<PAGE>
As filed with the Securities and Exchange Commission on February 17, 1999.
File No. 333-52645
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1 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 Insurance Company
C. Complete address of depositor's principal executive offices:
P.O. Box 2999
Hartford, CT 06104-2999
D. Name and complete address of agent for service:
Marianne O'Doherty, Esq.
Hartford Life Insurance Companies
P.O. Box 2999
Hartford, CT 06104-2999
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b) of Rule 485
___ on ________________, 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.
The registrant hereby amends this Registration Statement on such dates as may
be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
RECONCILIATION AND TIE BETWEEN
FORM N-8B-2 AND PROSPECTUS
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
- ------------ --------------------
1. Cover page
2. Cover page
3. Not applicable
4. The Company; Distribution of the Policies
5. Summary - The Separate Account; The Separate Account-
General
6. The Separate Account - General
7. Not required by Form S-6
8. Not required by Form S-6
9. Legal Proceedings
10. Summary; The Separate Account - The Portfolios; The Policy -
Application for a Policy; Policy Benefits and Rights;
Other Matters - Voting Rights, Dividends
11. Summary; The Separate Account - The Portfolios
12. Summary; The Separate Account - The Portfolios
13. Deductions and Charges; Distribution of the Policies;
Federal Tax Considerations
14. The Policy - Application for a Policy
15. The Policy - Allocation of Premiums
16. The Separate Account - The Portfolios; The Policy -
Allocation of Premiums
17. Summary; Policy Benefits and Rights - Account Value and
Amount Payable on Surrender of the Policy, Cancellation and
Exchange Rights
<PAGE>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
- ------------ --------------------
18. The Separate Account - The Portfolios; Deduction and Charges;
Federal Tax Considerations
19. Other Matters - Statements to Policy Owners
20. Not applicable
21. Policy Benefits and Rights - Policy Loans
22. Not applicable
23. Safekeeping of the Separate Account's Assets
24. Other Matters - Assignment
25. The Company
26. Not applicable
27. The Company
28. The Company
29. The Company
30. Not applicable
31. Not applicable
32. Not applicable
33. Not applicable
34. Not applicable
35. Distribution of Policies
36. Not required by Form S-6
37. Not applicable
38. Distribution of the Policies
<PAGE>
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
- ------------ ----------------------
39. The Company; Distribution of the Policies
40. Not applicable
41. The Company; Distribution of the Policies
42. Not applicable
43. Not applicable
44. The Policy - Allocation of Premiums
45. Not applicable
46. Policy Benefits and Rights - Account Value
47. The Separate Account - The Portfolios
48. Cover Page; The Company
49. Not applicable
50. The Separate Account - General
51. Summary; The Company; The Policy; Policy Benefits and
Rights; Other Matters - Beneficiary
52. The Separate Account - The Portfolios, The Separate Account -
Investment Adviser
53. Federal Tax Considerations
54. Not applicable
55. Not applicable
56. Not required by Form S-6
57. Not required by Form S-6
58. Not required by Form S-6
59. Not required by Form S-6
<PAGE>
SELECT DIMENSIONS LIFE SERIES II
MODIFIED SINGLE PREMIUM VARIABLE LIFE
INSURANCE POLICIES
HARTFORD LIFE INSURANCE COMPANY
P.O. Box 2999
Hartford, CT 06104-2999
Telephone (800) 231-5453
- --------------------------------------------------------------------------------
This Prospectus describes Select Dimensions Life Series II, a modified single
premium variable life insurance policy ("Policy" or "Policies"), offered by
Hartford Life Insurance Company ("Hartford") to applicants age 90 and under. The
Policies allow the Policy Owner to pay a single premium and, subject to certain
restrictions, additional premiums.
The Policy is a modified endowment contract for federal income tax purposes,
except in certain cases described under "Federal Tax Considerations," page 24. A
Policy loan, distribution or other amount received from a modified endowment
contract during the life of the Insured will be taxed to the extent of any
accumulated income in the Policy. Any surrender amounts that are taxable will be
subject to a 10% additional tax, with certain exceptions.
Generally, the minimum initial premium Hartford will accept is $10,000. The
initial premium will be allocated to the Money Market Portfolio. After the right
to cancel period has expired, the amounts allocated will be transferred to the
Portfolios specified in the Policy Owner's application. There are currently 18
Sub-Accounts available under the Policy. Underlying investment portfolios
("Portfolios") are available through the Morgan Stanley Dean Witter Select
Dimensions Investment Series (the "Fund"). The following Portfolios are
available under the Policy: the Money Market Portfolio, the North American
Government Securities Portfolio, the Diversified Income Portfolio, the Balanced
Growth Portfolio, the Utilities Portfolio, the Dividend Growth Portfolio, the
Value-Added Market Portfolio, the Growth Portfolio, the American Value
Portfolio, the Mid-Cap Growth Portfolio, the Global Equity Portfolio, the
Developing Growth Portfolio, and the Emerging Market Portfolio of the Morgan
Stanley Dean Witter Select Dimensions Investment Series; the High Yield
Portfolio, the Mid-Cap Value Portfolio and the Emerging Markets Debt Portfolio
of the Morgan Stanley Dean Witter Universal Funds, Inc.; the Strategic Stock
Portfolio and the Enterprise Portfolio of the Van Kampen American Capital Life
Investment Trust.
There is no guaranteed minimum Account Value for a Policy. The Account Value of
a Policy will vary up or down to reflect the investment experience of the
Portfolios to which premiums have been allocated. The Policy Owner bears the
investment risk for all amounts allocated to the Portfolios. The Policy
continues in effect as long as the Cash Surrender Value is sufficient to pay the
monthly charges under the Policy ("Deduction Amount"). The Policy may terminate
if the Cash Surrender Value is insufficient to cover a Deduction Amount and,
after expiration of a specified period, no additional premium payments are
received by Hartford.
The Policies provide for a Face Amount, which is the minimum death benefit under
the Policy. The Death Benefit may be greater than the Face Amount. The Account
Value will, and under certain circumstances the Death Benefit of the Policy may,
increase or decrease based on the investment experience of the Portfolios to
which premiums have been allocated. However, while the Policy is in effect, the
Death Benefit will never be less than the Face Amount. At the death of the
Insured, Hartford will pay the Death Proceeds to the beneficiary. The Death
Proceeds equal the Death Benefit less any Indebtedness under the Policy.
This prospectus is one part of a Registration Statement that we file with the
Securities and Exchange Commission. The entire Registration Statement contains
this prospectus, financial statements and other exhibits and information
regarding the Separate Account, sales loads, administrative, management and
other fees. You may view the entire Registration Statement on the Securities and
Exchange Commission website (HTTP://WWW.SEC.GOV).
IT MAY NOT BE ADVANTAGEOUS TO PURCHASE VARIABLE LIFE INSURANCE AS A REPLACEMENT
FOR YOUR CURRENT LIFE INSURANCE OR IF YOU ALREADY OWN A VARIABLE LIFE INSURANCE
POLICY.
THIS PROSPECTUS IS VALID ONLY IF ACCOMPANIED BY THE CURRENT PROSPECTUSES OF THE
APPLICABLE ELIGIBLE PORTFOLIOS WHICH CONTAIN A FULL DESCRIPTION OF THOSE
PORTFOLIOS. ALL PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE PRODUCTS DESCRIBED HEREIN ARE NOT DEPOSITS OF, OR GUARANTEED BY ANY BANK,
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
THE DATE OF THIS PROSPECTUS IS MARCH 29, 1999.
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
Special Terms 3
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Summary 5
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The Company 7
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The Separate Account 7
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General 7
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The Portfolios 8
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Investment Advisers 10
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The Policy 10
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Application for a Policy 10
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Premiums 11
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Allocation of Premiums 11
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Accumulation Unit Values 11
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Deductions and Charges 11
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Chart of Deduction and Charges 12
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Cost of Insurance Charge 12
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Administrative Charge 13
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Annual Maintenance Fee 13
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Surrender Charge 13
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Policy Owner Options 13
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Option 1 13
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Option 2 14
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Other Deductions or Charges 14
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Policy Benefits and Rights 15
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Death Benefit 15
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Account Value 15
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Transfer of Account Value 15
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Policy Loans 16
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Amount Payable on Surrender of the Policy 16
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Partial Surrenders 16
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Benefits at Maturity 17
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Lapse and Reinstatement 17
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Cancellation and Exchange Rights 17
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Suspension of Valuation, Payments and Transfers 17
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Last Survivor Policies 17
----------------------------------------------------------------------------
<CAPTION>
PAGE
<S> <C>
----------------------------------------------------------------------------
Other Matters 18
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Voting Rights 18
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Statements to Policy Owners 18
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Limit on Right to Contest 18
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Misstatement as to Age and Sex 18
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Settlement Provisions 18
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Beneficiary 20
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Assignment 20
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Dividends 20
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Executive Officers and Directors 21
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Distribution of the Policies 25
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Safekeeping of the Separate Account's Assets 26
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Federal Tax Considerations 26
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General 26
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Taxation of Hartford and the Separate Account 26
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Income Taxation of Policy Benefits 26
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Last Survivor Policies 27
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Modified Endowment Contracts 27
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Estate and Generation Skipping Taxes 27
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Diversification Requirements 27
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Ownership of the Assets in the Separate Account 28
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Life Insurance Purchased for Use in Split Dollar Arrangements 28
----------------------------------------------------------------------------
Federal Income Tax Withholding 28
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Non-Individual Ownership of Policies 28
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Other 28
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Life Insurance Purchases by Nonresident Aliens and Foreign
Corporations 29
----------------------------------------------------------------------------
Legal Proceedings 29
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Legal Matters 29
----------------------------------------------------------------------------
Experts 29
----------------------------------------------------------------------------
Year 2000 29
----------------------------------------------------------------------------
Appendix A -- Special Information for Policies Purchased in New York 31
----------------------------------------------------------------------------
Appendix B -- Illustrations of Benefits 33
----------------------------------------------------------------------------
</TABLE>
THE POLICIES AND/OR POLICY OWNER OPTION 2 MAY NOT BE AVAILABLE IN ALL STATES.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT BE LAWFULLY MADE. NO DEALER OR OTHER PERSON IS AUTHORIZED
TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE,
SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED ON.
2 - PROSPECTUS
<PAGE>
SPECIAL TERMS
--------------------------------------------------------------------
As used in this Prospectus, the following terms have the indicated meanings:
ACCOUNT VALUE: The current value of the Sub-Accounts plus the value of the Loan
Account under the Policy.
ACCUMULATION UNIT: An accounting unit of measure used to calculate the value of
a Sub-Account.
ANNUAL WITHDRAWAL AMOUNT: The amount of a surrender or partial surrender that is
not subject to the Surrender Charge. This amount in any Policy Year is the
greater of 10% of premiums or 100% of cumulative earnings (Account Value less
premiums paid).
ANNUITY UNIT: An accounting unit of measure used to calculate the amount of
annuity payments.
ATTAINED AGE: The Issue Age plus the number of fully completed Policy Years.
CASH SURRENDER VALUE: The Cash Value less all Indebtedness.
CASH VALUE: The Account Value less any Surrender Charge and any Unamortized Tax
charge due upon surrender.
CODE: The Internal Revenue Code of 1986, as amended.
COVERAGE AMOUNT: The Death Benefit less the Account Value.
DEATH BENEFIT: The greater of (1) the Face Amount specified in the Policy or (2)
the Account Value on the date of death multiplied by a stated percentage as
specified in the Policy.
DEATH PROCEEDS: The amount that Hartford will pay on the death of the Insured.
This equals the Death Benefit less any Indebtedness.
DEDUCTION AMOUNT: A deduction on the Policy Date and on each Monthly Activity
Date for the cost of insurance, Tax Expense charges under Option 1, an
administrative charge and a mortality and expense risk charge.
FACE AMOUNT: On the Policy Date, the Face Amount is the amount shown on the
Policy's Specifications page. Thereafter, the Face Amount is reduced in
proportion to any partial surrenders.
FUNDS: The registered investment management companies in which assets of the
Separate Account may be invested.
GUIDELINE SINGLE PREMIUM: The "Guideline Single Premium" as defined in Section
7702 of the Code.
HOME OFFICE: Currently located at 200 Hopmeadow Street, Simsbury, Connecticut;
however, the mailing address is P.O. Box 2999, Hartford, Connecticut 06104-2999.
INDEBTEDNESS: All monies owed to Hartford by the Policy Owner, including all
outstanding loans on the Policy, any interest due or accrued and any unpaid
Deduction Amount or annual maintenance fee arising during a grace period.
INSURED: The person on whose life the Policy is issued.
ISSUE AGE: As of the Policy Date, the Insured's age on Insured's last birthday.
LOAN ACCOUNT: An account in Hartford's General Account, established for any
amounts transferred from the Sub-Accounts for requested loans. The Loan Account
credits a fixed rate of interest that is not based on the investment experience
of the Separate Account.
MONTHLY ACTIVITY DATE: The day of each month on which any deductions or charges
are subtracted from the Account Value of the Policy. Monthly Activity Dates
occur on the same day of the month as the Policy Date.
POLICY: For a Policy issued to an individual, the Policy is the individual
Policy and any endorsements or riders. For a group Policy, the Policy is a
certificate evidencing a participatory interest in a group Policy and any
endorsements or riders. Any references in this Prospectus to a Policy includes
the certificate.
POLICY ANNIVERSARY: The anniversary of the Policy Date.
POLICY DATE: The date from which Policy Anniversaries and Policy Years are
measured.
POLICY LOAN RATE: The interest rate charged on Policy loans.
POLICY OWNER: The owner of the Policy.
POLICY OWNER OPTIONS: The Policy Owner may elect one of two options offered by
Hartford to pay Mortality and Expense Risk charges and certain tax related
charges. The Policy Owner must elect the option at the time the Policy is issued
and the option cannot be changed once the Policy is issued. The following
options are available:
OPTION 1: ASSET BASED CHARGES: Under this option the Policy Owner elects to
pay a Mortality and Expense Risk charge that is deducted monthly from Account
Value at an annual rate of .90% in Policy Years 1 through 10 and at an annual
rate of .50% in Policy Years 11 and beyond; a Tax Expense charge that is also
deducted monthly at an annual rate of .40% for the first 10 Policy Years and
an Unamortized Tax charge that is imposed during the first 9 Policy Years on
surrenders or partial surrenders according to the rate set forth in the
section entitled "Deductions and Charges -- Policy Owner Options --
Unamortized Tax Charge."
OPTION 2: FRONTED CHARGES: Under this option the Policy Owner elects to pay a
Mortality and Expense Risk charge that is deducted monthly from Account Value
at an annual rate of .65% in Policy Years 1 through 10 and an annual rate of
.50% in Policy Years 11 and beyond and a Tax Expense charge that is deducted
from any Premium payment in all Policy Years at an annual rate of 4.0%. This
option is not available in all states. See "Deductions and Charges -- Policy
Owner Options."
3 - PROSPECTUS
<PAGE>
POLICY YEAR: The twelve months between Policy Anniversaries.
SEPARATE ACCOUNT: Separate Account Five, an account established by Hartford to
separate the assets funding the Policies from other assets of Hartford.
SUB-ACCOUNT: The subdivisions of the Separate Account.
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.
4 - PROSPECTUS
<PAGE>
SUMMARY
--------------------------------------------------------------------
THE POLICIES
The Policies are life insurance policies with death benefits, cash values and
other traditional life insurance features. The Policies are "variable." Unlike
the fixed benefits of ordinary whole life insurance, the Account Value will, and
the Death Benefit may, increase or decrease based on the investment experience
of the Portfolios to which premium payments have been allocated. The Policies
are credited with units ("Accumulation Units") to calculate Account Values. The
Policy Owner may transfer the Account Values among the Portfolios.
The Policies can be issued on a single life or "last survivor" basis. For a
discussion of how last survivor Policies operate differently from single life
Policies, see "Last Survivor Policies."
THE SEPARATE ACCOUNT AND
THE PORTFOLIOS
Separate Account Five ("Separate Account") funds the variable life insurance
Policies offered by this Prospectus. Hartford established the Separate Account
pursuant to Connecticut insurance law and it is organized as a unit investment
trust registered under the Investment Company Act of 1940. The Policies
currently offer 18 Sub-Accounts each investing exclusively in a Portfolio. The
investment objectives of the Portfolios are as set forth in "The Separate
Account -- The Portfolios." Applicants should read the Fund's prospectus
accompanying this Prospectus in connection with the purchase of a Policy.
PREMIUMS
The Policy permits the Policy Owner to pay a large single premium and, subject
to restrictions, additional premiums. The Policy Owner may choose a minimum
initial premium of 80%, 90% or 100% of the Guideline Single Premium (based on
the Face Amount). Under current underwriting rules, which are subject to change,
applicants between the ages of 35 and 80 may be eligible for simplified
underwriting without a medical examination if they meet simplified underwriting
standards. For applicants who are below age 35 or above age 80, or who do not
meet simplified underwriting eligibility, full underwriting applies, except that
substandard underwriting applies in those cases that represent substandard risks
according to customary underwriting guidelines.
DEDUCTIONS AND CHARGES
On the Policy Date and on each Monthly Activity Date, Hartford will deduct a
Deduction Amount from the Account Value. The Deduction Amount will be made pro
rata from each Sub-Account. The Deduction Amount includes a cost of insurance
charge, a Tax Expense charge under Option 1, an administrative charge and a
mortality and expense risk charge. If the Cash Surrender Value is not sufficient
to cover a Deduction Amount due on any Monthly Activity Date the Policy may
lapse. See "Deductions and Charges" and "Policy Benefits and Rights -- Lapse and
Reinstatement."
If the Account Value on a Policy Anniversary or on any date the Policy is
surrendered is less than $50,000, Hartford will deduct an annual maintenance fee
of $30. See "Deductions and Charges -- Annual Maintenance Fee."
The Policy Owner may pay certain deductions and charges by electing one of two
available options at the time the Policy is issued. Once elected, the Policy
Owner Options cannot be changed:
Under Option 1:
- a Mortality and Expense Risk charge is deducted monthly from Account Value
at an annual rate of .90% in Policy Years 1 through 10 and at an annual
rate of .50% in Policy Years 11 and beyond.
- a Tax Expense charge is also deducted monthly at an annual rate of .40%
for the first 10 Policy Years.
- an Unamortized Tax charge is imposed during the first 9 Policy Years on
surrenders or partial surrenders according to the rate set forth in
"Deductions and Charges -- Policy Owner Options -- Unamortized Tax
Charge."
Under Option 2: (May not be available in all states)
- a Mortality and Expense Risk charge is deducted monthly from Account Value
at an annual rate of .65% in Policy Years 1 through 10 and an annual rate
of .50% in Policy Years 11 and beyond.
- a Tax Expense charge is deducted from any Premium payment in all Policy
Years at an annual rate of 4.0%.
Hartford may set up a provision for income taxes against the assets of the
Separate Account. See "Deductions and Charges -- Taxes Charged Against the
Separate Account" and "Federal Tax Considerations."
Applicants should review the Fund's prospectus accompanying this Prospectus for
a description of the charges assessed against the assets of the Portfolios.
5 - PROSPECTUS
<PAGE>
The following table shows annual Fund operating expenses of the Portfolios:
ANNUAL FUND OPERATING EXPENSES
(as a percentage of net assets)
<TABLE>
<CAPTION>
OTHER
MANAGEMENT EXPENSES
FEES (BEFORE ANY TOTAL FUND
(BEFORE ANY EXPENSE OPERATING
FEE WAIVERS) REIMBURSEMENT) EXPENSES (1)
------------ --------------- ------------
<S> <C> <C> <C>
MORGAN STANLEY DEAN WITTER SELECT DIMENSIONS
INVESTMENT SERIES:
Money Market
Portfolio............. 0.500% 0.050% 0.550%
North American
Government Securities
Portfolio............. 0.650% 0.610% 1.260%
Diversified Income
Portfolio............. 0.400% 0.150% 0.550%
Balanced Growth
Portfolio (2)......... 0.620% 0.110% 0.730%
Utilities Portfolio.... 0.650% 0.110% 0.760%
Dividend Growth
Portfolio (3)......... 0.625% 0.025% 0.650%
Value-Added Market
Portfolio............. 0.500% 0.080% 0.580%
Growth Portfolio (2)... 0.810% 0.160% 0.970%
American Value
Portfolio............. 0.625% 0.055% 0.680%
Mid-Cap Growth
Portfolio (3)......... 0.750% 0.370% 1.120%
Global Equity
Portfolio............. 1.000% 0.130% 1.130%
Developing Growth
Portfolio............. 0.500% 0.100% 0.600%
Emerging Markets
Portfolio............. 1.250% 0.460% 1.710%
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.:
High Yield Portfolio
(4)................... 0.500% 1.180% 1.680%
Mid-Cap Value Portfolio
(4)................... 0.750% 1.380% 2.130%
Emerging Markets Debt
Portfolio (4)......... 0.800% 1.260% 2.060%
VAN KAMPEN AMERICAN CAPITAL LIFE
INVESTMENT TRUST:
Strategic Stock
Portfolio (5)......... 0.500% 2.090% 2.590%
Enterprise Portfolio
(5)................... 0.500% 0.170% 0.670%
</TABLE>
(1) Management Fees generally represent the fees paid to the investment adviser
or its affiliates for investment and administrative services provided. Other
Expenses are expenses (other than Management Fees) which are deducted from
the fund including legal, accounting and custodian fees. For a complete
description of the nature of the services provided in consideration of the
operating expenses deducted, please see the Fund prospectuses.
(2) On March 2, 1998, the Balanced Portfolio was renamed the Balanced Growth
Portfolio. As of that date, its Management Fee was lowered from 0.75% to
0.60%. Also, on March 2, 1998, the Core Equity Portfolio was renamed the
Growth Portfolio. As of that date, its Management Fee was lowered from 0.85%
to 0.80%.
(3) The Investment Manager has undertaken to assume all expenses of the Mid-Cap
Growth Portfolio and waive the compensation provided for that Portfolio in
its Management Agreement with the Portfolio until such time as the Portfolio
has $50 million of net assets or until April 20, 1999, whichever occurs
first.
(4) With respect to the High Yield, Mid-Cap Value and Emerging Markets Debt
Portfolios, the investment advisers have voluntarily agreed to waive their
investment advisory fees and to reimburse the Portfolios if such fees would
cause their respective "Total Fund Operating Expenses" to exceed those set
forth in the following table. Due to such waivers and reimbursements, the
actual Management Fees and Other Expenses paid by the Portfolios for the
fiscal year ended December 31, 1998 were as set forth below:
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
PORTFOLIO FEES EXPENSES EXPENSES
- -------------------------- ------------ ----------- -----------
<S> <C> <C> <C>
High Yield................ 0.000% 0.800% 0.800%
Mid-Cap Value............. 0.000% 1.050% 1.050%
Emerging Markets Debt..... 0.090% 1.210% 1.300%
</TABLE>
(5) With respect to the Strategic Stock Portfolio and the Enterprise Portfolio,
the investment adviser, Van Kampen American Capital Asset Management, Inc.,
has voluntarily agreed to waive its investment advisory fees and to
reimburse the Portfolios if such fees would cause their respective "Total
Fund Operating Expenses" to exceed those set forth in the following table:
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
PORTFOLIO FEES EXPENSES EXPENSES
- -------------------------- ------------ ----------- -----------
<S> <C> <C> <C>
Strategic Stock........... 0.000% 0.650% 0.650%
Enterprise................ 0.430% 0.170% 0.600%
</TABLE>
Upon surrender of the Policy and partial surrenders in excess of the Annual
Withdrawal Amount, a Surrender Charge may be assessed. See "Deductions and
Charges -- Surrender Charge."
For a discussion of the tax consequences of surrender of the Policy or a partial
surrender, see "Federal Tax Considerations."
DEATH BENEFIT
The Policies provide for a Face Amount which is the minimum Death Benefit under
the Policy. The Death Benefit may be
6 - PROSPECTUS
<PAGE>
greater than the Face Amount. At the death of the Insured, Hartford will pay the
Death Proceeds to the beneficiary of the Policy. See "Policy Benefits and Rights
- -- Death Benefit."
ACCOUNT VALUE
The Account Value of the Policy will increase or decrease to reflect the
investment experience of the Portfolios applicable to the Policy and deductions
for the monthly Deduction Amount. There is no minimum guaranteed Account Value
and the Policy Owner bears the risk of the investment in the Portfolios. See
"Policy Benefits and Rights -- Account Value."
POLICY LOANS
A Policy Owner may obtain one or both types of cash loans from Hartford. Both
types of loans are secured by the Policy. At the time a loan is requested, the
aggregate amount of all loans (including the currently applied for loan) may not
exceed 90% of the Cash Value. See "Policy Benefits and Rights -- Policy Loans."
LAPSE
A Policy may terminate if the Cash Surrender Value on any Monthly Activity Date
is less than the required Deduction Amount. Hartford will give written notice to
the Policy Owner and a 61-day grace period during which additional amounts may
be paid to continue the Policy. See "Policy Benefits and Rights -- Policy Loans"
and "Policy Benefits and Rights -- Lapse and Reinstatement."
CANCELLATION AND EXCHANGE RIGHTS
A Policy Owner has a limited right to return the Policy for cancellation. If the
Policy Owner returns the Policy to Hartford or to the agent who sold the Policy,
to be canceled within ten days after delivery of the Policy to the Policy Owner
(in certain cases, this free-look period is longer), Hartford will return to the
Policy Owner, within seven days thereafter, the greater of the premiums paid for
the Policy, less any Indebtedness, or the sum of (1) the Account Value, less any
indebtedness, on the date the returned Policy is received by Hartford or its
agent and (2) any deductions under the Policy or by the Portfolios for taxes,
charges or fees.
In addition, once the Policy is in force, it may be exchanged during the first
24 months after its issuance for a permanent life insurance Policy on the life
of the Insured without submitting proof of insurability. See "Policy Benefits
and Rights -- Cancellation and Exchange Rights."
TAX CONSEQUENCES
The current federal tax law generally excludes all death benefit payments from
the gross income of the Policy beneficiary. The Policies generally will be
treated as modified endowment contract. This status does not affect the
Policies' classification as life insurance, nor does it affect the exclusion of
death benefit payments from gross income. However, loans, distributions or other
amounts received under a modified endowment contract are taxed to the extent of
accumulated income in the Policy (generally, the excess of Account Value over
premiums paid) and may be subject to a 10% penalty tax. See "Federal Tax
Considerations."
THE COMPANY
--------------------------------------------------------------------
Hartford Life Insurance Company ("Hartford") is a stock life insurance company
engaged in the business of writing health and life insurance, both individual
and group, in all states of the United States and the District of Columbia.
Hartford was originally incorporated under the laws of Massachusetts on June 5,
1902, and was subsequently redomiciled to Connecticut. Its offices are located
in Simsbury, Connecticut; however, its mailing address is P.O. Box 2999,
Hartford, CT 06104-2999. Hartford is a subsidiary of Hartford Fire Insurance
Company, one of the largest multiple lines insurance carriers in the United
States. Hartford is ultimately controlled by The Hartford Financial Services
Group, Inc., a Delaware Corporation.
Hartford is rated A+ (superior) by A.M. Best and Company, Inc., on the basis of
its financial soundness and operating performance. Hartford is rated AA by
Standard & Poor's and AA+ by Duff and Phelps, on the basis of its claims paying
ability. These ratings do not apply to the investment performance of the
Sub-Accounts. The ratings apply to Hartford's ability to meet its insurance
obligations, including those described in this Prospectus.
THE SEPARATE ACCOUNT
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GENERAL
Separate Account Five ("Separate Account") is a separate account of Hartford
established on August 17, 1994 pursuant to the insurance laws of the State of
Connecticut and it is organized as a unit investment trust registered with the
Securities and Exchange Commission under the Investment Company Act of 1940. The
Separate Account meets the definition of "separate account" under federal
securities law. Under Connecticut law, the assets of the Separate Account are
held exclusively for the benefit of Policy Owners and persons entitled to
payments under
7 - PROSPECTUS
<PAGE>
the Policies. The assets of the Separate Account are not chargeable with
liabilities arising out of any other business which Hartford may conduct.
THE PORTFOLIOS
The underlying investment for the Policies are shares of the Morgan Stanley Dean
Witter Select Dimensions Investment Series, the Morgan Stanley Dean Witter
Universal Funds, Inc., and Van Kampen American Capital Life Investment Trust,
all open-ended management investment companies. The underlying Portfolios
corresponding to each Sub-Account and their investment objectives are described
below. Hartford reserves the right, subject to compliance with the law, to offer
additional portfolios with differing investment objectives. The Portfolios may
not be available in all states.
MORGAN STANLEY DEAN WITTER SELECT DIMENSIONS INVESTMENT SERIES:
MONEY MARKET PORTFOLIO
Seeks high current income, preservation of capital and liquidity by investing in
the following money market instruments: U.S. Government securities, obligations
of U.S. regulated banks and savings institutions having total assets of more
than $1 billion, or less than $1 billion if such are fully federally insured as
to principal (the interest may not be insured) and high grade corporate debt
obligations maturing in thirteen months or less.
NORTH AMERICAN GOVERNMENT SECURITIES PORTFOLIO
Seeks to earn a high level of current income while maintaining relatively low
volatility of principal, by investing primarily in investment grade fixed-income
securities issued or guaranteed by the U.S., Canadian or Mexican governments.
DIVERSIFIED INCOME PORTFOLIO
Seeks, as a primary objective, to earn a high level of current income and, as a
secondary objective, to maximize total return, but only to the extent consistent
with its primary objective, by equally allocating its assets among three
separate groupings of fixed-income securities. Up to one-third of the securities
in which the Diversified Income Portfolio may invest will include securities
rated Baa/BBB or lower. See the Special Considerations for investments for high
yield securities disclosed in the Fund's prospectus.
BALANCED GROWTH PORTFOLIO
Seeks to provide capital growth with reasonable current income by investing,
under normal market conditions, at least 60% of its total assets in a
diversified portfolio of common stocks of companies which have a record of
paying dividends and, in the opinion of the Investment Manager, have the
potential for increasing dividends and in securities convertible into common
stock, and at least 20% of its total assets in investment grade fixed-income
(fixed-rate and adjustable-rate) securities such as corporate notes and bonds
and obligations issued or guaranteed by the U.S. Government, its agencies and
its instrumentalities.
UTILITIES PORTFOLIO
Seeks to provide current income and long-term growth of income and capital by
investing in equity and fixed-income securities of companies in the public
utilities industry.
DIVIDEND GROWTH PORTFOLIO
Seeks to provide reasonable current income and long-term growth of income and
capital by investing primarily in common stock of companies with a record of
paying dividends and the potential for increasing dividends.
VALUE-ADDED MARKET PORTFOLIO
Seeks to achieve a high level of total return on its assets through a
combination of capital appreciation and current income, by investing, on an
equally-weighted basis, in a diversified portfolio of common stocks of the
companies which are represented in the Standard & Poor's 500 Composite Stock
Price Index.
GROWTH PORTFOLIO
Seeks long-term growth of capital by investing primarily in common stocks and
securities convertible into common stocks issued by domestic and foreign
companies.
AMERICAN VALUE PORTFOLIO
Seeks long-term capital growth consistent with an effort to reduce volatility,
by investing principally in common stock of companies in industries which, at
the time of the investment, are believed to be attractively valued given their
above average relative earnings growth potential at that time.
MID-CAP GROWTH PORTFOLIO
Seeks long-term capital growth by investing primarily in equity securities of
"mid-cap" companies (that is, companies whose equity market capitalization falls
within the range of $250 million to $5 billion).
GLOBAL EQUITY PORTFOLIO
Seeks a high level of total return on its assets primarily through long-term
capital growth and, to a lesser extent, from income, through investments in all
types of common stocks and equivalents (such as convertible securities and
warrants), preferred stocks and bonds and other debt obligations of domestic and
foreign companies, governments and international organizations.
DEVELOPING GROWTH PORTFOLIO
Seeks long-term capital growth by investing primarily in common stocks of
smaller and medium-sized companies that, in the
8 - PROSPECTUS
<PAGE>
opinion of the Investment Manager, have the potential for growing more rapidly
than the economy and which may benefit from new products or services,
technological developments or changes in management.
EMERGING MARKETS PORTFOLIO
Seeks long-term capital appreciation by investing primarily in equity securities
of companies in emerging market countries. The Emerging Markets Portfolio may
invest up to 35% of its total assets in high risk fixed-income securities that
are rated below investment grade or are unrated (commonly referred to as "junk
bonds"). See the Special Considerations for investments in high yield securities
disclosed in the Fund's prospectus.
MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.:
HIGH YIELD PORTFOLIO
Seeks above-average total return over a market cycle of three to five years by
investing primarily in a diversified portfolio of high yield securities,
including corporate bonds and other fixed income securities and derivatives.
High yield securities are rated below investment grade and are commonly referred
to as "junk bonds." The Portfolio's average weighted maturity will ordinarily
exceed five years. See the Special Considerations for investments in high yield
securities disclosed in the Fund's prospectus.
MID-CAP VALUE PORTFOLIO
Seeks above-average total return over a market cycle of three to five years by
investing in common stocks and other equity securities of issuers with equity
capitalizations in the range of the companies represented in the S&P MidCap 400
Index.
EMERGING MARKETS DEBT PORTFOLIO
Seeks high total return by investing primarily in fixed income securities of
government and government related issuers located in emerging market countries.
Using macroeconomic and fundamental analysis, the adviser seeks to identify
developing countries that are undervalued and have attractive or improving
fundamentals. After the country allocation is determined, the sector and
security selection is made within each country.
VAN KAMPEN AMERICAN CAPITAL LIFE INVESTMENT TRUST:
STRATEGIC STOCK PORTFOLIO
Seeks to provide investors with an above average total return through a
combination of potential capital appreciation and dividend income, consistent
with the preservation of invested capital by investing primarily in a portfolio
of dividend paying equity securities included in the Dow Jones Industrial
Average or in the Morgan Stanley Capital International USA Index.
ENTERPRISE PORTFOLIO
Seeks capital appreciation through investments in securities believed by the
investment advisor to have above average potential for capital appreciation.
The Portfolios are available only to serve as the underlying investment for
variable annuity Policies and variable life policies. A full description of the
Portfolios, including their investment objectives, policies and restrictions,
risks, charges and expenses and other aspects of their operation, is contained
in the accompanying Fund prospectus which should be read in conjunction with
this Prospectus before investing, and in the Fund Statement of Additional
Information which may be ordered without charge from the Fund.
It is conceivable that in the future it may be disadvantageous for variable life
insurance separate accounts and variable annuity separate accounts to invest in
the Portfolios simultaneously. Although Hartford and the Fund do not currently
foresee any such disadvantages either to variable life insurance Policy Owners
or variable annuity contract owners, the Fund's Board of Trustees intends to
monitor events in order to identify any material conflicts between variable life
Policy Owners and variable annuity Policy owners and to determine what action,
if any, should be taken in response thereto. If the Fund's Board of Trustees
were to conclude that separate Portfolios should be established for variable
life and variable annuity separate accounts, Hartford will bear the attendant
expenses.
All investment income of and other distributions to each Sub-Account of the
Separate Account arising from the applicable Portfolio are reinvested in shares
of that Portfolio at net asset value. The income and both realized gains or
losses on the assets of each Sub-Account of the Separate Account are, therefore,
separate and are credited to or charged against the Sub-Account, without regard
to income, gains or losses from any other Sub-Account or from any other business
of Hartford. Hartford will purchase shares in the Portfolios in connection with
premiums allocated to the applicable Sub-Account in accordance with Policy
Owners' directions and will redeem shares in the Portfolios to meet Policy
obligations or make adjustments in reserves, if any. The Portfolios are required
to redeem Portfolio shares at net asset value and to make payment within seven
days.
Hartford reserves the right, subject to compliance with the law as then in
effect, to make additions to, deletions from or substitutions for the Separate
Account and its Sub-Accounts which fund the Policies. Hartford may substitute
shares of another Portfolio for shares already purchased, or to be purchased in
the future, under the Policies. No substitution of securities will take place
without notice to and consent of Policy Owners and without prior approval of the
Securities and Exchange Commission to the extent required by the Investment
Company Act of 1940. Subject to Policy Owner approval, Hartford also reserves
the right to end the registration under the Investment Company Act of 1940 of
the Separate Account or any other separate accounts of which it is the depositor
and which may fund the Policies.
9 - PROSPECTUS
<PAGE>
Each Portfolio is subject to investment restrictions which may not be changed
without the approval of a majority of the shareholders of the Fund. See the
Portfolios' prospectuses accompanying this Prospectus.
THE INVESTMENT ADVISERS
Morgan Stanley Dean Witter Advisors Inc. ("MSDW Advisors"), a Delaware
Corporation, whose address is Two World Trade Center, New York, New York 10048,
is the Investment Manager for the Money Market Portfolio, the North American
Government Securities Portfolio, the Diversified Income Portfolio, the Balanced
Growth Portfolio, the Utilities Portfolio, the Dividend Growth Portfolio, the
Value-Added Market Portfolio, the Growth Portfolio, the American Value
Portfolio, the Mid-Cap Growth Portfolio, the Global Equity Portfolio, the
Developing Growth Portfolio, and the Emerging Markets Portfolio of the Morgan
Stanley Dean Witter Select Dimensions Investment Series (the "Morgan Stanley
Dean Witter Portfolios"). MSDW Advisors was incorporated in July, 1992 and is a
wholly-owned subsidiary of Morgan Stanley Dean Witter & Co. ("MSDW").
MSDW Advisors provides administrative services, manages the Dean Witter
Portfolios' business affairs and manages the investment of the Morgan Stanley
Dean Witter Portfolios' assets, including the placing of orders for the purchase
and sales of portfolio securities. MSDW Advisors has retained Morgan Stanley
Dean Witter Services Company Inc., its wholly-owned subsidiary, to perform the
aforementioned administrative services for the Dean Witter Portfolios. For its
services, the Morgan Stanley Dean Witter Portfolios pay MSDW Advisors a monthly
fee. See the accompanying Fund prospectus for a more complete description of
MSDW Advisors and the respective fees of the Morgan Stanley Dean Witter
Portfolios.
