<PAGE>
As filed with the Securities and Exchange Commission December 4, 2000.
File No. 33-89990
811-07271
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
POST-EFFECTIVE AMENDMENT NO. 8
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 VL II
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
Hartford Life Insurance Company
P. O. Box 2999
Hartford, CT 06104-2999
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485
-----
X on January 2, 2001 pursuant to paragraph (b) of Rule 485
-----
60 days after filing pursuant to paragraph (a)(1) of Rule 485
-----
on ________, 2000 pursuant to paragraph (a)(1) of Rule 485
-----
this post-effective amendment designates a new effective date
----- for a previously filed post-effective amendment.
E. Title and amount of securities being registered: Pursuant to Rule 24f-2
under the Investment Company Act of 1940, the Registrant has registered an
indefinite amount of securities.
F. Proposed maximum aggregate offering price to the public of the securities
being registered: Not yet determined.
G. Amount of filing fee: Not applicable.
H. Approximate date of proposed public offering: As soon as practicable
after the effective date of this registration statement.
<PAGE>
RECONCILIATION AND TIE BETWEEN
FORM N-8B-2 AND PROSPECTUS
<TABLE>
<CAPTION>
ITEM NO. OF FORM N-8B-2 CAPTION IN PROSPECTUS
----------------------- ---------------------
<C> <S>
1. Cover Page
2. Cover Page
3. Not Applicable
4. Statement of Additional Information - Distribution of
5. About Us - Separate Account VL II
6. About Us - Separate Account VL II
7. Not required by Form S-6
8. Not required by Form S-6
9. Legal Proceedings
10. About Us - Separate Account VL II; The Funds
11. About Us - Separate Account VL II; The Funds
12. About Us - The Funds
13. Fee Table; Charges and Deductions
14. Premiums
15. Premiums
16. Premiums
17. Making Withdrawals From Your Policy
18. About Us - The Funds; Charges and Deductions
19. Your Policy - Contract Rights
20. Not Applicable
21. Loans
22. Not Applicable
23. Not Applicable
24. Not Applicable
25. About Us - Hartford Life Insurance Company
26. Not Applicable
27. About Us - Hartford Life Insurance Company
28. Statement of Additional Information - General
29. About Us - Hartford Life Insurance Company
30. Not Applicable
31. Not Applicable
32. Not Applicable
33. Not Applicable
34. Not Applicable
<PAGE>
<CAPTION>
ITEM NO. OF FORM N-8B-2 CAPTION IN PROSPECTUS
----------------------- ---------------------
<C> <S>
35. Statement of Additional Information - Distribution of the Policies
36. Not required by Form S-6
37. Not Applicable
38. Statement of Additional Information - Distribution of the Policies
39. Statement of Additional Information - Distribution of the Policies
40. Not Applicable
41. Statement of Additional Information - Distribution of the Policies
42. Not Applicable
43. Not Applicable
44. Premiums
45. Not Applicable
46. Premiums; Making Withdrawals From Your Policy
47. About Us - The Funds
48. Cover Page; About Us - Hartford Life Insurance Company
49. Not Applicable
50. About Us - Separate Account VL II
51. Not Applicable
52. About Us - The Funds
53. Taxes
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
</TABLE>
<PAGE>
The Prospectus is incorporated by reference in this Post-Effective Amendment
No. 8, by reference to Post-Effective Amendment No. 7 to the Registration
Statement on Form S-6 (File No. 33-89990), as filed on April 12, 2000 and
declared effective on May 1, 2000.
A Supplement to the Prospectus, dated January 2, 2001 is included in this
Post-Effective Amendment.
<PAGE>
<TABLE>
<S> <C>
STAG VARIABLE LIFE LAST SURVIVOR
SEPARATE ACCOUNT VL II
HARTFORD LIFE INSURANCE COMPANY
SUPPLEMENT DATED JANUARY 2, 2001 TO PROSPECTUS
DATED MAY 1, 2000 [LOGO]
</TABLE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Effective January 15, 2001 the following changes apply:
The following Sub-Accounts are added in alphabetical order to the cover page of
the prospectus:
- AMERICAN FUNDS GLOBAL GROWTH FUND SUB-ACCOUNT Class 2 of the Global Growth
Fund of American Funds Insurance Series
- AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION FUND SUB-ACCOUNT Class 2 of the
Global Small Capitalization Fund of American Funds Insurance Series
- AMERICAN FUNDS GROWTH FUND SUB-ACCOUNT Class 2 of the Growth Fund of American
Funds Insurance Series
- AMERICAN FUNDS GROWTH-INCOME FUND SUB-ACCOUNT Class 2 of the Growth-Income
Fund of American Funds Insurance Series
- HARTFORD GLOBAL LEADERS SUB-ACCOUNT Class IA of Hartford Global Leaders HLS
Fund of Hartford Series Fund, Inc.
- HARTFORD GLOBAL TECHNOLOGY SUB-ACCOUNT Class IA of Hartford Global Technology
HLS Fund of Hartford Series Fund, Inc.
Under the Section entitled "Summary of Benefits and Risks", the paragraph
entitled "Investment Choices" is deleted and replaced with the following:
INVESTMENT CHOICES -- You may invest in up to 9 different investment choices
within your policy, from a choice of 42 investment options and a Fixed Account.
You may transfer money among your investment choices, subject to restrictions.
The table of Annual Fund Operating Expenses is deleted and replaced with the
following:
<TABLE>
<CAPTION>
TOTAL FUND
OPERATING
OTHER EXPENSES
12B-1 FEES EXPENSES (INCLUDING ANY
MANAGEMENT FEES (INCLUDING (INCLUDING ANY WAIVERS AND/OR ANY
(INCLUDING ANY WAIVERS) ANY WAIVERS) REIMBURSEMENTS) REIMBURSEMENTS)
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------------------
American Funds Global Growth Fund 0.68% 0.25% 0.03% 0.96%
----------------------------------------------------------------------------------------------------------------------------
American Funds Global Small
Capitalization Fund 0.79% 0.25% 0.03% 1.07%
----------------------------------------------------------------------------------------------------------------------------
American Funds Growth Fund 0.38% 0.25% 0.01% 0.64%
----------------------------------------------------------------------------------------------------------------------------
American Funds Growth-Income Fund 0.34% 0.25% 0.01% 0.60%
----------------------------------------------------------------------------------------------------------------------------
Hartford Advisers HLS Fund 0.63% N/A 0.02% 0.65%
----------------------------------------------------------------------------------------------------------------------------
Hartford Bond HLS Fund 0.49% N/A 0.03% 0.52%
----------------------------------------------------------------------------------------------------------------------------
Hartford Capital Appreciation HLS Fund 0.64% N/A 0.02% 0.66%
----------------------------------------------------------------------------------------------------------------------------
Hartford Dividend and Growth HLS Fund 0.65% N/A 0.03% 0.68%
----------------------------------------------------------------------------------------------------------------------------
Hartford Global Leaders HLS Fund 0.74% N/A 0.12% 0.86%
----------------------------------------------------------------------------------------------------------------------------
Hartford Global Technology HLS Fund (1) 0.85% N/A 0.25% 1.10%
----------------------------------------------------------------------------------------------------------------------------
Hartford Growth and Income HLS Fund 0.78% N/A 0.04% 0.82%
----------------------------------------------------------------------------------------------------------------------------
Hartford Index HLS Fund 0.40% N/A 0.03% 0.43%
----------------------------------------------------------------------------------------------------------------------------
Hartford International Advisers HLS Fund 0.76% N/A 0.09% 0.85%
----------------------------------------------------------------------------------------------------------------------------
Hartford International Opportunities HLS
Fund 0.69% N/A 0.09% 0.78%
----------------------------------------------------------------------------------------------------------------------------
Hartford MidCap HLS Fund 0.76% N/A 0.03% 0.79%
----------------------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS Fund 0.45% N/A 0.02% 0.47%
----------------------------------------------------------------------------------------------------------------------------
Hartford Mortgage Securities HLS Fund 0.45% N/A 0.03% 0.48%
----------------------------------------------------------------------------------------------------------------------------
Hartford Small Company HLS Fund 0.75% N/A 0.03% 0.78%
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
2 HARTFORD LIFE INSURANCE COMPANY
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL FUND
OPERATING
OTHER EXPENSES
12B-1 FEES EXPENSES (INCLUDING ANY
MANAGEMENT FEES (INCLUDING (INCLUDING ANY WAIVERS AND/OR ANY
(INCLUDING ANY WAIVERS) ANY WAIVERS) REIMBURSEMENTS) REIMBURSEMENTS)
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------------------
Hartford Stock HLS Fund 0.46% N/A 0.02% 0.48%
----------------------------------------------------------------------------------------------------------------------------
Putnam VT Asia Pacific Growth Fund 0.80% N/A 0.33% 1.13%
----------------------------------------------------------------------------------------------------------------------------
Putnam VT Diversified Income Fund 0.68% N/A 0.10% 0.78%
----------------------------------------------------------------------------------------------------------------------------
Putnam VT Global Asset Allocation Fund 0.65% N/A 0.12% 0.77%
----------------------------------------------------------------------------------------------------------------------------
Putnam VT Global Growth Fund 0.61% N/A 0.12% 0.73%
----------------------------------------------------------------------------------------------------------------------------
Putnam VT Growth and Income Fund 0.46% N/A 0.04% 0.50%
----------------------------------------------------------------------------------------------------------------------------
Putnam VT Health Sciences Fund 0.70% N/A 0.13% 0.83%
----------------------------------------------------------------------------------------------------------------------------
Putnam VT High Yield Fund 0.65% N/A 0.07% 0.72%
----------------------------------------------------------------------------------------------------------------------------
Putnam VT Income Fund 0.60% N/A 0.07% 0.67%
----------------------------------------------------------------------------------------------------------------------------
Putnam VT International Growth Fund 0.80% N/A 0.22% 1.02%
----------------------------------------------------------------------------------------------------------------------------
Putnam VT International Growth and
Income Fund 0.80% N/A 0.18% 0.98%
----------------------------------------------------------------------------------------------------------------------------
Putnam VT International New
Opportunities Fund 1.08% N/A 0.33% 1.41%
----------------------------------------------------------------------------------------------------------------------------
Putnam VT Investors Fund 0.63% N/A 0.08% 0.71%
----------------------------------------------------------------------------------------------------------------------------
Putnam VT Money Market Fund 0.41% N/A 0.08% 0.49%
----------------------------------------------------------------------------------------------------------------------------
Putnam VT New Opportunities Fund 0.54% N/A 0.05% 0.59%
----------------------------------------------------------------------------------------------------------------------------
Putnam VT New Value Fund 0.70% N/A 0.10% 0.80%
----------------------------------------------------------------------------------------------------------------------------
Putnam VT OTC & Emerging Growth Fund (2) 0.53% N/A 0.37% 0.90%
----------------------------------------------------------------------------------------------------------------------------
Putnam VT The George Putnam Fund of
Boston 0.65% N/A 0.18% 0.83%
----------------------------------------------------------------------------------------------------------------------------
Putnam VT Utilities Growth and Income
Fund 0.65% N/A 0.06% 0.71%
----------------------------------------------------------------------------------------------------------------------------
Putnam VT Vista Fund 0.65% N/A 0.10% 0.75%
----------------------------------------------------------------------------------------------------------------------------
Putnam VT Voyager Fund 0.53% N/A 0.04% 0.57%
----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Asset Manager Portfolio
(3) 0.53% N/A 0.09% 0.62%
----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio (3) 0.48% N/A 0.08% 0.56%
----------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio (3) 0.73% N/A 0.14% 0.87%
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Hartford Global Technology HLS Fund is a new fund. Total Fund Operating
Expenses are based on annualized estimates of such expenses to be incurred
during the current fiscal year.
(2) Total Annual Fund Operating Expenses for Putnam VT OTC & Emerging Growth
Fund reflect voluntary reductions and reimbursements through at least
December 31, 2000. Absent voluntary reductions and reimbursements, Total
Annual Fund Operating Expenses would have been as follows:
<TABLE>
<CAPTION>
TOTAL FUND
OTHER OPERATING
MANAGEMENT FEES EXPENSES EXPENSES
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
Putnam VT OTC & Emerging Growth Fund 0.70% 0.37% 1.07%
--------------------------------------------------------------------------------------------------------
</TABLE>
(3) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, through arrangements with certain funds
of FMR on behalf of certain funds' custodian, credits realized as a result
of uninvested cash balances were used to reduce a portion of each applicable
fund's expenses. These reductions will continue through at least
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 3
--------------------------------------------------------------------------------
December 31, 2000 pursuant to an agreement between the adviser and the
funds. Without these reductions, Total Fund Operating Expenses would have
been:
<TABLE>
<CAPTION>
TOTAL FUND
OTHER OPERATING
MANAGEMENT FEES EXPENSES EXPENSES
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------------------
Fidelity VIP II Asset Manager Portfolio 0.53% 0.10% 0.63%
--------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 0.48% 0.09% 0.57%
--------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio 0.73% 0.18% 0.91%
--------------------------------------------------------------------------------------------------------
</TABLE>
The following is added in the section entitled "About Us" immediately following
the Hartford Ratings table:
These ratings apply to Hartford's ability to meet its obligations under the
Contract. The ratings do not apply to the Separate Account or the underlying
Funds.
Under the section entitled "The Funds," the following language is added in
alphabetical order:
AMERICAN FUNDS GLOBAL GROWTH FUND -- Seeks long-term growth of capital by
investing primarily in common stocks of issuers domiciled around the world.
AMERICAN FUNDS GLOBAL SMALL CAPITALIZATION FUND -- Seeks long-term growth of
capital by investing primarily in equity securities of smaller companies located
around the world that typically have market capitalization of $50 million to
$1.5 billion.
AMERICAN FUNDS GROWTH FUND -- Seeks long-term growth of capital by investing
primarily in common stocks which demonstrate the potential for appreciation.
AMERICAN FUNDS GROWTH-INCOME FUND -- Seeks growth of capital and income by
investing primarily in common stocks or other securities which demonstrate the
potential for appreciation and/or dividends.
HARTFORD GLOBAL LEADERS HLS FUND -- Seeks growth of capital by investing
primarily in equity securities issued through high-quality growth companies
worldwide that, in the opinion of Wellington Management, are leaders within
their respective industries as indicated by established market presence and
strong competitive position on a global, regional or country basis. Sub-advised
by Wellington Management.
HARTFORD GLOBAL TECHNOLOGY HLS FUND -- Seeks long-term capital appreciation by
investing in equity securities of technology companies worldwide. Sub-advised by
Wellington Management.
The following text is added under the section entitled "The Funds":
The Funds may not be available in all states.
Under the section entitled "The Funds," under the sub-section entitled
"Investment Advisers," the following paragraph is inserted as the first
paragraph of the section:
American Funds Global Growth Fund, American Funds Global Small Capitalization
Fund, American Funds Growth Fund and American Funds Growth-Income Fund are all
part of American Funds Insurance Series. American Funds Insurance Series is a
fully managed, diversified, open-end investment company organized as a
Massachusetts business trust in 1983. American Funds Insurance Series offers two
classes of fund shares: Class 1 shares and Class 2 shares. This policy invests
only in Class 2 shares of American Funds Insurance Series. The investment
adviser for each of the funds of American Funds Insurance Series is Capital
Research and Management Company located at 333 South Hope Street, Los Angeles,
California 90071. Capital Research and Management Company is a wholly owned
subsidiary of The Capital Growth Companies, Inc.
Under the section entitled "Investment Advisers", the second paragraph is
deleted and replaced with the following:
Each Hartford HLS Fund, except for Hartford Global Leaders HLS Fund, Hartford
Global Technology HLS Fund and Hartford Growth and Income HLS Fund is a separate
Maryland corporation registered with the Securities and Exchange Commission as
an open-end management investment company. Hartford Global Leaders HLS Fund and
Hartford Growth and Income HLS Fund are diversified series of Hartford Series
Fund, Inc., a Maryland corporation, also registered with the Securities and
Exchange Commission as an open-end management investment company. Hartford
Global Technology HLS Fund is a non-diversified series of Hartford Series Fund,
Inc. The shares of each Fund have been divided into Class IA and Class IB. Only
Class IA shares are available in the policy.
The fourth paragraph under the sub-section entitled "Illustration of death
Benefits, Account Values and Cash Surrender Values" in the section entitled
"Statement of Additional Information" is deleted and replaced with the
following:
The amounts shown for the Death Benefit, Account Value and Cash Surrender Value
as of the end of each Policy Year take into account an average daily charge
equal to an annual charge of 0.75% of the average daily net assets of the Funds
for investment advisory and
<PAGE>
4 HARTFORD LIFE INSURANCE COMPANY
--------------------------------------------------------------------------------
administrative service fees. The gross annual investment return rates of 0%, 6%
and 12% on the Fund's assets are equal to net annual investment return rates
(net of the 0.75% average daily charge) of -0.75%, 5.25% and 11.25%,
respectively.
The three "Illustration of Death Benefits, Account Values and Cash Surrender
Values" tables in the section entitled "Statement of Additional Information" are
replaced with the attached three tables.
The attached Financial Statements are added to the section entitled "Statement
of Additional Information."
THIS SUPPLEMENT SHOULD BE RETAINED WITH THE PROSPECTUS FOR FUTURE REFERENCE.
HV-2857
33-89990
<PAGE>
4 HARTFORD LIFE INSURANCE COMPANY
--------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
$1,000,000 BASIC FACE AMOUNT
ISSUE AGE 55 MALE PREFERRED NON-NICOTINE
ISSUE AGE 50 FEMALE PREFERRED NON-NICOTINE
$15,500 PLANNED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 12% (11.25% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
END OF ACCUMULATED ------------------------------------------
POLICY AT 5% INTEREST ACCOUNT DEATH ACCOUNT DEATH
YEAR PER YEAR VALUE BENEFIT VALUE BENEFIT
<S> <C> <C> <C> <C> <C>
----------------------------------------------------------------------
1 16,275 6,680 1,000,000 6,394 1,000,000
2 33,364 19,953 1,000,000 19,353 1,000,000
3 51,307 34,498 1,000,000 33,550 1,000,000
4 70,147 50,424 1,000,000 49,093 1,000,000
5 89,930 67,850 1,000,000 66,095 1,000,000
6 110,701 88,649 1,000,000 86,426 1,000,000
7 132,511 111,402 1,000,000 108,660 1,000,000
8 155,412 136,282 1,000,000 132,968 1,000,000
9 179,457 163,485 1,000,000 159,536 1,000,000
10 204,705 193,216 1,000,000 188,564 1,000,000
11 231,215 229,837 1,000,000 222,317 1,000,000
12 259,051 270,355 1,000,000 259,324 1,000,000
13 288,279 315,183 1,000,000 299,898 1,000,000
14 318,968 364,779 1,000,000 344,391 1,000,000
15 351,191 419,653 1,000,000 393,212 1,000,000
16 385,026 480,372 1,000,000 446,837 1,000,000
17 420,552 547,546 1,000,000 505,841 1,000,000
18 457,855 621,891 1,000,000 570,908 1,000,000
19 497,022 704,197 1,000,000 642,870 1,000,000
20 538,148 795,345 1,000,000 722,736 1,000,000
25 724,270 1,439,280 1,540,030 1,297,307 1,388,119
30 1,014,302 2,520,219 2,646,230 2,255,580 2,368,360
----------------------------------------------------------------------
</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 Death Benefit may, and the Account Values and Cash Surrender Values will
differ if premiums are paid in different amounts or frequencies.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 12% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 12%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 5
--------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
$1,000,000 BASIC FACE AMOUNT
ISSUE AGE 55 MALE PREFERRED NON-NICOTINE
ISSUE AGE 50 FEMALE PREFERRED NON-NICOTINE
$15,500 PLANNED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 6% (5.25% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
END OF ACCUMULATED ----------------------------------------
POLICY AT 5% INTEREST ACCOUNT DEATH ACCOUNT DEATH
YEAR PER YEAR VALUE BENEFIT VALUE BENEFIT
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------
1 16,275 6,292 1,000,000 6,015 1,000,000
2 33,364 18,443 1,000,000 17,877 1,000,000
3 51,307 31,027 1,000,000 30,160 1,000,000
4 70,147 44,044 1,000,000 42,861 1,000,000
5 89,930 57,486 1,000,000 55,975 1,000,000
6 110,701 73,017 1,000,000 71,160 1,000,000
7 132,511 89,027 1,000,000 86,810 1,000,000
8 155,412 105,507 1,000,000 102,912 1,000,000
9 179,457 122,441 1,000,000 119,451 1,000,000
10 204,705 139,804 1,000,000 136,400 1,000,000
11 231,215 161,494 1,000,000 155,495 1,000,000
12 259,051 184,183 1,000,000 175,065 1,000,000
13 288,279 207,915 1,000,000 195,060 1,000,000
14 318,968 232,731 1,000,000 215,411 1,000,000
15 351,191 258,676 1,000,000 236,047 1,000,000
16 385,026 285,798 1,000,000 256,880 1,000,000
17 420,552 314,122 1,000,000 277,826 1,000,000
18 457,855 343,712 1,000,000 298,789 1,000,000
19 497,022 374,638 1,000,000 319,669 1,000,000
20 538,148 406,971 1,000,000 340,348 1,000,000
25 724,270 598,721 1,000,000 442,318 1,000,000
30 1,014,302 838,867 1,000,000 509,382 1,000,000
--------------------------------------------------------------------
</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 Death Benefit may, and the Account Values and Cash Surrender Values will
differ if premiums are paid in different amounts or frequencies.
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS MAY BE MORE OR LESS THAN
THOSE SHOWN. THE DEATH BENEFIT, ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A
POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN
APPLICABLE TO THE POLICY AVERAGE 6% OVER A PERIOD OF YEARS, BUT ALSO FLUCTUATED
ABOVE OR BELOW THAT AVERAGE FOR INDIVIDUAL POLICY YEARS. THE DEATH BENEFIT,
ACCOUNT VALUE AND CASH SURRENDER VALUE FOR A POLICY WOULD ALSO BE DIFFERENT FROM
THOSE SHOWN, DEPENDING ON THE INVESTMENT ALLOCATIONS MADE TO THE SEPARATE
ACCOUNTS AND THE RATES OF RETURN OF THE SEPARATE ACCOUNT IF THE ACTUAL RATES OF
INVESTMENT RETURN APPLICABLE TO THE POLICY AVERAGED 6%, BUT VARIED ABOVE OR
BELOW THAT AVERAGE FOR THE SEPARATE ACCOUNT. NO REPRESENTATION CAN BE MADE THAT
THIS HYPOTHETICAL RATE OF RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED
OVER ANY PERIOD OF TIME.
<PAGE>
6 HARTFORD LIFE INSURANCE COMPANY
--------------------------------------------------------------------------------
FLEXIBLE PREMIUM VARIABLE LIFE INSURANCE
DEATH BENEFIT OPTION: LEVEL
$1,000,000 BASIC FACE AMOUNT
ISSUE AGE 55 MALE PREFERRED NON-NICOTINE
ISSUE AGE 50 FEMALE PREFERRED NON-NICOTINE
$15,500 PLANNED PREMIUM
ASSUMING HYPOTHETICAL GROSS ANNUAL INVESTMENT RETURN OF 0% (-0.75% NET)
<TABLE>
<CAPTION>
PREMIUMS CURRENT CHARGES* GUARANTEED CHARGES**
END OF ACCUMULATED ----------------------------------------
POLICY AT 5% INTEREST ACCOUNT DEATH ACCOUNT DEATH
YEAR PER YEAR VALUE BENEFIT VALUE BENEFIT
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------
1 16,275 5,905 1,000,000 5,637 1,000,000
2 33,364 16,979 1,000,000 16,447 1,000,000
3 51,307 27,784 1,000,000 26,992 1,000,000
4 70,147 38,302 1,000,000 37,254 1,000,000
5 89,930 48,512 1,000,000 47,212 1,000,000
6 110,701 59,988 1,000,000 38,439 1,000,000
7 132,511 71,082 1,000,000 69,287 1,000,000
8 155,412 81,765 1,000,000 79,728 1,000,000
9 179,457 92,003 1,000,000 89,726 1,000,000
10 204,705 101,752 1,000,000 99,238 1,000,000
11 231,215 114,700 1,000,000 109,768 1,000,000
12 259,051 127,458 1,000,000 119,704 1,000,000
13 288,279 140,025 1,000,000 128,962 1,000,000
14 318,968 152,392 1,000,000 137,437 1,000,000
15 351,191 164,555 1,000,000 145,013 1,000,000
16 385,026 176,506 1,000,000 151,556 1,000,000
17 420,552 188,209 1,000,000 156,924 1,000,000
18 457,855 199,670 1,000,000 160,953 1,000,000
19 497,022 210,895 1,000,000 163,461 1,000,000
20 538,148 221,889 1,000,000 164,226 1,000,000
25 724,270 274,336 1,000,000 133,151 1,000,000
30 1,014,302 307,908 1,000,000 0 0
--------------------------------------------------------------------
</TABLE>
*These values reflect investment results using current cost of insurance rates,
administrative fees, and Mortality and Expense Risk rates.
**These values reflect investment results using guaranteed cost of insurance
rates, administrative fees, and Mortality and Expense Risk rates.
