6 13,401 11,559 11,043 33,334 10,727 10,220 33,334
7 14,071 11,844 11,355 33,334 10,819 10,337 33,334
8 14,775 12,137 11,876 33,334 10,892 10,638 33,334
9 15,513 12,438 12,207 33,334 10,943 10,716 33,334
10 16,289 12,747 12,747 33,334 10,967 10,967 33,334
11 17,103 13,131 13,131 33,334 11,006 11,006 33,334
12 17,959 13,526 13,526 33,334 11,014 11,014 33,334
13 18,856 13,935 13,935 33,334 10,989 10,989 33,334
14 19,799 14,357 14,357 33,334 10,930 10,930 33,334
15 20,789 14,793 14,793 33,334 10,829 10,829 33,334
16 21,829 15,243 15,243 33,334 10,677 10,677 33,334
17 22,920 15,707 15,707 33,334 10,460 10,460 33,334
18 24,066 16,187 16,187 33,334 10,159 10,159 33,334
19 25,270 16,682 16,682 33,334 9,752 9,752 33,334
20 26,533 17,193 17,193 33,334 9,215 9,215 33,334
25 33,864 20,009 20,009 33,334 3,514 3,514 33,334
35 55,160 27,193 27,193 33,334 -- -- --
- --------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance
rates, administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
13 - PROSPECTUS
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
-------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE FEMALE 55 PREFERRED
INITIAL FACE AMOUNT: $33,334
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
END PREMIUMS -----------------------------------------------------------------------------
OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
1 10,500 9,658 8,691 33,334 9,551 8,586 33,334
2 11,025 9,327 8,391 33,334 9,098 8,167 33,334
3 11,576 9,007 8,099 33,334 8,643 7,742 33,334
4 12,155 8,696 7,966 33,334 8,184 7,461 33,334
5 12,763 8,395 7,690 33,334 7,720 7,024 33,334
6 13,401 8,103 7,622 33,334 7,248 6,776 33,334
7 14,071 7,821 7,362 33,334 6,764 6,313 33,334
8 14,775 7,547 7,310 33,334 6,262 6,031 33,334
9 15,513 7,282 7,064 33,334 5,735 5,521 33,334
10 16,289 7,026 7,026 33,334 5,180 5,180 33,334
11 17,103 6,811 6,811 33,334 4,612 4,612 33,334
12 17,959 6,602 6,602 33,334 4,005 4,005 33,334
13 18,856 6,398 6,398 33,334 3,360 3,360 33,334
14 19,799 6,200 6,200 33,334 2,672 2,672 33,334
15 20,789 6,007 6,007 33,334 1,935 1,935 33,334
16 21,829 5,820 5,820 33,334 1,137 1,137 33,334
17 22,920 5,637 5,637 33,334 259 259 33,334
18 24,066 5,459 5,459 33,334 -- -- --
19 25,270 5,285 5,285 33,334 -- -- --
20 26,533 5,117 5,117 33,334 -- -- --
25 33,864 4,337 4,337 33,334 -- -- --
35 55,160 3,059 3,059 33,334 -- -- --
- --------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance
rates, administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
14 - PROSPECTUS
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
-------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE MALE 65 PREFERRED
INITIAL FACE AMOUNT: $19,380
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
END PREMIUMS -----------------------------------------------------------------------------
OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
1 10,500 10,827 9,833 19,380 10,643 9,653 19,380
2 11,025 11,725 10,740 19,380 11,342 10,365 19,380
3 11,576 12,700 11,728 19,380 12,106 11,144 19,380
4 12,155 13,759 12,953 19,380 12,948 12,154 19,380
5 12,763 14,909 14,123 19,380 13,880 13,106 19,380
6 13,401 16,158 15,596 19,380 14,919 14,369 19,380
7 14,071 17,517 16,985 19,794 16,085 15,564 19,380
8 14,775 19,009 18,714 21,099 17,405 17,118 19,380
9 15,513 20,641 20,390 22,499 18,892 18,645 20,592
10 16,289 22,405 22,405 24,421 20,504 20,504 22,349
11 17,103 24,423 24,423 26,377 22,348 22,348 24,135
12 17,959 26,632 26,632 28,496 24,366 24,366 26,071
13 18,856 29,034 29,034 31,066 26,557 26,557 28,416
14 19,799 31,663 31,663 33,562 28,960 28,960 30,697
15 20,789 34,525 34,525 36,596 31,568 31,568 33,462
16 21,829 37,661 37,661 39,543 34,433 34,433 36,154
17 22,920 41,070 41,070 43,123 37,544 37,544 39,420
18 24,066 44,792 44,792 47,031 40,917 40,917 42,962
19 25,270 48,853 48,853 51,295 44,571 44,571 46,799
20 26,533 53,286 53,286 55,949 48,525 48,525 50,950
25 33,864 82,517 82,517 86,642 73,681 73,681 77,365
35 55,160 197,898 197,898 199,876 171,445 171,445 173,159
- --------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance
rates, administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
15 - PROSPECTUS
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
-------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE MALE 65 PREFERRED
INITIAL FACE AMOUNT: $19,380
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
END PREMIUMS -----------------------------------------------------------------------------
OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
1 10,500 10,243 9,262 19,380 10,055 9,079 19,380
2 11,025 10,492 9,532 19,380 10,090 9,138 19,380
3 11,576 10,748 9,810 19,380 10,101 9,174 19,380
4 12,155 11,011 10,246 19,380 10,085 9,334 19,380
5 12,763 11,281 10,540 19,380 10,038 9,312 19,380
6 13,401 11,559 11,043 19,380 9,952 9,453 19,380
7 14,071 11,844 11,355 19,380 9,820 9,346 19,380
8 14,775 12,137 11,876 19,380 9,630 9,382 19,380
9 15,513 12,438 12,207 19,380 9,369 9,146 19,380
10 16,289 12,747 12,747 19,380 9,023 9,023 19,380
11 17,103 13,131 13,131 19,380 8,611 8,611 19,380
12 17,959 13,526 13,526 19,380 8,079 8,079 19,380
13 18,856 13,935 13,935 19,380 7,403 7,403 19,380
14 19,799 14,357 14,357 19,380 6,551 6,551 19,380
15 20,789 14,793 14,793 19,380 5,481 5,481 19,380
16 21,829 15,243 15,243 19,380 4,133 4,133 19,380
17 22,920 15,707 15,707 19,380 2,425 2,425 19,380
18 24,066 16,187 16,187 19,380 244 244 19,380
19 25,270 16,682 16,682 19,380 -- -- --
20 26,533 17,193 17,193 19,380 -- -- --
25 33,864 20,009 20,009 21,009 -- -- --
35 55,160 27,195 27,195 27,467 -- -- --
- --------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance
rates, administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
16 - PROSPECTUS
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
-------------------------------------------------------------------
SINGLE LIFE OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE MALE 65 PREFERRED
INITIAL FACE AMOUNT: $19,380
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
END PREMIUMS -----------------------------------------------------------------------------
OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
1 10,500 9,658 8,691 19,380 9,468 8,505 19,380
2 11,025 9,327 8,391 19,380 8,910 7,981 19,380
3 11,576 9,007 8,099 19,380 8,320 7,425 19,380
4 12,155 8,696 7,966 19,380 7,695 6,979 19,380
5 12,763 8,395 7,690 19,380 7,025 6,337 19,380
6 13,401 8,103 7,622 19,380 6,302 5,839 19,380
7 14,071 7,821 7,362 19,380 5,512 5,070 19,380
8 14,775 7,547 7,310 19,380 4,638 4,415 19,380
9 15,513 7,282 7,064 19,380 3,662 3,453 19,380
10 16,289 7,026 7,026 19,380 2,562 2,562 19,380
11 17,103 6,811 6,811 19,380 1,321 1,321 19,380
12 17,959 6,602 6,602 19,380 -- -- --
13 18,856 6,398 6,398 19,380 -- -- --
14 19,799 6,200 6,200 19,380 -- -- --
15 20,789 6,007 6,007 19,380 -- -- --
16 21,829 5,820 5,820 19,380 -- -- --
17 22,920 5,637 5,637 19,380 -- -- --
18 24,066 5,459 5,459 19,380 -- -- --
19 25,270 5,285 5,285 19,380 -- -- --
20 26,533 5,117 5,117 19,380 -- -- --
25 33,864 4,337 4,337 19,380 -- -- --
35 55,160 3,059 3,059 19,380 -- -- --
- --------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance
rates, administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
17 - PROSPECTUS
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
-------------------------------------------------------------------
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE MALE 55 PREFERRED
ISSUE AGE FEMALE 55 PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
END PREMIUMS -----------------------------------------------------------------------------
OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
1 10,500 10,895 9,900 44,053 10,895 9,900 44,053
2 11,025 11,867 10,879 44,053 11,867 10,879 44,053
3 11,576 12,922 11,946 44,053 12,922 11,946 44,053
4 12,155 14,068 13,257 44,053 14,068 13,257 44,053
5 12,763 15,312 14,520 44,053 15,312 14,520 44,053
6 13,401 16,662 16,096 44,053 16,662 16,096 44,053
7 14,071 18,129 17,593 44,053 18,129 17,593 44,053
8 14,775 19,724 19,425 44,053 19,721 19,422 44,053
9 15,513 21,461 21,208 44,053 21,449 21,195 44,053
10 16,289 23,355 23,355 44,053 23,325 23,325 44,053
11 17,103 25,546 25,546 44,053 25,468 25,468 44,053
12 17,959 27,947 27,947 44,053 27,810 27,810 44,053
13 18,856 30,575 30,575 44,053 30,377 30,377 44,053
14 19,799 33,454 33,454 44,053 33,195 33,195 44,053
15 20,789 36,607 36,607 44,053 36,297 36,297 44,053
16 21,829 40,066 40,066 46,076 39,721 39,721 45,678
17 22,920 43,857 43,857 49,558 43,479 43,479 49,130
18 24,066 48,009 48,009 53,289 47,594 47,594 52,829
19 25,270 52,559 52,559 57,289 52,105 52,105 56,794
20 26,533 57,565 57,565 62,745 57,059 57,059 62,193
25 33,864 90,719 90,719 96,161 89,637 89,637 95,015
35 55,160 225,309 225,309 236,574 214,453 214,453 225,175
- --------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance
rates, administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
18 - PROSPECTUS
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
-------------------------------------------------------------------
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE MALE 55 PREFERRED
ISSUE AGE FEMALE 55 PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
END PREMIUMS -----------------------------------------------------------------------------
OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
1 10,500 10,307 9,325 44,053 10,307 9,325 44,053
2 11,025 10,618 9,655 44,053 10,618 9,655 44,053
3 11,576 10,932 9,991 44,053 10,932 9,991 44,053
4 12,155 11,248 10,480 44,053 11,248 10,480 44,053
5 12,763 11,566 10,821 44,053 11,566 10,821 44,053
6 13,401 11,893 11,374 44,053 11,883 11,364 44,053
7 14,071 12,230 11,738 44,053 12,197 11,706 44,053
8 14,775 12,578 12,315 44,053 12,506 12,243 44,053
9 15,513 12,936 12,704 44,053 12,805 12,573 44,053
10 16,289 13,306 13,306 44,053 13,090 13,090 44,053
11 17,103 13,755 13,755 44,053 13,412 13,412 44,053
12 17,959 14,221 14,221 44,053 13,715 13,715 44,053
13 18,856 14,704 14,704 44,053 13,994 13,994 44,053
14 19,799 15,204 15,204 44,053 14,244 14,244 44,053
15 20,789 15,722 15,722 44,053 14,457 14,457 44,053
16 21,829 16,259 16,259 44,053 14,625 14,625 44,053
17 22,920 16,815 16,815 44,053 14,733 14,733 44,053
18 24,066 17,392 17,392 44,053 14,765 14,765 44,053
19 25,270 17,989 17,989 44,053 14,699 14,699 44,053
20 26,533 18,608 18,608 44,053 14,511 14,511 44,053
25 33,864 22,054 22,054 44,053 10,618 10,618 44,053
35 55,160 31,084 31,084 44,053 -- -- --
- --------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance
rates, administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
19 - PROSPECTUS
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
-------------------------------------------------------------------
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE MALE 55 PREFERRED
INITIAL FACE AMOUNT: $44,053
ISSUE AGE FEMALE 55 PREFERRED
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
END PREMIUMS -----------------------------------------------------------------------------
OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
1 10,500 9,719 8,750 44,053 9,719 8,750 44,053
2 11,025 9,438 8,499 44,053 9,438 8,499 44,053
3 11,576 9,157 8,247 44,053 9,157 8,247 44,053
4 12,155 8,874 8,141 44,053 8,874 8,141 44,053
5 12,763 8,598 7,890 44,053 8,587 7,880 44,053
6 13,401 8,329 7,846 44,053 8,295 7,812 44,053
7 14,071 8,068 7,607 44,053 7,994 7,534 44,053
8 14,775 7,814 7,575 44,053 7,682 7,444 44,053
9 15,513 7,567 7,348 44,053 7,353 7,135 44,053
10 16,289 7,327 7,327 44,053 7,004 7,004 44,053
11 17,103 7,129 7,129 44,053 6,655 6,655 44,053
12 17,959 6,936 6,936 44,053 6,273 6,273 44,053
13 18,856 6,747 6,747 44,053 5,851 5,851 44,053
14 19,799 6,563 6,563 44,053 5,384 5,384 44,053
15 20,789 6,383 6,383 44,053 4,861 4,861 44,053
16 21,829 6,207 6,207 44,053 4,271 4,271 44,053
17 22,920 6,035 6,035 44,053 3,598 3,598 44,053
18 24,066 5,867 5,867 44,053 2,819 2,819 44,053
19 25,270 5,703 5,703 44,053 1,906 1,906 44,053
20 26,533 5,542 5,542 44,053 830 830 44,053
25 33,864 4,794 4,794 44,053 -- -- --
35 55,160 3,535 3,535 44,053 -- -- --
- --------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance
rates, administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
20 - PROSPECTUS
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
-------------------------------------------------------------------
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE MALE 65 PREFERRED
ISSUE AGE FEMALE 65 PREFERRED
INITIAL FACE AMOUNT: $27,778
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12.00% (11.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
END PREMIUMS -----------------------------------------------------------------------------
OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
1 10,500 10,890 9,895 27,778 10,890 9,895 27,778
2 11,025 11,847 10,860 27,778 11,847 10,860 27,778
3 11,576 12,878 11,903 27,778 12,877 11,902 27,778
4 12,155 14,002 13,192 27,778 13,985 13,176 27,778
5 12,763 15,226 14,436 27,778 15,180 14,390 27,778
6 13,401 16,560 15,994 27,778 16,470 15,905 27,778
7 14,071 18,014 17,479 27,778 17,865 17,331 27,778
8 14,775 19,598 19,300 27,778 19,379 19,082 27,778
9 15,513 21,325 21,071 27,778 21,027 20,774 27,778
10 16,289 23,206 23,206 27,778 22,831 22,831 27,778
11 17,103 25,383 25,383 27,778 24,922 24,922 27,778
12 17,959 27,768 27,768 29,711 27,253 27,253 29,160
13 18,856 30,379 30,379 32,505 29,803 29,803 31,889
14 19,799 33,240 33,240 35,234 32,594 32,594 34,550
15 20,789 36,373 36,373 38,554 35,635 35,635 37,772
16 21,829 39,804 39,804 41,793 38,964 38,964 40,912
17 22,920 43,562 43,562 45,739 42,589 42,589 44,718
18 24,066 47,677 47,677 50,061 46,528 46,528 48,854
19 25,270 52,185 52,185 54,794 50,805 50,805 53,345
20 26,533 57,155 57,155 60,012 55,474 55,474 58,247
25 33,864 90,073 90,073 94,576 85,114 85,114 89,369
35 55,160 223,706 223,706 225,942 198,956 198,956 200,945
- --------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance
rates, administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 12%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
21 - PROSPECTUS
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
-------------------------------------------------------------------
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE MALE 65 PREFERRED
ISSUE AGE FEMALE 65 PREFERRED
INITIAL FACE AMOUNT: $27,778
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6.00% (5.18% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
END PREMIUMS -----------------------------------------------------------------------------
OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
1 10,500 10,302 9,320 27,778 10,302 9,320 27,778
2 11,025 10,598 9,636 27,778 10,598 9,636 27,778
3 11,576 10,895 9,955 27,778 10,886 9,945 27,778
4 12,155 11,202 10,434 27,778 11,161 10,394 27,778
5 12,763 11,517 10,774 27,778 11,421 10,678 27,778
6 13,401 11,843 11,325 27,778 11,661 11,145 27,778
7 14,071 12,179 11,687 27,778 11,876 11,387 27,778
8 14,775 12,525 12,262 27,778 12,057 11,796 27,778
9 15,513 12,881 12,649 27,778 12,194 11,963 27,778
10 16,289 13,249 13,249 27,778 12,276 12,276 27,778
11 17,103 13,697 13,697 27,778 12,342 12,342 27,778
12 17,959 14,161 14,161 27,778 12,330 12,330 27,778
13 18,856 14,641 14,641 27,778 12,225 12,225 27,778
14 19,799 15,139 15,139 27,778 12,009 12,009 27,778
15 20,789 15,655 15,655 27,778 11,658 11,658 27,778
16 21,829 16,189 16,189 27,778 11,136 11,136 27,778
17 22,920 16,743 16,743 27,778 10,399 10,399 27,778
18 24,066 17,317 17,317 27,778 9,383 9,383 27,778
19 25,270 17,911 17,911 27,778 8,005 8,005 27,778
20 26,533 18,527 18,527 27,778 6,153 6,153 27,778
25 33,864 21,958 21,958 27,778 -- -- --
35 55,160 30,947 30,947 31,256 -- -- --
- --------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance
rates, administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 6%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
22 - PROSPECTUS
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
-------------------------------------------------------------------
LAST SURVIVOR OPTION
$10,000 INITIAL PREMIUM
ISSUE AGE MALE 65 PREFERRED
ISSUE AGE FEMALE 65 PREFERRED
INITIAL FACE AMOUNT: $27,778
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0.00% (-0.82% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
END PREMIUMS -----------------------------------------------------------------------------
OF ACCUMULATED CASH CASH
CONTRACT AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
<C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
1 10,500 9,714 8,746 27,778 9,714 8,746 27,778
2 11,025 9,419 8,480 27,778 9,419 8,480 27,778
3 11,576 9,127 8,217 27,778 9,110 8,200 27,778
4 12,155 8,844 8,111 27,778 8,784 8,052 27,778
5 12,763 8,568 7,861 27,778 8,435 7,730 27,778
6 13,401 8,300 7,817 27,778 8,059 7,578 27,778
7 14,071 8,040 7,579 27,778 7,646 7,189 27,778
8 14,775 7,787 7,548 27,778 7,186 6,950 27,778
9 15,513 7,541 7,322 27,778 6,666 6,449 27,778
10 16,289 7,301 7,301 27,778 6,068 6,068 27,778
11 17,103 7,104 7,104 27,778 5,398 5,398 27,778
12 17,959 6,912 6,912 27,778 4,611 4,611 27,778
13 18,856 6,723 6,723 27,778 3,681 3,681 27,778
14 19,799 6,540 6,540 27,778 2,582 2,582 27,778
15 20,789 6,360 6,360 27,778 1,276 1,276 27,778
16 21,829 6,185 6,185 27,778 -- -- --
17 22,920 6,013 6,013 27,778 -- -- --
18 24,066 5,846 5,846 27,778 -- -- --
19 25,270 5,682 5,682 27,778 -- -- --
20 26,533 5,522 5,522 27,778 -- -- --
25 33,864 4,776 4,776 27,778 -- -- --
35 55,160 3,521 3,521 27,778 -- -- --
- --------------------------------------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance
rates, administrative fees, and mortality and expense risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and mortality and expense risk rates.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
CONTRACT WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE CONTRACT AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO
FLUCTUATED ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL CONTRACT YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A CONTRACT WOULD ALSO BE
DIFFERENT FROM THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE
SEPARATE ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL
RATES OF INVESTMENT RETURN APPLICABLE TO THE CONTRACT AVERAGED 0%, BUT VARIED
ABOVE OR BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE
MADE THAT THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
23 - PROSPECTUS
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To 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 statements of assets and liabilities of
Hartford Life and Annuity Insurance Company Putnam Capital Manager Trust
Separate Account Five (Asia Pacific Growth, Diversified Income, The George
Putnam Fund of Boston, Global Asset Allocation, Global Growth, Growth and
Income, Health Sciences, High Yield, International Growth, International Growth
and Income, International New Opportunities, Investors, Money Market, New
Opportunities, New Value, OTC & Emerging Growth, Research, U.S. Government and
High Quality Bond, Utilities Growth and Income, Vista, and Voyager),
(collectively, the Account) as of December 31, 1998, and the related statements
of operations and the statements of changes in net assets for the periods
presented. 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 the Account as of December 31,
1998, and the results of their operations and the changes in their net assets
for the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 15, 1999 ARTHUR ANDERSEN LLP
SA-1 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Assets & Liabilities
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1998 Asia Pacific Diversified The George Global Asset
Growth Income Putnam Fund Allocation
Sub-Account Sub-Account of Boston Sub-Account
Sub-Account
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments:
-------------------------------------------------------------------------------------------
PUTNAM VT ASIA PACIFIC GROWTH
FUND
Shares 45,266
Cost $459,302
..........................................................................................
Market Value: $377,065 $ -- $ -- $ --
-------------------------------------------------------------------------------------------
PUTNAM VT DIVERSIFIED INCOME FUND
Shares 261,588
Cost $2,865,478
..........................................................................................
Market Value: -- 2,744,055 -- --
-------------------------------------------------------------------------------------------
PUTNAM VT THE GEORGE PUTNAM FUND
OF BOSTON
Shares 8,504
Cost $85,947
..........................................................................................
Market Value: -- -- 87,421 --
-------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL ASSET ALLOCATION
FUND
Shares 208,991
Cost $3,556,181
..........................................................................................
Market Value: -- -- -- 3,960,381
-------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL GROWTH FUND
Shares 477,729
Cost $8,042,791
..........................................................................................
Market Value: -- -- -- --
-------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND
Shares 1,176,109
Cost $28,936,293
..........................................................................................
Market Value: -- -- -- --
-------------------------------------------------------------------------------------------
PUTNAM VT HEALTH SCIENCES FUND
Shares 26,666
Cost $266,542
..........................................................................................
Market Value: -- -- -- --
-------------------------------------------------------------------------------------------
Due from Hartford Life & Annuity
Insurance Company 3 64 -- 36
..........................................................................................
Receivable from fund shares sold -- -- -- --
..........................................................................................
Total Assets 377,068 2,744,119 87,421 3,960,417
..........................................................................................
LIABILITIES
Due to Hartford Life & Annuity
Insurance Company -- -- -- --
..........................................................................................
Payable for fund shares purchased -- -- -- --
..........................................................................................