With regard to the North American Government Securities Portfolio and the
Emerging Markets Portfolio, TCW Funds Management ("TCW"), under a Sub-Advisory
Agreement with MSDW Advisors, provides these Portfolios with investment advice
and portfolio management, in each case subject to the overall supervision of the
MSDW Advisors. TCW's address is 865 South Figueroa Street, Suite 1800, Los
Angeles, California 90017.
With regard to the Growth Portfolio, Morgan Stanley Dean Witter Investment
Management Inc. ("MSDW Investment Management"), under a Sub-Advisory Agreement
with MSDW Advisors, provides the Growth Portfolio with investment advice and
portfolio management, subject to the overall supervision of MSDW Advisors. MSDW
Investment Management, like MSDW Advisors, is a wholly-owned subsidiary of MSDW.
MSDW Investment Management's address is 1221 Avenue of the Americas, New York,
New York 10020.
In addition to acting as the Sub-Advisor for the Growth Portfolio, MSDW
Investment Management, pursuant to an Investment Advisory Agreement with the
Morgan Stanley Dean Witter Universal Funds, Inc., is the investment adviser for
the Emerging Markets Debt Portfolio. As the investment adviser, MSDW Investment
Management, provides investment advice and portfolio management services for the
Emerging Markets Debt Portfolio, subject to the supervision of the Morgan
Stanley Dean Witter Universal Fund's Board of Directors.
The investment adviser for the High Yield Portfolio and the Mid-Cap Value
Portfolio is Miller Anderson & Sherrerd, LLP ("MAS"). MAS is a Pennsylvania
limited liability partnership founded in 1969 with its principal offices at One
Tower Bridge, West Conshohocken, Pennsylvania 19428. MAS provides investment
advisory services to employee benefit plans, endowment funds, foundations and
other institutional investors and has served as an investment advisor to several
open-end investment companies. MAS is an indirect wholly-owned subsidiary of
MSDW.
The Investment Adviser with respect to the Strategic Stock Portfolio and the
Enterprise Portfolio is Van Kampen American Capital Asset Management, Inc., a
wholly-owned subsidiary of Van Kampen American Capital, Inc. Van Kampen American
Capital, Inc. is an indirect wholly-owned subsidiary of MSDW. Van Kampen
American Capital, Inc. is a diversified asset management company with more than
two million retail investor accounts, extensive capabilities for managing
institutional portfolios, and more than $60 billion under management or
supervision. Van Kampen American Capital, Inc.'s more than 50 open-end and 38
closed-end funds and more than 2,500 unit investment trusts are professionally
distributed by leading financial advisers nationwide.
THE POLICY
--------------------------------------------------------------------
APPLICATION FOR A POLICY
Individuals wishing to purchase a Policy must submit an application to Hartford.
A Policy will be issued only on the lives of Insureds age 90 and under who
supply evidence of insurability satisfactory to Hartford. Acceptance is subject
to Hartford's underwriting rules and Hartford reserves the right to reject an
application for any reason. IF AN APPLICATION FOR A POLICY IS REJECTED, THEN
YOUR INITIAL PREMIUM WILL BE RETURNED ALONG WITH AN ADDITIONAL AMOUNT FOR
INTEREST, BASED ON THE CURRENT RATE BEING CREDITED BY HARTFORD. No change in the
terms or conditions of a Policy will be made without the consent of the Policy
Owner.
The Policy will be effective on the Policy Date only after Hartford has received
all outstanding delivery requirements and
10 - PROSPECTUS
<PAGE>
received the initial premium. The Policy Date is the date used to determine all
future cyclical transactions on the Policy, e.g., Monthly Activity Date, Policy
Months and Policy Years. The Policy Date may be prior to, or the same as, the
date the Policy is issued ("Issue Date").
If the Coverage Amount is over then current limits established by Hartford, the
initial payment will not be accepted with the application. In other cases where
Hartford receives the initial payment with the application, Hartford will
provide fixed conditional insurance during underwriting according to the terms
of conditional receipt established by Hartford. The fixed conditional insurance
will be the insurance applied for, up to a maximum that varies by age. If no
fixed conditional insurance was in effect, on Policy delivery, Hartford will
require a sufficient payment to place the insurance in force.
PREMIUMS
The Policy permits the Policy Owner to pay a large single premium and, subject
to restrictions, additional premiums. The Policy Owner may choose a minimum
initial premium of 80%, 90% or 100% of the Guideline Single Premium (based on
the Face Amount). Under current underwriting rules, which are subject to change,
applicants between ages 35 and 80 may be eligible for simplified underwriting
without a medical examination if they meet simplified underwriting standards as
evidenced in their responses in the application. For applicants who are below
age 35 or above age 80, or who do not meet simplified underwriting eligibility,
full underwriting applies, except that substandard underwriting applies only in
those cases that represent substandard risks according to customary underwriting
guidelines.
Additional premiums are allowed if they do not cause the Policy to fail to meet
the definition of a life insurance Policy under Section 7702 of the Code. The
amount and frequency of additional premium payments will affect the Cash Value
and the amount and duration of insurance. Hartford may require evidence of
insurability for any additional premiums which increase the Coverage Amount.
Generally, the minimum initial premium Hartford will accept is $10,000. Hartford
may accept less than $10,000 under certain circumstances. Premium which does not
meet the tax qualification guidelines for life insurance under the Code will not
be applied to the Policy.
ALLOCATION OF PREMIUMS
Within three business days of receipt of a completed application and the initial
premium payment at Hartford's Home Office, Hartford will allocate the entire
premium payment to the Money Market Portfolio. After the expiration of the right
to cancel period, the Account Value in the Money Market Portfolio will be
allocated among the Portfolios in whole percentages to purchase Accumulation
Units in the applicable Sub-Accounts as the Policy Owner directs in the
application. Premiums received on or after the expiration of the right to cancel
period will be allocated among the Sub-Accounts to purchase Accumulation Units
in such Sub-Accounts as directed by the Policy Owner or, in the absence of
directions, as specified in the original application. The number of Accumulation
Units in each Sub-Account to be credited to a Policy (including the initial
allocation to the Money Market Portfolio) will be determined first by
multiplying the premium payment by the percentage to be allocated to each Fund
to determine the portion to be invested in the Sub-Account. Each portion to be
invested in each Sub-Account is then divided by the Accumulation Unit Value of
that particular Sub-Account next computed after receipt of the premium payment.
ACCUMULATION UNIT VALUES
The Accumulation Unit Value for each Sub-Account will vary to reflect the
investment experience of the applicable Portfolio and will be determined on each
Valuation Day by multiplying the Accumulation Unit Value of the particular
Sub-Account on the preceding Valuation Day by a "Net Investment Factor" for that
Sub-Account for the Valuation Period then ended. The Net Investment Factor for
each Sub-Account is the net asset value per share of the corresponding Portfolio
at the end of the Valuation Period (plus the per share dividends or capital
gains by that Portfolio if the ex-dividend date occurs in the Valuation Period
then ended) divided by the net asset value per share of the corresponding
Portfolio at the beginning of the Valuation Period. Refer to the Fund's
prospectus accompanying this Prospectus for a description of how the assets of
each Fund are valued, since such determination has a direct bearing on the
Accumulation Unit Value of the Sub-Account and therefore the Account Value of a
Policy. See, also, "Policy Benefits and Rights -- Account Value."
All valuations in connection with a Policy, e.g., with respect to determining
Account Value and Cash Surrender Value and in connection with Policy Loans, or
calculation of Death Benefits, or with respect to determining the number of
Accumulation Units to be credited to a Policy with each premium, other than the
initial premium, will be made on the date the request or payment is received by
Hartford at its Home Office if such date is a Valuation Day; otherwise such
determination will be made on the next succeeding date which is a Valuation Day.
DEDUCTIONS AND CHARGES
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The deduction or charges associated with this Policy are subtracted, depending
on the type of deduction or charge, from Premium payments as they are made, upon
surrender or partial surrender of the Policy, on the Policy Anniversary Date or
on a monthly pro rated basis from each Sub-Account ("Deduction Amount").
11 - PROSPECTUS
<PAGE>
Deductions are taken from Premium payments before allocations to the
Sub-Accounts are made. Monthly Deduction Amounts are subtracted on the Policy
Date and on each Monthly Activity Date after the Policy Date to cover charges
and expenses incurred in connection with a Policy. Each Deduction Amount will be
subtracted pro rata from each Sub-Account such that the proportion of Account
Value of the Policy attributable to each Sub-Account remains the same before and
after the deduction. The Deduction Amount will vary from month to month. If the
Cash Surrender Value is not sufficient to cover a Deduction Amount due on any
Monthly Activity Date, the Policy may lapse. See "Policy Benefits and Rights --
Lapse and Reinstatement."
The Policy Owner may elect one of two options offered by Hartford to pay the
Mortality and Expense Risk charge, the Tax Expense charge and any Unamortized
Tax charge. Once selected, the option may not be changed. Option 2 may not be
available in all states.
The following chart illustrates the charges and deductions associated with this
Policy. For a more detailed discussion see the descriptions below:
<TABLE>
<CAPTION>
DEDUCTION OR CHARGE DEDUCTED FROM ALL POLICIES WHEN DEDUCTION IS MADE AMOUNT DEDUCTED
- ----------------------- ----------------------------------- ----------------------------------- ----------------------------
<S> <C> <C> <C>
Cost of Insurance Yes Monthly Individualized depending on
age, sex and other factors
Administrative Charge Yes Monthly .25% of amounts allocated to
the Separate Account
Annual Maintenance Fee Only Policies with an Account On the Policy Anniversary Date or $30.00
Value of less than $50,000 on the upon surrender of the Policy
Policy Anniversary Date or date of
surrender
Surrender Charge Yes Upon surrender or partial A percentage of the amount
surrender of the Policy surrendered, depending on
the Policy Year, which is
attributable to premiums
paid
Tax Expense Charge Yes Under Option 1: Monthly Under Option 1: .40% of
Under Option 2: Receipt of premium Account Value for Policy
payment Years 1-10
Under Option 2: 4% of each
premium payment in all
Policy Years
Mortality and Expense Yes Monthly Under Option 1: .90% of
Risk Charge Account Value in Policy
Years 1-10 and .50% for
Policy Years 11 and beyond.
Under Option 2: .65% of
Account Value in Policy
Years 1-10 and .50% for
Policy Years 11 and beyond
Unamortized Tax Charge No, only under Option 1 Upon surrender or partial surrender A percentage of the Account
of the Policy Value depending on the
Policy Year the surrender
takes place.
</TABLE>
COST OF INSURANCE CHARGE
The cost of insurance charge covers Hartford's anticipated mortality costs for
standard and substandard risks. Current cost of insurance rates are lower after
the tenth Policy Year and are based on whether 100%, 90% or 80% of the Guideline
Single Premium has been paid at issue. The current cost of insurance charge will
not exceed the guaranteed cost of insurance charge. 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
12 - PROSPECTUS
<PAGE>
less than those shown in the Table. For standard risks that require full
underwriting, the guaranteed maximum cost of insurance rate is 100% of the 1980
Commissioner's Standard Ordinary Smoker/Nonsmoker Sex Distinct Age Last Birthday
Mortality Table (1980 CS0 Table). For standard risks eligible for simplified
underwriting, the guaranteed cost of insurance rate is 125% of the 1980 CSO
Table through age 90, grading to 100% of the 1980 CSO Table at age 100.
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.
The Coverage Amount is first set on the Policy Date and then on each Monthly
Activity Date. On such days, it is the Face Amount less the Account Value
subject to a Minimum Coverage Amount. The Coverage Amount remains level between
the Monthly Activity Dates. The Coverage Amount may be adjusted to continue to
qualify the Policies as life insurance Policies under the current federal tax
law. Under that law, the Minimum Coverage Amount is a stated percentage of the
Account Value of the Policy determined on each Monthly Activity Date. The
percentages vary according to the attained age of the Insured.
EXAMPLE:
Face Amount = $100,000
Account Value on the Monthly Activity Date = $70,000
Insured's attained age = 60
Minimum Coverage Amount percentage for age 60 = 30%
On the Monthly Activity Date, the Coverage Amount is $30,000. This is calculated
by subtracting the Account Value on the Monthly Activity Date ($70,000) from the
Face Amount ($100,000), subject to a possible Minimum Coverage Amount
adjustment. This Minimum Coverage Amount is determined by taking a percentage of
the Account Value on the Monthly Activity Date. In this case, the Minimum
Coverage Amount is $21,000 (30% of $70,000). Since $21,000 is less than the Face
Amount less the Account Value ($30,000), no adjustment is necessary. Therefore,
the Coverage Amount will be $30,000.
Assume that the Account Value in the above example was $90,000. The Minimum
Coverage Amount would be $27,000 (30% of $90,000). Since this is greater than
the Face Amount less the Account Value ($10,000), the Coverage Amount for the
Policy Month is $27,000. (For an explanation of the Death Benefit, see "Policy
Benefits and Rights -- Death Benefit.")
Because the Account Value and, as a result, the Coverage Amount under a Policy
may vary from month to month, the cost of insurance charge may also vary on each
Monthly Activity Date.
ADMINISTRATIVE CHARGE
Hartford will deduct monthly from the Account Value attributable to the Separate
Account an administrative charge equal to an annual rate of 0.25%. This charge
compensates Hartford for administrative expenses incurred in the administration
of the Separate Account and the Policies.
ANNUAL MAINTENANCE FEE
If the Account Value on a Policy Anniversary or on the date the Policy is
surrendered is less than $50,000, Hartford will deduct on such date an annual
maintenance fee of $30. This fee will help reimburse Hartford for administrative
and maintenance costs of the Policies. The sum of the monthly administrative
charges and the annual maintenance fee will not exceed the cost Hartford incurs
in providing administrative services under the Policies. Hartford reserves the
right to waive the Annual Maintenance Fee under certain conditions.
SURRENDER CHARGE
Upon surrender of the Policy or partial surrenders in excess of the Annual
Withdrawal Amount, a Surrender Charge may be assessed. In Policy Years 1 through
3, this charge is 7.5% of surrendered Account Value attributable to premiums
paid. In Policy Years 4 through 5, this charge is 6%. In Policy Years 6 through
7, this charge is 4%. In Policy Years 8 through 9, this charge is 2%. After the
ninth Policy Year, there is no charge.
In determining the Surrender Charge and any Unamortized Tax charge discussed
below, any surrender or partial surrender during the first ten Policy Years will
be deemed first from premiums paid and then from earnings. If an amount equal to
all premiums paid has been withdrawn, no charge will be assessed on a surrender
of the remaining Account Value.
The Surrender Charge is imposed to cover a portion of the sales expense incurred
by Hartford in distributing the Policies. This expense includes agents
commissions, advertising and the printing of prospectuses. See "Policy Benefits
and Rights -- Amount Payable on Surrender of the Policy."
POLICY OWNER OPTIONS
In addition to the deductions and charges described above, the Policy Owner, at
the time the Policy is issued, will elect one of two options described below to
pay charges relating to certain taxes and mortality and expense risk charges.
The option selected by the Policy Owner may affect Policy Value.
OPTION 1: ASSET-BASED CHARGES:
Under this payment option, the Policy Owner will pay:
MORTALITY AND EXPENSE RISK CHARGE: Hartford will deduct monthly from the Account
Value attributable to the Separate Account for Policy Years 1 through 10 a
charge equal to an annual rate of 0.90% for the mortality risks and expense
risks Hartford assumes in relation to the variable portion of the Policies. In
Policy Years 11 and beyond, the charge drops to an annual rate of 0.50% for the
mortality risks and expense risks Hartford assumes in relation to the variable
portion of the Policies. The mortality risk assumed is that the cost of
insurance
13 - PROSPECTUS
<PAGE>
charges specified in the Policy will be insufficient to meet claims. Hartford
also assumes a risk that the Face Amount (the minimum Death Benefit) will exceed
the Coverage Amount on the date of death plus the Account Value on the date
Hartford receives written notice of death. The expense risk assumed is that
expenses incurred in issuing and administering the Policies will exceed the
administrative charges set in the Policy. Hartford may profit from the mortality
and expense risk charge and may use any profits for any proper purpose,
including any difference between the cost it incurs in distributing the Policies
and the proceeds of the Surrender Charge. The mortality and expense risk charge
is deducted while the Policy is in force, including the duration of a payment
option.
TAX EXPENSE CHARGE: Hartford will deduct monthly from the Account Value a charge
equal to an annual rate of 0.40% for the first ten Policy Years. This charge
compensates Hartford for premium taxes imposed by various states and local
jurisdictions and for the cost of the capitalization of certain policy
acquisition expenses under Section 848 of the Code. The charge includes a
premium tax deduction of 0.25% and Section 848 costs of 0.15%. The 0.25% premium
tax deduction over ten Policy Years approximates Hartford's average expenses for
state and local premium taxes (2.5%). Premium taxes vary, ranging from zero to
more than 4.0%. The premium tax deduction is made whether or not any premium tax
applies. The deduction may be higher or lower than the premium tax imposed.
However, Hartford does not expect to make a profit from this deduction. The
0.15% charge helps reimburse Hartford for approximate expenses incurred under
Section 848 of the Code.
UNAMORTIZED TAX CHARGE: Under this option, during the first nine Policy Years,
an Unamortized Tax charge will be imposed on surrender or partial surrenders.
The Unamortized Tax charge is shown below, as a percentage of Account Value, at
the end of each Policy Year:
<TABLE>
<CAPTION>
POLICY
YEAR RATE
------ -------
<S> <C>
1 2.25%
2 2.00%
3 1.75%
4 1.50%
5 1.25%
6 1.00%
7 0.75%
8 0.50%
9 0.25%
10+ 0.00%
</TABLE>
After the ninth Policy Year, no Unamortized Tax charge will be imposed.
OPTION 2: FRONTED CHARGES:
Under this option, the Policy Owner will pay:
MORTALITY AND EXPENSE RISK CHARGE: In Policy Years 1 through 10, Hartford will
deduct monthly from the Account Value attributable to the Separate Account a
charge equal to an annual rate of 0.65% for the mortality risks and expense
risks Hartford assumes in relation to the variable portion of the Policies. In
Policy Years 11 and beyond, the charge drops to an annual rate of 0.50%. The
mortality risk assumed is that the cost of insurance charges specified in the
Policy will be insufficient to meet claims. Hartford also assumes a risk that
the Face Amount (the minimum Death Benefit) will exceed the Coverage Amount on
the date of death plus the Account Value on the date Hartford receives written
notice of death. The expense risk assumed is that expenses incurred in issuing
and administering the Policies will exceed the administrative charges set in the
Policy. Hartford may profit from the mortality and expense risk charge and may
use any profits for any proper purpose, including any difference between the
cost it incurs in distributing the Policies and the proceeds of the Surrender
Charge. The mortality and expense risk charge is deducted while the Policy is in
force, including the duration of a payment option.
TAX EXPENSE CHARGE: Hartford will deduct from Premium payments a tax expense
charge equal to an annual rate of 4.0% for all Policy Years. This charge
compensates Hartford for premium taxes imposed by various states and local
jurisdictions and for the cost of capitalization of certain policy acquisition
expenses under Section 848 of the Code. The charge includes a premium tax
deduction of 2.5% and a Section 848 cost of 1.5%. The premium tax deduction
approximates Hartford's average expenses for state and local premium taxes.
Premium taxes vary, ranging from zero to more than 4.0%. The premium tax
deduction is made whether or not any premium tax applies. The deduction may be
higher or lower than the premium tax imposed. However, Hartford does not expect
to make a profit from this deduction. The 0.15% charge helps reimburse Hartford
for approximate expenses incurred under Section 848 of the Code.
This Option may not be available in all states.
OTHER DEDUCTIONS OR CHARGES
CHARGES AGAINST THE PORTFOLIOS: The Separate Account purchases shares of the
Portfolios 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 Portfolios. These charges are described in the Fund's prospectus
accompanying this Prospectus.
TAXES CHARGED AGAINST THE SEPARATE ACCOUNT: Currently, no charge is made to the
Separate Account for federal income taxes that may be attributable to the
Separate Account. Hartford may, however, make such a charge in the future.
Charges for other taxes, if any, attributable to the Separate Account may also
be made.
14 - PROSPECTUS
<PAGE>
POLICY BENEFITS AND RIGHTS
--------------------------------------------------------------------
DEATH BENEFIT
While in force, the Policy provides for the payment of the Death Proceeds to the
named beneficiary when the Insured under the Policy dies. The Death Proceeds
payable to the beneficiary equal the Death Benefit less any loans outstanding.
The Death Benefit equals the greater of (1) the Face Amount or (2) the Account
Value multiplied by a specified percentage. The per-centages vary according to
the attained age of the Insured and are 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.
EXAMPLES:
<TABLE>
<CAPTION>
A B
-------- --------
<S> <C> <C>
Face Amount........................ $100,000 $100,000
Insured's Age...................... 40 40
Account Value on Date of Death..... 46,500 34,000
Specified Percentage............... 250% 250%
</TABLE>
In Example A, the Death Benefit equals $116,250, i.e., the greater of $100,000
(the Face Amount) or $116,250 (the Account Value at the Date of Death of
$46,500, multiplied by the specified percentage of 250%). This amount less any
outstanding loans constitutes the Death Proceeds which Hartford would pay to the
beneficiary.
In Example B, the death benefit is $100,000, i.e., the greater of $100,000 (the
Face Amount) or $85,000 (the Account Value of $34,000, multiplied by the
specified percentage of 250%).
All or part of the Death Proceeds may be paid in cash or applied under a
"Payment Option." See "Other Matters -- Settlement Provisions."
ACCOUNT VALUE
The Account Value of a Policy will be computed on each Valuation Day. The
Account Value will vary to reflect the investment experience of the Portfolios,
the value of the Loan Account and the monthly Deduction Amounts. There is no
minimum guaranteed Account Value.
The Account Value of a particular Policy is related to the net asset value of
the Portfolios to which premiums on the Policy have been allocated. The Account
Value on any Valuation Day is calculated by multiplying the number of
Accumulation Units credited to the Policy in each Sub-Account as of the
Valuation Day by the Accumulation Unit Value of that Sub-Account, and then
summing the result for all the Sub-Accounts credited to the Policy and the value
of the Loan Account. See "The Policy -- Accumulation Unit Values."
TRANSFER OF ACCOUNT VALUE
While the Policy remains in force, and subject to Hartford's transfer rules then
in effect, the Policy Owner may request that part or all of the Account Value of
a particular Sub-Account be transferred to other Sub-Accounts. Hartford reserves
the right to restrict the number of such transfers to no more than 12 per Policy
Year, with no two transfers being made on consecutive Valuation Days. However,
there are no restrictions on the number of transfers at the present time.
Transfers may be made by written request or by calling toll free 1-800-231-5453.
Transfers by telephone may be made by the agent of record or by the
attorney-in-fact pursuant to a power of attorney. Telephone transfers may not be
permitted in some states. The policy of Hartford and its agents and affiliates
is that they will not be responsible for losses resulting from acting upon
telephone requests reasonably believed to be genuine. Hartford will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine; otherwise, Hartford may be liable for any losses due to unauthorized or
fraudulent instructions. The procedures Hartford follows for transactions
initiated by telephone include requirements that callers provide certain
information for identification purposes. All transfer instructions by telephone
are tape recorded. Hartford will send the Policy Owner a confirmation of the
transfer within five days from the date of any instruction. IT IS THE
RESPONSIBILITY OF THE POLICY OWNER TO VERIFY THE ACCURACY OF ALL CONFIRMATIONS
OF TRANSFERS AND TO PROMPTLY ADVISE HARTFORD OF ANY INACCURACIES WITHIN 30 DAYS
OF RECEIPT OF THE CONFIRMATION.
Hartford may modify the right to reallocate Account Value among the Sub-Accounts
if Hartford determines, in its sole discretion, that the exercise of that right
by one or more Policy Owners is, or would be, to the disadvantage of other
Policy Owners. Any modification could be applied to transfers to or from some or
all of the Sub-Accounts and could include, but not be limited to, the
requirement of a minimum period between each transfer, not accepting transfer
requests of an agent acting under the power of attorney on behalf of more than
one Policy Owner, or limiting the dollar amount that may be transferred among
the Sub-Accounts at one time. These restrictions may be applied in any manner
reasonably designed to prevent any use of the transfer right that Hartford
considers to be disadvantageous to other Policy Owners.
As a result of a transfer, the number of Accumulation Units credited to the
Sub-Account from which the transfer is made will be reduced by the number
obtained by dividing the amount transferred by the Accumulation Unit Value of
that Sub-Account on the Valuation Day Hartford receives the transfer request.
The number of Accumulation Units credited to the Sub-Account to which the
transfer is made will be increased by the number
15 - PROSPECTUS
<PAGE>
obtained by dividing the amount transferred by the Accumulation Unit Value of
that Sub-Account on the Valuation Day Hartford receives the transfer request.
POLICY LOANS
While the Policy is in effect, a Policy Owner may obtain, without the consent of
the beneficiary (provided the designation of beneficiary is not irrevocable),
one or both of two types of cash loans from Hartford. Both types of loans are
secured by the Policy. The aggregate loans (including the currently applied for
loan) may not exceed, at the time a loan is requested, 90% of the Cash Value.
The loan amount will be transferred pro rata from each Sub-Account attributable
to the Policy (unless the Policy Owner specifies otherwise) to the Loan Account.
The amounts allocated to the Loan Account will earn interest at a rate of 4% per
annum (6% for "Preferred Loans"). The amount of the Loan Account that equals the
difference between the Cash Value and the total of all premiums paid under the
Policy is considered a "Preferred Loan." For exchanges which take place
according to IRC Section 1035(a) that have an outstanding loan at the time of
transfer, the difference between the Account Value and the total of all premiums
paid under the Policy is considered a Preferred Loan. The loan interest rate
that Hartford will charge on all loans is 6% per annum. The difference between
the value of the Loan Account and the Indebtedness will be transferred on a
pro-rata basis from the Sub-Accounts to the Loan Account on each Monthly
Activity Date. The proceeds of a loan will be delivered to the Policy Owner
within seven business days of Hartford's receipt of the loan request.
If the aggregate outstanding loan(s) secured by the Policy exceeds the Account
Value of the Policy less any Surrender Charges and due and unpaid Deduction
Amount, Hartford will give written notice to the Policy Owner that, unless
Hartford receives an additional payment within 61 days to reduce the aggregate
outstanding loan(s) secured by the Policy, the Policy may lapse.
All or any part of any loan secured by a Policy may be repaid while the Policy
is still in effect. When loan repayments or interest payments are made, they
will be allocated among the Sub-Account(s) in the same percentage as premiums
are allocated (unless the Policy Owner requests a different allocation) and an
amount equal to the payment will be deducted from the Loan Account. Any
outstanding loan at the end of a grace period must be repaid before the Policy
will be reinstated. See "Policy Benefits and Rights -- Lapse and Reinstatement,"
below.
A loan, whether or not repaid, will have a permanent effect on the Account Value
because the investment results of each Sub-Account will apply only to the amount
remaining in such Sub-Accounts. The longer a loan is outstanding, the greater
the effect is likely to be. The effect could be favorable or unfavorable. If the
Sub-Accounts earn more than the annual interest rate for amounts held in the
Loan Account, a Policy Owner's Account Value will not increase as rapidly as it
would have had no loan been made. If the Sub-Accounts earn less than the annual
interest rate for amounts held in the Loan Account, the Policy Owner's Account
Value will be greater than it would have been had no loan been made. Also, if
not repaid, the aggregate outstanding loan(s) will reduce the Death Proceeds and
Cash Surrender Value otherwise payable.
AMOUNT PAYABLE ON SURRENDER OF THE POLICY
While the Policy is in force, a Policy Owner may elect, without the consent of
the beneficiary (provided the designation of beneficiary is not irrevocable), to
fully surrender the Policy. Upon surrender, the Policy Owner will receive the
Cash Surrender Value determined as of the day Hartford receives the Policy
Owner's written request or the date requested by the Policy Owner whichever is
later. The Cash Surrender Value equals the Account Value less any Surrender
Charges and any Unamortized Tax charge and all Indebtedness. Hartford will pay
the Cash Surrender Value of the Policy within seven days of receipt by Hartford
of the written request or on the effective surrender date requested by the
Policy Owner, whichever is later. The Policy will terminate on the date of
receipt of the written request, or the date the Policy Owner requests the
surrender to be effective, whichever is later. For a discussion of the tax
consequences of surrendering the Policy, see "Federal Tax Considerations."
If the Policy Owner chooses to apply the surrender proceeds to a payment option
(see "Other Matters -- Settlement Provisions"), the Surrender Charge will not be
imposed to the surrender proceeds applied to the option. In other words, the
surrender proceeds will equal the Cash Surrender Value without reduction for the
Surrender Charge. However, any Unamortized Tax charge, if applicable, will be
deducted from the surrender proceeds to be applied. In addition, amounts
withdrawn from payment Option 1, Option 5 or Option 6 will be subject to any
applicable Surrender Charge.
PARTIAL SURRENDERS
While the Policy is in force, a Policy Owner may elect, by written request, to
make partial surrenders from the Cash Surrender Value. The Cash Surrender Value,
after partial surrender, must at least equal Hartford's minimum amount rules
then in effect; otherwise, the request will be treated as a request for full
surrender. The partial surrender will be deducted pro rata from each
Sub-Account, unless the Policy Owner instructs otherwise. The Face Amount will
be reduced proportionate to the reduction in the Account Value due to the
partial surrender. Partial surrenders in excess of the Annual Withdrawal Amount
will be subject to the Surrender Charge and any Unamortized Tax charges. See
"Deductions and Charges -- Surrender Charge" and "Deductions and Charges --
Policy Owner Option 1." For a discussion of the tax consequences of partial
surrenders, see "Federal Tax Considerations."
16 - PROSPECTUS
<PAGE>
BENEFITS AT MATURITY
If the Insured is living on the "Maturity Date" (the anniversary of the Policy
Date on which the Insured is age 100), on surrender of the Policy to Hartford,
Hartford will pay to the Policy Owner the Cash Surrender Value. In such case,
the Policy will terminate and Hartford will have no 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.")
LAPSE AND REINSTATEMENT
The Policy will remain in force until the Cash Surrender Value is insufficient
to cover the Deduction Amount due on a Monthly Activity Date. Hartford will
notify the Policy Owner of the deficiency in writing and will provide a 61-day
grace period to pay an amount sufficient to cover the Deduction Amounts due as
well as three. 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 "Policy Benefits and Rights -- Death Benefit."
If the Policy lapses, the Policy Owner 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 was outstanding at the time of lapse, Hartford will require repayment of
the loan before permitting reinstatement. In addition, Hartford reserves the
right to require evidence of insurability satisfactory to Hartford.
CANCELLATION AND EXCHANGE RIGHTS
A Policy Owner has a limited right to return a Policy for cancellation. If the
Policy is returned, by mail or personal delivery to Hartford or to the agent who
sold the Policy, to be canceled within ten days after delivery of the Policy to
the Policy Owner (a longer free-look period is provided in certain cases),
Hartford will return to the Policy Owner, within seven days, the greater of
premiums paid for the Policy less Indebtedness or the sum of (1) the Account
Value less any Indebtedness on the date the returned Policy is received by
Hartford or its agent and (2) any deductions under Policy or by the Portfolios
for taxes, charges or fees.
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 Hartford (or an affiliated company) on the life of
the Insured. No evidence of insurability will be required. The new Policy will
have, at the election of the Policy Owner, either the same Coverage Amount 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. There may be a cash adjustment required on the exchange.
SUSPENSION OF VALUATION, PAYMENTS AND TRANSFERS
Hartford will suspend all procedures requiring valuation (including transfers,
surrenders and loans) on any day a national stock exchange is closed or trading
is restricted due to an existing emergency, as defined by the Securities and
Exchange Commission, or on any day the Securities and Exchange Commission has
ordered that the right of surrender of the Policies be suspended for the
protection of Policy Owners, until such condition has ended.
LAST SURVIVOR POLICIES
--------------------------------------------------------------------
The Policies are offered on both a single life and a "last survivor" basis.
Policies sold on a last survivor basis operate in a manner almost identical to
the single life version. The most important difference is that the last survivor
version involves two Insureds and the Death Proceeds are paid on the death of
the last surviving Insured. The other significant differences between the last
survivor and single life versions are listed below.
1. The cost of insurance charges under the last survivor Policies are
determined in a manner that reflects the anticipated mortality of the two
Insureds and the fact that the Death Benefit is not payable until the death
of the second Insured. See the last survivor illustrations in "Appendix B,"
page 32.
2. To qualify for simplified underwriting under a last survivor Policy, both
Insureds must meet the simplified underwriting standards.
3. For a last survivor Policy to be reinstated, both Insureds must be alive on
the date of reinstatement.
4. The Policy provisions regarding misstatement of age or sex, suicide and
incontestability apply to either Insured.
5. Additional tax disclosures applicable to last survivor Policies are provided
in "Federal Tax Considerations."
17 - PROSPECTUS
<PAGE>
OTHER MATTERS
--------------------------------------------------------------------
VOTING RIGHTS
In accordance with its interpretation of presently applicable law, Hartford will
vote the shares of the Portfolios at regular and special meetings of the
shareholders of the Portfolios in accordance with instructions from Policy
Owners (or the assignee of the Policy, as the case may be) having a voting
interest in the Separate Account. The number of shares held in the Separate
Account which are attributable to each Policy Owner is determined by dividing
the Policy Owner's interest in each Sub-Account by the net asset value of the
applicable shares of the Portfolios. Hartford will vote shares for which no
instructions have been given and shares which are not attributable to Policy
Owners (i.e., shares owned by Hartford) in the same proportion as it votes
shares for which it has received instructions. However, if the Investment
Company Act of 1940 or any rule promulgated thereunder should be amended, or if
Hartford's present interpretation should change and, as a result, Hartford
determines it is permitted to vote the shares of the Portfolios in its own
right, it may elect to do so.
The voting interests of the Policy Owner (or the assignee) in the Portfolios
will be determined as follows: Policy Owners may cast one vote for each full or
fractional Accumulation Unit owned under the Policy and allocated to a
Sub-Account, the assets of which are invested in the particular Fund on the
record date for the shareholder meeting for that Fund. If, however, a Policy
Owner has taken a loan secured by the Policy, amounts transferred from the
Sub-Account(s) to the Loan Account in connection with the loan (see "Policy
Benefits and Rights -- Policy Loans") will not be considered in determining the
voting interests of the Policy Owner. Policy Owners should review the Fund's
prospectus accompanying this Prospectus to determine matters on which
shareholders may vote.
Hartford may, when required by state insurance regulatory authorities, disregard
Policy Owners' voting instructions if such instructions require that the shares
be voted so as to cause a change in the sub-classification or investment
objective of one or more of the Portfolios or to approve or disapprove an
investment advisory Policy for the Portfolios.
In addition, Hartford itself may disregard Policy Owners' voting instructions in
favor of changes initiated by a Policy Owner in the investment policy or the
investment adviser of the Portfolios if Hartford reasonably disapproves of such
changes. A change would be disapproved only if the proposed change is contrary
to state law or prohibited by state regulatory authorities. If Hartford does
disregard voting instructions, a summary of that action and the reasons for such
action will be included in the next periodic report to Policy Owners.
STATEMENTS TO POLICY OWNERS
Hartford will maintain all records relating to the Separate Account and the
Sub-Accounts. At least once each Policy Year, Hartford will send to Policy
Owners a statement showing the Coverage Amount and the Account Value of the
Policy (indicating the number of Accumulation Units credited to the Policy in
each Sub-Account and the corresponding Accumulation Unit Value) and any
outstanding loan secured by the Policy as of the date of the statement. The
statement will also show premium paid, and Deduction Amounts under the Policy
since the last statement, and any other information required by any applicable
law or regulation.
LIMIT ON RIGHT TO CONTEST
Hartford may not contest the validity of the Policy after it has been in force
during the Insured's lifetime for two years from the Issue Date. If the Policy
is reinstated, the two-year period is measured from the date of reinstatement.
Any increase in the Coverage Amount as a result of a premium payment is
contestable for two years from its effective date. In addition, if the Insured
commits suicide in the two year period, or such period as specified in state
law, the benefit payable will be limited to the Account Value less any
Indebtedness.
MISSTATEMENT AS TO AGE AND SEX
If the age or sex of the Insured is incorrectly stated, the Death Benefit will
be appropriately adjusted as specified in the Policy.
SETTLEMENT PROVISIONS
The surrender proceeds or Death Proceeds under the Policies may be paid in a
lump sum or may be applied to one of Hartford's payment options. The minimum
amount that may be applied under a payment option is $5,000, unless Hartford
consents to a lesser amount. UNDER PAYMENT OPTIONS 2, 3 AND 4, NO SURRENDER OR
PARTIAL SURRENDERS ARE PERMITTED AFTER PAYMENTS COMMENCE. FULL SURRENDER OR
PARTIAL SURRENDERS MAY BE MADE FROM PAYMENT OPTION 1 OR OPTION 6, BUT THEY ARE
SUBJECT TO THE SURRENDER CHARGE, IF APPLICABLE. ONLY A FULL SURRENDER IS ALLOWED
FROM PAYMENT OPTION 5. A SURRENDER FROM PAYMENT OPTION 5 WILL ALSO BE SUBJECT TO
THE SURRENDER CHARGE, IF APPLICABLE.
Hartford will pay interest of at least 3 1/2% per year on the Death Proceeds
from the date of the Insured's death to the date payment is made or a payment
option is elected. At such times, the proceeds are not subject to the investment
experience of the Separate Account.
18 - PROSPECTUS
<PAGE>
The following options are available under the Policies (Hartford may offer other
payment options):
OPTION 1: INTEREST INCOME
This option offers payments of interest, at the rate Hartford declares, on the
amount applied under his option. The interest rate will never be less than
3 1/2% per year.