The Death Benefit may, and the Account Values and Cash Surrender Values will
differ if premiums are paid in different amounts or frequencies.
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.
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
INDEX FOR HARTFORD AND FIDELITY SUB-ACCOUNTS
Statements of Assets and Liabilities For the Period Ended
September 30, 2000 (unaudited)............................. SA-2
Statements of Operations For the Period Ended September 30,
2000 (unaudited)........................................... SA-4
Statements of Changes in Net Assets For the Period Ended
September 30, 2000 (unaudited)............................. SA-6
INDEX FOR PUTNAM SUB-ACCOUNTS
Statements of Assets and Liabilities For the Period Ended
September 30, 2000 (unaudited)............................. SA-10
Statements of Operations For the Period Ended September 30,
2000 (unaudited)........................................... SA-14
Statements of Changes in Net Assets For the Period Ended
September 30, 2000 (unaudited)............................. SA-17
</TABLE>
SA-1
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
September 30, 2000 Bond Stock Money Advisers Capital Mortgage Index
Fund Fund Market Fund Fund Appreciation Securities Fund
Sub-Account Sub-Account Sub-Account Sub-Account Fund Fund Sub-Account
Sub-Account Sub-Account
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
-------------------------------------------------------------------------------------------------------------------------
HARTFORD BOND HLS FUND, INC. --
CLASS IA
Shares 5,811,397
Cost $6,174,474
........................................................................................................................
Market Value: $6,179,514 $ -- $ -- $ -- $ -- $ -- $ --
-------------------------------------------------------------------------------------------------------------------------
HARTFORD STOCK HLS
FUND, INC. -- CLASS IA
Shares 3,766,637
Cost $20,856,576
........................................................................................................................
Market Value: -- 23,412,687 -- -- -- -- --
-------------------------------------------------------------------------------------------------------------------------
HARTFORD MONEY MARKET HLS
FUND, INC. -- CLASS IA
Shares 5,728,264
Cost $5,728,264
........................................................................................................................
Market Value: -- -- 5,728,264 -- -- -- --
-------------------------------------------------------------------------------------------------------------------------
HARTFORD ADVISERS HLS
FUND, INC. -- CLASS IA
Shares 4,412,680
Cost $11,533,871
........................................................................................................................
Market Value: -- -- -- 11,972,249 -- -- --
-------------------------------------------------------------------------------------------------------------------------
HARTFORD CAPITAL APPRECIATION HLS
FUND, INC. -- CLASS IA
Shares 4,291,297
Cost $19,598,277
........................................................................................................................
Market Value: -- -- -- -- 27,097,852 -- --
-------------------------------------------------------------------------------------------------------------------------
HARTFORD MORTGAGE SECURITIES HLS
FUND, INC. -- CLASS IA
Shares 217,890
Cost $232,757
........................................................................................................................
Market Value: -- -- -- -- -- 239,242 --
-------------------------------------------------------------------------------------------------------------------------
HARTFORD INDEX HLS
FUND, INC. -- CLASS IA
Shares 5,411,247
Cost $16,657,404
........................................................................................................................
Market Value: -- -- -- -- -- -- 22,061,739
-------------------------------------------------------------------------------------------------------------------------
HARTFORD INTERNATIONAL
OPPORTUNITIES HLS FUND, INC. --
CLASS IA
Shares 3,581,501
Cost $4,961,085
........................................................................................................................
Market Value: -- -- -- -- -- -- --
-------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company -- -- 54,145 -- -- -- --
........................................................................................................................
Receivable from fund shares sold 2,569 -- -- 5,012 8,451 336 3,598
........................................................................................................................
Total Assets 6,182,083 23,412,687 5,782,409 11,977,261 27,106,303 239,578 22,065,337
........................................................................................................................
LIABILITIES:
Due to Hartford Life Insurance
Company 2,593 752 -- 4,993 8,135 337 8,195
........................................................................................................................
Payable for fund shares purchased -- 636 53,285 -- -- -- --
........................................................................................................................
TOTAL LIABILITIES 2,593 1,388 53,285 4,993 8,135 337 8,195
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $6,179,490 $23,411,299 $5,729,124 $11,972,268 $27,098,168 $ 239,241 $22,057,142
-------------------------------------------------------------------------------------------------------------------------
Units Owned by Participants 3,950,341 6,399,345 4,008,825 4,441,032 6,670,762 153,829 6,262,389
........................................................................................................................
Unit Values $ 1.564293 $ 3.658390 $ 1.429128 $ 2.695830 $ 4.062230 $1.555236 $ 3.522161
-------------------------------------------------------------------------------------------------------------------------
<S> <C>
September 30, 2000 International
Opportunities
Fund
Sub-Account
--------------------------------------------------------------
ASSETS
Investments:
---------------------------------------------------------------------------
HARTFORD BOND HLS FUND, INC. --
CLASS IA
Shares 5,811,397
Cost $6,174,474
................................
Market Value: $ --
----------------------------------------------------------------------------------------
HARTFORD STOCK HLS
FUND, INC. -- CLASS IA
Shares 3,766,637
Cost $20,856,576
................................
Market Value: --
-----------------------------------------------------------------------------------------------------
HARTFORD MONEY MARKET HLS
FUND, INC. -- CLASS IA
Shares 5,728,264
Cost $5,728,264
................................
Market Value: --
------------------------------------------------------------------------------------------------------------------
HARTFORD ADVISERS HLS
FUND, INC. -- CLASS IA
Shares 4,412,680
Cost $11,533,871
................................
Market Value: --
-------------------------------------------------------------------------------------------------------------------------
HARTFORD CAPITAL APPRECIATION HLS
FUND, INC. -- CLASS IA
Shares 4,291,297
Cost $19,598,277
................................
Market Value: --
-------------------------------------------------------------------------------------------------------------------------
HARTFORD MORTGAGE SECURITIES HLS
FUND, INC. -- CLASS IA
Shares 217,890
Cost $232,757
................................
Market Value: --
-------------------------------------------------------------------------------------------------------------------------
HARTFORD INDEX HLS
FUND, INC. -- CLASS IA
Shares 5,411,247
Cost $16,657,404
................................
Market Value: --
-------------------------------------------------------------------------------------------------------------------------
HARTFORD INTERNATIONAL
OPPORTUNITIES HLS FUND, INC. --
CLASS IA
Shares 3,581,501
Cost $4,961,085
................................
Market Value: 5,218,931
-------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company --
................................
Receivable from fund shares sold 1,154
................................
Total Assets 5,220,085
................................
LIABILITIES:
Due to Hartford Life Insurance
Company 1,305
................................
Payable for fund shares purchased --
................................
TOTAL LIABILITIES 1,305
-------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $5,218,780
-------------------------------------------------------------------------------------------------------------------------
Units Owned by Participants 2,499,204
................................
Unit Values $ 2.088177
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-2
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
September 30, 2000 Dividend Growth and International Small MidCap Fidelity VIP Fidelity
and Income Advisers Company Fund Fund Equity-Income VIP
Growth Fund Fund Fund Sub-Account Sub-Account Portfolio Overseas
Sub-Account Sub-Account Sub-Account Sub-Account Portfolio
Sub-Account
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
-----------------------------------------------------------------------------------------------------------------------------
HARTFORD DIVIDEND AND GROWTH HLS
FUND, INC. -- CLASS IA
Shares 4,909,747
Cost $9,338,020
............................................................................................................................
Market Value: $10,081,709 $ -- $ -- $ -- $ -- $ -- $ --
-----------------------------------------------------------------------------------------------------------------------------
HARTFORD GROWTH AND INCOME HLS
FUND -- CLASS IA
Shares 264,786
Cost $358,903
............................................................................................................................
Market Value: -- 380,934 -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------
HARTFORD INTERNATIONAL ADVISERS
HLS FUND, INC. -- CLASS IA
Shares 2,577
Cost $3,282
............................................................................................................................
Market Value: -- -- 3,168 -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------
HARTFORD SMALL COMPANY HLS
FUND, INC. -- CLASS IA
Shares 625,134
Cost $1,142,737
............................................................................................................................
Market Value: -- -- -- 1,192,116 -- -- --
-----------------------------------------------------------------------------------------------------------------------------
HARTFORD MIDCAP HLS
FUND, INC. -- CLASS IA
Shares 583,768
Cost $1,332,090
............................................................................................................................
Market Value: -- -- -- -- 1,532,517 -- --
-----------------------------------------------------------------------------------------------------------------------------
FIDELITY VIP EQUITY-INCOME
PORTFOLIO
Shares 394,853
Cost $9,059,855
............................................................................................................................
Market Value: -- -- -- -- -- 9,689,702 --
-----------------------------------------------------------------------------------------------------------------------------
FIDELITY VIP OVERSEAS PORTFOLIO
Shares 204,435
Cost $4,379,775
............................................................................................................................
Market Value: -- -- -- -- -- -- 4,448,508
-----------------------------------------------------------------------------------------------------------------------------
FIDELITY VIP II ASSET MANAGER
PORTFOLIO
Shares 124,628
Cost $2,100,314
............................................................................................................................
Market Value: -- -- -- -- -- -- --
-----------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company 3,872 -- -- -- -- -- 7,125
............................................................................................................................
Receivable from fund shares sold -- 84 -- 883 528 -- --
............................................................................................................................
Total Assets 10,085,581 381,018 3,168 1,192,999 1,533,045 9,689,702 4,455,633
............................................................................................................................
LIABILITIES:
Due to Hartford Life Insurance
Company -- 81 -- 888 515 1,644 --
............................................................................................................................
Payable for fund shares purchased 4,088 -- -- -- -- 1,760 45
............................................................................................................................
TOTAL LIABILITIES 4,088 81 -- 888 515 3,404 45
-----------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $10,081,493 $ 380,937 $ 3,168 $1,192,111 $1,532,530 $9,686,298 $4,455,588
-----------------------------------------------------------------------------------------------------------------------------
Units Owned by Participants 3,911,711 267,713 2,678 680,097 686,809 4,459,891 2,320,108
............................................................................................................................
Unit Values $ 2.577259 $1.422924 $1.183079 $ 1.752856 $ 2.231378 $ 2.171869 $ 1.920422
-----------------------------------------------------------------------------------------------------------------------------
<S> <C>
September 30, 2000 Fidelity VIP
II
Asset
Manager
Portfolio
Sub-Account
-----------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments:
-----------------------------------------------------------------------------------------------------------------------------
HARTFORD DIVIDEND AND GROWTH HLS
FUND, INC. -- CLASS IA
Shares 4,909,747
Cost $9,338,020
................................
Market Value: $ --
-----------------------------------------------------------------------------------------------------------------------------
HARTFORD GROWTH AND INCOME HLS
FUND -- CLASS IA
Shares 264,786
Cost $358,903
................................
Market Value: --
-----------------------------------------------------------------------------------------------------------------------------
HARTFORD INTERNATIONAL ADVISERS
HLS FUND, INC. -- CLASS IA
Shares 2,577
Cost $3,282
................................
Market Value: --
-----------------------------------------------------------------------------------------------------------------------------
HARTFORD SMALL COMPANY HLS
FUND, INC. -- CLASS IA
Shares 625,134
Cost $1,142,737
................................
Market Value: --
-----------------------------------------------------------------------------------------------------------------------------
HARTFORD MIDCAP HLS
FUND, INC. -- CLASS IA
Shares 583,768
Cost $1,332,090
................................
Market Value: --
-----------------------------------------------------------------------------------------------------------------------------
FIDELITY VIP EQUITY-INCOME
PORTFOLIO
Shares 394,853
Cost $9,059,855
................................
Market Value: --
-----------------------------------------------------------------------------------------------------------------------------
FIDELITY VIP OVERSEAS PORTFOLIO
Shares 204,435
Cost $4,379,775
................................
Market Value: --
-----------------------------------------------------------------------------------------------------------------------------
FIDELITY VIP II ASSET MANAGER
PORTFOLIO
Shares 124,628
Cost $2,100,314
................................
Market Value: 2,073,809
-----------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company --
................................
Receivable from fund shares sold --
................................
Total Assets 2,073,809
................................
LIABILITIES:
Due to Hartford Life Insurance
Company 7,066
................................
Payable for fund shares purchased --
................................
TOTAL LIABILITIES 7,066
-----------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $2,066,743
-----------------------------------------------------------------------------------------------------------------------------
Units Owned by Participants 1,063,166
................................
Unit Values $ 1.943951
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-3
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
For the Period Ended Bond Stock Money Advisers Capital Mortgage Index
September 30, 2000 Fund Fund Market Fund Fund Appreciation Securities Fund
Sub-Account Sub-Account Sub-Account Sub-Account Fund Fund Sub-Account
Sub-Account Sub-Account
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 34,347 $ 6,073 $223,777 $ 25,821 $ 10,337 $ 1,561 $ 2,251
......................................................................................................................
Net investment income (loss) 34,347 6,073 223,777 25,821 10,337 1,561 2,251
......................................................................................................................
Capital gains income -- 2,507,944 (139) 1,027,707 3,415,266 -- 211,235
......................................................................................................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
......................................................................................................................
Net realized gain (loss) on
security transactions 29,364 2,748 -- (3,366) 3,212 (4,304) (6,956)
......................................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period 459,858 (3,069,509) -- (995,416) 943,911 17,575 (600,372)
......................................................................................................................
Net gain (loss) on investments 489,222 (3,066,761) -- (998,782) 947,123 13,271 (607,328)
-----------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $523,569 $ (552,744) $223,638 $ 54,746 $4,372,726 $14,832 $(393,842)
-----------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Period Ended International
September 30, 2000 Opportunities
Fund
Sub-Account
--------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 37,460
................................
Net investment income (loss) 37,460
................................
Capital gains income 600,005
................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
................................
Net realized gain (loss) on
security transactions 2,892
................................
Net unrealized appreciation
(depreciation) of investments
during the period (1,331,996)
................................
Net gain (loss) on investments (1,329,104)
---------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $ (691,639)
----------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-4
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
For the Period Ended Dividend Growth and International Small MidCap Fidelity VIP Fidelity
September 30, 2000 and Income Advisers Company Fund Fund Equity-Income VIP
Growth Fund Fund Sub-Account Sub-Account Portfolio Overseas
Fund Sub-Account Sub-Account Sub-Account Portfolio
Sub-Account Sub-Account
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 7,705 $ 18 $ 41 $ -- $ -- $ 181,507 $ 66,972
.............................................................................................................................
Net investment income (loss) 7,705 18 41 -- -- 181,507 66,972
.............................................................................................................................
Capital gains income 846,252 3,766 222 126,600 35,459 683,816 421,740
.............................................................................................................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
.............................................................................................................................
Net realized gain (loss) on
security transactions 2,713 96 1 783 1,076 (196,811) (3,030)
.............................................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period (364,258) 2,178 (425) (164,246) 147,231 (442,687) (1,086,099)
.............................................................................................................................
Net gain (loss) on investments (361,545) 2,274 (424) (163,463) 148,307 (639,498) (1,089,129)
------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $ 492,412 $6,058 $(161) $ (36,863) $183,766 $ 225,825 $ (600,417)
------------------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Period Ended Fidelity VIP
September 30, 2000 II
Asset Manager
Portfolio
Sub-Account
-----------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 62,391
................................
Net investment income (loss) 62,391
................................
Capital gains income 146,990
................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
................................
Net realized gain (loss) on
security transactions 1,788
................................
Net unrealized appreciation
(depreciation) of investments
during the period (211,209)
................................
Net gain (loss) on investments (209,421)
--------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $ (40)
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-5
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
For the Period Ended Bond Stock Money Advisers Capital Mortgage Index
September 30, 2000 Fund Fund Market Fund Fund Appreciation Securities Fund
Sub-Account Sub-Account Sub-Account Sub-Account Fund Fund Sub-Account
Sub-Account Sub-Account
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 34,347 $ 6,073 $ 223,777 $ 25,821 $ 10,337 $ 1,561 $ 2,251
.........................................................................................................................
Capital gains income -- 2,507,944 (139) 1,027,707 3,415,266 -- 211,235
.........................................................................................................................
Net realized gain (loss) on
security transactions 29,364 2,748 -- (3,366) 3,212 (4,304) (6,956)
.........................................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period 459,858 (3,069,509) -- (995,416) 943,911 17,575 (600,372)
.........................................................................................................................
Net increase (decrease) in net
assets resulting from
operations 523,569 (552,744) 223,638 54,746 4,372,726 14,832 (393,842)
.........................................................................................................................
UNIT TRANSACTIONS:
Purchases 422,078 1,818,944 5,791,952 1,304,866 1,874,668 67,386 1,340,086
.........................................................................................................................
Net transfers (1,500,730) 1,479,878 (4,815,157) 597,986 522,652 (157,141) (349,224)
.........................................................................................................................
Surrenders for benefit payments
and fees (245,074) (428,697) (174,408) (233,403) (484,505) (10,162) (382,084)
.........................................................................................................................
Net Loan withdrawals 2,282 (9,888) (225) 11,040 (14,295) -- (7,549)
.........................................................................................................................
Cost of insurance (162,369) (612,698) (305,118) (479,092) (774,168) (9,222) (479,038)
.........................................................................................................................
Net (decrease) increase in net
assets resulting from unit
transactions (1,483,813) 2,247,539 497,044 1,201,397 1,124,352 (109,139) 122,191
.........................................................................................................................
Total (decrease) increase in net
assets (960,244) 1,694,795 720,682 1,256,143 5,497,078 (94,307) (271,651)
.........................................................................................................................
NET ASSETS:
Beginning of period 7,139,734 21,716,504 5,008,442 10,716,125 21,601,090 333,548 22,328,793
--------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $6,179,490 $23,411,299 $5,729,124 $11,972,268 $27,098,168 $ 239,241 $22,057,142
--------------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Period Ended International
September 30, 2000 Opportunities
Fund
Sub-Account
--------------------------------------------------------------
OPERATIONS:
Net investment income $ 37,460
................................
Capital gains income 600,005
................................
Net realized gain (loss) on
security transactions 2,892
................................
Net unrealized appreciation
(depreciation) of investments
during the period (1,331,996)
................................
Net increase (decrease) in net
assets resulting from
operations (691,639)
................................
UNIT TRANSACTIONS:
Purchases 459,659
................................
Net transfers 160,928
................................
Surrenders for benefit payments
and fees (202,739)
................................
Net Loan withdrawals (8,458)
................................
Cost of insurance (144,000)
................................
Net (decrease) increase in net
assets resulting from unit
transactions 265,390
................................
Total (decrease) increase in net
assets (426,249)
................................
NET ASSETS:
Beginning of period 5,645,029
---------------------------------------------------------------------------
END OF PERIOD $5,218,780
----------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-6
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
For the Period Ended Dividend Growth and International Small MidCap Fidelity VIP Fidelity
September 30, 2000 and Income Advisers Company Fund Fund Equity-Income VIP
Growth Fund Fund Fund Sub-Account Sub-Account Portfolio Overseas
Sub-Account Sub-Account Sub-Account Sub-Account Portfolio
Sub-Account
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 7,705 $ 18 $ 41 $ -- $ -- $ 181,507 $ 66,972
............................................................................................................................
Capital gains income 846,252 3,766 222 126,600 35,459 683,816 421,740
............................................................................................................................
Net realized gain (loss) on
security transactions 2,713 96 1 783 1,076 (196,811) (3,030)
............................................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period (364,258) 2,178 (425) (164,246) 147,231 (442,687) (1,086,099)
............................................................................................................................
Net increase (decrease) in net
assets resulting from
operations 492,412 6,058 (161) (36,863) 183,766 225,825 (600,417)
............................................................................................................................
UNIT TRANSACTIONS:
Purchases 928,057 24,206 -- 107,661 56,262 802,314 255,579
............................................................................................................................
Net transfers 96,826 213,260 1,927 500,142 1,131,250 (1,671,022) 202,866
............................................................................................................................
Surrenders for benefit payments
and fees (246,982) (21,555) (440) (104,866) (79,549) (239,180) (155,420)
............................................................................................................................
Net Loan withdrawals (14,987) -- -- -- -- (11,050) (14)
............................................................................................................................
Cost of insurance (304,436) (9,579) (42) (45,498) (30,525) (257,830) (91,236)
............................................................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 458,478 206,332 1,445 457,439 1,077,438 (1,376,768) 211,775
............................................................................................................................
Total increase (decrease) in net
assets 950,890 212,390 1,284 420,576 1,261,204 (1,150,943) (388,642)
............................................................................................................................
NET ASSETS:
Beginning of period 9,130,603 168,547 1,884 771,535 271,326 10,837,241 4,844,230
-----------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $10,081,493 $ 380,937 $3,168 $1,192,111 $1,532,530 $ 9,686,298 $ 4,455,588
-----------------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Period Ended Fidelity VIP
September 30, 2000 II
Asset
Manager
Portfolio
Sub-Account
-----------------------------------------------------------------------------------------------------
OPERATIONS:
Net investment income $ 62,391
................................
Capital gains income 146,990
................................
Net realized gain (loss) on
security transactions 1,788
................................
Net unrealized appreciation
(depreciation) of investments
during the period (211,209)
................................
Net increase (decrease) in net
assets resulting from
operations (40)
................................
UNIT TRANSACTIONS:
Purchases 217,564
................................
Net transfers 2,923
................................
Surrenders for benefit payments
and fees (28,064)
................................
Net Loan withdrawals --
................................
Cost of insurance (70,566)
................................
Net increase (decrease) in net
assets resulting from unit
transactions 121,857
................................
Total increase (decrease) in net
assets 121,817
................................
NET ASSETS:
Beginning of period 1,944,926
------------------------------------------------------------------------------------------------------------------
END OF PERIOD $2,066,743
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-7
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
September 30, 2000 Asia Diversified The George Global Global Growth Health
Pacific Income Putnam Asset Growth and Income Sciences
Growth Sub-Account Fund Allocation Sub-Account Sub-Account Sub-Account
Sub-Account of Boston Sub-Account
Sub-Account
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
--------------------------------------------------------------------------------------------------------------------------
PUTNAM VT ASIA PACIFIC GROWTH
FUND
Shares 14,864
Cost $191,425
.........................................................................................................................
Market Value: $166,924 $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------------------------------------
PUTNAM VT DIVERSIFIED INCOME FUND
Shares 55,548
Cost $571,376
.........................................................................................................................
Market Value: -- $ 512,151 -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
PUTNAM VT THE GEORGE PUTNAM FUND
OF BOSTON
Shares 7,606
Cost $76,531
.........................................................................................................................
Market Value: -- -- $79,330 -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL ASSET ALLOCATION
FUND
Shares 238,111
Cost $4,318,259
.........................................................................................................................
Market Value: -- -- -- $4,093,120 -- -- --
--------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL GROWTH FUND
Shares 468,990
Cost $9,105,904
.........................................................................................................................
Market Value: -- -- -- -- $10,228,673 -- --
--------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND
Shares 631,284
Cost $16,349,980
.........................................................................................................................
Market Value: -- -- -- -- -- $15,655,832 --
--------------------------------------------------------------------------------------------------------------------------
PUTNAM VT HEALTH SCIENCES FUND
Shares 23,982
Cost $294,982
.........................................................................................................................
Market Value: -- -- -- -- -- -- $353,254
--------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company -- 1,331 3 230 3,176 86,005 401
.........................................................................................................................
Receivable from fund shares sold -- -- -- -- -- -- --
.........................................................................................................................
Total Assets 166,924 513,482 79,333 4,093,350 10,231,849 15,741,837 353,655
.........................................................................................................................
LIABILITIES
Due to Hartford Life Insurance
Company 1 -- -- -- -- --
.........................................................................................................................
Payable for fund shares purchased -- 1,329 -- -- 2,576 87,657 405
.........................................................................................................................
TOTAL LIABILITIES 1 1,329 -- 0 2,576 87,657 405
--------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $166,923 $ 512,153 $79,333 $4,093,350 $10,229,273 $15,654,180 $353,250
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-8
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
September 30, 2000 High Yield Income International International International Investors Money
Sub-Account Sub-Account Growth Growth and New Sub-Account Market
Sub-Account Income Opportunities Sub-Account
Sub-Account Sub-Account
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments:
------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT HIGH YIELD FUND
Shares 427,248
Cost $4,963,588
.............................................................................................................................
Market Value: $4,093,037 $ -- $ -- $ -- $ -- $ -- $ --
------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INCOME FUND
Shares 176,459
Cost $2,236,332
.............................................................................................................................
Market Value: -- $2,159,855 -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH
FUND
Shares 41,689
Cost $723,206
.............................................................................................................................
Market Value: -- -- $752,901 -- -- -- --
------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH
AND INCOME FUND
Shares 7,261
Cost $102,403
.............................................................................................................................
Market Value: -- -- -- $92,582 -- -- --
------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL NEW
OPPORTUNITIES FUND
Shares 16,407
Cost $374,292
.............................................................................................................................
Market Value: -- -- -- -- $276,450 -- --
------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INVESTORS FUND
Shares 48,350
Cost $572,089
.............................................................................................................................
Market Value: -- -- -- -- -- $702,519 --
------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT MONEY MARKET FUND
Shares 195,393
Cost $195,393
.............................................................................................................................
Market Value: -- -- -- -- -- -- $ 195,393
------------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company 2,768 -- -- -- 488 4,585 42
.............................................................................................................................