TOTAL LIABILITIES -- -- -- --
-------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $377,068 $ 2,744,119 $87,421 $ 3,960,417
-------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1998 Global Growth Health
Growth and Income Sciences
Sub-Account Sub-Account Sub-Account
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments:
-------------------------------------------------------------------------------------------
PUTNAM VT ASIA PACIFIC GROWTH
FUND
Shares 45,266
Cost $459,302
................................
Market Value: $ -- $ -- $ --
-------------------------------------------------------------------------------------------
PUTNAM VT DIVERSIFIED INCOME FUND
Shares 261,588
Cost $2,865,478
................................
Market Value: -- -- --
-------------------------------------------------------------------------------------------
PUTNAM VT THE GEORGE PUTNAM FUND
OF BOSTON
Shares 8,504
Cost $85,947
................................
Market Value: -- -- --
-------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL ASSET ALLOCATION
FUND
Shares 208,991
Cost $3,556,181
................................
Market Value: -- -- --
-------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL GROWTH FUND
Shares 477,729
Cost $8,042,791
................................
Market Value: 9,688,338 -- --
-------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND
Shares 1,176,109
Cost $28,936,293
................................
Market Value: -- 33,836,645 --
-------------------------------------------------------------------------------------------
PUTNAM VT HEALTH SCIENCES FUND
Shares 26,666
Cost $266,542
................................
Market Value: -- -- 291,722
-------------------------------------------------------------------------------------------
Due from Hartford Life & Annuity
Insurance Company -- -- --
................................
Receivable from fund shares sold -- -- --
................................
Total Assets 9,688,338 33,836,645 291,722
................................
LIABILITIES
Due to Hartford Life & Annuity
Insurance Company 29 53 --
................................
Payable for fund shares purchased -- 209 1
................................
TOTAL LIABILITIES 29 262 1
-------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $ 9,688,309 $ 33,836,383 $291,721
-------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-2 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Assets and Liabilities (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1998 High Yield International International International
Sub-Account Growth Growth and New
Sub-Account Income Opportunities
Sub-Account Sub-Account
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments:
--------------------------------------------------------------------------------------------
PUTNAM VT HIGH YIELD FUND
Shares 329,573
Cost $4,210,751
...........................................................................................
Market Value: $3,856,004 $ -- $ -- $ --
--------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH
FUND
Shares 57,698
Cost $697,874
...........................................................................................
Market Value: -- 780,074 -- --
--------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH
AND INCOME FUND
Shares 60,301
Cost $718,967
...........................................................................................
Market Value: -- -- 738,081 --
--------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL NEW
OPPORTUNITIES FUND
Shares 62,518
Cost $665,327
...........................................................................................
Market Value: -- -- -- 718,333
--------------------------------------------------------------------------------------------
PUTNAM VT INVESTORS FUND
Shares 21,886
Cost $227,856
...........................................................................................
Market Value: -- -- -- --
--------------------------------------------------------------------------------------------
PUTNAM VT MONEY MARKET FUND
Shares 3,594,608
Cost $3,594,608
...........................................................................................
Market Value: -- -- -- --
--------------------------------------------------------------------------------------------
PUTNAM VT NEW OPPORTUNITIES FUND
Shares 681,464
Cost $12,250,816
...........................................................................................
Market Value: -- -- -- --
--------------------------------------------------------------------------------------------
Due from Hartford Life & Annuity
Insurance Company 18 18 -- --
...........................................................................................
Receivable from fund shares sold -- -- -- --
...........................................................................................
Total Assets 3,856,022 780,092 738,081 718,333
...........................................................................................
LIABILITIES
Due to Hartford Life & Annuity
Insurance Company -- -- 42 10
...........................................................................................
Payable for fund shares purchased -- -- -- --
...........................................................................................
TOTAL LIABILITIES -- -- 42 10
--------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $3,856,022 $780,092 $738,039 $718,323
--------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1998 Investors Money New
Sub-Account Market Opportunities
Sub-Account Sub-Account
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments:
--------------------------------------------------------------------------------------------
PUTNAM VT HIGH YIELD FUND
Shares 329,573
Cost $4,210,751
................................
Market Value: $ -- $ -- $ --
--------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH
FUND
Shares 57,698
Cost $697,874
................................
Market Value: -- -- --
--------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH
AND INCOME FUND
Shares 60,301
Cost $718,967
................................
Market Value: -- -- --
--------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL NEW
OPPORTUNITIES FUND
Shares 62,518
Cost $665,327
................................
Market Value: -- -- --
--------------------------------------------------------------------------------------------
PUTNAM VT INVESTORS FUND
Shares 21,886
Cost $227,856
................................
Market Value: 254,975 -- --
--------------------------------------------------------------------------------------------
PUTNAM VT MONEY MARKET FUND
Shares 3,594,608
Cost $3,594,608
................................
Market Value: -- 3,594,608 --
--------------------------------------------------------------------------------------------
PUTNAM VT NEW OPPORTUNITIES FUND
Shares 681,464
Cost $12,250,816
................................
Market Value: -- -- 17,758,954
--------------------------------------------------------------------------------------------
Due from Hartford Life & Annuity
Insurance Company 1 88,017 561
................................
Receivable from fund shares sold -- -- --
................................
Total Assets 254,976 3,682,625 17,759,515
................................
LIABILITIES
Due to Hartford Life & Annuity
Insurance Company -- -- --
................................
Payable for fund shares purchased -- 87,285 --
................................
TOTAL LIABILITIES -- 87,285 --
--------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $254,976 $3,595,340 $ 17,759,515
--------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-3 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Assets & Liabilities (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, 1998 New OTC & Research U.S. Government
Value Emerging Sub-Account and High
Sub-Account Growth Quality Bond
Sub-Account Sub-Account
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments:
----------------------------------------------------------------------------------------------
PUTNAM VT NEW VALUE FUND
Shares 71,088
Cost $755,429
.............................................................................................
Market Value: $855,191 $ -- $ -- $ --
----------------------------------------------------------------------------------------------
PUTNAM VT OTC & EMERGING GROWTH
FUND
Shares 4,540
Cost $41,954
.............................................................................................
Market Value: -- 45,809 -- --
----------------------------------------------------------------------------------------------
PUTNAM RESEARCH FUND
Shares 531
Cost $5,337
.............................................................................................
Market Value: -- -- 6,329 --
----------------------------------------------------------------------------------------------
PUTNAM VT U.S. GOVERNMENT AND
HIGH QUALITY BOND FUND
Shares 129,727
Cost $1,705,963
.............................................................................................
Market Value: -- -- -- 1,781,152
----------------------------------------------------------------------------------------------
PUTNAM VT UTILITIES GROWTH &
INCOME FUND
Shares 180,546
Cost $2,627,965
.............................................................................................
Market Value: -- -- -- --
----------------------------------------------------------------------------------------------
PUTNAM VT VISTA FUND
Shares 47,643
Cost $554,768
.............................................................................................
Market Value: -- -- -- --
----------------------------------------------------------------------------------------------
PUTNAM VT VOYAGER FUND
Shares 430,252
Cost $14,508,848
.............................................................................................
Market Value: -- -- -- --
----------------------------------------------------------------------------------------------
Due from Hartford Life & Annuity
Insurance Company -- -- -- --
.............................................................................................
Receivable from fund shares sold -- -- -- --
.............................................................................................
Total Assets 855,191 45,809 6,329 1,781,152
.............................................................................................
LIABILITIES
Due to Hartford Life & Annuity
Insurance Company 5 -- -- 1
.............................................................................................
Payable for fund shares purchased -- -- -- --
.............................................................................................
TOTAL LIABILITIES 5 -- -- 1
----------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $855,186 $45,809 $6,329 $1,781,151
----------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1998 Utilities Vista Voyager
Growth Sub-Account Sub-Account
and Income
Sub-Account
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments:
----------------------------------------------------------------------------------------------
PUTNAM VT NEW VALUE FUND
Shares 71,088
Cost $755,429
................................
Market Value: $ -- $ -- $ --
----------------------------------------------------------------------------------------------
PUTNAM VT OTC & EMERGING GROWTH
FUND
Shares 4,540
Cost $41,954
................................
Market Value: -- -- --
----------------------------------------------------------------------------------------------
PUTNAM RESEARCH FUND
Shares 531
Cost $5,337
................................
Market Value: -- -- --
----------------------------------------------------------------------------------------------
PUTNAM VT U.S. GOVERNMENT AND
HIGH QUALITY BOND FUND
Shares 129,727
Cost $1,705,963
................................
Market Value: -- -- --
----------------------------------------------------------------------------------------------
PUTNAM VT UTILITIES GROWTH &
INCOME FUND
Shares 180,546
Cost $2,627,965
................................
Market Value: 3,284,125 -- --
----------------------------------------------------------------------------------------------
PUTNAM VT VISTA FUND
Shares 47,643
Cost $554,768
................................
Market Value: -- 701,307 --
----------------------------------------------------------------------------------------------
PUTNAM VT VOYAGER FUND
Shares 430,252
Cost $14,508,848
................................
Market Value: -- -- 19,727,033
----------------------------------------------------------------------------------------------
Due from Hartford Life & Annuity
Insurance Company 205 -- 619
................................
Receivable from fund shares sold -- -- --
................................
Total Assets 3,284,330 701,307 19,727,652
................................
LIABILITIES
Due to Hartford Life & Annuity
Insurance Company -- 3 --
................................
Payable for fund shares purchased -- -- 209
................................
TOTAL LIABILITIES -- 3 209
----------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $ 3,284,330 $701,304 $ 19,727,443
----------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-4 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Assets and Liabilities (continued)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
December 31, 1998 Units Unit Contract
Owned by Price Liability
Participants
<S> <C> <C> <C>
-------------------------------------------------------------------------------------
Deferred life contracts:
Asia Pacific Growth Fund 41,882 $9.003084 $ 377,068
....................................................................................
Diversified Income Fund 198,869 13.798650 2,744,119
....................................................................................
George Putnam Fund 8,456 10.338503 87,421
....................................................................................
Global Asset Allocation 202,019 19.604138 3,960,417
....................................................................................
Global Growth Fund 477,598 20.285477 9,688,309
....................................................................................
Growth and Income Fund 1,426,245 23.724100 33,836,383
....................................................................................
Health Sciences Fund 26,640 10.950541 291,721
....................................................................................
High Yield Fund 268,383 14.367617 3,856,022
....................................................................................
International Growth Fund 56,593 13.784342 780,092
....................................................................................
International Growth and Income Fund 55,543 13.287617 738,039
....................................................................................
International New Opportunities Fund 62,218 11.545331 718,323
....................................................................................
Investors Fund 22,097 11.539064 254,976
....................................................................................
Money Market Fund 2,932,369 1.226087 3,595,340
....................................................................................
New Opportunities Fund 722,243 24.589388 17,759,515
....................................................................................
New Value Fund 68,439 12.495592 855,186
....................................................................................
OTC & Emerging Markets Fund 4,547 10.074314 45,809
....................................................................................
Research Fund 505 12.540201 6,329
....................................................................................
U.S. Government and High Quality Bond Fund 122,682 14.518456 1,781,151
....................................................................................
Utilities Growth and Income Fund 148,147 22.169452 3,284,330
....................................................................................
Vista Fund 47,638 14.721507 701,304
....................................................................................
Voyager Fund 783,992 25.162820 19,727,443
....................................................................................
GRAND TOTAL: $105,089,297
-------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-5 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended Asia Pacific Diversified The George Global
December 31, 1998 Growth Income Putnam Fund Asset
Sub-Account Sub-Account of Boston Allocation
Sub-Account* Sub-Account
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 15,691 $115,993 $ 533 $ 74,618
........................................................................................
Capital gains income -- 49,267 -- 320,508
........................................................................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
........................................................................................
Net realized gain (loss) on
security transactions (2,525) (4,217) (1) (1,780)
........................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period (33,195) (207,136) 1,474 50,334
........................................................................................
Net gain (loss) on investments (35,720) (211,353) 1,473 48,554
-----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS: $(20,029) $(46,093) $ 2,006 $443,680
-----------------------------------------------------------------------------------------
<CAPTION>
For the Year Ended Global Growth Health
December 31, 1998 Growth and Income Sciences
Sub-Account Sub-Account Sub-Account*
---------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 192,953 $ 462,353 $ 260
................................
Capital gains income 964,765 3,018,243 --
................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
................................
Net realized gain (loss) on
security transactions 3,991 (9,131) (8,148)
................................
Net unrealized appreciation
(depreciation) of investments
during the period 952,580 635,979 25,180
................................
Net gain (loss) on investments 956,571 626,848 17,032
-----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS: $ 2,114,289 $ 4,107,444 $17,292
-----------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-6 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Operations (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended High Yield International International International
December 31, 1998 Sub-Account Growth Growth and New
Sub-Account Income Opportunities
Sub-Account Sub-Account
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 317,574 $ 2,618 $ 9,068 $ 1,182
.........................................................................................
Capital gains income 49,833 -- 23,112 --
.........................................................................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
.........................................................................................
Net realized gain (loss) on
security transactions (5,698) 162 (8,827) 627
.........................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period (617,216) 68,425 5,747 84,216
.........................................................................................
Net gain (loss) on investments (622,914) 68,587 (3,080) 84,843
------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS: $(255,507) $71,205 $29,100 $86,025
------------------------------------------------------------------------------------------
<CAPTION>
For the Year Ended Investors Money New
December 31, 1998 Sub-Account* Market Opportunities
Sub-Account Sub-Account
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 279 $203,946 $ --
................................
Capital gains income -- -- 199,094
................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
................................
Net realized gain (loss) on
security transactions (2) -- (13,414)
................................
Net unrealized appreciation
(depreciation) of investments
during the period 27,119 -- 3,153,786
................................
Net gain (loss) on investments 27,117 -- 3,140,372
------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS: $27,396 $203,946 $ 3,339,466
------------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-7 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Operations (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended New OTC & Research U.S. Government
December 31, 1998 Value Emerging Sub-Account** and High
Sub-Account Growth Quality Bond
Sub-Account* Sub-Account
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $15,023 $ 11 $ 10 $ 69,049
.........................................................................................
Capital gains income 14,769 -- 1 1,797
.........................................................................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
.........................................................................................
Net realized gain (loss) on
security transactions (10,038) (2,332) 5 2,076
.........................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period 16,198 3,855 992 46,607
.........................................................................................
Net gain (loss) on investments 6,160 1,523 997 48,683
------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS: $35,952 $1,534 $1,008 $119,529
------------------------------------------------------------------------------------------
<CAPTION>
For the Year Ended Utilities Vista Voyager
December 31, 1998 Growth Sub-Account Sub-Account
and Income
Sub-Account
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 81,719 $ -- $ 36,862
................................
Capital gains income 140,845 -- 899,428
................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
................................
Net realized gain (loss) on
security transactions (5,378) (5,989) (5,067)
................................
Net unrealized appreciation
(depreciation) of investments
during the period 193,433 104,296 2,742,962
................................
Net gain (loss) on investments 188,055 98,307 2,737,895
------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS: $410,619 $98,307 $ 3,674,185
------------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
**From inception, October 1, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-8 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended Asia Pacific Diversified The George Global Asset
December 31, 1998 Growth Income Putnam Fund Allocation
Sub-Account Sub-Account of Boston Sub-Account
Sub-Account*
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 15,691 $ 115,993 $ 533 $ 74,618
.............................................................................................
Capital gains income -- 49,267 -- 320,508
.............................................................................................
Net realized gain (loss) on
security transactions (2,525) (4,217) (1) (1,780)
.............................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period (33,195) (207,136) 1,474 50,334
.............................................................................................
Net increase (decrease) in net
assets resulting from
operations (20,029) (46,093) 2,006 443,680
.............................................................................................
UNIT TRANSACTIONS:
Purchases -- 247 1,000 30
.............................................................................................
Net transfers 44,963 504,241 84,597 567,261
.............................................................................................
Surrenders (6,023) (147,039) (131) (159,728)
.............................................................................................
Net loan activity (6) (46,391) -- (1,101)
.............................................................................................
Cost of insurance (2,403) (19,553) (51) (22,714)
.............................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 36,531 291,505 85,415 383,748
.............................................................................................
Total increase (decrease) in net
assets 16,502 245,412 87,421 827,428
.............................................................................................
NET ASSETS:
Beginning of period 360,566 2,498,707 -- 3,132,989
----------------------------------------------------------------------------------------------
END OF PERIOD $377,068 $ 2,744,119 $ 87,421 $ 3,960,417
----------------------------------------------------------------------------------------------
<CAPTION>
For the Year Ended Global Growth Health
December 31, 1998 Growth and Income Sciences
Sub-Account Sub-Account Sub-Account*
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 192,953 $ 462,353 $ 260
................................
Capital gains income 964,765 3,018,243 --
................................
Net realized gain (loss) on
security transactions 3,991 (9,131) (8,148)
................................
Net unrealized appreciation
(depreciation) of investments
during the period 952,580 635,979 25,180
................................
Net increase (decrease) in net
assets resulting from
operations 2,114,289 4,107,444 17,292
................................
UNIT TRANSACTIONS:
Purchases 133 475 1,000
................................
Net transfers 1,500,956 6,667,783 275,928
................................
Surrenders (236,217) (1,155,100) (1,830)
................................
Net loan activity (27,699) (95,023) (2)
................................
Cost of insurance (53,883) (190,625) (667)
................................
Net increase (decrease) in net
assets resulting from unit
transactions 1,183,290 5,227,510 274,429
................................
Total increase (decrease) in net
assets 3,297,579 9,334,954 291,721
................................
NET ASSETS:
Beginning of period 6,390,730 24,501,429 --
----------------------------------------------------------------------------------------------
END OF PERIOD $ 9,688,309 $ 33,836,383 $291,721
----------------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-9 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended High Yield International International International
December 31, 1998 Sub-Account Growth Growth and New
Sub-Account Income Opportunities
Sub-Account Sub-Account
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 317,574 $ 2,618 $ 9,068 $ 1,182
.............................................................................................
Capital gains income 49,833 -- 23,112 --
.............................................................................................
Net realized gain (loss) on
security transactions (5,698) 162 (8,827) 627
.............................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period (617,216) 68,425 5,747 84,216
.............................................................................................
Net increase (decrease) in net
assets resulting from
operations (255,507) 71,205 29,100 86,025
.............................................................................................
UNIT TRANSACTIONS:
Purchases -- -- 12 --
.............................................................................................
Net transfers 955,419 436,437 369,699 96,630
.............................................................................................
Surrenders (189,929) (32,004) (18,515) (12,804)
.............................................................................................
Net loan activity 4,370 (476) (160) (16)
.............................................................................................
Cost of insurance (26,315) (3,272) (3,970) (4,122)
.............................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 743,545 400,685 347,066 79,688
.............................................................................................
Total increase (decrease) in net
assets 488,038 471,890 376,166 165,713
.............................................................................................
NET ASSETS:
Beginning of period 3,367,984 308,202 361,873 552,610
----------------------------------------------------------------------------------------------
END OF PERIOD $ 3,856,022 $780,092 $738,039 $718,323
----------------------------------------------------------------------------------------------
<CAPTION>
For the Year Ended Investors Money New
December 31, 1998 Sub-Account* Market Opportunities
Sub-Account Sub-Account
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 279 $ 203,946 $ --
................................
Capital gains income -- -- 199,094
................................
Net realized gain (loss) on
security transactions (2) -- (13,414)
................................
Net unrealized appreciation
(depreciation) of investments
during the period 27,119 -- 3,153,786
................................
Net increase (decrease) in net
assets resulting from
operations 27,396 203,946 3,339,466
................................
UNIT TRANSACTIONS:
Purchases 1,000 18,282,533 312
................................
Net transfers 227,413 (18,970,303) 2,416,753
................................
Surrenders (581) (84,770) (425,737)
................................
Net loan activity (13) (167,934) (19,980)
................................
Cost of insurance (239) (37,639) (93,946)
................................
Net increase (decrease) in net
assets resulting from unit
transactions 227,580 (978,113) 1,877,402
................................
Total increase (decrease) in net
assets 254,976 (774,167) 5,216,868
................................
NET ASSETS:
Beginning of period -- 4,369,507 12,542,647
----------------------------------------------------------------------------------------------
END OF PERIOD $254,976 $ 3,595,340 $ 17,759,515
----------------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-10 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended New OTC & Research U.S.
December 31, 1998 Value Emerging Sub-Account** Government
Sub-Account Growth and High
Sub-Account* Quality Bond
Sub-Account
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 15,023 $ 11 $ 10 $ 69,049
........................................................................................
Capital gains income 14,769 -- 1 1,797
........................................................................................
Net realized gain (loss) on
security transactions (10,038) (2,332) 5 2,076
........................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period 16,198 3,855 992 46,607
........................................................................................
Net increase (decrease) in net
assets resulting from
operations 35,952 1,534 1,008 119,529
........................................................................................
UNIT TRANSACTIONS:
Purchases 6 1,000 1,000 --
........................................................................................
Net transfers 7,892 43,737 4,389 753,569
........................................................................................
Surrenders (24,964) (116) (40) (43,665)
........................................................................................
Net loan activity (40,176) (301) (13) (368)
........................................................................................
Cost of insurance (5,238) (45) (15) (10,772)
........................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions (62,480) 44,275 5,321 698,764
........................................................................................
Total increase (decrease) in net
assets (26,528) 45,809 6,329 818,293
........................................................................................
NET ASSETS:
Beginning of period 881,714 -- -- 962,858
-----------------------------------------------------------------------------------------
END OF PERIOD $855,186 $45,809 $6,329 $1,781,151
-----------------------------------------------------------------------------------------
<CAPTION>
For the Year Ended Utilities Vista Voyager
December 31, 1998 Growth Sub-Account Sub-Account
and Income
Sub-Account
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 81,719 $ -- $ 36,862
................................
Capital gains income 140,845 -- 899,428
................................
Net realized gain (loss) on
security transactions (5,378) (5,989) (5,067)
................................
Net unrealized appreciation
(depreciation) of investments
during the period 193,433 104,296 2,742,962
................................
Net increase (decrease) in net
assets resulting from
operations 410,619 98,307 3,674,185
................................
UNIT TRANSACTIONS:
Purchases -- -- 372
................................
Net transfers 704,200 169,516 3,138,920
................................
Surrenders (96,008) (9,634) (527,418)
................................
Net loan activity (13,012) (2,798) (17,815)
................................
Cost of insurance (20,396) (4,013) (107,679)
................................
Net increase (decrease) in net
assets resulting from unit
transactions 574,784 153,071 2,486,380
................................
Total increase (decrease) in net
assets 985,403 251,378 6,160,565
................................
NET ASSETS:
Beginning of period 2,298,927 449,926 13,566,878
-----------------------------------------------------------------------------------------
END OF PERIOD $ 3,284,330 $701,304 $ 19,727,443
-----------------------------------------------------------------------------------------
</TABLE>
*From inception, April 30, 1998, to December 31, 1998.