OPTION 2: LIFE ANNUITY
A life annuity is an annuity payable during the lifetime of the payee and
terminating with the last payment preceding the death of the payee. This option
offers the largest payment amount of any of the life annuity options, since
there is no guarantee of a minimum number of payments nor a provision for a
death benefit payable to a beneficiary.
It would be possible under this option for a payee to receive only one annuity
payment if he died prior to the due date of the second annuity payment, two
annuity payments if he died before the date of the third annuity payment, etc.
OPTION 3: LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN
This annuity option is an annuity payable monthly during the lifetime of the
payee with the provision that payments will be made for a minimum of 120, 180 or
240 months, as elected. If, at the death of the payee, payments have been made
for less than the minimum elected number of months, then the present value (as
of the date of the payee's death) of any remaining guaranteed payments will be
paid in one sum to the beneficiary or beneficiaries designated, unless other
provisions have been made and approved by Hartford.
OPTION 4: JOINT AND LAST SURVIVOR ANNUITY
An annuity payable monthly during the joint lifetime of the payee and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
Based on the options currently offered by Hartford, the payee may elect that the
payment to the survivor be less than the payment made during the joint lifetime
of the payee and a designated second person.
It would be possible under this option for a payee and designated second person
to receive only one payment in the event of the common or simultaneous death of
the parties prior to the due date for the second payment and so on.
OPTION 5: PAYMENTS FOR A DESIGNATED PERIOD
An amount payable monthly for the number of years selected, which may be from
five to 30 years. Under this option, you may, at any time, request a full
surrender and receive, within seven days, the termination value of the Policy as
determined by Hartford.
In the event of the payee's death prior to the end of the designated period, the
present value (as of the date of the payee's death) of any remaining guaranteed
payments will be paid in one sum to the beneficiary or beneficiaries designated
unless other provisions have been made and approved by Hartford.
Option 5 is an option that does not involve life contingencies.
OPTION 6: POLICY PROCEEDS SETTLEMENT OPTION
Proceeds from the Death Benefit left with Hartford. These proceeds will remain
in the Sub-Accounts to which they were allocated at the time of death, unless
the beneficiary elects to reallocate them. Full or partial surrenders may be
made at any time.
VARIABLE AND FIXED ANNUITY PAYMENTS: When an Annuity is effected, unless
otherwise specified, the surrender proceeds or Death Proceeds held in the
Sub-Accounts will be applied to provide a variable annuity based on the pro rata
amount in the various Sub-Accounts. Fixed annuities options are also available.
YOU SHOULD CONSIDER WHETHER THE ALLOCATION OF PROCEEDS AMONG SUB-ACCOUNTS OF THE
SEPARATE ACCOUNT FOR YOUR ANNUITY PAYMENTS ARE BASED ON THE INVESTMENT
ALTERNATIVE BEST SUITED TO YOUR RETIREMENT NEEDS.
VARIABLE ANNUITY: The Policy contains tables indicating the minimum dollar
amount of the first monthly payment under the optional variable forms of annuity
for each $1,000 of value of a Sub-Account. The first monthly payment varies
according to the form and type of variable payment annuity selected. The Policy
contains variable payment annuity tables derived from the 1983(a) Individual
Annuity Mortality Table, with ages set back one year and with an assumed
investment rate ("A.I.R.") of 5% per annum. The total first monthly variable
annuity payment is determined by multiplying the proceeds value (expressed in
thousands of dollars) of a Sub-Account by the amount of the first monthly
payment per $1,000 of value obtained from the tables in the Policy.
The amount of the first monthly variable annuity payment is divided by the value
of an annuity unit (an accounting unit of measure used to calculate the value of
annuity payments) for the appropriate Sub-Account no earlier than the close of
business on the fifth Valuation Day preceding the day on which the payment is
due in order to determine the number of annuity units represented by the first
payment. This number of annuity units remains fixed during the annuity payment
period and in each subsequent month the dollar amount of the variable annuity
payment is determined by multiplying this fixed number of annuity units by the
current annuity unit value.
LEVEL VARIABLE ANNUITY PAYMENTS WOULD BE PRODUCED IF THE INVESTMENT RATE
REMAINED CONSTANT AND EQUAL TO THE A.I.R. IN FACT, PAYMENTS WILL VARY UP OR DOWN
AS THE INVESTMENT RATE VARIES UP OR DOWN RELATIVE TO THE A.I.R.
FIXED ANNUITY: Fixed annuity payments are determined by multiplying the amount
applied to the annuity by a rate (to be
19 - PROSPECTUS
<PAGE>
determined by Hartford) which is no less than the rate specified in the fixed
payment annuity tables in the Policy. The annuity payment will remain level for
the duration of the annuity.
Hartford will make any other arrangements for income payments as may be agreed
on.
BENEFICIARY
The applicant names the beneficiary in the application for the Policy. The
Policy Owner may change the beneficiary (unless irrevocably named) during the
Insured's lifetime by written request to Hartford. If no beneficiary is living
when the Insured dies, the Death Proceeds will be paid to the Policy Owner if
living; otherwise to the Policy Owner's estate.
ASSIGNMENT
The Policy may be assigned as collateral for a loan or other obligation.
Hartford is not responsible for any payment made or action taken before receipt
of written notice of such assignment. Proof of interest must be filed with any
claim under a collateral assignment.
DIVIDENDS
No dividends will be paid under the Policies.
20 - PROSPECTUS
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS
--------------------------------------------------------------------
<TABLE>
<CAPTION>
OTHER BUSINESS PROFESSION,
VOCATION OR EMPLOYMENT
POSITION WITH HARTFORD, FOR PAST 5 YEARS;
NAME, AGE YEAR OF ELECTION OTHER DIRECTORSHIPS
- ---------------------------------- ---------------------------------- ---------------------------------------------------
<S> <C> <C>
Ahn, Dong H., 37 Vice President, 1998 Vice President (1998-Present), Hartford Life and
Accident Insurance Company.
Bossen, Wendell J., 64 Vice President, 1992** Vice President (1992-Present), Hartford Life and
Accident Insurance Company; President
(1992-Present), International Corporate Marketing
Group, Inc.; Executive Vice President
(1984-1992), Mutual Benefit.
Boyko, Gregory A., 46 Senior Vice President, Vice President and Controller (1995-1997),
Director, 1997 Hartford; Director (1997-Present); Senior Vice
President, Chief Financial Officer & Treasurer
(1997-Present); Vice President & Controller
(1995-1997), Hartford Life and Accident 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.
Cummins, Peter W., 60 Senior Vice President, 1997 Vice President (1989-1997); Director of Broker
Dealer Sales-ILAD (1989-1992), Hartford; Senior
Vice President (1997-Present) Vice President
(1989-1997); Director of Broker Dealer Sales-ILAD
(1989-1991), Hartford Life and Accident Insurance
Company.
de Raismes, Ann M., 47 Senior Vice President, 1997 Vice President (1994-1997); Assistant Vice
Director of Human Resources, President (1992-1994); Hartford; Senior Vice
1991 President (1997-Present); Director of Human
Resources (1991-Present); Vice President
(1994-1997); Assistant Vice President
(1992-1994); Hartford Life and Accident Insurance
Company; Vice President, Human Resources
(1997-Present), Hartford Life, Inc.
Fitch, Timothy M., 45 Vice President, 1995 Assistant Vice President (1992-1995), Hartford;
Actuary, 1994 Vice President (1995-Present); Actuary
(1994-Present); Assistant Vice President
(1992-1995), Hartford Life and Accident Insurance
Company.
Foy, David T., 31 Senior Vice President, 1998 Senior Vice President (1998-Present), Vice
President (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.
</TABLE>
21 - PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
OTHER BUSINESS PROFESSION,
VOCATION OR EMPLOYMENT
POSITION WITH HARTFORD, FOR PAST 5 YEARS;
NAME, AGE YEAR OF ELECTION OTHER DIRECTORSHIPS
- ---------------------------------- ---------------------------------- ---------------------------------------------------
<S> <C> <C>
Gardner, Bruce D., 47 Vice President, 1995 Director (1994-1997); General Counsel & Corporate
Secretary (1991-1995), Hartford; Vice President
(1995-1997); Director (1995-1997); General
Counsel & Corporate Secretary (1991-1995),
Hartford Life and Accident Insurance Company.
Garrett, J. Richard, 53 Vice President, 1993 Treasurer (1986-1997), Hartford; Vice President
Assistant Treasurer, 1997 (1993-Present); Assistant Treasurer
(1997-Present); Treasurer (1983-1997); Hartford
Life and Accident Insurance Company; Treasurer
(1977).
Godkin, Lynda, 44 Senior Vice President, 1997 Associate General Counsel (1995-1996); Assistant
General Counsel, 1996 General Counsel and Secretary (1994-1995);
Corporate Secretary, 1995 Counsel (1990-1994), Hartford; Director
Director, 1997 (1997-Present); Senior Vice President
(1997-Present); General Counsel (1996-Present);
Corporate Secretary (1995-Present); Associate
General Counsel (1995-1996); Assistant General
Counsel and Secretary (1994-1995); Counsel
(1990-1994), Hartford Life and Accident Insurance
Company; Vice President and General Counsel
(1997-Present), Hartford Life, Inc.
Grady, Lois W., 53 Senior Vice President, 1998 Vice President (1993-1998); Assistant Vice
Vice President, 1993 President (1987-1993), Hartford; Senior Vice
President, 1998); Vice President (1993-1997);
Assistant Vice President (1987-1993), Hartford
Life and Accident Insurance Company.
Graham, Christopher, 47 Vice President, 1997 Vice President, Senior Vice President, New Business
and Claims (1993-1996), National Life of Vermont;
Vice President (1996-Present), Hartford.
Hunt, Mark E., 37 Vice President, 1998 Assistant Vice President (1997-1998), Hartford;
Vice President (1998-Present), Assistant Vice
President (1997-1998), Hartford Life and Accident
Insurance Company; Director Asset
Allocation/Asset Liability Management Senior
Investment Officer, Associate Actuary, Assistant
Actuary, Senior Actuary Associate (1987-1996),
Connecticut Mutual Life.
Joyce, Stephen T., 39 Vice President, 1997 Director of Annuity Bank Distribution
(1990-Present), Assistant Vice President
(1994-1997), Hartford; Assistant Vice President
(1994-1997), Hartford Life and Accident Insurance
Company.
Keeler, Michael D., 37 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.
</TABLE>
22 - PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
OTHER BUSINESS PROFESSION,
VOCATION OR EMPLOYMENT
POSITION WITH HARTFORD, FOR PAST 5 YEARS;
NAME, AGE YEAR OF ELECTION OTHER DIRECTORSHIPS
- ---------------------------------- ---------------------------------- ---------------------------------------------------
<S> <C> <C>
Kerzner, Robert A., 46 Senior Vice President, 1998 Vice President, (1995-1998); Regional Vice
Vice President, 1995 President (1991-1994), Hartford; Vice President
(1994-1997), Hartford Life and Accident Insurance
Company.
Levenson, David N., 31 Vice President, 1998 Director and Assistant Vice President
(1995-Present), Hartford; Vice President
(1994-1995), Fidelity Investments; Actuary
(1990-1994), Aetna Life and Casualty.
Maher, Steven M., 43 Vice President, 1992 Assistant Vice President (1987-1992), Hartford;
Actuary, 1987 Vice President (1993-Present); Actuary
(1987-Present); Assistant Vice President
(1987-1993), Hartford Life and Accident Insurance
Company.
Malchodi, Jr., William B., 50 Vice President, 1994 Director of Taxes, Hartford (1991-1998); Director
of Taxes (1992-1998), Hartford Life and Accident
Insurance Company.
Marra, Raymond J., 37 Vice President, 1998 Assistant Vice President (1997-Present), Hartford;
Vice President (1998-Present), Assistant Vice
President (1994-1997), Hartford Life and Accident
Insurance Company.
Marra, Thomas M., 39 Executive Vice President, 1995 Senior Vice President (1994-1995); Vice President
Director, Individual Life and (1989-1994); Actuary (1987-1995), Hartford;
Annuity Division, 1994 Director (1994-Present); Executive Vice President
Director, 1994* (1995-Present); Senior Vice President
(1994-1995); Director, Individual Life and
Annuity Division (1994-Present); Actuary
(1987-1997), Hartford Life and Accident Insurance
Company; Executive Vice President, Individual
Life and Annuities (1997-Present), Hartford Life,
Inc.
Nolan, Jr., Robert F., 43 Senior Vice President, 1997 Vice President (1995-1997); Assistant Vice
President (1992-1995), Hartford; Vice President
(1995-1997); Assistant Vice President
(1992-1995), Hartford Life and Accident Insurance
Company; Vice President, Corporate Relations
(1997-Present), Hartford Life, Inc.; Manager,
Public Relations (1986), Aetna Life and Casualty
Insurance Company.
Noto, Joseph J., 46 Vice President, 1989 Executive Vice President & Chief Operating Officer
(1997-Present); Director (1994-Present);
President (1994-1997), American Maturity Life
Insurance Company; Vice President (1989-1997),
Hartford Life and Accident Insurance Company.
</TABLE>
23 - PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
OTHER BUSINESS PROFESSION,
VOCATION OR EMPLOYMENT
POSITION WITH HARTFORD, FOR PAST 5 YEARS;
NAME, AGE YEAR OF ELECTION OTHER DIRECTORSHIPS
- ---------------------------------- ---------------------------------- ---------------------------------------------------
<S> <C> <C>
O'Halloran, C. Michael, 51 Vice President, 1994 Senior Associate General Counsel (1988-1997),
Hartford; Vice President (1994-Present); Senior
Associate General Counsel (1988-1997), Hartford
Life and Accident Insurance Company; Corporate
Secretary (1997-Present), Hartford Life, Inc.;
Vice President (1994-Present); Senior Associate
General Counsel (1988-Present); Director of
Corporate Law (1994-Present), The Hartford
Financial Services Group.
O'Sullivan, Daniel E., 43 Vice President, 1998 Vice President (1998-Present), Hartford Life and
Accident Insurance Company.
Raymond, Craig R., 37 Senior Vice President, 1997 Chief Vice President (1993-1997); Assistant Vice
Actuary, 1994 President (1992-1993); Actuary (1990-1994),
Hartford; Senior Vice President (1997-Present);
Chief Actuary (1995-Present); Vice President
(1993-1997); Actuary (1990-1995), Hartford Life
and Accident Insurance Company; Vice President
and Chief Actuary (1997-Present), Hartford Life,
Inc.
Robinson, Mary P., 38 Vice President, 1998 Assistant Vice President (1995-1998), Hartford;
Assistant Vice President (1995-1998), Hartford
Life and Accident Insurance Company.
Salama, Donald A., 50 Vice President, 1997 Vice President (1997-Present), Hartford Life and
Accident Insurance Company.
Schiltz, Timothy P., 37 Vice President, 1997 Assistant Vice President (1994-1997), Hartford;
Vice President (1997-Present); Assistant Vice
President (1994-1997), Hartford Life and Accident
Insurance Company; Consulting Actuary
(1992-1993), Milliman & Robertson, Inc.;
Consulting Actuary (1988-1992) Chalke
Incorporated.
Smith, Lowndes A., 58 President, 1989 Chief Operating Officer (1989-1997), Hartford;
Chief Executive Officer, Director (1981-Present); President
1997 (1989-Present); Chief Executive Officer
Director, 1981* (1997-Present); Chief Operating Officer
(1989-1997), Hartford Life and Accident Insurance
Company; Chief Executive Officer and President
and Director (1997-Present), Hartford Life, Inc.
Stevenson, Keith A., 44 Vice President, 1998 Sweeney, Edward A., 51 Vice President, 1993 Chicago
Regional Manager (1985-1993), Hartford; Vice
President (1993-Present), Hartford Life and
Accident Insurance Company.
Tilbor, Judith V., 46 Vice President, 1998 Assistant Vice President (1994-1998), Hartford;
Vice President (1998-Present), Assistant Vice
President (1994-1998), Hartford Life and Accident
Insurance Company.
</TABLE>
24 - PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
OTHER BUSINESS PROFESSION,
VOCATION OR EMPLOYMENT
POSITION WITH HARTFORD, FOR PAST 5 YEARS;
NAME, AGE YEAR OF ELECTION OTHER DIRECTORSHIPS
- ---------------------------------- ---------------------------------- ---------------------------------------------------
<S> <C> <C>
Welnicki, Raymond P., 49 Senior Vice President & Vice President (1993-1994), Hartford; Director
Director, Employee Benefit (1994-Present); Senior Vice President
Division, 1994 (1995-Present); Director, Employee Benefit
Director, 1994* Division (1997-Present); Vice President
(1993-1995), Hartford Life and Accident Insurance
Company; Senior Vice President, Employee Benefits
(1997-Present), Hartford Life, Inc.; Board of
Directors, Ethix Corp.
Welsh, Walter C., 51 Senior Vice President, 1997 Vice President (1995-1997); Assistant Vice
President (1992-1995), Hartford; Senior Vice
President (1997-Present); Vice President
(1995-1997); Assistant Vice President
(1992-1995), Hartford Life and Accident Insurance
Company; Vice President, Government Affairs
(1997-Present), Hartford Life, Inc.
Zlatkus, Lizabeth H., 39 Senior Vice President, 1997 Vice President (1994-1997); Assistant Vice
Director, 1994* President (1992-1994), Hartford; Director
(1994-Present); Senior Vice President
(1997-Present); Vice President (1994-1997);
Assistant Vice President (1992-1994), Hartford
Life and Accident Insurance Company; Vice
President, Group Life and Disability
(1997-Present), Hartford Life, Inc.
Znamierowski, David M., 38 Senior Vice President, 1997 Director (1998-Present); Senior Vice President
Director, Risk Management (1997-Present), Hartford Life and Accident
Strategy, 1996 Insurance Company; Director (1998-Present);
Director, 1998* Senior Vice President (1997-Present); Director,
Risk Management Strategy (1996-Present); Vice
President (1997), Hartford Life Insurance
Company; Vice President, Investment Strategy
(1997-Present), Hartford Life, Inc.; Vice
President, Investment Strategy & Policy
(1991-1996), Aetna Life and Casualty Company.
</TABLE>
- ------------------------
* Denotes date of election to Board of Directors.
** The Hartford Financial Services Group, Inc. Affiliated Company
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
DISTRIBUTION OF THE POLICIES
--------------------------------------------------------------------
Hartford intends to sell the Policies in all jurisdictions where it is licensed
to do business. The Policies will be sold by life insurance sales
representatives who represent Hartford and who are registered representatives of
Hartford Equity Sales Company, Inc. ("HESCO") or certain other independent,
registered broker-dealers. Any sales representative or employee will have been
qualified to sell variable life insurance Policies under applicable federal and
state laws. Each broker-dealer is registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 and all are members of the
National Association of Securities Dealers, Inc.
Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account. Both
HESCO and HSD are wholly-owned subsidiaries of Hartford. The principal business
address of HESCO and HSD is the same as that of Hartford. The maximum
25 - PROSPECTUS
<PAGE>
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 this 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 markets, investment
strategies and techniques (such as value investing, dollar cost averaging and
asset allocation), the advantages and disadvantages of investing in
tax-advantaged and taxable instruments, customer profiles and hypothetical
purchase scenarios, financial management and tax and retirement planning, and
variable annuities and other investment alternatives, including comparisons
between the Policies and the characteristics of, and market for, such
alternatives.
SAFEKEEPING OF THE SEPARATE ACCOUNT'S ASSETS
--------------------------------------------------------------------
The assets of the Separate Account are held by Hartford. The assets of the
Separate Account are kept physically segregated and held separate and apart from
the General Account of Hartford. Hartford maintains records of all purchases and
redemptions of shares of the Fund. Additional protection for the assets of the
Separate Account is afforded by Hartford's blanket fidelity bond, issued by
Aetna Casualty and Surety Company, in the aggregate of $50 million, covering all
of the officers and employees of Hartford.
FEDERAL TAX CONSIDERATIONS
--------------------------------------------------------------------
GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING TO
THE ACTUAL STATUS OF THE POLICY OWNER INVOLVED, LEGAL AND TAX ADVICE MAY BE
NEEDED BY A PERSON, EMPLOYER OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A
POLICY DESCRIBED HEREIN.
It should be understood that any detailed description of the federal income tax
consequences regarding the purchase of these Policies cannot be made in this
Prospectus and that special tax rules may be applicable with respect to certain
purchase situations not discussed herein. In addition, no attempt is made here
to consider any applicable state or other tax laws. For detailed information, a
qualified tax adviser should always be consulted. This discussion of federal tax
considerations is based upon Hartford 's understanding of existing Federal
income tax laws as they are currently interpreted.
TAXATION OF HARTFORD AND
THE SEPARATE ACCOUNT
The Separate Account is taxed as a part of Hartford which is taxed as a life
insurance company under Subchapter L of the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Separate Account will not be taxed as a
"regulated investment company" under Subchapter M of the Code. Investment income
and realized capital gains on the assets of the Separate Account (the underlying
Portfolios) are reinvested and are taken into account in determining the value
of the Accumulation Units (see "Policy Benefits and Right -- 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
26 - PROSPECTUS
<PAGE>
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 Contract will meet the Section 7702 definition of a life
insurance contract.
MODIFIED ENDOWMENT CONTRACTS
A life insurance contract is treated as a "modified endowment contract" under
Section 7702A of the Code if it meets the definition of life insurance in
Section 7702 but fails the "seven-pay" test of Section 7702A. The seven-pay test
provides that premiums cannot be paid at a rate more rapidly than that allowed
by the payment of seven annual premiums using specified computational rules
provided in Section 7702A(c). The large single premium permitted under the
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 and there is no change in
the death benefit as the result of the exchange.
A contract that is classified as modified endowment contract is generally
eligible for the beneficial tax treatment accorded to life insurance. That is,
the death benefit is excluded from income and increments in value are not
subject to current taxation. However, loans, distributions or other amounts
received from a modified endowment contract during the life of the Insured will
be taxed to the extent of any accumulated income in the contract (generally, the
excess of account value over premiums paid). Amounts that are taxable
withdrawals will be subject to a 10% additional tax, with certain exceptions.
All modified endowment contracts that are issued within any calendar year to the
same Policy Owner by one company or its affiliates shall be treated as one
modified endowment contract in determining the taxable portion of any loan or
distributions.
ESTATE AND GENERATION
SKIPPING TAXES
When the Insured dies, the Death Proceeds will generally be includible in the
Policy Owner's estate for purposes of federal estate tax if the last surviving
Insured owned the Policy. If the Policy Owner was not the last surviving
Insured, the fair market value of the Policy would be included in the Policy
Owner's estate upon the Policy Owner's death. Nothing would be includible in the
last surviving Insured's estate if he or she neither retained incidents of
ownership at death nor had given up ownership within three years before death.
The federal estate tax is integrated with the federal gift tax under a unified
rate schedule and unified credit which shelters up to $625,000 (1998) from the
estate and gift tax. The Taxpayer Relief Act of 1997 gradually raises the credit
over the next eight 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. Because these rules are complex, the Policy Owner
should consult with a qualified tax adviser for specific information if
ownership is passing to younger generations.
DIVERSIFICATION REQUIREMENTS
Section 817 of the Code provides that a variable life insurance contract (other
than a pension plan policy) will not be treated as a life insurance contract for
any period during which the investments made by the separate account or
underlying fund are not adequately diversified in accordance with regulations
prescribed by the Treasury Department. If a Policy is not treated as a life
insurance contract, the Policy Owner will be subject to income tax on the annual
increases in cash value.
27 - PROSPECTUS
<PAGE>
The Treasury Department has issued diversification regulations which generally
require, among other things, that no more than 55% of the value of the total
assets of the segregated asset account underlying a variable contract is
represented by any one investment, no more than 70% is represented by any two
investments, no more than 80% is represented by any three investments, and no
more than 90% is represented by any four investments. In determining whether the
diversification standards are met, all securities of the same issuer, all
interests in the same real property project, and all interests in the same
commodity are each treated as a single investment. In addition, in the case of
government securities, each government agency or instrumentality shall be
treated as a separate issuer.
A separate account must be in compliance with the diversification standards on
the last day of each calendar quarter or within 30 days after the quarter ends.
If an insurance company inadvertently fails to meet the diversification
requirements, the company may comply within a reasonable period and avoid the
taxation of policy income on an ongoing basis. However, either the company or
the Policy Owner must agree to pay the tax due for the period during which the
diversification requirements were not met.
Hartford monitors the diversification of investments in the separate accounts
and tests for diversification as required by the Code. Hartford intends to
administer all contracts subject to the diversification requirements in a manner
that will maintain adequate diversification.
OWNERSHIP OF THE ASSETS IN
THE SEPARATE ACCOUNT
In order for a variable life insurance contract to qualify for tax deferral,
assets in the segregated asset accounts supporting the variable contract must be
considered to be owned by the insurance company and not by the variable contract
owner. The Internal Revenue Service ("IRS") has issued several rulings which
discuss investor control. The IRS has ruled that certain incidents of ownership
by the contract owner, such as the ability to select and control investments in
a separate account, will cause the contract owner to be treated as the owner of
the assets for tax purposes.
Further, in the explanation to the temporary Section 817 diversification
regulations, the Treasury Department noted that the temporary regulations "do
not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset account may cause the investor, rather
than the insurance company, to be treated as the owner of the assets in the
account." The explanation further indicates that "the temporary regulations
provide that in appropriate cases a segregated asset account may include
multiple sub-accounts, but do not specify the extent to which policyholders may
direct their investments to particular sub-accounts without being treated as the
owners of the underlying assets. Guidance on this and other issues will be
provided in regulations or revenue rulings under Section 817(d), relating to the
definition of variable contract." The final regulations issued under Section 817
did not provide guidance regarding investor control, and as of the date of this
Prospectus, no other such guidance has been issued. Further, Hartford does not
know if or in what form such guidance will be issued. In addition, although
regulations are generally issued with prospective effect, it is possible that
regulations may be issued with retroactive effect. Due to the lack of specific
guidance regarding the issue of investor control, there is necessarily some
uncertainty regarding whether a Policy Owner could be considered the owner of
the assets for tax purposes. Hartford reserves the right to modify the
contracts, as necessary, to prevent Policy Owners from being considered the
owners of the assets in the separate accounts.
LIFE INSURANCE PURCHASED FOR USE IN SPLIT DOLLAR ARRANGEMENTS
On January 26, 1996, the IRS released a technical advice memorandum ("TAM") on
the taxability of life insurance policies used in certain split dollar
arrangements. A TAM, issued by the National Office of the IRS, provides advice
as to the internal revenue laws, regulations, and related statutes with respect
to a specific set of facts and a specific taxpayer. In the TAM, among other
things, the IRS concluded that an employee was subject to current taxation on
the excess of the cash surrender value of the policy over the premiums to be
returned to the employer. Purchasers of life insurance policies to be used in
split dollar arrangements are strongly advised to consult with a qualified tax
adviser to determine the tax treatment resulting from such an arrangement.
FEDERAL INCOME TAX WITHHOLDING
If any amounts are deemed to be current taxable income to the 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.
28 - PROSPECTUS
<PAGE>
LIFE INSURANCE PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal income
tax consequences to life insurance purchasers that are U.S. citizens or
residents. Purchasers that are not U.S. citizens or residents will generally be
subject to U.S. federal income tax and withholding on taxable distributions from
life insurance policies at a 30% rate, unless a lower treaty rate applies. In
addition, purchasers may be subject to state and/or municipal taxes and taxes
that may be imposed by the purchaser's country of citizenship or residence.
Prospective purchasers are advised to consult with a qualified tax adviser
regarding U.S. state, and foreign taxation with respect to a life insurance
policy purchase.
LEGAL PROCEEDINGS
--------------------------------------------------------------------
There are no material legal proceedings pending to which the Separate Account is
a party.
LEGAL MATTERS
--------------------------------------------------------------------
Legal matters in connection with the issue and sale of flexible premium variable
life insurance 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.
EXPERTS
--------------------------------------------------------------------
The audited financial statements and financial statement schedules 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. The principal business address of Arthur
Andersen LLP is One Financial Plaza, Hartford, Connecticut 06103.
The hypothetical Policy illustrations included in this Prospectus and the
registration statement with respect to the Separate Account have been approved
by Michael Winterfield, FSA, MAAA, Assistant Vice President and Director,
Individual Annuity Product Management, for Hartford, and are included in
reliance upon his opinion as to their reasonableness.
YEAR 2000
--------------------------------------------------------------------
The Year 2000 issue relates to the ability or inability of computer systems 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 computer systems that are in use today were developed years ago when a year
was identified using a two-digit field rather than a four-digit field. As
information and data containing or related to the century date are introduced to
computer hardware, software and other systems, date sensitive systems may
recognize the year 2000 as 1900, or not at all, which may result in computer
systems processing information incorrectly. This, in turn, may significantly and
adversely affect the integrity and reliability of information databases 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 and others, may also adversely affect any
given company.
As an insurance and financial services company, Hartford has thousands of
individual and business customers that have purchased or invested in insurance
policies, annuities, mutual funds and other financial products. Nearly all of
these policies and products contain date sensitive data, such as policy
expiration dates, birth dates, premium payments dates and the like. In addition,
Hartford has business relationships with numerous third parties that affect
virtually all aspects of its business, including, without limitation, suppliers,
computer hardware and software vendors, insurance agents and brokers, securities
broker-dealers and other distributors of financial products.
Beginning in 1990, Hartford began working on making its computer systems Year
2000 ready, either by installing new programs or by replacing systems. In
January 1998, Hartford commenced a company-wide program to further identify,
assess and remediate the impact of Year 2000 problems in all of Hartford's
business segments. Hartford currently anticipates that this internal program
will be substantially completed by the end of 1998, and testing of computer
systems will continue through 1999.
29 - PROSPECTUS
<PAGE>
In addition, as part of its Year 2000 program, Hartford is identifying third
parties with which it has significant business relations in order to attempt to
assess any potential impact on Hartford as a result of such third-party Year
2000 issues and remediation plans. Hartford currently anticipates that it will
substantially complete this evaluation by the end of 1998, and will conduct
systems testing with certain third parties through 1999. 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 successfully address their Year 2000
issues. Hartford will continue to assess Year 2000 risk exposures related to its
own operations and its third-party relationships and is in the process of
developing contingency plans.
The costs of addressing the Year 2000 issue that have been incurred through the
six months ended June 30, 1998 have not been material to Hartford's financial
condition or results of operations. Hartford will continue to incur costs
related to its Year 2000 efforts and does not anticipate that the costs to be
incurred will be material to its financial condition or results of operations.
30 - PROSPECTUS
<PAGE>
APPENDIX A
--------------------------------------------------------------------
SPECIAL INFORMATION FOR POLICIES PURCHASED IN NEW YORK
If the Policy is purchased in the State of New York, the following provisions of
the Prospectus are amended as follows:
In the Special Terms subsection of the Prospectus, the definition of Account
Value is deleted and the following definition is substituted:
ACCOUNT VALUE: The current value of Accumulation Units plus the value of the
Loan Account under the Policy. In the case of a Policy Owner who purchases the
Policy in the State of New York (the "New York Policy Owner") and who elects to
transfer into the Fixed Account, Account Value is the current value of the Fixed
Account plus the value of the Loan Account under the Policy.
The following definition is added:
FIXED ACCOUNT: Part of the General Account of Hartford to which a New York
Policy Owner may allocate the entire Account Value.
The definition of Loan Account is deleted and the following definition is
substituted:
LOAN ACCOUNT: An account in Hartford's General Account, established for any
amounts transferred from the Sub-Accounts or, if a New York Policy Owner, from
the Fixed Account for requested loans. The Loan Account credits a fixed rate of
interest of 4% per annum that is not based on the investment experience of the
Separate Account.
The following is added to the Prospectus as a separate section following the
section entitled "The Separate Account":
THE FIXED ACCOUNT
--------------------------------------------------------------------
THAT PORTION OF THE POLICY RELATING TO THE FIXED ACCOUNT IS NOT REGISTERED UNDER
THE SECURITIES ACT OF 1933 ("1933 ACT") AND THE FIXED ACCOUNT IS NOT REGISTERED
AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940 ("1940 ACT").
ACCORDINGLY, NEITHER THE FIXED ACCOUNT NOR ANY INTERESTS THEREIN ARE SUBJECT TO
THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT, AND THE
DISCLOSURE REGARDING THE FIXED ACCOUNT HAS NOT BEEN REVIEWED BY THE STAFF OF THE
SECURITIES AND EXCHANGE COMMISSION. THE FOLLOWING DISCLOSURE ABOUT THE FIXED
ACCOUNT MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL
SECURITIES LAWS REGARDING THE ACCURACY AND COMPLETENESS OF DISCLOSURE.
Under the circumstances described under the heading "Transfer of Entire Account
Value to the Fixed Account," below, New York Policy Owners may transfer no less
than the entire Account Value to the Fixed Account. Account Value transferred to
the Fixed Account becomes part of the general assets of Hartford. Hartford
invests the assets of the General Account in accordance with applicable laws
governing the investment of insurance company general accounts.
Hartford currently credits interest to the Account Value transferred to the
Fixed Account under the Policy at the Minimum Credited Rate of 3% per year,
compounded annually. Hartford reserves the right to credit a lower minimum
interest rate according to state law. Hartford may also credit interest at rates
greater than the minimum Fixed Account interest rate. There is no specific
formula for determining the interest credited to the Account Value in the Fixed
Account.
The following language is added to the section of the Prospectus entitled
"Deductions and Charges -- Administrative Charge:"
No Administrative Charge is deducted from Account Value in the Fixed Account.
The following language is added to the section of the Prospectus entitled
"Deductions and Charges -- Mortality and Expense Risk Charge:"
No Mortality and Expense Risk Charge is deducted from Account Value in the Fixed
Account.
The following separate sections are added to the section of the Prospectus
entitled "Policy Benefits and Rights:"
TRANSFER OF ENTIRE ACCOUNT VALUE TO THE FIXED ACCOUNT
New York Policy Owners may transfer no less than the entire Account Value into
the Fixed Account under the following circumstances: (i) during the first 18
months following the Date of Issue, (ii) within 30 days following a Policy
Anniversary, or (iii) within 60 days following the effective date of a material
change in the investment policy of the Separate Account which the New York
Policy Owner objects to.
A TRANSFER TO THE FIXED ACCOUNT MUST BE FOR THE ENTIRE ACCOUNT VALUE AND ONCE
THE ACCOUNT VALUE HAS BEEN TRANSFERRED TO THE FIXED ACCOUNT, IT MAY NOT, UNDER
ANY CIRCUMSTANCES, BE TRANSFERRED BACK TO THE SEPARATE ACCOUNT.
31 - PROSPECTUS
<PAGE>
For New York Policy Owners who elect to invest in the Fixed Account, Hartford
will transfer the entire Account Value from the Separate Account to the Fixed
Account on the Monthly Activity Date next following the date on which Hartford
received the transfer request. The Account Value in the Fixed Account on the
date of transfer equals the entire Account Value; plus the value of the Loan
Account; minus the Monthly Deduction Amount applicable to the Fixed Account and
minus the Annual Maintenance Fee, if applicable. On each subsequent Monthly
Activity Date, the Account Value in the Fixed Account equals the Account Value
on the previous Monthly Activity Date; plus any premiums received since the last
Monthly Activity Date; plus interest credited since the last Monthly Activity
Date; minus the Monthly Deduction Amount applicable to the Fixed Account; minus
any partial surrenders taken since the last Monthly Activity Date and minus any
Surrender Charges deducted since the last Monthly Deduction Date. On each
Valuation Date (other than a Monthly Activity Date), the Account Value of the
Fixed Account equals the Account Value on the previous Monthly Activity Date;
plus any premiums received since the last Monthly Activity Date; plus any
interest credited since the last Monthly Activity Date; minus any partial
surrenders taken since the last Monthly Activity Date and minus any Surrender
Charges deducted since the last Monthly Activity Date.
DEFERRED PAYMENTS
Hartford reserves the right to defer payment of any Cash Surrender Values and
loan amounts which are attributable to the Fixed Account for up to six months
from the date of request. If payment is deferred for more than ten days,
Hartford will pay interest at the Fixed Account Minimum Credited Interest Rate.
32 - PROSPECTUS
<PAGE>
APPENDIX B
--------------------------------------------------------------------
ILLUSTRATIONS OF BENEFITS
The tables in Appendix B illustrate the way in which a Policy operates. They
show how the death benefit and surrender value could vary over an extended
period of time assuming hypothetical gross rates of return equal to constant
after tax annual rates of 0%, 6% and 12%. The tables are based on an initial
premium of $10,000. A male preferred age 55, a female preferred age 55 and a
male preferred age 65 with Face Amounts of $44,053, $34,014 and $20,000,
respectively, are illustrated for the single life preferred Policy for both
Policy Owner Option 1 and Policy Owner Option 2. The illustrations for the last
survivor preferred Policy assume male and female of equal ages, including age 55
and 65 for Face Amounts of $45,454 and $28,329.
The death benefit and surrender value for a Policy would be different from those
shown if the rates of return averaged 0%, 6% and 12% over a period of years, but
also fluctuated above or below those averages for individual Policy Years. They
would also differ if any Policy loan were made during the period of time
illustrated.
The tables reflect the deductions of current Policy charges for Policy Owner
Option 1 and Policy Owner Option 2 and guaranteed Policy charges for a single
gross interest rate. The death benefits and surrender values would change if the
current cost of insurance charges change.
The amounts shown for the death benefit and surrender value as of the end of
each Policy Year take into account an average daily charge equal to an annual
charge of 0.75% of the average daily net assets of the Portfolios for investment
advisory and administrative services fees. The gross annual investment return
rates of 0%, 6% and 12% on the Fund's assets are equal to net annual investment
return rates (net of the 0.80% average daily charge) of -0.80%, 5.20% and
11.20%, respectively.