Receivable from fund shares sold -- -- -- -- -- -- --
.............................................................................................................................
Total Assets 4,095,805 2,159,855 752,901 92,582 276,938 707,104 195,435
.............................................................................................................................
LIABILITIES
Due to Hartford Life Insurance
Company -- 72 4 1 -- -- --
.............................................................................................................................
Payable for fund shares purchased 2,758 -- -- -- 438 4,590 --
.............................................................................................................................
TOTAL LIABILITIES 2,758 72 4 1 438 4,590 0
------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $4,093,047 $2,159,783 $752,897 $92,581 $276,500 $702,514 $ 195,435
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-9
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
September 30, 2000 New New OTC & Utilities Vista Voyager
Opportunities Value Emerging Growth Sub-Account Sub-Account
Sub-Account Sub-Account Growth and Income
Sub-Account Sub-Account
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
PUTNAM VT NEW OPPORTUNITIES FUND
Shares 415,594
Cost $9,741,192
.................................................................................................................
Market Value: $17,442,478 $ -- $ -- $ -- $ -- $ --
------------------------------------------------------------------------------------------------------------------
PUTNAM VT NEW VALUE FUND
Shares 28,348
Cost $332,758
.................................................................................................................
Market Value: -- $349,525 -- -- -- --
------------------------------------------------------------------------------------------------------------------
PUTNAM VT OTC & EMERGING GROWTH
FUND
Shares 40,703
Cost $862,212
.................................................................................................................
Market Value: -- -- $755,048 -- -- --
------------------------------------------------------------------------------------------------------------------
PUTNAM VT UTILITIES GROWTH &
INCOME FUND
Shares 69,525
Cost $1,113,117
.................................................................................................................
Market Value: -- -- -- $1,229,896 -- --
------------------------------------------------------------------------------------------------------------------
PUTNAM VT VISTA FUND
Shares 28,861
Cost $686,239
.................................................................................................................
Market Value: -- -- -- -- $ 715,473 --
------------------------------------------------------------------------------------------------------------------
PUTNAM VT VOYAGER FUND
Shares 442,227
Cost $18,363,234
.................................................................................................................
Market Value: -- -- -- -- -- $25,299,833
------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company 3,789 3,779 -- 62 2 53,509
.................................................................................................................
Receivable from fund shares sold -- -- -- -- -- --
.................................................................................................................
Total Assets 17,446,267 353,304 755,048 1,229,958 715,475 25,353,342
.................................................................................................................
LIABILITIES
Due to Hartford Life Insurance
Company -- -- 7 -- -- --
.................................................................................................................
Payable for fund shares purchased 4,530 3,780 -- -- -- 51,571
.................................................................................................................
TOTAL LIABILITIES 4,530 3,780 7 -- -- 51,571
------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $17,441,737 $349,524 $755,041 $1,229,958 $ 715,475 $25,301,771
------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-10
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED) (CONTINUED)
<TABLE>
-----------------------------------------------------------------------------------
September 30, 2000 Units Unit Contract
Owned by Price Liability
Participants
<S> <C> <C> <C>
-----------------------------------------------------------------------------------
Variable life contracts
Asia Pacific Growth Fund 11,176 $14.935338 $ 166,923
..................................................................................
Diversified Income Fund 39,056 13.113302 512,153
..................................................................................
George Putnam Fund 7,186 11.040569 79,333
..................................................................................
Global Asset Allocation Fund 179,415 22.815002 4,093,350
..................................................................................
Global Growth Fund 310,165 32.980056 10,229,273
..................................................................................
Growth and Income Fund 582,230 26.886600 15,654,180
..................................................................................
Health Sciences Fund 23,315 15.151502 353,250
..................................................................................
High Yield Fund 254,003 16.114172 4,093,047
..................................................................................
Income Fund 143,049 15.098227 2,159,783
..................................................................................
International Growth Fund 52,056 14.463235 752,897
..................................................................................
International Growth and Income Fund 7,818 11.842557 92,581
..................................................................................
International New Opportunities Fund 18,499 14.947040 276,500
..................................................................................
Investors Fund 50,360 13.949961 702,514
..................................................................................
Money Market Fund 137,813 1.418117 195,435
..................................................................................
New Opportunities Fund 436,370 39.970028 17,441,737
..................................................................................
New Value Fund 29,385 11.894540 349,524
..................................................................................
OTC & Emerging Growth Fund 37,669 20.043914 755,041
..................................................................................
Utilities Growth and Income Fund 49,867 24.664702 1,229,958
..................................................................................
Vista Fund 36,398 19.656868 715,475
..................................................................................
Voyager Fund 566,147 44.691134 25,301,771
..................................................................................
GRAND TOTAL: $85,154,725
-----------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-11
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
For the Period Ended Asia Diversified The George Global Global Growth Health
September 30, 2000 Pacific Income Putnam Asset Growth and Income Sciences
Growth Sub-Account Fund Allocation Sub-Account Sub-Account Sub-Account
Sub-Account of Boston Sub-Account
Sub-Account
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 12,316 $ 35,542 -- $ 70,991 $ 75,911 $ 239,607 --
......................................................................................................................
Capital gains income -- -- 370,753 1,891,825 1,128,130 --
......................................................................................................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
......................................................................................................................
Net realized gain (loss) on
security transactions (33,484) (83) 13 (2,920) 1,082 8,516 189
......................................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period (79,251) (32,173) 3,572 (521,051) (3,829,450) (787,276) 54,307
......................................................................................................................
Net gain (loss) on investments (112,735) (32,256) 3,585 (523,971) (3,828,368) (778,760) 54,496
-----------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $(100,419) $ 3,286 $3,585 $(82,227) $(1,860,632) $ 588,977 $ 54,496
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-12
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
For the Period Ended High Yield Income International International International Investors Money Market
September 30, 2000 Sub-Account Sub-Account Growth Growth and New Sub-Account Sub-Account
Sub-Account Income Opportunities
Sub-Account Sub-Account
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $460,172 $154,348 $ 11,179 $ 3,053 $ 145 $ -- $ 9,603
..........................................................................................................................
Capital gains income -- 48,486 6,693 13,573 -- --
..........................................................................................................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
..........................................................................................................................
Net realized gain (loss) on
security transactions (16) (4,056) (368) 4 (36) 3,405 --
..........................................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period (555,990) (41,499) (117,160) (11,955) (110,927) (30,376) --
..........................................................................................................................
Net gain (loss) on investments (556,006) (45,555) (117,528) (11,951) (110,963) (26,971) --
---------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $(95,834) $108,793 $(57,863) $(2,205) $(97,245) $(26,971) $9,603
---------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-13
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
For the Period Ended New New OTC & Utilities Vista Voyager
September 30, 2000 Opportunities Value Emerging Growth Sub-Account Sub-Account
Sub-Account Sub-Account Growth and
Sub-Account Income
Sub-Account
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ -- $ 4,289 $ -- $ 40,997 $ -- $ 7,767
......................................................................................................
Capital gains income 1,304,356 15,191 6,665 72,373 1,850 3,295,557
......................................................................................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
......................................................................................................
Net realized gain (loss) on
security transactions 12,108 134 (16,212) (645) 663 (62,622)
......................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period (694,441) 17,392 (197,101) 49,888 23,635 (3,822,605)
......................................................................................................
Net gain (loss) on investments (682,333) 17,526 (213,313) 49,243 24,298 (3,885,227)
-------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $ 622,023 $37,006 $(206,648) $162,613 $26,148 $ (581,903)
-------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-14
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
For the Period Ended Asia Diversified The George Global Asset Global Growth Health
September 30, 2000 Pacific Income Putnam Fund Allocation Growth and Income Sciences
Growth Sub-Account of Boston Sub-Account Sub-Account Sub-Account Sub-Account
Sub-Account Sub-Account
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 12,316 $ 35,542 $ -- $ 70,991 $ 75,911 $ 239,607 $ --
............................................................................................................................
Capital gains income -- -- -- 370,753 1,891,825 1,128,130 --
............................................................................................................................
Net realized gain (loss) on
security transactions (33,484) (83) 13 (2,920) 1,082 8,516 189
............................................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period (79,251) (32,173) 3,572 (521,051) (3,829,450) (787,276) 54,307
............................................................................................................................
Net increase (decrease) in net
assets resulting from
operations (100,419) 3,286 3,585 (82,227) (1,860,632) 588,977 54,496
............................................................................................................................
UNIT TRANSACTIONS:
Purchases 17,571 116,833 16,368 230,443 934,029 1,752,733 24,162
............................................................................................................................
Net transfers 69,540 543 45,155 (75,950) (267,298) 1,538,652 209,568
............................................................................................................................
Surrenders for benefit payments
and fees (5,097) (9,606) (28,120) (32,233) (436,192) (242,831) (9,325)
............................................................................................................................
Net loan activity -- -- -- (6) (373) (12,445) (115)
............................................................................................................................
Cost of insurance (10,437) (20,544) (1,267) (86,856) (293,601) (486,484) (4,111)
............................................................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 71,577 87,226 32,136 35,398 (63,435) 2,549,625 220,179
............................................................................................................................
Total increase (decrease) in net
assets (28,842) 90,512 35,721 (46,829) (1,924,067) 3,138,602 274,675
............................................................................................................................
NET ASSETS:
Beginning of period 195,765 421,641 43,612 4,140,179 12,153,340 12,515,578 78,575
-----------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $166,923 $ 512,153 $79,333 $4,093,350 $10,229,273 $15,654,180 $353,250
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-15
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
For the Period Ended High Yield Income International International International Investors Money
September 30, 2000 Sub-Account Sub-Account Growth Growth and New Sub-Account Market
Sub-Account Income Opportunities Sub-Account
Sub-Account Sub-Account
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 460,172 $ 154,348 $ 11,179 $ 3,053 $ 145 $ -- $ 9,603
................................................................................................................................
Capital gains income -- -- 48,486 6,693 13,573 -- --
................................................................................................................................
Net realized gain (loss) on
security transactions (16) (4,056) (368) 4 (36) 3,405 --
................................................................................................................................
Net unrealized (depreciation)
appreciation of investments
during the period (555,990) (41,499) (117,160) (11,955) (110,927) (30,376) --
................................................................................................................................
Net increase (decrease) in net
assets resulting from
operations (95,834) 108,793 (57,863) (2,205) (97,245) (26,971) 9,603
................................................................................................................................
UNIT TRANSACTIONS:
Purchases (423,002) 272,666 28,440 12,024 40,701 48,933 115,616
................................................................................................................................
Net transfers 147,110 (286,388) 373,832 62,876 265,661 21,004 (251,024)
................................................................................................................................
Surrenders for benefit payments
and fees (83,220) (179,077) (18,320) (1,704) (25,529) (10,906) (3,836)
................................................................................................................................
Net loan activity (9) (1,942) (1,528) -- -- (109)
................................................................................................................................
Cost of insurance (109,925) (79,874) (19,716) (4,398) (13,210) (21,865) (7,254)
................................................................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions (469,046) (274,615) 362,708 68,798 267,623 37,057 (146,498)
................................................................................................................................
Total increase (decrease) in net
assets (564,880) (165,822) 304,845 66,593 170,378 10,086 (136,895)
................................................................................................................................
NET ASSETS:
Beginning of period 3,811,927 2,325,605 448,052 25,988 106,122 692,428 332,330
---------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $3,247,047 $2,159,783 $752,897 $92,581 $276,500 $ 702,514 $ 195,435
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-16
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
For the Period Ended New New OTC & Utilities Vista Voyager
September 30, 2000 Opportunities Value Emerging Growth Sub-Account Sub-Account
Sub-Account Sub-Account Growth and Income
Sub-Account Sub-Account
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ -- $ 14,289 $ -- $ 40,997 $ -- $ 7,767
...............................................................................................................................
Capital gains income 1,304,356 15,191 6,665 72,373 1,850 3,295,557
...............................................................................................................................
Net realized gain (loss) on security
transactions 12,108 134 (16,212) (645) 663 (62,622)
...............................................................................................................................
Net unrealized appreciation (depreciation) of
investments during the period (694,441) 17,392 (197,101) 49,888 23,635 (3,822,605)
...............................................................................................................................
Net increase (decrease) in net assets
resulting from operations 622,023 37,006 (206,648) 162,613 26,148 (581,903)
...............................................................................................................................
UNIT TRANSACTIONS:
Purchases 1,025,448 20,425 70,794 132,618 34,219 1,714,176
...............................................................................................................................
Net transfers 488,951 34,545 668,421 (180,639) 703,154 12,038
...............................................................................................................................
Surrenders for benefit payments and fees (496,370) (4,589) (14,638) (37,143) (71,247) (577,875)
...............................................................................................................................
Net loan activity 9,562 -- (5) (15,954)
...............................................................................................................................
Cost of insurance (460,628) (10,595) (18,804) (44,067) (7,167) (661,336)
...............................................................................................................................
Net increase (decrease) in net assets
resulting from unit transactions 566,963 39,786 705,773 (129,236) 658,959 471,049
...............................................................................................................................
Total increase (decrease) in net assets 1,188,986 76,792 499,125 33,377 685,107 (110,854)
...............................................................................................................................
NET ASSETS:
Beginning of period 16,252,751 272,732 255,916 1,196,581 30,368 25,412,625
--------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $17,441,737 $349,524 $755,041 $1,229,958 $715,475 $25,301,771
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-17
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hartford Life Insurance Company
Separate Account VL II and to the Owners of Units of Interest therein:
We have audited the accompanying statements of assets and liabilities of
Hartford Life Insurance Company Separate Account VL II (Bond Fund, Stock Fund,
Money Market Fund, Advisers Fund, Capital Appreciation Fund, Mortgage Securities
Fund, Index Fund, International Opportunities Fund, Dividend and Growth Fund,
Growth and Income Fund, International Advisers Fund, Small Company Fund, MidCap
Fund, Fidelity VIP Equity-Income Portfolio, Fidelity VIP Overseas Portfolio and
Fidelity VIP II Asset Manager Portfolio) (collectively, the Account) as of
December 31, 1999, and the related statements of operations and the statements
of changes in net assets for the periods presented. These financial statements
are the responsibility of the Account's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Account as of December 31,
1999, and the results of their operations and the changes in their net assets
for the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 17, 2000 ARTHUR ANDERSEN LLP
SA-1
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Statements of Assets & Liabilities
--------------------------------------------------------------------------------
<TABLE>
December 31, 1999 Bond Fund Stock Fund Money Advisers Capital Mortgage Index Fund
Sub-Account Sub-Account Market Fund Appreciation Securities Sub-Account
Fund Sub-Account Fund Fund
Sub-Account Sub-Account Sub-Account
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
--------------------------------------------------------------------------------------------------------------------------
HARTFORD BOND HLS FUND, INC. -
CLASS IA
Shares 7,183,854
Cost $7,594,577
.........................................................................................................................
Market Value $7,139,760 $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------------------------------------
HARTFORD STOCK HLS FUND, INC. -
CLASS IA
Shares 3,038,583
Cost $16,092,310
.........................................................................................................................
Market Value -- 21,717,930 -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
HARTFORD MONEY MARKET HLS
FUND, INC. - CLASS IA
Shares 5,008,118
Cost $5,008,118
.........................................................................................................................
Market Value -- -- 5,008,118 -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
HARTFORD ADVISERS HLS FUND, INC.
-CLASS IA
Shares 3,614,492
Cost $9,282,357
.........................................................................................................................
Market Value -- -- -- 10,716,151 -- -- --
--------------------------------------------------------------------------------------------------------------------------
HARTFORD CAPITAL APPRECIATION HLS
FUND, INC. - CLASS IA
Shares 3,543,798
Cost $15,045,160
.........................................................................................................................
Market Value -- -- -- -- 21,600,824 -- --
--------------------------------------------------------------------------------------------------------------------------
HARTFORD MORTGAGE SECURITIES HLS
FUND, INC. - CLASS IA
Shares 320,876
Cost $344,638
.........................................................................................................................
Market Value -- -- -- -- -- 333,548 --
--------------------------------------------------------------------------------------------------------------------------
HARTFORD INDEX HLS FUND, INC. -
CLASS IA
Shares 5,331,733
Cost $16,328,752
.........................................................................................................................
Market Value -- -- -- -- -- -- 22,333,459
--------------------------------------------------------------------------------------------------------------------------
HARTFORD INTERNATIONAL
OPPORTUNITIES HLS FUND, INC. -
CLASS IA
Shares 3,009,268
Cost $4,055,348
.........................................................................................................................
Market Value -- -- -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company 6,406 8,652 -- 3,873 5,956 -- 6,419
.........................................................................................................................
Receivable from fund shares sold -- -- 531 -- -- -- --
.........................................................................................................................
Total Assets 7,146,166 21,726,582 5,008,649 10,720,024 21,606,780 333,548 22,339,878
.........................................................................................................................
LIABILITIES:
Due to Hartford Life Insurance
Company -- -- 207 -- -- -- --
.........................................................................................................................
Payable for fund shares purchased 6,432 10,078 -- 3,899 5,690 -- 11,085
.........................................................................................................................
TOTAL LIABILITIES 6,432 10,078 207 3,899 5,690 -- 11,085
--------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $7,139,734 $21,716,504 $5,008,442 $10,716,125 $21,601,090 $ 333,548 $22,328,793
--------------------------------------------------------------------------------------------------------------------------
Units Owned by Participants 4,905,759 5,777,931 3,661,897 3,992,555 6,371,127 228,153 6,229,908
Unit Values $ 1.455378 $ 3.758526 $1.367718 $ 2.684027 $ 3.390466 $ 1.461942 $ 3.584129
--------------------------------------------------------------------------------------------------------------------------
<S> <C>
December 31, 1999 International
Opportunities
Fund
Sub-Account
------------------------------------------------------------
ASSETS:
Investments:
------------------------------------------------------------------------
HARTFORD BOND HLS FUND, INC. -
CLASS IA
Shares 7,183,854
Cost $7,594,577
................................
Market Value $ --
------------------------------------------------------------------------------------
HARTFORD STOCK HLS FUND, INC. -
CLASS IA
Shares 3,038,583
Cost $16,092,310
................................
Market Value --
------------------------------------------------------------------------------------------------
HARTFORD MONEY MARKET HLS
FUND, INC. - CLASS IA
Shares 5,008,118
Cost $5,008,118
................................
Market Value --
------------------------------------------------------------------------------------------------------------
HARTFORD ADVISERS HLS FUND, INC.
-CLASS IA
Shares 3,614,492
Cost $9,282,357
................................
Market Value --
------------------------------------------------------------------------------------------------------------------------
HARTFORD CAPITAL APPRECIATION HLS
FUND, INC. - CLASS IA
Shares 3,543,798
Cost $15,045,160
................................
Market Value --
--------------------------------------------------------------------------------------------------------------------------
HARTFORD MORTGAGE SECURITIES HLS
FUND, INC. - CLASS IA
Shares 320,876
Cost $344,638
................................
Market Value --
--------------------------------------------------------------------------------------------------------------------------
HARTFORD INDEX HLS FUND, INC. -
CLASS IA
Shares 5,331,733
Cost $16,328,752
................................
Market Value --
--------------------------------------------------------------------------------------------------------------------------
HARTFORD INTERNATIONAL
OPPORTUNITIES HLS FUND, INC. -
CLASS IA
Shares 3,009,268
Cost $4,055,348
................................
Market Value 5,645,191
--------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company 1,276
................................
Receivable from fund shares sold --
................................
Total Assets 5,646,467
................................
LIABILITIES:
Due to Hartford Life Insurance
Company --
................................
Payable for fund shares purchased 1,438
................................
TOTAL LIABILITIES 1,438
--------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $5,645,029
--------------------------------------------------------------------------------------------------------------------------
Units Owned by Participants 2,375,497
Unit Values $ 2.376357
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-2
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Statements of Assets & Liabilities (continued)
--------------------------------------------------------------------------------
<TABLE>
December 31, 1999 Dividend Growth and International Small MidCap Fund Fidelity Fidelity
and Growth Income Fund Advisers Company Sub-Account VIP Equity- VIP
Fund Sub-Account Fund Fund Income Overseas
Sub-Account Sub-Account Sub-Account Portfolio Portfolio
Sub-Account Sub-Account
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
--------------------------------------------------------------------------------------------------------------------------
HARTFORD DIVIDEND AND GROWTH HLS
FUND, INC. - CLASS IA
Shares 4,249,199
Cost $8,022,852
.........................................................................................................................
Market Value $9,130,798 $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------------------------------------
HARTFORD GROWTH AND INCOME HLS
FUND - CLASS IA
Shares 117,729
Cost $148,694
.........................................................................................................................
Market Value -- 168,547 -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
HARTFORD INTERNATIONAL ADVISERS
HLS FUND, INC. - CLASS IA
Shares 1,349
Cost $1,573
.........................................................................................................................
Market Value -- -- 1,884 -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
HARTFORD SMALL COMPANY HLS
FUND, INC. - CLASS IA
Shares 352,657
Cost $557,910
.........................................................................................................................
Market Value -- -- -- 771,535 -- -- --
--------------------------------------------------------------------------------------------------------------------------
HARTFORD MIDCAP HLS FUND, INC. -
CLASS IA
Shares 132,124
Cost $218,119
.........................................................................................................................
Market Value -- -- -- -- 271,316 -- --
--------------------------------------------------------------------------------------------------------------------------
FIDELITY VIP EQUITY-INCOME
PORTFOLIO
Shares 421,647
Cost $9,768,013
.........................................................................................................................
Market Value -- -- -- -- -- 10,840,547 --
--------------------------------------------------------------------------------------------------------------------------
FIDELITY VIP OVERSEAS PORTFOLIO
Shares 176,253
Cost $3,681,545
.........................................................................................................................
Market Value -- -- -- -- -- -- 4,836,377
--------------------------------------------------------------------------------------------------------------------------
FIDELITY VIP II ASSET MANAGER
PORTFOLIO
Shares 104,549
Cost $1,767,222
.........................................................................................................................
Market Value -- -- -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company 7,196 -- -- 1,103 1,113 4,845 8,819
.........................................................................................................................
Receivable from fund shares sold -- -- -- -- -- -- --
.........................................................................................................................
Total Assets 9,137,994 168,547 1,884 772,638 272,429 10,845,392 4,845,196
.........................................................................................................................
LIABILITIES:
Due to Hartford Life Insurance
Company -- -- -- -- -- -- --
.........................................................................................................................
Payable for fund shares purchased 7,391 -- -- 1,103 1,103 8,151 966
.........................................................................................................................
TOTAL LIABILITIES 7,391 -- -- 1,103 1,103 8,151 966
.........................................................................................................................
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $9,130,603 $ 168,547 $ 1,884 $ 771,535 $ 271,326 $10,837,241 $4,844,230
--------------------------------------------------------------------------------------------------------------------------
Units Owned by Participants 3,726,135 120,204 1,518 432,247 161,935 5,202,176 2,221,144
Unit Values $ 2.450422 $1.402176 $1.240838 $1.784939 $1.675516 $ 2.083213 $ 2.180961
--------------------------------------------------------------------------------------------------------------------------
<S> <C>
December 31, 1999 Fidelity
VIP II
Asset
Manager
Portfolio
Sub-Account
----------------------------------------------------------
ASSETS:
Investments:
----------------------------------------------------------------------
HARTFORD DIVIDEND AND GROWTH HLS
FUND, INC. - CLASS IA
Shares 4,249,199
Cost $8,022,852
................................
Market Value $ --
----------------------------------------------------------------------------------
HARTFORD GROWTH AND INCOME HLS
FUND - CLASS IA
Shares 117,729
Cost $148,694
................................
Market Value --
----------------------------------------------------------------------------------------------
HARTFORD INTERNATIONAL ADVISERS
HLS FUND, INC. - CLASS IA
Shares 1,349
Cost $1,573
................................
Market Value --
----------------------------------------------------------------------------------------------------------
HARTFORD SMALL COMPANY HLS
FUND, INC. - CLASS IA
Shares 352,657
Cost $557,910
................................
Market Value --
----------------------------------------------------------------------------------------------------------------------
HARTFORD MIDCAP HLS FUND, INC. -
CLASS IA
Shares 132,124
Cost $218,119
................................
Market Value --
--------------------------------------------------------------------------------------------------------------------------
FIDELITY VIP EQUITY-INCOME
PORTFOLIO
Shares 421,647
Cost $9,768,013
................................
Market Value --
--------------------------------------------------------------------------------------------------------------------------
FIDELITY VIP OVERSEAS PORTFOLIO
Shares 176,253
Cost $3,681,545
................................
Market Value --
--------------------------------------------------------------------------------------------------------------------------
FIDELITY VIP II ASSET MANAGER
PORTFOLIO
Shares 104,549
Cost $1,767,222
................................
Market Value 1,951,926
--------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company --
................................
Receivable from fund shares sold --
................................
Total Assets 1,951,926
................................
LIABILITIES:
Due to Hartford Life Insurance
Company 7,000
................................
Payable for fund shares purchased --
................................
TOTAL LIABILITIES 7,000
................................