**From inception, October 1, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-11 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended Asia Diversified Global Global
December 31, 1997 Pacific Income Asset Growth
Growth Sub-Account Allocation 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)
.......................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 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
----------------------------------------------------------------------------------------
<CAPTION>
For the Year Ended Growth High Yield International International
December 31, 1997 and Income Sub-Account Growth Growth
Sub-Account Sub-Account* and Income
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)
................................
Net increase (decrease) in net
assets resulting from unit
transactions 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 12,952,264 1,691,798 -- --
----------------------------------------------------------------------------------------
END OF PERIOD $ 24,501,429 $ 3,367,984 $308,202 $361,873
----------------------------------------------------------------------------------------
</TABLE>
*From inception, January 2, 1997 to December 31, 1997.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-12 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Statements of Changes in Net Assets (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Year Ended International Money New New
December 31, 1997 New Market Opportunities Value
Opportunities Sub-Account Sub-Account Sub-Account*
Sub-Account*
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 1,554 $ 263,015 $ -- $ --
............................................................................................
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)
............................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 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
---------------------------------------------------------------------------------------------
<CAPTION>
For the Year Ended U.S. Government Utilities Vista Voyager
December 31, 1997 and High Growth Sub-Account* Sub-Account
Quality Bond and Income
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)
................................
Net increase (decrease) in net
assets resulting from unit
transactions 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
---------------------------------------------------------------------------------------------
</TABLE>
*From inception, January 2, 1997 to December 31, 1997.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-13 PROSPECTUS
<PAGE>
PUTNAM CAPITAL MANAGER TRUST SEPARATE ACCOUNT FIVE -- HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Notes to Financial Statements
December 31, 1998
1. ORGANIZATION:
Putnam Capital Manager Trust Separate Account Five (the Account) is a separate
investment account within 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 various
mutual funds (the 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 is
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, 1998.
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:
A) COST OF INSURANCE -- In accordance with terms of the contracts, the Company
makes deductions for costs of insurance to cover the Company's anticipated
mortality costs. Because a policy's account value and death benefit may vary
from month to month, the cost of insurance charges may also vary.
B) MORTALITY AND EXPENSE UNDERTAKINGS -- The Company, as issuer of variable
annuity contracts, provides the mortality and expense undertakings and, with
respect to the Account, receives a maximum annual fee of 0.90% of the Account's
average daily net assets. The Company also provides administrative services and
receives an annual fee of 0.40% of the Account's average daily net assets. These
expenses are reflected in surrenders on the accompanying statements of changes
in net assets.
C) DEDUCTION OF ANNUAL MAINTENANCE FEE -- Annual maintenance fees are deducted
through termination of units of interest from applicable contract owners'
accounts, in accordance with the terms of the contracts. These expenses are
reflected in surrenders on the accompanying statements of changes in net assets.
D) TAX EXPENSE CHARGE -- The Company will deduct monthly from the account value
a tax expense charge equal to an annual rate of 0.40% for the first ten years.
During the first nine policy years, a premium tax charge will be imposed on full
or partial surrenders at a maximum rate of 2.25%.
SA-14 PROSPECTUS
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Directors of
Hartford Life and Annuity Insurance Company:
We have audited the accompanying statutory balance sheets of Hartford Life and
Annuity Insurance Company (a Connecticut Corporation and wholly owned subsidiary
of Hartford Life Insurance Company) (the Company) as of December 31, 1998 and
1997, and the related statutory statements of operations, changes in capital and
surplus, and cash flows for each of the three years in the period ended December
31, 1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these statutory
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The Company presents its financial statements in conformity with statutory
accounting practices as described in Note 1 of notes to statutory financial
statements. When statutory financial statements are presented for purposes other
than for filing with a regulatory agency, generally accepted auditing standards
require that an auditors' report on them state whether they are presented in
conformity with generally accepted accounting principles. The accounting
practices used by the Company vary from generally accepted accounting principles
as explained and quantified in Note 1.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the statutory financial statements referred to above do not present
fairly, in conformity with generally accepted accounting principles, the
financial position of the Company as of December 31, 1998 and 1997, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1998.
However, in our opinion, the statutory financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of December 31, 1998 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998 in
conformity with statutory accounting practices as described in Note 1.
/s/ Arthur Andersen LLP
Hartford, Connecticut
January 26, 1999
F-1 PROSPECTUS
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
BALANCE SHEETS
(STATUTORY BASIS)
($000)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------
1998 1997
----------- -----------
<S> <C> <C>
Assets
Bonds........................................... $ 1,453,792 $ 1,501,311
Common stocks................................... 40,650 64,408
Mortgage loans.................................. 59,548 85,103
Policy loans.................................... 47,212 36,533
Cash and short-term investments................. 469,955 309,432
Other invested assets........................... 2,188 20,942
----------- -----------
Total cash and invested assets................ 2,073,345 2,017,729
Investment income due and accrued............... 20,126 15,878
Premium balances receivable..................... 333 389
Receivables from affiliates..................... -- 1,269
Other assets.................................... 45,358 22,788
Separate account assets......................... 32,876,278 23,208,728
----------- -----------
Total Assets.................................. $35,015,440 $25,266,781
----------- -----------
----------- -----------
Liabilities
Aggregate reserves for future benefits.......... $ 579,140 $ 605,183
Policy and contract claims...................... 5,667 5,672
Liability for premium and other deposit funds... 2,011,672 1,795,149
Asset valuation reserve......................... 21,782 13,670
Payable to affiliates........................... 19,271 20,972
Other liabilities............................... (974,882) (754,393)
Separate account liabilities.................... 32,876,278 23,208,728
----------- -----------
Total liabilities............................. 34,538,928 24,894,981
----------- -----------
Capital and Surplus
Common stock.................................... 2,500 2,500
Gross paid-in and contributed surplus........... 226,043 226,043
Unassigned funds................................ 247,969 143,257
----------- -----------
Total capital and surplus..................... 476,512 371,800
----------- -----------
Total liabilities, capital and surplus............ $35,015,440 $25,266,781
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-2 PROSPECTUS
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
(STATUTORY BASIS)
($000)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Revenues
Premiums and annuity considerations............. $ 469,343 $ 296,645 $ 250,244
Annuity and other fund deposits................. 2,051,251 1,981,246 1,897,347
Net investment income........................... 129,982 102,285 98,441
Commissions and expense allowances on
reinsurance ceded.............................. 444,241 396,921 370,637
Reserve adjustment on reinsurance ceded......... 3,185,590 3,672,076 3,864,395
Other revenues.................................. 458,190 288,632 161,906
----------- ----------- -----------
Total revenues................................ 6,738,597 6,737,805 6,642,970
----------- ----------- -----------
Benefits and expenses
Death and annuity benefits...................... 43,390 66,176 60,194
Disability and other benefit payments........... 6,114 7,316 6,555
Surrenders...................................... 739,663 454,417 270,165
Commissions and other expenses.................. 666,515 564,077 491,637
Increase (Decrease) in aggregate reserves for
future benefits................................ (26,043) 33,213 27,351
Increase in liability for premium and other
deposit funds.................................. 216,523 640,006 207,156
Net transfers to separate accounts.............. 4,956,007 4,914,980 5,492,964
----------- ----------- -----------
Total benefits and expenses................... 6,602,169 6,680,185 6,556,022
----------- ----------- -----------
Net gain from operations
Before federal income tax (benefit) expense..... 136,428 57,620 86,948
Federal income tax (benefit) expense............ 35,887 (14,878) 19,360
----------- ----------- -----------
Net gain from operations.......................... 100,541 72,498 67,588
Net realized capital gains, after tax........... 2,085 1,544 407
----------- ----------- -----------
Net income........................................ $ 102,626 $ 74,042 $ 67,995
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-3 PROSPECTUS
<PAGE>
Hartford Life and Annuity Insurance Company
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
(STATUTORY BASIS)
($000)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Common stock,
Beginning and end of year....................... $ 2,500 $ 2,500 $ 2,500
----------- ----------- -----------
Gross paid-in and contributed surplus,
Beginning and end of year....................... $ 226,043 $ 226,043 $ 226,043
----------- ----------- -----------
Unassigned funds
Balance, beginning of year...................... $ 143,257 $ 74,570 $ 9,791
Net income...................................... 102,626 74,042 67,995
Change in net unrealized capital gains (losses)
on common stocks and other invested assets..... 1,688 2,186 (5,171)
Change in asset valuation reserve............... (8,112) (6,228) 568
Change in non-admitted assets................... (1,277) (1,313) 1,387
Credit on reinsurance ceded..................... 9,787 -- --
----------- ----------- -----------
Balance, end of year............................ $ 247,969 $ 143,257 $ 74,570
----------- ----------- -----------
Capital and surplus,
End of year..................................... $ 476,512 $ 371,800 $ 303,113
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-4 PROSPECTUS
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
(STATUTORY BASIS)
($000)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Operations
Premiums and annuity considerations............. $ 2,520,655 $ 2,277,874 $ 2,147,627
Investment income............................... 127,425 101,991 106,178
Other income.................................... 4,092,964 4,381,718 4,396,892
----------- ----------- -----------
Total income.................................. 6,741,044 6,761,583 6,650,697
----------- ----------- -----------
Benefits paid................................... 790,051 529,733 338,998
Federal income taxes (received) paid on
operations..................................... 25,780 (14,499) 28,857
Other expenses.................................. 5,859,063 5,754,725 6,254,139
----------- ----------- -----------
Total benefits and expenses................... 6,674,894 6,269,959 6,621,994
----------- ----------- -----------
Net cash from operations...................... 66,150 491,624 28,703
----------- ----------- -----------
Proceeds from investments
Bonds........................................... 633,926 614,413 871,019
Common stocks................................... 34,010 11,481 72,100
Mortgage loans.................................. 85,275 -- --
Other........................................... 127 152 10
----------- ----------- -----------
Net investment proceeds....................... 753,338 626,046 943,129
----------- ----------- -----------
Taxes paid on capital gains..................... -- -- 936
Other cash provided............................. 1,269 -- 41,998
----------- ----------- -----------
Total proceeds................................ 820,757 1,117,670 1,012,894
----------- ----------- -----------
Cost of investments acquired
Bonds........................................... 586,913 848,267 914,523
Common stocks................................... 7,012 28,302 82,495
Mortgage loans.................................. 59,702 85,103 --
Other........................................... 1,168 18,548 130
----------- ----------- -----------
Total investments acquired.................... 654,795 980,220 997,148
----------- ----------- -----------
Other cash applied
Other........................................... 5,439 4,848 12,220
----------- ----------- -----------
Total other cash applied...................... 5,439 4,848 12,220
----------- ----------- -----------
Total applications............................ 660,234 985,068 1,009,368
----------- ----------- -----------
Net change in cash and short-term investments..... 160,523 132,602 3,526
Cash and short-term investments, beginning of
year............................................. 309,432 176,830 173,304
----------- ----------- -----------
Cash and short-term investments, end of year...... $ 469,955 $ 309,432 $ 176,830
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-5 PROSPECTUS
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1998
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION
Hartford Life and Annuity Insurance Company ("ILA" or "the Company"), formerly
known as ITT Hartford Life and Annuity Insurance Company, is a wholly owned
subsidiary of Hartford Life Insurance Company ("HLIC"), which is an indirect
subsidiary of Hartford Life, Inc. ("HLI"), which is majority owned by The
Hartford Financial Services Group, Inc. ("The Hartford"), formerly a wholly
owned subsidiary of ITT Corporation ("ITT"). On February 10, 1997, HLI filed a
registration statement, as amended, with the Securities and Exchange Commission
relating to the initial public offering of HLI Class A Common Stock (the
"Offering"). Pursuant to the Offering on May 22, 1997, HLI sold to the public 26
million shares, representing 18.6% of the equity ownership of HLI. 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"), the State of
Connecticut Department of Insurance and the State of Wisconsin for the 1996
period, as applicable. Certain prior year amounts and balances have been
reclassified to conform with current year presentation.
Current prescribed statutory accounting practices include accounting
publications of the National Association of Insurance Commissioners ("NAIC"), as
well as state laws, regulations and general administrative rules. Permitted
statutory accounting practices encompass accounting practices approved by State
Insurance Departments. The Company does not follow any permitted statutory
accounting practices that have a material effect on statutory surplus, statutory
net income or risk-based capital.
Final approval of the NAIC's proposed "Comprehensive Guide" on statutory
accounting principles was distributed in 1998. The requirements are effective
January 1, 2001, and are not expected to have a material impact on statutory
surplus of the Company.
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. The most significant estimates include those used in
determining the liability for aggregate reserves for future benefits and the
liability for premium and other deposit funds. Although some variability is
inherent in these estimates, management believes the amounts provided are
adequate.
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 for GAAP purposes;
(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, for universal life policies and
investment products, generally, 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;
F-6 PROSPECTUS
<PAGE>
(5) excluding certain GAAP assets designated as non-admitted assets (e.g.,
negative Interest Maintenance Reserve, 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 currently, or using a twenty year phase-in approach, whereas GAAP
liabilities are recorded upon adoption of the applicable standard;
(7) establishing a formula reserve for realized and unrealized losses due to
default and equity risk associated with certain invested assets (Asset
Valuation Reserve); as well as the deferral and amortization of realized
gains and losses, motivated by changes in interest rates during the period
the asset is held, into income over the remaining life to maturity of the
asset sold (Interest Maintenance Reserve); whereas on a GAAP basis, no such
formula reserve is required and realized gains and losses are recognized in
the period the asset is sold;
(8) the reporting of reserves and benefits net of reinsurance ceded, where risk
transfer has taken place, whereas on a GAAP basis, reserves are reported
gross of reinsurance with reserve credits presented as recoverable assets;
as well as, the accounting for retroactive reinsurance which is immediately
charged to surplus for statutory accounting purposes whereas GAAP precludes
immediate gain recognition unless the ceding enterprise's liability to its
policyholders is extinguished; as well as reinsurance ceded that fails to
meet GAAP risk transfer guidelines would result in deposit accounting for
GAAP where as for statutory, reserves ceded and assumed would be reflected
in the statutory basis statements of operations;
(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 bonds were classified on a GAAP basis
as "available-for-sale" and accordingly, those investments and common stocks
were reflected at fair value with the corresponding impact included as a
component of Stockholder's Equity designated as "Net unrealized capital
gains (losses) on securities net of tax". For statutory reporting purposes,
Change in Net Unrealized Capital Gains (Losses) on Common Stocks and Other
Invested Assets includes the change in unrealized gains (losses) 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, the significant differences between
Statutory and GAAP basis net income and capital and surplus for the Company are
as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
GAAP Net Income.................... $ 74,525 $ 58,050 $ 41,202
Amortization and deferral of policy
acquisition costs, net............ (331,882) (345,657) (341,571)
Change in unearned revenue
reserve........................... 22,131 4,641 55,504
Deferred taxes..................... 2,476 47,092 2,090
Separate accounts.................. 259,287 282,818 306,978
Asset impairments and write-
downs............................. 17,250 -- --
Benefit reserve adjustment......... 32,759 24,666 (1,013)
Deposit accounting for Lyndon
reinsurance (Note 3).............. 24,627 -- --
Other, net......................... 1,453 2,432 4,805
------------ ------------ ------------
Statutory Net Income............... $ 102,626 $ 74,042 $ 67,995
------------ ------------ ------------
------------ ------------ ------------
GAAP Capital and Surplus........... $ 648,097 $ 570,469 $ 503,887
Deferred policy acquisition
costs............................. (1,615,653) (1,283,771) (938,114)
Unearned revenue reserve........... 156,920 134,789 130,148
Deferred taxes..................... 68,936 64,522 12,823
Separate accounts.................. 1,183,642 924,355 640,101
Asset impairments and write-
downs............................. 17,250 -- --
Unrealized gains on bonds.......... (26,119) (21,451) (7,978)
Benefit reserve adjustment......... 65,029 16,378 7,035
Asset valuation reserve............ (21,782) (13,670) (7,442)
Adjustment relating to Lyndon
contribution (Note 3)............. -- (23,671) (36,126)
Other, net......................... 192 3,850 (1,221)
------------ ------------ ------------
Statutory Capital and Surplus...... $ 476,512 $ 371,800 $ 303,113
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
As more fully described in Note 3, Lyndon Insurance Company (Lyndon) was
contributed to the Company on June 30, 1995. The GAAP net assets contributed
exceeded the statutory basis net assets by $41,277 as of December 31, 1995,
relating primarily to statutory reserves for future benefits, GAAP deposit
accounting receivables and deferred tax liabilities. In 1998, the majority of
the former Lyndon's assumed business was recaptured by the unaffiliated direct
writer.
AGGREGATE RESERVES FOR FUTURE BENEFITS AND LIABILITY 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 6%.
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
F-7 PROSPECTUS
<PAGE>
these contracts are reported in the statutory basis statements of operations.
INVESTMENTS
Investments in bonds are carried at amortized cost. Bonds that 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.
Short-term investments consist of money market funds and are stated at cost,
which approximates fair value. Common stocks are carried at fair value with the
current year change in the difference from cost reflected in surplus. Other
invested assets are generally recorded at fair value.
The Company uses a variety of derivative financial instruments as part of an
overall risk management strategy. These instruments, including interest rate and
foreign currency swaps, caps, and floors are used as a means of hedging exposure
to price, foreign currency and/or interest rate risk on planned investment
purchases or existing assets and liabilities. The Company does not hold or issue
derivative financial instruments for trading purposes. Derivatives must be
designated at inception as a hedge measured for effectiveness both at inception
and on an ongoing basis. The Company's correlation threshold for hedge
designation is 80% to 120%. If correlation, which is assessed monthly and
measured based on a rolling three month average, falls outside the 80% to 120%
range, hedge accounting will be terminated.
Interest rate swaps involve the periodic exchange of payments without the
exchange of underlying principal or notional amounts. Net receipts or payments
are accrued and recognized over the life of the swap agreement as an adjustment
to net investment income. Should the swap be terminated the gains or losses are
adjusted into the basis of the asset or liability and amortized over the
remaining life. Should the hedged asset be sold or liability terminated without
terminating the swap position, any swap gains or losses are immediately
recognized in net investment income. Interest rate swaps purchased in
anticipation of an asset purchase ("anticipatory transaction") are recognized
consistent with the underlying asset components such that the settlement
component is recognized in the statutory basis statements of operations while
the change in market value is recognized as an unrealized gain or loss. Foreign
currency swaps are similar to interest rate swaps except there is an initial
exchange of principal in two currencies and an agreement to re-exchange the
currencies at a future date, at an agreed upon exchange rate.
Premiums paid on purchased floor or cap agreements and the premium received on
issued cap or floor agreements (used for risk management) are adjusted into the
basis of the applicable asset and amortized over the asset life. Gains or losses
on termination of such positions are adjusted into the basis of the asset or
liability and amortized over the remaining asset life. Net payments are
recognized as an adjustment to income or basis adjusted and amortized depending
on the specific hedge strategy.
Derivatives used to create a synthetic asset must meet synthetic accounting
criteria, including designation at inception and consistency of terms between
the synthetic and the instrument being replicated. Consistent with industry
practice, synthetic instruments are accounted for like the financial instrument
they are intended to replicate. Derivatives which fail to meet risk management
criteria subsequent to acquisition, are accounted for at fair market value with
the impact reflected in the statutory basis statements of operations.
Open forward commitment contracts are marked to market through surplus. Such
contracts are accounted for at settlement by recording the purchase of specified
securities at the previously committed price. Gains or losses resulting from
termination of the forward commitment contracts before the delivery of the
securities are recognized immediately in the statutory basis statements of
operations as a component of Net Realized Capital Gains, after tax.
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 increased $8,112 and $6,228
in 1998 and 1997, respectively and decreased $(568) in 1996. 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 life of the mortgage
loan or bond sold. The IMR balance as of December 31, 1998 and December 31, 1997
was $452 and $(193), respectively and is reflected in Other Liabilities and as a
component of non-admitted assets in Unassigned Funds for each of the years then
ended. For the years ended December 31, 1998, 1997 and 1996, amortization of IMR
is included in Other Revenues and was $(207), $(85) and $(392), respectively.
Realized capital gains and losses, net of taxes not included in IMR are reported
in the statutory basis statements of operations. Realized investment gains and
losses are determined on a specific identification basis.
OTHER LIABILITIES
The amount reflected in other liabilities includes a receivable from the
separate accounts of $1,187 million and $923 million as of December 31, 1998 and
1997, respectively. The balances are classified in accordance with NAIC
prescribed practices.
MORTGAGE LOANS
Mortgage loans, which are carried at cost and approximate fair value, include
investments in assets backed by mortgage loan pools.
F-8 PROSPECTUS
<PAGE>
2. INVESTMENTS:
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Interest income from bonds and
short-term investments............ $ 123,370 $ 100,475 $ 89,940
Interest income from policy
loans............................. 3,133 1,958 1,846
Interest and dividends from other
investments....................... 4,482 1,005 7,864
--------- --------- ---------
Gross investment income............ 130,985 103,438 99,650
Less: investment expenses.......... 1,003 1,153 1,209
--------- --------- ---------
Net investment income.............. $ 129,982 $ 102,285 $ 98,441
--------- --------- ---------
--------- --------- ---------
</TABLE>
(B) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON COMMON STOCKS
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Gross unrealized capital gains.... $ 2,204 $ 537 $ 713
Gross unrealized capital losses... (1,871) (1,820) (4,160)
--------- --------- ---------
Net unrealized capital
(losses)/gains................... 333 (1,283) (3,447)
Balance, beginning of year........ (1,283) (3,447) 1,724
--------- --------- ---------
Change in net unrealized capital
gains (losses) on Common
stocks........................... $ 1,616 $ 2,164 $ (5,171)
--------- --------- ---------
--------- --------- ---------
</TABLE>
(C) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON BONDS AND
SHORT-TERM INVESTMENTS
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Gross unrealized capital
gains.......................... $ 10,905 $ 23,357 $ 11,821
Gross unrealized capital
losses......................... (833) (1,906) (3,842)
--------- --------- ---------
Net unrealized capital gains.... 10,072 21,451 7,979
Balance, beginning of year...... 21,451 7,979 20,877
--------- --------- ---------
Change in net unrealized capital
gains on bonds and short-term
investments.................... $ (11,379) $ 13,472 $ (12,898)
--------- --------- ---------
--------- --------- ---------
</TABLE>
(D) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Bonds and short-term investments.... $ 1,314 $ (120) $ 2,756
Common stocks....................... 1,624 -- --
Real estate and other............... (1) 114 --
--------- --------- ---------
Realized capital (losses) gains..... 2,937 (6) 2,756
Capital gains (benefit) tax......... -- (831) 936
--------- --------- ---------
Net realized capital gains.......... 2,937 825 1,820
Amounts transferred to IMR.......... 852 (719) 1,413
--------- --------- ---------
Net realized capital gains.......... $ 2,085 $ 1,544 $ 407
--------- --------- ---------
--------- --------- ---------
</TABLE>
(E) OFF-BALANCE SHEET INVESTMENTS
The Company had no significant financial instruments with off-balance sheet risk
as of December 31, 1998.