The hypothetical returns shown in the tables are without any tax charges that
may be attributable to the Separate Account in the future. In order to produce
after tax returns of 0%, 6%, and 12%, the Separate Account would have to earn a
sufficient amount in excess of 0% or 6% or 12% to cover any tax charges (see
"Deductions and Charges -- Taxes Charged Against the Separate Account."
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.
33 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.20% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,809 9,816 44,053 10,749 9,757 44,053
2 11,025 11,687 10,703 44,053 11,560 10,579 44,053
3 11,576 12,638 11,667 44,053 12,438 11,470 44,053
4 12,155 13,669 12,864 44,053 13,388 12,588 44,053
5 12,763 14,787 14,002 44,053 14,419 13,639 44,053
6 13,401 15,998 15,438 44,053 15,537 14,982 44,053
7 14,071 17,311 16,781 44,053 16,750 16,224 44,053
8 14,775 18,734 18,441 44,053 18,066 17,775 44,053
9 15,513 20,277 20,027 44,053 19,495 19,246 44,053
10 16,289 21,950 21,950 44,053 21,049 21,049 44,053
11 17,103 24,002 24,002 44,053 22,926 22,926 44,053
12 17,959 26,249 26,249 44,053 24,993 24,993 44,053
13 18,856 28,710 28,710 44,053 27,276 27,276 44,053
14 19,799 31,412 31,412 44,053 29,803 29,803 44,053
15 20,789 34,400 34,400 46,097 32,607 32,607 44,053
16 21,829 37,691 37,691 48,999 35,718 35,718 46,434
17 22,920 41,294 41,294 52,856 39,130 39,130 50,087
18 24,066 45,237 45,237 56,999 42,865 42,865 54,010
19 25,270 49,552 49,552 61,445 46,953 46,953 58,222
20 26,533 54,308 54,308 66,256 51,459 51,459 62,780
25 33,864 85,630 85,630 99,332 81,130 81,130 94,111
35 55,160 212,545 212,545 225,298 201,239 201,239 213,314
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
34 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.20% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,225 9,245 44,053 10,163 9,184 44,053
2 11,025 10,455 9,496 44,053 10,320 9,364 44,053
3 11,576 10,692 9,754 44,053 10,471 9,538 44,053
4 12,155 10,934 10,170 44,053 10,613 9,854 44,053
5 12,763 11,182 10,443 44,053 10,746 10,011 44,053
6 13,401 11,437 10,923 44,053 10,866 10,358 44,053
7 14,071 11,699 11,211 44,053 10,972 10,490 44,053
8 14,775 11,967 11,707 44,053 11,059 10,804 44,053
9 15,513 12,242 12,011 44,053 11,124 10,896 44,053
10 16,289 12,523 12,523 44,053 11,162 11,162 44,053
11 17,103 12,942 12,942 44,053 11,262 11,262 44,053
12 17,959 13,375 13,375 44,053 11,332 11,332 44,053
13 18,856 13,824 13,824 44,053 11,368 11,368 44,053
14 19,799 14,289 14,289 44,053 11,364 11,364 44,053
15 20,789 14,770 14,770 44,053 11,314 11,314 44,053
16 21,829 15,269 15,269 44,053 11,208 11,208 44,053
17 22,920 15,786 15,786 44,053 11,037 11,037 44,053
18 24,066 16,321 16,321 44,053 10,788 10,788 44,053
19 25,270 16,875 16,875 44,053 10,445 10,445 44,053
20 26,533 17,449 17,449 44,053 9,992 9,992 44,053
25 33,864 20,644 20,644 44,053 5,320 5,320 44,053
35 55,160 28,994 28,994 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 NSURANCE
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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
35 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION:1
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.80% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,718 8,749 44,053 9,655 8,688 44,053
2 11,025 9,443 8,504 44,053 9,302 8,366 44,053
3 11,576 9,175 8,265 44,053 8,941 8,034 44,053
4 12,155 8,914 8,180 44,053 8,569 7,841 44,053
5 12,763 8,659 7,951 44,053 8,186 7,484 44,053
6 13,401 8,411 7,927 44,053 7,789 7,311 44,053
7 14,071 8,169 7,708 44,053 7,374 6,919 44,053
8 14,775 7,933 7,693 44,053 6,939 6,704 44,053
9 15,513 7,703 7,484 44,053 6,479 6,263 44,053
10 16,289 7,479 7,479 44,053 5,991 5,991 44,053
11 17,103 7,334 7,334 44,053 5,515 5,515 44,053
12 17,959 7,191 7,191 44,053 4,999 4,999 44,053
13 18,856 7,050 7,050 44,053 4,437 4,437 44,053
14 19,799 6,912 6,912 44,053 3,824 3,824 44,053
15 20,789 6,775 6,775 44,053 3,152 3,152 44,053
16 21,829 6,641 6,641 44,053 2,412 2,412 44,053
17 22,920 6,509 6,509 44,053 1,593 1,593 44,053
18 24,066 6,379 6,379 44,053 681 681 44,053
19 25,270 6,251 6,251 44,053 -- -- --
20 26,533 6,124 6,124 44,053 -- -- --
25 33,864 5,522 5,522 44,053 -- -- --
35 55,160 4,449 4,449 44,053 -- -- --
</TABLE>
* 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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
36 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.20% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,444 9,694 44,053 10,378 9,628 44,053
2 11,025 11,365 10,615 44,053 11,226 10,476 44,053
3 11,576 12,369 11,619 44,053 12,151 11,401 44,053
4 12,155 13,465 12,865 44,053 13,159 12,559 44,053
5 12,763 14,661 14,061 44,053 14,261 13,661 44,053
6 13,401 15,966 15,566 44,053 15,464 15,064 44,053
7 14,071 17,389 16,989 44,053 16,780 16,380 44,053
8 14,775 18,942 18,742 44,053 18,218 18,018 44,053
9 15,513 20,637 20,437 44,053 19,793 19,593 44,053
10 16,289 22,485 22,485 44,053 21,519 21,519 44,053
11 17,103 24,589 24,589 44,053 23,449 23,449 44,053
12 17,959 26,892 26,892 44,053 25,577 25,577 44,053
13 18,856 29,414 29,414 44,053 27,927 27,927 44,053
14 19,799 32,192 32,192 44,426 30,531 30,531 44,053
15 20,789 35,263 35,263 47,253 33,421 33,421 44,784
16 21,829 38,637 38,637 50,229 36,616 36,616 47,601
17 22,920 42,331 42,331 54,184 40,115 40,115 51,347
18 24,066 46,374 46,374 58,431 43,944 43,944 55,370
19 25,270 50,829 50,829 63,028 48,136 48,136 59,689
20 26,533 55,707 55,707 67,963 52,755 52,755 64,362
25 33,864 87,836 87,836 101,891 83,174 83,174 96,482
35 55,160 218,020 218,020 231,102 206,309 206,309 218,688
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
37 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.20% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,879 9,129 44,053 9,812 9,062 44,053
2 11,025 10,167 9,417 44,053 10,021 9,271 44,053
3 11,576 10,464 9,714 44,053 10,227 9,477 44,053
4 12,155 10,770 10,170 44,053 10,429 9,829 44,053
5 12,763 11,087 10,487 44,053 10,624 10,024 44,053
6 13,401 11,414 11,014 44,053 10,811 10,411 44,053
7 14,071 11,751 11,351 44,053 10,987 10,587 44,053
8 14,775 12,099 11,899 44,053 11,148 10,948 44,053
9 15,513 12,458 12,258 44,053 11,291 11,091 44,053
10 16,289 12,829 12,829 44,053 11,413 11,413 44,053
11 17,103 13,258 13,258 44,053 11,526 11,526 44,053
12 17,959 13,703 13,703 44,053 11,610 11,610 44,053
13 18,856 14,164 14,164 44,053 11,661 11,661 44,053
14 19,799 14,641 14,641 44,053 11,674 11,674 44,053
15 20,789 15,135 15,135 44,053 11,642 11,642 44,053
16 21,829 15,647 15,647 44,053 11,556 11,556 44,053
17 22,920 16,177 16,177 44,053 11,407 11,407 44,053
18 24,066 16,726 16,726 44,053 11,181 11,181 44,053
19 25,270 17,295 17,295 44,053 10,864 10,864 44,053
20 26,533 17,884 17,884 44,053 10,440 10,440 44,053
25 33,864 21,162 21,162 44,053 5,976 5,976 44,053
35 55,160 29,730 29,730 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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
38 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 MALE PREFERRED
INITIAL FACE AMOUNT: $44,053
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.80% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,389 8,639 44,053 9,321 8,571 44,053
2 11,025 9,182 8,432 44,053 9,032 8,282 44,053
3 11,576 8,979 8,229 44,053 8,732 7,982 44,053
4 12,155 8,780 8,180 44,053 8,418 7,818 44,053
5 12,763 8,585 7,985 44,053 8,090 7,490 44,053
6 13,401 8,393 7,993 44,053 7,745 7,345 44,053
7 14,071 8,205 7,805 44,053 7,380 6,980 44,053
8 14,775 8,021 7,821 44,053 6,992 6,792 44,053
9 15,513 7,839 7,639 44,053 6,575 6,375 44,053
10 16,289 7,662 7,662 44,053 6,128 6,128 44,053
11 17,103 7,514 7,514 44,053 5,652 5,652 44,053
12 17,959 7,368 7,368 44,053 5,136 5,136 44,053
13 18,856 7,225 7,225 44,053 4,575 4,575 44,053
14 19,799 7,084 7,084 44,053 3,963 3,963 44,053
15 20,789 6,945 6,945 44,053 3,291 3,291 44,053
16 21,829 6,808 6,808 44,053 2,552 2,552 44,053
17 22,920 6,673 6,673 44,053 1,735 1,735 44,053
18 24,066 6,540 6,540 44,053 824 824 44,053
19 25,270 6,410 6,410 44,053 -- -- --
20 26,533 6,281 6,281 44,053 -- -- --
25 33,864 5,667 5,667 44,053 -- -- --
35 55,160 4,573 4,573 44,053 -- -- --
</TABLE>
* 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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
39 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.20% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,809 9,816 34,014 10,704 9,713 34,014
2 11,025 11,687 10,703 34,014 11,466 10,487 34,014
3 11,576 12,638 11,667 34,014 12,293 11,328 34,014
4 12,155 13,669 12,864 34,014 13,193 12,395 34,014
5 12,763 14,787 14,002 34,014 14,173 13,396 34,014
6 13,401 15,998 15,438 34,014 15,239 14,687 34,014
7 14,071 17,311 16,781 34,014 16,401 15,878 34,014
8 14,775 18,734 18,441 34,014 17,665 17,376 34,014
9 15,513 20,277 20,027 34,014 19,041 18,794 34,014
10 16,289 21,950 21,950 34,014 20,544 20,544 34,014
11 17,103 24,002 24,002 34,014 22,372 22,372 34,014
12 17,959 26,252 26,252 34,014 24,402 24,402 34,014
13 18,856 28,750 28,750 34,014 26,668 26,668 34,014
14 19,799 31,527 31,527 36,887 29,206 29,206 34,171
15 20,789 34,572 34,572 40,104 32,025 32,025 37,149
16 21,829 37,911 37,911 43,598 35,115 35,115 40,382
17 22,920 41,581 41,581 46,987 38,512 38,512 43,520
18 24,066 45,620 45,620 50,639 42,251 42,251 46,899
19 25,270 50,069 50,069 54,576 46,369 46,369 50,543
20 26,533 54,960 54,960 59,907 50,898 50,898 55,480
25 33,864 87,477 87,477 92,726 81,012 81,012 85,873
35 55,160 217,739 217,739 228,626 198,674 198,674 208,608
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
40 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.20% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,225 9,245 34,014 10,118 9,141 34,014
2 11,025 10,455 9,496 34,014 10,227 9,273 34,014
3 11,576 10,692 9,754 34,014 10,328 9,397 34,014
4 12,155 10,934 10,170 34,014 10,419 9,663 34,014
5 12,763 11,182 10,443 34,014 10,499 9,767 34,014
6 13,401 11,437 10,923 34,014 10,564 10,058 34,014
7 14,071 11,699 11,211 34,014 10,610 10,130 34,014
8 14,775 11,967 11,707 34,014 10,630 10,377 34,014
9 15,513 12,242 12,011 34,014 10,618 10,392 34,014
10 16,289 12,523 12,523 34,014 10,567 10,567 34,014
11 17,103 12,942 12,942 34,014 10,559 10,559 34,014
12 17,959 13,375 13,375 34,014 10,508 10,508 34,014
13 18,856 13,824 13,824 34,014 10,409 10,409 34,014
14 19,799 14,289 14,289 34,014 10,258 10,258 34,014
15 20,789 14,770 14,770 34,014 10,045 10,045 34,014
16 21,829 15,269 15,269 34,014 9,757 9,757 34,014
17 22,920 15,786 15,786 34,014 9,372 9,372 34,014
18 24,066 16,321 16,321 34,014 8,863 8,863 34,014
19 25,270 16,875 16,875 34,014 8,198 8,198 34,014
20 26,533 17,449 17,449 34,014 7,340 7,340 34,014
25 33,864 20,644 20,644 34,014 -- -- --
35 55,160 28,994 28,994 34,014 -- -- --
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
41 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.80% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,718 8,749 34,014 9,611 8,644 34,014
2 11,025 9,443 8,504 34,014 9,211 8,276 34,014
3 11,576 9,175 8,265 34,014 8,800 7,896 34,014
4 12,155 8,914 8,180 34,014 8,378 7,653 34,014
5 12,763 8,659 7,951 34,014 7,944 7,244 34,014
6 13,401 8,411 7,927 34,014 7,492 7,017 34,014
7 14,071 8,169 7,708 34,014 7,018 6,566 34,014
8 14,775 7,933 7,693 34,014 6,516 6,283 34,014
9 15,513 7,703 7,484 34,014 5,976 5,761 34,014
10 16,289 7,479 7,479 34,014 5,393 5,393 34,014
11 17,103 7,334 7,334 34,014 4,802 4,802 34,014
12 17,959 7,191 7,191 34,014 4,153 4,153 34,014
13 18,856 7,050 7,050 34,014 3,443 3,443 34,014
14 19,799 6,912 6,912 34,014 2,665 2,665 34,014
15 20,789 6,775 6,775 34,014 1,809 1,809 34,014
16 21,829 6,641 6,641 34,014 859 859 34,014
17 22,920 6,509 6,509 34,014 -- -- --
18 24,066 6,379 6,379 34,014 -- -- --
19 25,270 6,251 6,251 34,014 -- -- --
20 26,533 6,124 6,124 34,014 -- -- --
25 33,864 5,522 5,522 34,014 -- -- --
35 55,160 4,449 4,449 34,014 -- -- --
</TABLE>
* 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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
42 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.20% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,444 9,694 34,014 10,332 9,582 34,014
2 11,025 11,365 10,615 34,014 11,129 10,379 34,014
3 11,576 12,369 11,619 34,014 12,000 11,250 34,014
4 12,155 13,465 12,865 34,014 12,955 12,355 34,014
5 12,763 14,661 14,061 34,014 14,002 13,402 34,014
6 13,401 15,966 15,566 34,014 15,150 14,750 34,014
7 14,071 17,389 16,989 34,014 16,410 16,010 34,014
8 14,775 18,942 18,742 34,014 17,792 17,592 34,014
9 15,513 20,637 20,437 34,014 19,309 19,109 34,014
10 16,289 22,486 22,486 34,014 20,980 20,980 34,014
11 17,103 24,589 24,589 34,014 22,861 22,861 34,014
12 17,959 26,901 26,901 34,014 24,952 24,952 34,014
13 18,856 29,479 29,479 34,786 27,287 27,287 34,014
14 19,799 32,328 32,328 37,825 29,901 29,901 34,985
15 20,789 35,452 35,452 41,125 32,788 32,788 38,035
16 21,829 38,876 38,876 44,708 35,953 35,953 41,346
17 22,920 42,641 42,641 48,185 39,432 39,432 44,559
18 24,066 46,784 46,784 51,930 43,261 43,261 48,020
19 25,270 51,377 51,377 56,001 47,478 47,478 51,752
20 26,533 56,396 56,396 61,472 52,116 52,116 56,807
25 33,864 89,762 89,762 95,149 82,950 82,950 87,927
35 55,160 223,428 223,428 234,599 203,426 203,426 213,598
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
43 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.20% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,879 9,129 34,014 9,766 9,016 34,014
2 11,025 10,167 9,417 34,014 9,925 9,175 34,014
3 11,576 10,464 9,714 34,014 10,079 9,329 34,014
4 12,155 10,770 10,170 34,014 10,227 9,627 34,014
5 12,763 11,087 10,487 34,014 10,366 9,766 34,014
6 13,401 11,414 11,014 34,014 10,495 10,095 34,014
7 14,071 11,751 11,351 34,014 10,608 10,208 34,014
8 14,775 12,099 11,899 34,014 10,700 10,500 34,014
9 15,513 12,458 12,258 34,014 10,763 10,563 34,014
10 16,289 12,829 12,829 34,014 10,791 10,791 34,014
11 17,103 13,258 13,258 34,014 10,797 10,797 34,014
12 17,959 13,703 13,703 34,014 10,761 10,761 34,014
13 18,856 14,164 14,164 34,014 10,678 10,678 34,014
14 19,799 14,641 14,641 34,014 10,545 10,545 34,014
15 20,789 15,135 15,135 34,014 10,353 10,353 34,014
16 21,829 15,647 15,647 34,014 10,086 10,086 34,014
17 22,920 16,177 16,177 34,014 9,726 9,726 34,014
18 24,066 16,726 16,726 34,014 9,246 9,246 34,014
19 25,270 17,295 17,295 34,014 8,613 8,613 34,014
20 26,533 17,884 17,884 34,014 7,792 7,792 34,014
25 33,864 21,162 21,162 34,014 -- -- --
35 55,160 29,730 29,730 34,014 -- -- --
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
44 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 55 FEMALE PREFERRED
INITIAL FACE AMOUNT: $34,014
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.80% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,389 8,639 34,014 9,275 8,525 34,014
2 11,025 9,182 8,432 34,014 8,937 8,187 34,014
3 11,576 8,979 8,229 34,014 8,586 7,836 34,014
4 12,155 8,780 8,180 34,014 8,221 7,621 34,014
5 12,763 8,585 7,985 34,014 7,839 7,239 34,014
6 13,401 8,393 7,993 34,014 7,438 7,038 34,014
7 14,071 8,205 7,805 34,014 7,011 6,611 34,014
8 14,775 8,021 7,821 34,014 6,553 6,353 34,014
9 15,513 7,839 7,639 34,014 6,055 5,855 34,014
10 16,289 7,662 7,662 34,014 5,509 5,509 34,014
11 17,103 7,514 7,514 34,014 4,919 4,919 34,014
12 17,959 7,368 7,368 34,014 4,272 4,272 34,014
13 18,856 7,225 7,225 34,014 3,562 3,562 34,014
14 19,799 7,084 7,084 34,014 2,786 2,786 34,014
15 20,789 6,945 6,945 34,014 1,933 1,933 34,014
16 21,829 6,808 6,808 34,014 985 985 34,014
17 22,920 6,673 6,673 34,014 -- -- --
18 24,066 6,540 6,540 34,014 -- -- --
19 25,270 6,410 6,410 34,014 -- -- --
20 26,533 6,281 6,281 34,014 -- -- --
25 33,864 5,667 5,667 34,014 -- -- --
35 55,160 4,573 4,573 34,014 -- -- --
</TABLE>
* 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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 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.
45 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,000
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.20% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,809 9,816 20,000 10,618 9,629 20,000
2 11,025 11,687 10,703 20,000 11,284 10,309 20,000
3 11,576 12,638 11,667 20,000 12,007 11,047 20,000
4 12,155 13,669 12,864 20,000 12,796 12,004 20,000
5 12,763 14,787 14,002 20,000 13,664 12,893 20,000
6 13,401 15,998 15,438 20,000 14,625 14,079 20,000
7 14,071 17,312 16,782 20,000 15,699 15,181 20,000
8 14,775 18,765 18,471 20,830 16,911 16,626 20,000
9 15,513 20,369 20,118 22,203 18,294 18,049 20,000
10 16,289 22,099 22,099 24,088 19,844 19,844 21,631
11 17,103 24,173 24,173 26,107 21,704 21,704 23,440
12 17,959 26,450 26,450 28,302 23,745 23,745 25,408
13 18,856 28,930 28,930 30,955 25,967 25,967 27,785
14 19,799 31,656 31,656 33,556 28,410 28,410 30,115
15 20,789 34,629 34,629 36,708 31,069 31,069 32,934
16 21,829 37,899 37,899 39,795 34,000 34,000 35,700
17 22,920 41,465 41,465 43,539 37,188 37,188 39,048
18 24,066 45,370 45,370 47,638 40,651 40,651 42,684
19 25,270 49,644 49,644 52,127 44,407 44,407 46,628
20 26,533 54,355 54,355 57,073 48,474 48,474 50,898
25 33,864 85,523 85,523 89,799 74,397 74,397 78,117
35 55,160 211,899 211,899 214,018 178,715 178,715 180,502
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
46 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,000
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.20% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,225 9,245 20,000 10,030 9,054 20,000
2 11,025 10,455 9,496 20,000 10,030 9,080 20,000
3 11,576 10,692 9,754 20,000 9,999 9,074 20,000
4 12,155 10,934 10,170 20,000 9,929 9,180 20,000
5 12,763 11,182 10,443 20,000 9,814 9,091 20,000
6 13,401 11,437 10,923 20,000 9,644 9,147 20,000
7 14,071 11,699 11,211 20,000 9,406 8,935 20,000
8 14,775 11,967 11,707 20,000 9,083 8,838 20,000
9 15,513 12,242 12,011 20,000 8,655 8,434 20,000
10 16,289 12,523 12,523 20,000 8,098 8,098 20,000
11 17,103 12,942 12,942 20,000 7,449 7,449 20,000
12 17,959 13,375 13,375 20,000 6,609 6,609 20,000
13 18,856 13,824 13,824 20,000 5,531 5,531 20,000
14 19,799 14,289 14,289 20,000 4,157 4,157 20,000
15 20,789 14,770 14,770 20,000 2,401 2,401 20,000
16 21,829 15,269 15,269 20,000 146 146 20,000
17 22,920 15,786 15,786 20,000 -- -- --
18 24,066 16,321 16,321 20,000 -- -- --
19 25,270 16,875 16,875 20,000 -- -- --
20 26,533 17,449 17,449 20,000 -- -- --
25 33,864 20,644 20,644 21,676 -- -- --
35 55,160 29,018 29,018 29,309 -- -- --
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
47 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,000
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.80% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,718 8,749 20,000 9,520 8,555 20,000
2 11,025 9,443 8,504 20,000 9,002 8,072 20,000
3 11,576 9,175 8,265 20,000 8,442 7,544 20,000
4 12,155 8,914 8,180 20,000 7,830 7,113 20,000
5 12,763 8,659 7,951 20,000 7,158 6,469 20,000
6 13,401 8,411 7,927 20,000 6,412 5,948 20,000
7 14,071 8,169 7,708 20,000 5,575 5,133 20,000
8 14,775 7,933 7,693 20,000 4,623 4,400 20,000
9 15,513 7,703 7,484 20,000 3,529 3,320 20,000
10 16,289 7,479 7,479 20,000 2,261 2,261 20,000
11 17,103 7,334 7,334 20,000 795 795 20,000
12 17,959 7,191 7,191 20,000 -- -- --
13 18,856 7,050 7,050 20,000 -- -- --
14 19,799 6,912 6,912 20,000 -- -- --
15 20,789 6,775 6,775 20,000 -- -- --
16 21,829 6,641 6,641 20,000 -- -- --
17 22,920 6,509 6,509 20,000 -- -- --
18 24,066 6,379 6,379 20,000 -- -- --
19 25,270 6,251 6,251 20,000 -- -- --
20 26,533 6,124 6,124 20,000 -- -- --
25 33,864 5,522 5,522 20,000 -- -- --
35 55,160 4,449 4,449 20,000 -- -- --
</TABLE>
* 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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 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.
48 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,000
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.20% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,444 9,694 20,000 10,237 9,487 20,000
2 11,025 11,365 10,615 20,000 10,928 10,178 20,000
3 11,576 12,369 11,619 20,000 11,682 10,932 20,000
4 12,155 13,465 12,865 20,000 12,511 11,911 20,000
5 12,763 14,661 14,061 20,000 13,429 12,829 20,000
6 13,401 15,966 15,566 20,000 14,453 14,053 20,000
7 14,071 17,390 16,990 20,000 15,606 15,206 20,000
8 14,775 18,977 18,777 21,065 16,917 16,717 20,000
9 15,513 20,734 20,534 22,601 18,425 18,225 20,084
10 16,289 22,642 22,642 24,681 20,118 20,118 21,929
11 17,103 24,768 24,768 26,750 22,003 22,003 23,764
12 17,959 27,103 27,103 29,000 24,073 24,073 25,759
13 18,856 29,644 29,644 31,720 26,326 26,326 28,169
14 19,799 32,438 32,438 34,385 28,804 28,804 30,532
15 20,789 35,486 35,486 37,616 31,500 31,500 33,390
16 21,829 38,838 38,838 40,780 34,471 34,471 36,195
17 22,920 42,493 42,493 44,618 37,704 37,704 39,590
18 24,066 46,494 46,494 48,819 41,216 41,216 43,277
19 25,270 50,906 50,906 53,452 45,024 45,024 47,276
20 26,533 55,736 55,736 58,523 49,148 49,148 51,606
25 33,864 87,696 87,696 92,082 75,432 75,432 79,204
35 55,160 217,284 217,284 219,457 181,202 181,202 183,014
</TABLE>
* THESE VALUES REFLECT INVESTMENT RESULTS USING CURRENT COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
** THESE VALUES REFLECT INVESTMENT RESULTS USING GUARANTEED COST OF INSURANCE
RATES, ADMINISTRATIVE FEES, AND MORTALITY AND EXPENSE RISK RATES.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
49 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,000
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.20% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,879 9,129 20,000 9,669 8,919 20,000
2 11,025 10,167 9,417 20,000 9,711 8,961 20,000
3 11,576 10,464 9,714 20,000 9,722 8,972 20,000
4 12,155 10,770 10,170 20,000 9,698 9,098 20,000
5 12,763 11,087 10,487 20,000 9,630 9,030 20,000
6 13,401 11,414 11,014 20,000 9,510 9,110 20,000
7 14,071 11,751 11,351 20,000 9,324 8,924 20,000
8 14,775 12,099 11,899 20,000 9,057 8,857 20,000
9 15,513 12,458 12,258 20,000 8,687 8,487 20,000
10 16,289 12,829 12,829 20,000 8,191 8,191 20,000
11 17,103 13,258 13,258 20,000 7,554 7,554 20,000
12 17,959 13,703 13,703 20,000 6,728 6,728 20,000
13 18,856 14,164 14,164 20,000 5,667 5,667 20,000
14 19,799 14,641 14,641 20,000 4,314 4,314 20,000
15 20,789 15,135 15,135 20,000 2,584 2,584 20,000
16 21,829 15,647 15,647 20,000 362 362 20,000
17 22,920 16,177 16,177 20,000 -- -- --
18 24,066 16,726 16,726 20,000 -- -- --
19 25,270 17,295 17,295 20,000 -- -- --
20 26,533 17,884 17,884 20,000 -- -- --
25 33,864 21,162 21,162 22,220 -- -- --
35 55,160 29,755 29,755 30,053 -- -- --
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
50 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
SINGLE LIFE OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGE: 65 MALE PREFERRED
INITIAL FACE AMOUNT: $20,000
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.80% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,389 8,639 20,000 9,177 8,427 20,000
2 11,025 9,182 8,432 20,000 8,713 7,963 20,000
3 11,576 8,979 8,229 20,000 8,204 7,454 20,000
4 12,155 8,780 8,180 20,000 7,640 7,040 20,000
5 12,763 8,585 7,985 20,000 7,011 6,411 20,000
6 13,401 8,393 7,993 20,000 6,305 5,905 20,000
7 14,071 8,205 7,805 20,000 5,504 5,104 20,000
8 14,775 8,021 7,821 20,000 4,583 4,383 20,000
9 15,513 7,839 7,639 20,000 3,514 3,314 20,000
10 16,289 7,662 7,662 20,000 2,265 2,265 20,000
11 17,103 7,514 7,514 20,000 799 799 20,000
12 17,959 7,368 7,368 20,000 -- -- --
13 18,856 7,225 7,225 20,000 -- -- --
14 19,799 7,084 7,084 20,000 -- -- --
15 20,789 6,945 6,945 20,000 -- -- --
16 21,829 6,808 6,808 20,000 -- -- --
17 22,920 6,673 6,673 20,000 -- -- --
18 24,066 6,540 6,540 20,000 -- -- --
19 25,270 6,410 6,410 20,000 -- -- --
20 26,533 6,281 6,281 20,000 -- -- --
25 33,864 5,667 5,667 20,000 -- -- --
35 55,160 4,573 4,573 20,000 -- -- --
</TABLE>
* 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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 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.
51 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPITION: 1
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE/55 FEMALE
INITIAL FACE AMOUNT: $45,454
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.20% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,899 9,904 45,454 10,899 9,904 45,454
2 11,025 11,875 10,888 45,454 11,875 10,888 45,454
3 11,576 12,935 11,959 45,454 12,935 11,959 45,454
4 12,155 14,085 13,273 45,454 14,085 13,273 45,454
5 12,763 15,332 14,540 45,454 15,332 14,540 45,454
6 13,401 16,684 16,118 45,454 16,684 16,117 45,454
7 14,071 18,151 17,614 45,454 18,151 17,614 45,454
8 14,775 19,740 19,441 45,454 19,740 19,441 45,454
9 15,513 21,461 21,208 45,454 21,461 21,208 45,454
10 16,289 23,327 23,327 45,454 23,327 23,327 45,454
11 17,103 25,575 25,575 45,454 25,556 25,556 45,454
12 17,959 28,041 28,041 45,454 28,000 28,000 45,454
13 18,856 30,749 30,749 45,454 30,685 30,685 45,454
14 19,799 33,723 33,723 45,454 33,643 33,643 45,454
15 20,789 37,004 37,004 45,454 36,915 36,915 45,454
16 21,829 40,644 40,644 46,741 40,544 40,544 46,626
17 22,920 44,659 44,659 50,466 44,549 44,549 50,341
18 24,066 49,073 49,073 54,471 48,952 48,952 54,337
19 25,270 53,957 53,957 58,814 53,824 53,824 58,669
20 26,533 59,301 59,301 64,638 59,155 59,155 64,479
25 33,864 94,779 94,779 100,466 94,543 94,543 100,216
35 55,160 240,620 240,620 252,652 232,087 232,087 243,691
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
52 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPITION: 1
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE/55 FEMALE
INITIAL FACE AMOUNT: $45,454
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.20% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,309 9,328 45,454 10,309 9,328 45,454
2 11,025 10,623 9,660 45,454 10,623 9,660 45,454
3 11,576 10,939 9,997 45,454 10,939 9,997 45,454
4 12,155 11,256 10,487 45,454 11,256 10,487 45,454
5 12,763 11,573 10,829 45,454 11,573 10,829 45,454
6 13,401 11,888 11,369 45,454 11,888 11,369 45,454
7 14,071 12,196 11,705 45,454 12,196 11,705 45,454
8 14,775 12,509 12,246 45,454 12,496 12,233 45,454
9 15,513 12,829 12,597 45,454 12,781 12,549 45,454
10 16,289 13,159 13,159 45,454 13,045 13,045 45,454
11 17,103 13,634 13,634 45,454 13,391 13,391 45,454
12 17,959 14,128 14,128 45,454 13,711 13,711 45,454
13 18,856 14,640 14,640 45,454 13,998 13,998 45,454
14 19,799 15,172 15,172 45,454 14,243 14,243 45,454
15 20,789 15,725 15,725 45,454 14,436 14,436 45,454
16 21,829 16,299 16,299 45,454 14,563 14,563 45,454
17 22,920 16,895 16,895 45,454 14,605 14,605 45,454
18 24,066 17,513 17,513 45,454 14,536 14,536 45,454
19 25,270 18,156 18,156 45,454 14,326 14,326 45,454
20 26,533 18,823 18,823 45,454 13,937 13,937 45,454
25 33,864 22,563 22,563 45,454 7,457 7,457 45,454
35 55,160 32,532 32,532 45,454 -- -- --
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE REATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
53 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPITION: 1
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE/55 FEMALE
INITIAL FACE AMOUNT: $45,454
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.80% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,798 8,828 45,454 9,798 8,828 45,454
2 11,025 9,594 8,652 45,454 9,594 8,652 45,454
3 11,576 9,384 8,470 45,454 9,384 8,470 45,454
4 12,155 9,168 8,430 45,454 9,168 8,430 45,454
5 12,763 8,943 8,231 45,454 8,943 8,231 45,454
6 13,401 8,710 8,222 45,454 8,707 8,220 45,454
7 14,071 8,481 8,018 45,454 8,457 7,994 45,454
8 14,775 8,258 8,017 45,454 8,188 7,947 45,454
9 15,513 8,040 7,820 45,454 7,895 7,675 45,454
10 16,289 7,827 7,827 45,454 7,570 7,570 45,454
11 17,103 7,696 7,696 45,454 7,267 7,267 45,454
12 17,959 7,567 7,567 45,454 6,915 6,915 45,454
13 18,856 7,439 7,439 45,454 6,504 6,504 45,454
14 19,799 7,313 7,313 45,454 6,026 6,026 45,454
15 20,789 7,188 7,188 45,454 5,467 5,467 45,454
16 21,829 7,065 7,065 45,454 4,809 4,809 45,454
17 22,920 6,944 6,944 45,454 4,028 4,028 45,454
18 24,066 6,824 6,824 45,454 3,091 3,091 45,454
19 25,270 6,706 6,706 45,454 1,958 1,958 45,454
20 26,533 6,590 6,590 45,454 582 582 45,454
25 33,864 6,029 6,029 45,454 -- -- --
35 55,160 5,010 5,010 45,454 -- -- --
</TABLE>
* 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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 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.
54 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE/55 FEMALE
INITIAL FACE AMOUNT: $45,454
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.20% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,530 9,780 45,454 10,530 9,780 45,454
2 11,025 11,547 10,797 45,454 11,547 10,797 45,454
3 11,576 12,659 11,909 45,454 12,659 11,909 45,454
4 12,155 13,872 13,272 45,454 13,872 13,272 45,454
5 12,763 15,199 14,599 45,454 15,199 14,599 45,454
6 13,401 16,647 16,247 45,454 16,647 16,247 45,454
7 14,071 18,228 17,828 45,454 18,228 17,828 45,454
8 14,775 19,955 19,755 45,454 19,955 19,755 45,454
9 15,513 21,840 21,640 45,454 21,840 21,640 45,454
10 16,289 23,898 23,898 45,454 23,898 23,898 45,454
11 17,103 26,201 26,201 45,454 26,189 26,189 45,454
12 17,959 28,729 28,729 45,454 28,702 28,702 45,454
13 18,856 31,505 31,505 45,454 31,465 31,465 45,454
14 19,799 34,560 34,560 45,454 34,512 34,512 45,454
15 20,789 37,936 37,936 45,454 37,883 37,883 45,454
16 21,829 41,679 41,679 47,931 41,620 41,620 47,863
17 22,920 45,798 45,798 51,752 45,733 45,733 51,679
18 24,066 50,324 50,324 55,861 50,253 50,253 55,781
19 25,270 55,334 55,334 60,314 55,255 55,255 60,229
20 26,533 60,814 60,814 66,287 60,727 60,727 66,193
25 33,864 97,196 97,196 103,029 97,057 97,057 102,880
35 55,160 246,758 246,758 259,096 238,257 238,257 250,170
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
55 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE/55 FEMALE
INITIAL FACE AMOUNT: $45,454
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.20% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,961 9,211 45,454 9,961 9,211 45,454
2 11,025 10,329 9,579 45,454 10,329 9,579 45,454
3 11,576 10,705 9,955 45,454 10,705 9,955 45,454
4 12,155 11,086 10,486 45,454 11,086 10,486 45,454
5 12,763 11,472 10,872 45,454 11,472 10,872 45,454
6 13,401 11,860 11,460 45,454 11,860 11,460 45,454
7 14,071 12,248 11,848 45,454 12,248 11,848 45,454
8 14,775 12,643 12,443 45,454 12,631 12,431 45,454
9 15,513 13,053 12,853 45,454 13,007 12,807 45,454
10 16,289 13,477 13,477 45,454 13,367 13,367 45,454
11 17,103 13,964 13,964 45,454 13,729 13,729 45,454
12 17,959 14,470 14,470 45,454 14,066 14,066 45,454
13 18,856 14,996 14,996 45,454 14,370 14,370 45,454
14 19,799 15,542 15,542 45,454 14,635 14,635 45,454
15 20,789 16,108 16,108 45,454 14,850 14,850 45,454
16 21,829 16,697 16,697 45,454 15,001 15,001 45,454
17 22,920 17,308 17,308 45,454 15,070 15,070 45,454
18 24,066 17,943 17,943 45,454 15,031 15,031 45,454
19 25,270 18,602 18,602 45,454 14,855 14,855 45,454
20 26,533 19,286 19,286 45,454 14,505 14,505 45,454
25 33,864 23,122 23,122 45,454 8,359 8,359 45,454
35 55,160 33,346 33,346 45,454 -- -- --
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
56 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGES: 55 MALE/55 FEMALE
INITIAL FACE AMOUNT: $45,454
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.80% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,467 8,717 45,454 9,467 8,717 45,454
2 11,025 9,328 8,578 45,454 9,328 8,578 45,454
3 11,576 9,183 8,433 45,454 9,183 8,433 45,454
4 12,155 9,029 8,429 45,454 9,029 8,429 45,454
5 12,763 8,864 8,264 45,454 8,864 8,264 45,454
6 13,401 8,689 8,289 45,454 8,686 8,286 45,454
7 14,071 8,517 8,117 45,454 8,492 8,092 45,454
8 14,775 8,347 8,147 45,454 8,277 8,077 45,454
9 15,513 8,181 7,981 45,454 8,035 7,835 45,454
10 16,289 8,017 8,017 45,454 7,760 7,760 45,454
11 17,103 7,883 7,883 45,454 7,456 7,456 45,454
12 17,959 7,751 7,751 45,454 7,103 7,103 45,454
13 18,856 7,621 7,621 45,454 6,693 6,693 45,454
14 19,799 7,492 7,492 45,454 6,215 6,215 45,454
15 20,789 7,366 7,366 45,454 5,657 5,657 45,454
16 21,829 7,240 7,240 45,454 5,000 5,000 45,454
17 22,920 7,117 7,117 45,454 4,220 4,220 45,454
18 24,066 6,995 6,995 45,454 3,286 3,286 45,454
19 25,270 6,875 6,875 45,454 2,156 2,156 45,454
20 26,533 6,756 6,756 45,454 784 784 45,454
25 33,864 6,184 6,184 45,454 -- -- --
35 55,160 5,147 5,147 45,454 -- -- --
</TABLE>
* 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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 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.