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $1,944,926
--------------------------------------------------------------------------------------------------------------------------
Units Owned by Participants 999,637
Unit Values $ 1.945633
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-3
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Statements of Operations
--------------------------------------------------------------------------------
<TABLE>
For the Year Ended Bond Fund Stock Fund Money Advisers Capital Mortgage Index Fund
December 31, 1999 Sub-Account Sub-Account Market Fund Appreciation Securities Sub-Account
Fund Sub-Account Fund Fund
Sub-Account Sub-Account Sub-Account
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 389,916 $ 148,629 $270,522 $ 223,535 $ 64,817 $ 18,656 $ 204,111
........................................................................................................................
Capital gains income 27,919 1,376,125 138 710,073 982,513 -- 242,973
........................................................................................................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
........................................................................................................................
Net realized (loss) gain on
security transactions (217) (1,037) -- (2,197) 46,004 (164) (8,989)
........................................................................................................................
Net unrealized (depreciation)
appreciation of investments
during the period (528,300) 1,855,342 -- 32,325 4,620,392 (14,413) 2,990,567
........................................................................................................................
Net (loss) gain on investments (528,517) 1,854,305 -- 30,128 4,666,396 (14,577) 2,981,578
-------------------------------------------------------------------------------------------------------------------------
NET (DECREASE) INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS $(110,682) $3,379,059 $270,660 $ 963,736 $5,713,726 $ 4,079 $3,428,662
-------------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Year Ended International
December 31, 1999 Opportunities
Fund
Sub-Account
------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 54,978
................................
Capital gains income --
................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
................................
Net realized (loss) gain on
security transactions 237,802
................................
Net unrealized (depreciation)
appreciation of investments
during the period 1,473,851
................................
Net (loss) gain on investments 1,711,653
------------------------------------------------------------------------
NET (DECREASE) INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS $1,766,631
------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-4
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Statements of Operations (continued)
--------------------------------------------------------------------------------
<TABLE>
For the Year Ended Dividend Growth and International Small MidCap Fund Fidelity Fidelity
December 31, 1999 and Growth Income Fund Advisers Company Sub-Account VIP VIP
Fund Sub-Account Fund Fund Equity- Overseas
Sub-Account Sub-Account Sub-Account Income Portfolio
Portfolio Sub-Account
Sub-Account
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $147,722 $ 462 $ 55 $ -- $ -- $ 135,354 $ 55,675
........................................................................................................................
Capital gains income 342,313 1,064 -- 924 12,242 299,204 89,799
........................................................................................................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
........................................................................................................................
Net realized gain (loss) on
security transactions 32,258 51 90 (1,319) 2,552 (5,697) 163,510
........................................................................................................................
Net unrealized (depreciation)
appreciation of investments
during the period (30,149) 19,702 303 199,277 53,093 134,510 1,066,662
........................................................................................................................
Net gain on investments 2,109 19,753 393 197,958 55,645 128,813 1,230,172
-------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $492,144 $21,279 $ 448 $198,882 $ 67,887 $ 563,371 $1,375,646
-------------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Year Ended Fidelity
December 31, 1999 VIP II
Asset
Manager
Portfolio
Sub-Account
----------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 49,346
................................
Capital gains income 62,505
................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
................................
Net realized gain (loss) on
security transactions 110
................................
Net unrealized (depreciation)
appreciation of investments
during the period 70,100
................................
Net gain on investments 70,210
----------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $182,061
----------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-5
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
For the Year Ended Bond Fund Stock Fund Money Advisers Capital Mortgage Index Fund
December 31, 1999 Sub-Account Sub-Account Market Fund Fund Appreciation Securities Sub-Account
Sub-Account Sub-Account Fund Fund
Sub-Account Sub-Account
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 389,916 $ 148,629 $ 270,522 $ 223,535 $ 64,817 $ 18,656 $ 204,111
............................................................................................................................
Capital gains income 27,919 1,376,125 138 710,073 982,513 -- 242,973
............................................................................................................................
Net realized (loss) gain on
security transactions (217) (1,037) -- (2,197) 46,004 (164) (8,989)
............................................................................................................................
Net unrealized (depreciation)
appreciation of investments
during the period (528,300) 1,855,342 -- 32,325 4,620,392 (14,413) 2,990,567
............................................................................................................................
Net (decrease) increase in net
assets resulting from
operations (110,682) 3,379,059 270,660 963,736 5,713,726 4,079 3,428,662
............................................................................................................................
UNIT TRANSACTIONS:
Purchases 906,756 2,808,097 5,256,362 1,915,900 2,681,591 176,753 5,504,772
............................................................................................................................
Net transfers 3,046,307 985,523 (5,594,076) 635,438 (289,293) (29,483) 842,727
............................................................................................................................
Surrenders for benefit payments
and fees (72,647) (408,643) (332,938) (349,009) (473,077) (12,808) (300,584)
............................................................................................................................
Net loan activity (580) 113,577 (1,129) 9,903 21,822 -- 37,126
............................................................................................................................
Cost of insurance (178,194) (730,808) (410,504) (544,241) (771,602) (37,402) (596,819)
............................................................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 3,701,642 2,767,746 (1,082,285) 1,667,991 1,169,441 97,060 5,487,222
............................................................................................................................
Net increase (decrease) in net
assets 3,590,960 6,146,805 (811,625) 2,631,727 6,883,167 101,139 8,915,884
............................................................................................................................
NET ASSETS:
Beginning of period 3,548,774 15,569,699 5,820,067 8,084,398 14,717,923 232,409 13,412,909
-----------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $7,139,734 $21,716,504 $5,008,442 $10,716,125 $21,601,090 $ 333,548 $22,328,793
-----------------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Year Ended International
December 31, 1999 Opportunities
Fund
Sub-Account
------------------------------------------------------------
OPERATIONS:
Net investment income $ 54,978
................................
Capital gains income --
................................
Net realized (loss) gain on
security transactions 237,802
................................
Net unrealized (depreciation)
appreciation of investments
during the period 1,473,851
................................
Net (decrease) increase in net
assets resulting from
operations 1,766,631
................................
UNIT TRANSACTIONS:
Purchases 677,267
................................
Net transfers (1,859,466)
................................
Surrenders for benefit payments
and fees (121,807)
................................
Net loan activity 26,015
................................
Cost of insurance (219,619)
................................
Net increase (decrease) in net
assets resulting from unit
transactions (1,497,610)
................................
Net increase (decrease) in net
assets 269,021
................................
NET ASSETS:
Beginning of period 5,376,008
------------------------------------------------------------------------
END OF PERIOD $5,645,029
------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-6
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Statements of Changes in Net Assets (continued)
--------------------------------------------------------------------------------
<TABLE>
For the Year Ended Dividend Growth and International Small MidCap Fidelity Fidelity
December 31, 1999 and Growth Income Fund Advisers Company Fund Fund VIP Equity- VIP
Fund Sub-Account Fund Sub-Account Sub-Account Income Overseas
Sub-Account Sub-Account Portfolio Portfolio
Sub-Account Sub-Account
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
...........................................................................................................................
Net investment income $ 147,722 $ 462 $ 55 -- -- $ 135,354 $ 55,675
...........................................................................................................................
Capital gains income 342,313 1,064 -- 924 12,242 299,204 89,799
...........................................................................................................................
Net realized gain (loss) on
security transactions 32,258 51 90 (1,319) 2,552 (5,697) 163,510
...........................................................................................................................
Net unrealized (deoreciation)
appreciation of investments
during the period (30,149) 19,702 303 199,277 53,093 134,510 1,066,662
...........................................................................................................................
Net increase in net assets
resulting from operations 492,144 21,279 448 198,882 67,887 563,371 1,375,646
...........................................................................................................................
UNIT TRANSACTIONS:
Purchases 1,433,200 8,474 -- 130,785 26,831 1,305,399 434,002
...........................................................................................................................
Net transfers (565,534) 143,243 2,134 407,361 190,145 669,108 (532,883)
...........................................................................................................................
Surrenders for benefit payments
and fees (285,404) (3,898) (1,686) (2,001) (7,597) (217,417) (99,612)
...........................................................................................................................
Net loan activity 26,838 -- -- -- -- (1,401) 19,098
...........................................................................................................................
Cost of insurance (453,821) (2,157) (19) (20,448) (7,044) (400,372) (113,429)
...........................................................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 155,279 145,662 429 515,697 202,335 1,355,317 (292,824)
...........................................................................................................................
Net increase in net assets 647,423 166,941 877 714,579 270,222 1,918,688 1,082,822
...........................................................................................................................
NET ASSETS:
Beginning of period 8,483,180 1,606 1,007 56,956 1,104 8,918,553 3,761,408
----------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $9,130,603 $ 168,547 $ 1,884 $ 771,535 $ 271,326 $10,837,241 $4,844,230
----------------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Year Ended Fidelity
December 31, 1999 VIP II
Asset
Manager
Portfolio
Sub-Account
------------------------------------------------------------------------------------------------
OPERATIONS:
................................
Net investment income $ 49,346
................................
Capital gains income 62,505
................................
Net realized gain (loss) on
security transactions 110
................................
Net unrealized (deoreciation)
appreciation of investments
during the period 70,100
................................
Net increase in net assets
resulting from operations 182,061
................................
UNIT TRANSACTIONS:
Purchases 397,109
................................
Net transfers 51,243
................................
Surrenders for benefit payments
and fees (78,051)
................................
Net loan activity --
................................
Cost of insurance (80,468)
................................
Net increase (decrease) in net
assets resulting from unit
transactions 289,833
................................
Net increase in net assets 471,894
................................
NET ASSETS:
Beginning of period 1,473,032
------------------------------------------------------------------------------------------------------------
END OF PERIOD $1,944,926
------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-7
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Statements of Changes in Net Assets (continued)
--------------------------------------------------------------------------------
<TABLE>
For the Year Ended Bond Fund Stock Fund Money Advisers Capital Mortgage Index Fund
December 31, 1998 Sub-Account Sub-Account Market Fund Fund Appreciation Securities Sub-Account
Sub-Account Sub-Account Fund Fund
Sub-Account Sub-Account
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
............................................................................................................................
Net investment income $ 166,560 $ 116,844 $ 524,273 $ 158,735 $ 77,525 $ 14,559 $ 107,603
............................................................................................................................
Capital gains income -- 289,691 -- 148,349 573,895 -- 176,994
............................................................................................................................
Net realized gain (loss) on
security transactions 20,736 (19,525) -- 3,423 (40,897) (1) 41,466
............................................................................................................................
Net unrealized appreciation of
investments during the period 48,115 2,840,198 -- 925,117 1,053,772 632 2,102,732
............................................................................................................................
Net increase in net assets
resulting from operations 235,411 3,227,208 524,273 1,235,624 1,664,295 15,190 2,428,795
............................................................................................................................
UNIT TRANSACTIONS:
............................................................................................................................
Purchases 408,130 2,041,519 27,722,133 1,892,134 2,473,509 56,332 1,752,558
............................................................................................................................
Net transfers 1,509,453 4,810,627 (33,879,254) 1,620,594 3,402,616 (58,529) 3,270,849
............................................................................................................................
Surrenders for benefit payments
and fees (69,652) (576,595) (1,840,672) (400,056) (595,743) (8,870) (264,762)
............................................................................................................................
Net loan activity (519) (125,205) (66,865) 20,293 35,831 -- (56,810)
............................................................................................................................
Cost of insurance (87,306) (456,787) (501,588) (299,823) (540,583) (20,595) (313,799)
............................................................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 1,760,106 5,693,559 (8,566,246) 2,833,142 4,775,630 (31,662) 4,388,036
............................................................................................................................
Net increase (decrease) in net
assets 1,995,517 8,920,767 (8,041,973) 4,068,766 6,439,925 (16,472) 6,816,831
............................................................................................................................
NET ASSETS:
Beginning of period 1,553,257 6,648,932 13,862,040 4,015,632 8,277,998 248,881 6,596,078
-----------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $3,548,774 $15,569,699 $ 5,820,067 $8,084,398 $14,717,923 $ 232,409 $13,412,909
-----------------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Year Ended International
December 31, 1998 Opportunities
Fund
Sub-Account
------------------------------------------------------------
OPERATIONS:
................................
Net investment income $ 69,373
................................
Capital gains income 235,374
................................
Net realized gain (loss) on
security transactions (12,897)
................................
Net unrealized appreciation of
investments during the period 226,926
................................
Net increase in net assets
resulting from operations 518,776
................................
UNIT TRANSACTIONS:
................................
Purchases 707,600
................................
Net transfers 1,517,699
................................
Surrenders for benefit payments
and fees (221,694)
................................
Net loan activity (97,052)
................................
Cost of insurance (144,802)
................................
Net increase (decrease) in net
assets resulting from unit
transactions 1,761,751
................................
Net increase (decrease) in net
assets 2,280,527
................................
NET ASSETS:
Beginning of period 3,095,481
------------------------------------------------------------------------
END OF PERIOD $5,376,008
------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-8
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Statements of Changes in Net Assets (continued)
--------------------------------------------------------------------------------
<TABLE>
For the Year Ended Dividend Growth and International Small MidCap Fidelity Fidelity
December 31, 1998 and Growth Income Fund Advisers Company Fund Fund VIP Equity- VIP
Fund Sub-Account* Fund Sub-Account* Sub-Account* Income Overseas
Sub-Account Sub-Account* Portfolio Portfolio
Sub-Account Sub-Account
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
...........................................................................................................................
Net investment income $ 132,007 $ 6 $ -- $ -- $ -- $ 64,760 $ 22,698
...........................................................................................................................
Capital gains income 182,157 -- -- -- -- 230,469 66,900
...........................................................................................................................
Net realized gain (loss) on
security transactions (22,437) -- -- 41 -- 16 (12,367)
...........................................................................................................................
Net unrealized appreciation of
investments during the period 652,784 150 7 14,348 104 303,166 80,752
...........................................................................................................................
Net increase in net assets
resulting from operations 944,511 156 7 14,389 104 598,411 157,983
...........................................................................................................................
UNIT TRANSACTIONS:
Purchases 1,129,533 1,000 1,000 1,344 1,000 1,148,707 296,446
...........................................................................................................................
Net transfers 2,842,341 450 -- 41,605 -- 3,213,980 2,455,676
...........................................................................................................................
Surrenders for benefit payments
and fees (358,785) -- -- (271) -- (198,212) (66,416)
...........................................................................................................................
Net loan activity (33,674) -- -- -- -- (929) (1,217)
...........................................................................................................................
Cost of insurance (302,161) -- -- (111) -- (201,357) (50,423)
...........................................................................................................................
Net increase in net assets
resulting from unit
transactions 3,277,164 1,450 1,000 42,567 1,000 3,962,189 2,634,066
...........................................................................................................................
Net increase in net assets 4,221,675 1,606 1,007 56,956 1,104 4,560,600 2,792,049
...........................................................................................................................
NET ASSETS:
Beginning of period 4,261,505 -- -- -- -- 4,357,953 969,359
----------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $8,483,180 $ 1,606 $ 1,007 $ 56,956 $ 1,104 $8,918,553 $3,761,408
----------------------------------------------------------------------------------------------------------------------------
<S> <C>
For the Year Ended Fidelity
December 31, 1998 VIP II
Asset
Manager
Portfolio
Sub-Account
------------------------------------------------------------------------------------------------
OPERATIONS:
................................
Net investment income $ 29,183
................................
Capital gains income 87,549
................................
Net realized gain (loss) on
security transactions (943)
................................
Net unrealized appreciation of
investments during the period 48,191
................................
Net increase in net assets
resulting from operations 163,980
................................
UNIT TRANSACTIONS:
Purchases 276,627
................................
Net transfers 218,464
................................
Surrenders for benefit payments
and fees (46,101)
................................
Net loan activity --
................................
Cost of insurance (44,434)
................................
Net increase in net assets
resulting from unit
transactions 404,556
................................
Net increase in net assets 568,536
................................
NET ASSETS:
Beginning of period 904,496
------------------------------------------------------------------------------------------------------------
END OF PERIOD $1,473,032
------------------------------------------------------------------------------------------------------------------------
</TABLE>
* From inception, August 3, 1998 to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-9
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Notes to Financial Statements
December 31, 1999
1. ORGANIZATION:
Separate Account Variable Life Two (the Account) is a separate investment
account within 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 mutuals 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). Realized gains and losses on the
sales of securities are computed on the basis of identified cost of the fund
shares sold. Dividend and capital gains income is accrued as of the ex-dividend
date. Capital gains income represents those dividends from the Funds which are
characterized as capital gains under tax regulations.
B) SECURITY VALUATION -- The investments in shares of the Funds are valued at
the closing net asset value per share as determined by the appropriate Fund as
of December 31, 1999.
C) UNIT TRANSACTIONS -- Unit transactions are executed based on the unit values
calculated at the close of the business day.
D) 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.
E) USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported amounts
of income and expenses during the period. Operating results in the future could
vary from the amounts derived from management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
A) DEDUCTIONS AND CHARGES FROM THE ACCOUNT VALUE -- On the policy date and on
each subsequent monthly activity date, the Company will deduct from the Account
an amount to cover mortality and expense risk charges, cost of insurance,
administrative charges and any other benefits provided by the rider. These
charges, which may vary from month to month in accordance with the terms of the
contracts, are deducted through termination of units of interest from the
applicable contractholders' accounts.
SA-10
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Hartford Life Insurance Company
Separate Account VL II and to the Owners of Units of Interest therein:
We have audited the accompanying statements of assets and liabilities of
Hartford Life Insurance Company Separate Account VL II (Asia Pacific Growth,
Diversified Income, The George Putnam Fund of Boston, Global Asset Allocation,
Global Growth, Growth and Income, Health Sciences, High Yield, Income,
International Growth, International Growth and Income, International New
Opportunities, Investors, Money Market, New Opportunities, New Value, OTC &
Emerging Growth, Utilities Growth and Income, Vista, and Voyager sub-accounts),
(collectively, the Account) as of December 31, 1999, and the related statements
of operations and the statements of changes in net assets for the periods
presented. These financial statements are the responsibility of the Account's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Account as of December 31,
1999, and the results of its operations and the changes in its net assets for
the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 11, 2000 ARTHUR ANDERSEN LLP
SA-11
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Statements of Assets & Liabilities
--------------------------------------------------------------------------------
<TABLE>
December 31, 1999 Asia Diversified The George Global Global Growth Health
Pacific Income Putnam Asset Growth and Income Sciences
Growth Sub-Account Fund Allocation Sub-Account Sub-Account Sub-Account
Sub-Account of Boston Sub-Account
Sub-Account
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
--------------------------------------------------------------------------------------------------------------------------
PUTNAM VT ASIA PACIFIC GROWTH
FUND
Shares 11,322
Cost $141,016
.........................................................................................................................
Market Value: $195,766 $ -- $ -- $ -- $ -- $ -- $ --
--------------------------------------------------------------------------------------------------------------------------
PUTNAM VT DIVERSIFIED INCOME FUND
Shares 42,461
Cost $448,692
.........................................................................................................................
Market Value: -- 421,639 -- -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
PUTNAM VT THE GEORGE PUTNAM FUND
OF BOSTON
Shares 4,370
Cost $44,384
.........................................................................................................................
Market Value: -- -- 43,612 -- -- -- --
--------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL ASSET ALLOCATION
FUND
Shares 211,113
Cost $3,844,016
.........................................................................................................................
Market Value: -- -- -- 4,139,928 -- -- --
--------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GLOBAL GROWTH FUND
Shares 398,583
Cost $7,200,576
.........................................................................................................................
Market Value: -- -- -- -- 12,152,795 -- --
--------------------------------------------------------------------------------------------------------------------------
PUTNAM VT GROWTH AND INCOME FUND
Shares 467,054
Cost $12,423,917
.........................................................................................................................
Market Value: -- -- -- -- -- 12,517,045 --
--------------------------------------------------------------------------------------------------------------------------
PUTNAM VT HEALTH SCIENCES FUND
Shares 7,483
Cost $74,611
.........................................................................................................................
Market Value: -- -- -- -- -- -- 78,576
--------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company -- 2,127 -- 3,467 2,198 4,035 --
.........................................................................................................................
Receivable from fund shares sold -- -- -- -- -- -- --
.........................................................................................................................
TOTAL ASSETS 195,766 423,766 43,612 4,143,395 12,154,993 12,521,080 78,576
.........................................................................................................................
LIABILITIES
Due to Hartford Life Insurance
Company 1 -- -- -- -- -- 1
.........................................................................................................................
Payable for fund shares purchased -- 2,125 -- 3,216 1,653 5,502 --
.........................................................................................................................
TOTAL LIABILITIES 1 2,125 -- 3,216 1,653 5,502 1
--------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $195,765 $421,641 $43,612 $4,140,179 $12,153,340 $12,515,578 $78,575
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-12
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Statements of Assets and Liabilities (continued)
--------------------------------------------------------------------------------
<TABLE>
December 31, 1999 High Yield Income International International International Investors Money
Sub-Account Sub-Account Growth Growth and New Sub-Account Market
Sub-Account Income Opportunities Sub-Account
Sub-Account Sub-Account
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT HIGH YIELD FUND
Shares 343,726
Cost $4,126,478
.............................................................................................................................
Market Value: $3,811,917 $ -- $ -- $ -- $ -- $ -- $ --
------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INCOME FUND
Shares 185,757
Cost $2,360,652
.............................................................................................................................
Market Value: -- 2,325,674 -- -- -- -- --
------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH
FUND
Shares 20,695
Cost $301,201
.............................................................................................................................
Market Value: -- -- 448,055 -- -- -- --
------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL GROWTH
AND INCOME FUND
Shares 1,704
Cost $23,855
.............................................................................................................................
Market Value: -- -- -- 25,990 -- -- --
------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INTERNATIONAL NEW
OPPORTUNITIES FUND
Shares 4,549
Cost $92,959
.............................................................................................................................
Market Value: -- -- -- -- 106,044 -- --
------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT INVESTORS FUND
Shares 45,675
Cost $531,627
.............................................................................................................................
Market Value: -- -- -- -- -- 692,433 --
------------------------------------------------------------------------------------------------------------------------------
PUTNAM VT MONEY MARKET FUND
Shares 332,312
Cost $332,312
.............................................................................................................................
Market Value: -- -- -- -- -- -- 332,312
------------------------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company 2,549 3,147 -- -- 78 1,445 18
.............................................................................................................................
Receivable from fund shares sold -- -- -- -- -- -- --
.............................................................................................................................
TOTAL ASSETS 3,814,466 2,328,821 448,055 25,990 106,122 693,878 332,330
.............................................................................................................................
LIABILITIES
Due to Hartford Life Insurance
Company -- -- 3 2 -- -- --
.............................................................................................................................
Payable for fund shares purchased 2,539 3,216 -- -- -- 1,450 --
.............................................................................................................................
TOTAL LIABILITIES 2,539 3,216 3 2 -- 1,450 --
------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $3,811,927 $2,325,605 $448,052 $25,988 $106,122 $692,428 $332,330
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-13
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Statements of Assets & Liabilities (continued)
--------------------------------------------------------------------------------
<TABLE>
December 31, 1999 New New OTC & Utilities Growth Vista Voyager
Opportunities Value Emerging and Income Sub-Account Sub-Account
Sub-Account Sub-Account Growth Sub-Account
Sub-Account
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments:
-----------------------------------------------------------------------------------------------------------------
PUTNAM VT NEW OPPORTUNITIES FUND
Shares 373,288
Cost $7,857,227
................................................................................................................
Market Value: $16,252,954 $ -- $ -- $ -- $ -- $ --
-----------------------------------------------------------------------------------------------------------------
PUTNAM VT NEW VALUE FUND
Shares 22,996
Cost $273,358
................................................................................................................
Market Value: -- 272,732 -- -- -- --
-----------------------------------------------------------------------------------------------------------------
PUTNAM VT OTC & EMERGING GROWTH
FUND
Shares 11,229
Cost $165,980
................................................................................................................
Market Value: -- -- 255,917 -- -- --
-----------------------------------------------------------------------------------------------------------------
PUTNAM VT UTILITIES GROWTH &
INCOME FUND
Shares 70,508
Cost $1,129,635
................................................................................................................
Market Value: -- -- -- 1,196,527 -- --
-----------------------------------------------------------------------------------------------------------------
PUTNAM VT VISTA FUND
Shares 1,468
Cost $24,769
................................................................................................................
Market Value: -- -- -- -- 30,368 --
-----------------------------------------------------------------------------------------------------------------
PUTNAM VT VOYAGER FUND
Shares 383,553
Cost $14,651,156
................................................................................................................
Market Value: -- -- -- -- -- 25,410,360
-----------------------------------------------------------------------------------------------------------------
Due from Hartford Life Insurance
Company 8,724 -- -- 54 -- 15,663
................................................................................................................
Receivable from fund shares sold -- -- -- -- -- --
................................................................................................................
TOTAL ASSETS 16,261,678 272,732 255,917 1,196,581 30,368 25,426,023
................................................................................................................
LIABILITIES
Due to Hartford Life Insurance
Company -- -- 1 -- -- --
................................................................................................................
Payable for fund shares purchased 8,927 -- -- -- -- 13,398
................................................................................................................