(F) CONCENTRATION OF CREDIT RISK
The Company has invested in securities of a single issuer, Bankers Trust
Corporation, in an amount greater than 10% of the Company's statutory capital
and surplus. The statement value of this investment was $105,221 as of December
31, 1998. The NAIC ratings on these holdings were 1z and 2. Excluding this and
U.S. government and government agency investments, the Company had no other
significant concentrations of credit risk as of December 31, 1998.
(G) BONDS, SHORT-TERM INVESTMENTS AND COMMON STOCKS
<TABLE>
<CAPTION>
1998
------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. government and government agencies and authorities:
-- Guaranteed and sponsored.................................... $ 4,982 $ 35 $ (2) $ 5,015
-- Guaranteed and sponsored -- asset-backed.................... 75,615 -- -- 75,615
States, municipalities and political subdivisions................ 10,402 415 -- 10,817
International governments........................................ 7,466 568 -- 8,034
Public utilities................................................. 94,475 1,330 (39) 95,766
All other corporate.............................................. 607,679 8,473 (792) 615,360
All other corporate -- asset-backed.............................. 505,900 -- -- 505,900
Short-term investments........................................... 343,783 -- -- 343,783
Certificates of deposit.......................................... 130,216 84 -- 130,300
Parents, subsidiaries and affiliates............................. 117,057 -- -- 117,057
---------- ---------- ----- ----------
Total bonds and short-term investments........................... $1,897,575 $10,905 $(833) $1,907,647
---------- ---------- ----- ----------
---------- ---------- ----- ----------
</TABLE>
F-9 PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Common stock -- unaffiliated................................. $ 4,933 $ 290 $ (50) $ 5,173
Common stock -- affiliated................................... 35,384 1,914 (1,821) 35,477
--------- ---------- ---------- ----------
Total common stocks.......................................... $40,317 $2,204 $(1,871) $40,650
--------- ---------- ---------- ----------
--------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
1997
------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. government and government agencies and authorities:
-- Guaranteed and sponsored.................................... $ 11,114 $ 55 $ (51) $ 11,118
-- Guaranteed and sponsored -- asset-backed.................... 55,506 1,056 (269) 56,293
States, municipalities and political subdivisions................ 26,404 329 -- 26,733
International governments........................................ 7,609 500 -- 8,109
Public utilities................................................. 73,024 754 (132) 73,646
All other corporate.............................................. 517,715 14,110 (704) 531,121
All other corporate -- asset-backed.............................. 630,069 5,005 (739) 634,335
Short-term investments........................................... 277,330 33 (8) 277,355
Certificates of deposit.......................................... 93,770 1,515 (3) 95,282
Parents, subsidiaries and affiliates............................. 86,100 -- -- 86,100
---------- ---------- ---------- ----------
Total bonds and short-term investments........................... $1,778,641 $23,357 $(1,906) $1,800,092
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Common stock -- unaffiliated................................. $30,307 $537 $ -- $30,844
Common stock -- affiliated................................... 35,384 -- (1,820) 33,564
--------- ----- ---------- ----------
Total common stocks.......................................... $65,691 $537 $(1,820) $64,408
--------- ----- ---------- ----------
--------- ----- ---------- ----------
</TABLE>
The amortized cost and estimated fair value of bonds and short-term investments
as of December 31, 1998 by estimated maturity year are shown below. Asset-backed
securities, including mortgage backed securities and collaterialized mortgage
obligations, are distributed to maturity year based on ILA's estimates of the
rate of future prepayments of principal over the remaining lives of the
securities. Expected maturities differ from contractual maturities due to call
or repayment provisions.
<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
MATURITY COST FAIR VALUE
- ----------------------------------- ------------ ------------
<S> <C> <C>
One year or less................... $ 788,845 $ 792,826
Over one year through five years... 689,025 692,811
Over five years through ten
years............................. 308,661 310,357
Over ten years..................... 111,044 111,653
------------ ------------
Total.............................. $ 1,897,575 $ 1,907,647
------------ ------------
------------ ------------
</TABLE>
Proceeds from sales and maturities of investments in bonds and short-term
investments during 1998, 1997 and 1996 were $1,354,563, $1,435,820 and
$1,139,073, respectively, resulting in gross realized gains of $1,705, $964 and
$3,675, respectively, and gross realized losses of $391, $1,084 and $919,
respectively, before transfers to IMR.
(H) FAIR VALUE OF FINANCIAL INSTRUMENTS BALANCE SHEET ITEMS (IN MILLIONS):
<TABLE>
<CAPTION>
1998 1997
-------------------------- --------------------------
CARRYING ESTIMATED CARRYING ESTIMATED
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Assets
Bonds and short-term
investments..................... $ 1,898 $ 1,908 $ 1,779 $ 1,800
Common stocks.................... 41 41 64 64
Policy loans..................... 47 47 37 37
Mortgage loans................... 60 60 85 85
Other invested assets............ 2 2 21 21
Liabilities
Liabilities on investment
contracts....................... $ 2,053 $ 2,129 $ 1,911 $ 1,835
</TABLE>
The estimated fair value of bonds and short-term investments was determined by
the Company primarily using NAIC market values. The carrying amounts for policy
loans approximates fair value. The fair value of mortgage loans was determined
by discounting future
F-10 PROSPECTUS
<PAGE>
expected cash flows using interest rates currently being offered for similar
loans. The fair value of liabilities on investment contracts is determined by
forecasting future cash flows and discounting the forecasted cash flows at
current market interest rates.
3. AGGREGATE RESERVES FOR FUTURE BENEFITS
The Company's existing reserves consist of life, health, annuity and
supplementary contracts. The Company cedes and assumes insurance to and from
non-affiliated insurers in order to limit its maximum loss. Such transfers do
not relieve the Company or the unaffiliated reinsured of their primary
liabilities. The Company cedes to RGA Reinsurance Company and its affiliate
Employers Reassurance Corporation, on a modified coinsurance basis, 80% of the
variable annuity business written since 1994 and 100% of the variable life and
variable universal life excess sales load refund obligation effective 1998.
There were no material reinsurance recoverables from reinsurers outstanding as
of, and for the years ended, December 31, 1998 and 1997.
A summary of reinsurance information as of and for the years ended December 31,
follows:
<TABLE>
<CAPTION>
1998 DIRECT ASSUMED CEDED NET
- ----------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Premium and Annuity
Considerations.................... $ 483,328 $ 24,954 $ (38,939) $ 469,343
Death, Annuity, Disability and
Other Benefits.................... $ 64,331 $ 1,574 $ (16,401) $ 49,504
Surrenders......................... $ 739,663 $ -- $ -- $ 739,663
Aggregate Reserves for Future
Benefits.......................... $ 713,425 $ -- $ (134,285) $ 579,140
Policy and Contract Claims......... $ 5,895 $ 85 $ (313) $ 5,667
<CAPTION>
1997 DIRECT ASSUMED CEDED NET
- ----------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Premium and Annuity
Considerations.................... $ 266,427 $ 51,630 $ (21,412) $ 296,645
Death, Annuity, Disability and
Other Benefits.................... $ 79,779 $ 839 $ (7,126) $ 73,492
Surrenders......................... $ 454,417 $ -- $ -- $ 454,417
Aggregate Reserves for Future
Benefits.......................... $ 651,820 $ -- $ (46,637) $ 605,183
Policy and Contract Claims......... $ 5,861 $ 157 $ (346) $ 5,672
<CAPTION>
1996 DIRECT ASSUMED CEDED NET
- ----------------------------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Premium and Annuity
Considerations.................... $ 226,612 $ 33,817 $ (10,185) $ 250,244
Death, Annuity, Disability and
Other Benefits.................... $ 34,950 $ 35,138 $ (3,339) $ 66,749
Surrenders......................... $ 270,165 $ -- $ -- $ 270,165
</TABLE>
In connection with the distribution described in Note 1, on June 30, 1995, the
assets of Lyndon were contributed to the Company. The statutory basis assets in
excess of statutory basis liabilities was approximately $112 million and was
reflected as an increase in Gross Paid-In and Contributed Surplus at December
31, 1995. In 1998, the majority of former Lyndon's assumed business was
recaptured by the unaffiliated direct writer. A ceding commission of $25,622 and
change in reserve of $26,404 for the year ended December 31, 1998, is reflected
in Other Revenue and Increase/(Decrease) in Aggregate Reserves for Future
Benefits in the statutory basis statements of operations, respectively.
Analysis of Annuity Actuarial Reserves and Deposit Liabilities by Withdrawal
Characteristics as of December 31, 1998 (including general and separate account
liabilities) are as follows:
<TABLE>
<CAPTION>
% OF
SUBJECT TO DISCRETIONARY WITHDRAWAL: AMOUNT TOTAL
- --------------------------------------- ----------- ---------
<S> <C> <C>
With market value adjustment........... $ 4,563 0.0%
At book value less current surrender
charge of 5% or more.................. 1,378,056 4.1%
At market value........................ 31,087,511 93.8%
----------- ---------
Total with adjustment or at market
value................................. 32,470,130 97.9%
At book value without adjustment
(minimal or no charge or
adjustment)........................... 665,159 2.0%
Not subject to discretionary
withdrawal............................ 19,739 0.1%
----------- ---------
Reinsurance ceded...................... 33,155,028
Total, net......................... $33,155,028
-----------
-----------
</TABLE>
4. RELATED PARTY TRANSACTIONS:
Transactions between the Company and its affiliates within The Hartford relate
principally to tax settlements, reinsurance, rental and service fees, capital
contributions and payments of dividends. The Company has also invested in bonds
of its affiliates, Hartford Financial Services Corporation and HL Investment
Advisors, Inc., and common stock of its subsidiary, ITT Hartford Life, LTD.
5. 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 filing separate Federal, state and local
income tax returns.
As long as The Hartford continues to own at least 80% of the combined voting
power and 80% of the value of the outstanding capital stock of HLI, 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 intention of The Hartford and
its non-life subsidiaries to file a single consolidated Federal income tax
return. The life insurance companies will file a separate consolidated Federal
income tax return. Federal income taxes (received) paid by the Company for
operations and capital gains were $25,780, $(14,499) and $29,793 in 1998,
F-11 PROSPECTUS
<PAGE>
1997 and 1996, respectively. The effective tax rate was 26%, (26)% and 22% in
1998, 1997 and 1996, respectively.
The Company is currently under audit by the Internal Revenue Service (IRS) for
the three year tax period ending 1995. The audit is not yet complete. As of
December 31, 1998, the Company does not currently expect any material
adjustments to arise from this audit.
The following schedule provides a reconciliation of the tax provision at the
U.S. Federal Statutory rate to Federal income tax (benefit) expense (in
millions):
<TABLE>
<CAPTION>
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Tax provision at U.S. Federal statutory
rate.................................. $ 48 $ 20 $ 30
Tax deferred acquisition costs......... 25 25 27
Statutory to tax reserve differences... 8 1 --
Unrealized gain on separate accounts... (41) (44) (21)
Investments and other.................. (4) (17) (17)
--- --- ---
Federal income tax (benefit) expense... $ 36 $ (15) $ 19
--- --- ---
--- --- ---
</TABLE>
6. 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 generally restricted
to the greater of 10% of surplus as of the preceding December 31st or the net
gain from operations for the previous year. Dividends are paid as determined by
the Board of Directors and are not cumulative. No dividends were paid in 1998,
1997 and 1996. The amount available for dividend in 1999 is $100,541.
7. PENSION PLANS AND OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS:
HLI'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.
HLI'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, as amended, and the maximum amount that can be deducted for U.S. Federal
income tax purposes. Generally, pension costs are funded through the purchase of
affiliated group pension contracts. The cost to HLI was approximately $9,000 in
1998 and $7,000 in both 1997 and 1996.
HLI also provides, through The Hartford, certain health care and life insurance
benefits for eligible retired employees. A substantial portion of HLI's
employees may become eligible for these benefits upon retirement. HLI's
contribution for health care benefits will depend on the retiree's date of
retirement and years of service. In addition, the plan has a defined dollar cap
which limits average company contributions. HLI 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. Postretirement health
care and life insurance benefits expense, allocated by The Hartford, was
immaterial to the results of operations for 1998, 1997 and 1996.
The assumed rate in the per capita cost of health care (the health care trend
rate) was 7.8% for 1998, decreasing ratably to 5.0% in the year 2003. Increasing
the health care trend rates by one percent per year would have an immaterial
impact on the accumulated postretirement benefit obligation and the annual
expense. To the extent that the actual experience differs from the inherent
assumptions, the effect will be amortized over the average future service of
covered employees.
8. SEPARATE ACCOUNTS:
The Company maintains separate account assets and liabilities totaling $32.9
billion and $23.2 billion as of December 31, 1998 and 1997, respectively.
Separate account assets are reported at fair value and separate account
liabilities are determined in accordance with CARVM, which approximates the
market value less applicable surrender charges. Separate account assets are
segregated from other investments, the policyholder assumes the investment risk,
and the investment income and gains and losses accrue directly to the
policyholder. Separate account management fees, net of minimum guarantees, were
$360 million, $252 million and $144 million in 1998, 1997 and 1996,
respectively, and are recorded as a component of other revenues on the statutory
basis statements of operations.
9. COMMITMENTS AND CONTINGENCIES:
As of December 31, 1998, 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 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, at the present
time the Company does not anticipate that the ultimate liability arising from
such pending or threatened litigation, after consideration of provisions made
for potential losses and costs of defense, will have a material adverse effect
on the statutory capital and surplus of the Company.
As discussed in Note 5, issues may potentially be raised by the IRS in future
audits of open years. Management does not believe that possible audit
adjustments will have a material effect on the statutory capital and surplus of
the Company.
Under insurance guaranty fund laws in each state, insurers licensed to do
business 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 $1,043, $1,544 and $1,262 in 1998, 1997 and
1996, respectively. ILA incurred guaranteed fund expense of $548 in 1998, 1997
and 1996.
F-12 PROSPECTUS
<PAGE>
PART C
<PAGE>
OTHER INFORMATION
Item 27. Exhibits
(a) Resolution of the Board of Directors of Hartford Life and Annuity
Insurance Company ("Hartford") authorizing the establishment of the
Separate Account.(1)
(b) Not Applicable.
(b) Principal Underwriting Agreement.(2)
(c) Form of Modified Single Premium Variable Life Insurance Policy.(1)
(d) Form of Application for Modified Single Premium Variable Life
Insurance Policies.(1)
(f) Certificate of Incorporation of Hartford (3) and Bylaws of
Hartford.(2)
(g) Form of Reinsurance Contract.
(h) Form of Participation Agreement.
(i) Not Applicable.
(j) Not Applicable.
(k) Opinion and consent of Lynda Godkin, Senior Vice President, General
Counsel and Corporate Secretary.
(l) Opinion and Consent of Michael R. Winterfield, FSA, MAAA.
(m) Not Applicable.
(n) Consent of Arthur Andersen LLP, Independent Public Accountants.
(o) No financial statement will be omitted.
(p) Not Applicable.
(q) Memorandum describing transfer and redemption procedures.(1)
(r) Power of Attorney.
(s) Organizational Chart.
- --------------------------------
(1) Incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement on Form S-6, File No. 33-83652, of Hartford Life
and Annuity Insurance Company filed with the Securities and Exchange
Commission on May 1, 1995.
(2) Incorporated by reference to Post-Effective Amendment No. 3 to the
Registration Statement on Form S-6, File No. 33-83652, of Hartford Life
and Annuity Insurance Company filed with the Securities and Exchange
Commission on May 1, 1996.
(3) Incorporated by reference to Post-Effective Amendment No. 4 to the
Registration Statement on Form S-6, File No. 33-83654, of Hartford Life
and Annuity Insurance Company filed with the Securities and Exchange
Commission on April 15, 1997.
<PAGE>
Item 28. Officers and Directors.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
NAME, AGE POSITION WITH HARTFORD
- ------------------------------------------------------------------------------
<S> <C>
Wendell J. Bossen Vice President
- ------------------------------------------------------------------------------
Gregory A. Boyko Senior Vice President, Director*
- ------------------------------------------------------------------------------
Peter W. Cummins Senior Vice President
- ------------------------------------------------------------------------------
Timothy M. Fitch Vice President & Actuary
- ------------------------------------------------------------------------------
Mary Jane B. Fortin Vice President & Chief Accounting Officer
- ------------------------------------------------------------------------------
David T. Foy Senior Vice President & Treasurer
- ------------------------------------------------------------------------------
Lynda Godkin Senior Vice President, General Counsel, and
Corporate Secretary, Director*
- ------------------------------------------------------------------------------
Lois W. Grady Senior Vice President
- ------------------------------------------------------------------------------
Stephen T. Joyce Vice President
- ------------------------------------------------------------------------------
Michael D. Keeler Vice President
- ------------------------------------------------------------------------------
Robert A. Kerzner Senior Vice President
- ------------------------------------------------------------------------------
Thomas M. Marra Executive Vice President, Director*
- ------------------------------------------------------------------------------
Steven L. Matthiesen Vice President
- ------------------------------------------------------------------------------
Craig R. Raymond Senior Vice President and Chief Actuary
- ------------------------------------------------------------------------------
Lowndes A. Smith President and Chief Executive Officer,
Director*
- ------------------------------------------------------------------------------
David M. Znamierowski Senior Vice President, Director*
- ------------------------------------------------------------------------------
</TABLE>
Unless otherwise indicated, the principal business address of each of the
above individuals is P.O. Box 2999, Hartford, CT 06104-2999
- ---------------------------
* Denotes Board of Directors of Hartford.
Item 29. Persons Controlled By or Under Common Control with the Depositor or
Registrant
Filed herewith as Exhibit(s).
Item 30: 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.
<PAGE>
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
employees or officers 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 VIII, Section 2 of the Registrant's
bylaws, the Registrant must indemnify both directors and officers
of the Registrant who are parties or threatened to be parties to a
legal proceeding by reason of his being or having been a director
or officer of the Registrant for any expenses if he acted in good
faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the company, and with respect to
criminal proceedings, had no reason to believe his conduct was
unlawful. Unless otherwise mandated by a court, no indemnification
shall be made if such officer or director is adjudged to be liable
for negligence or misconduct in the performance of his duty to the
Registrant.
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 (the "Act") may be permitted to directors,
officers and controlling persons of the Registrant pursuant to the
foregoing provisions, 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,
<PAGE>
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.
Item 31. Principal Underwriters
(a) HSD acts as principal underwriter for the following investment
companies:
Hartford Life Insurance Company - Separate Account One
Hartford Life Insurance Company - Separate Account Two
Hartford Life Insurance Company - Separate Account Two (DC Variable
Account I)
Hartford Life Insurance Company - Separate Account Two (DC Variable
Account II)
Hartford Life Insurance Company - Separate Account Two (QP Variable
Account)
Hartford Life Insurance Company - Separate Account Two (Variable
Account "A")
Hartford Life Insurance Company - Separate Account Two (NQ Variable
Account)
Hartford Life Insurance Company - Putnam Capital Manager Trust
Separate Account
Hartford Life Insurance Company - Separate Account Three
Hartford Life Insurance Company - Separate Account Five
Hartford Life Insurance Company - Separate Account Seven
Hartford Life and Annuity Insurance Company - Separate Account One
Hartford Life and Annuity Insurance Company - Putnam Capital Manager
Trust Separate Account Two
Hartford Life and Annuity Insurance Company - Separate Account Three
Hartford Life and Annuity Insurance Company - Separate Account Five
Hartford Life and Annuity Insurance Company - Separate Account Six
Alpine Life Insurance Company VA - Separate Account One
Alpine Life Insurance Company VL - Separate Account Two
American Maturity Life Insurance Company - Separate Account AMLVA
Royal Life Insurance Company of America VA - Separate Account One
Royal Life Insurance Company of America VL - Separate Account Two
<PAGE>
(b) Directors and Officers of HSD
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address With Underwriter
------------------ ---------------------
<S> <C>
Lowndes A. Smith President and Chief Executive Officer, Director
Thomas M. Marra Executive Vice President, Director
Robert A. Kerzner Executive Vice President
Lynda Godkin Senior Vice President, General Counsel and
Corporate Secretary, Director
Peter W. Cummins Senior Vice President
David T. Foy Treasurer
George R. Jay Controller
</TABLE>
Unless otherwise indicated, the principal business address of each
the above individuals is P.O. Box 2999, Hartford, CT 06104-2999.
Item 32. Location of Accounts and Records
All of the accounts, books, records or other documents required to
be kept by Section 31(a) of the Investment Company Act of 1940 and
rules thereunder, are maintained by Hartford at 200 Hopmeadow
Street, Simsbury, Connecticut 06089.
Item 33. Management Services
All management contracts are discussed in Part A and Part B of this
Registration Statement.
Item 34. Representation of Reasonableness of Fees
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.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act and the Investment Company
Act, the Registrant certifies that it meets all of the requirements for
effectiveness of this registration statement under rule 485(b) under the
Securities Act and has duly caused this registration statement to be signed
on its behalf by the undersigned, duly authorized, in the Town of Simsbury,
and State of Connecticut on the day of April 12, 1999.
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT FIVE
(Registrant)
*By: David T. Foy *By: /s/ Marianne O'Doherty
------------------------------------ ----------------------
David T. Foy, Senior Vice Marianne O'Doherty
President & Treasurer Attorney-In-Fact
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
(Depositor)
*By: David T. Foy
------------------------------------
David T. Foy, Senior Vice
President & Treasurer
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, Director*
Lynda Godkin, Senior Vice President, General *By: /s/ Marianne O'Doherty
Counsel, & Corporate Secretary, Director* ----------------------
Thomas M. Marra, Executive Vice Marianne O'Doherty
President, Director* Attorney-In-Fact
Lowndes A. Smith, President,
Chief Executive Officer, Director* Dated: April 12, 1999
David M. Znamierowski, Senior Vice President,
Director*
<PAGE>
EXHIBIT INDEX
1.1 Form of Reinsurance Contract.
1.2 Form of Participation Agreement.
1.3 Opinion and Consent of Lynda Godkin, Senior Vice President, General
Counsel and Corporate Secretary.