57 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE/65 FEMALE
INITIAL FACE AMOUNT: $28,329
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.20% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,893 9,898 28,329 10,893 9,898 28,329
2 11,025 11,849 10,862 28,329 11,849 10,862 28,329
3 11,576 12,872 11,897 28,329 12,872 11,897 28,329
4 12,155 13,968 13,159 28,329 13,968 13,159 28,329
5 12,763 15,149 14,360 28,329 15,143 14,354 28,329
6 13,401 16,432 15,868 28,329 16,405 15,841 28,329
7 14,071 17,826 17,293 28,329 17,763 17,230 28,329
8 14,775 19,342 19,045 28,329 19,229 18,933 28,329
9 15,513 20,988 20,736 28,329 20,818 20,566 28,329
10 16,289 22,777 22,777 28,329 22,554 22,554 28,329
11 17,103 24,971 24,971 28,329 24,669 24,669 28,329
12 17,959 27,398 27,398 29,316 27,051 27,051 28,945
13 18,856 30,068 30,068 32,174 29,687 29,687 31,766
14 19,799 33,000 33,000 34,981 32,582 32,582 34,537
15 20,789 36,201 36,201 38,373 35,741 35,741 37,886
16 21,829 39,719 39,719 41,705 39,214 39,214 41,175
17 22,920 43,566 43,566 45,745 43,001 43,001 45,152
18 24,066 47,789 47,789 50,179 47,125 47,125 49,482
19 25,270 52,455 52,455 55,078 51,638 51,638 54,220
20 26,533 57,576 57,576 60,455 56,535 56,535 59,362
25 33,864 91,732 91,732 96,319 87,658 87,658 92,042
35 55,160 232,852 232,852 235,181 211,550 211,550 213,666
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
58 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE/65 FEMALE
INITIAL FACE AMOUNT: $28,329
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.20% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,303 9,321 28,329 10,303 9,321 28,329
2 11,025 10,596 9,634 28,329 10,596 9,634 28,329
3 11,576 10,874 9,934 28,329 10,874 9,934 28,329
4 12,155 11,149 10,382 28,329 11,133 10,366 28,329
5 12,763 11,432 10,689 28,329 11,368 10,626 28,329
6 13,401 11,723 11,205 28,329 11,572 11,057 28,329
7 14,071 12,021 11,531 28,329 11,736 11,248 28,329
8 14,775 12,329 12,067 28,329 11,849 11,590 28,329
9 15,513 12,644 12,413 28,329 11,895 11,665 28,329
10 16,289 12,969 12,969 28,329 11,858 11,858 28,329
11 17,103 13,437 13,437 28,329 11,816 11,816 28,329
12 17,959 13,923 13,923 28,329 11,654 11,654 28,329
13 18,856 14,427 14,427 28,329 11,348 11,348 28,329
14 19,799 14,951 14,951 28,329 10,864 10,864 28,329
15 20,789 15,496 15,496 28,329 10,159 10,159 28,329
16 21,829 16,060 16,060 28,329 9,170 9,170 28,329
17 22,920 16,647 16,647 28,329 7,811 7,811 28,329
18 24,066 17,256 17,256 28,329 5,959 5,959 28,329
19 25,270 17,889 17,889 28,329 3,442 3,442 28,329
20 26,533 18,546 18,546 28,329 25 25 28,329
25 33,864 22,229 22,229 28,329 -- -- --
35 55,160 32,044 32,044 32,365 -- -- --
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
59 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 1
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE/65 FEMALE
INITIAL FACE AMOUNT: $28,329
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.80% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,792 8,822 28,329 9,792 8,822 28,329
2 11,025 9,567 8,625 28,329 9,567 8,625 28,329
3 11,576 9,319 8,406 28,329 9,318 8,405 28,329
4 12,155 9,077 8,341 28,329 9,042 8,306 28,329
5 12,763 8,840 8,130 28,329 8,731 8,022 28,329
6 13,401 8,609 8,123 28,329 8,376 7,893 28,329
7 14,071 8,383 7,920 28,329 7,968 7,508 28,329
8 14,775 8,162 7,922 28,329 7,489 7,252 28,329
9 15,513 7,947 7,727 28,329 6,921 6,704 28,329
10 16,289 7,736 7,736 28,329 6,242 6,242 28,329
11 17,103 7,606 7,606 28,329 5,472 5,472 28,329
12 17,959 7,477 7,477 28,329 4,526 4,526 28,329
13 18,856 7,351 7,351 28,329 3,368 3,368 28,329
14 19,799 7,226 7,226 28,329 1,951 1,951 28,329
15 20,789 7,102 7,102 28,329 211 211 28,329
16 21,829 6,981 6,981 28,329 -- -- --
17 22,920 6,861 6,861 28,329 -- -- --
18 24,066 6,742 6,742 28,329 -- -- --
19 25,270 6,625 6,625 28,329 -- -- --
20 26,533 6,509 6,509 28,329 -- -- --
25 33,864 5,953 5,953 28,329 -- -- --
35 55,160 4,944 4,944 28,329 -- -- --
</TABLE>
* 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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 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.
60 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE/65 FEMALE
INITIAL FACE AMOUNT: $28,329
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.20% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 10,524 9,774 28,329 10,524 9,774 28,329
2 11,025 11,520 10,770 28,329 11,520 10,770 28,329
3 11,576 12,594 11,844 28,329 12,594 11,844 28,329
4 12,155 13,752 13,152 28,329 13,752 13,152 28,329
5 12,763 15,012 14,412 28,329 15,004 14,404 28,329
6 13,401 16,389 15,989 28,329 16,358 15,958 28,329
7 14,071 17,896 17,496 28,329 17,828 17,428 28,329
8 14,775 19,544 19,344 28,329 19,429 19,229 28,329
9 15,513 21,347 21,147 28,329 21,181 20,981 28,329
10 16,289 23,321 23,321 28,329 23,112 23,112 28,329
11 17,103 25,569 25,569 28,329 25,303 25,303 28,329
12 17,959 28,064 28,064 30,029 27,767 27,767 29,711
13 18,856 30,800 30,800 32,957 30,474 30,474 32,608
14 19,799 33,804 33,804 35,833 33,446 33,446 35,453
15 20,789 37,084 37,084 39,309 36,690 36,690 38,892
16 21,829 40,688 40,688 42,723 40,256 40,256 42,269
17 22,920 44,630 44,630 46,862 44,144 44,144 46,352
18 24,066 48,957 48,957 51,406 48,378 48,378 50,798
19 25,270 53,737 53,737 56,424 53,011 53,011 55,662
20 26,533 58,983 58,983 61,933 58,039 58,039 60,941
25 33,864 93,974 93,974 98,673 89,990 89,990 94,490
35 55,160 238,544 238,544 240,929 217,177 217,177 219,349
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
61 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE/65 FEMALE
INITIAL FACE AMOUNT: $28,329
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.20% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,954 9,204 28,329 9,954 9,204 28,329
2 11,025 10,302 9,552 28,329 10,302 9,552 28,329
3 11,576 10,638 9,888 28,329 10,638 9,888 28,329
4 12,155 10,978 10,378 28,329 10,960 10,360 28,329
5 12,763 11,330 10,730 28,329 11,262 10,662 28,329
6 13,401 11,693 11,293 28,329 11,537 11,137 28,329
7 14,071 12,070 11,670 28,329 11,777 11,377 28,329
8 14,775 12,460 12,260 28,329 11,971 11,771 28,329
9 15,513 12,863 12,663 28,329 12,104 11,904 28,329
10 16,289 13,280 13,280 28,329 12,161 12,161 28,329
11 17,103 13,760 13,760 28,329 12,141 12,141 28,329
12 17,959 14,258 14,258 28,329 12,007 12,007 28,329
13 18,856 14,775 14,775 28,329 11,732 11,732 28,329
14 19,799 15,313 15,313 28,329 11,287 11,287 28,329
15 20,789 15,871 15,871 28,329 10,628 10,628 28,329
16 21,829 16,450 16,450 28,329 9,696 9,696 28,329
17 22,920 17,052 17,052 28,329 8,408 8,408 28,329
18 24,066 17,677 17,677 28,329 6,645 6,645 28,329
19 25,270 18,325 18,325 28,329 4,244 4,244 28,329
20 26,533 18,999 18,999 28,329 978 978 28,329
25 33,864 22,776 22,776 28,329 -- -- --
35 55,160 32,842 32,842 33,170 -- -- --
</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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
62 - PROSPECTUS
<PAGE>
MODIFIED SINGLE PREMIUM VARIABLE LIFE INSURANCE
--------------------------------------------------------------------
LAST SURVIVOR OPTION
POLICY OWNER OPTION: 2
$10,000 INITIAL PREMIUM
ISSUE AGES: 65 MALE/65 FEMALE
INITIAL FACE AMOUNT: $28,329
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.80% NET)
<TABLE>
<CAPTION>
CURRENT CHARGES* GUARANTEED CHARGES**
PREMIUMS -------------------------------------- -------------------------------------
END OF ACCUMULATED CASH CASH
POLICY AT 5% INTEREST ACCOUNT SURRENDER DEATH ACCOUNT SURRENDER DEATH
YEAR PER YEAR VALUE VALUE BENEFIT VALUE VALUE BENEFIT
------- -------------- ----------- ----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1 10,500 9,460 8,710 28,329 9,460 8,710 28,329
2 11,025 9,301 8,551 28,329 9,301 8,551 28,329
3 11,576 9,118 8,368 28,329 9,116 8,366 28,329
4 12,155 8,939 8,339 28,329 8,900 8,300 28,329
5 12,763 8,763 8,163 28,329 8,647 8,047 28,329
6 13,401 8,589 8,189 28,329 8,349 7,949 28,329
7 14,071 8,418 8,018 28,329 7,993 7,593 28,329
8 14,775 8,251 8,051 28,329 7,565 7,365 28,329
9 15,513 8,085 7,885 28,329 7,046 6,846 28,329
10 16,289 7,923 7,923 28,329 6,412 6,412 28,329
11 17,103 7,791 7,791 28,329 5,645 5,645 28,329
12 17,959 7,660 7,660 28,329 4,704 4,704 28,329
13 18,856 7,531 7,531 28,329 3,553 3,553 28,329
14 19,799 7,404 7,404 28,329 2,144 2,144 28,329
15 20,789 7,278 7,278 28,329 415 415 28,329
16 21,829 7,154 7,154 28,329 -- -- --
17 22,920 7,031 7,031 28,329 -- -- --
18 24,066 6,911 6,911 28,329 -- -- --
19 25,270 6,791 6,791 28,329 -- -- --
20 26,533 6,674 6,674 28,329 -- -- --
25 33,864 6,107 6,107 28,329 -- -- --
35 55,160 5,079 5,079 28,329 -- -- --
</TABLE>
* 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
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 0% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 0%, 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.
63 - PROSPECTUS
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1998 - UNAUDITED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH AMERICAN DIVIDEND
MONEY MARKET GOV'T. SECURITIES BALANCED UTILITIES AND GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in Morgan Stanley Dean Witter Universal Funds:
Money Market Portfolio
Shares 22,976
Cost $ 22,976
Market Value.......................................... $ 22,976 - - - -
North American Government Securities Portfolio
Shares 107
Cost $ 1,077
Market Value.......................................... - $ 1,087 - - -
Balanced Portfolio
Shares 256
Cost $ 3,641
Market Value.......................................... - - $ 4,187 - -
Utilities Portfolio
Shares 1,417
Cost $ 23,944
Market Value.......................................... - - - $ 26,511 -
Dividend and Growth Portfolio
Shares 5,732
Cost $ 113,070
Market Value.......................................... - - - - $ 126,388
Value-Added Market Portfolio
Shares 1,238
Cost $ 23,865
Market Value.......................................... - - - - -
Growth Portfolio
Shares 71
Cost $ 1,040
Market Value.......................................... - - - - -
American Value Portfolio
Shares 1,503
Cost $ 28,854
Market Value.......................................... - - - - -
Global Equity Value Portfolio
Shares 1,888
Cost $ 25,508
Market Value.......................................... - - - - -
Developing Growth Portfolio
Shares 2,042
Cost $ 39,099
Market Value.......................................... - - - - -
Due from Hartford Life Insurance Company.................. - - - - -
Receivable from fund shares sold.......................... - - - - -
------------ ----------------- ----------- ----------- -----------
Total Assets.............................................. $ 22,976 $ 1,087 $ 4,187 $ 26,511 $ 126,388
------------ ----------------- ----------- ----------- -----------
LIABILITIES:
Due to Hartford Life Insurance Company.................... - - - - -
Payable for fund shares purchased......................... - - - - -
------------ ----------------- ----------- ----------- -----------
Total Liabilities......................................... - - - - -
------------ ----------------- ----------- ----------- -----------
Net Assets (variable life contract liabilities)........... $ 22,976 $ 1,087 $ 4,187 $ 26,511 $ 126,388
------------ ----------------- ----------- ----------- -----------
------------ ----------------- ----------- ----------- -----------
VARIABLE LIFE CONTRACTS IN THE ACCUMULATION PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by Contractholders.......................... 21,164 100 327 1,761 9,458
Unit Values............................................. $ 1.085641 $ 10.866400 $ 12.817596 $ 15.051545 $ 13.363243
<CAPTION>
VALUE-ADDED AMERICAN GLOBAL DEVELOPING
MARKET GROWTH VALUE EQUITY VALUE GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in Morgan Stanley Dean Witter Universal Funds:
Money Market Portfolio
Shares 22,976
Cost $ 22,976
Market Value.......................................... - - - - -
North American Government Securities Portfolio
Shares 107
Cost $ 1,077
Market Value.......................................... - - - - -
Balanced Portfolio
Shares 256
Cost $ 3,641
Market Value.......................................... - - - - -
Utilities Portfolio
Shares 1,417
Cost $ 23,944
Market Value.......................................... - - - - -
Dividend and Growth Portfolio
Shares 5,732
Cost $ 113,070
Market Value.......................................... - - - - -
Value-Added Market Portfolio
Shares 1,238
Cost $ 23,865
Market Value.......................................... $ 23,762 - - - -
Growth Portfolio
Shares 71
Cost $ 1,040
Market Value.......................................... - $ 1,301 - - -
American Value Portfolio
Shares 1,503
Cost $ 28,854
Market Value.......................................... - - $ 35,027 - -
Global Equity Value Portfolio
Shares 1,888
Cost $ 25,508
Market Value.......................................... - - - $ 27,735 -
Developing Growth Portfolio
Shares 2,042
Cost $ 39,099
Market Value.......................................... - - - - $ 42,486
Due from Hartford Life Insurance Company.................. - - - - -
Receivable from fund shares sold.......................... - - - - -
----------- ----------- ----------- ------------ -----------
Total Assets.............................................. 23,762 1,301 35,027 27,735 42,486
----------- ----------- ----------- ------------ -----------
LIABILITIES:
Due to Hartford Life Insurance Company.................... - - - - -
Payable for fund shares purchased......................... - - - - -
----------- ----------- ----------- ------------ -----------
Total Liabilities......................................... - - - - -
----------- ----------- ----------- ------------ -----------
Net Assets (variable life contract liabilities)........... $ 23,762 $ 1,301 $ 35,027 $ 27,735 $ 42,486
----------- ----------- ----------- ------------ -----------
----------- ----------- ----------- ------------ -----------
VARIABLE LIFE CONTRACTS IN THE ACCUMULATION PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by Contractholders.......................... 1,829 100 2,121 2,408 3,237
Unit Values............................................. $ 12.991413 $ 13.000700 $ 16.515884 $ 11.515729 $ 13.126689
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
63
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1998 - UNAUDITED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EMERGING DIVERSIFIED MID-CAP MORGAN STANLEY
MARKETS INCOME GROWTH HIGH YIELD
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in Morgan Stanley Dean Witter Universal Funds:
Emerging Market Portfolio
Shares 83
Cost $ 1,015
Market Value................................................. $ 659 - - -
Diversified Income Portfolio
Shares 3,192
Cost $ 32,583
Market Value................................................. - $ 31,695 - -
Mid-Cap Growth Portfolio
Shares 516
Cost $ 5,473
Market Value................................................. - - $ 6,120 -
Morgan Stanley High Yield Portfolio
Shares 97
Cost $ 1,068
Market Value................................................. - - - $ 1,006
Morgan Stanley Mid-Cap Portfolio
Shares 68
Cost $ 1,032
Market Value................................................. - - - -
Morgan Stanley Emerging Markets Debt Fund
Shares 2,420
Cost $ 22,689
Market Value................................................. - - - -
Van Kempen Strategic Stock Fund
Shares 87
Cost $ 1,000
Market Value................................................. - - - -
Van Kempen Enterprise Fund
Shares 47
Cost $ 1,000
Market Value................................................. - - - -
Due from Hartford Life Insurance Company....................... - - - -
Receivable from fund shares sold............................... - - - -
------------- ------------- ------------- -------------
Total Assets................................................... 659 31,695 6,120 1,006
------------- ------------- ------------- -------------
LIABILITIES:
Due to Hartford Life Insurance Company......................... - - - -
Payable for fund shares purchased.............................. - - - -
------------- ------------- ------------- -------------
Total Liabilities.............................................. - - - -
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net Assets (variable life contract liabilities)................ $ 659 $ 31,695 $ 6,120 $ 1,006
------------- ------------- ------------- -------------
VARIABLE LIFE CONTRACTS IN THE ACCUMULATION PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by Contractholders................................. 100 2,859 489 100
Unit Values.................................................... $ 6.586700 $ 11.084591 $ 12.514755 $ 10.053100
<CAPTION>
MORGAN STANLEY
MORGAN STANLEY EMERGING VAN KEMPEN VAN KEMPEN
MID-CAP MARKETS DEBT STRATEGIC STOCK ENTERPRISE
PORTFOLIO FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in Morgan Stanley Dean Witter Universal Funds:
Emerging Market Portfolio
Shares 83
Cost $ 1,015
Market Value................................................. - - - -
Diversified Income Portfolio
Shares 3,192
Cost $ 32,583
Market Value................................................. - - - -
Mid-Cap Growth Portfolio
Shares 516
Cost $ 5,473
Market Value................................................. - - - -
Morgan Stanley High Yield Portfolio
Shares 97
Cost $ 1,068
Market Value................................................. - - - -
Morgan Stanley Mid-Cap Portfolio
Shares 68
Cost $ 1,032
Market Value................................................. $ 1,006 - - -
Morgan Stanley Emerging Markets Debt Fund
Shares 2,420
Cost $ 22,689
Market Value................................................. - $ 14,765 - -
Van Kempen Strategic Stock Fund
Shares 87
Cost $ 1,000
Market Value................................................. - - $ 1,033 -
Van Kempen Enterprise Fund
Shares 47
Cost $ 1,000
Market Value................................................. - - - $ 1,060
Due from Hartford Life Insurance Company....................... - - - -
Receivable from fund shares sold............................... - - - -
-------------- -------------- --------------- --------------
Total Assets................................................... 1,006 14,765 1,033 1,060
-------------- -------------- --------------- --------------
LIABILITIES:
Due to Hartford Life Insurance Company......................... - - - -
Payable for fund shares purchased.............................. - - - -
-------------- -------------- --------------- --------------
Total Liabilities.............................................. - - - -
-------------- -------------- --------------- --------------
Net Assets (variable life contract liabilities)................ $ 1,006 $ 14,765 $ 1,033 $ 1,060
-------------- -------------- --------------- --------------
-------------- -------------- --------------- --------------
VARIABLE LIFE CONTRACTS IN THE ACCUMULATION PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by Contractholders................................. 100 2,177 100 100
Unit Values.................................................... $ 10.058200 $ 6.783341 $ 10.329000 $ 10.596300
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
64
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998 - UNAUDITED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH AMERICAN DIVIDEND
MONEY MARKET GOV'T. SECURITIES BALANCED UTILITIES AND GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends................................................ $ 1,723 $ 47 $ 108 $ 310 $ 1,991
------------ ----------------- ----------- ------------- -------------
Net investment income (loss)........................... 1,723 47 108 310 1,991
------------ ----------------- ----------- ------------- -------------
------------ ----------------- ----------- ------------- -------------
CAPITAL GAINS INCOME - - 86 273 4,319
------------ ----------------- ----------- ------------- -------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on security transactions....... - - - 2 5,289
Net unrealized appreciation (depreciation) of
investments during the period.......................... - (2) 338 2,358 9,599
------------ ----------------- ----------- ------------- -------------
Net gain (loss) on investments...................... - (2) 338 2,360 14,888
------------ ----------------- ----------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations.......................... $ 1,723 $ 45 $ 532 $ 2,943 $ 21,198
------------ ----------------- ----------- ------------- -------------
------------ ----------------- ----------- ------------- -------------
<CAPTION>
VALUE-ADDED AMERICAN GLOBAL DEVELOPING
MARKET GROWTH VALUE EQUITY VALUE GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends................................................ $ 170 $ - $ 167 $ 388 $ 76
------------ ----------- ----------- ------------- -----------
Net investment income (loss)........................... 170 - 167 388 76
------------ ----------- ----------- ------------- -----------
CAPITAL GAINS INCOME 331 34 1,308 96 58
------------ ----------- ----------- ------------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on security transactions....... (3) - 5,367 5,127 (34)
Net unrealized appreciation (depreciation) of
investments during the period.......................... (249) 118 3,491 2,441 1,841
------------ ----------- ----------- ------------- -----------
Net gain (loss) on investments...................... (252) 118 8,858 7,568 1,807
------------ ----------- ----------- ------------- -----------
Net increase (decrease) in net assets
resulting from operations.......................... $ 249 $ 152 $ 10,333 $ 8,052 $ 1,941
------------ ----------- ----------- ------------- -----------
------------ ----------- ----------- ------------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
65
<PAGE>
- -------------------------------------------------------------------------------
SEPARATE ACCOUNT FIVE
- -------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998 - UNAUDITED
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EMERGING DIVERSIFIED MID-CAP MORGAN STANLEY *
MARKETS INCOME GROWTH HIGH YIELD
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------ ----------- ----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends .................................................... $ 9 $ 1,650 $ 39 $ 57
------------ ------------ ----------- -----------
Net investment income (loss) ............................... 9 1,650 39 57
------------ ------------ ----------- -----------
CAPITAL GAINS INCOME 2 42 53 11
------------ ------------ ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on security transactions ............ (1,107) - - -
Net unrealized appreciation (depreciation) of
investments during the period .............................. (281) (947) 236 (62)
------------ ------------ ----------- -----------
Net gain (loss) on investments ........................... (1,388) (947) 236 (62)
------------ ------------ ----------- -----------
Net increase (decrease) in net assets resulting
from operations ........................................ $ (1,377) $ 745 $ 328 $ 6
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
<CAPTION>
MORGAN STANLEY *
MORGAN STANLEY * EMERGING VAN KEMPEN * VAN KEMPEN *
MID-CAP MARKETS DEBT STRATEGIC STOCK ENTERPRISE
PORTFOLIO FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
---------------- ---------------- --------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ............................................... $ 2 $ 1,756 $ - $ -
---------------- ---------------- --------------- -------------
Net investment income (loss) .......................... 2 1,756 - -
---------------- ---------------- --------------- -------------
CAPITAL GAINS INCOME 29 - - -
---------------- ---------------- --------------- -------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on security transactions ....... - (60) - -
Net unrealized appreciation (depreciation) of
investments during the period ......................... (26) (7,924) 33 60
---------------- ---------------- --------------- -------------
Net gain (loss) on investments ...................... (26) (7,984) 33 60
---------------- ---------------- --------------- -------------
Net increase (decrease) in net assets resulting
from operations ................................... $ 5 $ (6,228) $ 33 $ 60
---------------- ---------------- --------------- -------------
---------------- ---------------- --------------- -------------
</TABLE>
* From inception, April 1, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
66
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998 - UNAUDITED
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
NORTH AMERICAN DIVIDEND
MONEY MARKET GOV'T. SECURITIES BALANCED UTILITIES AND GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)................................. $ 1,723 $ 47 $ 108 $ 310 $ 1,991
Capital gains income ......................................... - - 86 273 4,319
Net realized gain(loss) on security transactions.............. - - - 2 5,289
Net unrealized appreciation(depreciation) of investments
during the period......................................... - (2) 338 2,358 9,599
------------ ----------------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations.................................... 1,723 45 532 2,943 21,198
------------ ----------------- ----------- ----------- -----------
UNIT TRANSACTIONS:
Purchases..................................................... 164,406 - - - -
Net transfers................................................. (54,386) - - 22,647 1,712
Surrenders.................................................... (110,832) - (50) (225) (3,479)
Loan withdrawals.............................................. - - - - 1,673
Cost of insurance............................................. (302) - (18) (86) (674)
------------ ----------------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from unit transactions....................................... (1,114) - (68) 22,336 (768)
------------ ----------------- ----------- ----------- -----------
Total increase (decrease) in net assets....................... 609 45 464 25,279 20,430
NET ASSETS:
Beginning of period........................................... 22,367 1,042 3,723 1,232 105,958
------------ ----------------- ----------- ----------- -----------
End of period................................................. $ 22,976 $ 1,087 $ 4,187 $ 26,511 $ 126,388
------------ ----------------- ----------- ----------- -----------
------------ ----------------- ----------- ----------- -----------
<CAPTION>
VALUE-ADDED AMERICAN GLOBAL DEVELOPING
MARKET GROWTH VALUE EQUITY GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)................................. $ 170 $ - $ 167 $ 388 $ 76
Capital gains income ......................................... 331 34 1,308 96 58
Net realized gain(loss) on security transactions.............. (3) - 5,367 5,127 (34)
Net unrealized appreciation(depreciation) of investments
during the period......................................... (249) 118 3,491 2,441 1,841
------------ ----------------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations.................................... 249 152 10,333 8,052 1,941
------------ ----------------- ----------- ----------- -----------
UNIT TRANSACTIONS:
Purchases..................................................... - - - - -
Net transfers................................................. 22,647 - (20,608) (37,288) 21,315
Surrenders.................................................... (212) - (2,132) (2,292) (510)
Loan withdrawals.............................................. - - 1,673 1,723 -
Cost of insurance............................................. (80) - (164) (222) (192)
------------ ----------------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from unit transactions....................................... 22,355 - (21,231) (38,079) 20,613
------------ ----------------- ----------- ----------- -----------
Total increase (decrease) in net assets....................... 22,604 152 (10,898) (30,027) 22,554
------------ ----------------- ----------- ----------- -----------
NET ASSETS:
Beginning of period........................................... 1,158 1,149 45,925 57,762 19,932
------------ ----------------- ----------- ----------- -----------
End of period................................................. $ 23,762 $ 1,301 $ 35,027 $ 27,735 $ 42,486
------------ ----------------- ----------- ----------- -----------
------------ ----------------- ----------- ----------- -----------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION, MAY 20, 1997 TO DECEMBER 31, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
NORTH AMERICAN BALANCED DIVIDEND
MONEY MARKET GOV'T. SECURITIES GROWTH UTILITIES AND GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)................................. $ 950 $ 30 $ 17 $ 18 $ 729
Capital gains income ......................................... - - 3 4 37
Net realized gain(loss) on security transactions.............. - - - - 49
Net unrealized appreciation(depreciation) of investments
during the period......................................... - 12 208 210 3,719
------------ ----------------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations.................................... 950 42 228 232 4,534
------------ ----------------- ----------- ----------- -----------
UNIT TRANSACTIONS:
Purchases..................................................... 259,950 1,000 1,000 1,000 1,000
Net transfers................................................. (237,803) - 2,500 - 102,911
Surrenders.................................................... (491) - (4) - (607)
Loan withdrawals.............................................. - - - - (1,647)
Cost of insurance............................................. (239) - (1) - (233)
------------ ----------------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from unit transactions....................................... 21,417 1,000 3,495 1,000 101,424
------------ ----------------- ----------- ----------- -----------
Total increase (decrease) in net assets....................... 22,367 1,042 3,723 1,232 105,958
NET ASSETS:
Beginning of period........................................... - - - - -
------------ ----------------- ----------- ----------- -----------
End of period................................................. $ 22,367 $ 1,042 $ 3,723 $ 1,232 $ 105,958
------------ ----------------- ----------- ----------- -----------
------------ ----------------- ----------- ----------- -----------
<CAPTION>
VALUE-ADDED AMERICAN GLOBAL DEVELOPING
MARKET GROWTH VALUE EQUITY GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)................................. $ 10 $ 1 $ 33 $ 111 $ 7
Capital gains income ......................................... 2 5 22 2 -
Net realized gain(loss) on security transactions.............. - - 64 58 8
Net unrealized appreciation(depreciation) of investments
during the period......................................... 146 143 2,682 (214) 1,546
------------ ----------------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations.................................... 158 149 2,801 (43) 1,561
------------ ----------------- ----------- ----------- -----------
UNIT TRANSACTIONS:
Purchases..................................................... 1,000 1,000 1,000 1,000 1,000
Net transfers................................................. - - 43,968 58,859 17,580
Surrenders.................................................... - - (138) (256) (151)
Loan withdrawals.............................................. - - (1,653) (1,700) -
Cost of insurance............................................. - - (53) (98) (58)
------------ ----------------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from unit transactions....................................... 1,000 1,000 43,124 57,805 18,371
------------ ----------------- ----------- ----------- -----------
Total increase (decrease) in net assets....................... 1,158 1,149 45,925 57,762 19,932
NET ASSETS:
Beginning of period........................................... - - - - -
------------ ----------------- ----------- ----------- -----------
End of period................................................. $ 1,158 $ 1,149 $ 45,925 $ 57,762 $ 19,932
------------ ----------------- ----------- ----------- -----------
------------ ----------------- ----------- ----------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
67
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998 - UNAUDITED
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
EMERGING DIVERSIFIED MID-CAP MORGAN STANLEY *
MARKETS INCOME GROWTH HIGH YIELD
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)................................. $ 9 $ 1,650 $ 39 $ 57
Capital gains income ......................................... 2 42 53 11
Net realized gain(loss) on security transactions.............. (1,107) - - -
Net unrealized appreciation(depreciation) of investments
during the period......................................... (281) (947) 236 (62)
----------- ----------- ----------- ----------------
Net increase (decrease) in net assets
resulting from operations.................................... (1,377) 745 328 6
----------- ----------- ----------- ----------------
UNIT TRANSACTIONS:
Purchases..................................................... - - - 1,000
Net transfers................................................. 1,107 22,647 - -
Surrenders.................................................... 1 (367) (84) -
Loan withdrawals.............................................. - - - -
Cost of insurance............................................. - (137) (30) -
----------- ----------- ----------- ----------------
Net increase (decrease) in net assets resulting
from unit transactions....................................... 1,108 22,143 (114) 1,000
----------- ----------- ----------- ----------------
Total increase (decrease) in net assets....................... (269) 22,888 214 1,006
NET ASSETS:
Beginning of period........................................... 928 8,807 5,906 -
----------- ----------- ----------- ----------------
End of period................................................. $ 659 $ 31,695 $ 6,120 $ 1,006
----------- ----------- ----------- ----------------
----------- ----------- ----------- ----------------
<CAPTION>
MORGAN STANLEY *
MORGAN STANLEY * EMERGING VAN KEMPEN * VAN KEMPEN *
MID-CAP MARKETS DEBT STRATEGIC STOCK ENTERPRISE
PORTFOLIO FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
---------------- ---------------- --------------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)................................. $ 2 $ 1,756 $ - $ -
Capital gains income ......................................... 29 - - -
Net realized gain(loss) on security transactions.............. - (60) - -
Net unrealized appreciation(depreciation) of investments
during the period......................................... (26) (7,924) 33 60
---------------- ---------------- --------------- -----------
Net increase (decrease) in net assets
resulting from operations.................................... 5 (6,228) 33 60
---------------- ---------------- --------------- -----------
UNIT TRANSACTIONS:
Purchases..................................................... 1,000 1,000 1,000 1,000
Net transfers................................................. - 20,208 - -
Surrenders.................................................... 1 (155) - -
Loan withdrawals.............................................. - - - -
Cost of insurance............................................. - (60) - -
---------------- ---------------- --------------- -----------
Net increase (decrease) in net assets resulting
from unit transactions....................................... 1,001 20,993 1,000 1,000
---------------- ---------------- --------------- -----------
Total increase (decrease) in net assets....................... 1,006 14,765 1,033 1,060
NET ASSETS:
Beginning of period........................................... - - - -
---------------- ---------------- --------------- -----------
End of period................................................. $ 1,006 $ 14,765 $ 1,033 $ 1,060
---------------- ---------------- --------------- -----------
---------------- ---------------- --------------- -----------
From inception, April 1, 1998, to December 31, 1998.
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION, MAY 20, 1997 TO DECEMBER 31, 1997
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
EMERGING DIVERSIFIED MID-CAP
MARKETS INCOME GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- -----------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss)................................. $ 3 $ 348 $ 23
Capital gains income ......................................... - 2 -
Net realized gain(loss) on security transactions.............. - - -
Net unrealized appreciation(depreciation) of investments
during the period......................................... (75) 59 411
----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations.................................... (72) 409 434
----------- ----------- -----------
UNIT TRANSACTIONS:
Purchases..................................................... 1,000 1,000 1,000
Net transfers................................................. - 7,487 4,498
Surrenders.................................................... - - -
Loan withdrawals.............................................. - (66) (19)
Cost of insurance............................................. - (23) (7)
----------- ----------- -----------
Net increase (decrease) in net assets resulting
from unit transactions....................................... 1,000 8,398 5,472
----------- ----------- -----------
Total increase (decrease) in net assets....................... 928 8,807 5,906
NET ASSETS:
Beginning of period........................................... - - -
----------- ----------- -----------
End of period................................................. $ 928 $ 8,807 $ 5,906
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
68
<PAGE>
SEPARATE ACCOUNT FIVE
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 - UNAUDITED
1. ORGANIZATION:
Separate Account Five (the Account) is a separate investment account with
Hartford Life 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 are accrued as of the ex-dividend date. Capital
gains income represents dividends from the Funds which are
characterized as capital gains under tax regulations.
b) SECURITY VALUATION - The investment in shares of the Dean Witter
Select Dimensions Mutual 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:
In accordance with the terms of the contracts, the Company makes deductions
for mortality and expense undertakings, cost of insurance, administrative
fees, and state premium taxes. These charges are deducted through
termination of units of interest from applicable contract owners' accounts.
69
<PAGE>
SEPARATE ACCOUNT FIVE
HARTFORD LIFE INSURANCE COMPANY
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FIVE AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statement of assets and liabilities of the
Money Market Portfolio Sub-Account, North American Government Securities
Portfolio Sub-Account, Balanced Portfolio Sub-Account, Utilities Portfolio
Sub-Account, Dividend Growth Portfolio Sub-Account, Value-Added Market Portfolio
Sub-Account, Core-Equity Portfolio Sub-Account, American Value Portfolio
Sub-Account, Global Equity Value Portfolio Sub-Account, Developing Growth
Portfolio Sub-Account, Emerging Markets Portfolio Sub-Account, Diversified
Income Portfolio Sub-Account and Mid-Cap Growth Portfolio Sub-Account
(constituting Hartford Life Insurance Company Separate Account Five) (the
Account) as of December 31, 1997, and the related statement of operations and
statement of changes in net assets for the period from inception, May 20, 1997,
to December 31, 1997. 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 Money Market Portfolio
Sub-Account, North American Government Securities Portfolio Sub-Account,
Balanced Portfolio Sub-Account, Utilities Portfolio Sub-Account, Dividend Growth
Portfolio Sub-Account, Value-Added Market Portfolio Sub-Account, Core-Equity
Portfolio Sub-Account, American Value Portfolio Sub-Account, Global Equity Value
Portfolio Sub-Account, Developing Growth Portfolio Sub-Account, Emerging Markets
Portfolio Sub-Account, Diversified Income Portfolio Sub-Account and Mid-Cap
Growth Portfolio Sub-Account (constituting Hartford Life Insurance Company
Separate Account Five) as of December 31, 1997, the results of its operations
and the changes in its net assets for the period from inception, May 20, 1997,
to December 31, 1997, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 16, 1998
70
<PAGE>
SEPARATE ACCOUNT FIVE
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH
AMERICAN
GOVERNMENT DIVIDEND
MONEY MARKET SECURITIES BALANCED UTILITIES AND GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in Dean
Witter Select
Dimensions Investment
Series:
Money Market Portfolio
Shares 22,367
Cost $ 22,367
Market Value......... $ 22,367 -- -- -- --
North American
Government Securities
Portfolio
Shares 102
Cost $ 1,030
Market Value......... -- $ 1,042 -- -- --
Balanced Portfolio
Shares 248
Cost $ 3,515
Market Value......... -- -- $ 3,723 -- --
Utilities Portfolio
Shares 78
Cost $ 1,022
Market Value......... -- -- -- $ 1,232 --
Dividend and Growth
Portfolio
Shares 5,414
Cost $102,239
Market Value......... -- -- -- -- $ 105,958
Value-Added Market
Portfolio
Shares 66
Cost $ 1,012
Market Value......... -- -- -- -- --
Core-Equity Portfolio
Shares 69
Cost $ 1,006
Market Value......... -- -- -- -- --
American Value
Portfolio
Shares 2,332
Cost $ 43,243
Market Value......... -- -- -- -- --
Global Equity Value
Portfolio
Shares 4,454
Cost $ 57,976
Market Value......... -- -- -- -- --
Developing Growth
Portfolio
Shares 1,040
Cost $ 18,386
Market Value......... -- -- -- -- --
Emerging Market
Portfolio
Shares 82
Cost $ 1,003
Market Value......... -- -- -- -- --
Diversified Income
Portfolio
Shares 856
Cost $ 8,748
Market Value......... -- -- -- -- --
Mid-Cap Growth
Portfolio
Shares 518
Cost $ 5,495
Market Value......... -- -- -- -- --
Due from Hartford Life
Insurance Company..... -- -- -- -- --
Receivable from fund
shares sold........... -- -- -- -- --
------------- ----------- ----------- ----------- -----------
Total Assets........... 22,367 1,042 3,723 1,232 105,958
------------- ----------- ----------- ----------- -----------
LIABILITIES
Due to Hartford Life
Insurance Company..... -- -- -- -- --
Payable for fund shares
purchased............. -- -- -- -- --
------------- ----------- ----------- ----------- -----------
Total Liabilities...... -- -- -- -- --
------------- ----------- ----------- ----------- -----------
Net Assets (variable
life contract
liabilities).......... $ 22,367 $ 1,042 $ 3,723 $ 1,232 $ 105,958
------------- ----------- ----------- ----------- -----------
------------- ----------- ----------- ----------- -----------
Units Owned by
Contractholders....... 21,667 100 332 100 9,493
Unit Values............ $ 1.032342 $10.420600 $11.202964 $12.314200 $11.161390
</TABLE>
The accompanying notes are an integral part of these financial statements.