TOTAL LIABILITIES 8,927 -- 1 -- -- 13,398
-----------------------------------------------------------------------------------------------------------------
NET ASSETS (VARIABLE LIFE
CONTRACT LIABILITIES) $16,252,751 $272,732 $255,916 $1,196,581 $30,368 $25,412,625
-----------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-14
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Statements of Assets and Liabilities (continued)
<TABLE>
----------------------------------------------------------------------------------
December 31, 1999 Units Unit Contract
Owned by Price Liability
Participants
<S> <C> <C> <C>
----------------------------------------------------------------------------------
Variable Life Contracts:
Asia Pacific Growth Fund 8,820 $22.195177 $ 195,765
.................................................................................
Diversified Income Fund 32,428 13.002362 421,641
.................................................................................
George Putnam Fund of Boston 4,128 10.564227 43,612
.................................................................................
Global Asset Allocation Fund 178,026 23.255993 4,140,179
.................................................................................
Global Growth Fund 312,423 38.900326 12,153,340
.................................................................................
Growth and Income Fund 482,803 25.922728 12,515,578
.................................................................................
Health Sciences Fund 7,275 10.800460 78,575
.................................................................................
High Yield Fund 231,043 16.498765 3,811,927
.................................................................................
Income Fund 161,483 14.401541 2,325,605
.................................................................................
International Growth Fund 28,594 15.669625 448,052
.................................................................................
International Growth and Income Fund 2,135 12.169641 25,988
.................................................................................
International New Opportunities Fund 5,361 19.795791 106,122
.................................................................................
Investors Fund 47,574 14.554810 692,428
.................................................................................
Money Market Fund 244,629 1.358506 332,330
.................................................................................
New Opportunities Fund 421,990 38.514515 16,252,751
.................................................................................
New Value Fund 25,634 10.639520 272,732
.................................................................................
OTC & Emerging Growth Fund 10,487 24.402281 255,916
.................................................................................
Utilities Growth and Income Fund 55,671 21.493623 1,196,581
.................................................................................
Vista Fund 1,871 16.227448 30,368
.................................................................................
Voyager Fund 556,989 45.624982 25,412,625
.................................................................................
GRAND TOTAL: $80,712,115
----------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-15
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Statements of Operations
--------------------------------------------------------------------------------
<TABLE>
For the Year Ended Asia Diversified The George Global Global Growth Health
December 31, 1999 Pacific Income Putnam Asset Growth and Income Sciences
Growth Sub-Account Fund Allocation Sub-Account Sub-Account Sub-Account
Sub-Account of Boston Sub-Account
Sub-Account
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
....................................................................................................................
Dividends $ -- $ 22,458 $ 1,001 $ 71,013 $ 29,989 $ 168,362 $ 125
....................................................................................................................
Capital gains income -- -- 41 199,267 624,480 840,162 --
....................................................................................................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
....................................................................................................................
Net realized gain (loss) on
security transactions 449 48 2 2,237 10,150 (33,683) (382)
....................................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period 54,681 (15,631) (1,442) 161,213 4,049,316 (833,418) (3,071)
....................................................................................................................
Net gain (loss) on investments 55,130 (15,583) (1,440) 163,450 4,059,466 (867,101) (3,453)
---------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $55,130 $ 6,875 $ (398) $433,730 $4,713,935 $ 141,423 $(3,328)
---------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-16
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Statements of Operations (continued)
--------------------------------------------------------------------------------
<TABLE>
For the Year Ended High Yield Income International International International Investors Money
December 31, 1999 Sub-Account Sub-Account* Growth Growth and New Sub-Account Market
Sub-Account Income Opportunities Sub-Account
Sub-Account Sub-Account
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $241,157 $141,863 $ -- $ -- $ 1 $ -- $16,902
........................................................................................................................
Capital gains income -- 42,324 -- -- -- -- --
........................................................................................................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
........................................................................................................................
Net realized gain (loss) on
security transactions 1,475 (12,893) 254 2,632 57 (78) --
........................................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period (96,976) (221,917) 146,577 (715) 12,844 140,714 --
........................................................................................................................
Net gain (loss) on investments (95,501) (234,810) 146,831 1,917 12,901 140,636
........................................................................................................................
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $145,656 $(50,623) $146,831 $1,917 $12,902 $140,636 $16,902
-------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Formerly Putnam U.S. Government and High Quality Bond Sub-Account, change
effective on April 9, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-17
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Statements of Operations (continued)
--------------------------------------------------------------------------------
<TABLE>
For the Year Ended New New OTC & Utilities Vista Voyager
December 31, 1999 Opportunities Value Emerging Growth Sub-Account Sub-Account
Sub-Account Sub-Account Growth and Income
Sub-Account Sub-Account
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ -- $ -- $ -- $29,351 $ -- $ 16,812
...........................................................................................................
Capital gains income 127,960 48 669 30,824 2,322 1,348,226
...........................................................................................................
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
...........................................................................................................
Net realized gain (loss) on
security transactions 8,119 (50) 3,794 (1,167) 242 (36,877)
...........................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period 6,351,649 (997) 85,875 (67,896) 4,571 7,727,928
...........................................................................................................
Net gain (loss) on investments 6,359,768 (1,047) 89,669 (69,063) 4,813 7,691,051
...........................................................................................................
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $6,487,728 $ (999) $90,338 $(8,888) $7,135 $9,056,089
------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-18
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
For the Year Ended Asia Diversified The George Global Global Growth Health
December 31, 1999 Pacific Income Putnam Asset Growth and Income Sciences
Growth Sub-Account Fund Allocation Sub-Account Sub-Account Sub-Account
Sub-Account of Boston Sub-Account
Sub-Account
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ -- $ 22,458 $ 1,001 $ 71,013 $ 29,989 $ 168,362 $ 125
......................................................................................................................
Capital gains income -- -- 41 199,267 624,480 840,162
......................................................................................................................
Net realized gain (loss) on
security transactions 449 48 2 2,237 10,150 (33,683) (382)
......................................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period 54,681 (15,631) (1,442) 161,213 4,049,316 (833,418) (3,071)
......................................................................................................................
Net increase (decrease) in net
assets resulting from
operations 55,130 6,875 (398) 433,730 4,713,935 141,423 (3,328)
......................................................................................................................
UNIT TRANSACTIONS:
Purchases 24,427 179,265 11,255 314,949 1,301,509 2,424,542 9,089
......................................................................................................................
Net transfers 118,773 (49,985) 21,592 (39,079) (121,599) (363,554) 10,606
......................................................................................................................
Surrenders for benefit payments
and fees (2,565) (16,582) (2,658) (56,245) (286,077) (378,131) (2,828)
......................................................................................................................
Net loan activity -- -- -- (14) (1,865) (24,549) (8,505)
......................................................................................................................
Cost of insurance (1,069) (22,843) (423) (105,067) (322,725) (620,162) (1,870)
......................................................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 139,566 89,855 29,766 114,544 569,243 1,038,146 6,492
......................................................................................................................
Total increase (decrease) in net
assets 194,696 96,730 29,368 548,274 5,283,178 1,179,569 3,164
-----------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,069 324,911 14,244 3,591,905 6,870,162 11,336,009 75,411
-----------------------------------------------------------------------------------------------------------------------
END OF PERIOD $ 195,765 $ 421,641 $43,612 $4,140,179 $12,153,340 $12,515,578 $ 78,575
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-19
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Statements of Changes in Net Assets (continued)
--------------------------------------------------------------------------------
<TABLE>
For the Year Ended High Yield Income International International International Investors Money
December 31, 1999 Sub-Account Sub-Account* Growth Growth and New Sub-Account Market
Sub-Account Income Opportunities Sub-Account
Sub-Account Sub-Account
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 241,157 $ 141,863 $ -- $ -- $ 1 $ -- $ 16,902
............................................................................................................................
Capital gains income -- 42,324 -- -- -- -- --
............................................................................................................................
Net realized gain (loss) on
security transactions 1,475 (12,893) 254 2,632 57 (78)
............................................................................................................................
Net unrealized (depreciation)
appreciation of investments
during the period (96,976) (221,917) 146,577 (715) 12,844 140,714
............................................................................................................................
Net increase (decrease) in net
assets resulting from
operations 145,656 (50,623) 146,831 1,917 12,902 140,636 16,902
............................................................................................................................
UNIT TRANSACTIONS:
............................................................................................................................
Purchases 723,890 463,993 17,892 9,252 4,815 28,819 235,220
............................................................................................................................
Net transfers 1,056,399 (441,576) 293,024 (8,372) 81,822 428,229 (283,112)
............................................................................................................................
Surrenders for benefit payments
and fees (80,333) (43,311) (5,128) (1,616) 3,487 (6,953) (7,691)
............................................................................................................................
Net loan activity (93) 66,816 (1,909) -- -- (8,548) --
............................................................................................................................
Cost of insurance (124,382) (179,232) (8,009) (928) (480) (12,574) (17,144)
............................................................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 1,575,481 (133,310) 295,870 (1,664) 89,644 428,973 (72,727)
............................................................................................................................
Total increase (decrease) in net
assets 1,721,137 (183,933) 442,701 253 102,546 569,609 (55,825)
............................................................................................................................
NET ASSETS:
Beginning of period 2,090,790 2,509,538 5,351 25,735 3,576 122,819 388,155
-----------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $3,811,927 $2,325,605 $448,052 $25,988 $106,122 $692,428 $332,330
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Formerly Putnam U.S. Government and High Quality Bond Sub-Account, change
effective on April 9, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-20
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Statements of Changes in Net Assets (continued)
--------------------------------------------------------------------------------
<TABLE>
For the Year Ended New New OTC & Utilities Growth Vista Voyager
December 31, 1999 Opportunities Value Emerging and Income Sub-Account Sub-Account
Sub-Account Sub-Account Growth Sub-Account
Sub-Account
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ -- $ -- $ -- $ 29,351 $ -- $ 16,812
...................................................................................................................
Capital gains income 127,960 48 669 30,824 2,322 1,348,226
...................................................................................................................
Net realized gain (loss) on
security transactions 8,119 (50) 3,794 (1,167) 242 (36,877)
...................................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period 6,351,649 (997) 85,875 (67,896) 4,571 7,727,928
...................................................................................................................
Net increase (decrease) in net
assets resulting from
operations 6,487,728 (999) 90,338 (8,888) 7,135 9,056,089
...................................................................................................................
UNIT TRANSACTIONS:
Purchases 1,631,913 25,445 1,058 233,952 6,440 2,360,763
...................................................................................................................
Net transfers 83,908 250,987 153,855 26,751 13,830 672,345
...................................................................................................................
Surrenders for benefit payments
and fees (332,858) (2,892) (3,558) (27,357) (2,301) (442,195)
...................................................................................................................
Net loan activity (57,806) -- -- (14) -- (45,856)
...................................................................................................................
Cost of insurance (446,062) (2,735) (1,247) (58,839) (96) (639,283)
...................................................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 879,095 270,805 150,108 174,493 17,873 1,905,774
...................................................................................................................
Total increase (decrease) in net
assets 7,366,823 269,806 240,446 165,605 25,008 10,961,863
...................................................................................................................
NET ASSETS:
Beginning of period 8,885,928 2,926 15,470 1,030,976 5,360 14,450,762
...................................................................................................................
END OF PERIOD $16,252,751 $272,732 $255,916 $1,196,581 $ 30,368 $25,412,625
--------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-21
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Statements of Changes in Net Assets (continued)
--------------------------------------------------------------------------------
<TABLE>
For the Year Ended Asia Diversified The George Global Global Growth Health
December 31, 1998 Pacific Income Putnam Fund Asset Growth and Income Sciences
Growth Sub-Account of Boston Allocation 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) $ -- $ 8,975 $ 122 $ 51,115 $ 127,435 $ 129,504 $ 69
.........................................................................................................................
Capital gains income -- 3,812 -- 219,555 637,175 845,402
.........................................................................................................................
Net realized gain (loss) on
security transactions -- 181 11 68 (12,611) 15,246 11
.........................................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period 69 (17,009) 670 37,408 623,542 249,632 7,036
.........................................................................................................................
Net increase (decrease) in net
assets resulting from
operations 69 (4,041) 803 308,146 1,375,541 1,239,784 7,116
.........................................................................................................................
UNIT TRANSACTIONS:
Purchases 1,000 128,587 1,000 369,681 1,390,116 2,372,295 1,000
.........................................................................................................................
Net transfers -- 47,983 12,809 1,442,896 472,175 2,636,000 67,576
.........................................................................................................................
Surrenders for benefit payments
and fees -- (17,974) (356) (73,960) (229,540) (394,619) (213)
.........................................................................................................................
Net loan activity -- -- -- 23,838 13,683 (74,317) --
.........................................................................................................................
Cost of insurance -- (18,831) (12) (73,651) (210,154) (418,260) (68)
.........................................................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 1,000 139,765 13,441 1,688,804 1,436,280 4,121,099 68,295
.........................................................................................................................
Total increase (decrease) in net
assets 1,069 135,724 14,244 1,996,950 2,811,821 5,360,883 75,411
.........................................................................................................................
NET ASSETS:
Beginning of period -- 189,187 -- 1,594,955 4,058,341 5,975,126 --
--------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $1,069 $ 324,911 $14,244 $3,591,905 $6,870,162 $11,336,009 $75,411
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
*From inception August 3, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-22
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Statements of Changes in Net Assets (continued)
--------------------------------------------------------------------------------
<TABLE>
For the Year Ended High Yield Income International International International Investors Money
December 31, 1998 Sub-Account Sub-Account** Growth Growth and New Sub-Account* Market
Sub-Account* Income Opportunities Sub-Account
Sub-Account* Sub-Account*
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 114,613 $ 159,132 $ 15 $ 320 $ -- $ 158 $ 17,549
.............................................................................................................................
Capital gains income 17,985 4,142 -- 770 -- -- --
.............................................................................................................................
Net realized gain (loss) on
security transactions (6,169) 3,345 4 5 7 18 --
.............................................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period (280,696) 47,564 278 2,850 240 20,091
.............................................................................................................................
Net increase (decrease) in net
assets resulting from
operations (154,267) 214,183 297 3,945 247 20,267 17,549
.............................................................................................................................
UNIT TRANSACTIONS:
Purchases 451,806 480,043 1,000 1,172 1,000 1,207 376,321
.............................................................................................................................
Net transfers 938,222 (975,004) 4,157 20,802 2,431 101,790 (222,386)
.............................................................................................................................
Surrenders for benefit payments
and fees (78,942) (62,811) (102) (132) (101) (298) (14,326)
.............................................................................................................................
Net loan activity (19) (15,305) -- -- -- -- --
.............................................................................................................................
Cost of insurance (68,646) (137,056) (1) (52) (1) (147) (4,514)
.............................................................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 1,242,421 (710,133) 5,054 21,790 3,329 102,552 135,095
.............................................................................................................................
Total increase (decrease) in net
assets 1,088,154 (495,950) 5,351 25,735 3,576 122,819 152,644
.............................................................................................................................
NET ASSETS:
Beginning of period 1,002,636 3,005,488 -- -- -- -- 235,511
------------------------------------------------------------------------------------------------------------------------------
END OF PERIOD $2,090,790 $2,509,538 $ 5,351 $25,735 $3,576 $122,819 $388,155
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*From inception August 3, 1998, to December 31, 1998.
**Formerly Putnam U.S. Government and High Quality Bond Sub-Account, change
effective on April 9, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-23
<PAGE>
SEPARATE ACCOUNT VL II -- HARTFORD LIFE INSURANCE COMPANY
Statements of Changes in Net Assets (continued)
--------------------------------------------------------------------------------
<TABLE>
For the Year Ended New New OTC & Utilities Vista Voyager
December 31, 1998 Opportunities Value Emerging Growth Sub-Account* Sub-Account
Sub-Account Sub-Account Growth and Income
Sub-Account* Sub-Account
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ -- $ 32 $ 6 $ 19,667 $ -- $ 23,145
..............................................................................................................
Capital gains income 79,622 6 -- 33,897 -- 564,740
..............................................................................................................
Net realized gain (loss) on
security transactions 5 18 8 (421) 25 4,061
..............................................................................................................
Net unrealized appreciation
(depreciation) of investments
during the period 1,351,153 371 4,062 66,049 1,028 1,898,310
..............................................................................................................
Net increase (decrease) in net
assets resulting from
operations 1,430,780 427 4,076 119,192 1,053 2,490,256
..............................................................................................................
UNIT TRANSACTIONS:
Purchases 1,645,046 1,000 1,086 175,713 1,000 2,546,550
..............................................................................................................
Net transfers 1,581,473 1,668 10,401 361,235 3,533 2,515,789
..............................................................................................................
Surrenders for benefit payments
and fees (286,756) (168) (66) (24,641) (224) (452,353)
..............................................................................................................
Net loan activity (61,049) -- -- 23,875 -- 47,899
..............................................................................................................
Cost of insurance (251,400) (1) (27) (33,941) (2) (400,770)
..............................................................................................................
Net increase (decrease) in net
assets resulting from unit
transactions 2,627,314 2,499 11,394 502,241 4,307 4,257,115
..............................................................................................................
Total increase (decrease) in net
assets 4,058,094 2,926 15,470 621,433 5,360 6,747,371
..............................................................................................................
NET ASSETS:
Beginning of period 4,827,834 -- -- 409,543 -- 7,703,391
---------------------------------------------------------------------------------------------------------------
END OF PERIOD $8,885,928 $2,926 $15,470 $1,030,976 $5,360 $14,450,762
---------------------------------------------------------------------------------------------------------------
</TABLE>
*From inception August 3, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SA-24
<PAGE>
SEPARATE ACCOUNT VL I -- HARTFORD LIFE INSURANCE COMPANY
Notes to Financial Statements
December 31, 1999
1. ORGANIZATION:
Separate Account VL II (the Account) is a separate investment account within
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
policyowners of the Company in the various mutual funds (the Funds) as directed
by the policyowners.
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). Realized gains and losses on the
sales of securities are computed on the basis of identified cost of the fund
shares sold. Dividend and capital gains income is accrued as of the ex-dividend
date. Capital gains income represents dividends from the Funds which are
characterized as capital gains under tax regulations.
B) SECURITY VALUATION -- The investments in shares of the Funds are valued at
the closing net asset value per share as determined by the appropriate Fund as
of December 31, 1999.
C) UNIT TRANSACTIONS -- Unit transactions are executed based on the unit values
calculated at the close of the business day. All unit transactions are executed
at fair value.
D) 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.
E) USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported amounts
of income and expenses during the period. Operating results in the future could
vary from the amounts derived from management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
A) COST OF INSURANCE -- In accordance with terms of the policies, the Company
assesses deductions for costs of insurance charges to cover the Company's
anticipated mortality costs. Because a policy's account value and death benefit
may vary from month to month, the cost of insurance charges may also vary.
B) MORTALITY AND EXPENSE RISK CHARGE -- The Company, as issuer of variable life
policies, provides the mortality and expense undertakings and, with respect to
the Account, receives a maximum annual fee of 0.80% of the Account's average
daily net assets. These charges are reflected in surrenders for benefit payments
and fees on the accompanying statements of changes in net assets.
C) ADMINISTRATIVE -- The Company assesses a monthly administrative charge to
compensate the Company for administrative costs in connection with the policies.
This charge covers the average expected cost for these services and varies based
on the face amount of the underlying policy, among other factors. These charges
are reflected in surrenders for benefit payments and fees on the accompanying
statements of changes in net assets.
D) DEDUCTION OF ANNUAL MAINTENANCE FEE -- Annual maintenance fees are deducted
through termination of units of interest from applicable policyowners' accounts,
in accordance with the terms of the policies. In addition, certain other charges
may apply based on the characteristics of the underlying policy. These charges
are reflected in surrenders for benefit payments and fees on the accompanying
statements of changes in net assets.
SA-25
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THIRD QUARTER NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
-----------------------------------------------
2000 1999 2000 1999
-----------------------------------------------
(in millions) (Unaudited)
<S> <C> <C> <C> <C>
REVENUES
Premiums and other considerations $588 $513 $1,653 $1,517
Net investment income 338 333 979 1,019
Net realized capital gains (losses) (7) -- (44) 1
-----------------------------------------------
TOTAL REVENUES 919 846 2,588 2,537
-----------------------------------------------
BENEFITS, CLAIMS AND EXPENSES
Benefits, claims and claim adjustment expenses 372 379 1,086 1,195
Amortization of deferred policy acquisition costs 163 141 462 396
Dividends to policyholders 7 70 53 97
Other expenses 188 105 456 432
-----------------------------------------------
TOTAL BENEFITS, CLAIMS AND EXPENSES 730 695 2,057 2,120
-----------------------------------------------
Income before income tax expense 189 151 531 417
Income tax expense 60 51 144 144
-----------------------------------------------
NET INCOME $129 $100 $ 387 $ 273
-----------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------------------------------
(Unaudited)
(in millions, except for share data)
<S> <C> <C>
ASSETS
Investments
Fixed maturities, available for sale, at fair value
(amortized cost of $13,851 and $13,923) $ 13,599 $ 13,499
Equity securities, at fair value 51 56
Policy loans, at outstanding balance 3,561 4,187
Other investments 727 342
------------------------------------
TOTAL INVESTMENTS 17,938 18,084
------------------------------------
Cash 95 55
Premiums receivable and agents' balances 23 29
Reinsurance recoverables 1,267 1,274
Deferred policy acquisition costs 4,242 4,013
Deferred income tax 462 459
Other assets 555 654
Separate account assets 118,333 110,397
------------------------------------
TOTAL ASSETS $142,915 $134,965
------------------------------------
LIABILITIES
Future policy benefits $ 4,643 $ 4,332
Other policyholder funds 14,796 16,004
Other liabilities 2,223 1,613
Separate account liabilities 118,333 110,397
------------------------------------
TOTAL LIABILITIES 139,995 132,346
------------------------------------
STOCKHOLDER'S EQUITY
Common stock -- 1,000 shares authorized,
issued and outstanding, par value $5,690 6 6
Capital surplus 1,045 1,045
Accumulated other comprehensive loss
Net unrealized capital losses on securities, net of tax (156) (255)
------------------------------------
TOTAL ACCUMULATED OTHER COMPREHENSIVE LOSS (156) (255)
------------------------------------
Retained earnings 2,025 1,823
------------------------------------
TOTAL STOCKHOLDER'S EQUITY 2,920 2,619
------------------------------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $142,915 $134,965
------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-3
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Accumulated Other
Comprehensive
Income (Loss)
-----------------
Net Unrealized
Capital Gains
(Losses) on Total
Common Capital Securities, Retained Stockholder's
Stock Surplus Net of Tax Earnings Equity
---------------------------------------------------------------
(in millions) (Unaudited)
<S> <C> <C> <C> <C> <C>
NINE MONTHS ENDED SEPTEMBER 30, 2000
Balance, December 31, 1999 $6 $1,045 $(255) $1,823 $2,619
Comprehensive income (loss)
Net income 387 387
Other comprehensive income (loss), net of
tax
Net unrealized capital gains (losses) on
securities (1) 99 99
Total other comprehensive income (loss) 99
Total comprehensive income (loss) 486
Dividends paid to parent (185) (185)
---------------------------------------------------------------
BALANCE, SEPTEMBER 30, 2000 $6 $1,045 $(156) $2,025 $2,920
---------------------------------------------------------------
NINE MONTHS ENDED SEPTEMBER 30, 1999
Balance, December 31, 1998 $6 $1,045 $ 184 $1,462 $2,697
Comprehensive income (loss)
Net income 273 273
Other comprehensive income (loss), net of
tax
Net unrealized capital gains (losses) on
securities (1) (353) (353)
Total other comprehensive income (loss) (353)
Total comprehensive income (loss) (80)
---------------------------------------------------------------
BALANCE, SEPTEMBER 30, 1999 $6 $1,045 $(169) $1,735 $2,617
---------------------------------------------------------------
</TABLE>
(1) Net unrealized capital gains (losses) on securities are reflected net of tax
provision (benefit) of $53 and $(190) for the nine months ended
September 30, 2000 and 1999, respectively. There were reclassification
adjustments for after-tax gains (losses) realized in net income of $(29) and
$1 for the nine months ended September 30, 2000 and 1999, respectively.
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-4
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------------
2000 1999
--------------------------------
(Unaudited) (in millions)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 387 $ 273
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation and amortization (20) (8)
Net realized capital losses (gains) 44 (1)
Decrease (increase) in premiums receivable and agents'
balances 6 (15)
Increase (decrease) in other liabilities 169 (97)
Change in receivables, payables and accruals 40 142
Increase (decrease) in accrued tax 262 (200)
(Increase) decrease in deferred income tax (56) 164
Increase in deferred policy acquisition costs (229) (258)
Increase in future policy benefits 311 438
Decrease (increase) in reinsurance recoverables 27 (162)
Other, net 79 (100)
--------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,020 176
--------------------------------
INVESTING ACTIVITIES
Purchases of investments (4,134) (5,132)
Sales of investments 3,458 6,434
Maturities and principal paydowns of fixed maturity
investments 1,117 1,338
Purchase of affiliates and other 2 --
--------------------------------
NET CASH PROVIDED BY INVESTING ACTIVITIES 443 2,640
--------------------------------
FINANCING ACTIVITIES
Dividends paid to parent (185) --
Net disbursements for investment and universal life-type
contracts charged against policyholder accounts (1,238) (2,798)
--------------------------------
Net cash used for financing activities (1,423) (2,798)
--------------------------------
Net increase in cash 40 18
Cash -- beginning of period 55 17
--------------------------------
Cash -- end of period $ 95 $ 35
--------------------------------
Supplemental Disclosure of Cash Flow Information
Net cash paid during the period for
Income taxes $ 34 $ 111
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN MILLIONS, UNLESS OTHERWISE STATED)
(Unaudited)
--------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Hartford Life
Insurance Company and subsidiaries ("Hartford Life Insurance Company" or the
"Company"), a wholly-owned subsidiary of Hartford Life and Accident Insurance
Company (its parent), a wholly-owned subsidiary of Hartford Life, Inc., 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 on the basis of accounting principles
generally accepted in the United States 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 Hartford Life Insurance Company's 1999 Form
10-K Annual Report.