1.4 Opinion and Consent of Michael R. Winterfield, FSA, MAAA.
1.5 Consent of Arthur Andersen LLP, Independent Public Accountants.
1.6 Power of Attorney.
1.7 Organizational Chart.
<PAGE>
AUTOMATIC YEARLY RENEWABLE TERM
REINSURANCE AGREEMENT
between
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY
HARTFORD LIFE INSURANCE COMPANY
and
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
and
[REINSURER]
Effective: [DATE]
<PAGE>
ARTICLES
I. Parties to the Agreement . . . . . . . . . . . . . 1
II. Reinsurance Coverage . . . . . . . . . . . . . . . 1
III. Liability. . . . . . . . . . . . . . . . . . . . . 3
IV. Reinsurance Premiums . . . . . . . . . . . . . . . 4
V. Oversights . . . . . . . . . . . . . . . . . . . . 5
VI. Changes, Reductions and Terminations . . . . . . . 6
VII. Increase in Retention. . . . . . . . . . . . . . . 7
VIII. Reinstatement. . . . . . . . . . . . . . . . . . . 8
IX. Expenses . . . . . . . . . . . . . . . . . . . . . 9
X. Claims . . . . . . . . . . . . . . . . . . . . . . 9
XI. Extra-Contractual Damages. . . . . . . . . . . . .11
XII. Inspection of Records. . . . . . . . . . . . . . .12
XIII. DAC Tax - Section 1.848-2 (g)(8) Election. . . . .12
XIV. Insolvency . . . . . . . . . . . . . . . . . . . .13
XV. Offset . . . . . . . . . . . . . . . . . . . . . .14
XVI. Arbitration. . . . . . . . . . . . . . . . . . . .14
XVII. Termination. . . . . . . . . . . . . . . . . . . .15
XVIII. Entire Agreement and Amendments. . . . . . . . . .15
XIX. Effective Date . . . . . . . . . . . . . . . . . .16
XX. Execution. . . . . . . . . . . . . . . . . . . . .17
SCHEDULES
A Specifications
B Basis of Reinsurance
EXHIBITS
I Reinsurance Premiums
II Retention, Binding, and Issue Limits
All Schedules and Exhibits attached will be considered part of this Reinsurance
Agreement.
<PAGE>
ARTICLE I
PARTIES TO THE AGREEMENT
This Agreement is between three Hartford Life Companies, Hartford Life Insurance
Company, Hartford Life and Accident Insurance Company, and Hartford Life and
Annuity Insurance Company (collectively referred to as the Ceding Company) and
[Reinsurance Company] (referred to as the Reinsurer). The Reinsurer agrees that
the terms and conditions of this Agreement shall apply to each of the Hartford
Life Companies individually, unless otherwise set forth herein.
ARTICLE II
REINSURANCE COVERAGE
Reinsurance under this Agreement will apply to insurance issued by Ceding
Company on the Plans of Insurance shown in Schedule A. Such Plans of Insurance
shall be reinsured with the Reinsurer on an automatic basis, subject to the
requirements set forth in Section A below or on a facultative basis, subject to
the requirements set forth in Section B below. The specifications for all
reinsurance under this Agreement are provided in Schedule A.
A. Requirements for Automatic Reinsurance
For risks which meet the requirements for automatic reinsurance as set
forth below, Reinsurer will participate in a reinsurance pool whereby
Reinsurer will automatically reinsure a portion of the insurance risks as
indicated in Schedule A. The requirements for automatic reinsurance are as
follows:
1. Each life must be a resident of the United States or Canada at the
time of application.
2. Each life must be underwritten according to the Ceding Company's
standard underwriting practices and guidelines. Any life falling into
the category of special underwriting programs will be excluded from
this Agreement unless previously agreed to by the Reinsurer via a
written amendment.
3. Any risk offered on a facultative basis by the Ceding Company to the
Reinsurer or any other company will not qualify for automatic
reinsurance under this Agreement for the same risk and same life.
4. The maximum issue age on any risk will be age 85.
<PAGE>
5. The mortality rating on each risk must not exceed Table 16, Table P,
or 500%, or its equivalent, as shown in the Ceding Company's retention
schedule, on a flat extra premium basis. However, one life may be
uninsurable if the other life meets the preceding requirements.
6. The total face amount of insurance for the Plans of Insurance in
Schedule A to be reinsured on an automatic basis must not exceed the
Automatic Issue Limits in Exhibit II.
7. The total amount of insurance issued and applied for in all companies
on each life must not exceed the jumbo limits as stated in Exhibit II.
8. The Ceding Company shall retain it's maximum limit of retention for
the age and risk classification of each life, as shown in Exhibit II,
either on previous insurance or insurance currently applied for.
B. Requirements for Facultative Reinsurance
1. If the requirements for automatic reinsurance are met, but the Ceding
Company prefers to apply for facultative reinsurance with the
Reinsurer, or if the requirements for automatic reinsurance are not
met and the Ceding Company applies for facultative reinsurance with
the Reinsurer, then the Ceding Company must submit to the Reinsurer
all the papers relating to the insurability of each life for
facultative reinsurance.
2. For applications for facultative reinsurance, Ceding Company will send
copies of all of the papers relating to the insurability of each life
to the Reinsurer. After the Reinsurer has examined the request, the
Reinsurer will promptly notify the Ceding Company of the underwriting
offer subject to additional requirements or the final underwriting
offer. The final underwriting offer on the risk will automatically
terminate upon the earlier of the withdrawal of the application or 120
days from the date of the final offer, unless accepted earlier.
3. Notwithstanding the above, if the requirements for automatic
reinsurance are met except that the face amount of insurance applied
for is greater than the Automatic Issue Limit, but does not exceed the
Auto Process Limit, then the Ceding Company will submit to the Lead
Reinsurer,(as designated in Schedule A), all papers relating to the
insurability of each life. The Lead Reinsurer
<PAGE>
shall review the papers to determine if the risk should be reinsured
by the Pool, and, if so, on what basis. The Lead Reinsurer shall
provide Ceding Company with a response within 24 hours of receipt of
the papers. Approval of the Lead Reinsurer shall be binding on all
other Pool members. This process shall be known as Automatic
Processing and subject to the limitations in Exhibit II.
C. Basis of Reinsurance
Reinsurance under this Agreement will be on the basis as stated in Schedule
B.
D. Policy Forms.
When requested, the Ceding Company will furnish the Reinsurer with a copy
of each policy, rider, rate book, and applicable sales or marketing
material which applies to the life insurance reinsured hereunder.
ARTICLE III
LIABILITY
A. The Reinsurer's liability for automatic reinsurance will begin
simultaneously with the Ceding Company's liability except for those risks
which qualify for automatic reinsurance but are submitted on a facultative
basis.
B. The Reinsurer's liability for facultative reinsurance will begin
simultaneously with the Ceding Company's liability once the Reinsurer has
accepted the application for facultative reinsurance and the Ceding Company
has accepted the offer.
C. In no event shall the reinsurance be in force and binding if the issuance
and delivery of such insurance constituted the doing of business in a
jurisdiction in which the ceding company was not properly licensed.
D. The Reinsurer's liability for reinsurance on each risk will terminate when
the Ceding Company's liability terminates.
E. The liability of each pool member shall be separate and not joint with the
other pool members.
F. Payment of reinsurance premiums is a condition precedent to the Reinsurer's
liability.
<PAGE>
G. The Reinsurer shall establish reserves on Reinsurer's portion of the policy
on the reserve basis specified in Schedule B.
<PAGE>
ARTICLE IV
REINSURANCE PREMIUMS
A. Computation.
Premiums for reinsurance under this Agreement will be computed as described
in Exhibit I.
B. Premium Accounting.
1. Payment of Reinsurance Premiums.
For automatic and facultative reinsurance, following the close of each
calendar month, the Ceding Company will send the Reinsurer a statement
and a listing of new business, changes and terminations.
If a net reinsurance premium balance is payable to the Reinsurer, the
Ceding Company will forward this balance within (60) sixty days after
the close of each month.
If a net reinsurance premium balance is payable to the Ceding Company,
the balance due will be subtracted from the reinsurance premium
payable by Ceding Company for the current month and any remaining
balance due the Ceding Company shall be paid by the Reinsurer within
(60) sixty days after the Ceding Company submits the statement.
2. Non-Payment of Premium
If reinsurance premiums are delinquent, the Reinsurer has the right to
terminate the reinsurance risks on those policies listed on the
delinquent monthly statement by giving the Ceding Company ninety days'
advance written notice. If the delinquent premiums have not been paid
as of the close of the ninety-day period, the Reinsurer's liability
will terminate for the risks described in the delinquency notice.
Regardless of the termination, the Ceding Company will continue to be
liable to the Reinsurer for all unpaid reinsurance premiums earned.
3. Reinstatement
<PAGE>
The Ceding Company may reinstate the risks terminated due to non
payment of reinsurance premium within sixty days after the effective
date of termination by paying the unpaid reinsurance premiums for the
risks in force prior to the termination. However, the Reinsurer will
not be liable for any claim incurred between the date of termination
and reinstatement. The effective date of reinstatement will be the
date the required back premiums are received.
4. Currency
The reinsurance premiums and benefits payable under this Agreement
will be payable in the lawful money of the United States.
5. Detailed Listing
The Ceding Company will send the Reinsurer a detailed listing of all
reinsurance in force as of the close of the immediately preceding
calendar year.
6. Guaranteed Rates
For technical reasons relating to the uncertain status of deficiency
reserve requirements by the various state insurance departments, the
life reinsurance rates cannot be guaranteed for more than one year.
On all reinsurance ceded at these rates, however, the Reinsurer
anticipates continuing to accept premiums on the basis of the rates
shown in Exhibit I.
ARTICLE V
OVERSIGHTS
If there is an unintentional oversight or misunderstanding in the administration
of this Agreement by Ceding Company or Reinsurer, it can be corrected provided
the correction takes place within a reasonable time after the oversight or
misunderstanding is first discovered. Both Ceding Company and the Reinsurer
will be restored to the position they would have occupied had the oversight or
misunderstanding not occurred.
<PAGE>
ARTICLE VI
CHANGES, REDUCTIONS AND TERMINATIONS
A. Replacement or Change
If there is a contractual change or non-contractual replacement of the
insurance reinsured under this Agreement where full underwriting evidence
according to the Ceding Company's regular underwriting rules is not
required, the insurance may continue to be reinsured with the Reinsurer
provided it meets the minimum reinsurance cession amount stated in Schedule
A. If a non-contractual change is requested on a facultatively reinsured
policy, the Reinsurer must consent to the change.
B. Increases or Decreases
1. If the policy face amount of a risk reinsured automatically under this
Agreement increases and:
a. The increase is subject to new underwriting evidence, then the
provisions of Article Ii, Section A, shall apply to the increase
in reinsurance.
b. The increase is not subject to new underwriting evidence, then
Reinsurer will accept automatically the increase in reinsurance
but not to exceed the automatic binding limit.
2. If the policy face amount increases, the Ceding Company's retention
will be filled first, then any remaining risk of the increase will be
ceded to the Reinsurer as of the effective date of the increase. If
the policy face amount is reduced, the reinsurance will be reduced
first, thereby maintaining the Ceding Company's retention. Reinsurer
will refund to Ceding Company all unearned reinsurance premiums not
including policy fees, less applicable allowances, arising from
reductions, terminations and changes as described in this Article.
3. In the event of a reduction in the face amount of a policy which was
ceded facultatively, the Reinsurer's percentage of the reduced face
amount should be the same percentage of the initial reinsurance ceded.
4. Increases in face amount of policies reinsured on a facultative basis,
will be submitted to the Reinsurer for acceptance.
<PAGE>
C. Reduction in Retained Coverage
If any portion of the aggregate insurance retained by Ceding Company on an
individual life reduces or terminates, any reinsurance under this Agreement
based on the same life may also be reduced or terminated. Ceding Company
will reduce the reinsurance by applying the retention limits which were in
effect at the time each policy was issued. Ceding Company will not be
required to retain an amount in excess of its regular retention limit for
the age, mortality rating and risk classification at the time of issue for
any policy on which reinsurance is being reduced.
The reinsurance to be terminated or reduced will be determined by
chronological order in which the reinsurance was first reinsured, thereby
reducing or terminating the oldest risks first.
D. Multiple Reinsurers
If a risk is shared by more than one reinsurer, Reinsurer's percentage of
any increased or reduced reinsurance will be the same as its initial
percentage of the reinsurance for that risk.
E. Termination
If the policy for a risk reinsured under this Agreement is terminated, the
reinsurance for the risk involved will be terminated on the effective date
of termination.
F. Facultative
On facultative reinsurance, if Ceding Company wishes to reduce the
mortality rating, this reduction will be subject to and reinsured under the
facultative provisions of this Agreement.
ARTICLE VII
INCREASE IN RETENTION
A. If the Ceding Company should increase the retention limits as listed in
Exhibit II, prompt written notice of the increase must be given to the
Reinsurer.
B. In the event of an increase in retention, the Ceding Company will have the
option of recapturing the reinsurance under this Agreement when the
retention limit increases. The Ceding Company may exercise its option to
<PAGE>
recapture by giving written notice to the Reinsurer within ninety days
after the effective date of the increase.
C. If the Ceding Company exercises its option to recapture, then
1. The Ceding Company must reduce the reinsurance on each risk on which
the Ceding Company retained the maximum retention limit that was in
effect at the time the reinsurance was ceded to the Reinsurer.
2. No recapture will be made to reinsurance on a risk if (a) the Ceding
Company retained a special retention limit less than the maximum
retention limit in effect at the time the reinsurance was ceded to the
Reinsurer, or if (b) the Ceding Company did not retain insurance on
the risk.
3. The Ceding Company must increase its total amount of insurance on the
risk up to the new retention limit by reducing the reinsurance. If a
risk is shared by more than one reinsurer, the Reinsurer's percentage
of the reduced reinsurance will be the same as the initial percentage
on the individual risk.
4. Upon increasing the retention limit, the reduction in reinsurance will
become effective on the next annual premium anniversary of those
policies that have been inforce for at least ten (10) years.
ARTICLE VIII
REINSTATEMENT
If an insurance policy lapses for nonpayment of premium and is reinstated under
the Ceding Company's terms and rules, the reinsurance will be reinstated by the
Reinsurer as follows:
A. Automatic Cases:
The Ceding Company must pay the Reinsurer all back reinsurance premiums in
the same manner as the Ceding Company received insurance premiums under the
policy. When the policy is reinstated by the Ceding Company, the
reinsurance will be automatically reinstated.
B. Facultative Cases:
If the Ceding Company requires reinstatement evidence of insurability, the
<PAGE>
Ceding Company will submit it to the Reinsurer for approval. In such
cases, the Reinsurer's approval is required for the reinsurance to be
reinstated. Upon the Reinsurer's approval, the Ceding Company must pay the
Reinsurer all back reinsurance premiums in the same manner as the Ceding
Company received insurance premium under the policy.
ARTICLE IX
EXPENSES
The Ceding Company must pay the expense of all medical examinations, inspection
fees and other charges in connection with the issuance of the insurance.
ARTICLE X
CLAIMS
A. Liability
The Reinsurer's liability for the insurance benefits reinsured under this
Agreement will be the same as the Ceding Company's liability for such
benefits. All reinsurance claim settlements will be subject to the terms
and conditions of the particular contract under which the Ceding Company is
liable.
B. Notification
When the Ceding Company is advised of a claim, the Reinsurer must be
notified promptly.
C. Claim Payment
1. Automatic Reinsurance on a Risk
If a claim is made on a risk reinsured automatically under this
Agreement and is not contested by the Ceding Company, Reinsurer will
abide by the issue as it is settled by the Ceding Company. Copies of
proofs or other written matters relating to any claim reimbursements
under this Agreement shall be furnished to the Reinsurer upon written
request. The Ceding Company will receive payment of the reinsurance
proceeds from the Reinsurer when the Ceding Company makes the
settlement of the policy proceeds and delivers a copy of the proof of
death, check copy or
<PAGE>
proof of payment and the claimant's statement to the Reinsurer.
2. Facultative Reinsurance on a Risk
If a claim is made on a risk reinsured facultatively under this
Agreement, the Ceding Company shall submit to Reinsurer all
relevant and/or requested documents and papers related to the
claim along with Ceding Company's recommendation. Ceding Company
shall then wait five days from the date of mailing during which
time Reinsurer shall have the opportunity to advise Ceding
Company of its consent or disagreement with the recommendation.
In the event Reinsurer does not contact Ceding Company within the
five day period, Reinsurer shall be deemed to have approved the
recommendation and Ceding Company shall be authorized to act
accordingly. The Ceding Company will receive payment of the
reinsurance proceeds from Reinsurer when Ceding Company makes the
settlement of the policy proceeds and delivers proof of payment
to the Reinsurer.
3. Payment of Reinsurance Proceeds
Payment of life reinsurance proceeds will be made in a single sum
regardless of the Ceding Company's mode of settlement with the
payee.
D. Contested Claims
The Ceding Company must promptly notify the Reinsurer of any intent to
contest a claim reinsured under this Agreement or to assert defenses. If
the Ceding Company's contest of such claim results in the increase or
reduction of liability, the Reinsurer will share in this increase or
reduction. The Reinsurer's share of the increase or decrease shall be
proportional to their share of the met amount at risk on the date of death
of the insured.
If the Reinsurer should decline to participate in the contest or assertion
of defenses, the Reinsurer will then release all of the liability by paying
the Ceding Company the full amount of reinsurance and not sharing in any
subsequent increase or reduction in liability.
E. Misstatement of Age or Sex
If the amount of insurance provided by the policy or policies reinsured
under this Agreement is increased or reduced because of misstatement of age
or sex established after the death of the insured, the Reinsurer will share
with the Ceding Company in this increase or reduction.
<PAGE>
F. Routine Expenses
The Ceding Company will pay the routine expenses incurred in connection
with settling claims. These expenses may include compensation of agent and
employees and the cost of routine investigations such as inspection
reports.
G. Non-Routine Expenses
The Reinsurer will share with the Ceding Company all expenses that are not
routine. Expenses that are not routine are those directly incurred in
connection with the contest or the possibility of a contest of a claim or
the assertion of defenses, including legal expenses. The expenses will be
shared in proportion to the net amount at risk for the Ceding Company and
Reinsurer. However, if the Reinsurer has released the liability under
Section D of this Article, the Reinsurer will not share in any expenses
incurred after the date of the Reinsurer's release.
H. Contestable Period
If, during the contestable period, Ceding Company is notified of the death
of the first joint insured, the Ceding Company will investigate the case.
ARTICLE XI
EXTRA-CONTRACTUAL DAMAGES
In no event will the Reinsurer have any liability for any extra-contractual
damages which are awarded against the Ceding Company as a result of acts,
omissions or course of conduct committed by the Ceding Company in connection
with the insurance reinsured under this Agreement.
The Reinsurer does recognize that circumstances may arise under which the
Reinsurer, in equity, should share, to the extent permitted by law, in paying
certain assessed damages. Such circumstances are difficult to define in
advance, but involve those situations in which the Reinsurer was an active party
in the act, omission or course of conduct which ultimately results in the
assessment of such damages. The extent of such sharing is dependent on good
faith assessment of culpability in each case, but all factors being equal, the
division of any such assessment would be in the proportion of total risk
accepted by each party for the plan of insurance involved.
ARTICLE XII
<PAGE>
INSPECTION OF RECORDS
Each party will have the right, at any reasonable time and upon reasonable
notice, to inspect the other party's books and documents which relate to
reinsurance under this Agreement.
ARTICLE XIII
DAC TAX
SECTION 1.848-2(g) (8) ELECTION
A. The Reinsurer and the Ceding Company hereby agree to the following pursuant
to section 1.848-2(g)(8) of the Income Tax Regulations issued December 1992
under Section 848 of the Internal Revenue Code of 1986, as amended. This
election shall be effective for 1993 and for all subsequent taxable years
for which this Agreement remains in effect.
B. The terms used in this Article are defined by reference to Regulation
Section 1.848-2 in effect December 1992.
C. The party with net positive consideration for this Agreement for each
taxable year will capitalize specified policy acquisition expenses with
respect to this Agreement without regard to the general deduction
limitation of section 848(c)(1).
D. Both parties agree to exchange information pertaining to the amount of net
consideration under this Agreement each year to ensure consistency or as
otherwise required by the Internal Revenue Service.
E. The Ceding Company will submit to the Reinsurer by May 1 of each year a
schedule of the calculation of the net consideration for the preceding
calendar year. This schedule of calculations will be accompanied by a
statement signed by an officer of the Ceding Company stating that such net
consideration will be reported in the tax return for the preceding calendar
year.
F. The Reinsurer may contest such calculation by providing an alternative
calculation to the Ceding Company in writing within 30 days of receipt of
Ceding Company's calculation. If the Reinsurer does not notify the Ceding
Company, Reinsurer will report the net consideration as determined by the
Ceding Company in the tax return for the preceding calendar year.
G. If the Reinsurer contests the Ceding Company's calculation of the net
consideration, both parties will act in good faith to reach an agreement as
<PAGE>
to the correct amount within thirty (30) days of the date the Reinsurer
submits their alternative calculation. If both parties reach agreement on
an amount of net consideration, both parties shall report such amount in
their respective tax returns for the previous calendar year.
ARTICLE XIV
INSOLVENCY
A. Insolvency of Reinsurer
If the Reinsurer becomes insolvent as determined by the Department of
Insurance responsible for such determination, amounts due the Reinsurer
will be paid net of the terms of this Agreement and directly to the
liquidator, receiver, or statutory successor without decrease. All
reinsurance ceded under this Agreement may be recaptured by the Ceding
Company without charge or penalty as of the date Reinsurer fails to meet
its obligations under this Agreement.
B. Insolvency of Ceding Company
If Hartford Life Insurance Company, Hartford Life and Accident Insurance
Company or Hartford Life and Annuity Insurance Company should become
insolvent, all reinsurance under this Agreement covering risks ceded by
that particular company will be payable by Reinsurer directly to that
Company's liquidator, receiver or statutory successor, on the basis of the
liability of that Company under the policy or policies reinsured and
without diminution because of the insolvency of the Company. However, in
the event of such insolvency, the liquidator, receiver or statutory
successor will give written notice of a pending claim against Ceding
Company on the reinsured policy. It will do so within a reasonable time
after the claim is filed in the insolvency proceedings. During the
pendency of such a claim, Reinsurer may investigate the claim and may, at
its own expense, interpose any defense or defenses which it may deem
available to the insolvent Company, its liquidator, receiver or statutory
successor, in the proceedings where the claim is to be adjudicated.
The expense thus incurred by Reinsurer will be chargeable against the
insolvent Company, subject to court approval, as part of the expense of
liquidation to the extent of a proportionate share of the benefit which may
accrue to the insolvent Company solely as a result of the defense
undertaken by Reinsurer.
Where two or more reinsurers are involved in the same claim and a majority
in interest elect to interpose defense to the claim, the expense
<PAGE>
will be apportioned in accord with the terms of the reinsurance agreement
as though the expense had been incurred by the insolvent Company.
It is agreed that the insolvency of any one of the Hartford Life Companies
shall not affect this Agreement as it applies to the remaining solvent
companies.
ARTICLE XV
OFFSET
Any debts or credits, matured or unmatured, liquidated or unliquidated,
regardless of when they arose or were incurred, in favor of or against either
the Ceding Company or the Reinsurer with respect to this Agreement or with
respect to any other claim of one party against the other are deemed mutual
debts or credits, as the case may be, and shall be set off, and only the balance
shall be allowed or paid. In the event the Ceding Company becomes insolvent,
offsets shall be allowed in accordance with applicable law.