71
<PAGE>
<TABLE>
<CAPTION>
GLOBAL
VALUE-ADDED AMERICAN EQUITY DEVELOPING EMERGING DIVERSIFIED
MARKET CORE-EQUITY VALUE VALUE GROWTH MARKETS INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ------------ ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in Dean
Witter Select
Dimensions Investment
Series:
Money Market Portfolio
Shares 22,367
Cost $ 22,367
Market Value......... -- -- -- -- -- -- --
North American
Government Securities
Portfolio
Shares 102
Cost $ 1,030
Market Value......... -- -- -- -- -- -- --
Balanced Portfolio
Shares 248
Cost $ 3,515
Market Value......... -- -- -- -- -- -- --
Utilities Portfolio
Shares 78
Cost $ 1,022
Market Value......... -- -- -- -- -- -- --
Dividend and Growth
Portfolio
Shares 5,414
Cost $102,239
Market Value......... -- -- -- -- -- -- --
Value-Added Market
Portfolio
Shares 66
Cost $ 1,012
Market Value......... $ 1,158 -- -- -- -- -- --
Core-Equity Portfolio
Shares 69
Cost $ 1,006
Market Value......... -- $ 1,149 -- -- -- -- --
American Value
Portfolio
Shares 2,332
Cost $ 43,243
Market Value......... -- -- $ 45,925 -- -- -- --
Global Equity Value
Portfolio
Shares 4,454
Cost $ 57,976
Market Value......... -- -- -- $ 57,762 -- -- --
Developing Growth
Portfolio
Shares 1,040
Cost $ 18,386
Market Value......... -- -- -- -- 19,932 -- --
Emerging Market
Portfolio
Shares 82
Cost $ 1,003
Market Value......... -- -- -- -- -- $ 928 --
Diversified Income
Portfolio
Shares 856
Cost $ 8,748
Market Value......... -- -- -- -- -- -- $ 8,807
Mid-Cap Growth
Portfolio
Shares 518
Cost $ 5,495
Market Value......... -- -- -- -- -- -- --
Due from Hartford Life
Insurance Company..... -- -- -- -- -- -- --
Receivable from fund
shares sold........... -- -- -- -- -- -- --
----------- ----------- ------------ ----------- ------------- ------------- -----------
Total Assets........... 1,158 1,149 45,925 57,762 19,932 928 8,807
----------- ----------- ------------ ----------- ------------- ------------- -----------
LIABILITIES
Due to Hartford Life
Insurance Company..... -- -- -- -- -- -- --
Payable for fund shares
purchased............. -- -- -- -- -- -- --
----------- ----------- ------------ ----------- ------------- ------------- -----------
Total Liabilities...... -- -- -- -- -- -- --
----------- ----------- ------------ ----------- ------------- ------------- -----------
Net Assets (variable
life contract
liabilities).......... $ 1,158 $ 1,149 $ 45,925 $ 57,762 $ 19,932 $ 928 $ 8,807
----------- ----------- ------------ ----------- ------------- ------------- -----------
----------- ----------- ------------ ----------- ------------- ------------- -----------
Units Owned by
Contractholders....... 100 100 3,637 5,774 1,656 100 828
Unit Values............ $11.579600 $11.482200 $ 12.628705 $10.003694 $12.038601 $ 9.281000 $10.635925
<CAPTION>
MID-CAP
GROWTH
PORTFOLIO
SUB-ACCOUNT
-----------
<S> <C>
ASSETS:
Investments in Dean
Witter Select
Dimensions Investment
Series:
Money Market Portfolio
Shares 22,367
Cost $ 22,367
Market Value......... --
North American
Government Securities
Portfolio
Shares 102
Cost $ 1,030
Market Value......... --
Balanced Portfolio
Shares 248
Cost $ 3,515
Market Value......... --
Utilities Portfolio
Shares 78
Cost $ 1,022
Market Value......... --
Dividend and Growth
Portfolio
Shares 5,414
Cost $102,239
Market Value......... --
Value-Added Market
Portfolio
Shares 66
Cost $ 1,012
Market Value......... --
Core-Equity Portfolio
Shares 69
Cost $ 1,006
Market Value......... --
American Value
Portfolio
Shares 2,332
Cost $ 43,243
Market Value......... --
Global Equity Value
Portfolio
Shares 4,454
Cost $ 57,976
Market Value......... --
Developing Growth
Portfolio
Shares 1,040
Cost $ 18,386
Market Value......... --
Emerging Market
Portfolio
Shares 82
Cost $ 1,003
Market Value......... --
Diversified Income
Portfolio
Shares 856
Cost $ 8,748
Market Value......... --
Mid-Cap Growth
Portfolio
Shares 518
Cost $ 5,495
Market Value......... $ 5,906
Due from Hartford Life
Insurance Company..... --
Receivable from fund
shares sold........... --
-----------
Total Assets........... 5,906
-----------
LIABILITIES
Due to Hartford Life
Insurance Company..... --
Payable for fund shares
purchased............. --
-----------
Total Liabilities...... --
-----------
Net Assets (variable
life contract
liabilities).......... $ 5,906
-----------
-----------
Units Owned by
Contractholders....... 499
Unit Values............ $11.843234
</TABLE>
72
<PAGE>
SEPARATE ACCOUNT FIVE
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION MAY 20, 1997, TO DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH
AMERICAN
GOVERNMENT DIVIDEND AND
MONEY MARKET SECURITIES BALANCED UTILITIES GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
---------------- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Investment income:
Dividends.............. $ 950 $30 $ 17 $ 18 $ 729
----- --- ----- ----- ------
Net investment
income................ 950 30 17 18 729
----- --- ----- ----- ------
Capital gains income..... -- -- 3 4 37
----- --- ----- ----- ------
Net realized and
unrealized gain (loss)
on investments:
Net realized gain on
security
transactions.......... -- -- -- -- 49
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 12 208 210 3,719
----- --- ----- ----- ------
Net realized and
unrealized gain
(loss) on
investments......... -- 12 208 210 3,768
----- --- ----- ----- ------
Net increase
(decrease) in net
assets resulting
from operations..... $ 950 $42 $ 228 $232 $ 4,534
----- --- ----- ----- ------
----- --- ----- ----- ------
</TABLE>
* From inception, January 21, 1997 to December 31, 1997.
The accompanying notes are an integral part of these financial statements.
73
<PAGE>
<TABLE>
<CAPTION>
GLOBAL
VALUE-ADDED AMERICAN EQUITY DEVELOPING EMERGING DIVERSIFIED
MARKET CORE-EQUITY VALUE VALUE GROWTH MARKETS INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------ ------------ ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividends.............. $ 10 $ 1 $ 33 $ 111 $ 7 $ 3 $ 348
----- ----- ------ ----- ---------- --- -----
Net investment
income................ 10 1 33 111 7 3 348
----- ----- ------ ----- ---------- --- -----
Capital gains income..... -- -- -- -- -- -- --
----- ----- ------ ----- ---------- --- -----
Net realized and
unrealized gain (loss)
on investments:
Net realized gain on
security
transactions.......... 2 5 22 2 -- -- 2
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- -- 64 58 8 -- --
----- ----- ------ ----- ---------- --- -----
Net realized and
unrealized gain
(loss) on
investments......... 146 143 2,682 (214) 1,546 (75) 59
----- ----- ------ ----- ---------- --- -----
146 143 2,746 (156) 1,554 (75) 59
------- ------- -------- ------ ------- ------- --------
Net increase
(decrease) in net
assets resulting
from operations..... $ 158 $ 149 $ 2,801 $ (43) $1,561 $ (72) $ 409
----- ----- ------ ----- ---------- --- -----
----- ----- ------ ----- ---------- --- -----
<CAPTION>
MID-CAP
GROWTH
PORTFOLIO
SUB-ACCOUNT*
------------
<S> <C>
Investment income:
Dividends.............. $ 23
-----
Net investment
income................ 23
-----
Capital gains income..... --
-----
Net realized and
unrealized gain (loss)
on investments:
Net realized gain on
security
transactions.......... --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ --
-----
Net realized and
unrealized gain
(loss) on
investments......... 411
-----
411
--------
Net increase
(decrease) in net
assets resulting
from operations..... $ 434
-----
-----
</TABLE>
74
<PAGE>
SEPARATE ACCOUNT FIVE
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION, MAY 20, 1997 TO DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTH
AMERICAN
GOVERNMENT DIVIDEND
MONEY MARKET SECURITIES BALANCED UTILITIES AND GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Operations:
Net investment income
(loss)................ $ 950 $ 30 $ 17 $ 18 $ 729
Capital gains income... -- -- 3 4 37
Net realized gain
(loss) on security
transactions.......... -- -- -- -- 49
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 12 208 210 3,719
------------- ----------- --------- ---------- ----------
Net increase (decrease)
in net assets
resulting from
operations............ 950 42 228 232 4,534
------------- ----------- --------- ---------- ----------
Unit transactions:
Purchases.............. 259,950 1,000 1,000 1,000 1,000
Net transfers.......... (237,803) -- 2,500 -- 102,911
Surrenders............. (491) -- (4) -- (607)
Loan withdrawals....... -- -- -- -- (1,647)
Cost of insurance...... (239) -- (1) -- (233)
------------- ----------- --------- ---------- ----------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 21,417 1,000 3,495 1,000 101,424
------------- ----------- --------- ---------- ----------
Total increase
(decrease) in net
assets.............. 22,367 1,042 3,723 1,232 105,958
Net Assets:
Beginning of period.... -- -- -- -- --
------------- ----------- --------- ---------- ----------
End of period.......... $ 22,367 $1,042 $3,723 $1,232 $105,958
------------- ----------- --------- ---------- ----------
------------- ----------- --------- ---------- ----------
</TABLE>
* From inception, January 21, 1997 to December 31, 1997.
The accompanying notes are an integral part of these financial statements.
75
<PAGE>
<TABLE>
<CAPTION>
VALUE-ADDED AMERICAN GLOBAL DEVELOPING EMERGING DIVERSIFIED
MARKET CORE-EQUITY VALUE EQUITY VALUE GROWTH MARKETS INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ---------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income
(loss)................ $ 10 $ 1 $ 33 111 $ 7 $ 3 $ 348
Capital gains income... 2 5 22 2 -- -- 2
Net realized gain
(loss) on security
transactions.......... -- -- 64 58 8 -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 146 143 2,682 (214) 1,546 (75) 59
----------- ----------- ---------- ------------ ------------ ------------ -----------
Net increase (decrease)
in net assets
resulting from
operations............ 158 149 2,801 (43) 1,561 (72) 409
----------- ----------- ---------- ------------ ------------ ------------ -----------
Unit transactions:
Purchases.............. 1,000 1,000 1,000 1,000 1,000 1,000 1,000
Net transfers.......... -- -- 43,968 58,859 17,580 -- 7,487
Surrenders............. -- -- (138) (256) (151) -- --
Loan withdrawals....... -- -- (1,653) (1,700) -- -- (66)
Cost of insurance...... -- -- (53) (98) (58) -- (23)
----------- ----------- ---------- ------------ ------------ ------------ -----------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,000 1,000 43,124 57,805 18,371 1,000 8,398
----------- ----------- ---------- ------------ ------------ ------------ -----------
Total increase
(decrease) in net
assets.............. 1,158 1,149 45,925 57,762 19,932 928 8,807
Net Assets:
Beginning of period.... -- -- -- -- -- -- --
----------- ----------- ---------- ------------ ------------ ------------ -----------
End of period.......... $1,158 $1,149 $45,925 $57,762 $19,932 $ 928 $8,807
----------- ----------- ---------- ------------ ------------ ------------ -----------
----------- ----------- ---------- ------------ ------------ ------------ -----------
<CAPTION>
MID-CAP
GROWTH
PORTFOLIO
SUB-ACCOUNT*
-----------
<S> <C>
Operations:
Net investment income
(loss)................ $ 23
Capital gains income... --
Net realized gain
(loss) on security
transactions.......... --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 411
-----------
Net increase (decrease)
in net assets
resulting from
operations............ 434
-----------
Unit transactions:
Purchases.............. 1,000
Net transfers.......... 4,498
Surrenders............. --
Loan withdrawals....... (19)
Cost of insurance...... (7)
-----------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 5,472
-----------
Total increase
(decrease) in net
assets.............. 5,906
Net Assets:
Beginning of period.... --
-----------
End of period.......... $5,906
-----------
-----------
</TABLE>
76
<PAGE>
SEPARATE ACCOUNT FIVE
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
1. ORGANIZATION:
Separate Account Five (the Account) is a separate investment account with
Hartford Life 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. The Account consists of forty-one
sub-accounts. These financial statements include thirteen sub-accounts which
invest solely in Dean Witter Select Dimensions Portfolios (the Funds). The
twelve sub-accounts which invest in Hartford Mutual Funds and the sixteen
sub-accounts which invest in Putnam VT Mutual Funds are presented in separate
financial statements. Both the Company and the Account are subject to
supervision and regulation by the Department of Insurance of the State of
Connecticut and the SEC. The Account invests deposits by variable life
contractholders of the Company in the Funds as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the Account,
which are in accordance with generally accepted accounting principles in the
investment company industry:
a) Security Transactions -- Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments sold is
determined on the basis of identified cost. Dividend and capital gains income
are accrued as of the ex-dividend date. Capital gains income represents
dividends from the Funds which are characterized as capital gains under tax
regulations.
b) Security Valuation -- The investment in shares of the Dean Witter Select
Dimensions Investment Series Mutual Funds are valued at the closing net asset
value per share as determined by the appropriate Fund as of December 31, 1997.
c) Federal Income Taxes -- The operations of the Account form a part of,
and are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no federal
income taxes are payable with respect to the operations of the Account.
d) Use of Estimates -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported amounts
of income and expenses during the period. Operating results in the future could
vary from the amounts derived from management's estimates.
3. ADMINISTRATION OF THE ACCOUNT
AND RELATED CHARGES:
In accordance with the terms of the contracts, the Company makes deductions for
mortality and expense undertakings, cost of insurance, administrative fees, and
state premium taxes. These charges are deducted through termination of units of
interest from applicable contract owners' accounts.
77
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
THIRD QUARTER NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- ---------------
1998 1997 1998 1997
----- ----- ------ ------
(IN MILLIONS)
(UNAUDITED)
<S> <C> <C> <C> <C>
Revenues
Premiums and other considerations............... $ 484 $ 360 $1,430 $ 993
Net investment income........................... 339 319 1,035 978
Net realized capital (losses) gains............. 3 -- (3) 4
----- ----- ------ ------
Total revenues................................ 826 679 2,462 1,975
----- ----- ------ ------
Benefits, claims and expenses
Benefits, claims and claim adjustment
expenses....................................... 353 318 1,100 970
Amortization of deferred policy acquisition
costs.......................................... 119 80 328 252
Dividends to policyholders...................... 61 47 177 119
Other insurance expenses........................ 155 105 461 295
----- ----- ------ ------
Total benefits, claims and expenses........... 688 550 2,066 1,636
----- ----- ------ ------
Income before income tax expense................ 138 129 396 339
Income tax expense.............................. 49 48 139 121
----- ----- ------ ------
Net income...................................... $ 89 $ 81 $ 257 $ 218
----- ----- ------ ------
----- ----- ------ ------
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
78
<PAGE>
CONDENSED CONSOLIDATED BALANCE SHEETS
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- -------------
(IN MILLIONS, EXCEPT
FOR SHARE DATA)
(UNAUDITED)
<S> <C> <C>
Assets
Investments
Fixed maturities, available for sale, at fair
value (amortized cost of $13,771 and
$13,885)....................................... $14,214 $14,176
Equity securities, at fair value................ 114 180
Policy loans, at outstanding balance............ 3,742 3,756
Other investments, at cost...................... 275 47
------------- -------------
Total investments............................. 18,345 18,159
Cash............................................ 86 54
Premiums and amounts receivable................. 22 18
Accrued investment income....................... 330 330
Reinsurance recoverables........................ 5,903 6,114
Deferred policy acquisition costs............... 3,674 3,315
Deferred income tax............................. 376 348
Other assets.................................... 332 352
Separate account assets......................... 76,725 69,055
------------- -------------
Total assets.................................. $105,793 $97,745
------------- -------------
------------- -------------
Liabilities
Future policy benefits.......................... $ 3,341 $ 3,059
Other policyholder funds........................ 20,684 21,034
Other liabilities............................... 2,331 2,254
Separate account liabilities.................... 76,725 69,055
------------- -------------
Total liabilities............................. 103,081 95,402
Stockholder's Equity
Common stock -- authorized, issued and
outstanding 1,000, par value $5,690............ 6 6
Capital surplus................................. 1,045 1,045
Accumulated other comprehensive income
Net unrealized capital gains on securities, net
of tax......................................... 291 179
Total accumulated other comprehensive income... 291 179
Retained earnings.............................. 1,370 1,113
------------- -------------
Total stockholder's equity.................... 2,712 2,343
------------- -------------
Total liabilities and stockholder's equity...... $105,793 $97,745
------------- -------------
------------- -------------
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
79
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDER'S EQUITY
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
NINE MONTHS ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
ACCUMULATED OTHER
COMPREHENSIVE INCOME
-----------------------------------------------------------------------------
NET UNREALIZED
CAPITAL GAINS ON TOTAL
COMMON SECURITIES, NET OF RETAINED STOCKHOLDER'S
STOCK CAPITAL SURPLUS TAX EARNINGS EQUITY
------ --------------- --------------------- ---------- -------------
(IN MILLIONS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997................... $6 $1,045 $ 179 $1,113 $2,343
Comprehensive income
Net income................................. -- -- -- 257 257
Other comprehensive income, net of tax (1):
Changes in net unrealized capital gains
on securities (2)........................ -- -- 112 -- 112
Total other comprehensive income........... 112
Total comprehensive income................... 369
--
------ ----- ---------- ------
Balance, September 30, 1998.................. $6 $1,045 $ 291 $1,370 $2,712
--
--
------ ----- ---------- ------
------ ----- ---------- ------
NINE MONTHS ENDED SEPTEMBER 30, 1997
<CAPTION>
ACCUMULATED OTHER
COMPREHENSIVE INCOME
-----------------------------------------------------------------------------
NET UNREALIZED
CAPITAL GAINS ON TOTAL
COMMON SECURITIES, NET OF RETAINED STOCKHOLDER'S
STOCK CAPITAL SURPLUS TAX EARNINGS EQUITY
------ --------------- --------------------- ---------- -------------
(IN MILLIONS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996................... $6 $1,045 $ 30 $ 811 $1,892
Comprehensive income
Net income................................. -- -- -- 218 218
Other comprehensive income, net of tax (1):
Changes in net unrealized capital gains
on securities (2)........................ -- -- 105 -- 105
Total other comprehensive income........... 105
Total comprehensive income 323
--
------ ----- ---------- ------
Balance, September 30, 1997.................. $6 $1,045 $ 135 $1,029 $2,215
--
--
------ ----- ---------- ------
------ ----- ---------- ------
</TABLE>
- ---------
(1) Net unrealized gain on securities is reflected net of tax of $60 and $57 as
of September 30, 1998 and 1997, respectively.
(2) Net of reclassification adjustment for (losses) gains realized in net income
of $(2) and $3 for the nine months ended September 30, 1998 and 1997,
respectively.
See Notes to Condensed Consolidated Financial Statements.
80
<PAGE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-------------------
1998 1997
-------- --------
(IN MILLIONS)
(UNAUDITED)
<S> <C> <C>
Operating Activities
Net income............................ $ 257 $ 218
Adjustments to net income:
Depreciation and amortization......... (15) 5
Net realized capital losses (gains)... 3 (4)
Increase in deferred income taxes..... (90) (14)
Increase in deferred policy
acquisition costs.................... (359) (396)
(Increase) decrease in premiums and
amounts receivable................... (4) 3
Decrease in accrued investment
income............................... -- 48
Decrease in other assets.............. 65 169
Decrease (increase) in reinsurance
recoverables......................... 39 (310)
Increase in liability for future
policy benefits...................... 282 650
(Decrease) increase in other
liabilities.......................... (55) 131
-------- --------
Cash provided by operating
activities......................... 123 500
-------- --------
Investing Activities
Purchases of fixed maturity
investments.......................... (4,530) (4,628)
Sales of fixed maturity investments... 2,848 3,039
Maturities and principal paydowns of
fixed maturity investments........... 1,387 1,643
Net (purchases) sales of other
investments.......................... (89) 32
Net sales (purchases) of short-term
investments.......................... 492 (70)
-------- --------
Cash provided by investing
activities......................... 108 16
-------- --------
Financing Activities
Net disbursements for investment and
universal life-type contracts charged
against policyholder accounts........ (199) (506)
-------- --------
Cash used for financing activities.... (199) (506)
-------- --------
Increase in cash...................... 32 10
Cash -- beginning of period........... 54 43
-------- --------
Cash -- end of period................. $ 86 $ 53
-------- --------
Supplemental Disclosure of Cash Flow
Information:
Net Cash paid during the period for:
Income taxes.......................... $ 241 $ 31
-------- --------
-------- --------
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
81
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN MILLIONS EXCEPT FOR SHARE DATA UNLESS OTHERWISE STATED)
(UNAUDITED)
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
Hartford Life Insurance Company and subsidiaries (the "Company") have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and note disclosures which are normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to those rules and
regulations, although the Company believes that the disclosures made are
adequate to make the information presented not misleading. In the opinion of
management, these statements include all adjustments which were normal recurring
adjustments necessary to present fairly the financial position, results of
operations and cash flows for the periods presented. For a description of
significant accounting policies, see Note 2 of Notes to Consolidated Financial
Statements in the Company's 1997 Form 10-K Annual Report.
(B) CHANGES IN ACCOUNTING PRINCIPLES
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income", which
establishes standards for reporting and display of comprehensive income and its
components in a full set of general purpose financial statements. The objective
of this statement is to report a measure of all changes in equity of an
enterprise that result from transactions and other economic events of the period
other than transactions with owners. Comprehensive income is the total of net
income and all other nonowner changes in equity. Accordingly, the Company has
reported comprehensive income in the Condensed Consolidated Statement of Changes
in Stockholder's Equity.
In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) No. 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use". The SOP provides guidance on
accounting for the costs of internal use software and in determining whether the
software is for internal use. The SOP defines internal use software as software
that is acquired, internally developed, or modified solely to meet internal
needs and identifies stages of software development and accounting for the
related costs incurred during the stages. This statement is effective for fiscal
years beginning after December 15, 1998 and is not expected to have a material
impact on the Company's financial condition or results of operations.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". The new standard
establishes accounting and reporting guidance for derivative instruments,
including certain derivative instruments embedded in other contracts. The
standard requires, among other things, that all derivatives be carried on the
balance sheet at fair value. The standard also specifies hedge accounting
criteria under which a derivative can qualify for special accounting. In order
to receive special accounting, the derivative instrument must qualify as either
a hedge of the fair value or the variability of the cash flow of a qualified
asset or liability. Special accounting for qualifying hedges provides for
matching the timing of gain or loss recognition on the hedging instrument with
the recognition of the corresponding changes in value of the hedged item. SFAS
No. 133 will be effective for fiscal years beginning after June 15, 1999.
Initial application for the Company will begin for the first quarter of the year
2000. The Company is currently in the process of quantifying the impact of SFAS
No. 133.
In September 1998, the Securities and Exchange Commission stated that until
the Emerging Issues Task Force (EITF) concludes its discussion regarding the
accounting for combined structured notes, affected companies that entered into
these notes prior to September 25, 1998 are required to either restate prior
period financial statements to conform with the recently prescribed unit
accounting model or disclose the related impact on earnings for all periods
presented and cumulatively over the life of the instruments had the registrant
accounted for the structure as a unit. Included in net income for the nine
months ended September 30, 1998 was $32 of after-tax net realized capital losses
and approximately $2 of after-tax net investment income related to a combined
structured note transaction, which was accounted for in accordance with then
current generally accepted accounting principles (GAAP). Had the transaction
been accounted for as a unit, based upon recently prescribed GAAP for such types
of transactions entered into after September 24, 1998, net income would have
been approximately $2 lower for the third quarter and $30 higher for the nine
months ended September 30, 1998.
NOTE 2. INITIAL PUBLIC OFFERING (IPO)
On February 10, 1997, the Company's indirect parent, Hartford Life, Inc.
(Hartford Life), filed a registration statement, as amended, with the Securities
and Exchange Commission, relating to the IPO of Hartford Life's Class A Common
Stock. Pursuant to the IPO on May 22, 1997, Hartford Life sold to the public 26
million shares at $28.25
82
<PAGE>
per share and received proceeds, net of offering expenses, of $687. Of the
proceeds, $527 was used to retire debt related to Hartford Life's promissory
notes outstanding and line of credit. The remaining $160 was contributed by
Hartford Life to Hartford Life and Accident Insurance Company, the Company's
direct parent, to support growth in its core businesses.
The 26 million shares sold in the IPO represented approximately 18.6% of the
equity ownership in Hartford Life and approximately 4.4% of the combined voting
power of Hartford Life's Class A and Class B Common Stock. Hartford Financial
Services Group, Inc., an indirect parent of Hartford Life, owns all of the 114
million outstanding shares of Class B Common Stock of Hartford Life,
representing approximately 81.4% of the equity ownership in Hartford Life and
approximately 95.6% of the combined voting power of Hartford Life's Class A and
Class B Common Stock. Holders of Class A Common Stock generally have identical
rights to the holders of Class B Common Stock except that the holders of Class A
Common Stock are entitled to one vote per share while holders of Class B Common
Stock are entitled to five votes per share on all matters submitted to a vote of
Hartford Life's stockholders.
NOTE 3. COMMITMENTS AND CONTINGENCIES
(A) LITIGATION
The Company is involved in pending and threatened litigation in the normal
course of its business in which claims for monetary and punitive damages have
been asserted. Although there can be no assurances, management, at the present
time, does not anticipate that the ultimate liability arising from such pending
or threatened litigation will have a material effect on the financial condition
or operating results of the Company.
(B) INVESTMENTS
As of September 30, 1998, the Company held $110 of asset-backed securities
securitized and serviced by Commercial Finance Services, Inc. (CFS). In October
1998, the Company became aware of allegations of improper activities at CFS. CFS
has engaged an independent accounting firm and outside legal counsel to
investigate these allegations. Currently, these securities are performing in
line with expectations. Based upon information available at this time, the
Company is presently unable to determine the amount of potential loss, if any,
related to the securities.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(DOLLAR AMOUNTS IN MILLIONS UNLESS OTHERWISE STATED)
Management's Discussion and Analysis of Financial Condition and Results of
Operations (MD&A) addresses the financial condition of the Company as of
September 30, 1998, compared with December 31, 1997, and its results of
operations for the third quarter and nine months ended September 30, 1998
compared with the equivalent 1997 periods. This discussion should be read in
conjunction with the MD&A in the Company's 1997 Form 10-K Annual Report.
Certain statements contained in this discussion, other than statements of
historical fact, are forward-looking statements. These statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 and include estimates and assumptions related to economic,
competitive and legislative developments. These forward-looking statements are
subject to change and uncertainty which are, in many instances, beyond the
Company's control and have been made based upon management's expectations and
beliefs concerning future developments and their potential effect on Hartford
Life Insurance Company and subsidiaries (the "Company"). There can be no
assurance that future developments will be in accordance with management's
expectations or that the effect of future developments on the Company will be
those anticipated by management. Actual results could differ materially from
those expected by the Company, depending on the outcome of certain factors,
including those described in the forward-looking statements.
INDEX
<TABLE>
<S> <C>
Consolidated Results of
Operations:
Operating Summary............... 9
Annuity......................... 10
Individual Life Insurance....... 11
Employee Benefits............... 11
Guaranteed Investment
Contracts...................... 11
Regulatory Initiatives and
Contingencies.................. 12
Accounting Standards............ 13
Other Matters................... 13
</TABLE>
CONSOLIDATED RESULTS OF OPERATIONS:
OPERATING SUMMARY
<TABLE>
<CAPTION>
THIRD QUARTER ENDED
NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues................ $ 826 $ 679 $ 2,462 $ 1,975
Expenses................ 737 598 2,205 1,757
--------- --------- --------- ---------
Net Income............ $ 89 $ 81 $ 257 $ 218
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
The Company's insurance business operates in three principal segments:
Annuity, Individual Life Insurance, and Employee Benefits as well as a
Guaranteed Investments Contracts segment, which is primarily comprised of
business written prior to 1995. The Company also maintains a Corporate operation
through which it reports items that are not directly allocable to any of its
business segments.
83
<PAGE>
The Annuity segment focuses on the savings and retirement needs of the
growing number of individuals who are preparing for retirement or have already
retired. This segment consists of two areas of operation: Individual Annuity and
Group Annuity. The variety of products sold within this segment reflects the
diverse nature of the market. These include, in the Individual Annuity area,
individual variable annuities, fixed market value adjusted (MVA) annuities, and
mutual funds; and in the Group Annuity area, deferred compensation and
retirement plan services for municipal governments and corporations, structured
settlement contracts and other special purpose annuity contracts, and investment
management contracts. The Individual Life Insurance segment, which focuses on
the high end estate and business planning markets, sells a variety of life
insurance products, including variable life and universal life insurance. The
Employee Benefits segment consists of two areas of operation: Group Insurance
and Specialty Insurance. Through Group Insurance, the Company offers products
such as group life insurance, group short- and long-term disability and
accidental death and dismemberment. Substantially all of the Group Insurance
business directly written by the Company is ceded to its direct parent, Hartford
Life and Accident Insurance Company. Specialty Insurance primarily consists of
the Company's corporate owned life insurance (COLI) business. The Guaranteed
Investment Contracts segment consists of guaranteed rate contract (GRC) business
that is supported by assets held in either the Company's general account or a
guaranteed separate account and includes a closed block of guaranteed rate
contracts (Closed Book GRC). The Company decided in 1995, after a thorough
review of its GRC business, that it would significantly de-emphasize general
account GRC, choosing to focus its distribution efforts on other products sold
through other divisions. Management expects no material income or loss from the
Guaranteed Investment Contracts segment in the future.
Revenues increased $147, or 22%, and $487, or 25%, for the third quarter and
nine months ended September 30, 1998, respectively, compared to the equivalent
1997 periods. This increase was driven by higher fee income earned on growth in
separate account assets primarily related to the Annuity and Individual Life
Insurance segments, revenue growth due to new sales and renewals in the Employee
Benefits segment, as well as higher net investment income, partially offset by
decreasing revenues related to the declining block of Closed Book GRC. For a
discussion of combined structured note transactions and investment contingencies
see Notes 1 (b) and 3 (b), respectively, of Notes to Condensed Consolidated
Financial Statements.
Expenses increased $139, or 23%, and $448, or 25%, for the third quarter and
nine months ended September 30, 1998, respectively, compared to the same prior
year periods. This increase was due to higher benefits, claims, and claim
adjustment expenses, increased amortization of deferred policy acquisition costs
and increased operating expenses primarily related to growth in the Company's
principal operating segments.
Net income increased $8, or 10%, and $39, or 18%, for the third quarter and
nine months ended September 30, 1998, respectively, as compared to the same
periods in 1997 primarily due to revenue growth in both the Annuity and
Individual Life Insurance segments. These increases were partially offset by a
decrease in Employee Benefits earnings as a result of COLI.
SEGMENT RESULTS
The Company's reporting segments, consist of Annuity, Individual Life
Insurance, Employee Benefits, Guaranteed Investment Contracts and a Corporate
Operation.
Below is a summary of net income by segment.
<TABLE>
<CAPTION>
THIRD QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ --------------------
1998 1997 1998 1997
----- ----- --------- ---------
<S> <C> <C> <C> <C>
Annuity....................... $ 67 $ 56 $ 197 $ 148
Individual Life Insurance..... 16 15 44 38
Employee Benefits............. 6 8 18 23
Guaranteed Investment
Contracts.................... -- -- -- --
Corporate Operation........... -- 2 (2) 9
--- --- --------- ---------
Net Income.................. $89 $81 $ 257 $ 218
--- --- --------- ---------
--- --- --------- ---------
</TABLE>
The sections that follow analyze each segment's results.
ANNUITY
<TABLE>
<CAPTION>
THIRD QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues.................. $ 410 $ 336 $ 1,208 $ 924
Expenses.................. 343 280 1,011 776
--------- --------- --------- ---------
Net Income.............. $ 67 $ 56 $ 197 $ 148
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
Revenues for the third quarter and nine months ended September 30, 1998
increased $74, or 22%, and $284, or 31%, respectively, compared to the
equivalent prior year periods. This increase was driven by Individual Annuity
revenues which increased $72, or 31%, and $255, or 41%, for the third quarter
and nine months ended September 30, 1998, respectively, as compared to the same
periods in 1997 primarily due to higher fee income earned on growth in
individual variable annuity account values. Despite the fact that the equity
market did not experience significant appreciation during the third quarter of
1998, the segment's assets under management have increased from prior year
levels. Average individual variable annuity account values grew $11.0 billion,
or 29%, to $49.7 billion as of September 30, 1998 from $38.7 billion as of
September 30,
84
<PAGE>
1997. This growth was the result of strong individual variable annuity sales of
$2.4 billion and $7.6 billion for the third quarter and nine months ended
September 30, 1998, respectively, compared to sales of $2.5 billion and $7.2
billion for the third quarter and nine months ended September 30, 1997,
respectively. In addition, Group Annuity revenues increased $2, or 2%, and $29,
or 10%, for the third quarter and nine months ended September 30, 1998,
respectively, over the equivalent prior periods, primarily due to higher fee
income and net investment income resulting from growth in assets under
management. Group Annuity average total account values grew $1.3 billion, or
13%, to $11.1 billion as of September 30, 1998 from $9.8 billion as of September
30, 1997, due to new deposits.
Expenses increased $63, or 23%, and $235, or 30%, for the third quarter and
nine months ended September 30, 1998, respectively, as compared to the same
prior year periods. Benefits, claims and claim adjustment expenses increased $6
and $68 for the third quarter and nine months ended September 30, 1998,
respectively, compared to the same periods in 1997 primarily due to increased
interest credited on Individual Annuity general account values. Average
Individual Annuity general account values increased $975, or 31%, to $4.1
billion at September 30, 1998 from $3.1 billion at September 30, 1997.
Amortization of deferred policy acquisition costs increased $26 and $64 for the
third quarter and nine months ended September 30, 1998, respectively, compared
to the same periods in 1997 as prior and current year sales remained strong. In
addition, for the third quarter and nine months ended September 30, 1998, other
business expenses increased $23 and $75, respectively, compared to prior year
periods, as a result of the continued growth in this segment.
Annuity net income increased $11, or 20%, and $49, or 33%, for the third
quarter and nine months ended September 30, 1998, respectively, as compared to
the same prior year periods as a result of revenue growth and continued
operating efficiencies.
INDIVIDUAL LIFE INSURANCE
<TABLE>
<CAPTION>
THIRD QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues.................... $ 137 $ 122 $ 401 $ 358
Expenses 121 107 357 320
--------- --------- --------- ---------
Net Income................ $ 16 $ 15 $ 44 $ 38
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
Revenues for the third quarter and nine months ended September 30, 1998
increased $15, or 12%, and $43, or 12%, respectively, as compared to the
equivalent periods in 1997. This increase was primarily due to higher cost of
insurance charges and other fee income earned on the Company's growing block of
variable life insurance. Variable life average account values increased $447, or
57%, to $1.2 billion as of September 30, 1998 from $786 as of September 30, 1997
due to strong sales. Variable life product sales constituted $82, or 75%, of
total Individual Life Insurance new sales as of September 30, 1998, an increase
of $21, or 34%, compared to the same period in 1997.
Expenses increased $14, or 13%, and $37, or 12%, for the third quarter and
nine months ended September 30, 1998, respectively, as compared to the
equivalent period in 1997. This increase was primarily the result of higher
benefits, claims, and claim adjustment expenses and amortization of deferred
acquisition costs associated with the growth in this segment as well as
increased mortality experience during 1998.