Certain reclassifications have been made to prior year financial information to
conform to the current year classification of transactions and accounts.
(b) NEW ACCOUNTING STANDARDS
In October 2000, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities - a Replacement of SFAS No. 125". SFAS No. 140 carries forward most
of SFAS No. 125's provisions without amendment. However, it revises criteria for
accounting for certain transfers of financial assets and the reporting and
disclosure requirements for collateral arrangements. SFAS No. 140's disclosure
requirements must be applied for fiscal years ending after December 15, 2000.
The other provisions of SFAS No. 140 apply prospectively to transactions and
commitments occurring after March 31, 2001. Implementation of the accounting
provisions of SFAS No. 140 is not expected to have a material impact on the
Company's financial condition or results of operations.
In July 2000, the Emerging Issues Task Force (EITF) reached consensus on Issue
No. 99-20, "Recognition of Interest Income and Impairment on Certain
Investments". This pronouncement requires investors in certain asset-backed
securities to record changes in their estimated yield on a prospective basis and
to evaluate these securities for an other-than-temporary decline in value. This
consensus is effective for financial statements with fiscal quarters beginning
after December 15, 2000. While the Company is currently in the process of
quantifying the impact of EITF No. 99-20, the consensus provisions are not
expected to have a material impact on the Company's financial condition or
results of operations.
In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities", which amended SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133
established accounting and reporting requirements for derivative instruments,
including certain derivative instruments embedded in other contracts. SFAS No.
133 requires, among other things, that all derivatives be carried on the balance
sheet at fair value. SFAS No. 133 also specifies hedge accounting criteria under
which a derivative can qualify for special accounting. SFAS No. 138 amended SFAS
No. 133 so that for interest rate hedges, a company may designate as the hedged
risk, the risk of changes only in a benchmark interest rate. Also, credit risk
is newly defined as the company-specific spread over the benchmark interest rate
and may be hedged separately from, or in combination with, the benchmark
interest rate. Initial application of SFAS No. 133, as amended, for Hartford
Life Insurance Company will begin January 1, 2001. Implementation of SFAS No.
133, as amended, is not expected to have a material impact on the Company's
financial condition or results of operations. However, the FASB's Derivative
Implementation Group continues to deliberate on multiple issues, the resolution
of which could have a significant impact on the Company's expectations.
Effective January 1, 2000, Hartford Life Insurance Company adopted Statement of
Position (SOP) No. 98-7, "Accounting for Insurance and Reinsurance Contracts
That Do Not Transfer Insurance Risk". This SOP provides guidance on the method
of accounting for insurance and reinsurance contracts that do not transfer
insurance risk, defined in the SOP as the deposit method. Adoption of this SOP
did not have a material impact on the Company's financial condition or results
of operations.
2. COMMITMENTS AND CONTINGENT LIABILITIES
(a) LITIGATION
Hartford Life Insurance Company is involved in pending and threatened litigation
in the normal course of its business in which claims for alleged economic and
punitive damages have been asserted. Although there can be no assurances, at the
present time the Company does not anticipate that the ultimate liability arising
from such pending or threatened litigation, after consideration of provisions
made for estimated losses and costs of defense, will have a material adverse
effect on the financial condition or operating results of the Company.
(b) TAX MATTERS
Hartford Life, Inc.'s federal income tax returns are routinely audited by the
Internal Revenue Service. Hartford Life, Inc.'s 1996-1997 federal income tax
returns are currently under audit by the Internal Revenue Service.
F-6
<PAGE>
Management believes that sufficient provision has been made in the financial
statements for issues that may result from tax examinations and other tax
related matters for all open years.
During the second quarter of 2000, Hartford Life, Inc. reached a settlement with
the Internal Revenue Service with respect to certain tax matters for the
1993-1995 years. This settlement resulted in a $24 tax benefit being recorded in
Hartford Life Insurance Company's second quarter results of operations.
3. SEGMENT INFORMATION
Hartford Life Insurance Company is organized into three reportable operating
segments which include Investment Products, Individual Life and Corporate Owned
Life Insurance (COLI). Investment Products offers individual fixed and variable
annuities, retirement plan services and other investment products. Individual
Life sells a variety of life insurance products, including variable life,
universal life, interest sensitive whole life and term life insurance. COLI
primarily offers variable products used by employers to fund non-qualified
benefits or other post-employment benefit obligations as well as leveraged COLI.
The Company includes in "Other" corporate items not directly allocable to any of
its reportable operating segments, as well as certain group benefit products
including group life and disability insurance that is directly written by the
Company and is substantially ceded to its parent.
The accounting policies of the reportable operating segments are the same as
those described in the summary of significant accounting policies in Note 2 of
Notes to Consolidated Financial Statements in Hartford Life Insurance Company's
1999 Form 10-K Annual Report. Hartford Life Insurance Company evaluates
performance of its segments based on revenues, net income and the segment's
return on allocated capital. The Company charges direct operating expenses to
the appropriate segment and allocates the majority of indirect expenses to the
segments based on an intercompany expense arrangement. Intersegment revenues are
not significant and primarily occur between corporate and the operating
segments. These amounts include interest income on allocated surplus and the
allocation of net realized capital gains and losses through net investment
income utilizing the duration of the segment's investment portfolios.
The following tables present summarized financial information concerning the
Company's segments.
<TABLE>
<CAPTION>
Investment Individual
SEPTEMBER 30, 2000 Products Life COLI Other Total
<S> <C> <C> <C> <C> <C>
------------------------------------------------
THIRD QUARTER ENDED
Total revenues $ 522 $141 $238 $ 18 $ 919
Net income 86 19 9 15 129
------------------------------------------------
NINE MONTHS ENDED
Total revenues $1,548 $405 $572 $ 63 $2,588
Net income 262 53 25 47 387
</TABLE>
<TABLE>
<CAPTION>
Investment Individual
SEPTEMBER 30, 1999 Products Life COLI Other Total
<S> <C> <C> <C> <C> <C>
------------------------------------------------
THIRD QUARTER ENDED
Total revenues $ 468 $148 $220 $ 10 $ 846
Net income 69 19 7 5 100
------------------------------------------------
NINE MONTHS ENDED
Total revenues $1,403 $421 $659 $ 54 $2,537
Net income (loss) 228 51 20 (26) 273
</TABLE>
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 Hartford Life Insurance
Company and subsidiaries ("Hartford Life Insurance Company" or the "Company") as
of September 30, 2000, compared with December 31, 1999, and its results of
operations for the third quarter and nine months ended September 30, 2000
compared with the equivalent periods in 1999. This discussion should be read in
conjunction with the MD&A included in the Company's 1999 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 the
F-7
<PAGE>
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 Hartford Life Insurance 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 the possibility
of general economic, business and legislative conditions that are less favorable
than anticipated, changes in interest rates or the stock markets, stronger than
anticipated competitive activity and those described in the forward-looking
statements.
INDEX
<TABLE>
<S> <C> <C> <C>
Consolidated Results of Operations 9 Corporate Owned Life Insurance (COLI) 11
Investment Products 10 Regulatory Matters and Contingencies 11
Individual Life 10 Accounting Standards 12
</TABLE>
CONSOLIDATED RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
THIRD QUARTER NINE MONTHS
ENDED ENDED
OPERATING SUMMARY SEPTEMBER 30, SEPTEMBER 30,
<S> <C> <C> <C> <C>
--------------------------------------------------
2000 1999 2000 1999
--------------------------------------------------
Revenues $919 $846 $2,588 $2,537
Expenses 790 746 2,201 2,264
--------------------------------------------------
NET INCOME $129 $100 $ 387 $ 273
--------------------------------------------------
</TABLE>
Hartford Life Insurance Company has the following reportable segments:
Investment Products, Individual Life and Corporate Owned Life Insurance (COLI).
The Company reports in "Other" corporate items not directly allocable to any of
its segments, as well as certain group benefits business, including group life
and disability insurance that is directly written by the Company and is
substantially ceded to its parent, Hartford Life and Accident Insurance Company
(HLA).
Revenues increased $73, or 9%, and $51, or 2%, for the third quarter and nine
months ended September 30, 2000, respectively, as compared to the equivalent
1999 periods. The increases in revenues were primarily attributable to growth in
the Investment Products segment which was, for the most part, due to higher fee
income related to the individual annuity operation which is directly
attributable to increased assets under management. Additionally, for the third
quarter the COLI segment's revenues increased primarily due to fees generated
from strong sales. Partially offsetting the growth in the nine month period was
a decline in the COLI segment's revenues primarily due to the declining block of
leveraged COLI business.
Expenses increased $44, or 6%, for the third quarter, while expenses for the
nine month period decreased $63, or 3%, as compared to the equivalent prior year
periods due to the factors described above.
Net income increased $29, or 29%, and $114, or 42%, for the third quarter and
nine months ended September 30, 2000, respectively, as compared to the
equivalent 1999 periods primarily driven by increases in net income across each
of the Company's reportable segments for the nine months. The Company also
reported a benefit related to the settlement of certain federal tax matters of
$24 for the second quarter of 2000 (see Note 2(b) of Notes to Consolidated
Financial Statements). This benefit, along with an $8 benefit related to state
income taxes in the first quarter of 2000, resulted in $32 of tax benefits for
the nine months ended September 30, 2000. Partially offsetting the increase for
the nine month period, the Company realized $29 of net realized capital losses,
primarily as a result of portfolio re-balancing. Excluding the tax items and the
net realized capital losses, net income increased $111, or 41%, for the nine
months ended September 30, 2000.
SEGMENT RESULTS
Below is a summary of net income (loss) by segment.
<TABLE>
<CAPTION>
THIRD QUARTER NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
<S> <C> <C> <C> <C>
--------------------------------------------------
2000 1999 2000 1999
--------------------------------------------------
Investment Products $ 86 $ 69 $262 $228
Individual Life 19 19 53 51
Corporate Owned Life Insurance
(COLI) 9 7 25 20
Other 15 5 47 (26)
--------------------------------------------------
NET INCOME $129 $100 $387 $273
--------------------------------------------------
</TABLE>
The sections that follow analyze each segment's results.
F-8
<PAGE>
INVESTMENT PRODUCTS
<TABLE>
<CAPTION>
THIRD QUARTER NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
<S> <C> <C> <C> <C>
--------------------------------------------------
2000 1999 2000 1999
--------------------------------------------------
Revenues $522 $468 $1,548 $1,403
Expenses 436 399 1,286 1,175
--------------------------------------------------
NET INCOME $ 86 $ 69 $ 262 $ 228
--------------------------------------------------
</TABLE>
Revenues in the Investment Products segment increased $54, or 12%, and $145, or
10%, for the third quarter and nine months ended September 30, 2000,
respectively, as compared to the equivalent 1999 periods, primarily due to
higher fee income in the individual annuity operation. Fee income generated by
individual annuities increased $58, or 22%, and $149, or 19%, for the respective
third quarter and nine month periods, as related account values grew
$14.7 billion, or 19%, from September 30, 1999. This substantial growth was
mostly due to strong individual annuity sales (including $8.5 billion for the
first nine months of 2000) and equity market appreciation.
Due to the continued growth in this segment, particularly the individual annuity
operation, expenses increased $37, or 9%, or $111, or 9%, for the third quarter
and nine months ended September 30, 2000, respectively, as compared to the
equivalent 1999 periods. These increases were primarily driven by amortization
of deferred policy acquisition costs, which grew $24, or 23%, and $61, or 20%,
for the respective third quarter and nine month periods and other expenses which
increased $9, or 10%, and $43, or 17%, over the respective prior year levels.
The segment's operating expenses as a percentage of average assets under
management declined slightly for the third quarter and nine months ended versus
the respective prior year periods.
Net income increased $17, or 25%, and $34, or 15%, for the third quarter and
nine months ended September 30, 2000, respectively, as compared to the
equivalent 1999 periods, primarily due to the growth in revenues associated with
the increase in assets under management across the entire segment. Additionally,
the Investment Products segment continued to maintain its profit margins related
to its primary businesses thus contributing to the segment's earnings growth.
INDIVIDUAL LIFE
<TABLE>
<CAPTION>
THIRD QUARTER NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
<S> <C> <C> <C> <C>
--------------------------------------------------
2000 1999 2000 1999
--------------------------------------------------
Revenues $141 $148 $405 $421
Expenses 122 129 352 370
--------------------------------------------------
NET INCOME $ 19 $ 19 $ 53 $ 51
--------------------------------------------------
</TABLE>
The slight decrease in revenues and expenses in the Individual Life segment is
primarily due to HLA's December 1, 1999 recapture of an in force block of
individual life insurance previously ceded to the Company. (For a discussion of
the recapture, see Note 9 of Notes to Consolidated Financial Statements in
Hartford Life Insurance Company's 1999 Form 10-K Annual Report.)
Excluding the recapture described above, revenues in the Individual Life segment
increased $16, or 13%, and $53, or 15%, for the third quarter and nine months
ended September 30, 2000, respectively, as compared to the equivalent 1999
periods. This increase in revenues is attributable to higher fee income
associated with the growing block of variable life insurance. Fee income
increased $13, or 15%, and $53, or 22%, for the respective third quarter and
nine month periods, as variable life account values increased $918, or 44%, and
variable life insurance in force increased $9.7 billion, or 46%, from
September 30, 1999.
Excluding the recapture described above, expenses increased $14, or 13%, and
$47, or 15%, for the third quarter and nine months ended September 30, 2000,
respectively, as compared to the equivalent 1999 periods. The increases in
expenses were primarily due to a $4, or 9%, and $12, or 8%, increase in
benefits, claims and claim adjustment expenses for the respective third quarter
and nine month periods and other expenses which increased $7, or 40%, and $16,
or 29%, over the respective prior year levels. These increases were associated
with the growth in this segment as indicated above. Additionally, for the nine
month period, amortization of deferred policy acquisition costs increased $15,
or 19%, primarily associated with the growth in this segment's variable
business. Excluding the recapture described above, net income increased $2, or
12%, and $6, or 13%, for the respective periods, primarily due to the higher fee
income as year-to-date mortality was essentially in line with prior year.
F-9
<PAGE>
CORPORATE OWNED LIFE INSURANCE (COLI)
<TABLE>
<CAPTION>
THIRD QUARTER NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
<S> <C> <C> <C> <C>
--------------------------------------------------
2000 1999 2000 1999
--------------------------------------------------
Revenues $238 $220 $572 $659
Expenses 229 213 547 639
--------------------------------------------------
NET INCOME $ 9 $ 7 $ 25 $ 20
--------------------------------------------------
</TABLE>
COLI revenues increased $18, or 8%, for the third quarter ended September 30,
2000, from the respective prior year period, while for the nine month period,
revenues decreased $87, or 13%. The revenue increase in the third quarter was
primarily due to an increase in fee income of $22, or 19%, associated with
strong sales of $2.5 billion in the third quarter 2000.
For the nine month period, revenues decreased primarily due to a decline in net
investment income of $59, or 18%. This decline was primarily due to the
leveraged COLI block of business, as related account values decreased $786, or
14%, as a result of the downsizing caused by the Health Insurance Portability
and Accountability Act of 1996.
Expenses increased $16, or 8%, for the third quarter, while expenses for the
nine month period decreased $92, or 14%, respectively, as compared to the
equivalent prior year periods due to the factors described above.
Net income increased $2, or 29%, and $5, or 25%, for the third quarter and nine
months ended September 30, 2000, respectively, as compared to the equivalent
prior year periods. The increase was primarily attributable to the variable COLI
business where account values increased $3.5 billion, or 29%, as well as
increased earnings associated with a block of leveraged COLI business recaptured
in 1998. (For a discussion of the MBL Recapture, see the Capital Resources and
Liquidity section in Hartford Life Insurance Company's 1999 Form 10-K Annual
Report.)
REGULATORY MATTERS AND CONTINGENCIES
NAIC PROPOSALS
The NAIC adopted the Codification of Statutory Accounting Principles (SAP) in
March 1998. The effective date for the statutory accounting guidance is
January 1, 2001. Hartford Life Insurance Company and its subsidiaries'
domiciliary state has adopted the SAP and the Company will make the necessary
changes required for implementation. The Company has not yet determined the
impact that the SAP will have on the statutory financial statements of Hartford
Life Insurance Company and its subsidiaries.
DEPENDENCE ON CERTAIN THIRD PARTY RELATIONSHIPS
Hartford Life Insurance Company distributes its annuity and life insurance
products through a variety of distribution channels, including broker-dealers,
banks, wholesalers, its own internal sales force and other third party marketing
organizations. The Company periodically negotiates provisions and renewals of
these relationships and there can be no assurance that such terms will remain
acceptable to the Company or such service providers. An interruption in the
Company's continuing relationship with certain of these third parties could
materially affect the Company's ability to market its products.
ACCOUNTING STANDARDS
For a discussion of accounting standards, see Note 1 of Notes to Consolidated
Financial Statements.
F-10
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------------------
To Hartford Life Insurance Company:
We have audited the accompanying Consolidated Balance Sheets of Hartford Life
Insurance Company and subsidiaries as of December 31, 1999 and 1998, and the
related Consolidated Statements of Income, Changes in Stockholder's Equity and
Cash Flows for each of the three years in the period ended December 31, 1999.
These Consolidated Financial Statements and the schedules referred to below are
the responsibility of Hartford Life Insurance 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 auditing standards generally accepted
in the United States. 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, 1999 and 1998, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules listed in the 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.
Hartford, Connecticut
January 31, 2000 ARTHUR ANDERSEN LLP
F-1
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(in millions)
REVENUES
Premiums and other considerations $2,045 $2,218 $1,637
Net investment income 1,359 1,759 1,368
Net realized capital gains (losses) (4) (2) 4
----------------------------------------------------------------------------------------------
TOTAL REVENUES 3,400 3,975 3,009
----------------------------------------------------------------------------------------------
BENEFITS, CLAIMS AND EXPENSES
Benefits, claims and claim adjustment expenses 1,574 1,911 1,379
Amortization of deferred policy acquisition costs 539 431 335
Dividends to policyholders 104 329 240
Other expenses 631 766 586
----------------------------------------------------------------------------------------------
TOTAL BENEFITS, CLAIMS AND EXPENSES 2,848 3,437 2,540
----------------------------------------------------------------------------------------------
Income before income tax expense 552 538 469
Income tax expense 191 188 167
----------------------------------------------------------------------------------------------
NET INCOME $ 361 $ 350 $ 302
----------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
<S> <C> <C>
------------------------------------------------------------------------------------------
1999 1998
------------------------------------------------------------------------------------------
(in millions, except
for share data)
ASSETS
Investments
Fixed maturities, available for sale, at fair value
(amortized cost of $13,923 and $14,505) $ 13,499 $ 14,818
Equity securities, at fair value 56 31
Policy loans, at outstanding balance 4,187 6,684
Other investments 342 264
------------------------------------------------------------------------------------------
TOTAL INVESTMENTS 18,084 21,797
------------------------------------------------------------------------------------------
Cash 55 17
Premiums receivable and agents' balances 29 17
Reinsurance recoverables 1,274 1,257
Deferred policy acquisition costs 4,013 3,754
Deferred income tax 459 464
Other assets 654 695
Separate account assets 110,397 90,262
------------------------------------------------------------------------------------------
TOTAL ASSETS $134,965 $118,263
------------------------------------------------------------------------------------------
LIABILITIES
Future policy benefits $ 4,332 $ 3,595
Other policyholder funds 16,004 19,615
Other liabilities 1,613 2,094
Separate account liabilities 110,397 90,262
------------------------------------------------------------------------------------------
TOTAL LIABILITIES 132,346 115,566
------------------------------------------------------------------------------------------
STOCKHOLDER'S EQUITY
Common stock -- 1,000 shares authorized, issued and
outstanding, par value $5,690 6 6
Capital surplus 1,045 1,045
Accumulated other comprehensive income (loss)
Net unrealized capital gains (losses) on securities, net
of tax (255) 184
------------------------------------------------------------------------------------------
TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (255) 184
------------------------------------------------------------------------------------------
Retained earnings 1,823 1,462
------------------------------------------------------------------------------------------
TOTAL STOCKHOLDER'S EQUITY 2,619 2,697
------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $134,965 $118,263
------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-3
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Accumulated Other
Comprehensive
Income (Loss)
-----------------
<S> <C> <C> <C> <C> <C>
Net Unrealized
Capital Gains
(Losses) on Total
Common Capital Securities, Retained Stockholder's
Stock Surplus Net of Tax Earnings Equity
-------------------------------------------------------------------------------------------------------------
(in millions)
1999
Balance, December 31, 1998 $6 $1,045 $ 184 $1,462 $2,697
Comprehensive income
Net income -- -- -- 361 361
Other comprehensive income (loss), net of
tax (1):
Changes in net unrealized capital gains
(losses) on securities (2) -- -- (439) -- (439)
Total other comprehensive income (loss) (439)
Total comprehensive income (loss) (78)
-------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999 $6 $1,045 $(255) $1,823 $2,619
-------------------------------------------------------------------------------------------------------------
1998
Balance, December 31, 1997 $6 $1,045 $ 179 $1,113 $2,343
Comprehensive income
Net income -- -- -- 350 350
Other comprehensive income, net of tax
(1):
Changes in net unrealized capital gains
on securities (2) -- -- 5 -- 5
Total other comprehensive income 5
Total comprehensive income 355
Dividends (1) (1)
-------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998 $6 $1,045 $ 184 $1,462 $2,697
-------------------------------------------------------------------------------------------------------------
1997
Balance, December 31, 1996 $6 $1,045 $ 30 $ 811 $1,892
Comprehensive income
Net income -- -- -- 302 302
Other comprehensive income, net of tax
(1):
Changes in net unrealized capital gains
on securities (2) -- -- 149 -- 149
Total other comprehensive income 149
Total comprehensive income 451
-------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1997 $6 $1,045 $ 179 $1,113 $2,343
-------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Net unrealized capital gain (loss) on securities is reflected net of tax of
$(236), $3 and $80, for the years ended December 31, 1999, 1998 and 1997,
respectively.
(2) Net of reclassification adjustment for after-tax gains (losses) realized in
net income of $(2), $(1) and $2 for the years ended December 31, 1999, 1998
and 1997, respectively.
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-4
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
<S> <C> <C> <C>
--------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(in millions)
OPERATING ACTIVITIES
Net income $ 361 $ 350 $ 302
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation and amortization (18) (23) 8
Net realized capital losses (gains) 4 2 (4)
Loss due to commutation of reinsurance 16 -- --
(Increase) decrease in premiums receivable and agents'
balances (18) 1 119
(Decrease) increase in other liabilities (263) (79) 223
Change in receivables, payables, and accruals 125 83 107
(Decrease) increase in accrued taxes (163) 60 126
Decrease (increase) in deferred income tax 241 (118) 40
Increase in deferred policy acquisition costs (358) (439) (555)
Increase in future policy benefits 797 536 585
Increase in reinsurance recoverables (318) (101) (31)
Other, net (81) 99 52
--------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 325 371 972
--------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchases of investments (5,753) (6,061) (6,869)
Sales of investments 6,383 4,901 4,256
Maturity of investments 1,818 1,761 2,329
Purchases of affiliates and other (25) -- --
--------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES 2,423 601 (284)
--------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net disbursements for investment and universal life-type
contracts charged against policyholder accounts (2,710) (1,009) (677)
--------------------------------------------------------------------------------------------
Net cash used for financing activities (2,710) (1,009) (677)
--------------------------------------------------------------------------------------------
Net increase (decrease) in cash 38 (37) 11
Cash -- beginning of year 17 54 43
--------------------------------------------------------------------------------------------
Cash -- end of year $ 55 $ 17 $ 54
--------------------------------------------------------------------------------------------
Supplemental Disclosure of Cash Flow Information:
Net Cash Paid During the Year for:
Income taxes $ 111 $ 263 $ 9
Noncash Investing Activities:
In 1999, the Company's parent, Hartford Life and Accident Insurance Company, recaptured an
in force block of individual life insurance previously ceded to the Company. This
commutation resulted in a reduction in the Company's assets of $666, consisting of $556
of invested assets, $99 of deferred policy acquisition costs and $11 of other assets.
Liabilities decreased $650, consisting of $543 of other policyholder funds, $60 of future
policy benefits and $47 of other liabilities. As a result, the Company recognized an
after-tax loss relating to this transaction of $16.
In 1998, due to the recapture of an in force block of business previously ceded to MBL
Life Assurance Co. of New Jersey, reinsurance recoverables of $4,753 were exchanged for
the fair value of assets comprised of $4,310 in policy loans and $443 in other net
assets.