ARTICLE XVI
ARBITRATION
Any disagreement, controversy, or claim arising out of or relating to this
Agreement between the Reinsurer and any one of the Hartford Life Companies will
be settled by arbitration. There will be three arbitrators chosen among current
or retired officers of life insurance companies other than parties or their
affiliates. Each party to the dispute will appoint one of the arbitrators and
these two arbitrators will select the third arbitrator. In the event that
either party should fail to choose an arbitrator within 30 days following a
written request by the other party to do so, the requesting party may choose two
arbitrators who shall in turn choose a third arbitrator before entering upon
arbitration. If the two arbitrators fail to agree upon the selection of a third
arbitrator within 30 days following their appointment, each arbitrator shall
nominate three candidates within 10 days thereafter, two of whom the other shall
decline, and the decision shall be made by drawing lots.
Arbitration will be conducted in accordance with the Commercial Arbitration
Rules of the American Arbitration Association which will be in effect on the
date of delivery of demand for arbitration. The arbitrators will base their
decision on the terms and conditions of this Agreement plus, as necessary, on
the customs and practices of the insurance and reinsurance industry rather than
solely on a strict interpretation of the applicable law. The site of any
arbitration will be determined by a majority vote of the arbitrators. All
expenses and fees of the
<PAGE>
arbitrations will be borne equally by the parties unless otherwise decreed by
the arbitrators.
The award agreed to by a majority of the arbitrators will be final and binding
and there will be no appeal from their decision. Judgment may be entered upon
it in any court having jurisdiction.
ARTICLE XVII
TERMINATION
A. Each Hartford Life Insurance Company and the Reinsurer may terminate this
Agreement as it applies to the business of each by giving (90) ninety days'
written notice of termination. The day the notice is deposited in the
mail addressed to the Home Office, or to an Officer of each party, will be
the first day of the (90) ninety-day period.
B. During the (90) ninety-day period, this Agreement will continue to be in
force between the terminating parties.
C. After termination, the terminating parties shall remain liable under the
terms of this Agreement for all automatic reinsurance which becomes
effective prior to termination of this Agreement. After termination the
terminating parties shall be liable for all automatic and facultative
reinsurance which has an application date on or before the effective date
of the termination.
D. Termination by one or two of the Hartford Life Companies shall not affect
this Agreement as it relates to the non-terminating Hartford Life Company
(ies).
ARTICLE XVIII
ENTIRE AGREEMENT AND AMENDMENT
A. Entire Contract
This Agreement with any attached Schedules and Exhibits, shall constitute
the entire agreement between the parties with respect to the business being
reinsured hereunder and there are no understandings between the parties
other than as expressed herein.
B. Modifications
<PAGE>
Any modification or change to the provisions of this Agreement shall be
null and void unless set forth in a written amendment to the Agreement
which is signed by all parties to the amendment.
<PAGE>
ARTICLE XIX
EFFECTIVE DATE
The provisions of this Agreement shall be effective with respect to policies
issued on or after [date].
<PAGE>
ARTICLE XX
EXECUTION
[REINSURER]
By _____________________________ Attest __________________________
Title _____________________________ Title __________________________
____________________________ __________________________
Date _____________________________ Date __________________________
HARTFORD LIFE INSURANCE COMPANY
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
By _____________________________ Attest __________________________
Date _____________________________ Date __________________________
<PAGE>
SCHEDULE A
SPECIFICATIONS
TYPE OF BUSINESS
REINSURANCE POOL SHARE
PLANS OF INSURANCE
DESCRIPTION GENERAL FORM NO'S.
----------- ------------------
RIDERS
------
MINIMUM REINSURANCE CESSION
LEAD REINSURER
<PAGE>
SCHEDULE B
BASIS OF REINSURANCE
LIFE PRODUCTS Life reinsurance will be on the yearly renewable term (YRT)
basis for the amount at risk on the portion of the policy
reinsured by Reinsurer. The amount at risk on a policy
shall be the death benefit of the policy less the amount
retained by the Ceding Company, less the cash value under
the policy. The basis for determining Reinsurer's liability
shall be the amount at risk used for computation of the
reinsurance premium.
EXCHANGES Exchanges from one last survivor plan reinsured under this
agreement to a different last survivor plan, for the purpose
of allowing the policyowner premium flexibility (UL) or
potentially higher investment return (VL), will be reinsured
hereunder as NEW BUSINESS at first year reinsurance rates if
the new plan has been fully underwritten and has new
contestable and suicide exclusion periods. Otherwise, the
reinsurance rates will be point-in-scale.
RESERVE BASIS Reserves are calculated according to the applicable CRVM
methodology, interest rate and mortality table. The
mortality tables used are male/female, smoker distinct, age
last birthday and ultimate. The mortality rates are
frasierized. There is a 1/2 qx unearned premium reserve
minimum.
<PAGE>
PARTICIPATION AGREEMENT
Among
______________________________,
______________________________,
______________________________,
and
HARTFORD LIFE INSURANCE COMPANY
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I. Fund Shares 5
ARTICLE II. Representations and Warranties 7
ARTICLE III. Prospectuses, Reports to Shareholders and 8
Proxy Statements; Voting
ARTICLE IV. Sales Material and Information 11
ARTICLE V. Reserved 12
ARTICLE VI. Diversification 12
ARTICLE VII. Potential Conflicts 12
ARTICLE VIII. Indemnification 14
ARTICLE IX. Applicable Law 20
ARTICLE X. Termination 20
ARTICLE XI. Notices 23
ARTICLE XII. Foreign Tax Credits 23
ARTICLE XIII. Miscellaneous 23
SCHEDULE A Separate Accounts and Contracts 27
SCHEDULE B Participating Life Investment Trust 28
Portfolios
SCHEDULE C Proxy Voting Procedures 29
<PAGE>
PARTICIPATION AGREEMENT
Among
[FUND]
[UNDERWRITER]
[ADVISER]
and
HARTFORD LIFE INSURANCE COMPANY
THIS AGREEMENT, made and entered into as of the _______ day of__________,
1998 by and among HARTFORD LIFE INSURANCE COMPANY (hereinafter the "Company"); a
Connecticut corporation, on its behalf and on behalf of each separate account of
the Company set forth on Schedule A hereto as may be amended from time to time
(each such account hereinafter referred to as the "Account") and
_______________________, a __________ corporation established under the laws of
the state of _________ ("state") (hereinafter the "Fund"); and
______________________, a ___________ corporation (hereinafter the
"Underwriter") and ____________________, a ___________ corporation (hereinafter
the "Adviser").
WHEREAS, the Fund engages in business as an open-end management investment
company and is available to act as the investment vehicle for separate accounts
established by insurance companies for individual and group life insurance
policies and annuity contracts with variable accumulation and/or pay-out
provisions (hereinafter referred to individually and/or collectively as
"Variable Insurance Products"); and
WHEREAS, insurance companies desiring to utilize the Fund as an investment
vehicle under their Variable Insurance Products are required to enter into
participation agreements with the Fund and the Underwriter (the "Participating
Insurance Companies"); and
WHEREAS, shares of the Fund are divided into several series of shares,
each representing the interest in a particular managed portfolio of
securities and other assets, any one or more of which may be made available
for Variable Insurance Products of Participating Insurance Companies; and
WHEREAS, the Fund intends to offer shares of the series set forth on
Schedule B (each such series hereinafter referred to as a "Portfolio") as may be
amended from time to time by mutual agreement of the parties hereto, under this
Agreement to the Accounts of the Company; and
3
<PAGE>
WHEREAS, the Fund has obtained an order from the Securities and Exchange
Commission, granting Participating Insurance Companies and Variable Insurance
Product separate accounts exemptions from the provisions of Sections 9(a),
13(a), 15(a), and 15(b) of the Investment Company Act of 1940, as amended
(hereinafter the "1940 Act") and Rules 6e-2(b)(15) and 6e-3(T)(b)(15)
thereunder, to the extent necessary to permit shares of the Fund to be sold to
and held by Variable Annuity Product separate accounts of both affiliated and
unaffiliated life insurance companies (hereinafter the "Shared Funding Exemptive
Order"); and
WHEREAS, the Fund is registered as an open-end management investment
company under the 1940 Act and its shares are registered under the Securities
Act of 1933, as amended (hereinafter the "1933 Act"); and
WHEREAS, the Adviser is duly registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and any applicable state securities
laws; and
WHEREAS, the Adviser is the investment adviser of the Portfolios of the
Fund; and
WHEREAS, the Underwriter is registered as a broker/dealer under the
Securities Exchange Act of 1934, as amended (hereinafter the "1934 Act"), is a
member in good standing of the National Association of Securities Dealers, Inc.
(hereinafter "NASD") and serves as principal underwriter of the shares of the
Fund; and
WHEREAS, the Company has registered or will register certain Variable
Insurance Products under the 1933 Act; and
WHEREAS, each Account is a duly organized, validly existing segregated
asset account, established by resolution or under authority of the Board of
Directors of the Company, on the date shown for such Account on Schedule A
hereto, to set aside and invest assets attributable to the aforesaid Variable
Insurance Products; and
WHEREAS, the Company has registered or will register each Account as a unit
investment trust under the 1940 Act unless exempt from such registration; and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Company intends to purchase shares in the Portfolios on behalf
of each Account to fund certain of the aforesaid Variable Insurance Products and
the Underwriter is authorized to sell such shares to each such Account at net
asset value.
NOW, THEREFORE, in consideration of their mutual promises, the Company, the
Fund, the Underwriter and the Adviser agree as follows:
4
<PAGE>
ARTICLE I. FUND SHARES
1.1. The Fund and the Underwriter agree to make available for purchase
by the Company shares of the Portfolios and shall execute orders placed for each
Account on a daily basis at the net asset value next computed after receipt by
the Fund or its designee of such order. For purposes of this Section 1.1, the
Company shall be the designee of the Fund and Underwriter for receipt of such
orders from each Account and receipt by such designee shall constitute receipt
by the Fund; provided that the Fund receives notice of such order by 10:00 a.m.
(local time where the Fund processes orders) on the next following Business Day.
Notwithstanding the foregoing, the Company shall use its best efforts to
provide the Fund with notice of such orders by 9:15 a.m. on the next following
Business Day. "Business Day" shall mean any day on which the New York Stock
Exchange is open for trading and on which the Fund calculates its net asset
value pursuant to the rules of the Securities and Exchange Commission, as set
forth in the Fund's prospectus and statement of additional information.
Notwithstanding the foregoing, the Board of Trustees of the Fund (hereinafter
the "Board") may refuse to permit the Fund to sell shares of any Portfolio to
any person, or suspend or terminate the offering of shares of any Portfolio if
such action is required by law or by regulatory authorities having jurisdiction
or is, in the sole discretion of the Board acting in good faith and in light of
their fiduciary duties under federal and any applicable state laws, necessary
in the best interests of the shareholders of such Portfolio.
1.2. The Fund and the Underwriter agree that shares of the Fund will
be sold only to Participating Insurance Companies for their Variable Insurance
Products. No shares of any Portfolio will be sold to the general public.
1.3. The Fund will not make its shares available for purchase by any
insurance company or separate account unless an agreement containing provisions
which afford the Company substantially the same protections currently provided
by Sections 2.1, 2.4, 2.9, 3.4 and Article VII of this Agreement is in effect to
govern such sales.
1.4. The Fund and the Underwriter agree to redeem for cash, on the
Company's request, any full or fractional shares of the Fund held by the
Company, executing such requests on a daily basis at the net asset value next
computed after receipt by the Fund or its designee of the request for
redemption. For purposes of this Section 1.4, the Company shall be the designee
of the Fund for receipt of requests for redemption from each Account and receipt
by such designee shall constitute receipt by the Fund; provided that the
Underwriter receives notice of such request for redemption on the next following
Business Day in accordance with the timing rules described in Section 1.1.
1.5. The Company agrees that purchases and redemptions of Portfolio
shares offered by the then current prospectus of the Fund shall be made in
accordance with the provisions of such prospectus. The Accounts of the Company,
under which amounts may be invested in the Fund are listed on Schedule A
attached hereto and incorporated herein by reference, as such
5
<PAGE>
Schedule A may be amended from time to time by mutual written agreement of
all of the parties hereto. The Company will give the Fund and the Underwriter
concurrent written notice of its intention to make available in the future,
as a funding vehicle under the Contracts, any other investment company.
1.6. The Company will place separate orders to purchase or redeem
shares of each Portfolio. Each order shall describe the net amount of shares and
dollar amount of each Portfolio to be purchased or redeemed. In the event of net
purchases, the Company shall pay for Portfolio shares on the next Business Day
after an order to purchase Portfolio shares is made in accordance with the
provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted
by wire. In the event of net redemptions, the Portfolio shall pay the redemption
proceeds in federal funds transmitted by wire on the next Business Day after an
order to redeem Portfolio shares is made in accordance with the provisions of
Section 1.4 hereof. Notwithstanding the foregoing, if the payment of redemption
proceeds on the next Business Day would require the Portfolio to dispose of
Portfolio securities or otherwise incur substantial additional costs, and if the
Portfolio has determined to settle redemption transactions for all shareholders
on a delayed basis, proceeds shall be wired to the Company within seven (7) days
and the Portfolio shall notify in writing the person designated by the Company
as the recipient for such notice of such delay by 3:00 p.m. Eastern Time on the
same Business Day that the Company transmits the redemption order to the
Portfolio.
1.7. Issuance and transfer of the Fund's shares will be by book entry
only. Share certificates will not be issued to the Company or any Account.
Shares ordered from the Fund will be recorded in an appropriate title for each
Account or the appropriate subaccount of each Account.
1.8. The Underwriter shall use its best efforts to furnish same day
notice by 6:00 p.m. in its local time zone (by wire or telephone, followed by
written confirmation) to the Company of any dividends or capital gain
distributions payable on the Fund's shares. The Company hereby elects to receive
all such dividends and capital gain distributions as are payable on the
Portfolio shares in additional shares of that Portfolio. The Company reserves
the right to revoke this election and to receive all such dividends and capital
gain distributions in cash. The Fund shall notify the Company of the number of
shares so issued as payment of such dividends and distributions.
1.9. The Underwriter shall make the net asset value per share of each
Portfolio available to the Company on a daily basis as soon as reasonably
practical after the net asset value per share is calculated and shall use its
best efforts to make such net asset value per share available by 6:00 p.m.
Eastern Time. In the event that Underwriter is unable to meet the 6:00 p.m. time
stated immediately above, then Underwriter shall provide the Company with
additional time to notify Underwriter of purchase or redemption orders pursuant
to Sections 1.1 and 1.4, respectively, above. Such additional time shall be
equal to the additional time that Underwriter takes to make the net asset values
available to the Company; provided, however, that notification
6
<PAGE>
must be made by 11:00 a.m. Eastern Time on the Business Day such order is to
be executed, regardless of when net asset valuer is made available.
1.10. If Underwriter provides materially incorrect share net asset
value information through no fault of the Company, the Company shall be entitled
to an adjustment with respect to the Fund shares purchased or redeemed to
reflect the correct net asset value per share. The determination of the
materiality of any net asset value pricing error shall be based on the SEC's
recommended guidelines regarding such errors. The correction of any such errors
shall be made at the Company level pursuant to the SEC's recommended guidelines.
Any material error in the calculation or reporting of net asset value per share,
dividend or capital gain information shall be reported promptly upon discovery
to the Company.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. The Company represents and warrants that the interests of the
Accounts which offer the Funds (the "Contracts") are or will be registered
unless exempt and that it will maintain such registration under the 1933 Act and
the regulations thereunder to the extent required by the 1933 Act; that the
Contracts will be issued and sold in compliance with all applicable federal and
state laws and regulations. The Company further represents and warrants that it
is an insurance company duly organized and in good standing under applicable law
and that it has legally and validly established each Account prior to any
issuance or sale thereof as a segregated asset account under the Connecticut
Insurance Code and the regulations thereunder and has registered or, prior to
any issuance or sale of the Contracts, will register and will maintain the
registration of each Account as a unit investment trust in accordance with and
to the extent required by the provisions of the 1940 Act and the regulations
thereunder, unless exempt therefrom, to serve as a segregated investment account
for the Contracts. The Company shall amend its registration statement for its
contracts under the 1933 Act and the 1940 Act from time to time as required in
order to effect the continuous offering of its Contracts.
2.2. The Fund and the Underwriter represent and warrant that Fund
shares sold pursuant to this Agreement shall be registered under the 1933 Act
and the regulations thereunder to the extent required by the 1933 Act, duly
authorized for issuance in accordance with the laws of State and sold in
compliance with all applicable federal and state securities laws and regulations
and that the Fund is and shall remain registered under the 1940 Act and the
regulations thereunder to the extent required by the 1940 Act. The Fund shall
amend the registration statement for its shares under the 1933 Act and the 1940
Act from time to time as required in order to effect the continuous offering of
its shares. The Fund shall register and qualify the shares for sale in
accordance with the laws of the various states only if and to the extent deemed
advisable by the Fund.
2.3. The Fund and the Adviser represent that the Fund is currently
qualified as a Regulated Investment Company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code") and that each will make every
effort to maintain such qualification (under
7
<PAGE>
Subchapter M or any successor or similar provision) and that each will notify
the Company immediately upon having a reasonable basis for believing that the
Fund has ceased to so qualify or that the Fund might not so qualify in the
future.
2.4. The Company represents that each Account is and will continue to
be a "segregated account" under applicable provisions of the Code and that each
Contract is and will be treated as a "variable contract" under applicable
provisions of the Code and that it will make every effort to maintain such
treatment and that it will notify the Fund immediately upon having a reasonable
basis for believing that the Account or Contract has ceased to be so treated or
that they might not be so treated in the future.
2.5. The Fund represents that to the extent that it decides to finance
distribution expenses pursuant to Rule 12b-1 under the 1940 Act, the Fund
undertakes to have a board of directors, a majority of whom are not interested
persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance
distribution expenses.
2.6. The Fund makes no representation as to whether any aspect of its
operations (including, but not limited to, fees and expenses and investment
policies) complies with the insurance laws or regulations of the various
states.
2.7. The Fund and the Adviser represent that the Fund is duly
organized and validly existing under the laws of State and that the Fund does
and will comply in all material respects with the 1940 Act.
2.8. The Underwriter represents and warrants that it is and shall
remain duly registered under all applicable federal and state laws and
regulations and that it will perform its obligations for the Fund and the
Company in compliance with the laws and regulations of its state of domicile and
any applicable state and federal laws and regulations.
2.9. The Company represents and warrants that all of its trustees,
officers, employees, investment advisers, and other individuals/entities dealing
with the money and/or securities of the Fund are covered by a blanket fidelity
bond or similar coverage, in an amount equal to the greater of $5 million or any
amount required by applicable federal or state law or regulation. The aforesaid
includes coverage for larceny and embezzlement is issued by a reputable bonding
company.
ARTICLE III. PROSPECTUSES; REPORTS TO SHAREHOLDERS AND PROXY STATEMENTS; VOTING
3.1. The Fund shall provide the Company with as many printed copies of
the Fund's current prospectus and statement of additional information as the
Company may reasonably request. If requested by the Company in lieu of providing
printed copies the Fund shall provide camera-ready film or computer diskettes
containing the Fund's prospectus and statement of additional information, and
such other assistance as is reasonably necessary in order for the
8
<PAGE>
Company once each year (or more frequently if the prospectus and/or statement
of additional information for the Fund is amended during the year) to have
the prospectus for the Contracts and the Fund's prospectus printed together
in one document or separately. The Company may elect to print the Fund's
prospectus and/or its statement of additional information in combination with
other fund companies' prospectuses and statements of additional information.
3.2(a). Except as otherwise provided in this Section 3.2, all expenses of
preparing, setting in type and printing and distributing Fund prospectuses and
statements of additional information shall be the expense of the Company. For
prospectuses and statements of additional information provided by the Company to
its existing owners of Contracts in order to update disclosure as required by
the 1933 Act and/or the 1940 Act, the cost of setting in type, printing and
distributing shall be borne by the Fund. If the Company chooses to receive
camera-ready film or computer diskettes in lieu of receiving printed copies of
the Fund's prospectus and/or statement of additional information, the Fund shall
bear the cost of typesetting to provide the Fund's prospectus and/or statement
of additional information to the Company in the format in which the Fund is
accustomed to formatting prospectuses and statements of additional information,
respectively, and the Company shall bear the expense of adjusting or changing
the format to conform with any of its prospectuses and/or statements of
additional information. In such event, the Fund will reimburse the Company in an
amount equal to the product of x and y where x is the number of such
prospectuses distributed to owners of the Contracts, and y is the Fund's per
unit cost of printing the Fund's prospectuses. The same procedures shall be
followed with respect to the Fund's statement of additional information. The
Fund shall not pay any costs of typesetting, printing and distributing the
Fund's prospectus and/or statement of additional information to prospective
Contract owners.
3.2(b). The Fund, at its expense, shall provide the Company with copies
of its proxy statements, reports to shareholders, and other communications
(except for prospectuses and statements of additional information, which are
covered in Section 3.2(a) above) to shareholders in such quantity as the Company
shall reasonably require for distributing to Contract owners. The Fund shall
not pay any costs of distributing such proxy-related material, reports to
shareholders, and other communications to prospective Contract owners.
3.2(c). The Company agrees to provide the Fund or its designee with such
information as may be reasonably requested by the Fund to assure that the Fund's
expenses do not include the cost of typesetting, printing or distributing any of
the foregoing documents other than those actually distributed to existing
Contract owners.
3.2(d) The Fund shall pay no fee or other compensation to the Company
under this Agreement, except that if the Fund or any Portfolio adopts and
implements a plan pursuant to Rule 12b-1 to finance distribution expenses, then
the Underwriter may make payments to the Company or to the underwriter for the
Contracts if and in amounts agreed to by the Underwriter in writing.
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3.2(e) All expenses, including expenses to be borne by the Fund pursuant
to Section 3.2 hereof, incident to performance by the Fund under this Agreement
shall be paid by the Fund. The Fund shall see to it that all its shares are
registered and authorized for issuance in accordance with applicable federal law
and, if and to the extent deemed advisable by the Fund, in accordance with
applicable state laws prior to their sale. The Fund shall bear the expenses for
the cost of registration and qualification of the Fund's shares.
3.3. The Fund's statement of additional information shall be
obtainable from the Fund, the Underwriter, the Company or such other person as
the Fund may designate.
3.4. If and to the extent required by law the Company shall
distribute all proxy material furnished by the Fund to Contract Owners to whom
voting privileges are required to be extended and shall:
(i) solicit voting instructions from Contract owners;
(ii) vote the Fund shares in accordance with instructions received
from Contract owners; and
(iii) vote Fund shares for which no instructions have been received in
the same proportion as Fund shares of such Portfolio for
which instructions have been received, so long as and to the
extent that the Securities and Exchange Commission continues
to interpret the 1940 Act to require pass-through voting
privileges for variable contract owners. The Company reserves
the right to vote Fund shares held in any segregated asset
account in its own right, to the extent permitted by law. The
Fund and the Company shall follow the procedures, and shall
have the corresponding responsibilities, for the handling of
proxy and voting instruction solicitations, as set forth in
Schedule C attached hereto and incorporated herein by
reference. Participating Insurance Companies shall be
responsible for ensuring that each of their separate
accounts participating in the Fund calculates voting
privileges in a manner consistent with the standards set
forth on Schedule C, which standards will also be provided to
the other Participating Insurance Companies.