Net income increased $1, or 7%, and $6, or 16%, for the third quarter and
nine months ended September 30, 1998, respectively, as compared to the same
period in 1997 as a result of strong sales and revenue growth.
EMPLOYEE BENEFITS
<TABLE>
<CAPTION>
THIRD QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- --------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues.................... $ 219 $ 150 $ 697 $ 471
Expenses.................... 213 142 679 448
--------- --------- --------- ---------
Net Income................ $ 6 $ 8 $ 18 $ 23
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
Revenues increased $69, or 46%, and $226, or 48%, for the third quarter and
nine months ended September 30, 1998, respectively, as compared to the same
periods in 1997, as a result of an increase in fee income related to new sales
of variable COLI, and renewal premium on leveraged COLI. Expenses increased $71,
or 50%, and $231, or 52%, for the third quarter and nine months ended September
30, 1998, respectively, as compared to the same prior year periods, due to
higher expenses associated with variable COLI sales and leveraged COLI renewal
premium. Net income decreased $2, or 25%, and $5, or 22%, for the third quarter
and nine months ended September 30, 1998, respectively, as compared to the same
prior periods in 1997.
GUARANTEED INVESTMENT CONTRACTS
<TABLE>
<CAPTION>
THIRD QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ --------------------
1998 1997 1998 1997
----- ----- --------- ---------
<S> <C> <C> <C> <C>
Revenues...................... $ 35 $ 62 $ 125 $ 196
Expenses...................... 35 62 125 196
--- --- --------- ---------
Net Loss.................... $ -- $ -- $ -- $ --
--- --- --------- ---------
--- --- --------- ---------
</TABLE>
85
<PAGE>
This segment reported no net income for the third quarter and nine months
ended September 30, 1998 and 1997 consistent with management's expectations that
net income from Closed Book GRC in the years subsequent to 1996 will be
immaterial based on the Company's current projections for the performance of the
assets and liabilities associated with Closed Book GRC. However, no assurance
can be given that, under certain unanticipated economic circumstances which
result in the Company's assumptions being proven inaccurate, further losses in
respect of Closed Book GRC will not occur in the future.
REGULATORY INITIATIVES AND CONTINGENCIES
NAIC PROPOSALS
The National Association of Insurance Commissioners ("NAIC") adopted the
Codification of Statutory Accounting Principles ("SAP") in March, 1998. The
proposed effective date for the statutory accounting guidance is January 1,
2001. It is expected that the Company's domiciliary state will adopt SAP and the
Company will make the necessary changes required for implementation. These
changes are not anticipated to have a material impact on the statutory financial
statements of the Company.
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 the Company's IT systems, as well as the
reliability of its non-IT systems, are integral aspects of the Company's
business. The Company has thousands of individual and business customers that
have insurance policies, annuities, mutual funds and other financial products of
the Company. Nearly all of these policies and products contain date sensitive
data, such as policy expiration dates, birth dates, premium payment dates, and
the like. In addition, various IT systems support communications and other
systems that integrate the Company's various business segments and field
offices. The Company also has business relationships with numerous third parties
that affect virtually all aspects of the Company'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 the Company, and whose
operations are important to the Company's business.
INTERNAL YEAR 2000 EFFORTS AND TIMETABLE
Beginning in 1990, the Company began working on making its IT systems Year
2000 ready, either through installing new programs or replacing systems. Since
January 1998, the Company's Year 2000 efforts have focused on the remaining Year
2000 issues related to IT and non-IT systems in all of the Company'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 and
certifying IT and non-IT systems as Year 2000 ready; (4) deploying such
remediated and tested systems back into their respective production
environments; and (5) conducting internal and external integrated testing of
such systems. The Company currently anticipates that initiatives (1) through (4)
of its internal Year 2000 efforts will be substantially complete by the end of
1998, and that initiative (5) testing will begin in early 1999 and continue
through the end of 1999.
THIRD PARTY YEAR 2000 EFFORTS AND TIMETABLE
The Company's Year 2000 efforts include assessing the potential impact on
the Company of third Year 2000 readiness. The Company's third party Year 2000
efforts include the following three main initiatives: (1) identifying third
parties which have significant business relationships with the Company and
inquiring of such third parties regarding their Year 2000 readiness; (2)
evaluating such third parties' responses to the Company's inquiries; and (3)
based on the evaluation of third party responses and the significance of the
business relationship, conducting additional activities with third parties as
determined to be necessary in each case, which activities may include integrated
IT systems testing. The Company has completed the first third party initiative
and is in the process of evaluating third party responses received. The Company
currently anticipates that it will substantially complete the response
evaluation in early 1999 and that it will conduct the additional activities
described in initiative (3) beginning in early 1999 and continue through the end
of 1999 as necessary. However, notwithstanding these third party Year 2000
efforts, the Company does not have control over these third parties and, as a
result, the Company cannot currently determine to
86
<PAGE>
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 the Company's Year 2000 program that have been incurred through
the year ended December 31, 1997 have not been material to the Company's
financial condition or results of operations. Management estimates that
after-tax costs related to the Year 2000 program to be incurred in 1998 and 1999
will be $4 in total, of which approximately $2 has been incurred as of September
30, 1998. These costs are being expensed as incurred and have not had, and are
not currently expected to have, a material impact on Hartford Life's financial
condition or results of operations.
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 the Company's business. Given the
uncertain nature of Year 2000 problems that may arise, especially those related
to the readiness of third parties discussed above, the Company cannot determine
at this time whether the consequences of Year 2000 related problems that could
arise will have a material impact on the Company's financial condition or
results of operations.
The Company 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 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 the Company's business on third parties and
their Year 2000 readiness. The Company 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 then
existing plans may need to be modified as circumstances warrant.
ACCOUNTING STANDARDS
For a discussion of accounting standards, see Note 1 of Notes to Condensed
Consolidated Financial Statements.
OTHER MATTERS
SUBSEQUENT EVENT
On November 10, 1998, Hartford Life, Inc. (Hartford Life), an indirect
parent of the Company, recaptured an in-force block of COLI business from MBL
Life Assurance Co. of New Jersey (MBL Life), as well as purchased the
outstanding interest in International Corporate Marketing Group (ICMG), which
was previously 40% owned by MBL Life. The transaction was consummated through
the assignment of a reinsurance arrangement between Hartford Life and MBL Life
to a Hartford Life subsidiary. Hartford Life originally assumed the life
insurance block in 1992 from Mutual Benefit Life Insurance Company (Mutual
Benefit Life), which was placed in court-supervised rehabilitation in 1991, and
reinsured a portion of those polices back to MBL Life. MBL Life, previously a
Mutual Benefit Life subsidiary, operates under the Rehabilitation Plan for
Mutual Benefit Life.
87
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hartford Life Insurance Company:
We have audited the accompanying Consolidated Balance Sheets of Hartford Life
Insurance Company (the "Company") and subsidiaries as of December 31, 1997 and
1996, and the related Consolidated Statements of Income, Stockholder's Equity
and Cash Flows for each of the three years in the period ended December 31,
1997. These consolidated financial statements and the schedules referred to
below are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements and schedules 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Hartford Life
Insurance Company and subsidiaries as of December 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1997, in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in Index to
Consolidated Financial Statements and Schedules are presented for the purpose of
complying with the Securities and Exchange Commission's rules and are not part
of the basic financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
January 27, 1998
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<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
------------------------
1997 1996 1995
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Revenues
Premiums and other considerations............... $1,637 $1,705 $1,487
Net investment income........................... 1,368 1,397 1,328
Net realized capital gains (losses)............. 4 (213) (11)
------ ------ ------
Total revenues................................ 3,009 2,889 2,804
------ ------ ------
Benefits, claims and expenses
Benefits, claims and claim adjustment
expenses....................................... 1,379 1,535 1,422
Amortization of deferred policy acquisition
costs.......................................... 335 234 199
Dividends to policyholders...................... 240 635 675
Other expenses.................................. 586 427 317
------ ------ ------
Total benefits, claims and expenses........... 2,540 2,831 2,613
------ ------ ------
Income before income tax expense................ 469 58 191
Income tax expense.............................. 167 20 62
------ ------ ------
Net income........................................ $ 302 $ 38 $ 129
------ ------ ------
------ ------ ------
</TABLE>
See Notes to Consolidated Financial Statements.
89
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER
31,
-----------------
1997 1996
------- -------
<S> <C> <C>
(IN MILLIONS,
EXCEPT FOR SHARE
DATA)
Assets
Investments
Fixed maturities, available for sale, at fair
value (amortized cost of $13,885 and
$13,579)....................................... $14,176 $13,624
Equity securities, at fair value................ 180 119
Policy loans, at outstanding balance............ 3,756 3,836
Other investments, at cost...................... 47 56
------- -------
Total investments............................. 18,159 17,635
Cash............................................ 54 43
Premiums receivable and agents' balances........ 18 137
Accrued investment income....................... 330 407
Reinsurance recoverables........................ 6,325 6,259
Deferred policy acquisition costs............... 3,315 2,760
Deferred income tax............................. 348 474
Other assets.................................... 352 357
Separate account assets......................... 69,055 49,690
------- -------
Total assets.................................. $97,956 $77,762
------- -------
------- -------
Liabilities
Future policy benefits.......................... $ 3,270 $ 2,474
Other policyholder funds........................ 21,034 22,134
Other liabilities............................... 2,254 1,572
Separate account liabilities.................... 69,055 49,690
------- -------
Total liabilities............................. 95,613 75,870
------- -------
Stockholder's Equity
Common stock -- 1,000 shares authorized, issued
and outstanding, par value $5,690.............. 6 6
Additional paid in capital...................... 1,045 1,045
Net unrealized capital gains on securities, net
of tax......................................... 179 30
Retained earnings............................... 1,113 811
------- -------
Total stockholder's equity.................... 2,343 1,892
------- -------
Total liabilities and stockholder's equity...... $97,956 $77,762
------- -------
------- -------
</TABLE>
See Notes to Consolidated Financial Statements.
90
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
NET UNREALIZED
CAPITAL GAINS
ADDITIONAL (LOSSES) ON TOTAL
COMMON PAID IN SECURITIES, RETAINED STOCKHOLDER'S
STOCK CAPITAL NET OF TAX EARNINGS EQUITY
------ -------------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
(IN MILLIONS)
Balance, December 31, 1994.............. $6 $ 826 $(654) $ 644 $ 822
Net income............................ -- -- -- 129 129
Capital contribution.................. -- 181 -- -- 181
Change in net unrealized capital gains
(losses) on securities, net of tax... -- -- 597 -- 597
--
------ ------ ----------- ------
Balance, December 31, 1995.............. 6 1,007 (57) 773 1,729
Net income............................ -- -- -- 38 38
Capital contribution.................. -- 38 -- -- 38
Change in net unrealized capital gains
(losses) on securities, net of tax... -- -- 87 -- 87
--
------ ------ ----------- ------
Balance, December 31, 1996.............. 6 1,045 30 811 1,892
Net income............................ -- -- -- 302 302
Change in net unrealized capital gains
(losses) on securities, net of tax... -- -- 149 -- 149
--
------ ------ ----------- ------
Balance, December 31, 1997.............. $6 $1,045 $179 $1,113 $2,343
--
--
------ ------ ----------- ------
------ ------ ----------- ------
</TABLE>
See Notes to Consolidated Financial Statements.
91
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER
31,
------------------------------
1997 1996 1995
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Operating Activities
Net income............................ $ 302 $ 38 $ 129
Adjustments to reconcile net income to
cash provided by operating activities
Depreciation and amortization......... 8 14 21
Net realized capital (gains) losses... (4) 213 11
Decrease (increase) in deferred income
taxes................................ 40 (102) (172)
Increase in deferred policy
acquisition costs.................... (555) (572) (379)
Decrease (increase) in premiums
receivable and agents' balances...... 119 10 (81)
Decrease (increase) in accrued
investment income.................... 77 (13) (16)
Decrease (increase) in other assets... 52 (132) (177)
(Increase) decrease in reinsurance
recoverables......................... (416) 179 (35)
Increase (decrease) in liabilities for
future policy benefits............... 796 (92) 483
Increase in other liabilities......... 379 477 281
-------- -------- --------
Cash provided by operating
activities......................... 798 20 65
-------- -------- --------
Investing Activities
Purchases of fixed maturity
investments.......................... (6,231) (5,747) (6,228)
Sales of fixed maturity investments... 4,232 3,459 4,845
Maturities and principal paydowns of
fixed maturity investments........... 2,329 2,693 1,741
Net sales (purchases) of other
investments.......................... 24 (107) (871)
Net (purchases) sales of short-term
investments.......................... (638) 84 (24)
-------- -------- --------
Cash (used for) provided by
investing activities............... (284) 382 (537)
-------- -------- --------
Financing Activities
Capital contribution.................. -- 38 --
Net (disbursements for) receipts from
investment and universal life-type
contracts (charged against) credited
to policyholder accounts............. (503) (443) 498
-------- -------- --------
Cash (used for) provided by
financing activities............... (503) (405) 498
-------- -------- --------
Increase (decrease) in cash........... 11 (3) 26
Cash -- beginning of year............. 43 46 20
-------- -------- --------
Cash -- end of year................... $ 54 $ 43 $ 46
-------- -------- --------
-------- -------- --------
Supplemental Disclosure of Cash Flow
Information:
Net Cash Paid During the Year for:
Income taxes.......................... $ 9 $ 189 $ 162
Noncash Financing Activities:
Capital contribution.................. $ -- $ -- $ 181
-------- -------- --------
-------- -------- --------
</TABLE>
See Notes to Consolidated Financial Statements.
92
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN MILLIONS EXCEPT PER SHARE DATA UNLESS OTHERWISE STATED)
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
These consolidated financial statements include Hartford Life Insurance
Company and its wholly-owned subsidiaries (the "Company"), ITT Hartford Life and
Annuity Insurance Company ("ILA") and ITT Hartford International Life
Reassurance Corporation ("HLRe"), formerly American Skandia Life Reinsurance
Corporation. The Company is a wholly-owned subsidiary of Hartford Life and
Accident Insurance Company ("HLA"), a wholly-owned subsidiary of Hartford Life,
Inc. ("Hartford Life"). Hartford Life is a direct subsidiary of Hartford
Accident and Indemnity Company ("HA&I"), an indirect subsidiary of The Hartford
Financial Services Group, Inc. ("The Hartford"). On February 10, 1997, Hartford
Life filed a registration statement, as amended, with the Securities and
Exchange Commission relating to an Initial Public Offering ("IPO") of the
Hartford Life's Class A Common Stock. Pursuant to the IPO on May 22, 1997,
Hartford Life sold to the public 26 million shares at $28.25 per share and
received net proceeds of $687. Of the proceeds, $527 was used to retire debt
related to Hartford Life's outstanding promissory notes and line of credit with
the remaining $160 contributed by Hartford Life to HLA to support growth in its
core businesses.
On December 19, 1995, ITT Industries, Inc. (formerly ITT Corporation)
("ITT") distributed all the outstanding shares of capital stock of The Hartford
to ITT stockholders of record on such date. As a result, The Hartford became an
independent, publicly traded company.
Along with its parent, the Company is a leading insurance and financial
services company which provides (a) investment products such as individual
variable annuities and fixed market value adjusted annuities, deferred
compensation and retirement plan services and mutual funds for savings and
retirement needs; (b) life insurance for income protection and estate planning;
and (c) employee benefits products such as group life and group disability
insurance and corporate owned life insurance.
2. SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION
These consolidated financial statements present the financial position,
results of operations and cash flows of the Company. All material intercompany
transactions and balances between the Company, its subsidiaries and affiliates
have been eliminated. The consolidated financial statements are prepared on the
basis of generally accepted accounting principles which differ materially from
the statutory accounting practices prescribed by various insurance regulatory
authorities.
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 and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The most
significant estimates include those used in determining deferred policy
acquisition costs and the liability for future policy benefits and other
policyholder funds. Although some variability is inherent in these estimates,
management believes the amounts provided are adequate.
Certain reclassifications have been made to prior year financial information
to conform to the current year presentation.
(B) CHANGES IN ACCOUNTING PRINCIPLES
In December 1997, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") No. 97-3 "Accounting by Insurance
and Other Enterprises for Insurance Related Assessments". This SOP provides
guidance on accounting by insurance and other enterprises for assessments
related to insurance activities. Specifically, the SOP provides guidance on when
a guaranty fund or other assessment should be recognized, how to measure the
liability, and what information should be disclosed. This SOP will be effective
for fiscal years beginning after December 15, 1998. Adoption of SOP 97-3 is not
expected to have a material impact on the Company's financial condition or
results of operations.
On November 14, 1996, the Emerging Issues Task Force ("EITF") reached a
consensus on Issue No. 96-12, "Recognition of Interest Income and Balance Sheet
Classification of Structured Notes". This EITF issue requires companies to
record income on certain structured securities on a retrospective interest
method. The Company adopted EITF No. 96-12 for structured securities acquired
after November 14, 1996. Adoption of EITF No. 96-12 did not have a material
effect on the Company's financial condition or results of operations.
In June 1996, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of Liabilities"
which is effective for transfers and servicing of financial
93
<PAGE>
assets and extinguishments of liabilities occurring after December 31, 1996.
This statement established criteria for determining whether transferred assets
should be accounted for as sales or secured borrowings. Subsequently, in
December 1996, the FASB issued SFAS No. 127, "Deferral of Effective Date of
Certain Provisions of FASB Statement No. 125", which defers the effective date
of certain provisions of SFAS No. 125 for one year. Adoption of SFAS No. 125 is
not expected to have a material effect on the Company's financial condition or
results of operations.
Effective January 1, 1996, the Company adopted SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of". This statement establishes accounting standards for the impairment of
long-lived assets, certain identifiable intangibles, and goodwill related to
those assets to be held and used and for long-lived assets and certain
identifiable intangibles to be disposed of. Adoption of SFAS No. 121 did not
have a material effect on the Company's financial condition or results of
operations.
The Company's cash flows were not impacted by these changes in accounting
principles.
(C) REVENUE RECOGNITION
Revenues for universal life-type policies and investment products consist of
policy charges for the cost of insurance, policy administration and surrender
charges assessed to policy account balances and are recognized in the period in
which services are provided. Premiums for traditional life insurance and
disability policies are recognized as revenues when they are due from
policyholders.
(D) FUTURE POLICY BENEFITS AND OTHER POLICYHOLDER FUNDS
Liabilities for future policy benefits are computed by the net level premium
method using interest rate assumptions varying from 3% to 11% and withdrawal and
mortality assumptions appropriate at the time the policies were issued. Health
reserves, which are the result of sales of group long-term and short-term
disability, stop loss, Medicare Supplement and individual disability products,
are stated at amounts determined by estimates on individual cases and estimates
of unreported claims based on past experience. Liabilities for universal
life-type and investment contracts are stated at policyholder account values
before surrender charges.
(E) POLICYHOLDER REALIZED CAPITAL GAINS AND LOSSES
Realized capital gains and losses on security transactions associated with
the Company's immediate participation guaranteed contracts are excluded from
revenues and deferred over the expected maturity of the securities, since under
the terms of the contracts the realized gains and losses will be credited to
policyholders in future years as they are entitled to receive them.
(F) INVESTMENTS
The Company's investments in fixed maturities include bonds and commercial
paper which are considered "available for sale" and accordingly are carried at
fair value with the after-tax difference from cost reflected as a component of
Stockholder's Equity designated "Net unrealized capital gains (losses) on
securities, net of tax". Equity securities, which include common and
non-redeemable preferred stocks, are carried at fair values with the after-tax
difference from cost reflected in Stockholder's Equity. Policy loans are carried
at outstanding balance which approximates fair value. Net realized capital gains
and losses, after deducting pension policyholders' share, are reported as a
component of revenue and are determined on a specific identification basis.
The Company's accounting policy for impairment requires recognition of an
other than temporary impairment charge on a security if it is determined that
the Company is unable to recover all amounts due under the contractual
obligations of the security. In addition, for securities expected to be sold, an
other than temporary impairment charge is recognized if the Company does not
expect the fair value of a security to recover to cost or amortized cost prior
to the expected date of sale. Once an impairment charge has been recorded, the
Company then continues to review the other than temporarily impaired securities
for appropriate valuation on an on-going basis.
During 1996, it was determined that certain individual securities within the
investment portfolio supporting the Company's block of guaranteed rate contract
business written prior to 1995 ("Closed Book GRC") could not recover to
amortized cost prior to sale. Therefore, an other than temporary impairment loss
of $88, after-tax, was recorded.
(G) DERIVATIVE INSTRUMENTS
The Company uses a variety of derivative instruments including swaps, caps,
floors, forwards and exchange traded financial futures and options as part of an
overall risk management strategy. These instruments 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 instruments for trading purposes. The
Company's accounting for derivative instruments used to manage risk is in
accordance with the concepts established in SFAS No. 80, "Accounting for Futures
Contracts", SFAS No. 52, "Foreign Currency Translation", AICPA SOP 86-2,
"Accounting for Options" and various EITF pronouncements. Written options are
used, in all cases in conjunction with other assets and derivatives, as part of
the Company's asset and liability management strategy. Derivative instruments
are carried at values consistent with the asset or liability being hedged.
Derivative instruments used to hedge fixed maturities or equity securities are
carried at fair value
94
<PAGE>
with the after-tax difference from cost reflected in Stockholder's Equity.
Derivative instruments used to hedge other invested assets or liabilities are
carried at cost.
Derivative instruments must be designated at inception as a hedge and
measured for effectiveness both at inception and on an on-going basis. The
Company's minimum correlation threshold for hedge designation is 80%. If
correlation, which is assessed monthly and measured based on a rolling three
month average, falls below 80%, hedge accounting will be terminated. Derivative
instruments 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
it is intended to replicate. Derivative instruments which fail to meet risk
management criteria, subsequent to acquisition, are marked to market with the
impact reflected in the Consolidated Statements of Income.
Gains or losses on financial futures contracts entered into in anticipation
of the investment of future receipt of product cash flows are deferred and, at
the time of the ultimate investment purchase, reflected as an adjustment to the
cost basis of the purchased asset. Gains or losses on futures used in invested
asset risk management are deferred and adjusted into the cost basis of the
hedged asset when the contract futures are closed, except for futures used in
duration hedging which are deferred and basis adjusted on a quarterly basis. The
basis adjustments are amortized into net investment income over the remaining
asset life.
Open forward commitment contracts are marked to market through Stockholder's
Equity. Such contracts are accounted for at settlement by recording the purchase
of the specified securities at the previously committed price. Gains or losses
resulting from the termination of forward commitment contracts before the
delivery of the securities are recognized immediately in the Consolidated
Statements of Income as a component of net investment income.
The cost of options entered into as part of a risk management strategy are
basis adjusted to the underlying asset or liability and amortized over the
remaining life of the option. Gains or losses on expiration or termination are
adjusted into the basis of the underlying asset or liability and amortized over
the remaining asset life.
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 investment income. Should the swap be terminated, the gain or loss is
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 Consolidated Statements of Income while the
change in market value is recognized as an unrealized capital gain or loss.
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.
Forward exchange contracts and foreign currency swaps are accounted for in
accordance with SFAS No. 52. Changes in the spot rate of instruments designated
as hedges of the net investment in a foreign subsidiary are reflected in the
cumulative translation adjustments component of Stockholder's Equity. Cash flows
from futures, options, and swaps, accounted for as hedges, are included with the
cash flows of the item being hedged.
(H) SEPARATE ACCOUNTS
The Company maintains separate account assets and liabilities which are
reported at fair value. Separate account assets are segregated from other
investments, and investment income and gains and losses accrue directly to the
policyholders. Separate accounts reflect two categories of risk assumption:
non-guaranteed separate accounts, wherein the policyholder assumes the
investment risk, and guaranteed separate account assets, wherein the Company
contractually guarantees either a minimum return or account value to the
policyholder.
(I) DEFERRED POLICY ACQUISITION COSTS
Policy acquisition costs, which include commissions and certain underwriting
expenses associated with acquiring business, are deferred and amortized over the
estimated lives of the contracts, generally 20 years. Generally, acquisition
costs are deferred and amortized using the retrospective deposit method. Under
the retrospective deposit method, acquisition costs are amortized in proportion
to the present value of expected gross profits from surrender charges,
investment, mortality and expense margins. Actual gross profits can vary from
management's estimates resulting in increases or decreases in the rate of
amortization. Management periodically updates these estimates, when appropriate,
and evaluates the recoverability of the deferred acquisition cost asset. When
appropriate, management revises its assumptions on the estimated gross profits
of these contracts and the cumulative amortization
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<PAGE>
for the books of business are reestimated and adjusted by a cumulative charge or
credit to income.
The Company's other expenses include the following:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Commissions........................... $ 976 $ 848 $ 619
Deferred acquisition costs............ (862) (823) (618)
Other................................. 472 402 316
--------- --------- ---------
Total other expenses.............. $ 586 $ 427 $ 317
--------- --------- ---------
--------- --------- ---------
</TABLE>
(J) DIVIDENDS TO POLICYHOLDERS
Certain life insurance policies contain dividend payment provisions that
enable the policyholder to participate in the earnings of the life insurance
subsidiaries of the Company. The participating insurance in force accounted for
55%, 44%, and 41% in 1997, 1996, and 1995, respectively, of total insurance in
force.
3. INITIAL PUBLIC OFFERING
On February 10, 1997, Hartford Life filed a registration statement, as
amended, with the Securities and Exchange Commission, relating to the IPO of
Hartford Life's Class A Common Stock. Pursuant to the IPO on May 22, 1997,
Hartford Life sold to the public 26 million shares at $28.25 per share and
received proceeds, net of offering expenses, of $687. Of the proceeds, $527 was
used to retire debt related to Hartford Life's promissory notes outstanding and
line of credit. The remaining $160 was contributed by Hartford Life to HLA to
support growth in its core businesses. The 26 million shares sold in the
Offering represent approximately 18.6% of the equity ownership in Hartford Life
and approximately 4.4% of the combined voting power of Hartford Life's Class A
and Class B Common Stock. The Hartford owns all of the 114 million outstanding
shares of Class B Common Stock of Hartford Life, representing approximately
81.4% of the equity ownership in Hartford Life and approximately 95.6% of the
combined voting power of Hartford Life's Class A and Class B Common Stock.
Holders of Class A Common Stock generally have identical rights to the holders
of Class B Common Stock except that the holders of Class A Common Stock are
entitled to one vote per share while holders of Class B Common Stock are
entitled to five votes per share on all matters submitted to a vote of Hartford
Life's stockholders.
4. INVESTMENTS AND DERIVATIVE INSTRUMENTS
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Interest income from fixed
maturities......................... $ 932 $ 918 $ 996
Interest income from policy loans... 425 477 342
Income from other investments....... 26 15 1
--------- --------- ---------
Gross investment income............. 1,383 1,410 1,339
Less: Investment expenses........... 15 13 11
--------- --------- ---------
Net investment income............... $ 1,368 $ 1,397 $ 1,328
--------- --------- ---------
--------- --------- ---------
</TABLE>
(B) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
---------------------------------
1997 1996 1995
----- --------- ---------
<S> <C> <C> <C>
Fixed maturities......................... $ (7) $ (201) $ 23
Equity securities........................ 12 2 (6)
Real estate and other.................... (1) (4) (25)
Less: Increase in liability to
policyholders for realized capital
gains................................... -- (10) (3)
--- --------- ---------
Net realized capital gains (losses)...... $ 4 $ (213) $ (11)
--- --------- ---------
--- --------- ---------
</TABLE>
(C) NET UNREALIZED CAPITAL GAINS (LOSSES) ON EQUITY SECURITIES
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------------------
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Gross unrealized capital gains.............. $ 14 $ 13 $ 4
Gross unrealized capital losses............. -- (1) (2)
--- --- ---
Net unrealized capital gains................ 14 12 2
Deferred income tax expense................. 5 4 1
--- --- ---
Net unrealized capital gains, net of tax.... 9 8 1
Balance -- beginning of year................ 8 1 (6)
--- --- ---
Net change in unrealized capital gains
(losses) on equity securities.............. $ 1 $ 7 $ 7
--- --- ---
--- --- ---
</TABLE>
96
<PAGE>
(D) NET UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED MATURITIES
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
---------------------
1997 1996 1995
----- ----- -----
<S> <C> <C> <C>
Gross unrealized capital gains................................... $ 371 $ 386 $ 529
Gross unrealized capital losses.................................. (80) (341) (569)
Unrealized capital (gains) losses credited to policyholders...... (30) (11) (52)
----- ----- -----
Net unrealized capital gains (losses)............................ 261 34 (92)
Deferred income tax expense (benefit)............................ 91 12 (34)
----- ----- -----
Net unrealized capital gains (losses), net of tax................ 170 22 (58)
Balance -- beginning of year..................................... 22 (58) (648)
----- ----- -----
Net change in unrealized capital gains (losses) on fixed
maturities...................................................... $ 148 $ 80 $ 590
----- ----- -----
----- ----- -----
</TABLE>
(E) FIXED MATURITY INVESTMENTS
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
---------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
U.S. gov't and gov't agencies and authorities
(guaranteed and sponsored)...................................... $ 217 $ 3 $ (1) $ 219
U.S. gov't and gov't agencies and authorities
(guaranteed and sponsored) -- asset backed...................... 1,175 64 (35) 1,204
States, municipalities and political subdivisions................ 211 7 (1) 217
International governments........................................ 376 20 (3) 393
Public utilities................................................. 871 26 (3) 894
All other corporate including international...................... 5,033 200 (25) 5,208
All other corporate -- asset backed.............................. 4,091 41 (8) 4,124
Short-term investments........................................... 1,318 -- -- 1,318
Certificates of deposit.......................................... 593 10 (4) 599
---------- ----- ----- ----------
Total fixed maturities....................................... $13,885 $371 $(80) $14,176
---------- ----- ----- ----------
---------- ----- ----- ----------
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996
---------------------------------------------------
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED
COST GAINS LOSSES FAIR VALUE
---------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
U.S. gov't and gov't agencies and authorities
(guaranteed and sponsored)...................................... $ 166 $ 12 $ (3) $ 175
U.S. gov't and gov't agencies and authorities
(guaranteed and sponsored) -- asset backed...................... 1,970 161 (128) 2,003
States, municipalities and political subdivisions................ 373 6 (11) 368
International governments........................................ 281 12 (4) 289
Public utilities................................................. 877 12 (8) 881
All other corporate including international...................... 4,656 120 (107) 4,669
All other corporate -- asset backed.............................. 3,601 49 (59) 3,591
Short-term investments........................................... 1,655 14 (21) 1,648
---------- ----- ----------- ----------
Total fixed maturities....................................... $13,579 $386 $(341) $13,624
---------- ----- ----------- ----------
---------- ----- ----------- ----------
</TABLE>
The amortized cost and estimated fair value of fixed maturity investments at
December 31, 1997 by estimated maturity year are shown below. Expected
maturities differ from contractual maturities due to call or prepayment
provisions. Asset backed securities, including MBS and CMO's, are distributed to
maturity year based on the Company's estimates of the rate of future prepayments
of principal over the remaining lives of the securities. These estimates are
developed using prepayment speeds provided in broker consensus data. Such
estimates are derived from prepayment speeds experienced at the interest rate
levels projected for the applicable underlying collateral and can be expected to
vary from actual experience.
MATURITY
<TABLE>
<CAPTION>
AMORTIZED
COST FAIR VALUE
----------- -----------
<S> <C> <C>
One year or less......................... $ 2,838 $ 2,867
Over one year through five years......... 5,528 5,595
Over five years through ten years........ 3,094 3,156
Over ten years........................... 2,425 2,558
----------- -----------
Total................................ $ 13,885 $ 14,176
----------- -----------
----------- -----------
</TABLE>
97
<PAGE>
Sales of fixed maturities, excluding short-term fixed maturities, for the
years ended December 31, 1997, 1996 and 1995 resulted in proceeds of $4.2
billion, $3.5 billion and $4.8 billion, gross realized capital gains of $169,
$87 and $91, gross realized capital losses (including writedowns) of $176, $298
and $72, respectively. Sales of equity security investments for the years ended
December 31, 1997, 1996 and 1995 resulted in proceeds of $132, $74 and $64,
gross realized capital gains of $12, $2 and $28 and gross realized capital
losses of $0, $0 and $59, respectively.
(F) CONCENTRATION OF CREDIT RISK
Excluding investments in U.S. government and agencies, the Company has not
invested in the securities of a single issuer in amounts greater than 10% of
stockholder's equity at December 31, 1997.
(G) DERIVATIVE INSTRUMENTS
The Company utilizes a variety of derivative instruments, including swaps,
caps, floors, forwards and exchange traded futures and options, in accordance
with Company policy and in order to achieve one of three Company approved
objectives: to hedge risk arising from interest rate, price or currency exchange
rate volatility; to manage liquidity; or, to control transactions costs. The
Company utilizes derivative instruments to manage market risk through four
principal risk management strategies: hedging anticipated transactions, hedging
liability instruments, hedging invested assets and hedging portfolios of assets
and/or liabilities. The Company does not trade in these instruments for the
express purpose of earning trading profits.
The Company maintains a derivatives counterparty exposure policy which
establishes market-based credit limits, favors long-term financial stability and
creditworthiness, and typically requires credit enhancement/credit risk reducing
agreements. Credit risk is measured as the amount owed to the Company based on
current market conditions and potential payment obligations between the Company
and its counterparties. Credit exposures are quantified weekly and netted, and
collateral is pledged to or held by the Company to the extent the current value
of derivatives exceed exposure policy thresholds.
The Company's derivative program is monitored by an internal compliance unit
and is reviewed by senior management and Hartford Life's Finance Committee.
Notional amounts, which represent the basis upon which pay or receive amounts
are calculated and are not reflective of credit risk, pertaining to derivative
financial instruments (excluding the Company's guaranteed separate account
derivative investments), totaled $6.5 billion and $9.9 billion ($4.6 billion and
$7.4 billion related to the Company's investments, $1.9 billion and $2.5 billion
on the Company's liabilities) at December 31, 1997 and 1996, respectively.
The table below provides a summary of derivative instruments held by the
Company at December 31, 1997 and 1996, segregated by major investment and
liability category:
<TABLE>
<CAPTION>
1997 -- AMOUNT HEDGED (NOTIONAL AMOUNTS)
----------------------------------------------------------------------------------
PURCHASED
CAPS, FOREIGN
TOTAL ISSUED FLOORS INTEREST CURRENCY TOTAL
CARRYING CAPS & AND FUTURES RATE SWAPS NOTIONAL
ASSETS HEDGED VALUE FLOORS OPTIONS (2) SWAPS (3) AMOUNT
- ----------------------------------- -------- -------- ---------- ---------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Asset backed securities (excluding
inverse floaters and
anticipatory)..................... $ 5,253 $ 500 $ 1,404 $ 28 $ 221 $-- $ 2,153
Inverse floaters (1)............... 75 47 80 -- 25 -- 152
Anticipatory (4)................... -- -- -- -- -- -- --
Other bonds and notes.............. 7,531 462 460 22 1,258 91 2,293
Short-term investments............. 1,317 -- -- -- -- -- --
-------- -------- ---------- --- ---------- --- ----------
Total fixed maturities......... 14,176 1,009 1,944 50 1,504 91 4,598
Equity securities, policy loans and
other investments................. 3,983 -- -- -- -- -- --
-------- -------- ---------- --- ---------- --- ----------
Total investments.............. $ 18,159 $ 1,009 $ 1,944 $ 50 $ 1,504 $91 $ 4,598
Long term debt................. -- -- -- -- -- -- --
Other policy claims............ -- 10 150 -- 1,747 -- 1,907
-------- -------- ---------- --- ---------- --- ----------
Total derivatives -- notional
value........................... $ -- $ 1,019 $ 2,094 $ 50 $ 3,251 $91 $ 6,505
-------- -------- ---------- --- ---------- --- ----------
Total derivatives -- fair value.... $ -- $ (8) $ 23 $ -- $ 19 $(6) $ 28
-------- -------- ---------- --- ---------- --- ----------
-------- -------- ---------- --- ---------- --- ----------
</TABLE>
98
<PAGE>
<TABLE>
<CAPTION>
1996 --AMOUNT HEDGED (NOTIONAL AMOUNTS)
--------------------------------------------------------------------------
FOREIGN
TOTAL ISSUED PURCHASED INTEREST CURRENCY TOTAL
CARRYING CAPS & CAPS, FLOORS RATE SWAPS NOTIONAL
ASSETS HEDGED VALUE FLOORS AND OPTIONS FUTURES (2) SWAPS (3) AMOUNT
- ----------------------------------- -------- ------- ------------ ----------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Asset backed securities (excluding
inverse floaters and
anticipatory)..................... $ 5,242 $ 500 $ 2,454 $ -- $ 941 $ -- $3,895
Inverse floaters (1)............... 352 98 856 -- 346 -- 1,300
Anticipatory (4)................... -- -- -- 132 -- -- 132
Other bonds and notes.............. 7,369 425 440 5 1,079 125 2,074
Short-term investments............. 661 -- -- -- -- -- --
-------- ------- ------------ ----- --------- -------- -------
Total fixed maturities......... 13,624 1,023 3,750 137 2,366 125 7,401
Equity securities, policy loans and
other investments................. 4,011 -- -- -- 19 -- 19
-------- ------- ------------ ----- --------- -------- -------
Total investments.............. $ 17,635 $ 1,023 $ 3,750 $ 137 $ 2,385 $ 125 $7,420
Long term debt................. -- -- -- -- -- -- --
Other policy claims............ -- 10 150 -- 2,351 -- 2,511
-------- ------- ------------ ----- --------- -------- -------
Total derivatives -- notional
value......................... $ -- $ 1,033 $ 3,900 $ 137 $ 4,736 $ 125 $9,931
-------- ------- ------------ ----- --------- -------- -------
Total derivatives -- fair
value......................... $ -- $ (10) $ 38 $ -- $ 2 $ (9 ) $ 21
-------- ------- ------------ ----- --------- -------- -------
-------- ------- ------------ ----- --------- -------- -------
</TABLE>
- ---------
(1) Inverse floaters are variations of collateralized mortgage obligations
("CMO's") for which the coupon rates move inversely with an index rate such as
the London interbank offered rate ("LIBOR"). The risk to principal is considered
negligible as the underlying collateral for the securities is guaranteed or
sponsored by government agencies. To address the volatility risk created by the
coupon variability, the Company uses a variety of derivative instruments,
primarily interest rate swaps, caps and floors.