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
F-5
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
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 ("Hartford Life Insurance Company" or the
"Company"), Hartford Life and Annuity Insurance Company (HLAI) and 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). In November 1998,
Hartford Life Insurance Company transferred in the form of a dividend, Hartford
Financial Services, LLC and its subsidiaries to HLA.
Pursuant to an initial public offering (the "IPO") on May 22, 1997, Hartford
Life sold 26 million shares of Class A Common Stock 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 outstanding promissory notes and
line of credit with the remaining $160 contributed by Hartford Life to its
insurance subsidiaries to support growth in its core businesses. Hartford Life
became a publicly traded company upon the sale of 26 million shares representing
approximately 18.6% of the equity ownership in Hartford Life.
Along with its parent, HLA, the Company is a leading financial services and
insurance company which provides (a) investment products such as individual
variable annuities and fixed market value adjusted annuities, mutual funds and
retirement plan services for savings and retirement needs; (b) life insurance
for income protection and estate planning; (c) employee benefits products such
as group life and disability insurance that is directly written by the Company
and is substantially ceded to its parent, HLA, and (d) corporate owned life
insurance.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF PRESENTATION
These Consolidated Financial Statements are prepared on the basis of accounting
principles generally accepted in the United States, which differ materially from
the statutory accounting practices prescribed by various insurance regulatory
authorities. All material intercompany transactions and balances between
Hartford Life Insurance Company and its subsidiaries have been eliminated.
The preparation of financial statements, in conformity with accounting
principles generally accepted in the United States, 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) ADOPTION OF NEW ACCOUNTING STANDARDS
Effective January 1, 1999, Hartford Life Insurance Company adopted Statement of
Position (SOP) No. 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use". This 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. Adoption of this SOP did not have a
material impact on the Company's financial condition or results of operations.
Effective January 1, 1999, Hartford Life Insurance Company adopted SOP
No. 97-3, "Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments". This SOP addresses accounting by insurance and other enterprises
for assessments related to insurance activities, including recognition,
measurement and disclosure of guaranty fund or other assessments. Adoption of
this SOP did not have a material impact 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) FUTURE ADOPTION OF NEW ACCOUNTING STANDARDS
In June 1999, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133". This statement amends SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities", to defer its effective date for
one year, to fiscal years beginning after June 15, 2000. Initial
F-6
<PAGE>
application for Hartford Life Insurance Company will begin January 1, 2001. SFAS
No. 133 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.
The Company has reviewed its derivative holdings and is in the process of
quantifying the impact of SFAS No. 133. The Company is also assessing what
actions, if any, need to be taken to minimize potential volatility, while at the
same time maintaining the economic protection needed to support the goals of its
business.
In October 1998, the American Institute of Certified Public Accountants (AICPA)
issued SOP No. 98-7, "Accounting for Insurance and Reinsurance Contracts That Do
Not Transfer Insurance Risk". This SOP provides guidance on the method of
accounting for insurance and reinsurance contracts that do not transfer
insurance risk, defined in the SOP as the deposit method. This SOP is effective
for financial statements for fiscal years beginning after June 15, 1999 and is
not expected to have a material impact on the Company's financial condition or
results of operations.
(D) REVENUE RECOGNITION
Revenues for investment products and universal life-type policies consist of
policy charges for policy administration, cost of insurance 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 ratably over the policy period.
(E) DIVIDENDS TO POLICYHOLDERS
Certain life insurance policies contain dividend payment provisions that enable
the policyholder to participate in the earnings on that participating block of
business of the life insurance subsidiaries of the Company. The participating
insurance in force accounted for 34%, 35% and 33% in 1999, 1998 and 1997,
respectively, of total insurance in force.
(F) INVESTMENTS
Hartford Life Insurance Company's investments in both fixed maturities, which
include bonds, redeemable preferred stock and commercial paper, and equity
securities, which include common and non-redeemable preferred stocks, are
classified as "available for sale" in accordance with SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities". Accordingly, these
securities are carried at fair value with the after-tax difference from cost
reflected in stockholder's equity as a component of accumulated other
comprehensive income. Policy loans are carried at outstanding balance which
approximates fair value. Other invested assets consist primarily of partnership
investments, which are accounted for by the equity method, and mortgage loans,
whereby the carrying value approximates fair value. 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. Net realized capital gains and losses,
excluding those related to immediate participation guaranteed contracts, 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
additional impairment, if necessary.
(G) DERIVATIVE INSTRUMENTS
HEDGE ACCOUNTING -- Hartford Life Insurance 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. Hartford Life Insurance Company does not hold or issue
derivative instruments for trading purposes. Hartford Life Insurance 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 No. 86-2, "Accounting for
Options" and various Emerging Issues Task Force 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 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. For a discussion of SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", issued in June
1998, see (c) Future Adoption of New Accounting Standards.
Derivative instruments must be designated at inception as a hedge and measured
for effectiveness both at inception
F-7
<PAGE>
and on an ongoing basis. Hartford Life Insurance Company's correlation threshold
for hedge designation is 80% to 120%. If correlation, which is assessed monthly
or quarterly and measured based on a rolling three month average, falls outside
the 80% to 120% range, 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
they are 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.
FUTURES -- 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.
FORWARD COMMITMENTS -- 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 are recognized immediately in the Consolidated Statements of Income as
a component of net investment income.
OPTIONS -- 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 -- 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 earnings. 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.
INTEREST RATE CAPS AND FLOORS -- Premiums paid on purchased cap or floor
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 AND CURRENCY SWAPS CONTRACTS -- 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 adjustment
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
Hartford Life Insurance Company maintains separate account assets and
liabilities which are reported at fair value. Separate account assets are
segregated from other investments. Separate accounts reflect two categories of
risk assumption: non-guaranteed separate accounts, wherein the policyholder
assumes substantially all the investment risk and rewards, and guaranteed
separate accounts, 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 other expenses
associated with acquiring business, are deferred and amortized over the
estimated lives of the contracts, usually 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
charges, 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 for the books of business are
re-estimated and adjusted by a cumulative charge or credit to income.
F-8
<PAGE>
Acquisition costs and their related deferral are included in the Company's other
expenses as follows:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
------------------------------
Commissions $ 887 $1,069 $ 976
Deferred acquisition costs (898) (891) (862)
Other 642 588 472
------------------------------
TOTAL OTHER EXPENSES $ 631 $ 766 $ 586
------------------------------
</TABLE>
(J) FUTURE POLICY BENEFITS
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.
(K) OTHER POLICYHOLDER FUNDS
Other policyholder funds include reserves for investment contracts without life
contingencies, corporate owned life insurance and universal life insurance
contracts. These reserves are based on account values, which represent the
balance that accrues to the benefit of policyholders.
3. INVESTMENTS AND DERIVATIVE INSTRUMENTS
(A) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
For the years ended
December 31,
--------------------------------
1999 1998 1997
<S> <C> <C> <C>
--------------------------------
Interest income from fixed maturities $ 934 $ 952 $ 932
Interest income from policy loans 391 789 425
Income from other investments 48 32 26
--------------------------------
Gross investment income 1,373 1,773 1,383
Less: Investment expenses 14 14 15
--------------------------------
NET INVESTMENT INCOME $1,359 $1,759 $1,368
--------------------------------
</TABLE>
(B) COMPONENTS OF NET REALIZED CAPITAL GAINS (LOSSES)
<TABLE>
<CAPTION>
For the years ended
December 31,
--------------------------
1999 1998 1997
<S> <C> <C> <C>
--------------------------
Fixed maturities $(7) $(28) $(7)
Equity securities 2 21 12
Real estate and other 1 5 (1)
--------------------------
NET REALIZED CAPITAL GAINS (LOSSES) $(4) $(2) $ 4
--------------------------
</TABLE>
(C) NET UNREALIZED CAPITAL GAINS (LOSSES) ON EQUITY SECURITIES
<TABLE>
<CAPTION>
For the years ended
December 31,
--------------------------
1999 1998 1997
<S> <C> <C> <C>
--------------------------
Gross unrealized capital gains $ 9 $ 2 $14
Gross unrealized capital losses (2) (1) --
--------------------------
Net unrealized capital gains 7 1 14
Deferred income tax expense 2 -- 5
--------------------------
Net unrealized capital gains, net of tax 5 1 9
Balance -- beginning of year 1 9 8
--------------------------
NET CHANGE IN UNREALIZED CAPITAL GAINS (LOSSES) ON EQUITY
SECURITIES $ 4 $(8) $ 1
--------------------------
</TABLE>
F-9
<PAGE>
(D) NET UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED MATURITIES
<TABLE>
<CAPTION>
For the years ended
December 31,
----------------------------
1999 1998 1997
<S> <C> <C> <C>
----------------------------
Gross unrealized capital gains $ 48 $ 421 $371
Gross unrealized capital losses (472) (108) (80)
Unrealized capital (gains) losses credited to policyholders 24 (32) (30)
----------------------------
Net unrealized capital gains (losses) (400) 281 261
Deferred income tax expense (benefit) (140) 98 91
----------------------------
Net unrealized capital gains (losses), net of tax (260) 183 170
Balance -- beginning of year 183 170 22
----------------------------
NET CHANGE IN UNREALIZED CAPITAL GAINS (LOSSES) ON FIXED
MATURITIES $(443) $ 13 $148
----------------------------
</TABLE>
(E) FIXED MATURITY INVESTMENTS
<TABLE>
<CAPTION>
As of December 31, 1999
---------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
---------------------------------------------
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) $ 180 $ 5 $ (3) $ 182
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) -- asset backed 1,094 5 (35) 1,064
States, municipalities and political subdivisions 155 2 (1) 156
Foreign governments 289 6 (14) 281
Public utilities 865 7 (39) 833
All other corporate, including international 5,646 18 (244) 5,420
All other corporate -- asset backed 4,103 5 (123) 3,985
Short-term investments 1,156 -- -- 1,156
Certificates of deposit 434 -- (12) 422
Redeemable preferred stock 1 -- (1) --
---------------------------------------------
TOTAL FIXED MATURITIES $13,923 $48 $(472) $13,499
---------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
As of December 31, 1998
---------------------------------------------
Gross Gross
Amortized Unrealized Unrealized
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
---------------------------------------------
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) $ 121 $ 2 $ -- $ 123
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) -- asset backed 1,001 23 (8) 1,016
States, municipalities and political subdivisions 165 8 -- 173
Foreign governments 393 26 (7) 412
Public utilities 844 33 (3) 874
All other corporate, including international 5,469 260 (42) 5,687
All other corporate -- asset backed 4,155 58 (42) 4,171
Short-term investments 1,847 -- -- 1,847
Certificates of deposit 510 11 (6) 515
---------------------------------------------
TOTAL FIXED MATURITIES $14,505 $421 $(108) $14,818
---------------------------------------------
</TABLE>
The amortized cost and estimated fair value of fixed maturity investments as of
December 31, 1999 by estimated maturity year are shown below. Expected
maturities differ from contractual maturities due to call or prepayment
provisions. Asset backed securities, including mortgage backed securities and
collateralized mortgage obligations, 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
F-10
<PAGE>
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.
<TABLE>
<CAPTION>
Amortized
Cost Fair Value
<S> <C> <C>
----------------------------
MATURITY
One year or less $ 2,454 $ 2,440
Over one year through five years 4,874 4,787
Over five years through ten years 3,072 2,940
Over ten years 3,523 3,332
----------------------------
TOTAL $13,923 $13,499
----------------------------
</TABLE>
(F) SALES OF FIXED MATURITY AND EQUITY SECURITY INVESTMENTS
Sales of fixed maturities, excluding short-term fixed maturities, for the years
ended December 31, 1999, 1998 and 1997 resulted in proceeds of $3.4 billion,
$3.2 billion and $4.2 billion, gross realized capital gains of $153, $103 and
$169, gross realized capital losses (including writedowns) of $160, $131 and
$176, respectively. Sales of equity security investments for the years ended
December 31, 1999, 1998 and 1997 resulted in proceeds of $7, $35 and $132 and
gross realized capital gains of $2, $21 and $12, respectively, and no gross
realized capital losses for all periods.
(G) CONCENTRATION OF CREDIT RISK
The Company is not exposed to any significant concentration of credit risk in
fixed maturities of a single issuer greater than 10% of stockholder's equity.
(H) DERIVATIVE INSTRUMENTS
Hartford Life Insurance 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. 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 $5.5
billion and $6.2 billion ($3.9 billion and $3.9 billion related to the Company's
investments, $1.6 billion and $2.3 billion on the Company's liabilities) as of
December 31, 1999 and 1998, respectively.
The tables below provide a summary of derivative instruments held by Hartford
Life Insurance Company as of December 31, 1999 and 1998, segregated by major
investment and liability category:
F-11
<PAGE>
<TABLE>
<CAPTION>
1999 -- Amount Hedged (Notional Amounts)
----------------------------------------------------------------------------------
Total Issued Purchased Interest Rate Foreign Total
Carrying Caps & Caps, Floors Swaps & Currency Notional
ASSETS HEDGED Value Floors & Options Futures (1) Forwards Swaps (2) Amount
<S> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------
Asset backed securities (excluding
anticipatory) $ 5,049 $ -- $ -- $ -- $ 911 $-- $ 911
Anticipatory (3) -- -- -- 5 112 -- 117
Other bonds and notes 7,294 494 611 -- 1,676 80 2,861
Short-term investments 1,156 -- -- -- -- -- --
----------------------------------------------------------------------------------
TOTAL FIXED MATURITIES 13,499 494 611 5 2,699 80 3,889
Equity securities, policy loans and
other investments 4,585 -- -- -- -- -- --
----------------------------------------------------------------------------------
TOTAL INVESTMENTS $18,084 494 611 5 2,699 80 3,889
----------------------------------------------------------------------------------
OTHER POLICYHOLDER FUNDS $16,004 -- 1,150 -- 430 -- 1,580
----------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
NOTIONAL VALUE $ 494 $1,761 $ 5 $3,129 $80 $5,469
----------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
FAIR VALUE $ (22) $ 8 $ -- $ (30) $ 2 $ (42)
----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1998 -- Amount Hedged (Notional Amounts)
-------------------------------------------------------------------------------
Total Issued Purchased Interest Rate Foreign Total
Carrying Caps & Caps & Swaps & Currency Notional
ASSETS HEDGED Value Floors Floors Futures (1) Forwards Swaps (2) Amount
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------
Asset backed securities (excluding
anticipatory) $ 5,187 $ 44 $ 243 $ 3 $ 885 $-- $1,175
Anticipatory (3) -- -- -- -- 235 -- 235
Other bonds and notes 7,683 461 597 18 1,300 90 2,466
Short-term investments 1,948 -- -- -- -- -- --
-------------------------------------------------------------------------------
TOTAL FIXED MATURITIES 14,818 505 840 21 2,420 90 3,876
Equity securities, policy loans and
other investments 6,979 -- -- -- -- -- --
-------------------------------------------------------------------------------
TOTAL INVESTMENTS $21,797 505 840 21 2,420 90 3,876
-------------------------------------------------------------------------------
OTHER POLICYHOLDER FUNDS $19,615 -- 1,150 -- 1,195 -- 2,345
-------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
NOTIONAL VALUE $ 505 $1,990 $21 $3,615 $90 $6,221
-------------------------------------------------------------------------------
TOTAL DERIVATIVE INSTRUMENTS --
FAIR VALUE $ (6) $ 19 $-- $ 27 $(7) $ 33
-------------------------------------------------------------------------------
</TABLE>
(1) As of December 31, 1999 and 1998, approximately 100% and 5%,
respectively, of the notional futures contracts expire within one year.
(2) As of December 31, 1999 and 1998, approximately 28% and 11%,
respectively, of foreign currency swaps expire within one year.
(3) 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. As of December 31, 1999, the Company had $1.4 of net
deferred losses on interest rate swaps and futures. The Company expects to basis
adjust the entire loss in 2000. During 1999, $0.2 of new future activity was
basis adjusted. As of December 31, 1998, the Company had no deferred gains for
interest rate swaps.
F-12
<PAGE>
The following is a reconciliation of notional amounts by derivative type and
strategy as of December 31, 1999 and 1998:
<TABLE>
<CAPTION>
BY DERIVATIVE TYPE
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------
<CAPTION>
December 31, 1998 Maturities/ December 31, 1999
Notional Amount Additions Terminations (1) Notional Amount
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Caps $1,912 $ -- $ 148 $1,764
Floors 583 -- 178 405
Swaps/Forwards 3,705 991 1,487 3,209
Futures 21 292 308 5
Options -- 86 -- 86
-------------------------------------------------------------------------------------------------------------------------------
TOTAL $6,221 $1,369 $2,121 $5,469
-------------------------------------------------------------------------------------------------------------------------------
BY STRATEGY
-------------------------------------------------------------------------------------------------------------------------------
Liability $2,345 $ 17 $ 782 $1,580
Anticipatory 235 204 322 117
Asset 2,398 831 427 2,802
Portfolio 1,243 317 590 970
-------------------------------------------------------------------------------------------------------------------------------
TOTAL $6,221 $1,369 $2,121 $5,469
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) During 1999, the Company had no significant gains or losses on
terminations of hedge positions using derivative financial instruments.
4. FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS 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. Hartford
Life Insurance Company uses the following methods and assumptions in estimating
the fair value of each class of financial instrument.
Fair value for fixed maturities and marketable equity securities approximates
those quotations published by applicable stock exchanges or received from other
reliable sources.
For policy loans, carrying amounts approximate fair value.
Other invested assets consist primarily of partnership investments, which are
accounted for by the equity method, and mortgage loans, whereby the carrying
value approximates fair value.
Other policyholder funds fair value information is determined by estimating
future cash flows, discounted at the current market rate.
The fair value of derivative financial instruments, including swaps, caps,
floors, futures, options and forward commitments, is determined using a pricing
model which is similar to external valuation models.
The carrying amount and fair values of Hartford Life Insurance Company's
financial instruments as of December 31, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
<S> <C> <C> <C> <C>
------------------------------------
ASSETS
Fixed maturities $13,499 $13,499 $14,818 $14,818
Equity securities 56 56 31 31
Policy loans 4,187 4,187 6,684 6,684
Other investments 342 348 264 309
LIABILITIES
Other policyholder funds (1) 11,734 11,168 11,709 11,726
------------------------------------
</TABLE>
(1) Excludes corporate owned life insurance and universal life insurance
contracts.
F-13
<PAGE>
5. SEPARATE ACCOUNTS
Hartford Life Insurance Company maintained separate account assets and
liabilities totaling $110.4 billion and $90.3 billion as of December 31, 1999
and 1998, respectively, which are reported at fair value. Separate account
assets, which are segregated from other investments, reflect two categories of
risk assumption: non-guaranteed separate accounts totaling $101.7 billion and
$80.6 billion as of December 31, 1999 and 1998, respectively, wherein the
policyholder assumes substantially all the investment risk, and guaranteed
separate accounts totaling $8.7 and $9.7 billion as of December 31, 1999 and
1998, respectively, wherein Hartford Life Insurance Company contractually
guarantees either a minimum return or account value to the policyholder.
Included in non-guaranteed separate account assets were policy loans totaling
$860 and $1.8 billion as of December 31, 1999 and 1998, 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 and other revenues were $1.1 billion, $908 and
$699 in 1999, 1998 and 1997, respectively. The guaranteed separate accounts
include fixed market value adjusted (MVA) individual annuities and modified
guaranteed life insurance. The average credited interest rate on these contracts
was 6.5% and 6.6% as of December 31, 1999 and 1998, respectively. The assets
that support these liabilities were comprised of $8.7 billion and $9.5 billion
in fixed maturities as of December 31, 1999 and 1998, respectively, and $0.2
billion of other invested assets as of December 31, 1998. 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 $(96) and $40 in carrying value and $2.0 billion and
$3.5 billion in notional amounts as of December 31, 1999 and 1998, respectively.
6. STATUTORY RESULTS
<TABLE>
<CAPTION>
For the years ended December 31,
------------------------------------
1999 1998 1997
<S> <C> <C> <C>
------------------------------------
Statutory net income $ 151 $ 211 $ 214
------------------------------------
Statutory capital and surplus $1,905 $1,676 $1,441
------------------------------------
</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
2000, without prior regulatory approval, is estimated to be $190.
Hartford Life Insurance Company and its domestic insurance subsidiaries prepare
their statutory financial statements in accordance with accounting practices
prescribed by the applicable state of domicile. Prescribed statutory accounting
practices include publications of the National Association of Insurance
Commissioners (NAIC), as well as state laws, regulations and general
administrative rules.
The 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 Hartford Life Insurance Company's
domiciliary state will adopt the SAP and the Company will make the necessary
changes required for implementation. The Company has not yet determined the
impact that the SAP will have on the statutory financial statements of Hartford
Life Insurance Company and its insurance subsidiaries.
7. STOCK COMPENSATION PLANS
Hartford Life Insurance Company's employees are included in the 1997 Hartford
Life, Inc. Incentive Stock Plan (the "Plan"), which was adopted during the
second quarter of 1997. Under the Plan, options granted may be either non-
qualified options or incentive stock options qualifying under Section 422A of
the Internal Revenue Code, stock appreciation rights, performance shares or
restricted stock, or any combination of the foregoing. 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 and Class B Common Stock
and treasury stock as reported in the Annual Report on Hartford Life's Form 10-K
of the Company for the preceding year plus unused portions of such limit from
prior years.
In addition, no more than 5 million 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 awards. Performance shares
awards of common stock granted under the Plan become payable upon the attainment
of specific performance goals achieved over a three year period.
F-14
<PAGE>
All options granted have an exercise price equal to the market price of the
Company's stock on the date of grant and an option's maximum term is ten years.
Certain non-performance 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 non-performance based options
become exercisable over a three year period commencing with the date of grant.
During the second quarter of 1997, Hartford Life established the Hartford Life,
Inc. 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 120,694, 121,943 and 54,316
shares under the ESPP in 1999, 1998 and 1997, respectively. The weighted average
fair value of the discount under the ESPP was $7.48 per share in 1999, $13.74
per share in 1998 and $9.63 per share in 1997.
8. POSTRETIREMENT BENEFIT AND SAVINGS PLANS
(A) PENSION PLANS
Hartford Life Insurance 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 $6 in both 1999 and
1998, and $5 in 1997.
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 1999, 1998 and 1997.
The assumed rate in the per capita cost of health care (the health care trend
rate) was 7.1% for 1999, decreasing ratably to 5.0% in the year 2003. Increasing
or decreasing the health care trend rates by one percent per year would have an
immaterial impact on the accumulated postretirement benefit obligation and the
annual expense. To the extent that the actual experience differs from the
inherent assumptions, the effect will be amortized over the average future
service of covered employees.
(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 Hartford Life Insurance Company for the above-mentioned
plan was approximately $4 in both 1999 and 1998, and $2 in 1997.
9. REINSURANCE
Hartford Life Insurance Company cedes insurance to other insurers in order to
limit its maximum losses. Such transfer does not relieve Hartford Life Insurance
Company of its primary liability. Failure of reinsurers to honor their
obligations could result in losses to Hartford Life Insurance Company. Hartford
Life Insurance Company reduces this risk by evaluating the financial condition
of reinsurers, and monitoring for possible concentrations of credit risk.
Hartford Life Insurance Company has no significant reinsurance related
concentrations of credit risk.
The Company records a receivable for the portion of reinsured benefits paid and
insurance liabilities. Reinsurance recoveries on ceded reinsurance contracts
were $397, $300 and $418 for the years ended December 31, 1999, 1998 and 1997,
respectively. Hartford Life Insurance Company also assumes insurance from other
insurers.
The effect of reinsurance on premiums and other considerations is summarized as
follows:
<TABLE>
<CAPTION>
For the years ended December 31,
------------------------------------
1999 1998 1997
<S> <C> <C> <C>
------------------------------------
Direct premiums and other considerations $2,660 $2,722 $2,164
Reinsurance assumed 95 150 159
Reinsurance ceded (710) (654) (686)
------------------------------------
PREMIUMS AND OTHER CONSIDERATIONS $2,045 $2,218 $1,637
------------------------------------
</TABLE>
F-15
<PAGE>
Hartford Life Insurance Company maintains certain reinsurance agreements with
HLA, whereby the Company cedes both group life and group accident and health
risk. Under these treaties, the Company ceded group life premium of $119, $132
and $80 in 1999, 1998 and 1997, respectively, and accident and health premium of
$430, $379, and $335, respectively, to HLA.
Pursuant to a reinsurance agreement dating back to 1992, the Company assumed
100% of certain blocks of individual life insurance from HLA. Under this
reinsurance agreement Hartford Life Insurance Company assumed $9, $13 and $18 of
premium from HLA in 1999, 1998 and 1997, respectively. On December 1, 1999, HLA
recaptured this in force block of individual life insurance previously ceded to
the Company. This commutation resulted in a reduction in the Company's assets of
$666, consisting of $556 of invested assets, $99 of deferred policy acquisition
costs and $11 of other assets. Liabilities decreased $650, consisting of $543 of
other policyholder funds, $60 of future policy benefits and $47 of other
liabilities. As a result, the Company recognized an after-tax loss relating to
this transaction of $16.