(iv) For unregistered separate accounts subject to the Employee
Retirement Income Security Act of 1974 ("ERISA") to refrain
from voting shares for which no instructions are received if
such shares are held in an unregistered segregated asset
account subject to ERISA.
3.5. The Fund will comply with all provisions of the 1940 Act
requiring voting by shareholders, and in particular the Fund will either provide
for annual meetings (except insofar as the Securities and Exchange Commission
may interpret Section 16 not to require such meetings)
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or comply with Section 16(c) of the 1940 Act (although the Fund is not one of
the trusts described in Section 16(c) of that Act) as well as with Sections
16(a) and, if and when applicable, 16(b). Further, the Fund will act in
accordance with the Securities and Exchange Commission's interpretation of
the requirements of Section 16(a) with respect to periodic elections of
directors and with whatever rules the Commission may promulgate with respect
thereto.
ARTICLE IV. SALES MATERIAL AND INFORMATION
4.1. The Company shall furnish, or shall cause to be furnished, to the
Fund, the Underwriter or their designee, each piece of sales literature or other
promotional material prepared by the Company or any person contracting with the
Company in which the Fund, the Adviser or the Underwriter is described, at least
ten Business Days prior to its use. No such material shall be used if the Fund,
the Adviser, the Underwriter or their designee reasonably objects to such use
within ten Business Days after receipt of such material.
4.2. Neither the Company nor any person contracting with the Company
shall give any information or make any representations or statements on behalf
of the Fund or concerning the Fund in connection with the sale of the Contracts
other than the information or representations contained in the registration
statement or Fund prospectus, as such registration statement or Fund prospectus
may be amended or supplemented from time to time, or in reports to shareholders
or proxy statements for the Fund, or in sales literature or other promotional
material approved by the Fund or its designee, except with the permission of the
Fund or its designee.
4.3. The Fund shall furnish, or shall cause to be furnished, to the
Company or its designee, each piece of sales literature or other promotional
material prepared by the Fund in which the Company or its Accounts, are
described at least ten Business Days prior to its use. No such material shall be
used if the Company or its designee reasonably objects to such use within ten
Business Days after receipt of such material.
4.4. Neither the Fund nor the Underwriter shall give any information
or make any representations on behalf of the Company or concerning the Company,
each Account, or the Contracts, other than the information or representations
contained in a registration statement or prospectus for the Contracts, as such
registration statement or prospectus may be amended or supplemented from time to
time, or in published reports or solicitations for voting instruction for each
Account which are in the public domain or approved by the Company for
distribution to Contract owners, or in sales literature or other promotional
material approved by the Company or its designee, except with the permission of
the Company.
4.5. The Fund will provide to the Company at least one complete copy
of all registration statements, prospectuses, statements of additional
information, reports, proxy statements, sales literature and other promotional
materials, applications for exemptions, requests for no-action letters, and all
amendments to any of the above, that relate to the Fund or its shares,
contemporaneously with the filing of such document with the Securities and
Exchange Commission or other regulatory authorities.
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4.6. The Company will provide to the Fund, upon the Fund's request, at
least one complete copy of all registration statements, prospectuses, statements
of additional information, reports, solicitations for voting instructions, sales
literature and other promotional materials, applications for exemptions,
requests for no action letters, and all amendments to any of the above, that
relate to the investment in an Account or Contract, contemporaneously with the
filing of such document with the Securities and Exchange Commission or other
regulatory authorities.
4.7. For purposes of this Article IV, the phrase "sales literature or
other promotional material" includes, but is not limited to, any of the
following: advertisements (such as material published, or designed for use in, a
newspaper, magazine, or other periodical, radio, television, telephone or tape
recording, videotape display, signs or billboards, motion pictures, or other
public media), sales literature (i.e., any written communication distributed or
made generally available to customers or the public, including brochures,
circulars, research reports, market letters, form letters, seminar texts,
reprints or excerpts of any other advertisement, sales literature, or published
article), educational or training materials or other communications distributed
or made generally available to some or all agents or employees, and registration
statements, prospectuses, statements of additional information, shareholder
reports, and proxy materials.
ARTICLE V. [RESERVED]
ARTICLE VI. DIVERSIFICATION
6.1. The Fund and the Adviser represent and warrant that, at all
times, the Fund will comply with Section 817(h) of the Code and Treasury
Regulation 1.817-5, relating to the diversification requirements for variable
annuity, endowment, or life insurance contracts and any amendments or other
modifications to such Section or Regulations. In the event the Fund ceases to so
qualify, it will take all reasonable steps (a) to notify Company of such event
and (b) to adequately diversify the Fund so as to achieve compliance within the
grace period afforded by Regulation 817-5.
ARTICLE VII. POTENTIAL CONFLICTS
7.1. The Board will monitor the Fund for the existence of any material
irreconcilable conflict between the interests of the contract owners of all
separate accounts investing in the Fund. An irreconcilable material conflict may
arise for a variety of reasons, including: (a) an action by any state insurance
regulatory authority; (b) a change in applicable federal or state insurance,
tax, or securities laws or regulations, or a public ruling, private letter
ruling, no-action or interpretative letter, or any similar action by insurance,
tax, or securities regulatory authorities; (c) an administrative or judicial
decision in any relevant proceeding; (d) the manner in which the investments of
any Portfolio are being managed; (e) a difference in voting instructions given
by
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<PAGE>
variable annuity contract owners and variable life insurance contract owners;
or (f) a decision by a Participating Insurance Company to disregard the
voting instructions of contract owners. The Board shall promptly inform the
Company if it determines that an irreconcilable material conflict exists and
the implications thereof.
7.2. The Company will report any potential or existing material
irreconcilable conflict of which it is aware to the Board. The Company will
assist the Board in carrying out its responsibilities under the Shared Funding
Exemptive Order, by providing the Board with all information reasonably
necessary for the Board to consider any issues raised. This includes, but is not
limited to, an obligation by the Company to inform the Board whenever contract
owner voting instructions are disregarded.
7.3. If it is determined by a majority of the Board, or a majority of
its disinterested trustees, that a material irreconcilable conflict exists, the
Company and other Participating Insurance Companies shall, at their expense and
to the extent reasonably practicable (as determined by a majority of the
disinterested trustees), take whatever steps are necessary to remedy or
eliminate the irreconcilable material conflict, up to and including: (1)
withdrawing the assets allocable to some or all of the separate accounts from
the Fund or any Portfolio and reinvesting such assets in a different investment
medium, including (but not limited to) another Portfolio of the Fund, or
submitting the question whether such segregation should be implemented to a vote
of all affected Contract owners and, as appropriate, segregating the assets of
any appropriate group (i.e., annuity contract owners, life insurance policy
owners, or variable contract owners of one or more Participating Insurance
Companies) that votes in favor of such segregation, or offering to the affected
contract owners the option of making such a change; and (2) establishing a new
registered management investment company or managed separate account. No charge
or penalty will be imposed as a result of such withdrawal. The Company agrees
that it bears the responsibility to take remedial action in the event of a Board
determination of an irreconcilable material conflict and the cost of such
remedial action, and these responsibilities will be carried out with a view only
to the interests of Contract owners.
7.4. If a material irreconcilable conflict arises because of a
decision by the Company to disregard contract owner voting instructions and that
decision represents a minority position or would preclude a majority vote, the
Company may be required, at the Fund's election, to withdraw the affected
Account's investment in the Fund and terminate this Agreement with respect to
such Account (at the Company's expense); provided, however that such withdrawal
and termination shall be limited to the extent required by the foregoing
material irreconcilable conflict as determined by a majority of the
disinterested members of the Board. No charge or penalty will be imposed as a
result of such withdrawal. The Company agrees that it bears the responsibility
to take remedial action in the event of a Board determination of an
irreconcilable material conflict and the cost of such remedial action, and these
responsibilities will be carried out with a view only to the interests of
Contract owners.
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7.5. For purposes of Sections 7.3 through 7.4 of this Agreement, a
majority of the disinterested members of the Board shall determine whether
any proposed action adequately remedies any irreconcilable material conflict,
but in no event will the Fund be required to establish a new funding medium
for the Contracts. The Company shall not be required by Section 7.3 through
7.4 to establish a new funding medium for the Contracts if an offer to do so
has been declined by vote of a majority of Contract owners materially
adversely affected by the irreconcilable material conflict.
7.6. If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended,
or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the
1940 Act or the rules promulgated thereunder with respect to mixed or shared
funding (as defined in the Shared Funding Exemptive Order) on terms and
conditions materially different from those contained in the Shared Funding
Exemptive Order, then the Fund and/or the Participating Insurance Companies, as
appropriate, shall take such steps as may be necessary to comply with Rules 6e-2
and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are
applicable.
7.7 Each of the Company and the Adviser shall at least annually
submit to the Board such reports, materials or data as the Board may reasonably
request so that the Board may fully carry out the obligations imposed upon them
by the provisions hereof and in the Shared Funding Exemptive Order, and said
reports, materials and data shall be submitted more frequently if deemed
appropriate by the Board. All reports received by the Board of potential or
existing conflicts, and all Board action with regard to determining the
existence of a conflict, notifying Participating Insurance Companies of a
conflict, and determining whether any proposed action adequately remedies a
conflict, shall be properly recorded in the minutes of the Board or other
appropriate records, and such minutes or other records shall be made available
to the Securities and Exchange Commission upon request.
ARTICLE VIII. INDEMNIFICATION
8.1. INDEMNIFICATION BY THE COMPANY
8.1 (a). The Company agrees to indemnify and hold harmless the Fund, the
Underwriter and each member of their respective Board and officers and each
person, if any, who controls the Fund within the meaning of Section 15 of the
1933 Act (collectively, the "Indemnified Parties" for purposes of this Section
8.1) against any and all losses, claims, damages, liabilities (including amounts
paid in settlement with the written consent of the Company) or litigation
(including legal and other expenses), to which the Indemnified Parties may
become subject under any statute, regulation, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the sale or acquisition of the
Fund's shares or the Contracts and:
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained
in the registration statement or
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<PAGE>
prospectus for the Contracts or contained in the Contracts or
sales literature for the Contracts (or any amendment or
supplement to any of the foregoing), or arise out of or are
based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading,
provided that this agreement to indemnify shall not apply as
to any Indemnified Party if such statement or omission or
such alleged statement or omission was made in reliance upon
and in conformity with information furnished to the Company
by or on behalf of the Fund for use in the registration
statement or prospectus for the Contracts or in the Contracts
or sales literature (or any amendment or supplement) or
otherwise for use in connection with the sale of the
Contracts or Fund shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of the
Fund not supplied by the Company, or persons under its
control and other than statements or representations
authorized by the Fund or the Underwriter) or unlawful
conduct of the Company or persons under its control, with
respect to the sale or distribution of the Contracts or Fund
shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, or sales literature of
the Fund or any amendment thereof or supplement thereto or
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading if such a statement or
omission was made in reliance upon and in conformity with
information furnished to the Fund by or on behalf of the
Company; or
(iv) arise as a result of any failure by the Company to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this
Agreement or arise out of or result from any other material
breach of this Agreement by the Company.
8.1 (b). The Company shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations or duties under this Agreement.
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<PAGE>
8.1(c). The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Company shall be entitled to participate,
at as own expense, in the defense of such action. The Company also shall be
entitled to assume the defense thereof, with counsel satisfactory to the party
named in the action. After notice from the Company to such party of the
Company's election to assume the defense thereof, the Indemnified Party shall
bear the fees and expenses under this Agreement for any legal or other expenses
subsequently incurred by such Party independently in connection with the defense
thereof other than reasonable costs of investigation.
8.1(d). The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Fund shares or the Contracts or the operation of the
Fund.
8.2. INDEMNIFICATION BY UNDERWRITER
8.2(a). The Underwriter agrees, with respect to each Portfolio that it
distributes, to indemnify and hold harmless the Company and each of as directors
and officers and each person, if any, who controls the Company within the
meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties"
for purposes of this Section 8.2) against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Underwriter) or litigation (including legal and other expenses) to which the
Indemnified Parties may become subject under any statute, at common law or
otherwise, insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) or settlements are related to the sale or
acquisition of shares of the Portfolio that it distributes or the Contracts
and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of
the Fund (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with
information furnished to the Fund or the Underwriter by or on
behalf of the Company for use in the registration statement
or prospectus for the
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<PAGE>
Fund or in sales literature (or any amendment or supplement)
or otherwise for use in connection with the sale of the
Contracts or Portfolio shares; or
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for
the Contracts not supplied by the Fund, the Underwriter or
persons under their respective control and other than
statements or representations authorized by the Company) or
unlawful conduct of the Fund or Underwriter or persons under
their control, with respect to the sale or distribution of
the Contracts or Portfolio shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, or sales literature
covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on
behalf of the Fund or the Underwriter; or
(iv) arise as a result of any failure by the Fund or the Underwriter
to provide the services and furnish the materials under the
terms of this Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Underwriter in
this Agreement or arise out of or result from any other
material breach of this Agreement by the Underwriter; as
limited by and in accordance with the provisions of Section
8.2(b) and 8.2(c) hereof.
8.2(b). The Underwriter shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an Indemnified Party as such may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement.
8.2(c). The Underwriter shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Underwriter in writing within
a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice
of such service on any designated agent), but failure to notify the
Underwriter of any such claim shall not relieve the Underwriter from any
liability which it may have to the Indemnified Party against whom
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<PAGE>
such action is brought otherwise than on account of this indemnification
provision. In case any such action is brought against the Indemnified
Parties, the Underwriter will be entitled to participate, at its own expense,
in the defense thereof. The Underwriter also shall be entitled to assume the
defense thereof, with counsel satisfactory to the party named in the action.
After notice from the Underwriter to such party of the Underwriter's election
to assume the defense thereof, the Indemnified Party shall bear the fees and
expenses of any additional counsel retained by it, and the Underwriter will
not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other than reasonable costs of investigation.
8.2(d). The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of the Contracts or the
operation of each Account in which the Funds are made available.
8.3. INDEMNIFICATION BY THE ADVISER
8.3(a). The Adviser agrees to indemnify and hold harmless the Company and
its directors and officers and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act (hereinafter collectively, the
"Indemnified Parties" and individually, "Indemnified Party," for purposes of
this Section 8.3) against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Adviser)
or litigation (including legal and other expenses) to which the Indemnified
Parties may become subject under any statute, at common law or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) or settlements are related to the operations of the Adviser or
the Fund and:
(i) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of
the Fund (or any amendment or supplement to any of the
foregoing), or arise out of or are based upon the omission or
the alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, provided that this
agreement to indemnify shall not apply as to any Indemnified
Party if such statement or omission or such alleged statement
or omission was made in reliance upon and in conformity with
information furnished to the Adviser, the Fund or the
Underwriter by or on behalf of the Company for use in the
registration statement or prospectus for the Fund or in sales
literature (or any amendment or supplement) or otherwise for
use in connection with the sale of the Contracts or Portfolio
shares; or
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<PAGE>
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for
the Contracts not supplied by the Fund, the Adviser or
persons under its control and other than statements or
representations authorized by the Company) or unlawful
conduct of the Fund, the Adviser or persons under their
control, with respect to the sale or distribution of the
Contracts or Portfolio shares; or
(iii) arise out of or as a result of any untrue statement or alleged
untrue statement of a material fact contained in a
registration statement, prospectus, or sales literature
covering the Contracts, or any amendment thereof or
supplement thereto, or the omission or alleged omission to
state therein a material fact required to be stated therein
or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in
reliance upon information furnished to the Company by or on
behalf of the Fund or the Adviser; or
(iv) arise as a result of any failure by the Adviser to provide the
services and furnish the materials under the terms of this
Agreement; or
(v) arise out of or result from any material breach of any
representation and/or warranty made by the Fund or the
Adviser in this Agreement or arise out of or result from any
other material breach of this Agreement by the Fund or the
Adviser, including without limitation any failure by the Fund
to comply with the conditions of Article VI hereof.
8.3(b). The Adviser shall not be liable under this indemnification
provision with respect to any losses, claims, damages, liabilities or litigation
incurred or assessed against an indemnified Party as may arise from such
Indemnified Party's willful misfeasance, bad faith, or gross negligence in the
performance of such Indemnified Party's duties or by reason of such Indemnified
Party's reckless disregard of obligations and duties under this Agreement.
8.3(c). The Adviser shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Adviser in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Adviser of any
such claim shall not relieve the Adviser from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision. In case any such action is brought
against the Indemnified Parties, the Adviser will be entitled to participate, at
its own expense, in the defense thereof. The Adviser also shall be entitled to
assume the defense thereof, with counsel satisfactory to the party named in the
action. After notice from the Adviser to such party of the Adviser's election to
assume the defense thereof, the Indemnified Party shall bear the
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<PAGE>
fees and expenses of any additional counsel retained by it, and the Adviser
will not be liable to such party under this Agreement for any legal or other
expenses subsequently incurred by such party independently in connection with
the defense thereof other then reasonable costs of investigation.
8.3(d). The Company agrees to promptly notify the Adviser of the
commencement of any litigation or proceedings against it or any of as respective
officers or directors in connection with this Agreement, the issuance or sale of
the Contracts, with respect to the operation of each Account, or the sale or
acquisition of shares of the Adviser.
ARTICLE IX. APPLICABLE LAW
9.1. This Agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of the State of Connecticut.
9.2. This Agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the
Securities and Exchange Commission may grant (including, but not limited to, the
Shared Funding Exemptive Order) and the terms hereof shall be interpreted and
construed in accordance therewith.
ARTICLE X. TERMINATION
10.1. This Agreement shall continue in full force and effect until the
first to occur of:
(a) termination by any party for any reason upon six-months advance
written notice delivered to the other parties; or
(b) termination by the Company by written notice to the Fund, the
Adviser and the Underwriter with respect to any Portfolio
based upon the Company's determination that shares of such
Portfolio are not reasonably available to meet the
requirements of the Contracts. Reasonable advance notice of
election to terminate shall be furnished by the Company, said
termination to be effective ten (10) days after receipt of
notice unless the Fund makes available a sufficient number of
shares to reasonably meet the requirements of the Account
within said ten (10) day period; or
(c) termination by the Company upon written notice to the Fund, the
Adviser and the Underwriter with respect to any Portfolio in
the event any of the Portfolio's shares are not registered,
issued or sold in accordance with applicable state and/or
federal law or such law precludes the use of such shares as
the underlying investment medium of the Contracts issued or
to be issued by the Company. The terminating party shall give
prompt notice to the other parties of its decision to terminate;
or
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<PAGE>
(d) termination by the Company upon written notice to the Fund,
the Adviser and the Underwriter with respect to any Portfolio
in the event that such portfolio ceases to qualify as a
Regulated Investment Company under Subchapter M of the Code
or under any successor or similar provision; or
(e) termination by the Company upon written notice to the Fund and
the Underwriter with respect to any Portfolio in the event
that such Portfolio fails to meet the diversification
requirements specified in Article VI hereof; or
(f) termination by either the Fund, the Adviser or the Underwriter by
written notice to the Company, if either one or more of the
Fund, the Adviser or the Underwriter, shall determine, in its
or their sole judgment exercised in good faith, that the
Company and/or their affiliated companies has suffered a
material adverse change in its business, operations,
financial condition or prospects since the date of this
Agreement or is the subject of material adverse publicity,
provided that the Fund, the Adviser or the Underwriter will
give the Company sixty (60) days' advance written notice of
such determination of as intent to terminate this Agreement,
and provided further that after consideration of the actions
taken by the Company and any other changes in circumstances
since the giving of such notice, the determination of the
Fund, the Adviser or the Underwriter shall continue to apply
on the 60th day since giving of such notice, then such 60th
day shall be the effective date of termination; or
(g) termination by the Company by written notice to the Fund, the
Adviser and the Underwriter, if the Company shall determine,
in its sole judgment exercised in good faith, that either the
Fund, the Adviser or the Underwriter has suffered a material
adverse change in its business, operations, financial
condition or prospects since the date of this Agreement or is
the subject of material adverse publicity, provided that the
Company will give the Fund, the Adviser and the Underwriter
sixty (60) days' advance written notice of such determination
of its intent to terminate this Agreement, and provided
further that after consideration of the actions taken by the
Fund, the Adviser or the Underwriter and any other changes in
circumstances since the giving of such notice, the
determination of the Company shall continue to apply on the
60th day since giving of such notice, then such 60th day
shall be the effective date of termination; or
(h) termination by the Fund, the Adviser or the Underwriter by
written notice to the Company, if the Company gives the Fund,
the Adviser and the
21
<PAGE>
Underwriter the written notice specified in Section 1.5
hereof and at the time such notice was given there was no
notice of termination outstanding under any other provision
of this Agreement; provided, however any termination under
this Section 10.1(h) shall be effective sixty (60) days after
the notice specified in Section 1.5 was given; or
(i) termination by any party upon the other party's breach of any
representation in Section 2 or any material provision of this
Agreement, which breach has not been cured to the
satisfaction of the terminating party within ten (10) days
after written notice of such breach is delivered to the Fund
or the Company, as the case may be; or
(j) termination by the Fund, Adviser or Underwriter by written notice
to the Company in the event an Account or Contract is not
registered (unless exempt from registration) or sold in
accordance with applicable federal or state law or
regulation, or the Company fails to provide pass-through
voting privileges as specified in Section 3.4.
10.2. EFFECT OF TERMINATION. Notwithstanding any termination of this
Agreement, the Fund shall at the option of the Company, continue to make
available additional shares of the Fund pursuant to the terms and conditions of
this Agreement, for all Contracts in effect on the effective date of termination
of this Agreement (hereinafter referred to as "Existing Contracts") unless such
further sale of Fund shares is proscribed by law, regulation or applicable
regulatory body, or unless the Fund determines that liquidation of the Fund
following termination of this Agreement is in the best interests of the Fund and
its shareholders. Specifically, without limitation, the owners of the Existing
Contracts shall be permitted to direct reallocation of investments in the Fund,
redemption of investments in the Fund and/or investment in the Fund upon the
making of additional purchase payments under the Existing Contracts. The parties
agree that this Section 10.2 shall not apply to any terminations under Article
VII and the effect of such Article Vii terminations shall be governed by Article
VII of this Agreement.
10.3. The Company shall not redeem Fund shares attributable to the
Contracts (as distinct from Fund shares attributable to the Company's assets
held in the Account) except (i) as necessary to implement Contract Owner
initiated or approved transactions, or (ii) as required by state and/or federal
laws or regulations or judicial or other legal precedent of general application
(hereinafter referred to as a "Legally Required Redemption") or (iii) as
permitted by an order of the SEC pursuant to Section 26(b) of the 1940 Act. Upon
request, the Company will promptly furnish to the Fund and the Underwriter the
opinion of counsel for the Company (which counsel shall be reasonably
satisfactory to the Fund and the Underwriter) to the effect that any redemption
pursuant to clause (ii) above is a Legally Required Redemption. Furthermore,
except in cases where permitted under the terms of the Contracts, the Company
shall not prevent Contract Owners from allocating payments to a Portfolio that
was otherwise available under the Contracts without first giving the Fund or the
Adviser 30 days notice of its intention to do so.