(2) As of December 31, 1997 and 1996, over 44% and 39% , respectively, of
the notional futures contracts expire within one year.
(3) As of December 31, 1997 and 1996, over 16% and 42%, respectively, of
foreign currency swaps expire within one year; the balance matures over the
succeeding 9 years.
(4) Deferred gains and losses on anticipatory transactions are included in
the carrying value of fixed maturities in the Consolidated Balance Sheets. At
the time of the ultimate purchase, they are reflected as a basis adjustment to
the purchased asset. At December 31, 1997, the Company had $0 deferred gains and
losses. At December 31, 1996, the Company had $0.9 in net deferred gains for
futures, interest rate swaps and purchased options of which $2.0 was basis
adjusted in 1997.
The following is a reconciliation of notional amounts by derivative type and
strategy as of December 31, 1997 and 1996:
<TABLE>
<CAPTION>
DECEMBER 31, 1996 MATURITIES/ DECEMBER 31, 1997
NOTIONAL AMOUNT ADDITIONS TERMINATIONS (1) NOTIONAL AMOUNT
----------------- -------- ----------------- -----------------
<S> <C> <C> <C> <C>
BY DERIVATIVE TYPE
Caps......................................... $1,755 $ 14 $ 530 $1,239
Floors....................................... 3,168 28 1,332 1,864
Swaps/Forwards............................... 4,861 941 2,460 3,342
Futures...................................... 137 131 218 50
Options...................................... 10 -- -- 10
------- -------- ------- -------
Total.................................... $9,931 $1,114 $4,540 $6,505
------- -------- ------- -------
BY STRATEGY
Liability.................................... $2,511 $ 191 $ 795 $1,907
Anticipatory................................. 132 4 136 --
Asset........................................ 2,112 739 1,046 1,805
Portfolio.................................... 5,176 180 2,563 2,793
------- -------- ------- -------
Total.................................... $9,931 $1,114 $4,540 $6,505
------- -------- ------- -------
------- -------- ------- -------
</TABLE>
- ---------
(1) During 1997, the Company had no significant gains or losses on terminations
of hedge positions using derivative financial instruments.
99
<PAGE>
5. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107 "Disclosure about Fair
Value of Financial Instruments" requires disclosure of fair value information of
financial instruments. For certain financial instruments where quoted market
prices are not available, other independent valuation techniques and assumptions
are used. Because considerable judgment is used, these estimates are not
necessarily indicative of amounts that could be realized in a current market
exchange. SFAS No. 107 excludes certain financial instruments from disclosure,
including insurance contracts.
For cash, short-term investments, accounts receivable, policy loans,
mortgage loans and other liabilities, carrying amounts on the Consolidated
Balance Sheets approximate fair value.
Fair value for fixed maturities and marketable equity securities are based
upon quoted market prices. Fair value for securities that are not publicly
traded are analytically determined. These amounts are disclosed in Note 4 of
Notes to Consolidated Financial Statements.
The fair value of derivative financial instruments, including swaps, caps,
floors, futures, options and forward commitments, is determined using a pricing
model which is validated through quarterly comparison to dealer quoted prices.
Amounts are disclosed in Note 4 of Notes to Consolidated Financial Statements.
Fair value for partnerships and trusts are based on external market
valuations from partnership and trust management.
Other policy claims and benefits payable fair value information is
determined by estimating future cash flows, discounted at the current market
rate.
The carrying amount and fair values of the Company's financial instruments
at December 31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
------------------ ------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- ------- --------- -------
<S> <C> <C> <C> <C>
ASSETS
Fixed maturities..................................... $ 14,176 $14,176 $ 13,624 $13,624
Equity securities.................................... 180 180 119 119
Policy loans......................................... 3,756 3,756 3,836 3,836
Mortgage loans....................................... -- -- 2 2
Investments in partnerships, trusts and other........ 47 91 54 104
LIABILITIES
Other policy benefits................................ $ 11,769 $11,755 $ 11,707 $11,469
</TABLE>
6. SEPARATE ACCOUNTS
The Company maintained separate account assets and liabilities totaling
$69.1 billion and $49.7 billion at December 31, 1997 and 1996, respectively,
which are reported at fair value. Separate account assets are segregated from
other investments and net investment income and net realized capital gains and
losses accrue directly to the policyholder. Separate accounts reflect two
categories of risk assumption: non-guaranteed separate accounts totaling $58.6
billion and $39.4 billion at December 31, 1997 and 1996, respectively, wherein
the policyholder assumes the investment risk, and guaranteed separate accounts
totaling $10.5 and $10.3 billion at December 31, 1997 and 1996, respectively,
wherein the Company contractually guarantees either a minimum return or account
value to the policyholder. Included in the non-guaranteed category were policy
loans totaling $1.9 billion and $2.0 billion at December 31, 1997 and 1996,
respectively. Net investment income (including net realized capital gains and
losses) and interest credited to policyholders on separate account assets are
not reflected in the Consolidated Statements of Income.
Separate account management fees were $699, $538 and $387 in 1997, 1996 and
1995, respectively. The guaranteed separate accounts include fixed market value
adjusted individual annuity and modified guaranteed life insurance. The average
credited interest rate on these contracts was 6.52% at December 31, 1997. The
assets that support these liabilities were comprised of $10.2 billion in fixed
maturities as of December 31, 1997. The portfolios are segregated from other
investments and are managed to minimize liquidity and interest rate risk. In
order to minimize the risk of disintermediation associated with early
withdrawals, fixed MVA annuity and modified guaranteed life insurance contracts
carry a graded surrender charge as well as a market value adjustment. Additional
investment risk is hedged using a variety of derivatives which totaled $119 in
carrying value and $3.0 billion in notional amounts as of December 31, 1997.
100
<PAGE>
7. INCOME TAX
Hartford Life 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 beneficially own, directly or
indirectly, at least 80% of the combined voting power and 80% of the value of
the outstanding capital stock of Hartford Life, the Company will be included for
Federal income tax purposes in the affiliated group of which The Hartford is the
common parent. To the extent allowed by law, it is the intention of The Hartford
and its subsidiaries to continue to file a single consolidated Federal income
tax return. The Company will continue to remit (receive from) The Hartford a
current income tax provision (benefit) computed in accordance with such tax
sharing agreement. The Company's effective tax rate was 36%, 35% and 32% in
1997, 1996 and 1995, respectively.
Income tax expense is as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
-------------------------
1997 1996 1995
---- ------ ------
<S> <C> <C> <C>
Current...................................... $119 $ 122 $ 211
Deferred..................................... 48 (102) (149)
---- ------ ------
Income tax expense......................... $167 $ 20 $ 62
---- ------ ------
---- ------ ------
</TABLE>
A reconciliation of the tax provision at the U.S. Federal statutory rate to
the provision for income taxes is as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------
1997 1996 1995
--------- ----- -----
<S> <C> <C> <C>
Tax provision at the U.S. Federal statutory
rate...................................... $ 164 $ 20 $ 67
Tax-exempt income.......................... -- -- (3)
Foreign tax credit......................... -- -- (4)
Other...................................... 3 -- 2
--------- --- ---
Total.................................... $ 167 $ 20 $ 62
--------- --- ---
--------- --- ---
</TABLE>
Deferred tax assets include the following at December 31:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Tax return deferred acquisition costs............ $ 639 $ 514
Financial statement deferred acquisition costs
and reserves.................................... (366) (242)
Employee benefits................................ 5 8
Net unrealized capital gains on securities....... (96) (16)
Investments and other............................ 166 210
--------- ---------
Total.......................................... $ 348 $ 474
--------- ---------
--------- ---------
</TABLE>
Income taxes paid were $9, $189 and $162 in 1997, 1996 and 1995,
respectively. The Company had a current tax payment of $27 due to The Hartford
at December 31, 1997 and a tax refund due from The Hartford of $72 at December
31, 1996.
Prior to the Tax Reform Act of 1984, the Life Insurance Company Income Tax
Act of 1959 permitted the deferral from taxation of a portion of statutory
income under certain circumstances. In these situations, the deferred income was
accumulated in a "Policyholders' Surplus Account" and will be taxable in the
future only under conditions which management considers to be remote; therefore,
no Federal income taxes have been provided on this deferred income. The balance
for tax return purposes of the Policyholders' Surplus Account as of December 31,
1997 was $37.
8. POSTRETIREMENT BENEFIT AND SAVINGS PLANS
(A) PENSION PLANS
The Company's employees are included in The Hartford's noncontributory
defined benefit pension plans. These plans provide pension benefits that are
based on years of service and the employee's compensation during the last ten
years of employment. The Company's funding policy is to contribute annually an
amount between the minimum funding requirements set forth in the Employee
Retirement Income Security Act of 1974, 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 the Company's group pension contracts. The
cost to the Company was approximately $5, $5 and $2 in 1997, 1996 and 1995,
respectively.
The Company also provides, through The Hartford, certain health care and
life insurance benefits for eligible retired employees. A substantial portion of
the Company's employees may become eligible for these benefits upon retirement.
The Company'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. The Company has prefunded
a portion of the health care and life insurance obligations through trust funds
where such prefunding can be accomplished on a tax effective basis.
Postretirement health care and life insurance benefits expense, allocated by The
Hartford, was immaterial to the results of operations for 1997, 1996 and 1995,
respectively.
The assumed rate in the per capita cost of health care (the health care
trend rate) was 8.5% for 1997, decreasing ratably to 6.0% in the year 2001.
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,
101
<PAGE>
the effect will be amortized over the average future service of covered
employees.
(B) INVESTMENT AND SAVINGS PLAN
Substantially all employees of the Company are eligible to participate in The
Hartford's Investment and Savings Plan. Under this plan, designated
contributions, which may be invested in Class A Common Stock of Hartford Life or
certain other investments, are matched, up to 3% of compensation, by the
Company. The cost to the Company for the above-mentioned plans was approximately
$2 in 1997.
9. STOCK COMPENSATION PLANS
During the second quarter of 1997, Hartford Life adopted the 1997 HLI
Incentive Stock Plan (the "Plan"). Under the Plan, options granted may be either
non-qualified options or incentive stock options qualifying under Section 422A
of the Internal Revenue Code. The aggregate number of shares of Class A Common
Stock which may be awarded in any one year shall be subject to an annual limit.
The maximum number of shares of Class A Common Stock which may be granted under
the Plan in each year shall be 1.5% of the total issued and outstanding shares
of Hartford Life Class A Common Stock and treasury stock as reported in the
Annual Report on Hartford Life's Form 10-K for the preceding year plus unused
portions of such limit from prior years. In addition, no more than 5,000,000
shares of Class A Common Stock shall be cumulatively available for awards of
incentive stock options under the Plan, and no more than 20% of the total number
of shares on a cumulative basis shall be available for restricted stock and
performance shares.
All options granted have an exercise price equal to the market price of
Hartford Life's stock on the date of grant and an option's maximum term is ten
years. Certain nonperformance based options become exercisable upon the
attainment of specified market price appreciation of Hartford Life's common
shares or at seven years after the date of grant, while the remaining
nonperformance based options become exercisable over a three year period
commencing with the date of grant.
Also included in the Plan are long term performance awards which become
payable upon the attainment of specific performance goals achieved over a three
year period.
During the second quarter of 1997, Hartford Life established the HLI
Employee Stock Purchase Plan ("ESPP"). Under this plan, eligible employees of
Hartford Life and the Company may purchase Class A Common Stock of Hartford Life
at a 15% discount from the lower of the market price at the beginning or end of
the quarterly offering period. Hartford Life may sell up to 2,700,000 shares of
stock to eligible employees. Hartford Life sold 54,316 shares under the ESPP in
1997.
10. REINSURANCE
The Company cedes insurance to other insurers, including its parent HLA, in
order to limit its maximum loss. Such transfer does not relieve the Company of
its primary liability. The Company also assumes insurance from other insurers.
Failure of reinsurers to honor their obligations could result in losses to the
Company. The Company evaluates the financial condition of its reinsurers and
monitors concentration of credit risk.
Net premiums and other considerations were comprised of the following:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Gross premiums............................... $ 2,164 $ 2,138 $ 1,545
Assumed...................................... 159 190 591
Ceded........................................ (686) (623) (649)
--------- --------- ---------
Net premiums and other considerations...... $ 1,637 $ 1,705 $ 1,487
--------- --------- ---------
--------- --------- ---------
</TABLE>
The Company ceded approximately $76, $100 and $101 of group life premium in
1997, 1996 and 1995, respectively, representing $33.6 billion, $33.3 billion and
$32.3 billion of insurance in force, respectively. The Company ceded $339, $318
and $320 of accident and health premium to HLA in 1997, 1996 and 1995,
respectively. The Company assumed $89, $101 and $103 of premium in 1997, 1996
and 1995, respectively, representing $8.2 billion, $8.5 billion and $8.5 billion
of individual life insurance in force, respectively, from HLA.
Life reinsurance recoveries, which reduce death and other benefits,
approximated $158, $140 and $220 for the years ended December 31, 1997, 1996 and
1995, respectively.
As of December 31, 1997, the Company had reinsurance recoverables of $5.0
billion from Mutual Benefit Life Assurance Corporation ("Mutual Benefit"),
supported by assets in a security trust of $5.0 billion (including policy loans
and accrued interest of $4.5 billion). The risk of Mutual Benefit becoming
insolvent is mitigated by the reinsurance agreement's requirement that the
assets be kept in a security trust with the Company as sole beneficiary. The
Company has no other significant reinsurance-related concentrations of credit
risk.
11. RELATED PARTY TRANSACTIONS
Transactions of the Company with HA&I and its affiliates relate principally
to tax settlements, reinsurance, insurance coverage, rental and service fees,
payment of dividends and capital contributions. In addition, certain affiliated
insurance companies purchased group annuity contracts from the Company to fund
pension costs and claim annuities to settle casualty claims. Substantially all
general insurance expenses related to the Company, including rent and employee
benefit plan expenses, are initially paid by The Hartford. Direct expenses are
allocated to the Company using specific identification, and indirect expenses
are allocated using other applicable methods. Indirect expenses include those
for corporate areas which,
102
<PAGE>
depending on type, are allocated based on either a percentage of direct expenses
or on utilization. Indirect expenses allocated to the Company by The Hartford
were $34, $40, and $45 in 1997, 1996 and 1995, respectively. Management believes
that the methods used are reasonable.
The rent paid to Hartford Fire for space occupied by the Company was $7 in
1997, and $3 in 1996 and 1995. The Company expects to pay annual rent of $7 in
1998 and 1999, respectively, $12 in 2000 and 2001, respectively, $13 in 2002 and
$87 thereafter, over the remaining term of the sublease, which expires on
December 31, 2009. Rental expense is recognized over a level basis over the term
of the sublease and amounted to approximately $9 in 1997 and $8 in 1996 and
1995.
12. STATUTORY RESULTS
The domestic insurance subsidiaries of Hartford Life prepare their statutory
financial statements in accordance with accounting practices prescribed by the
State of Connecticut Insurance Department. Prescribed statutory accounting
practices include publications of the National Association of Insurance
Commissioners ("NAIC"), as well as state laws, regulations, and general
administrative rules.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Statutory net income......................... $ 214 $ 144 $ 112
------ ------ ------
Statutory surplus............................ $1,441 $1,207 $1,125
------ ------ ------
------ ------ ------
</TABLE>
A significant percentage of the consolidated statutory surplus is
permanently reinvested or is subject to various state regulatory restrictions
which limit the payment of dividends without prior approval. The total amount of
statutory dividends which may be paid by the insurance subsidiaries of the
Company in 1998 is estimated to be $144.
13. COMMITMENTS AND CONTINGENT LIABILITIES
(A) LITIGATION
The Company is involved in pending and threatened litigation in the normal
course of its business in which claims for monetary and punitive damages have
been asserted. Although there can be no assurances, management, at the present
time, does not anticipate that the ultimate liability arising from such pending
or threatened litigation will have a material effect on the financial condition
or operating results of the Company.
(B) GUARANTY FUNDS
Under insurance guaranty fund laws in each state, the District of Columbia
and Puerto Rico, insurers licensed to do business can be assessed by state
insurance guaranty associations for certain obligations of insolvent insurance
companies to policyholders and claimants. Recent regulatory actions against
certain large life insurers encountering financial difficulty have prompted
various state insurance guaranty associations to begin assessing life insurance
companies for the deemed losses. Most of these laws do provide, however, that an
assessment may be excused or deferred if it would threaten an insurer's solvency
and further provide annual limits on such assessments. A large part of the
assessments paid by the Company's insurance subsidiaries pursuant to these laws
may be used as credits for a portion of the Company's insurance subsidiaries'
premium taxes. The Company paid guaranty fund assessments of approximately $15,
$11 and $10 in 1997, 1996 and 1995, respectively, of which $4, $5, and $6 were
estimated to be creditable against premium taxes.
14. BUSINESS SEGMENT INFORMATION
The Company, along with its parent, sells financial products such as fixed
and variable annuities, retirement plan services, and life and disability
insurance on both an individual and a group basis. The Company divides its core
businesses into three segments: Annuity, Individual Life Insurance, and Employee
Benefits. The Company also maintains a Guaranteed Investment Contracts segment,
which is primarily comprised of guaranteed rate contract business written prior
to 1995 and a Corporate Operation. The Annuity segment offers individual
variable annuities and fixed market value adjusted annuities, deferred
compensation and retirement plan services, mutual funds, investment management
services and other financial products. The Individual Life Insurance segment
sells a variety of individual life insurance products, including variable life,
universal life, interest-sensitive whole life, and term life policies. The
Employee Benefits segment sells group insurance products, including group life,
group short and long-term disability and corporate owned life insurance, and
engages in certain international operations. The Guaranteed Investment Contracts
segment sells a limited amount of guaranteed investment contracts and contains
Closed Book GRC. Through its Corporate Operation, the Company reports items that
are not directly allocable to any of its business segments. Included in the
Corporate Operation are unallocated income and expense and certain other items
not directly allocable to any segment. Net realized capital gains and losses are
recognized in the period of realization, but are allocated to the segments
utilizing durations of the segment portfolios.
103
<PAGE>
The following table outlines revenues, operating income and assets by
business segment:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
REVENUES
Annuity.............................................. $ 1,269 $ 968 $ 759
Individual Life Insurance............................ 487 440 383
Employee Benefits.................................... 972 1,366 1,273
Guaranteed Investment Contracts...................... 241 34 337
Corporate Operation.................................. 40 81 52
-------- -------- --------
Total revenues..................................... $ 3,009 $ 2,889 $ 2,804
-------- -------- --------
-------- -------- --------
INCOME (LOSS) BEFORE INCOME TAX EXPENSE (BENEFIT)
Annuity.............................................. $ 317 $ 226 $ 171
Individual Life Insurance............................ 85 68 56
Employee Benefits.................................... 53 44 37
Guaranteed Investment Contracts...................... -- (346) (103)
Corporate Operation.................................. 14 66 30
-------- -------- --------
Total income before income tax expense............. $ 469 $ 58 $ 191
-------- -------- --------
-------- -------- --------
ASSETS
Annuity $ 69,152 $ 52,877 $ 39,732
Individual Life Insurance............................ 4,918 3,753 3,173
Employee Benefits.................................... 18,196 14,708 13,494
Guaranteed Investment Contracts...................... 3,347 4,533 6,069
Corporate Operation.................................. 2,343 1,891 1,729
-------- -------- --------
Total assets....................................... $ 97,956 $ 77,762 $ 64,197
-------- -------- --------
-------- -------- --------
</TABLE>
104
<PAGE>
SCHEDULE I -- SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN AFFILIATES
AS OF DECEMBER 31, 1997
(IN MILLIONS)
<TABLE>
<CAPTION>
AMOUNT AT
WHICH
FAIR SHOWN ON
TYPE OF INVESTMENT COST VALUE BALANCE SHEET
- --------------------------------------------- ------- ------- --------------
<S> <C> <C> <C>
Fixed Maturities
Bonds and Notes
U. S. gov't and gov't agencies and
authorities (guaranteed and sponsored) $ 217 $ 219 $ 219
U. S. gov't and gov't agencies and
authorities (guaranteed and sponsored) --
asset-backed.............................. 1,175 1,204 1,204
States, municipalities and political
subdivisions.............................. 211 217 217
International governments.................. 376 393 393
Public utilities........................... 871 894 894
All other corporate including
international............................. 5,033 5,208 5,208
All other corporate -- asset-backed........ 4,091 4,124 4,124
Short-term investments..................... 1,318 1,318 1,318
Certificates of deposit...................... 593 599 599
------- ------- -------
Total fixed maturities....................... 13,885 14,176 14,176
------- ------- -------
Equity Securities
Common Stocks
Public utilities........................... -- -- --
Banks, trusts and insurance companies...... -- -- --
Industrial and miscellaneous............... 166 180 180
Nonredeemable preferred stocks............. -- -- --
------- ------- -------
Total equity securities...................... 166 180 180
------- ------- -------
Total fixed maturities and equity
securities.................................. 14,051 14,356 14,356
------- ------- -------
Real Estate.................................. -- -- --
Other Investments
Mortgage loans on real estate.............. -- -- --
Policy loans............................... 3,756 3,756 3,756
Investments in partnerships, trusts and
other..................................... 47 91 47
------- ------- -------
Total other investments...................... 3,803 3,847 3,803
------- ------- -------
Total investments............................ $17,854 $18,203 $18,159
------- ------- -------
------- ------- -------
</TABLE>
105
<PAGE>
SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(IN MILLIONS)
<TABLE>
<CAPTION>
FUTURE
POLICY
BENEFITS,
UNPAID OTHER
DEFERRED CLAIMS POLICY
POLICY AND CLAIM CLAIMS AND PREMIUMS NET
ACQUISITION ADJUSTMENT BENEFITS AND OTHER INVESTMENT
SEGMENT COSTS EXPENSES PAYABLE CONSIDERATIONS INCOME
- --------------------------------------------- ----------- --------- ---------- --------------- ---------
<S> <C> <C> <C> <C> <C>
1997
Annuity...................................... $2,478 $2,070 $ 6,838 $ 769 $ 500
Individual Life Insurance.................... 837 392 2,182 323 164
Employee Benefits............................ -- 780 9,232 541 431
Guaranteed Investment Contracts.............. -- -- 2,782 2 239
Corporate Operation.......................... -- 28 -- 2 34
----------- --------- ---------- ------ ---------
Consolidated operations...................... $3,315 $3,270 $21,034 $1,637 $1,368
----------- --------- ---------- ------ ---------
----------- --------- ---------- ------ ---------
1996
Annuity...................................... $2,030 $1,526 $ 6,016 $ 535 $ 433
Individual Life Insurance.................... 730 346 2,160 287 153
Employee Benefits............................ -- 574 9,834 881 485
Guaranteed Investment Contracts.............. -- -- 4,124 2 251
Corporate Operation.......................... -- 28 -- -- 75
----------- --------- ---------- ------ ---------
Consolidated operations...................... $2,760 $2,474 $22,134 $1,705 $1,397
----------- --------- ---------- ------ ---------
----------- --------- ---------- ------ ---------
1995
Annuity...................................... $1,561 $1,314 $ 5,661 $ 319 $ 400
Individual Life Insurance.................... 615 706 1,932 246 137
Employee Benefits............................ 12 325 9,285 922 351
Guaranteed Investment Contracts.............. -- 28 5,720 -- 377
Corporate Operation.......................... -- -- -- -- 63
----------- --------- ---------- ------ ---------
Consolidated operations...................... $2,188 $2,373 $22,598 $1,487 $1,328
----------- --------- ---------- ------ ---------
----------- --------- ---------- ------ ---------
<CAPTION>
NET BENEFITS, AMORTIZATION
REALIZED CLAIMS AND OF DEFERRED
CAPITAL CLAIM POLICY
GAINS ADJUSTMENT ACQUISITION DIVIDENDS TO OTHER
SEGMENT (LOSSES) EXPENSES COSTS POLICYHOLDERS EXPENSES
- --------------------------------------------- ----------- ----------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
1997
Annuity...................................... $ -- $ 445 $250 $ -- $ 257
Individual Life Insurance.................... -- 242 83 -- 77
Employee Benefits............................ -- 425 2 240 252
Guaranteed Investment Contracts.............. -- 232 -- -- 9
Corporate Operation.......................... 4 35 -- -- (9)
----------- ----------- ----- ----- -----
Consolidated operations...................... $ 4 $1,379 $335 $240 $ 586
----------- ----------- ----- ----- -----
----------- ----------- ----- ----- -----
1996
Annuity...................................... $ -- $ 412 $174 $ -- $ 156
Individual Life Insurance.................... -- 245 59 -- 68
Employee Benefits............................ -- 546 -- 635 141
Guaranteed Investment Contracts.............. (219) 332 1 -- 47
Corporate Operation.......................... 6 -- -- -- 15
----------- ----------- ----- ----- -----
Consolidated operations...................... $(213) $1,535 $234 $635 $ 427
----------- ----------- ----- ----- -----
----------- ----------- ----- ----- -----
1995
Annuity...................................... $ -- $ 317 $117 $ -- $ 114
Individual Life Insurance.................... -- 203 70 -- 54
Employee Benefits............................ -- 424 -- 675 137
Guaranteed Investment Contracts.............. -- 453 12 -- 15
Corporate Operation.......................... (11) 25 -- -- (3)
----------- ----------- ----- ----- -----
Consolidated operations...................... $ (11) $1,422 $199 $675 $ 317
----------- ----------- ----- ----- -----
----------- ----------- ----- ----- -----
</TABLE>
106
<PAGE>
SCHEDULE IV -- REINSURANCE
(IN MILLIONS)
<TABLE>
<CAPTION>
CEDED TO ASSUMED FROM PERCENTAGE
GROSS OTHER OTHER NET OF AMOUNT
AMOUNT COMPANIES COMPANIES AMOUNT ASSUMED TO NET
-------- -------------- -------------- -------- ---------------
<S> <C> <C> <C> <C> <C>
For the year ended December 31, 1997
Life insurance in force........................... $245,487 $ 178,771 $ 33,156 $ 99,872 33.2%
Insurance revenues
Life insurance and annuities.................... 1,818 340 157 1,635 9.6%
Accident and health insurance................... 346 346 2 2 100.0%
-------- -------------- ------- --------
Total insurance revenues.......................... $ 2,164 $ 686 $ 159 $ 1,637 9.7%
-------- -------------- ------- --------
-------- -------------- ------- --------
For the year ended December 31, 1996
Life insurance in force......................... $177,094 $ 106,146 $ 31,957 $102,905 31.1%
Insurance revenues
Life insurance and annuities.................... 1,801 298 169 1,672 10.1%
Accident and health insurance................... 337 325 21 33 63.6%
-------- -------------- ------- --------
Total insurance revenues.......................... $ 2,138 $ 623 $ 190 $ 1,705 11.1%
-------- -------------- ------- --------
-------- -------------- ------- --------
For the year ended December 31, 1995
Life insurance in force......................... $182,716 $ 112,774 $ 26,996 $ 96,938 27.8%
Insurance revenues
Life insurance and annuities.................... 1,232 325 574 1,481 38.8%
Accident and health insurance................... 313 324 17 6 283.3%
-------- -------------- ------- --------
Total insurance revenues.......................... $ 1,545 $ 649 $ 591 $ 1,487 39.7%
-------- -------------- ------- --------
-------- -------------- ------- --------
</TABLE>
107
<PAGE>
PART II
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and documents:
The facing sheet.
The prospectus consisting of 62 pages.
The undertaking to file reports.
The Rule 484 undertaking.
The signatures.
(1) The following exhibits included herewith correspond to those required by
paragraph A of the instructions for exhibits to Form N-8B-2.
(A1) Resolution of Board of Directors of Hartford Life Insurance
Company ("Hartford") authorizing the establishment of the
Separate Account.(1)
(A2) Not applicable.
(A3a) Principal Underwriting Agreement.(2)
(A3b) Forms of Selling Agreements.(2)
(A3c) Not applicable.
(A4) Not applicable.
(A5) Form of Modified Single Premium Variable Life Insurance
Policy.(1)
(A6a) Charter of Hartford.(3)
- ------------
(1) Incorporated by reference to Post-Effective Amendment No. 2, to the
Registration Statement File No. 33-83654, dated May 1, 1995.
(2) Incorporated by reference to Post Effective Amendment No. 3, to the
Registration Statement File No. 33-83654, dated May 1, 1996.
(3) Incorporated by reference to Post Effective Amendment No. 4, to the
Registration Statement File No. 33-83654, filed on April 15, 1997.
108
<PAGE>
(A6b) Bylaws of Hartford.(2)
(A7) Not applicable.
(A8) Not applicable.
(A9) Not applicable.
(A10) Form of Application for Modified Single Premium Variable Life
Insurance Policies.(1)
(A11) Memorandum describing transfer and redemption procedures.(1)
(2) Opinion and consent of Lynda Godkin, Senior Vice President, General
Counsel and Corporate Secretary.
(3) No financial statement will be omitted from the Prospectus pursuant to
Instruction 1 (b) or (c) of Part I.
(4) Not Applicable.
(5) Opinion and Consent of Michael Winterfield, FSA, MAAA.
(6) Consent of Arthur Andersen LLP, Independent Public Accountants.
(7) Power of Attorney.
(8) Not applicable.
109
<PAGE>
REPRESENTATION OF REASONABLENESS OF FEES
Hartford Life Insurance Company ("Hartford") hereby represents that the
aggregate fees and charges under the Policy are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks
assumed by Hartford.
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
UNDERTAKINGS AND REPRESENTATIONS AS REQUIRED BY RULE 6e-3(T)
1. Separate Account Five meets the definition of "Separate Account" under
Rule 6e-3(T).
2. Hartford undertakes to keep and make available to the Commission upon
request any documents used to support any representation as to the
reasonableness of fees.
UNDERTAKING ON INDEMNIFICATION
Under Section 33-772 of the Connecticut General Statutes, unless limited by its
certificate of incorporation, the Registrant must indemnify a director who was
wholly successful, on the merits or otherwise, in the defense of any proceeding
to which he was a party because he is or was a director of the corporation
against reasonable expenses incurred by him in connection with the proceeding.
The Registrant may indemnify an individual made a party to a proceeding because
he is or was a director against liability incurred in the proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Registrant, and, with respect to any criminal
proceeding, had no reason to believe his conduct was unlawful. Conn. Gen. Stat.
Section 33-771(a). Additionally, pursuant to Conn. Gen. Stat. Section 33-776,
the Registrant may indemnify officers and employees or agents for liability
incurred and for any expenses to which they become subject by reason of being or
having been an employee or officer of the Registrant. Connecticut law does not
prescribe standards for the indemnification of officers, employees and agents
and expressly states that their indemnification may be broader than the right of
indemnification granted to directors.
110
<PAGE>
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 1 of the Registrant's bylaws, the Registrant must
indemnify both directors and officers of the Registrant for (1) any claims
and liabilities to which they become subject by reason of being or having
been a directors or officers of the company and legal and (2) other expenses
incurred in defending against such claims, in each case, to the extent such
is consistent with statutory provisions.
Additionally, the directors and officers of Hartford and Hartford Securities
Distribution Company, Inc. ("HSD") are covered under a directors and officers
liability insurance policy issued to The Hartford Financial Services Group,
Inc. and its subsidiaries. Such policy will reimburse the Registrant for any
payments that it shall make to directors and officers pursuant to law and
will, subject to certain exclusions contained in the policy, further pay any
other costs, charges and expenses and settlements and judgments arising from
any proceeding involving any director or officer of the Registrant in his
past or present capacity as such, and for which he may be liable, except as
to any liabilities arising from acts that are deemed to be uninsurable.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
INFORMATION REGARDING CERTAIN SALES LOADS, ADMINISTRATIVE, MANAGEMENT AND
OTHER FEES
Separate Account Five of Hartford Life Insurance Company was established to
separate the assets funding the Policies from other assets of Hartford. In
addition to the Policies described in this Prospectus the Separate Account
holds assets of several other Registration Statements. In 1995, the Separate
Account received approximately $71,340,308 in policyholder premiums. In the
same year it charged policyholders approximately $582,077 in sales load,
administrative, management and other fees ("Separate Account Charges"). In
1996 policyholder premium was $107,397,075 with
111
<PAGE>
the associated Separate Account Charges equaled approximately $3,215,096. In
1997 policyholder premium for the entire Separate Account equaled $73,692,511
with Separate Account Charges for the same time period being $5,654,757.
OFFICERS AND DIRECTORS
The principal underwriter for Hartford Life Insurance Company Separate Account
Five is Hartford Securities Distribution Company, Inc. The following is a list
of Officers and Directors:
Name and Principal Positions and Offices
Business Address With Underwriter
------------------ ---------------------
Lowndes A. Smith President and Chief Executive Officer,
Director
Thomas M. Marra Executive Vice President, Director
Peter W. Cummins Senior Vice President
Lynda Godkin Senior Vice President, General Counsel
and Corporate Secretary
Donald E. Waggaman, Jr. Treasurer
George R. Jay Controller
Unless otherwise indicated, the principal business address of each the
above individuals is P. O. Box 2999, Hartford, Connecticut 06104-2999.
112
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, and attested, all in the Town of Simsbury, and
State of Connecticut, on the 12th day of February, 1999.
HARTFORD LIFE INSURANCE COMPANY -
SEPARATE ACCOUNT FIVE (Registrant)
By: David T. Foy
-------------------------
David T. Foy, Senior Vice President and Treasurer
HARTFORD LIFE INSURANCE COMPANY (Depositor)
By: David T. Foy By: /s/ Marianne O'Doherty
------------------------- ----------------------
David T. Foy, Senior Vice Marianne O'Doherty
President and Treasurer Attorney-In-Fact
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 Counsel, and Corporate
Secretary, Director*
Thomas M. Marra, Executive Vice *By: /s/ Marianne O'Doherty
President, Director* ----------------------
Lowndes A. Smith, President, Marianne O'Doherty
Chief Executive Officer, Director * Attorney-In-Fact
Raymond P. Welnicki, Senior Vice
President, Director* Dated: February 12, 1999
Lizabeth H. Zlatkus, Senior Vice President
Director*
David M. Znamierowski, Senior Vice
President, Director*
113
<PAGE>
EXHIBIT INDEX
(2) Opinion and Consent of Lynda Godkin, Senior Vice President, General
Counsel, and Corporate Secretary.
(5) Opinion and Consent of Michael Winterfield, FSA, MAAA.
(6) Consent of Arthur Andersen LLP, Independent Public Accountants.
(7) Power of Attorney.
114
<PAGE>
EXHIBIT 2
[LOGO]
Hartford Life
February 12, 1999 LYNDA GODKIN
SENIOR VICE PRESIDENT,
GENERAL COUNSEL &
CORPORATE SECRETARY
Board of Directors
Hartford Life Insurance Company
200 Hopmeadow Street
Simsbury, CT 06089
RE: SEPARATE ACCOUNT FIVE
HARTFORD LIFE INSURANCE COMPANY
File No. 333-52645
Dear Sir/Madam:
I have acted as General Counsel to Hartford Life Insurance Company (the
"Company"), a Connecticut insurance company, and Hartford Life 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.
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 5
[LOGO]
Hartford Life
MICHAEL R. WINTERFIELD, FSA, MAAA
Assistant Vice President
Director, Individual Annuity Product Management
February 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 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 utilize a reasonable estimation for expected fund operating expenses.
I hereby consent to the use of this opinion as an exhibit to the Form S-6
Registration Statement and to the reference to my name under the heading
"Experts" in the Prospectus included as a part of such Form S-6 Registration
Statement.
Very truly yours,
/s/ Michael Winterfield
Michael Winterfield, FSA, MAAA
<PAGE>
EXHIBIT 6
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made a part of this
Registration Statement File No. 333-52645 for Hartford Life Insurance Company
Separate Account Five on Form S-6.
/s/ Arthur Andersen LLP
Hartford, Connecticut
February 15, 1999
<PAGE>
EXHIBIT 7
HARTFORD LIFE INSURANCE COMPANY
POWER OF ATTORNEY
Gregory A. Boyko
John P. Ginnetti
Lynda Godkin
Thomas M. Marra
Lowndes A. Smith
Raymond P. Welnicki
Lizabeth H. Zlatkus
David M. Znamierowski
do hereby jointly and severally authorize Lynda Godkin, Marianne O'Doherty,
and Leslie T. Soler to sign as their agent, any Registration Statement,
pre-effective amendment, post-effective amendment and any application for
exemptive relief of the Hartford Life Insurance Company under the Securities
Act of 1933 and/or the Investment Company Act of 1940.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney
for the purpose herein set forth.
/s/ Gregory A. Boyko Dated as of March 16, 1998
- -----------------------------------
Gregory A. Boyko
/s/ John P. Ginnetti Dated as of March 16, 1998
- -----------------------------------
John P. Ginnetti
/s/ Lynda Godkin Dated as of March 16, 1998
- -----------------------------------
Lynda Godkin
/s/ Thomas M. Marra Dated as of March 16, 1998
- -----------------------------------
Thomas M. Marra
/s/ Lowndes A. Smith Dated as of March 16, 1998
- -----------------------------------
Lowndes A. Smith
/s/ Raymond P. Welnicki Dated as of March 16, 1998
- -----------------------------------
Raymond P. Welnicki
/s/ Lizabeth H. Zlatkus Dated as of March 16, 1998
- -----------------------------------
Lizabeth H. Zlatkus
/s/ David M. Znamierowski Dated as of March 16, 1998
- -----------------------------------
David M. Znamierowski