In 1998, the Hartford Life recaptured an in force block of Corporate Owned Life
Insurance (COLI) business previously ceded to MBL Assurance Co. of New Jersey
(MBL Life). The transaction was consummated through an 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, which was placed in court-supervised rehabilitation in
1991, and reinsured a portion of those policies back to MBL Life. This recapture
was effective January 1, 1998 and resulted in a decrease in ceded premiums and
other considerations of $163 in 1998. Additionally, this transaction resulted in
a decrease in reinsurance recoverables of $4.8 billion, which was exchanged for
the fair value of assets comprised of $4.3 billion in policy loans and $443 in
other net assets.
10. 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 own 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. It is the intention of The
Hartford and its non-life subsidiaries to file a single consolidated federal
income tax return. The life insurance companies will file a separate
consolidated federal income tax return for 1997 and 1998 and intend to file a
separate consolidated federal income tax return for 1999. The Company's
effective tax rate was 35%, 35% and 36% in 1999, 1998 and 1997, respectively.
Income tax expense (benefit) is as follows:
<TABLE>
<CAPTION>
For the years ended
December 31,
------------------------------
1999 1998 1997
<S> <C> <C> <C>
------------------------------
Current $(50) $307 $162
Deferred 241 (119) 5
------------------------------
INCOME TAX EXPENSE $191 $188 $167
------------------------------
</TABLE>
A reconciliation of the tax provision at the U.S. federal statutory rate to the
provision (benefit) for income taxes is as follows:
<TABLE>
<CAPTION>
For the years ended
December 31,
------------------------------
1999 1998 1997
<S> <C> <C> <C>
------------------------------
Tax provision at the U.S. federal statutory rate $193 $188 $164
Other (2) -- 3
------------------------------
TOTAL $191 $188 $167
------------------------------
</TABLE>
Deferred tax assets (liabilities) include the following as of December 31:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C> <C>
---------------------
Tax basis deferred policy acquisition costs $ 720 $ 751
Financial statement deferred policy acquisition costs and
reserves 11 103
Employee benefits (3) 4
Net unrealized capital losses (gains) on securities 138 (98)
Investments and other (407) (296)
---------------------
TOTAL $ 459 $ 464
---------------------
</TABLE>
F-16
<PAGE>
Hartford Life Insurance Company had a current tax receivable of $56 as of
December 31, 1999 and a current tax payable of $65 as of December 31, 1998.
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, based on current tax law,
will be taxable in the future only under conditions which management considers
to be remote; therefore, no federal income taxes have been provided on the
balance in this account, which for tax return purposes was $104 as of December
31, 1999.
11. RELATED PARTY TRANSACTIONS
Transactions of the Company with 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, 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 $47 in both 1999 and 1998 and $39 in 1997.
12. COMMITMENTS AND CONTINGENT LIABILITIES
(A) LITIGATION
Hartford Life Insurance Company is involved in pending and threatened litigation
in the normal course of its business in which claims for alleged economic and
punitive damages have been asserted. Some of these cases have been filed as
purported class actions and some cases have been filed in certain jurisdictions
that permit punitive damage awards disproportionate to the actual damages
incurred. Although there can be no assurances, at the present time the Company
does not anticipate that the ultimate liability arising from such pending or
threatened litigation, after consideration of provisions made for estimated
losses and costs of defense, will have a material adverse 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. Part of the assessments paid
by the Company and its subsidiaries pursuant to these laws may be used as
credits for a portion of the associated premium taxes. The Company paid guaranty
fund assessments of approximately $2, $9 and $15 in 1999, 1998 and 1997,
respectively, of which $1 in 1999 and $4 in both 1998 and 1997 were estimated to
be creditable against premium taxes.
(C) LEASES
The rent paid to Hartford Fire for space occupied by the Company was $9 in 1999
and $7 in both 1998 and 1997. Future minimum rental commitments are as follows:
<TABLE>
<S> <C>
2000 $ 14
2001 14
2002 13
2003 12
2004 12
Thereafter 62
--------
TOTAL $ 127
--------
</TABLE>
The principal executive offices of Hartford Life Insurance Company, together
with its parent, are located in Simsbury, Connecticut. Rental expense is
recognized on a level basis over the term of the primary sublease for the
facility located in Simsbury, Connecticut, which expires on December 31, 2009,
and amounted to approximately $9 in each of the years ended December 31, 1999,
1998 and 1997.
(D) TAX MATTERS
Hartford Life's federal income tax returns are routinely audited by the Internal
Revenue Service. Hartford Life's 1996-1997 federal income tax returns are
currently under audit by the Internal Revenue Service. Management believes that
sufficient provision has been made in the financial statements for issues that
may result from tax examinations and other tax related matters for all open tax
years.
F-17
<PAGE>
13. SEGMENT INFORMATION
Hartford Life Insurance Company is organized into three reportable operating
segments which include Investment Products, Individual Life and Corporate Owned
Life Insurance (COLI). Investment Products offers individual fixed and variable
annuities, mutual funds, retirement plan services other investment products.
Individual Life sells a variety of life insurance products, including variable
life, universal life, interest sensitive whole life and term life insurance.
COLI primarily offers variable products used by employers to fund non-qualified
benefits or other post-employment benefit obligations as well as leveraged COLI.
The Company includes in "Other" corporate items not directly allocable to any of
its reportable operating segments, as well as certain employee benefit products
including group life and disability insurance that is directly written by the
Company and is substantially ceded to its parent, HLA.
The accounting policies of the reportable operating segments are the same as
those described in the summary of significant accounting policies in Note 2.
Hartford Life Insurance Company evaluates performance of its segments based on
revenues, net income and the segment's return on allocated capital. The Company
charges direct operating expenses to the appropriate segment and allocates the
majority of indirect expenses to the segments based on an intercompany expense
arrangement. Intersegment revenues are not significant and primarily occur
between corporate and the operating segments. These amounts include interest
income on allocated surplus and the amortization of net realized capital gains
and losses through net investment income utilizing the duration of the segment's
investment portfolios. The Company's revenues are primarily derived from
customers within the United States. The Company's long-lived assets primarily
consist of deferred policy acquisition costs and deferred tax assets from within
the United States. The following tables outlines summarized financial
information concerning the Company's segments.
<TABLE>
<CAPTION>
Investment Individual
1999 Products Life COLI Other Total
<S> <C> <C> <C> <C> <C>
--------------------------------------------------
Total revenues $ 1,884 $ 574 $ 830 $ 112 $ 3,400
Net investment income 699 169 431 60 1,359
Amortization of deferred policy acquisition costs 411 128 -- -- 539
Income tax expense (benefit) 159 37 15 (20) 191
Net income (loss) 300 68 28 (35) 361
Assets 106,352 5,962 20,198 2,453 134,965
</TABLE>
<TABLE>
<CAPTION>
Investment Individual
1998 Products Life COLI Other Total
<S> <C> <C> <C> <C> <C>
--------------------------------------------------
Total revenues $ 1,779 $ 543 $ 1,567 $ 86 $ 3,975
Net investment income 736 181 793 49 1,759
Amortization of deferred policy acquisition costs 326 105 -- -- 431
Income tax expense (benefit) 145 35 12 (4) 188
Net income (loss) 270 64 24 (8) 350
Assets 87,207 5,228 22,631 3,197 118,263
</TABLE>
<TABLE>
<CAPTION>
Investment Individual
1997 Products Life COLI Other Total
<S> <C> <C> <C> <C> <C>
-------------------------------------------------
Total revenues $ 1,510 $ 487 $ 980 $ 32 $ 3,009
Net investment income 739 164 429 36 1,368
Amortization of deferred policy acquisition costs 250 83 -- 2 335
Income tax expense 111 30 15 11 167
Net income 206 55 27 14 302
Assets 72,288 4,914 17,800 2,743 97,745
</TABLE>
14. QUARTERLY RESULTS FOR 1999 AND 1998 (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 31, June 30, September 30, December 31,
------------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
------------------------------------------------------------------------------
Revenues $838 $915 $853 $721 $846 $826 $863 $1,513
Benefits, claims and expenses 703 787 722 591 695 688 728 1,371
Net income 88 83 85 85 100 89 88 93
</TABLE>
F-18
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE I -- SUMMARY OF INVESTMENTS
OTHER THAN INVESTMENTS IN AFFILIATES
AS OF DECEMBER 31, 1999
(IN MILLIONS)
<TABLE>
<CAPTION>
Amount at
Fair which shown
Type of Investment Cost Value on Balance Sheet
<S> <C> <C> <C>
------------------------------------
FIXED MATURITIES
Bonds and Notes
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) $ 180 $ 182 $ 182
U.S. Government and Government agencies and authorities
(guaranteed and sponsored) -- asset backed 1,094 1,064 1,064
States, municipalities and political subdivisions 155 156 156
Foreign governments 289 281 281
Public utilities 865 833 833
All other corporate, including international 5,646 5,420 5,420
All other corporate -- asset backed 4,103 3,985 3,985
Short-term investments 1,156 1,156 1,156
Certificates of deposit 434 422 422
Redeemable preferred stock 1 -- --
------------------------------------
TOTAL FIXED MATURITIES 13,923 13,499 13,499
------------------------------------
EQUITY SECURITIES
Common Stocks
Industrial and miscellaneous 49 56 56
------------------------------------
TOTAL EQUITY SECURITIES 49 56 56
------------------------------------
TOTAL FIXED MATURITIES AND EQUITY SECURITIES 13,972 13,555 13,555
------------------------------------
Policy Loans 4,187 4,187 4,187
------------------------------------
OTHER INVESTMENTS
Mortgage loans on real estate 198 198 198
Other invested assets 127 150 144
------------------------------------
TOTAL OTHER INVESTMENTS 325 348 342
------------------------------------
TOTAL INVESTMENTS $18,484 $18,090 $18,084
------------------------------------
</TABLE>
S-1
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE III -- SUPPLEMENTARY INSURANCE INFORMATION
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
(IN MILLIONS)
<TABLE>
<CAPTION>
Net Benefits,
Deferred Realized Claims and
Policy Future Other Premiums Net Capital Claim
Acquisition Policy Policyholder and Other Investment Gains Adjustment
Segment Costs Benefits Funds Considerations Income (Losses) Expenses
<S> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------
1999
Investment Products $3,099 $2,744 $ 8,859 $1,185 $ 699 $-- $ 660
Individual Life 914 270 1,880 405 169 -- 254
Corporate Owned Life Insurance -- 321 5,244 399 431 -- 621
Other -- 997 21 56 60 (4) 39
-------------------------------------------------------------------------------------------
CONSOLIDATED OPERATIONS $4,013 $4,332 $16,004 $2,045 $1,359 $(4) $1,574
-------------------------------------------------------------------------------------------
1998
-------------------------------------------------------------------------------------------
Investment Products $2,823 $2,407 $ 9,194 $1,043 $ 736 $-- $ 670
Individual Life 931 466 2,307 363 181 (1) 262
Corporate Owned Life Insurance -- 225 8,097 774 793 -- 924
Other -- 497 17 38 49 (1) 55
-------------------------------------------------------------------------------------------
CONSOLIDATED OPERATIONS $3,754 $3,595 $19,615 $2,218 $1,759 $(2) $1,911
-------------------------------------------------------------------------------------------
1997
-------------------------------------------------------------------------------------------
Investment Products $2,478 $2,070 $ 9,620 $ 771 $ 739 $-- $ 677
Individual Life 837 392 2,182 323 164 -- 242
Corporate Owned Life Insurance -- 56 9,259 551 429 -- 439
Other -- 541 (27) (8) 36 4 21
-------------------------------------------------------------------------------------------
CONSOLIDATED OPERATIONS $3,315 $3,059 $21,034 $1,637 $1,368 $ 4 $1,379
-------------------------------------------------------------------------------------------
<CAPTION>
Amortization
of Deferred
Policy
Acquisition Dividends to Other
Segment Costs Policyholders Expenses
<S> <C> <C> <C>
---------------------------------------
1999
Investment Products $411 $ -- $354
Individual Life 128 -- 87
Corporate Owned Life Insurance -- 104 62
Other -- -- 128
---------------------------------------
CONSOLIDATED OPERATIONS $539 $104 $631
---------------------------------------
1998
---------------------------------------
Investment Products $326 $ -- $368
Individual Life 105 -- 77
Corporate Owned Life Insurance -- 329 278
Other -- -- 43
---------------------------------------
CONSOLIDATED OPERATIONS $431 $329 $766
---------------------------------------
1997
---------------------------------------
Investment Products $250 $ -- $266
Individual Life 83 -- 77
Corporate Owned Life Insurance -- 240 259
Other 2 -- (16)
---------------------------------------
CONSOLIDATED OPERATIONS $335 $240 $586
---------------------------------------
</TABLE>
S-2
<PAGE>
HARTFORD LIFE INSURANCE COMPANY AND SUBSIDIARIES
SCHEDULE IV -- REINSURANCE
(IN MILLIONS)
<TABLE>
<CAPTION>
Percentage
Gross Ceded to Assumed From Net of Amount
Amount Other Companies Other Companies Amount Assumed to Net
<S> <C> <C> <C> <C> <C>
------------------------------------------------------------------------
FOR THE YEAR ENDED
DECEMBER 31, 1999
Life insurance in force $307,970 $131,162 $11,785 $188,593 6.2%
PREMIUMS AND OTHER CONSIDERATIONS
Life insurance and annuities $ 2,212 $ 275 $ 84 $ 2,021 4.2%
Accident and health insurance 448 435 11 24 45.8%
------------------------------------------------------------------------
TOTAL PREMIUMS AND OTHER CONSIDERATIONS $ 2,660 $ 710 $ 95 $ 2,045 4.6%
------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1998
------------------------------------------------------------------------
Life insurance in force $326,400 $200,782 $18,289 143,907 12.7%
------------------------------------------------------------------------
PREMIUMS AND OTHER CONSIDERATIONS
Life insurance and annuities $ 2,329 $ 271 142 $ 2,200 6.5%
Accident and health insurance 393 383 8 18 44.4%
------------------------------------------------------------------------
TOTAL PREMIUMS AND OTHER CONSIDERATIONS $ 2,722 $ 654 150 $ 2,218 6.8%
------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1997
------------------------------------------------------------------------
Life insurance in force $245,487 $178,771 $33,156 $ 99,872 33.2%
------------------------------------------------------------------------
PREMIUMS AND OTHER CONSIDERATIONS
Life insurance and annuities $ 1,818 $ 340 $ 157 $ 1,635 9.6%
Accident and health insurance 346 346 2 2 100.0%
------------------------------------------------------------------------
TOTAL PREMIUMS AND OTHER CONSIDERATIONS $ 2,164 $ 686 $ 159 $ 1,637 9.7%
------------------------------------------------------------------------
</TABLE>
S-3
<PAGE>
PART C
<PAGE>
OTHER INFORMATION
Item 27. Exhibits
(a) Resolution of the Board of Directors of Hartford Life Insurance
Company ("Hartford") authorizing the establishment of the Separate
Account.(1)
(b) Not Applicable.
(c) Principal Underwriting Agreement.(1)
(d) Form of Flexible Premium Variable Life Insurance Policy.(2)
(e) Form of Application for Flexible Premium Variable Life Insurance
Policies.(1)
(f) Certificate of Incorporation of Hartford(3) and Bylaws of Hartford.(1)
(g) Contracts of Reinsurance.(4)
(h) Form of Participation Agreement.(4)
(i) Not Applicable.
(j) Not Applicable.
(k) Opinion and consent of Christine Hayer Repasy, Senior Vice President,
General Counsel and Corporate Secretary.
---------------------------
(1) Incorporated by reference to Post-Effective Amendment No. 1 to the
Registration Statement on Form S-6, File No. 33-89990, of Hartford Life
Insurance Company filed with the Securities and Exchange Commission on
May 1, 1996.
(2) Incorporated by reference to Post-Effective Amendment No. 3 to the
Registration Statement on Form S-6, File No. 33-89990, of Hartford Life
Insurance Company filed with the Securities and Exchange Commission on
February 20, 1998.
(3) Incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement on Form S-6, File No. 33-89990, of Hartford Life
Insurance Company filed with the Securities and Exchange Commission on
April 16, 1997.
(4) Incorporated by reference to Post-Effective Amendment No. 6 to the
Registration Statement on Form S-6, File No. 33-89990, of Hartford Life
Insurance Company filed with the Securities and Exchange Commission on
April 12, 1999.
<PAGE>
(l) Opinion and Consent of Thomas P. Kalmbach, FSA, MAAA.
(m) Not Applicable.
(n) Consent of Arthur Andersen LLP, Independent Public Accountants.
(o) No financial statement will be omitted.
(p) Not Applicable.
(q) Memorandum describing transfer and redemption procedures.(1)
(r) Power of Attorney.
(q) Organizational Chart.
Item 28. Officers and Directors.
<TABLE>
<CAPTION>
--------------------------------------------- --------------------------------------------------------------------------
NAME POSITION WITH HARTFORD
--------------------------------------------- --------------------------------------------------------------------------
<S> <C>
David A. Carlson Vice President
--------------------------------------------- --------------------------------------------------------------------------
Peter W. Cummins Senior Vice President
--------------------------------------------- --------------------------------------------------------------------------
Bruce W. Ferris Vice President
--------------------------------------------- --------------------------------------------------------------------------
Timothy M. Fitch Vice President & Actuary
--------------------------------------------- --------------------------------------------------------------------------
Mary Jane B. Fortin Vice President & Chief Accounting Officer
--------------------------------------------- --------------------------------------------------------------------------
David T. Foy Senior Vice President, Chief Financial Officer and Treasurer, Director*
--------------------------------------------- --------------------------------------------------------------------------
Lois W. Grady Senior Vice President
--------------------------------------------- --------------------------------------------------------------------------
Stephen T. Joyce Senior Vice President
--------------------------------------------- --------------------------------------------------------------------------
Michael D. Keeler Vice President
--------------------------------------------- --------------------------------------------------------------------------
Robert A. Kerzner Senior Vice President
--------------------------------------------- --------------------------------------------------------------------------
Thomas M. Marra President, Director*
--------------------------------------------- --------------------------------------------------------------------------
Steven L. Matthiesen Vice President & Actuary
--------------------------------------------- --------------------------------------------------------------------------
Deanne Osgood Vice President
--------------------------------------------- --------------------------------------------------------------------------
Craig R. Raymond Senior Vice President and Chief Actuary
--------------------------------------------- --------------------------------------------------------------------------
Christine Hayer Repasy Senior Vice President, General Counsel, and Corporate Secretary, Director*
--------------------------------------------- --------------------------------------------------------------------------
Lowndes A. Smith Chairman of the Board, Chief Executive Officer, Director*
--------------------------------------------- --------------------------------------------------------------------------
Joe M. Thomson Senior Vice President
--------------------------------------------- --------------------------------------------------------------------------
John C. Walters Executive Vice President, Director*
--------------------------------------------- --------------------------------------------------------------------------
David M. Znamierowski Senior Vice President and Chief Investment Officer, Director*
--------------------------------------------- --------------------------------------------------------------------------
</TABLE>
<PAGE>
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
------------------------------
* Denotes Board of Directors of Hartford.
Item 29. Persons Controlled By or Under Common Control with the Depositor or
Registrant
Filed herewith as Exhibit 1.7.
Item 30: Indemnification
Sections 33-770 to 33-778, inclusive, of the Connecticut General
Statutes ("CGS") provide that a corporation may provide
indemnification of or advance expenses to a director, officer,
employee or agent. Reference is hereby made to Section 33-771(e) of
CGS regarding indemnification of directors and Section 33-776(d) of
CGS regarding indemnification of officers, employees and agents of
Connecticut corporations. These statutes provide, in general, that
Connecticut corporations incorporated prior to January 1, 1997
shall, except to the extent that their certificate of incorporation
expressly provides otherwise, indemnify their directors, officers,
employees and agents against "liability" (defined as the obligation
to pay a judgment, settlement, penalty, fine, including an excise
tax assessed with respect to an employee benefit plan, or
reasonable expenses incurred with respect to a proceeding) when (1)
a determination is made pursuant to Section 33-775 that the party
seeking indemnification has met the standard of conduct set forth
in Section 33-771 or (2) a court has determined that
indemnification is appropriate pursuant to Section 33-774. Under
Section 33-775, the determination of and the authorization for
indemnification are made (a) by the disinterested directors, as
defined in Section 33-770(3); (b) by special counsel; (c) by the
shareholders; or (d) in the case of indemnification of an officer,
agent or employee of the corporation, by the general counsel of the
corporation or such other officer(s) as the board of directors may
specify. Also, Section 33-772 provides that a corporation shall
indemnify an individual who was wholly successful on the merits or
otherwise against reasonable expenses incurred by him in connection
with a proceeding to which he was a party because he was a director
of the corporation. In the case of a proceeding by or in the right
of the corporation or with respect to conduct for which the
director, officer, agent or employee was adjudged liable on the
basis that he received a financial benefit to which he was not
entitled, indemnification is limited to reasonable expenses
incurred in connection with the proceeding against the corporation
to which the individual was named a party.
Under the Depositor's bylaws, the Depositor must indemnify both
directors and officers of the Depositor for (1) any claims and
liabilities to which they become
<PAGE>
subject by reason of being or having been directors or officers of
the Depositor and (2) legal and other expenses incurred in
defending against such claims, in each case, to the extent such is
consistent with statutory provisions.
Section 33-777 of CGS specifically authorizes a corporation to procure
indemnification insurance on behalf of an individual who was a
director, officer, employer or agent of the corporation. Consistent
with the statute, the directors and officers of the Depositor and
Hartford Equity Sales Company, Inc. ("HESCO") are covered under a
directors and officers liability insurance policy issued to The
Hartford Financial Services Group, Inc. and its subsidiaries.
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.
Item 31. Principal Underwriters
(a) Hartford Equity Sales Company ("HESCO") acts as principal
underwriter for the following investment companies:
Hartford Life Insurance Company - Separate Account VL I
Hartford Life Insurance Company - Separate Account VL II
Hartford Life Insurance Company - ICMG Secular Trust Separate
Account
Hartford Life Insurance Company - ICMG Registered Variable
Life Separate Account A
Hartford Life and Annuity Insurance Company - Separate Account
VL I
Hartford Life and Annuity Insurance Company - Separate Account
VL II
Hartford Life and Annuity Insurance Company - ICMG Registered
Variable Life Separate Account One
(b) Directors and Officers of HESCO
<PAGE>
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
NAME WITH UNDERWRITER
---- ---------------------
<S> <C>
David A. Carlson Vice President
Peter W. Cummins Senior Vice President
David T. Foy Treasurer
J. Richard Garrett Vice President
Christine Hayer Repasy Senior Vice President, General Counsel and
Corporate Secretary, Director
George R. Jay Controller
Robert A. Kerzner Executive Vice President, Director
Joseph F. Mahoney Executive Vice President
Thomas M. Marra President, Director
Lowndes A. Smith Chief Executive Officer
John C. Walters Executive Vice President
</TABLE>
Unless otherwise indicated, the principal business address of each the above
individuals is P.O. Box 2999, Hartford, CT 06104-2999.
Item 32. Location of Accounts and Records
All of the accounts, books, records or other documents required to
be kept by Section 31(a) of the Investment Company Act of 1940 and
rules thereunder, are maintained by Hartford at 200 Hopmeadow
Street, Simsbury, Connecticut 06089.
Item 33. Management Services
All management contracts are discussed in Part A and Part B of this Registration
Statement.
Item 34. Representation of Reasonableness of Fees
Hartford hereby represents that the aggregate fees and charges under the Policy
are reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by Hartford.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act and the Investment Company
Act, the Registrant certifies that it meets all of the requirements for
effectiveness of this registration statement under rule 485(b) under the
Securities Act and has duly caused this registration statement to be signed on
its behalf by the undersigned, duly authorized, in the Town of Simsbury, and
State of Connecticut on the 4th day of December, 2000.
HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VL II
(Registrant)
*By: /s/ David T. Foy
-------------------------------------------------
David T. Foy, Senior Vice President and Treasurer
*By: /s/ Christopher M. Grinnell
---------------------------
Christopher M. Grinnell
Attorney-In-Fact
HARTFORD LIFE INSURANCE COMPANY
(Depositor)
*By: /s/ David T. Foy
-------------------------------------------------
David T. Foy, Senior Vice President and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons and in the capacities and on
the dates indicated.
David T. Foy, Senior Vice President, Chief
Financial Officer and Treasurer, Director*
Christine Hayer Repasy, Senior Vice President, General
Counsel and Corporate Secretary, Director*
Thomas M. Marra, President, Director* *By: /s/ Christopher M. Grinnell
Lowndes A. Smith, Chairman of the Board, ----------------------------
Chief Executive Officer, and Director* Christopher M. Grinnell
John C. Walters, Executive Vice President, Attorney-in-Fact
Director*
David M. Znamierowski, Senior Vice President Date: December 4, 2000
And Chief Investment Officer, Director*
<PAGE>
EXHIBIT INDEX
1.3 Opinion and Consent of Christine Hayer Repasy, Senior Vice President,
General Counsel and Corporate Secretary.
1.4 Opinion and Consent of Thomas Kalmbach, FSA, MAAA.
1.5 Consent of Arthur Andersen LLP, Independent Public Accountants.
1.6 Power of Attorney.
1.7 Organizational Chart.