22
<PAGE>
ARTICLE XI. NOTICES
Any notice shall be sufficiently given when sent by registered or certified
mail to the other party at the address of such party set forth below or at such
other address as such party may from time to time specify in writing to the
other party.
If to the Fund:
____________________________
____________________________
____________________________
If to the Underwriter:
If to the Adviser:
If to the Company: With a copy to:
Hartford Life Insurance Co. Hartford Life Insurance Co.
200 Hopmeadow Street 200 Hopmeadow Street
Simsbury, Connecticut 06070 Simsbury, Connecticut 06070
Attn: Tom Marra Attn: Lynda Godkin, General Counsel
ARTICLE XII. FOREIGN TAX CREDITS
12.1. The Fund and Adviser agree to consult in advance with the Company
concerning whether any series of the Fund qualifies to provide a foreign tax
credit pursuant to Section 853 of the Code.
ARTICLE XIII. MISCELLANEOUS
13.1. All persons dealing with the Fund must look solely to the
property of the Fund for the enforcement of any claims against the Fund as
neither the Board, officers, agents or
23
<PAGE>
shareholders assume any personal liability for obligations entered into on
behalf of the Fund. Each of the Company, Adviser and Underwriter acknowledges
and agrees that, as provided by Article 8, Section 8.1, of the Fund's
Agreement and Declaration of Trust, the shareholders, trustees, officers,
employees and other agents of the Fund and as Portfolios shall not personally
be bound by or liable for matters set forth hereunder, nor shall resort be
had to their private property for the satisfaction of any obligation or claim
hereunder. A Certificate of Trust referring to the Fund's Agreement and
Declaration of Trust is on file with the Secretary of State of Connecticut.
13.2. Subject to the requirements of legal process and regulatory
authority, each party hereto shall treat as confidential the names and addresses
of the owners of the Contracts and all information reasonably identified as
confidential in writing by any other party hereto and, except as permitted by
this Agreement, shall not disclose, disseminate or utilize such names and
addresses and other confidential information until such time as it may come into
the public domain without the express written consent of the affected party.
13.3. The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
13.4. This Agreement may be executed simultaneously in two or more
counterparts, each of which taken together shall constitute one and the same
instrument.
13.5. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
13.6. Each party hereto shall cooperate with each other party and
all appropriate governmental authorities (including without limitation the
Securities and Exchange Commission, the National Association of Securities
Dealers and state insurance regulators) and shall permit such authorities
(and other parties hereto) reasonable access to its books and records in
connection with any investigation or inquiry relating to this Agreement or
the transactions contemplated hereby.
13.7. The rights, remedies and obligations contained in this Agreement
are cumulative and are in addition to any and all rights, remedies and
obligations at law or in equity, which the parties hereto are entitled to under
state and federal laws.
13.8. This Agreement or any of the rights and obligations hereunder may
not be assigned by any party without the prior written consent of all parties
hereto; provided, however, that the Adviser may, with advance written notice to
the other parties hereto, assign this Agreement or any rights or obligations
hereunder to any affiliate of or company under common control with the Adviser
if such assignee is duly licensed and registered to perform the obligations of
the Adviser under this Agreement.
24
<PAGE>
13.9. The Company shall furnish, or shall cause to be furnished, to the
Fund or its designee upon request, copies of the following reports:
(a) the Company's annual statement (prepared under statutory
accounting principles) and annual report (prepared under
generally accepted accounting principles ("GAAP"), if any),
as soon as practical and in any event within 90 days after
the end of each fiscal year;
(b) the Company's June 30th quarterly statements (statutory), as soon
as practical and in any event within 45 days following such
period;
(c) any financial statement, proxy statement, notice or report of the
Company sent to stockholders and/or policyholders, as soon as
practical after the delivery thereof to stockholders;
(d) any registration statement (without exhibits) and financial
reports of the Company filed with the Securities and Exchange
Commission or any state insurance regulator, as soon as
practical after the filing thereof;
(e) any other public report submitted to the Company by independent
accountants in connection with any annual, interim or special
audit made by them of the books of the Company, as soon as
practical after the receipt thereof.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in as name and on its behalf by its duly authorized representative
as of the date specified above.
HARTFORD LIFE INSURANCE COMPANY
on behalf of Itself and each of its Accounts named in
Schedule A hereto, as amended from time to time
By:
---------------------------------------------------
Peter Cummins
Its Senior Vice President
25
<PAGE>
FUND
By:
---------------------------------------------
Its
UNDERWRITER
By:
---------------------------------------------
Its
ADVISER
By:
---------------------------------------------
Its
26
<PAGE>
SCHEDULE A
SEPARATE ACCOUNTS AND CONTRACTS
- --------------------------------------------------------------------------------
Name of Separate Account and Date Established Form Numbers
by Board of Directors Funded by Separate Account
- --------------------------------------------------------------------------------
Contract Form Nos.:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
27
<PAGE>
SCHEDULE B
PARTICIPATING LIFE INVESTMENT TRUST PORTFOLIOS
28
<PAGE>
SCHEDULE C
PROXY VOTING PROCEDURES
The following is a list of procedures and corresponding responsibilities for the
handling of proxies and voting instructions relating to the Fund. The defined
terms herein shall have the meanings assigned in the Participation Agreement
except that the term "Company" shall also include the department or third party
assigned by the Company to perform the steps delineated below.
1. The proxy proposals are given to the Company by the Fund as early
as possible before the date set by the Fund for the shareholder
meeting to enable the Company to consider and prepare for the
solicitation of voting instructions from owners of the Contracts and
to facilitate the establishment of tabulation procedures. At this time
the Fund will inform the Company of the Record, Mailing and Meeting
dates. This will be done verbally approximately two months before
meeting.
2. Promptly after the Record Date, the Company will perform a "tape
run," or other activity, which will generate the names, address and
number of units which are attributed to each contract
owner/policyholder (the "Customer") as of the Record Date. Allowance
should be made for account adjustments made after this date that could
affect the status of the Customers' accounts as of the Record Date.
Note: The number of proxy statements is determined by the activities
described in Step #2. The Company will use its best efforts to call in
the number of Customers to the Fund, as soon as possible, but no later
than two weeks after the Record Date.
3. The Fund's Annual Report must be sent to each Customer by the
Company either before or together with the Customers' receipt of
voting instruction solicitation material. The Fund will provide the
last Annual Report to the Company pursuant to the terms of Section 3.3
of the Agreement to which this Schedule relates.
4. The text and format for the Voting Instruction Cards ("Cards" or
"Card") is provided to the Company by the Fund. The Company, at its
expense, shall produce and personalize the Voting Instruction Cards.
The Fund or its affiliate must approve the Card before it is printed.
Allow approximately 2-4 business days for printing information on the
Cards. Information commonly found on the Cards includes:
a. name (legal name as found on account registration)
b. address
c. fund or account number
d. coding to state number of units (or equivalent shares)
e. individual Card number for use in tracking and verification of votes
(already on Cards as printed by the Fund).
29
<PAGE>
5. During this time, the Fund will develop, produce, and the Fund
will pay for the Notice of Proxy and the Proxy Statement (one
document). Printed and folded notices and statements will be sent to
Company for insertion into envelopes (envelopes and return envelopes
are provided and paid for by the Company). Contents of envelope sent
to Customers by the Company will include:
a. Voting Instruction Card(s)
b. One proxy notice and statement (one document)
c. return envelope (postage pre-paid by Company) addressed to the
Company or its tabulation agent
d. "urge buck slip" - optional, but recommended. (This is a small,
single sheet of paper that requests Customers to vote as quickly
as possible and that their vote is important. One copy will be
supplied by the Fund.)
e. cover letter - optional, supplied by Company and reviewed and
approved in advance by the Fund.
6. The above contents should be received by the Company
approximately 3-5 business days before mail date. Individual in
charge at Company reviews and approves the contents of the mailing
package to ensure correctness and completeness. Copy of this approval
sent to the Fund.
7. Package mailed by the Company at the Fund's expense.
*The Fund must allow at least a 15-day solicitation time to the
Company as the shareowner. (A 5-week period is recommended.)
Solicitation time is calculated as calendar days from (but not
including), the meeting, counting backwards.
8. Collection and tabulation of Cards begins. Tabulation usually
takes place in another department or another vendor depending on
process used. An often used procedure is to sort Cards on arrival by
proposal into vote categories of all yes, no, or mixed replies, and to
begin data entry.
Note: Postmarks are not generally needed. A need for postmark
information would be due to an insurance company's internal procedure
and has not been required by the Fund in the past.
9. Signatures on Card checked against legal name on account
registration which was printed on the Card.
Note: For example, if the account registration is under "John A.
Smith, Trustee," then that is the exact legal name to be printed on
the Card and is the signature needed on the Card.
30
<PAGE>
10. If Cards are mutilated, or for any reason are illegible or are
not signed properly, they are sent back to Customer with an
explanatory letter and a new Card and return envelope. The mutilated
or illegible Card is disregarded and considered to be not received for
purposes of vote tabulation. Any Cards that have been "kicked out"
(e.g., mutilated, illegible) of the procedure are "hand verified,"
(i.e., examined as to why they did not complete the system). Any
questions on those Cards are usually remedied individually.
11. There are various control procedures used to ensure proper
tabulation of votes and accuracy of that tabulation. The most
prevalent is to sort the Cards as they first arrive into categories
depending upon their vote; an estimate of how the vote is progressing
may then be calculated. If the initial estimates and the actual vote
do not coincide, then an internal audit of that vote should occur.
This may entail a recount.
12. The actual tabulation of votes is done in units (or equivalent
shares) which is then converted to shares. (It is very important that
the fund receives the tabulations stated in terms of a percentage and
the number of shares.) The Fund must review and approve tabulation
format.
13. Final tabulation in shares is verbally given by the Company to
the Fund on the morning of the meeting not later then 10:00 A.M.
Houston time. The Fund may request an earlier deadline if reasonable
and if required to calculate the vote in time for the meeting.
14. A Certification of Mailing and Authorization to Vote Shares will
be required from the Company as well as an original copy of the final
vote. The Fund will provide a standard form for each Certification.
15. The Company will be required to box and archive the Cards
received from the Customers. In the event that any vote is challenged
or if otherwise necessary for legal, regulatory, or accounting
purposes, the Fund will be permitted reasonable access to such Cards.
16. All approvals and "signing-off" may be done orally, but must
always be followed up in writing.
31
<PAGE>
EXHIBIT 1.3
[LOGO]
HARTFORD LIFE
April 12, 1999
LYNDA GODKIN, SENIOR VICE PRESIDENT,
GENERAL COUNSEL & CORPORATE SECRETARY
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
POST-EFFECTIVE AMENDMENT NO. 6
FILE NO. 33-83652
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 policies (the
"Policies") 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 Policies.
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 Policies, 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.
4. The Policies, when issued as contemplated by the Form S-6 Registration
Statement, will constitute legal, validly issued and binding obligations
of the Company.
<PAGE>
Board of Directors
April 12, 1999
Page 2
I hereby consent to the filing of this opinion as an exhibit to the Form S-6
Registration Statement for the Policies and the Account.
Sincerely,
/s/ Lynda Godkin
Lynda Godkin
<PAGE>
EXHIBIT 1.4
MICHAEL R. WINTERFIELD, FSA, MAAA
Assistant Vice President
Individual Annuity Product Management
April 12, 1999
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 utilizing 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 Statement of Additional Information 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>
EXHIBIT 1.5
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of
this Registration Statement File No. 33-83652 for Hartford Life and Annuity
Insurance Company Separate Account Five on Form S-6.
/s/ Arthur Andersen LLP
Hartford, Connecticut
April 12, 1999
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
POWER OF ATTORNEY
-----------------
Gregory A. Boyko
David T. Foy
Lynda Godkin
Thomas M. Marra
Lowndes A. Smith
David M. Znamierowski
do hereby jointly and severally authorize Lynda Godkin, Christine Repasy,
Marianne O'Doherty, Thomas S. Clark and Brian Lord to sign as their agent,
any Registration Statement, pre-effective amendment, post-effective amendment
and any application for exemptive relief of the Hartford Life and Annuity
Insurance Company under the Securities Act of 1933 and/or the Investment
Company Act of 1940, and do hereby ratify any such signatures heretofore made
by such persons.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for
the purpose herein set forth.
/s/ Gregory A. Boyko Dated as of January 15, 1999
- ------------------------------
Gregory A. Boyko
/s/ David T. Foy Dated as of January 15, 1999
- ------------------------------
David T. Foy
/s/ Lynda Godkin Dated as of January 15, 1999
- ------------------------------
Lynda Godkin
/s/ Thomas M. Marra Dated as of January 15, 1999
- ------------------------------
Thomas M. Marra
/s/ Lowndes A. Smith Dated as of January 15, 1999
- ------------------------------
Lowndes A. Smith
/s/ David M. Znamierowski Dated as of January 15, 1999
- ------------------------------
David M. Znamierowski
<PAGE>
ORGANIZATIONAL CHART
<TABLE>
<CAPTION>
<S> <C>
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(DELAWARE)
|
---------------------------------------------
NUTMEG INSURANCE COMPANY |
(CONNECTICUT) THE HARTFORD INVESTMENT
| MANAGEMENT COMPANY
HARTFORD FIRE INSURANCE COMPANY (DELAWARE)
(CONNECTICUT) |
| |
HARTFORD ACCIDENT AND INDEMNITY COMPANY HARTFORD INVESTMENT
(CONNECTICUT) SERVICES, INC.
| (CONNECTICUT)
HARTFORD LIFE, INC.
(DELAWARE)
|
HARTFORD LIFE & ACCIDENT INSURANCE COMPANY
(CONNECTICUT)
|
|
|
-------------------------------------------------------------------------------------------------------------------------
| | | | | | | | |
ITT HARTFORD LIFE | | | | | | HLIC PLANCO
INTERNATIONAL LTD. | | | | | | CANADA FINANCIAL
(CONNECTICUT) | | | | | | HOLDINGS, INC. SERVICES,
| | | | | | | (CANADA) INCORPORATED
| | | | | | | | (PENNSYLVANIA)
| | | | | | | | |
| | ALPINE LIFE HARTFORD FINANCIAL HARTFORD LIFE HARTFORD AMERICAN | |
| | INSURANCE SERVICES LIFE INSURANCE COMPANY FINANCIAL MATURITY LIFE | |
| | COMPANY INSURANCE CO. (CONNECTICUT) SERVICES, LLC INSURANCE COMPANY | |
| | (CONNECTICUT) (CONNECTICUT) | (DELAWARE) (CONNECTICUT) | PLANCO, INC.
| | | | | | (PENNSYLVANIA)
| | ------------------------------------- | AML FINANCIAL, INC. |
HARTFORD CALMA | | | | | (CONNECTICUT) |
COMPANY | ROYAL LIFE HARTFORD HARTFORD | HARTFORD
(FLORIDA) | INSURANCE INTERNATIONAL LIFE AND | LIFE INSURANCE
| COMPANY LIFE REASSURANCE ANNUITY INSURANCE | COMPANY
| OF AMERICA CORP. COMPANY | OF CANADA
|(CONNECTICUT) (CONNECTICUT) (CONNECTICUT) | (CANADA)
| | |
| | |
| ITT HARTFORD |
| LIFE, LTD. |
| (BERMUDA) |
| |
| |
----------| ---------------------------------------------------------------------------------------------
| | | | | |
INTERNATIONAL MS FUND HL INVESTMENT HARTFORD HARTFORD SECURITIES HARTFORD COMP. EMP.
CORPORATE AMERICA 1993-K ADVISORS, LLC EQUITY SALES DISTRIBUTION BENEFITS SERVICE
MARKETING GROUP, INC. SPE, INC. (CONNECTICUT) COMPANY, INC. COMPANY, INC. COMPANY
(CONNECTICUT) (DELAWARE) | (CONNECTICUT) (CONNECTICUT) (CONNECTICUT)
| |
| |
THE EVERGREEN HARTFORD INVESTMENT
GROUP, INC. FINANCIAL SERVICES
(NEW YORK) COMPANY
(DELAWARE)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(DELAWARE)
|
NUTMEG INSURANCE COMPANY
(CONNECTICUT)
|
HARTFORD FIRE INSURANCE COMPANY
(CONNECTICUT)
|
----------------------------------------------------------------------------------------------------------------------------
| | |
| | ITT HARTFORD LIFE
| | -------INTERNATIONAL LTD.
| | | (CONNECTICUT)
| | | |
| | | ITT HARTFORD
| | | ----SUDAMERICANA
| | | | HOLDING S.A.
| | | | (ARGENTINA)
| | | |------------------------------------------------------
| | | | | |
| | | | HARTFORD GALICIA INSTITUTO DE
| | | | SEGUROS VIDA COMPANIA SALTA COMPANIA DE
| | | |--------DE VIDA DE SEGUROS S.A. SEGUROS DE VIDA S.A.
| | | | (URUGUAY) (ARGENTINA) (ARGENTINA)
| | | |
| | ICATU | | ITT HARTFORD
| | HARTFORD | |-----SEGUROS DE VIDA
| | SEGUROS S.A.----------| | (ARGENTINA)
| | (BRAZIL) | |
| | | | |
| | | | | ITT HARTFORD
| | -- ----------| | |------SEGUROS DE
| | | | | | RETIRO S.A.
| | | | | | (ARGENTINA)
|-----------|----------------|---------------|---|--------------------------------------------------------------------------
| | | | | |
| | | ICATU HARTFORD | | CONSULTORA DE CAPITALES
| | | FUNDO DE PENSAO | | S.A. SOCIEDAD GERENTE
| | | (BRAZIL) | |----DE FONDOS COMUNES
| | | | | | DE ENVERSION
| | | | | | (ARGENTINA)
| | | ICATU HARTFORD | |
| | | CAPITALIZACAO S.A. | | CLARIDAD
| | | (BRAZIL) | | ADMINISTRADORA DE
| | | | | |---FONDOS DE JUBILACIONES
| | | BRAZILCAP | | Y PENSIONES S.A.
| | | CAPITALIZACAO S.A. | | (ARGENTINA)
| | | (BRAZIL) | |
| | | | |
| | -------------------------- | |
| |--------------- | | |
| | | | |
HARTFORD FIRE HARTFORD FIRE | | |------- SEGPOOL S.A.
INTERNATIONAL------------INTERNATIONAL, LTD. | | | (ARGENTINA)
(GERMANY) GMBH (CONNECTICUT) | | |
(WEST GERMANY) | | |
| | |
ICATU HARTFORD | | | THESIS S.A.
ADMINISTRACAO | | |-------- (ARGENTINA)
DE BENEFICIOS LTDA-- | | |
(BRAZIL) | |
| |
----------------- |
| |
CAB |--------- U.O.R., S.A.
CORPORATION (ARGENTINA)
(BRITISH VIRGIN ISLANDS)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
THE HARTFORD FINANCIAL SERVICES GROUP, INC.
(DELAWARE)
|
NUTMEG INSURANCE COMPANY
(CONNECTICUT)
|
HARTFORD FIRE INSURANCE COMPANY
(CONNECTICUT)
|
- --------------------------------------------------------------------------------------------------------------------------------|
| |
THE HARTFORD INTERNATIONAL |
|-----------------------------------------------------------------------FINANCIAL SERVICES GROUP, INC. |
| | | (DELAWARE) |
| | | ----------------------|----------------- |
| | | | | | | |
ZWOLSCHE | | ITT HARTFORD LONDON AND | HARTFORD |
ALGEMEENE N.V. | | INTERNATIONAL, LTD. EDINBURGH | EUROPE, INC. |
(NETHERLANDS) | | (U.K.) INSURANCE GROUP, LTD.| (DELAWARE) |
| | | (U.K.) | |
| | | | | |
| | | ------------- | |
| | | | | |
| ITT ASSURANCES HARTFORD INTERNATIONAL | LONDON AND --ITT ERCOS |
| S.A. INSURANCE CO., N.V. |--- EDINBURGH DE SEGUROS Y |
| ZWOLSCHE ALGEMEENE (FRANCE) (BELGIUM) | INSURANCE CO., LTD. REASEGUROS S.A.|
|----SCHADEVERZEKERING | | (U.K.) (SPAIN) |
--------| N.V.----------------------------------- | | | |
| | (NETHERLANDS) | | | | |
Z.A. | | | | EXCESS INSURANCE |
- --VERZEKERINGEN | | | | COMPANY LTD. |
| N.V. | ZWOLSCHE ALGEMEENE | | | (U.K.) |
| (BELGIUM) |------HERVERZEKERING B.V. | | | |
| | -----| (NETHERLANDS) | | | LONDON AND |
| | | | | | |--- EDINBURGH LIFE |
| Z.A. LUX S.A. | | | | ASSURANCE CO., LTD. |
| (LUXEMBURG) | ZWOLSCHE ALGEMEENE | | | (U.K.) |
| |--LEVENS-VERZEKERING N.V.------------ | | | |
| | (NETHERLANDS) | | | | |
- ----------------|------------------------------------|------------|------|--------------|---------------------------------------|
| | | | | | |
| -------- | | | | |
| | | | | | | |
| ZWOLSCHE | ZWOLSCHE ALGEMEENE ZWOLSCHE ALGEMEENE | | | |
| ALGEMEENE |-----HYPOTHEKEN N.V. BELEGGINGEN III B.V. | | | |
| EUROPA B.V. | (NETHERLANDS) (NETHERLANDS) | | | |
| (NETHERLANDS) | ---------- | | |
- --------| | | | | |
| EXPLOITATIEMAAT- BELEGGINGSMAAT- | | |
|----- SCHAPPIJ SCHAPPIJ | | |
| BUIZERDLAAN B.V. BUIZERDLAAN B.V. | | |
| (NETHERLANDS) (NETHERLANDS) | | |
| | | |
| | | -----
| HOLLAND | |-------------------------- |
|---- BELEGGINGSGROEP B.V. | | | |
(NETHERLANDS) | |----------------- | |
| -------| | | |
| | | | | |
| | | | | |
F.A. KNIGHT | MACALISTER & LONDON AND | HARTFORD FIRE
& SON N.V. | DUNDAS, LTD. EDINBURGH | INTERNATIONAL
(BELGIUM) | (SCOTLAND) TRUSTEES, LTD. | SERVICIOS
| (U.K.) | (SPAIN)
------------------------- -----------
| | |
FENCOURT QUOTEL LONDON AND
PRINTERS, LTD. INSURANCE EDINBURGH
(U.K.) SYSTEMS, LTD. SERVICES, LTD.
(U.K.) (U.K.)
|
EUROSURE
INSURANCE
MARKETING, LTD.
(U.K.)
</TABLE>
